A three-justice 3rd Court of Appeals panel on Friday ruled the City of Austin’s ordinance forcing businesses to provide paid sick leave to all workers violates the Texas Constitution.
The panel overruled Austin District Judge Tim Sulak and ordered him to grant a temporary injunction to keep the ordinance from taking effect.
The final outcome of the case will have an impact on Austin and also San Antonio, which passed a nearly identical paid sick leave ordinance this summer, but did not set a date for it to take effect pending the ultimate ruling in the lawsuit.
The paid sick leave ordinances have drawn national attention and nearly $2 million in support from national advocacy groups.
The appeals court in August had granted an injunction to prevent the ordinance from taking effect Oct. 1 after Sulak declined plaintiffs’ request for such an order. Five private companies and six business associations led by the Texas Association of Business and National Federation of Independent Business had filed suit in April to overturn the ordinance passed in February by the Austin City Council.
The ordinance, drafted by council member Greg Casar, mandates that businesses operating in the city pay workers for sick days, as many as 64 hours a year for businesses with more than 15 employees and 48 hours for businesses with fewer than 15. State Attorney General Ken Paxton intervened in support of the lawsuit.
The lawsuit, filed on behalf of the plaintiffs by the Center for the American Future, contends the ordinance violates the constitution because its mandate violates the state’s minimum wage law. The center is a project of the conservative Texas Public Policy Foundation charged with examining government overreach.
“The plain language of the TMWA (Texas Minimum Wage Act) preempts the ordinance and, as a result, the ordinance violates the Texas Constitution’s mandate that no city ordinance shall contain any provision inconsistent with the general laws enacted by the legislature of this state,” Justice Jeff Rose wrote in the panel’s opinion.
The parties named in the suit established they would be “irreparably harmed if the ordinance goes into effect because they will incur costs that cannot be recovered,” Rose wrote. State sovereignty would also be irreparably harmed because the ordinance undermines state law, he said.
Ryan Walters, one of the attorneys for the businesses and business groups, told The Texas Monitor Friday that while the appeals court did not rule on the merits of the five main contentions in the lawsuit, it was very clear in saying the ordinance was illegal and unconstitutional.
“We were very pleased with the ruling today,” Walters said. “I am not speaking for the city about what it intends to do, but I don’t see that the trial court will have any alternative but to grant a permanent injunction in this case.”
The ruling, however, sends the case back to Sulak’s district court, giving city attorneys the option to argue its case again. The city attorney’s office issued no statement Friday about its intentions.
The Texas Monitor also contacted Mayor Steve Adler and Casar, the author of the ordinance, for comment. Lesley Varghese, Adler’s chief of staff, said the mayor was traveling and would be unlikely to comment on the ruling Friday.
Casar did not reply to the request before this story posted.
The court also pointed out that the ordinance gives the city the power to charge businesses with misdemeanors carrying a fine of up to $500 for each failure to provide sick leave. To insure compliance, the ordinance would allow the city to subpoena a business’ payroll records.
The ruling says that based on the framework of the suit, Sulak should have granted a temporary injunction blocking the ordinance until the suit could be argued in court. “We hold that the district court abused its discretion in denying the parties’ application for temporary injunction,” Rose wrote.
The appeals court granted the injunction because had the ordinance gone into effect, the plaintiffs would have begun paying for sick leave with no recourse should the suit be decided in their favor.
“If the Private Parties are successful in their challenge to the ordinance, they cannot recover damages from the city because of governmental immunity from liability and there are no other sources of recovery for these costs,” Rose wrote. “We hold that both the private parties and the state have established that they will suffer irreparable harm from the ordinance.”
Should the city decide to go forward in court to defend the ordinance, Walters said it is unlikely that a court date would be set before the end of the year.
Mark Lisheron can be reached at [email protected].