On April 24, 2019, Dallas became the third city in the Lone Star State to adopt an ordinance requiring all private employers to provide paid sick leave to employees, following Austin and San Antonio. The Dallas ordinance originally was proposed for inclusion on the November 2018 ballot. However, the associated petition fell short last summer by fewer than 1,000 signatures of the nearly 54,000 needed for inclusion on the ballot. The issue continued to percolate at both the local and state level, however, and the Dallas City Council voted 10-4 in favor of enacting its own paid sick leave ordinance after defeating a proposed delay pending the May 4, 2019, general election. But depending on the outcome of the pending legal and state legislative challenges against these types of ordinances, the Dallas ordinance may never go into effect, as discussed below.

Current State of Paid Sick Leave in Texas

Scheduled to take effect on August 1, 2019 (except as to employers with only five or fewer employees in the preceding year, whose obligations are delayed until August 1, 2021), the Dallas ordinance is modeled after Austin’s ordinance (previously scheduled to take effect on October 1, 2018, but stayed pending a legal challenge as noted below) and San Antonio’s ordinance (scheduled to take effect on August 1, 2019) – mirroring the latter ordinance almost exactly. Because of the similarities among the bills and recent action by the state legislature,  all of these ordinances are likely to suffer the same fate.

After forging the path towards paid sick leave requirements in Texas with its enactment on February 17, 2018, the Austin Earned Sick Time Ordinance has been threatened by legal challenges from a lawsuit filed by a coalition of businesses, and separately by state legislative action aimed at preempting local ordinances. 

Over five months ago, the Texas Third Court of Appeals blocked the Austin ordinance from taking effect until after the lawsuit was fully adjudicated, and further held that the Austin ordinance violated the Texas Constitution. A final decision on the ordinance’s constitutionality is expected from the Texas Supreme Court, as Austin filed a Petition for Review, challenging the appellate court decision on March 29, 2019, but a decision is likely still months away as the state’s response is not due until May 29, 2019.  

Meanwhile, since the 86^th Session of the Texas Legislature began on January 8, 2019, state senators and representatives have lodged multiple proposed bills to preempt local governments from mandating employee benefits.  Senate Bill 2487 prohibits any local government from “enforce[ing] an order, role, regulation, or policy regulating a private employer’s terms of employment relating to any form of employment leave, including paid days off from work for holidays, sick leave, vacation, and personal necessity.” The bill was fast-tracked through the Senate, passing on April 11, 2019, and is set for public hearing before the House on May 1, 2019.  If passed in the house, Governor Greg Abbott (R) likely will sign the bill into law and it will go into effect on September 1, 2019.

Regardless of the current legal and legislative landscape, which leads many to conclude that these ordinances will never take effect, employers should be aware of the obligations required under the ordinances should these challenges fail.

The Dallas Ordinance

Covered Employers and Employees

The law covers all private employers, but more leave must be provided by employers that had more than 15 employees at any time during the preceding year.

Employees who perform at least 80 hours of work in a year in Dallas are covered, including those who perform work through a temporary employment agency. The ordinance does not cover independent contractors or unpaid interns. Unlike many sick pay laws around the country, the ordinance applies to employees covered by a collective bargaining agreement (CBA). Only the accrual cap (discussed in the next section) may be partially waived via a CBA.

Accrual, Caps, and Carryover

Employees accrue at least one leave hour for every 30 hours worked in Dallas. Leave must accrue in whole-hour units unless the employer has a written policy providing for accrual in fractions of an hour.

Leave accrual is capped depending on the employer’s size:  64 hours annually for employers with 16 or more employees versus 48 hours annually for employers with 15 or fewer employers. Notably, leave must accrue based on time worked during the calendar year unless the employer provides the employee with a written notice—at the commencement of employment or the effective date of the ordinance—that a different 12-consecutive-month period will be used. This is unlike the Austin ordinance, which appears to require employers to use a calendar year, and also unlike the San Antonio ordinance, which allows employers to use a year other than a calendar year without written notice.

Leave accrual must begin on the day the law is applicable to the employer, or when the individual’s employment begins, whichever date is later.

Accrued leave, up to the applicable cap, may be carried over to the following year. This means that an employee’s leave bank could accumulate up to twice the annual, applicable cap. Employers can avoid this carryover requirement by providing the employee with the maximum annual leave amount at the beginning of each year (a process called “frontloading”).

For employers that already have paid time off policies, the law does not mandate any additional leave so long as the employer’s policy complies with the ordinance’s provisions regarding accrual, the yearly cap, and leave use.

Using Leave

Leave can be used for absences due to an employee or family member’s illness, injury, or health condition, including preventive care. If an employee or family member is a victim of stalking, domestic abuse, or sexual assault, leave can also be used for medical reasons, to relocate, to obtain services from a victim services organization, and to participate in legal proceedings. It is worth noting there is a slight difference in how the Dallas ordinance treats mental injuries compared to how the Austin and San Antonio ordinances treat them. All of these laws provide leave for physical or mental illnesses and physical injuries, but unlike its counterparts, the Dallas ordinance does not specifically allow leave for mental injuries. This small difference in the wording of the laws may be significant in cases where an employee or covered family member suffers a mental injury, e.g., a traumatic brain injury such as a concussion, without suffering a mental illness. In that situation, leave may be covered in Austin and San Antonio, but perhaps not in Dallas.

Covered family members include a child, parent, or spouse, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship.

Generally, employees may use leave as soon as it accrues. The law provides a limited exception to this rule:  employers may restrict use during the first 60 days of employment if the employee is guaranteed employment for at least one year. This exception would not apply, for example, to standard “at-will” employment situations where the employee is not guaranteed employment for any period of time – let alone for an entire year.

Another notable limitation is that employers are not required to allow employees to use leave on more than eight days in a year. Presumably, this means that an employee who has already used leave on eight days in a year could be prohibited from using any remaining leave for the rest of the year, but the law is not clear in this regard. Similar confusion abounds under ordinances in San Antonio and Austin; to date, no enforcement agency has clarified the requirement. 

Requesting and Documenting Leave

To use leave, employees must make a timely request before their scheduled work time. However, unlike other similar laws around the country, the ordinance does not define what constitutes a “timely request,” and employers are also prohibited from preventing use for an “unforeseen” qualified absence.

Employers are also limited in their ability to verify leave requests. The ordinance states that an employer can request verification to demonstrate that leave was taken for a covered purpose only where the employee is absent for more than three consecutive work days. Even where verification is allowed, the employer cannot require the employee to explain the nature of the illness, injury, health condition, domestic abuse, sexual assault, or stalking. 

Payment for Leave

Leave taken in accordance with the ordinance must be paid. Specifically, the employee must be paid the amount he or she would have earned had leave not been taken. Although the law states that overtime premiums, tips, and commissions can be excluded when calculating the employee’s rate of pay, the employee must be paid at least minimum wage (currently $7.25 per hour). Because the law is otherwise silent on this issue, difficulty may arise in calculating the required rate of pay for employees who are not hourly workers, i.e., those employees who are paid on a salary or piece-rate basis or who perform different jobs for the employer at different rates of pay.

End-of-Employment Issues

Unlike the vast majority of paid sick leave laws, the Dallas ordinance fails to state expressly whether an employer must pay out any accrued, unused leave when employment ends. The ordinance does state, however, that an employee’s accrued, unused leave must be reinstated if he or she is rehired within six months of separation, which implies that payout of accrued, unused leave is not mandatory.

Notice, Posting & Recordkeeping Requirements

The ordinance requires that employers provide monthly electronic or written statements to employees showing the amount of available leave. If an employer has an employee handbook, the handbook must include a notice of employee rights and remedies under the ordinance. Additionally, employers must conspicuously display any poster created by the city describing the law’s requirements in English and any other languages the city may eventually require.

The law also requires employers to maintain records concerning accrued and used leave. Curiously, the ordinances passed by Austin, San Antonio, and Dallas all cite to a non-existent federal recordkeeping regulation when describing the length of time that records must be kept, so this uncertainty will remain until clarification is provided (likely by amendments to these laws).

Prohibitions, Penalties & Enforcement

Employers cannot require employees to find replacement workers to cover the hours they use as leave. Additionally, they cannot transfer, demote, discharge, suspend, reduce hours, or directly threaten these actions against an employee because that employee: 1) requests or uses leave; 2) reports or attempts to report a violation of the law; 3) participates or attempts to participate in an investigation or proceeding under the law; 4) otherwise exercises any rights afforded by the law.

The ordinance does not specify who will be responsible for enforcing the law, leaving it to the city manager to designate a department to do so at some point in the future. The ordinance does not appear to provide employees a private right of action. Complaints must, instead, be filed with the to-be-designated department within two years from the date of the violation. A civil penalty in an amount not to exceed $500 per violation may be assessed, subject to appeal by the employer.  Though it is not clear what will constitute a separate “violation,” the law specifies that the director must seek voluntary compliance from the employer within 10 days of issuing notice of a violation before assessing a penalty. No penalties will be assessed until April 1, 2020, except for violations of the anti-retaliation provision.

Miscellaneous Provisions

Under the ordinance, employers may allow employees to donate their accrued leave to coworkers or to voluntarily exchange hours or to trade shifts instead of using accrued leave. Additionally, employers may advance leave to employees. If employees are transferred to a different facility, location, division, or job position with the employer, they keep pre-transfer accrued leave. The ordinance also provides that employees hired by a successor employer retain leave they accrued with the predecessor employer before the acquisition.

Next Steps

Employers that may be covered under any of the paid sick leave ordinances for Austin, San Antonio, or Dallas should consider developing policies and procedures that will comply with these ordinances.  Alternatively, employers may want to take a “wait and see” approach to avoid incurring compliance costs in anticipation that these laws may never go into effect as a result of the legislature’s recent activity and/or legal challenges to those laws. Employers that opt for the latter strategy would be wise to schedule recurring reminders to revisit their decision, leaving sufficient time to consult with counsel and roll out a compliant leave program, should any of these laws take effect.