In April 2018, NFIB filed a lawsuit challenging the authority of municipal governments to impose paid sick leave mandates on small businesses under Texas law. In conjunction with other industry groups and in collaboration with the Texas Public Policy Foundation (TPPF), NFIB hopes to invalidate the City of Austin, Texas’ paid sick leave ordinance, which was enacted—over strong objections from the small business community—earlier in 2018.
Less than a week after filing suit, Attorney General Ken Paxton announced that the State of Texas would intervene to support NFIB, TPPF, and our other partners in this legal effort. The Attorney General’s announcement is noteworthy because we are aware of no other case in which a state has intervened in a suit of this sort to defend the small business community against municipal balkanization of employment law standards. This is unquestionably a positive development because it means the State of Texas agrees that Texas’ minimum wage law preempts municipal wage and hour regulation—including paid sick leave mandates, which amount to heightened minimum wage standards in requiring pay for time not actually worked.
NFIB and the NFIB Small Business Legal Center have joined similar legal battles throughout the country—challenging municipal authorities for piling-on regulatory burdens in the face of state-level statutory preemptions. For example, NFIB Small Business Legal Center filed an amicus brief in the Pennsylvania Supreme Court, arguing that state law expressly prohibits local authorities from regulating the employment relationship. The Austin lawsuit is unique in that it’s the first time the Legal Center has challenged a municipal paid sick leave ordinance in the South. This litigation will be closely watched as other cities will surely follow-suit if the court upholds Austin’s ordinance.
But as other municipalities contemplate following Austin’s lead, its important to remember that small businesses cannot afford to comply with paid sick leave mandates and inconsistent regulatory requirements. For example, if a plumbing company sends employees to service homes throughout the entire region it must comply with the most demanding local standards, or otherwise calculate time spent in Austin down to the minute—a nearly impossible demand. NFIB will continue to fight for uniform statewide employment standards and work to ensure that Austin’s model isn’t adopted by other towns and cities in the country.