NFIB Challenges Austin's Paid Sick Leave Ordinance in Court

Date: April 24, 2018

NFIB, the state’s leading small-business association, in conjunction with other industry groups and with representation from the Texas Public Policy Foundation, filed a lawsuit today challenging the legality of a recently enacted Austin ordinance requiring businesses to offer paid sick leave beginning Oct. 1. 

NFIB State Executive Director Will Newton said local ordinances such as Austin’s are unconstitutional and create an unnecessary burden for employers, especially small businesses.

“Local measures purporting to regulate employment practices, like Austin’s paid sick leave ordinance, create a patchwork of rules and regulations that are difficult for small businesses to navigate, especially for companies with mobile employees. These ordinances create extra work and significantly drive up the cost of doing business in Texas,” Newton said.

“The legislature understands that, which is why it passed the Texas Minimum Wage Law to stop local governments from imposing burdens above and beyond what is required by state law,” Newton said. “Austin wants to force companies to pay workers for hours they don’t work. But state law is clear: Wages are owed only for time spent working.

“The other problem with the Austin ordinance is that it violates the Texas Constitution,” said Karen Harned, executive director of the NFIB Small Business Legal Center. “The Texas Supreme Court has said that to survive scrutiny, the government has to prove that the challenged regulatory imposition bears a ‘substantial relationship’ to a legitimate governmental interest.

“Here the burdens imposed on Austin employers are simply excessive; local authorities simply have no interest in regulating the employment relationship,” Harned said.

“Those sorts of impositions may be justified only at the state level where the Legislature can weigh the benefits and burdens of regulation on the state as a whole.

The lawsuit also takes issue with Austin’s decision to carve out a pro-union exception for businesses with collective bargaining agreements.

“That tells me this is about politics, not policy,” Newton said.  “In any event, small-business owners, not government officials, are in the best position to understand which benefits they can afford to offer employees,” Newton said.

“Small businesses can’t be encumbered by inconsistent labor standards throughout this state, and neither can their employees,” Newton said. “That’s why we’ll call on our state legislators to stand up for small business in next year’s legislative session.” 

The NFIB Small Business Legal Center is the voice of small business in the nation’s courts and the legal resource for small-business owners nationwide. To learn more, visit and follow @NFIBlegal on Twitter.

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