The Texas Senate recently approved Senate Bill 14 (“SB14”), coined the Business Freedom and Uniformity Act, which would ban cities and counties from requiring businesses to provide paid sick leave, predictable work schedules, and other employee benefits. Supporters of the bill believe that it will allow businesses to operate in multiple cities. However, opponents have called it an existential threat to Texas workers.

In the past three years, Austin, Dallas, and San Antonio passed paid-sick-leave ordinances, requiring employers to pay employees who use earned sick leave for hours spent not working. In Dallas, the ordinance found in Chapter 20 of the Dallas City Code, originally went into effect on August 1, 2019, and required employers to grant one hour of paid sick leave for every thirty hours worked by an employee within Dallas, regardless of the employer’s location.

Recent court rulings have kept ordinances such as this one from being enforced. Two Dallas-based companies and the State of Texas sued the City of Dallas to enjoin it from implementing the ordinance. On March 31, 2021, a Texas federal court issued a permanent injunction, blocking the ordinance, in the case of ESI/Employee Solutions, L.P., et al. v. City of Dallas, et al.

According to the court, the Dallas ordinance violates the Texas Minimum Wage Act, and is therefore unenforceable under the Texas Constitution. The court further reasoned that because it requires private employers to pay regular hourly wages for hours that are not actually worked by those employees who take sick leave and it requires private employers to pay a wage other than the state minimum wage, the ordinance was found to be preempted by the Texas Minimum Wage Act.

In response to this battle between Texas cities and courts, the Texas Senate approved SB14 in a 19-12 vote. SB14 was given initial approval several proposed amendments to the bill were rejected, including one suggested by Senator Sarah Eckhardt in Austin, that would have allowed local governments to require water breaks for construction workers and others affected by hot summers in Texas. This particular amendment was rejected in light of federal Occupational Safety and Health Administration guidelines already in place to protect workers from unsafe conditions.

Supporters of SB14 emphasize the rights of private employers to determine the best and most efficient way to operate a successful business. Even more vital to proponents of SB14 is giving businesses the opportunity to recover from the pandemic and assessing what the lasting effects of COVID-19 will be on small- and medium-sized businesses, as unemployment rates remain considerably higher than they were a year ago.

The attorneys in our Austin and Dallas offices are available to answer any questions you may have regarding SB14 or how it may affect your business.

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