In a long-awaited and much-anticipated decision, the federal court overseeing a legal challenge to the City of Dallas’s paid sick leave ordinance entered a preliminary injunction preventing the city from enforcing the ordinance during the pendency of the litigation.

Following the enactment of similar ordinances in Austin and San Antonio in 2018 and 2019, respectively, Dallas was the last of three Texas cities to enact a paid sick leave ordinance, doing so by vote of the city council on April 24, 2019.  All three ordinances are substantially similar, requiring employers to provide employees with paid leave covering certain health and safety-related absences. 

Affected employer groups have challenged each ordinance, arguing primarily that the Texas Minimum Wage Act preempts municipal efforts to legislate employee minimum wages, including the provision of paid leave benefits.  The state trial courts and appellate courts overseeing the lawsuits in Austin and San Antonio were persuaded by this argument, and consequently enjoined those ordinances from taking effect last year.  The situation in Dallas was different because an injunction did not issue before it took effect on August 1, 2019.  For approximately the last eight months, we have been waiting to see whether the federal court would agree with its state court counterparts, and enjoin the Dallas ordinance.  On March 30, 2020, the court agreed, holding the ordinance was likely preempted. 

The timing of this decision was critically important.  While the Dallas ordinance took effect on August 1, 2019, only the anti-retaliation provision has been enforced since then.  Penalties for general non-compliance could not be assessed until April 1, 2020.  Accordingly, the decision comes on the eve of this enforcement date. 

It is also important to note that this decision is not the final word on this issue in several respects.  First, while the court made an initial assessment that the ordinance is unlawful for purposes of entering the preliminary injunction, it has not made a final decision.  The outcome may be different when the court considers the merits of the lawsuit in light of additional evidence presented with a dispositive motion or perhaps after conducting a trial. 

Second, the Texas Supreme Court may conclude that the Texas Minimum Wage Act does not preempt local paid sick leave ordinances, which decision would be binding on the federal court.  A decision from the Texas Supreme Court on this issue is expected in the next several months because it is currently considering an appeal of the preliminary injunction that was issued against the Austin paid sick leave ordinance.  While it seems likely that the Texas Supreme Court will agree with all of the other courts to have considered this issue by holding that these ordinances are preempted, it is not bound by these prior decisions.

Finally, there could be movement by the legislature.  In this case, the court was keenly aware of the implications that the COVID-19 health crisis has had on the debate surrounding employer-provided paid leave.  The court was careful to point out that the judiciary is not a policymaking branch of government. Decisions about whether paid leave should be mandated is best left to the legislative branch, noting that Congress recently passed the Families First Coronavirus Response Act (FFCRA), which provides paid leave for certain employees.  Congress or the Texas Legislature could enact additional legislation to provide exactly the type of paid leave benefits that the Dallas ordinance was designed to require.

In short, while the court’s decision to enjoin the Dallas paid sick leave ordinance was an important one, it is by no means the “end of the story.”

Next Steps

Overall, the Texas paid sick leave ordinances continue to be moving targets. For employers with operations in Dallas, or employees who work in Dallas (including employees who work remotely from Dallas), we encourage you to consult employment counsel prior to changing any paid sick leave policies adopted to comply with the Dallas ordinance. In addition, it would be wise to set reminders for check-ins with counsel to review the statuses of the Texas paid sick leave ordinances, and to be prepared to roll out a compliant leave program, if these ordinances take effect.

Bear in mind that the outcome of these pending court actions regarding the Texas paid sick leave ordinances does not impact covered employers’ obligations to provide emergency paid sick leave and/or emergency unpaid and paid family leave to certain employees under the FFCRA.  The U.S. Department of Labor has made clear that any leave taken under the FFCRA is in addition to any other forms of sick/personal leave the employee has earned under an increasing number of state and local paid leave laws and ordinances offering similar protections.