On Friday, February 16, 2018, the Austin City Council voted to make paid sick leave a mandatory requirement for all non-government employers. Austin is now the first city in Texas to implement such a mandate.
The final text of the ordinance is not immediately available because the City Clerk must verify the approved language. For now, this FAQ highlights the key components of the law, based on the last amended proposal submitted on February 15, 2018, prior to the City Council’s final meeting and debate. That draft text is available here.
What does the ordinance require?
Most privately-owned businesses operating in Austin must now provide up to 64 hours (or eight 8-hour work days) of paid sick leave to each employee per year.
Employees will accrue paid sick leave at a rate of one hour per 30 hours worked. Sick leave hours are earned in one-hour increments; no partial hour accruals are allowed. All available and earned time, up to the applicable cap, must carry over into the next year.
Earned sick time shall be available for an employee to use as soon as it is accrued, but an employer may restrict an employee from using earned sick time during the employee’s first 60 days of employment under certain circumstances.
The ordinance also requires that employers provide monthly notifications to employees as to the amount of paid sick leave they’ve accrued. This may cause some administrative headache for employers who don’t already have a reporting tool for tracking this kind of information, but the ordinance doesn’t mandate the form of written notice—an email notification will likely be sufficient.
For those employers who issue company handbooks to their employees, the handbook must be updated to include a notice about employees’ rights and remedies under the ordinance. Employers will also be required to post notices about the ordinance, in English and Spanish, in a conspicuous spot in the workplace (usually with other mandatory labor law posters).
What if I already offer paid leave to my employees?
The ordinance doesn’t prevent employers from providing paid leave benefits that exceed the requirements of the ordinance. Nor does it require an employer that already makes paid time off available to an employee to provide additional earned sick time to the employee so long as the existing policy complies with the accrual and usage provisions of the ordinance.
But even businesses that already offer paid leave should look at their policies to ensure they’re in compliance. Many businesses offer leave for full-time employees, but not for part-time or seasonal employees. The ordinance doesn’t make a distinction amongst employee classes—any employee who works for more than 80 hours in a year is entitled to paid sick leave under the ordinance. That means even a college student hired over a summer or a year-round part-time employee working less than 2 hours per week would begin to earn sick leave under the ordinance.
What if I’m a small business?
Small businesses with 15 or fewer employees have to provide only 48 hours of paid leave (or six 8-hourt days) per year.
What if I’m a really small business?
The ordinance provides “micro-businesses”—those with five or fewer employees—a delayed compliance deadline of October 2020, but the same small business 48-hour policy will then be mandatory.
What if my business is headquartered outside Austin’s city limits?
The city has the ability to regulate working conditions within Austin, so it can require that sick pay be provided to anyone working in the city regardless of where the employer’s office is based. If your business is located outside Austin, but you have employees who regularly work inside the city limits, you’ll have to comply with the ordinance for those employees. And, if you’re complying for some of your workforce, it’s worth determining whether administratively and financially it makes sense to provide the same leave to all of your workforce.
When does the ordinance go into effect?
October 1, 2018, for most businesses. “Micro-businesses” have until October 2020 to comply. But given the administrative issues surrounding notices and handbook updates, effected employers should turn their attention to compliance well in advance of the effective date.
How will the ordinance be enforced?
The city will enforce the law on a complaint-driven basis. Austin’s Equal Employment Opportunity/Fair Housing Office will be the lead enforcer. Employees who believe their employer has violated the ordinance can complain. Complaints must be filed within two years of an alleged violation.
It appears that the EEO/FHO will only issue warning letters for the first effective year of the ordinance, but that’s no reason to hold off on compliance. The EEO/FHO will no doubt be tracking those employers who engage in violations.
What’s the penalty for non-compliance?
Businesses could face a $500 fine for each violation. Until enforcement begins, it’s not clear what might constitute a single “violation.” Failure to provide monthly notices to employees, failure to properly calculate accruals, failure to allow employees to use accrued sick leave, or failure to post appropriate signage in the workplace might each be considered an individual violation subject to a fine.
What’s next?
Austin’s City Council is well-known for its employee-protective legislation. In 2016, the City Council enacted the Fair Chance Hiring ordinance to “ban the box”—prohibiting employers from asking job candidates about their criminal history before making a conditional offer of employment.
Within hours of the City Council’s vote on the paid-sick leave ordinance, commentators and politicians vowed to see this ordinance overturned during the next legislative cycle in 2019 if changes aren’t made before then. This wouldn’t be the first time an Austin City Council ordinance was overturned by the state legislature. During last year’s session, the Legislature overturned the authority of Austin to regulate ride-hailing companies, took away Austin’s ability to enact a new kind of fee on construction to help pay for affordable housing, and limited the rules Austin and other municipalities can put in place to protect trees. We’ll be keeping a keen eye on this ordinance to see how it fares.
If you need guidance on compliance with the new ordinance or any other employment issues affecting your business, don’t hesitate to contact me at erik@flywheelclients.com/chapman2018 or 512.253.7344.
Erik Moskowitz is a commercial litigator and employment lawyer at The Chapman Firm PLLC. Erik holds a SHRM-CP certification and advises businesses of all sizes on HR compliance and litigation avoidance techniques.