On March 10, 2021, the Texas Fourth Court of Appeals affirmed the District Court of Bexar County’s entry of a temporary injunction preventing the City of San Antonio’s sick and safe leave ordinance from taking effect. The appellate court reasoned that San Antonio’s ordinance was preempted by the Texas Minimum Wage Act (TMWA) and was thus unconstitutional.

The San Antonio City Council passed an “earned paid sick time” ordinance in August 2018, generally requiring private employers to provide their employees with paid sick leave and providing for an effective date of August 1, 2019. Thereafter, despite broad support for a state law overturning local paid sick leave mandates, the Texas Legislature failed to pass a law preempting the type of paid sick leave ordinances enacted in Austin, San Antonio, and Dallas before the end of its regular session on May 27, 2019. On July 15, 2019, a coalition of San Antonio business groups filed suit against the City of San Antonio and some of its officials, seeking to temporarily and permanently enjoin enforcement of the ordinance. On July 24, 2019, a Bexar County district court judge entered an order delaying the implementation of the ordinance from August 1, 2019, to December 1, 2019. This order was based upon an agreement between the parties, with the City of San Antonio agreeing to review and refine the ordinance before the new effective date.

On October 3, 2019, the San Antonio City Council approved an amended ordinance, thereafter known as the “Sick and Safe Leave Ordinance.” Despite revisions to the ordinance, the business groups renewed their request for a temporary injunction, and on November 22, 2019, a Bexar County district court judge granted a temporary injunction, preventing the ordinance from taking effect. The City of San Antonio, along with entities that had intervened in support of the ordinance, filed an appeal seeking to overturn the temporary injunction.

On appeal, the Texas Fourth Court of Appeals reviewed and applied the analysis of its sister court’s decision in Texas Association of Business v. City of Austin, Texas, wherein the Third Court of Appeals considered the constitutionality of Austin’s paid sick leave ordinance. The City of Austin was the first Texas municipality to enact a paid sick leave ordinance, and it was the first Texas municipality to have a paid sick leave ordinance face legal challenge. A group of Austin-based businesses filed suit, seeking to enjoin the implementation of the Austin ordinance. The District Court of Travis County denied the businesses’ application for a temporary injunction, and the businesses appealed. On November 16, 2018, the Texas Third Court of Appeals reversed the district court’s order and remanded the case to the district court for entry of a temporary injunction. In its opinion, the Third Court of Appeals concluded that the paid sick leave mandate required the payment of “wages” in violation of the TMWA, such that the ordinance violated the Texas Constitution’s prohibition of city ordinances containing “any provision inconsistent with the … general laws enacted by the Legislature of the State.”

Given the similarity between the San Antonio ordinance and Austin’s paid sick leave ordinance, the Fourth Court of Appeals likewise concluded that the term “wage” under the TMWA meant “a payment to a person for services rendered” and rejected the City of San Antonio’s argument that the term “wage” should be limited to “a fixed regular payment owed for work performed,” as no such limitation exists in the TMWA. The court likewise determined that the ordinance established a minimum wage in contravention of the TMWA because “employers must pay those ‘employees who earn and take [sick and safe leave] more than employees who work the same hours without paid sick leave.’” For these reasons, the court held that the TMWA superseded the ordinance, making the ordinance unconstitutional.

The City of San Antonio has not yet indicated whether it will seek to appeal the decision to the Supreme Court of Texas. Notably, the Supreme Court of Texas refused to review the Third Court of Appeals’ decision involving Austin’s paid sick leave ordinance, and the underlying litigation involving that ordinance remains pending. The City of Dallas enacted a similar paid sick leave ordinance, and in the lawsuit that followed, a federal district judge similarly found the ordinance to be unconstitutional and entered a preliminary injunction on March 30, 2020.

Thus, as it stands, all three paid sick leave ordinances in Texas are enjoined, having been found to be unconstitutional, and employers are not required to comply with the ordinances at this time. Of course, these injunctions are preliminary in nature, and the underlying litigation associated with each ordinance remains pending.