Grant Bux, Big Daddy Bux’s nephew, owns Sparkle-Plenty Electrical Manufacturing in Dallas, and has a branch office in San Antonio. The Dallas office employs 13 family members and four non-family employees. San Antonio has 16 non-family employees. Grant learned that both the Cities of Dallas and San Antonio have mandatory sick leave ordinances becoming effective on August 1st. As a family business, will they impact Grant and Sparkle-Plenty?
Yes, in time it is likely that Sparkle-Plenty will be subject to both ordinances, in one form or another.
The City of Dallas “Earned Paid Sick Time” ordinance can be found at Dallas City Code Chapter 20, Article 1. My employment law colleagues Ruth Ann Daniels and Marcus Fettinger in our Dallas office, recently delivered an alert to our clients and commented in the Dallas Business Journal on this new ordinance. The Dallas and San Antonio ordinances – while they stand alone – are extremely similar. In a nutshell, the Dallas ordinance provides:
- Employees, whether full-time or part-time, are eligible for paid sick leave (PSL) if they worked at least 80 hours in a year for a covered employer (PSL may be capped by the employer at 64 hours if > 15 employees, and 48 hours if 15 or fewer employees). Employees can roll over unused PSL from year-to-year subject to these caps.
- Sick leave hours are accrued in a minimum of one-hour increments and calculated at the rate of one hour of PSL for every 30 hours worked. If the employer provides PTO that meets or exceeds the accrual, yearly caps and usage requirements, then no additional PSL is required.
- Sparkle-Plenty’s employee handbook will – upon the final, court-approved ordinance – include notice of employees’ rights and remedies under the ordinance, and Sparkle-Plenty will then have to post a notice describing its employees’ rights under these ordinances in a conspicuous workplace location.
- Sparkle-Plenty, and other covered employers, will – upon the final, court-approved ordinance – provide each employee with a statement (at least once a month) showing the amount of accrued PSL available.
- Sparkle-Plenty’s employees who use PSL may not – after the final, court-approved ordinance – be retaliated against.
If the current Dallas ordinance quickly passes court muster, it will not apply to Sparkle-Plenty until August 1, 2021, because the Dallas office has fewer than five non-family employees. Even if Sparkle-Plenty had more than five non-family employees, a June 28, 2019 City of Dallas Memorandum advises that, “except for penalties for retaliation, … employers will not be fined for noncompliance with the [Dallas] ordinance until April 1, 2020.” A lawsuit against the Dallas ordinance was threatened last week, and has reportedly been filed. With 16 non-family employees, the San Antonio ordinance would have become effective August 1st; however, after a lawsuit was filed challenging the ordinance, an agreement was reached delaying implementation until December 1st. It is noteworthy that the comparable Austin ordinance was struck down by the Austin Court of Appeals in 2018 and is currently on appeal to the Texas Supreme Court.
Tilting the Scales in Your Favor
My employment law colleagues Ruth Ann and Marcus counsel employers, like Sparkle-Plenty, to consider:
- Revising the Sparkle-Plenty handbook to include the ordinances’ provisions. Ruth Ann and Marcus suggest holding off, but if the employer insists upon acting now, add “subject to the implementation and enforceability of the ordinances after consideration by Texas Courts.”
- Post the required notice in a conspicuous location (again, subject to its enforceability and the city providing its “official notice”);
- Determine, upon final court approval of the ordinance, whether Sparkle-Plenty’s current PSL policies meet the accrual, yearly cap and usage requirements of this ordinance;
- Educate all Sparkle-Plenty managers and human resources staff about the cities’ requirements; and
- Upon final court approval of the ordinance, generate monthly statements detailing employees’ accrued PSL.
Employment Law Expertise
Gray Reed’s experienced labor and employment lawyers are my go-to resources. I coordinate with them both in planning and in protecting my family business clients who manage – on occasion – to get into full-fledged fights, and hopefully not within the family.