At its Feb. 15 meeting, the Austin City Council voted to make the city the first in Texas to require that employers provide paid sick leave to virtually all employees—whether full or part time—who work within the City of Austin. Employers and their counsel should be aware that the ordinance is broadly drafted to include both Austin employers and employers outside of Austin that have employees who perform work in Austin. Moreover, the ordinance has implications for covered employers regardless of whether they already offer paid sick leave.

One concern that led Austin City Council to pass the new ordinance was the large number of employees in the city without paid sick leave, particularly part-time employees. To that end, the new law covers any employee who performs at least 80 hours of paid work in a calendar year within the City of Austin, including those who perform services through temporary or employment agencies. Bona fide independent contractors and unpaid interns are excluded from the definition of an employee.

Some local Austin employers came out in favor of the ordinance, while several others opposed either the mandated leave, or the lack of ability to provide input before the ordinance came up for a vote. Regardless of position, almost all private employers with Austin employees fall within the scope of the ordinance, which defines “employer” inclusively to encompass all persons or entities—excluding governmental entities—that pay an employee to perform work and exercise “control over the employee's wages, hours and working conditions.”

There is no size limit on employers covered by the ordinance; however, smaller employers have to provide less leave, and the smallest employers—those with fewer than five employees—have longer to conform to the ordinance's requirements. For employers with six or more employees, the ordinance becomes effective Oct. 1, 2018, while employers with fewer than six employees have until Oct. 1, 2020, to provide paid sick leave.

Once the ordinance comes into effect, covered employers must grant one hour of sick leave for every 30 hours worked by an employee. Sick leave accrues in hourly increments. Most employers are required to provide a yearly maximum of 64 hours of paid sick leave in a calendar year; however, this yearly cap is lower—48 hours—for employers with no more than 15 employees, excluding family members. Employees must be allowed to carry over sick leave into a new calendar year, up to the yearly maximum.

Employers that already provide paid sick leave or paid time off are not required to provide additional leave so long as their existing policies are aligned with the ordinance. However, employers should be aware that the ordinance contains many requirements that may not be present in many existing leave policies. For example, many existing policies do not provide leave for part-time or seasonal employees. Under the ordinance, such employees must be provided leave if they work 80 hours in Austin within a calendar year.

The ordinance allows employees to take paid leave for more than simply being sick. So long as an employee “makes a timely request for use of earned sick time before their scheduled work time,” the employee may use such leave for an absence caused by their own health condition, illness, or need for preventative care. Absences caused by an employee's need to attend to a family member's health condition, illness, or preventative care are similarly covered. Finally, employees may take leave to seek care and assistance when they or their family member are victims of domestic abuse, sexual assault or stalking.

Covered employers will also be required to comply with the ordinance's administrative and notice requirements. At least monthly, employers must provide a statement to their employees detailing the amount of earned sick time accrued. Employers who have a handbook must include within it a notice of the employee's rights and remedies under the ordinance. All employers must post notice of the ordinance's requirements in the workplace once an approved sign has been made available by the City of Austin.

The ordinance prohibits employers from retaliating against employees who request or use leave, report violations of the ordinance, or participate in administrative proceedings conducted pursuant to the ordinance. Covered employers who violate the ordinance are subject to a $500 fine per violation.

The new law has clear ramifications for Austin employers that do not currently provide sick leave or paid time off to their employees: Once the ordinance takes effect, those employers will need to begin providing benefits and must comply with the record-keeping and other aspects of the ordinance.

What is easy to overlook is that non-Austin businesses and businesses that already offer sick leave will also be impacted. A business headquartered outside of Austin, but with an office in Austin—for example, a large national franchise—will be required to conform to the ordinance at least with respect to its Austin employees. Similarly, a business located outside of Austin that sends employees to Austin for any work-related reason must ensure that, if those employees exceed 80 hours of work within Austin, they are provided leave. So, for example, an air-conditioning repair company based in Round Rock, but that sends service teams to Austin, may find itself subject to the ordinance.

Many employers who provide generous leave packages may also find that their existing policies and procedures will require adjustments to conform to the ordinance. For example, a tech company that hires paid interns over the summer, or a retailer that employs seasonal workers during the holidays, must ensure such workers are provided at least the leave mandated by the ordinance. Almost all part-time workers must similarly be covered—a year-round part-time employee working less than an average of two hours per week would be eligible to accrue sick leave under the ordinance.

What is ultimately evident from the new ordinance's requirements is that all employers who have employees working in Austin will need to take a look at their policies and procedures to ensure compliance.

Fred Sultan is a senior attorney in the Litigation Group with Gardere. He helps individuals and businesses throughout Texas and the U.S. with commercial litigation and appeals involving a broad range of business disputes, including employment, contract, business tort and trade secret-related claims.