Changes to Dallas Paid Sick Leave Policy Impacts Employers

August 15, 2019
Author: Tyran Saffold Jr

Currently, there are 19 cities across 13 states that have a mandated paid sick leave policy. The latest to join the list is Dallas. Excluding government agencies and independent contractors, the law mandates paid sick leave for employees who work at least 80 hours a year in the city of Dallas. Sick time would be accrued at one hour, per every thirty hours worked. Businesses with more than 15 employees would be able to cap their workers paid sick leave accruals at 64, while smaller businesses cap at 38 hours a year.

Dallas Paid Sick Leave

The Sky is Falling, Right?

Two North Texas businesses filed a federal lawsuit against Dallas in an attempt to stop the city’s paid sick leave ordinance that labor organizations pushed to implement.
The plaintiffs argue that the ordinance violates the rights to freedom of association, equal protection for non-unionized employers, and the right to be free of reasonable searches and seizures because of the city’s subpoena power over business records to investigate complaints.

“The issue is government coming in and inserting itself in the relationship between the employers and employees, and mandating a one-size-fits-all requirement that interferes with the autonomy of employees to negotiate with their own business,” said Robert Henneke, attorney for the two companies that filed lawsuits.

There are both assumed positives and negatives, associated with the new policy change.

Positives of the Dallas Policy

According to research published by Donald R. Winkler in the Industrial and Labor Relations Review, the availability of paid sick leave is associated with reductions in:

• Presenteeism (working while sick)
• Job loss (because of sickness)
• Employee turnover

Negatives of the Dallas Policy

Some believe the new law will create massive costs to employers across the board leading to a decrease in employment and wages. In addition, employers are being asked to administer a policy and be in compliance while the regulations are still not in place — an extremely legitimate concern, especially when city officials are not able to offer clarity on the issue. Instead, employers have to wait until the city releases a set of administrative rules regarding the ordinance.

While some employers will attempt to recoup financial losses through cutting pay or reducing employees, others may opt to raise prices which, in turn, could have a negative effect on retaining customers, prompting drops in revenue. It may be a bit of paranoia behind the potential domino effect of a bank-breaking policy for employers, but will the positives outweigh the negatives?

From Austin to Dallas

Just south of Dallas, Autin’s appellate court’s three-judge panel concluded that Austin’s sick leave ordinance indirectly regulated wages, which is the role of the state and federal governments. The court concluded that because the ordinance requires employers to pay for time off, it consequently affects the rate workers are paid.

The difference between what happened in Austin versus Dallas is that in Dallas, the case was filed in federal court under the belief that the ordinance violates both the state’s minimum wage and the U.S. Constitution.

“I see no reason why a federal court in the Eastern District of Texas is not going to come to the same determination that the Austin Court of Appeals came to,” said Julie Heath, an employment lawyer in Dallas. She believes that it is unlikely that the federal judge wouldn’t rule on the case. As of now, the court has not yet issued a ruling.

The Sky is Still.....Up There

If the court rules in favor of the plaintiffs, it could flip Dallas’s labor market upside down as employees will relive past fears of losing money and possibly their jobs by staying home sick and employers return to business as usual with no skin off their backs.

However, if the court rules against the plaintiffs, then some newer businesses may not be able to support the costs. The costs paid out due to 1 hour per thirty hours of a work year equals roughly 8 days per year. However, if you combine those days with the production lost due to absences, then the costs would quickly add up and threaten the success of businesses that are not able to sustain the effects of the ordinance.