From soup to nuts, Austin’s controversial new paid sick leave ordinance is bad public policy.
To start, the citywide mandate — which requires all employers to provide their employees with paid sick time — was rammed through at lightning speed.
In fact, it wasn’t until a few months ago, on Jan. 19, that a first draft of the ordinance was available for public consumption. Twenty-seven days later, on Feb. 15, the Austin City Council met and took a 1 a.m. vote to impose it on a largely unsuspecting public.
Such haste might be welcome when filling potholes or answering 9-1-1 calls, but it has no place in Austin’s policymaking process where transparency, thoughtfulness and deliberation ought to be hallmarks — especially on matters affecting everyone.
That said, the blitz was a feature, not a bug. Proponents rushed the ordinance through the process, in large part to shield it from criticism. After all, it’s hard to galvanize public opinion against something when there’s been no serious study of it.
The fact that city officials had little grasp of its impact or cost was no secret, either. In a revealing interview published before the ordinance was passed, Austin Chamber of Commerce President Drew Scheberle recalled a meeting he had with Austin City Council Member Greg Casar during which Scheberle said of Casar: “He did come to our board meeting, and we asked him how much it would cost. He said that he cannot model that until they pass the ordinance.”
Based on Scheberle’s account, some supported passing the ordinance so that they could find out what was in it. But not the chamber. It conducted its own analysis and “pegged the cost of the plan to employers at $140 million annually.”
If the chamber’s $140 million-per-year estimate is even close to the new regulation’s actual cost, then the mystery of why it was not thoroughly vetted is obvious. That’s an enormous cost for employers, employees and consumers to absorb, albeit in different ways: smaller profit margins, slower wage growth and higher prices.
But while there are obvious concerns with how it was passed and what it will cost, the more serious problem is whether it’s lawful. There’s a good chance that it is not.
Right now, the Texas Minimum Wage Act prohibits cities like Austin from regulating the wages of employees of private businesses and pre-empts any ordinance from going beyond the standards set forth in the federal Fair Labor Standards Act. Through the Texas Minimum Wage Act, state law caps the minimum wage at the federal rate.
Austin’s paid sick leave ordinance is in direct conflict with state law, since it requires employers to pay a minimum wage to employees for hours not actually worked. The effect is to push their hourly wage above the minimum wage ceiling set by Texas law.
For these and other reasons, the Texas Public Policy Foundation represents a broad coalition of area businesses in suing the city of Austin, seeking relief from the ordinance before it can go into effect on Oct. 1. Even with this lawsuit under way, there’s still a need for legislative action.
The policy problems and legal questions surrounding Austin’s ordinance, as well as those popping up in other cities, too, beg for legislative action. That is, the Legislature should pass pre-emptive rules that add unmistakable clarity to this issue and prevent cities from making policy in areas that they aren’t intended to.
Passing this sort of targeted pre-emptive legislation — or, better yet, a broad-based reform that drastically limits all types of local economic regulation — ought to be a top priority for next session’s lawmakers. This will not only help rid Austin of a hastily adopted, costly, and likely illegal ordinance, but it will also be a powerful rebuke to those who seek to micromanage every aspect of people’s lives.