State & Local Employment Law Developments: Q2 2023

The trend of increasing workplace regulations by state and local governments continued throughout the second quarter of 2023. Although it is not possible to discuss all state and local laws, this update provides an overview of recent and upcoming legislative developments to help you and your organization stay in compliance.

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Uncertainty Remains for Texas Paid Sick Leave Ordinances

Over the past two years, city councils in three of the four largest cities in Texas — Austin, San Antonio, and Dallas — each have passed ordinances requiring local employers to provide their employees with paid sick leave. In each instance, the new proposed ordinance was met with fierce resistance from local businesses, staffing agencies and professional associations. Those aligned against the ordinances promised that their adoption would be followed swiftly by lawsuits. What’s more, the opposition was supported by none other than Texas Attorney General Ken Paxton, who took a hardline stance that such ordinances violate the Texas Minimum Wage Act. The purpose of the Minimum Wage Act, Paxton argued, was to set a uniform statewide policy with respect to wage requirements that municipal governments had no right to circumvent. Despite all of this pushback, the city council in each city overwhelmingly voted to adopt the ordinance.

The ordinances in all three cities are similar and contain some of the same key features but each also has its own distinguishing characteristics:

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New Texas Rule Classifies Gig Economy Workers as Independent Contractors

Under a new administrative rule adopted by the Texas Workforce Commission (the TWC), effective as of April 29, 2019, many Texans working in the ever-growing “gig economy”—that sector of the labor market in which workers provide on-demand services, typically connecting with customers using digital platforms hosted by companies such as Uber and Lyft—are likely to be treated as independent contractors rather than employees. The new rule insulates companies that provide such digital platforms from paying unemployment taxes, since the individuals comprising their workforces will not be treated as employees under the Texas Unemployment Compensation Act.

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