September 11, 2023 Texas trial court holds law preempting local employment practice ordinances unconstitutional; law remains in effect during litigation On August 30, 2023, the Texas District Court for Travis County ruled in favor of Houston in a lawsuit against Texas asserting that parts of H.B. 2127 are unconstitutional, overly vague and unenforceable (City of Houston v. Texas, DC TX, Dkt. No. D-1-GN-23-003474, Aug. 30, 2023). The court held that absent a severability clause, the state is enjoined from enforcing the legislation in its entirety. Dozens of local officials signed onto an amicus brief in support of the lawsuit. The Texas Attorney General (TAG) issued a press release on September 1, 2023, confirming that, despite the ruling of the Texas District Court, H.B. 2127 went into effect on September 1, 2023. The TAG explained that the District Court's decision "does not enjoin enforcement of the law by Texans who were not parties to Houston's suit and who were harmed by local ordinances, which H.B. 2127 preempts." The TAG further explained that it immediately appealed the District Court's decision, automatically staying the effect of the Court's ruling pending the outcome of the litigation. Background Governor Greg Abbott had signed into law H.B. 2127 with an effective date of September 1, 2023, specifying that, for employers other than a municipality or county, the Texas state labor code preempts local ordinances that exceed or conflict with federal or state law. H.B. 2127 covers nine sections of the state's code, including labor/employment. Pursuant to the labor/employment code, the preemption extends to employment leave (e.g., paid sick and safe leave), hiring practices (e.g., pay transparency requirements), breaks, employment benefits, work scheduling and other employment practices. The preamble to H.B. 2127 explains that the law was enacted to address the local "patchwork of regulations that apply inconsistently across the state." In recent years, several Texas municipalities have enacted ordinances regulating the employment practices of private businesses. For instance, Austin and El Paso have wage theft ordinances and Austin and Dallas have rest break requirements for construction workers. The Texas state appeals court blocked enforcement of Austin and San Antonio's paid sick and safe leave ordinances ruling that they violate the Texas Constitution (City of Austin, No. 03-18-00445-CV (Tex. App., Nov. 16, 2018.) Ernst & Young LLP insights Austin and San Antonio's paid sick and safe leave ordinances are enjoined from enforcement regardless of the final outcome of litigation in connection with H.B. 2127. If Texas employers have questions about compliance with other local ordinances governing employment and hiring practices, they should speak with their employment law advisors. Texas joins 25 states where state law preempts or prohibits local paid sick leave ordinances (Alabama, Arkansas, Delaware, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee and Wisconsin). ———————————————
Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor | |||||||||
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