Austin’s Earned Sick Time Ordinance: What Employers Need to Know

1. Austin’s Earned Sick Time Ordinance: What Employers Need to Know Scott Brutocao Cornell Smith Mierl Brutocao Burton LLP (512) 328-1540 sbrutocao@cornellsmith.com

2. When Does Ordinance Take Effect? • Oct. 1, 2018 for all employers with 6 or more employees • For employers with 5 or fewer employees in the preceding 12 months, the ordinance is not effective until Oct. 1, 2020 • Civil penalties cannot be issued until June 1, 2019

3. Eligible Employees • Anyone who performs at least 80 hours of work for pay withinthe City of Austin in a calendar year • Includes part-time, temporary and seasonal employees • Includes exempt and non-exempt employees • Includes paid interns and employees hired through a temp or employment agency • Does not include independent contractors or unpaid interns

4. When Can Employee Use EST? Employee’s Own Health Condition Family Member’s Health Condition Leave for Domestic Violence/Sexual Assault/Stalking

5. How is EST Accrued and Used? Sick time will accrue in 1-hour increments and employees will earn 1 hour of sick time for every 30 hours worked EST will be available for an employee to use as soon as it is accrued; however, employers may restrict an employee from using earned sick time during the employee's first 60 days of employment—but only on the condition that the employee has a term of employment for at least 1 year EST will begin accruing on October 1, 2018 or upon the commencement of employment, whichever is later

6. Accrual and Carryover: Do the Math… • The amount of EST an employee can earn depends upon the size of the employer • For employers with 16 or more employees in the last 12 months, the yearly accrual cap is 64 hours (8 days) per year • For smaller employers with 15 or less employees in the last 12 months, the yearly accrual amount is 48 hours (6 days) per year, and • All unused sick time carries over to the following year

7. Accrual and Carryover: Do the Math… For employers who provide a lump sum grant of at least the annual minimum at the beginning of the year, carry over is not required Employees who are rehired within 6 months by the same employer must have their prior earned sick time reinstated

8. Employee Notice Requirements Employees are required to make a “timely request” before their scheduled work time. However, the ordinance provides that exceptions to the notice requirement may be made when unforeseen circumstances occur Employers may not require an employee to find a replacement to cover the hours of earned sick time as a condition of using earned sick time

9. What About Existing PTO Policies? If the employer already provides at least as much PTO as the ordinance requires, the employer does not have to provide additional EST Employers may allow employees to donate available EST to other employees and allow them to exchange hours or trade shifts voluntarily with other employees so as not to use accrued EST

10. Recordkeeping Requirements Must include notice of employee rights under ordinance in any existing employee handbook Once the City provides the signage, must post a notice about EST in English and Spanish in a “conspicuous place” Must maintain records showing amount of EST accrued and used by each employee Must provide monthly statement to each employee showing amount of available EST

11. Any Other Requirements? Retaliation against employees is prohibited-civil penalties for retaliation may be assessed as early as Oct. 1, 2018 Employers may not transfer, demote, discharge, suspend, reduce hours, or directly threaten these actions against an employee for requesting or using earned sick time, or for reporting a violation or participating in an administrative proceeding related to the EST regulations 

12. Enforcement Ordinance gives City of Austin’s EEO/FHO authority to adopt rules necessary to implement it EEO/FHO can assess civil penalty up to $500 for each violation occurring after 6/1/19 and can issue subpoenas for information The EEO/FHO may choose to offer an employer 10 business days to voluntarily comply with the ordinance before collecting a civil penalty No criminal liability or private cause of action

13. Speaking of Enforcement…Whatever Happened to Austin’s Ban the Box Ordinance? 2016-City passed “Fair Chance Hiring Ordinance” Prohibits employers with 15 or more employees from asking about criminal history until after conditional job offer is made Violators face written warnings and fines

14. No Enforcement • Five complaints filed since April 4, 2016 • All are “pending” (even though 4 were filed in 2016, 1 in Sept. 2017) • Complaints: • Local moving company asked about criminal history in online job application • Workers comp insurance company did criminal history check before job offer was made

15. City’s Response • “Haven't had time” to write rules about how to investigate complaints • (But Council approved almost $300k in 2016-17 budget to hire 3 FT employees to oversee the ordinance and employees were hired) • Hired consultant at $55k to do “public outreach” -all that was done was set up a phone number and email address for complaints and posted FAQ on city website • In Dec. 2016, staff told to stand down because of potential bill during session to preempt the law • After news story aired, City Manager said he had directed staff to complete the rules and resolve the complaints as quickly as possible

16. Wait for it… After news story aired, City Manager said he had directed staff to complete the rules and resolve the complaints as quickly as possible City Staff said it expects to make final investigative rules public in April

17. Unanswered Questions Employers based outside of the City Limits: How are they supposed to track the hours their employees perform work in Austin? Employers within the City Limits: May they exclude hours worked outside of Austin? Exempt employees: How many hours are they deemed to work per week?

18. Unanswered Questions If someone is hired late enough in the year that they won’t work 80 hours by 12/31, are they not entitled to accrue until 1/1? For the 60-day waiting period, how does the employer establish that the employee’s “term of employment is at least one year”? Are employers who require doctors’ notes for three days’ consecutive absence required to change their policies when the employee uses EST?

19. Unanswered Questions What type of notice requirements, if any, may an employer require for non-emergency EST use? Family members: What type of relationship is not “the equivalent of a family relationship”? Counting employees: What does it mean to have an “employee” in the past 12 months? Part-time? Temporary? Any? Will an employee’s ability to access the employee’s EST balance electronically suffice to satisfy the notice requirement?

20. Will the Legislature Act? Will Legislature try to reverse the Ordinance when it convenes in 2019? Hours after the Ordinance was passed, state Rep. Paul Workman said the ordinance is “declaring war” on small private businesses Workman said he has already talked to a number of lawmakers in both the House and the Senate who will support legislation overturning the ordinance in the next session

21. What Should Employers Do Now? • Review paid sick leave policy • PTO or vacation/sick? • Permitted uses? • Accrual or lump sum? • Minimum annual amounts provided? • Excluded categories of employees? • Waiting time? • Granted in one-hour increments? • Verification procedures? • Carry-over procedures? • Notice of employee rights and remedies under the Ordinance?

22. What Should Employers Do Now? Review number of employees in preceding 12 months Review time-tracking methods Review paystub capabilities showing available EST Look for signage rules issued by EEO/FHO Look for additional guidance issued by EEO/FHO

23. Austin’s Earned Sick Time Ordinance: What Employers Need to Know Scott Brutocao Cornell Smith Mierl Brutocao Burton LLP (512) 328-1540 sbrutocao@cornellsmith.com