U.S. businesses take minimum wage hikes, sick leave to court

Nov. 21 (UPI) -- Many states and municipalities have enacted laws or proposed legislation in recent years to hike pay and benefits for minimum wage earners but some businesses are fighting the new costs in court.

In Minnesota, the state Supreme Court has heard arguments for and against hiking the minimum hourly wage to $15. In Denver, an ordinance to hike the wage to nearly $16 by 2022 went before the City Council for its first reading Monday night.

In both cases, businesses oppose significant increases in the minimum wage for fear of the fiscal strain that would bring. Any increase to employee wages cuts into profits and, in some cases, forces businesses to downsize their staff to make up the difference, they argue.

The Colorado Restaurant Association, for example, is threatening to sue the city if it implements its phased minimum wage hike.

"First, the speed with which this hike would be implemented is extreme," restaurant association CEO Sonia Riggs told the Denver Post. "Second, this hike will further increase the earnings disparity between servers and kitchen staff.

"So in the case of the restaurant industry, this proposal actually hurts the people it's trying to help."

In Texas, several cities and labor organizations are battling business associations and chambers of commerce over recent ordinances that guarantee paid sick time. Dallas, Austin and San Antonio have approved laws mandating that businesses allow paid sick leave -- and all were challenged in court.

Texas' Third Court of Appeals ruled a year ago that Austin's ordinance is unconstitutional, prompting the capital city to appeal to the Texas Supreme Court. The high court has asked for briefings, but has not scheduled a hearing. In the meantime, a temporary injunction keeps the change from taking effect.

In San Antonio, implementation of the Sick and Safe Leave law was delayed from August to Dec. 1, subject to any possible injunction from a Bexar County district judge.

In Dallas, a new sick leave ordinance has taken effect, but won't be enforced until August 2020. A lawsuit that challenges the change is pending in the Eastern District of Texas court. Texas Attorney General Ken Paxton has joined the suit filed by ESI Employee Solutions, Hagan Law Group and two Dallas-area businesses.

The Dallas law would grant one hour of sick leave for every 30 hours worked, but is capped at 64 hours for businesses with more than 15 employees. Firms with fewer employees are capped at 48 hours. The law also says any unused sick pay must carry over to the next year or be paid in a lump sum. The Austin and San Antonio ordinances have similar requirements.

Proponents argue the change provides a safety net for workers who lose pay or their job if they are unable to work due to illness, Dallas attorney Sonja McGill said. Employees who work for a franchise or small business with fewer than 50 people aren't covered by the Family Medical Leave Act.

"This is just another layer to give people comfort that they'll be paid while they're sick," McGill said. "There's no guarantee they would be working for companies covered by FMLA. The ordinance is definitely geared toward these folks. It's a huge step up for people in that situation."

Paxton argues the Dallas law shows disregard for working Texans.

"Not only would this ordinance harm the ability of Texans to find and keep jobs, but it is a blatant attempt to silence the millions of other voters throughout our state who disagree with the agenda of urban elites, even after the courts have made it clear they cannot do so," he said in August.

Nonprofit MOVE Texas, which advocates for underrepresented youth communities, said a grass-roots effort collected 140,000 signatures to put paid sick leave on the San Antonio City Council's agenda.

"We had a very grass-roots, community-focused campaign," director Drew Gallaway said. "We packed out the room and there were a lot of different voices there. We were very proud of what we'd built in San Antonio."

The Texas Legislature considered a bill this year that would have prohibited cities from enacting their own sick leave ordinances. MOVE Texas helped defeat the bill.

Though he knows it's unlikely, Galloway said he wants to push the Legislature for a statewide paid sick leave bill.

"I just don't see any will at the State Legislature," he said. "I don't think we can even get Medicaid expansion in Texas. There's zero interest in the Legislature to do that, but there are cities that are willing to lead on that."

Texas Public Policy Foundation Director Robert Henneke, the plaintiffs' lead counsel in San Antonio, argues the greatest problem is that city ordinances are superseded by state law -- which bars minimum wages at the city level.

"When this ordinance mandates that employees get paid for hours when they are not working, that increases their hourly rate above the ceiling that has been set in state law," Henneke said.

"The vast majority of businesses do provide some type of paid leave. Businesses adjust to the marketplace by offering a number of different types of incentives for keeping and retaining qualified workers."

Opponents say the ordinances ultimately could force employers to lay off workers. Other problems, they argue, are that the ordinances exempt unions and give cities subpoena power for compliance.

Annie Spilman, the Texas director of the National Federation of Independent Business, said her group is fighting the measures in Dallas, San Antonio and Austin, and believes them to be politically motivated.

"It's not a question of whether it's good or bad," she said. "It's a question of whether cities should be regulating that."

She said the small, independently owned businesses represented by her group already operate on thin profit margins.

"It forces them to make decisions to keep their doors open," Spilman said.

If the ordinances pass court muster, experts say the question of whether the cities can actually enforce them will remain.

Richard Perez, president of the San Antonio Chamber of Commerce, said he strongly opposes the city ordinance -- not because he opposes worker benefits, but because San Antonio shouldn't have authority to require them.

"Market forces should push businesses that don't provide sick leave to provide it," Perez said. "Having the city impose it was not ... in the norm of what cities should be dictating."

Perez, whose family owns a landscaping business, said he understands both sides of the issue because he grew up in a working-class family.

"We worked every day in a poor household, so I know how that is," he said. "It's a hard deal. There's no doubt about it. But forcing business to be the one to burden that alone is unfair."