Texas Governor Signs Preemption Bill, CROWN Act, and Other Legislation into Law

The Texas legislature meets only for approximately six months every other year. This session, many bills signed into law impact employers. This article summarizes some of these new laws and how they impact employment operations in the State of Texas.

State Preemption of Conflicting Local Laws (AKA the “Death Star Law”)

Traditionally, Texas cities had the ability to enact local ordinances to regulate areas such as labor, agriculture, finance, insurance, natural resources, and occupations within their respective jurisdictions. However, The Texas Regulatory Consistency Act, or HB 2127, also known as the “Death Star” law, seeks to end the “patchwork of regulations that apply inconsistently across the state” and return commercial regulatory authority to the state by prohibiting cities and counties from enacting any law regulating labor practices that exceed or conflict with state law. The law goes into effect on September 1, 2023.

The Act, once in effect, will nullify any rule or ordinance regulating “employment leave, hiring practices, breaks, employment benefits, scheduling practices, and any other terms of employment that exceed or conflict with federal or state law.” A critical development for employers, this law most likely nullifies and preempts several local ordinances, including the enjoined paid sick leave ordinances (Austin, San Antonio, Dallas), the predictive scheduling ordinance (Euless), the mandatory water break ordinances (Dallas and Houston), and the ban-the-box ordinances (Austin), to name a few.

The Act also creates a private right of action for any individual or entity who “sustained an injury in fact, actual or threatened, from a municipal or county ordinance, order, or rule adopted or enforced by a municipality or county in violation of the Texas Labor Code. Damages, however, are limited to declaratory and injunctive relief and costs and reasonable attorney’s fees.

This law has already come under intense scrutiny by the largest cities in the state. On July 3, 2023, the City of Houston filed suit against the State of Texas alleging that the law was “unconstitutional, void, and unenforceable.” The cities of San Antonio and El Paso joined the lawsuit in support of the City, and the City of Dallas filed an amicus letter. This matter is moving forward quickly; the City has already filed a Motion for Summary Judgment, which is set for oral hearing on August 30, 2023.

Texas CROWN Act

HB 567, the Creating a Respectful and Open World for Natural Hair Act (commonly known as the CROWN Act), goes into effect on September 1, 2023. The Act prohibits discrimination on the basis of hair texture or protective hairstyles traditionally associated with race. The law, which is binding in both educational and employment settings, defines protective hairstyles as “braids, locks, and twists.” Within the education sector, student dress or grooming policies that discriminate against hair texture or protective hair styles are prohibited. Likewise, employers, labor unions, or employment agencies may not implement discriminatory policies related to hair texture or protective styles that are commonly or historically associated with race.

Employers should review their EEO and dress code/grooming policies to ensure ongoing compliance, and ensure that managers and supervisors are aware of this new employee protection.

Paid Family Leave Insurance Option

HB 1996 authorizes and establishes a regulatory framework for group family leave insurance that, starting January 1, 2024, will be available as a voluntary coverage option for employers. While there currently are some short-term disability insurance products available to employers, those policies apply only to absences due to serious illness or injury and provide no benefits for absences when an employee must take time away to care for a family member experiencing a serious health event. HB 1996 covers any leave taken from work by the insured for various reasons such as care for family members, bonding with a newborn child or adopted child, or for any other covered reason under the Family and Medical Leave Act of 1993 as amended.  

Security Breach Reporting Requirements

Brought about by increasing cyber security attacks, SB 768 shortens the length of time employers have to report security breaches, defined as unauthorized acquisitions of computerized data that compromises the security, confidentiality, or integrity of sensitive personal information maintained by a person. Prior to the amendment, businesses had 60 days to notify the state attorney general of any breach involving at least 250 employees. However, as of September 1, 2023, businesses must now notify the attorney general within 30 days of any authorized breach.  Additionally, businesses must submit a detailed description of the breach in addition to other required information using an electronic form accessed through the attorney general’s website.

Human Trafficking Training Requirements for Drivers at Transportation Companies

To prevent rideshare applications from being exploited by human traffickers, HB 2313 requires that transportation networks provide company drivers with annual training about human trafficking awareness and prevention. Effective September 1, 2023, training materials must be available in both English and Spanish, provided before a new driver is authorized to provide rides using the company’s digital network, approved by the attorney general, and at least 15 minutes in duration. Training materials must include an overview of human trafficking, guidance on how to identify at-risk individuals, relevant information on the difference between labor and sex trafficking, guidance on the role of a driver in reporting and responding to human trafficking, and contact information of appropriate entities for reporting human trafficking. Importantly, companies must maintain records necessary to establish that the company has provided the required training materials.

Posting Requirements for State Workplace Violence Hotline

HB 915 requires that employers post a notice to employees of the contact information for reporting instances of workplace violence or suspicious activity to the Department of Public Safety (DPS). To ensure employees are notified of this hotline, employers are required to post notice in a conspicuous place, in sufficient locations to be convenient to all employees, and in English and Spanish, as appropriate.  The Texas Workforce Commission (TWC) will adopt the rules of the notice (and likely providing a sample notice) by March 1, 2024.  Companies will have no obligations prior to this point.

Updates to Child Labor Investigations and Administrative Process

With changing times and expanding workforces, child labor remains a topic warranting continued attention. HB 2459, which was signed into law on June 12, 2023, addresses some of the growing concerns related to child labor practices in the State of Texas. Effective September 1, 2023, HB 2459: (i) creates a new penalty of up to $10,000 for employers that engage in child labor violations; (ii) requires the TWC to establish Child Labor Tribunals to adjudicate disputed preliminary determinations (including penalty amounts) by investigators; and (iii) establishes an additional level of appeal to the TWC for the parties, among other procedural changes. Under the act, the attorney general also reserves the right to seek injunctive relief against a repeated violator of the state law.

For those ever involved with child labor investigations, this update will provide much-needed clarity to the process.

More Restrictions on COVID-19 Regulations

SB 29 amends current laws relating to the prohibited enforcement of vaccine mandates, mask requirements, and private business or school closures to prevent the spread of COVID-19. Effective September 1, 2023, SB 29 prohibits government entities (excluding state-supported living centers, correctional facilities, and hospitals) from mandating or requiring persons from wearing a face mask or other face covering to prevent the spread of COVID-19.

* Mia Acheson was a summer associate in Littler’s Austin office.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.