On May 15, 2017, New York City’s “Freelance Isn’t Free Act” (“FIFA”) took effect, establishing certain protections for independent contractors, including freelance workers. For more information regarding FIFA and the classification of independent contractors, see our previous alerts: “New York City Counsel Passes the Freelance Isn’t Free Act” (http://putneylaw.com/cu_110316.html), and “New York Employers Should Prepare to Examine Their Independent Contractor Classifications” (http://putneylaw.com/cu_011217.html).

Under FIFA, freelance agreements worth at least $800 over the course of 120 days must be set forth in a written contract detailing the name and address of both parties, scope of work, rate, method of payment, and payment due date. Payment must be received within 30 days of work completion, unless the contract specifies otherwise. FIFA also forbids hiring parties from requiring that freelancers accept less than the amount stipulated in the contract in exchange for timely payment. Hiring parties cannot retaliate against a freelancer for pursuing payment, and can face a $250 penalty if they refuse to provide a contract. The law also establishes damages, double damages, injunctive relief, attorney’s fees, and “other remedies as may be appropriate.”

FIFA allows freelancers to bring their claims either via lawsuit in any court of competent jurisdiction, or through a complaint to New York City’s Office of Labor Standards. Serial violators are subject to a civil action brought by the Corporation Counsel of the City of New York for a civil penalty of up to $25,000. While FIFA places the burden of compliance on the hiring party, failure to comply does not render a contract between a hiring party and a freelancer void or voidable, nor does it otherwise impair any obligation, claim, or right related to such contract.

Takeaway for Employers

Employers should review all contracts with freelancers, as well as their accounts payable policies to ensure that freelance workers are timely paid in conformance with the terms of their contracts and/or the required 30 day time period. Employers should safeguard against ongoing obligations to freelancers by designing contracts to cover only specific engagements, and by clearly stating that the freelancer is not an employee. We recommend that such contracts be reviewed by counsel.

Employers should also be aware of the factors considered when determining whether an individual is an independent contractor versus an employee. Courts and agencies have considered relevant factors, which include but are not limited to:

  • the degree to which the employer controls or directs the manner in which the work is performed;
  • whether the worker can simultaneously perform services for other companies;
  • the extent of the worker’s opportunity for profit or loss;
  • whether the worker’s duties are performed for the employer on an ongoing or permanent basis;
  • whether the worker hires, supervises, and pays his or her own assistants;
  • whether the service performed by the worker is an integral part of the employer’s business;
  • whether the service performed by the worker is for a fixed term or project; and
  • the extent of the worker’s investment in equipment or materials needed to perform the job.

* * *

If you have any questions regarding FIFA or the distinction between independent contractors and employees, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On May 4, 2017, New York City Mayor Bill de Blasio signed a bill amending the New York City Human Rights Law (“NYCHRL”) to prohibit New York City private and public employers of all sizes from requesting a job applicant’s salary history to determine the salary, benefits, or other compensation for such applicants during the hiring process, including the negotiation of a contract. The bill also prohibits an employer that already knows the applicant’s salary history from relying upon that information in determining salary and benefits. The amendments to the NYCHRL will take effect on October 31, 2017.

Under the new law, employers are prohibited from “inquiring about or relying on a prospective employee’s salary history.” The term “salary history” is broadly defined, and includes the applicant’s “current or prior wage, benefits or other compensation.” However, “salary history” does not include “any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.” The term “to inquire” means “to communicate any question or statement to an applicant, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing or otherwise.” Significantly, employers are also prohibited from searching publicly available records or reports to ascertain a prospective employee’s salary history.

Despite these requirements, an employer may, without inquiring about salary history, discuss an applicant’s expectations with respect to his or her salary, benefits and other compensation, “including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.” In addition, where an applicant voluntarily and without solicitation discloses salary history to an employer, the employer may consider salary history in determining salary, benefits and other compensation for such applicant, and may verify such applicant’s salary history.

The law does not apply to: (1) any actions taken by an employer to any federal, state or local law that specifically authorizes the disclosure or verification of salary history for employment purposes, or specifically requires knowledge of salary history to determine an employee’s compensation; (2) applicants for internal transfer or promotion with their current employer; (3) any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check; or (4) public employee positions for which salary, benefits or other compensation are determined pursuant to procedures established by collective bargaining.

An aggrieved applicant or employee may file a complaint with the City Commission on Human Rights, or an action in court. Complaints need to be filed with the City Commission within one year or filed in court within three years of any alleged violation. The City Commission could impose penalties of up to $250,000, and a jury or judge could award compensatory and punitive damages, injunctive relief, and attorneys’ fees.

Challenges to Similar Laws

On April 16, 2017, the Chamber of Commerce of Greater Philadelphia (“Chamber”) challenged in federal court Philadelphia’s Wage Equity Ordinance, a recently enacted ordinance that prohibits employer’s from inquiry about applicant’s salary history. The Chamber of Commerce of Greater Philadelphia v. City of Philadelphia, et al. (April 10, 2017, E.D. Pa, 2:17-cv-01548). Specifically, the Chamber alleges that the ordinance infringed on constitutionally protected rights without showing that inquiries about an applicant’s wage history had any relationship to wage discrimination. On April 18, the Court temporarily stayed the effective date of the Wage Equity Ordinance pending further hearing.

While any final ruling on the Philadelphia ordinance will not directly impact New York City law, a successful challenge will make it more likely that the New York City bill will ultimately face a similar challenge.

Takeaway for Employers

The law significantly changes the way many New York City employers may calculate and negotiate a prospective employee’s compensation. Accordingly, New York City employers should train hiring managers and others involved in the hiring process on the law’s requirements. Prior to October 31, 2017, Employers should remove questions concerning salary history from employment applications, interview templates, and background check forms. Employers should also ensure that interviewers refrain from asking about salary history, focusing solely on a prospective applicant’s salary expectations. Employers should also confirm that any third party vendors, such as background check companies or external recruiters, comply with the law’s requirements.

* * *

If you have any questions regarding this Alert, or any other issue, please do not hesitate to contact us. We will keep you apprised of developments.
212-682-0020 | PutneyLaw.com.

On April 5, 2017, the New York City Council passed a bill amending the New York City Human Rights Law (“NYCHRL”) to prohibit New York City private and public employers of all sizes from requesting a job applicant’s salary history to determine the salary, benefits, or other compensation for such applicants during the hiring process, including the negotiation of a contract. The bill also prohibits an employer that already knows the applicant’s salary history from relying upon that information in determining salary and benefits. Mayor DeBlasio is expected to sign the bill, and the amendments to the NYCHRL would take effect 180 days thereafter.

Under the bill, employers would be prohibited from “inquiring about or relying on a prospective employee’s salary history.” The term “salary history” is broadly defined, and includes the applicant’s “current or prior wage, benefits or other compensation.” However, “salary history” does not include “any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.” The term “to inquire” means “to communicate any question or statement to an applicant, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing or otherwise.” Significantly, employers would also be prohibited from searching publicly available records or reports to ascertain a prospective employee’s salary history.

Despite these requirements, an employer may, without inquiring about salary history, discuss an applicant’s expectations with respect to his or her salary, benefits and other compensation, “including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.” In addition, where an applicant voluntarily and without solicitation discloses salary history to an employer, the employer may consider salary history in determining salary, benefits and other compensation for such applicant, and may verify such applicant’s salary history.

The proposed bill does not apply to: (1) any actions taken by an employer to any federal, state or local law that specifically authorizes the disclosure or verification of salary history for employment purposes, or specifically requires knowledge of salary history to determine an employee’s compensation; (2) applicants for internal transfer or promotion with their current employer; (3) any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check; or (4) public employee positions for which salary, benefits or other compensation are determined pursuant to procedures established by collective bargaining.

An aggrieved applicant or employee may file a complaint with the City Commission on Human Rights, or an action in court. Complaints need to be filed with the City Commission within one year or filed in court within three years of any alleged violation. The City Commission could impose penalties of up to $250,000, and a jury or judge could award compensatory and punitive damages, injunctive relief, and attorneys’ fees.

Challenges to Similar Laws

On April 10, 2017, the Chamber of Commerce of Greater Philadelphia (“Chamber”) challenged in federal court Philadelphia’s Wage Equity Ordinance, a recently enacted ordinance that prohibits employer’s from inquiry about applicant’s salary history. The Chamber of Commerce of Greater Philadelphia v. City of Philadelphia, et al. (April 10, 2017, E.D. Pa, 2:17-cv-01548). Specifically, the Chamber alleges that the ordinance infringed on constitutionally protected rights without showing that inquiries about an applicant’s wage history had any relationship to wage discrimination.
While any ruling on the Philadelphia ordinance will not directly impact the bill, a successful challenge will make it more likely that the New York City bill will ultimately face a similar challenge.

Takeaway for Employers

The bill significantly changes the way many New York City employers may calculate and negotiate a prospective employee’s compensation. Accordingly, New York City employers should train hiring managers and others involved in the hiring process on the bill’s requirements. Employers should immediately remove questions concerning salary history from employment applications, interview templates, and background check forms. Employers should also ensure that interviewers refrain from asking about salary history, focusing solely on a prospective applicant’s salary expectations. Employers should also confirm that any third party vendors, such as background check companies or external recruiters, comply with the bill’s requirements.

* * *

If you have any questions regarding this alert, or any other issue, please do not hesitate to contact us. We will keep you apprised of developments.
212-682-0020 | PutneyLaw.com.

On March 27, 2017, President Trump signed a Congressional Joint Resolution of Disapproval and a related Executive Order to repeal the regulations implementing the Obama-era Fair Pay and Safe Workplaces Executive Order, better known as the “Blacklisting Rule.” Under the Blacklisting Rule, federal contractors were required to disclose to the federal government violations or allegations of violations of various federal labor and employment laws, including those pertaining to workplace safety, wages, and discrimination. Contractors would have been required to make those disclosures when bidding on federal contracts valued at more than $500,000, unless the business agreed to remedies. The Blacklisting Rule also imposed paycheck transparency obligations, created restrictions on mandating arbitration agreements for employees’ Title VII claims, and imposed independent contractor notification requirements. Many of the rule’s impositions had already been enjoined by a federal judge in October of 2016.

Takeaway for Employers

The demise of the Blacklisting Rule is welcome news to federal contractors that were particularly concerned that they would be forced to report mere allegations of labor and employment violations. Employers will no longer need to abide by the provisions of the Blacklisting Rule that were not already enjoined, and the Rule is officially repealed.

* * *

If you have any questions regarding this Resolution, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On February 22, 2017, the New York State Workers’ Compensation Board published a proposed rule addressing various aspects of the Paid Family Leave Law (“PFLL”). The PFLL will go into effect on January 1, 2018, and will require private employers to provide paid family leave to eligible employees to be used for specified qualifying events. For more information regarding the PFLL see our previous alert: http://www.putneylaw.com/cu_040516.html.

The proposed rule explains and clarifies, among other things, employers’ rights and responsibilities, implementation, employee eligibility, and employees’ obligations. The following are some key points from the proposed rule.

Implementation

Pursuant to the PFLL, private employers must provide paid family leave benefits to their employees through a paid family leave insurance policy or self-insurance. The premiums for these policies will be funded by employee payroll deductions. The proposed rule describes a compliance schedule, which explains that employers are permitted, but not required, to collect these weekly employee contributions as early as July 1, 2017, in order to fund benefits for coverage beginning on January 1, 2018.

The proposed rule clarifies that the PFLL will adopt a “rolling backward” method for calculating an employee’s available leave in a 52-week period. That is, an employee’s leave time would be computed retroactively with respect to each day for which benefits are being claimed. Employers who use a different method to track leave under the Family and Medical Leave Act (“FMLA”) may face difficulty when they must also track PFLL leave.

The PFLL program will be implemented over a period of four years, beginning on January 1, 2018. Eligible employees will receive a portion of their weekly earnings during a “qualifying leave period,” subject to a New York state average weekly wage level cap, based on the following schedule:

  • On or after January 1, 2018 at least 50 percent of the employee’s average weekly wage or 50 percent of the state average weekly wage, whichever is less, and 8 weeks’ maximum duration of leave in a 52-week period;
  • On or after January 1, 2019 at least 55 percent of the employee’s average weekly wage or 55 percent of the state average weekly wage, whichever is less, and 10 weeks’ maximum duration of leave in a 52-week period;
  • On or after January 1, 2020 at least 60 percent of the employee’s average weekly wage or 60 percent of the state average weekly wage, whichever is less, and 10 weeks’ maximum duration of leave in a 52-week period; and
  • On or after January 1 of each succeeding year, at least 67 percent of the employee’s average weekly wage or 67 percent of the state average weekly wage, whichever is less, and 12 weeks’ maximum duration of leave in a 52-week period.

Employee Eligibility

Employees who have been employed by a covered employer full-time for at least 26 consecutive weeks or part-time for at least 175 days are eligible for PFLL benefits. Employees whose regular work schedule is less than either 26 weeks or 175 days in a consecutive 52-week period will be provided the option to file a waiver exempting them from paying PFLL contributions. This waiver also exempts the employer from having to provide PFLL benefits to that employee.

Employees’ Obligation to Provide Notice

The proposed rule provides that employees are required to provide to their employers a notice of their intent to take paid family leave. If an employee is seeking to take paid family leave for a foreseeable qualifying event the employee must provide at least 30 days’ notice. If 30 days’ notice is not practicable the employee must give notice as soon as it is practicable.

 

Employers’ Obligation to Provide Notice

The proposed rule specifies that employers must provide to employees written notice of their rights and obligations under the PFLL in the employee handbook, written leave policy, or other written PFLL benefits guidance.

Family Leave Benefits under a Collective Bargaining Agreement

The proposed rule states that employers shall be relieved from providing PFLL benefits to employees who are covered by a collective bargaining agreement (“CBA”), so long as the CBA provides benefits “at least as favorable” as those set forth in the PFLL. Subject to approval by the Chair of the New York State Workers’ Compensation Board, the CBA may provide rules related to paid family leave that differ from the requirements set forth in the PFLL. Where the CBA does not provide a different rule, the PFLL rule shall apply to family leave benefits. Although not made explicitly clear in the rules, it appears that alleged violations of any CBA-provided family leave would be subject to the remedies provided by the CBA (typically, arbitration) rather than the remedies found in the Workers’ Compensation Law.

Benefits While on Leave

The proposed rule states that employees are entitled to continuation of their group health insurance coverage, if provided by the employer, while on paid family leave. Employees who are on paid family leave are still obligated to make the normal contributions to the cost of health insurance premiums.

Penalties

Employers who fail to provide PFLL coverage beginning January 1, 2018 will be liable for a fine up to 0.5% of weekly payroll for the period the employer lacked coverage, and an additional sum of up to $500. Employers who fail to collect employee contributions to provide for paid family leave benefits and fail to provide coverage will be directly liable to each employee for the payment of family leave benefits and must also waive the employees’ contributions for the period(s) where no coverage was provided.

Disputes

Any claim-related dispute arising under the PFLL will be resolved in a hearing before the Workers’ Compensation Board.

Takeaway for Employers

The proposed rule is open to public comments until April 8, 2017. This rule, along with possible revisions, may be adopted in the coming months. We will keep you apprised of developments. Employers should review family and medical leave policies, disability leave policies, and related paid leave policies to ensure compliance with the Paid Family Leave Law that will become effective on January 1, 2018. Employers should also coordinate with their payroll department to coordinate appropriate PFLL deductions.

* * *

If you have any questions regarding New York’s Paid Family Leave Law, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On February 16, 2017, the New York State Industrial Board of Appeals (the “IBA”) revoked final regulations published by the New York State Department of Labor (the “DOL”) concerning the use of payroll debit cards. The regulations were set to take effect on March 7, 2017. See September 9, 2016 Client Alert, available at http://putneylaw.com/cu_090916.html.

In striking down the regulations, the IBA held that the regulations exceeded the scope of the DOL’s authority because the regulations placed impermissible restrictions on financial institutions. Specifically, the regulations infringed on banking regulations that set the fees that banks may charge. The IBA also noted that at least eight bills on payroll debit cards had been introduced in the New York State legislature in recent years, and none of the bills were enacted.

If they had been implemented, the regulations would have required employers using payroll debit cards or direct deposit as methods of compensation to provide special written notice to employees about their options and rights with their receipt of wages. The regulations also would have codified DOL guidance requiring that employees paid by payroll debit cards have access to unlimited free withdrawals and access to at least one A.T.M. located “a reasonable travel distance” from home or work. The revocation of the regulations does not disturb these requirements and employers are advised to continue to adhere to preexisting DOL guidance.

Takeaway for Employers

The DOL has 60 days to appeal the decision, but has not indicated whether it intends to do so. Barring a successful appeal, the regulations will not be implemented. However, we remind employers that Labor Law § 192 continues to require advance consent from an employee before making wage payments by payroll debit card. In addition, employers may not directly or indirectly charge an employee to receive his or her wages, pursuant to Labor Law § 193.

* * *

If you have any questions regarding the IBA’s decision or the revoked regulations, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On January 13, 2017, the United States Supreme Court agreed to consider the legality of class action waivers in arbitration agreements. At issue is the National Labor Relations Board’s (“NLRB”) interpretation that arbitration agreements containing class action waivers prohibiting employees from pursuing group claims are illegal under the National Labor Relations Act (the “Act”). The Board maintains that class action waivers restrict employee rights to engage in “concerted activities” in pursuit of their “mutual aid or protection” under the Act. The Board’s position dates back to its 2012 holding in D.R. Horton, 357 NLRB No. 184 (2012).

Circuit courts have split on the issue. The Second, Fifth, and Eighth Circuits have rejected D.R. Horton. The Seventh and Ninth Circuits have held that employers cannot use such waivers in arbitration agreements under the Act. The Supreme Court will hear three consolidated cases in an hour-long oral argument: it will review the Seventh Circuit’s ruling in Epic Systems v. Lewis, the Ninth Circuit’s ruling in Ernst & Young LLP. v. Morris, and the Fifth Circuit’s ruling in Murphy’s Oil USA Inc.

The Supreme Court is expected to reach a decision by early summer, 2017. However, with only eight Supreme Court Justices currently on the bench, a 4-4 tie remains possible, and the issue would be left unresolved. If that were to occur, the rulings of the appellate courts would be affirmed. It remains to be seen whether the incoming Trump administration will be able to nominate and successfully confirm a ninth Justice to the Court in time for this case to be decided. In addition, the Trump administration will be responsible for appointing new members of the Board, which could cause the Board to revise or abandon the position that it has held since D.R. Horton.

Takeaway for Employees

The Second Circuit, the federal appeals court with jurisdiction over New York, Connecticut, and Vermont, has upheld arbitration agreements with class action waivers. We would not therefore recommend any change to such agreements until the Supreme Court decision is handed down. We also recommend that employers regularly review their current arbitration agreements with counsel to ensure that they are in compliance with ever changing applicable law.

* * *

We’ll keep you apprised of developments. If you have any questions regarding class action waivers in arbitration agreements, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

As we previously advised, on October 27, 2016, the New York City Council passed the “Freelance Isn’t Free Act” establishing protections for independent contractors, including freelance workers. See our previous alert: http://www.putneylaw.com/cu_110316.html. The Act requires written contracts for independent contractors and freelancers that earn at least $800 in a 120 day period for their services. The Act will take effect on May 15, 2017.

In anticipation of compliance with the Freelance Isn’t Free Act, as well as to comply with other tax and employment laws regarding the proper classification of independent contractors, we advise employers to consider a recent case decided by New York’s highest court. In Yoga Vida NYC, Inc. v. Commissioner of Labor, decided on October 25, 2016, the Court of Appeals found that a yoga studio had properly classified non-staff instructors as independent contractors.

The Yoga Vida studio employed both staff instructors who were classified as employees, and non-staff instructors who were classified as independent contractors. The Court of Appeals found that the yoga studio did not exercise enough control over the contract instructors for them to be considered employees. The Court found significant that the contract instructors:

  1. made their own schedules and chose how they were paid;
  2. were allowed to teach classes at other competing studios and inform Yoga Vida students about the locations and times of these other classes;
  3. were not required to attend meetings or trainings, unlike staff instructors; and
  4. were only paid if a certain number of students attended their classes.

The Court determined that the “incidental control” Yoga Vida had over the contract instructors (such as inquiring if they had proper licenses, providing space for the classes, providing substitutes if an instructor could not teach a class, etc.) was not enough to classify them as full employees.

Takeaway for Employers

Employers in New York State should review their independent contractor relationships and policies and ensure that they are structured and implemented in compliance with applicable law, including the “Freelance Isn’t Free Act” and the Yoga Vida decision. This may include examining the difference between employees and contractors to avoid misclassification of contractors. To help clarify the terms of any contractor relationship, and as is required under the Freelance Isn’t Free Act for jobs valued at more than $800, it is further recommended that employers have independent contractors sign agreements that have been vetted by counsel.

* * *

If you have any questions regarding the Yoga Vida decision, the “Freelance Isn’t Free Act”, or the appropriate classification of independent contractors, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On December 28, 2016, the New York State Department of Labor (“NYSDOL”) formally adopted the proposed wage orders originally set forth on October 19, 2016. The new wage orders will increase the State minimum wage and the salary threshold for exempt executive and administrative employees effective December 31, 2016.

 

Increases to Minimum Wage

The new wage orders increase the state minimum wage on December 31 of each year according to the following chart:

Location

12/31/16

12/31/17

12/31/18

12/31/19

12/31/20

2021*

NYC – Large Employers
(11 or more)

$11.00

$13.00

$15.00

NYC – Small Employers
(10 or less)

$10.50

$12.00

$13.50

$15.00

Nassau, Suffolk
& Westchester

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

Remainder of
New York State

$9.70

$10.40

$11.10

$11.80

$12.50

*

* Annual increases for the remainder of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting 2021, the annual increases will be published by the Commissioner of Labor on or before October 1.

New York employees are required to post notice of the new minimum wages in the workplace. A copy of this required posting is available at: https://labor.ny.gov/formsdocs/wp/LS207.pdf.

Increases to Salary Threshold
The new wage orders increase New York’s minimum salary requirement for exempt executive and administrative employees according to the following chart:

Location

12/31/16

12/31/17

12/31/18

NYC – Large Employers
(11 or more)

$825/week
($42,900 annually)

$975/week
($50,700 annually)

$1,125/week
($58,500 annually)

NYC – Small Employers
(10 or less)

$787.50/week ($40,950 annually)

$900/week
($46,800 annually)

$1,012.50/week ($52,650 annually)

Nassau, Suffolk & Westchester

$750/week
($39,000 annually)

$825/week
($42,900 annually)

$900/week
($46,800 annually)

Remainder of New York State

$727.50/week ($37,830 annually)

$780/week
($40,560 annually)

$832/week
($43,264 annually)

Other Provisions

The wage orders also separately address issues for employees in the hospitality industry (including fast food workers and tipped employees), building service industry, apparel industry, and farming.

The NYSDOL’s website provides additional guidance, as well as answers to “Frequently Asked Questions.” See the NYSDOL website at:
https://labor.ny.gov/workerprotection/laborstandards/workprot/minwage.shtm for additional information.

Takeaway for Employers

As discussed in our April 5, 2016 Client Update at http://putneylaw.com/cu_040516.html, effective December 31, 2016 (and thereafter) New York employers should be sure to comply with the increase in the minimum wage rates and the minimal salary threshold required for exempt executive and administrative employees.

* * *

If you have any questions regarding New York’s minimum wage law, the changes to the salary thresholds for certain exempt employees, or other wage and hour issues, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On November 22, 2016, the United States District Court for the Eastern District of Texas granted a motion to enjoin the United States Department of Labor (the “DOL”) from implementing and enforcing the DOL’s recently revised Final Rule that increases the minimum annual salary to qualify for the “white collar” exemptions. Plano Chamber of Commerce v. Perez, No. 16-cv-732 (E.D. Tex. November 22, 2016).

The Final Rule would have increased the minimum salary threshold required to qualify for the white collar exemption under the Fair Labor Standards Act (“FLSA”), from $23,660 ($455 per week) to $47,476 ($913 per week). The Final Rule also created an automatic updating mechanism in which the salary level would be updated every 3 years. For more information about the Final Rule, please see our alert dated May 18, 2016 at http://putneylaw.com/cu_051816.html. In granting a preliminary injunction, the Court found “that the Department’s salary level under the final rule and the automatic updating mechanism are without statutory authority.”

Despite this development in the FLSA, we remind New York employers that recent changes to the State Minimum Wage Order will become effective on December 31, 2016 for executive and administrative employees.

12/31/16

12/31/17

12/31/18

NYC Large Employers
(11 or more employees)

$825/week
($42,900 annually)

$975/week
($50,700 annually)

$1125/week
($58,500 annually)

NYC Small Employers
(10 or fewer employees)

$787.50/week ($40,950 annually)

$900/week
($46,800 annually)

$1012.50/week ($52,650 annually)

Nassau, Suffolk, and
Westchester
County Employers

$750/week
($39,000 annually)

$825/week
($42,900 annually)

$900/week
($46,800 annually)

Employers of All
Other Counties

$727.50/week ($37,830 annually)

$780/week
($40,560 annually)

$832/week
($43,264 annually)

If employers do not satisfy the applicable New York State salary threshold for exempt white collar workers, employers must ensure that the total weekly compensation for such workers equals or exceeds the minimum wage for all hours worked up to 40 hours worked in the workweek and at least 1 ½ times the minimum wage for all hours worked in excess of 40 in the workweek.

Takeaway for Employers

Barring a reversal by a federal appellate court, the nationwide injunction bars implementation and enforcement of the Final Rule on the intended date. We will continue to provide updates in the event of any developments. Despite the preliminary injunction, New York employers should be mindful that on December 31, 2016, the salaries for their exempt executive and administrative employees meet New York’s minimum salary threshold. Please contact us with any questions.

On November 16, 2016, the United States District Court for the District of Texas permanently blocked the United States Department of Labor (the “DOL”) from enforcing its recently revised “Persuader Rule.” Nat’l Fed’n of Independent Bus. v. Perez, Case No. 16-cv-066 (N.D. Tex. November 16, 2016).

The Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”) has long required that employers report and disclose their dealings with third-party consultants/attorneys when such consultants/attorneys communicated directly with employees in an effort to persuade employees about their rights to union representation and collective bargaining. However, employers have been protected from certain disclosures under the LMRDA’s “Advice Exemption,” which exempted reporting and disclosing advice received from consultants/attorneys concerning persuading employees about their rights to union representation and collective bargaining. The DOL’s Persuader Rule would have effectively eliminated the “Advice Exemption” by requiring employers to disclose to the DOL’s Office of Labor-Management Standards from whom they receive assistance regarding resisting union organizing campaigns, such as attorneys or other consultants, and the financial terms of such engagements. “Persuader” activities subject to disclosure under the Persuader Rule would have included planning or conducting meetings to persuade employees, training supervisors to conduct such meetings, and developing related policies.

In granting summary judgment to Plaintiffs (Texas, along with nine other states and various business groups were the plaintiffs), the Court converted its preliminary injunction, issued in June of 2016, into a permanent order blocking the Rule’s nationwide implementation. For more information about the Persuader Rule and the District Court’s preliminary injunction, please see our alerts dated March 30, 2016 and June 27, 2016 at http://putneylaw.com/cu_033016.html and http://putneylaw.com/cu_062716.html.

Takeaway for Employers

This decision is an important victory for employers as it prevents the DOL from imposing the Persuader Rule and the significant reporting and disclosure obligations under the Rule. It is unclear whether the DOL will appeal this decision. Barring a reversal by the United States Court of Appeals for the Fifth Circuit, or the United States Supreme Court, employers will remain free of disclosure requirements when merely consulting with attorneys and other consultants about opposing union organizing campaigns. We will continue to provide updates in the event of any developments, but please contact us with any questions.

On October 27, 2016, the New York City Council passed the “Freelance Isn’t Free Act” (the “Act”) establishing wage theft protections for independent contractors, including freelance workers. Mayor de Blasio is expected to sign the Act into law. The Act does not apply to attorneys, licensed medical professionals, or commissioned sales representatives.

The Act requires freelance workers’ contracts to be in writing whenever employed to perform services worth at least $800. This $800 threshold can be met by one project, or multiple projects aggregated over a 120-day period. The written contract must contain: (1) the name and mailing address of both the employer and the freelance worker, (2) an itemization of all services to be performed, (3) the value of the services to be provided and the rate and method of compensation, and (4) the date on which the employer must pay the agreed-upon compensation. If the contract is silent on the payment due date, payment must be made within 30 days of the completion of services.

The Act also establishes the right of aggrieved freelance workers to file a complaint with the Director of the Office of Labor Standards. The complaint must detail the alleged violations of the employer and be filed within two years of the alleged actions. After receiving the complaint, the Director will send notice to the employer. The employer can respond by paying for the work, respond with proof of payment, or not respond at all. If no response is received, the freelance worker can commence a civil action under the Act and the employer will bear the burden to disprove liability. The Act exposes Employers to potential liability for double damages as well as attorneys’ fees.

Takeaway for Employers

The Act will take effect 180 days after receiving the Mayor’s signature and, when signed, will only apply to contracts entered into on or after the effective date. Employers who utilize freelance workers should evaluate their policies and adjust accordingly. Employers should also review and update their independent contractor agreements as well as their payment practices.

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If you have any questions regarding the Act, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On September 8, 2016, the New York State Department of Labor (the “DOL”) published final regulations that prohibit the use of payroll debit cards without employee consent and prohibit charging employees fees for using the cards. The regulations will take effect on March 7, 2017.

Under the regulations, employers must offer their workers the option of being paid either by cash or check, and may only provide compensation in a debit card with an employee’s approval. Employees who are paid on debit cards must be allowed to make unlimited, free withdrawals from their cards from at least one A.T.M. located “a reasonable travel distance” from home or work. An employer who uses methods of compensation other than cash or check must provide employees with a written notice that identifies:

  1. A plain language description of the employee’s options for receiving wages;
  2. A statement that the employer may not require the employee to accept wages by payroll debit card or by direct deposit;
  3. A statement that the employee may not be charged any fees for services that are necessary for the employee to access his or her wages in full;
  4. If offering employees the option of receiving payment via a payroll debit card, a list of locations where employees can access and withdraw wages at no charge to the employees within reasonable proximity to their place of residence or place of work.

The regulations do not apply to employees in a bona fide executive, administrative or professional capacity whose earnings are in excess of $900 per week, or an employee working on a farm not connected with a factory. However, under “Regulation E” of the federal Electronic Fund Transfer Act, employers are nevertheless prohibited from requiring such employees to receive wages via payroll cards. Instead, such employees must at least be offered the option of receiving wages via direct deposit and/or check.

Takeaway for Employers

Employers who offer debit cards as a method of compensation should review their policies to ensure they comply with the DOL’s regulations regarding debit cards. Specifically, employers should ensure that they obtain employee consent, provide their employees with the requisite notice and remove any deductions from employees’ wages for fees associated with the cards.

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If you have any questions regarding the regulations, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On August 29, 2016, the United States Equal Employment Opportunity Commission (the “EEOC”) issued its final “Enforcement Guidance on Retaliation and Related Issues” (the “Guidance”) to address recent court decisions and legal developments regarding retaliation under several federal statutes. It will replace the EEOC’s 1998 Compliance Manual’s section on retaliation. The Guidance can be found here.

The Guidance addresses retaliation under each of the equal employment opportunity (“EEO”) statutes enforced by EEOC, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act (ADA), Section 501 of the Rehabilitation Act, the Equal Pay Act (EPA) and Title II of the Genetic Information Nondiscrimination Act (GINA). The Guidance discusses each element of retaliation, specifically (1) protected activity, (2) materially adverse action, and (3) causal connection between the protected activity and materially adverse action, and includes examples of protected and unprotected employer actions based on recent court decisions. It also discusses the separate “interference” provision under the ADA, which prohibits coercion, threats, or other acts that interfere with the exercise of ADA rights, as well as remedies under the EEO statutes.

In the Guidance, the EEOC also lists five “promising practices” to minimize the likelihood of retaliation violations: (1) written employer policies; (2) training; (3) anti-retaliation advice and individualized support for employees, managers and supervisors; (4) proactive follow-up; and (5) review of employment actions to ensure EEO compliance.

Takeaway for Employers

According to the EEOC, retaliation is the most frequently alleged basis of discrimination. We remind employers to always consider all federal and state anti-retaliation statutes when weighing whether to take an adverse action against an employee. Employers should also seek to implement and abide by the five “promising practices” to reduce exposure to liability.

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If you have any questions regarding the Guidance, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On August 23, 2016, the National Labor Relations Board (the “Board”) held that graduate and undergraduate student assistants who perform teaching and research roles at private colleges and universities are statutory employees under the National Labor Relations Act (the “NLRA” or the “Act”) and are therefore entitled to unionize. Columbia University, Case 02-RC-143012 (August 23, 2016).

The decision overturned a 2004 case involving graduate students at Brown University. There, the Board held that the relationship between graduate assistants and Brown was primarily educational, rather than economic. It also found that the “fundamental belief that the imposition of collective bargaining on graduate students would improperly intrude into the educational process and would be inconsistent with the purposes and policies of the Act.” Brown University, 342 N.L.R.B. 483, 493 (2004); see also http://www.putneylaw.com/cu_102715.html.

However, in Columbia University, the Board found that there was no “convincing justification” for depriving “an entire category of workers of the protections of the Act.” Instead, the Board determined that the definitions of “employer” and “employee” under the NLRA are “very broad” and that the policy of the NLRA … is to “‘encourage the practice and procedure of elective bargaining’ and to ‘protect the exercise of workers of full freedom of association, self-organization and designation of representatives of their own choosing.'” Therefore, the “fundamental belief” of the Brown board is “unsupported by legal authority, by empirical evidence, or by the Board’s actual experience.”

Takeaway for Employers

This decision is the latest instance of the Board’s vacillation on the issue of student unionization, and reflects the current Board’s willingness to overturn established precedent and to offer “very broad” protections to employees that seek to unionize.

Private university employers should prepare for unionization efforts from their graduate and undergraduate student assistants and research assistants. We remind employers that under the election rules recently adopted by the Board (see http://www.putneylaw.com/cu_122214b.html), union campaigns can appear with little notice, and elections can occur in as little as two to three weeks from the date a union files a representation petition.

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If you have any questions regarding the NLRB decision, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.