On August 30, 2017, the New York State Department of Taxation and Finance issued a guidance (the “Tax Guidance”) on the tax implications of New York’s Paid Family Leave Law (“PFLL”). The key provisions of the Tax Guidance instruct as follows:

  • Employers should deduct contributions from employees’ after-tax wages.
  • Employers should report employee contributions on Form W-2, using Box 14 – “State Disability Insurance Taxes Withheld.”
  • PFLL Benefits paid to employees will be taxable non-wage income that must be included in federal gross income.
  • Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding.
  • Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC.

For more information regarding the PFLL, see our previous alerts:

 

Takeaway for Employers

While the Tax Guidance is a useful tool, we remind employers to consult with their tax advisors on the tax treatment of PFLL contributions. We further remind employers that although PFLL leave is not available until January 1, 2018, they may begin making deductions from employees immediately to help fund the cost of purchasing PFLL insurance which must be purchased prior to that date.

As we have previously advised, employers should review all applicable leave policies in anticipation of the January 1, 2018 effective date, such as FMLA, NYC Earned Sick Leave, disability leave, sick leave, military leave, and maternity/paternity leave policies to help ensure coordination with the PFLL. Employers should also consider adopting a system to appropriately track PFLL leave, particularly when PFLL overlaps with other required leave or is taken on an intermittent basis. Employers should also determine whether and when they will make deductions from employees, and, if so, should coordinate with their payroll department or outside payroll vendor.

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

On August 5, 2017, final rules (“Rules”) interpreting New York City’s Fair Chance Act (“FCA”), commonly known as the “Ban the Box” law, will take effect. The FCA itself has been in effect since October of 2015. The FCA amended the New York City Human Rights Law’s provisions regarding discrimination on the basis of criminal history against job applicants and employees. It also addressed discrimination against applicants for licenses, registrations, and permits. Specifically, the FCA prohibits employers from inquiring about criminal convictions until after the applicant has been offered a job. For more information regarding the FCA, see our previous alert here.

Key Provisions

“Per Se Violations”

The Rules establish certain definitions and procedures applying to the FCA. The Rules define a new category of “per se violations” to include “an action or inaction that, standing alone, without reference to additional facts, constitutes a violation of [the FCA], regardless of whether any adverse employment action was taken or any actual injury was incurred.” For example, “per se violations” include:

  • Referring to criminal convictions or criminal background checks in job postings, advertisements, or other publications. This includes, but is not limited to, phrases such as “no felonies,” “background check required,” and “must have clean record.”
  • Using applications for employment that require applicants to either grant the employer permission to run a background check, or provide information regarding criminal history prior to a conditional offer.
  • Making any statement or inquiry regarding the job applicant’s pending arrest or criminal conviction before a conditional offer of employment is extended.
  • Using, within New York City, a boilerplate form for a job application intended to be used across multiple other jurisdictions, where such form requests or refers to the applicant’s criminal history. Such a practice would be a per se violation even if the form states that applicants should not answer specific questions if applying for a position subject to the New York City Human Rights Law.
  • Failing to comply with the requirements of the Human Rights Law, when applicable, to: (a) provide the applicant a written copy of any inquiry an employer conducted into the applicant’s criminal history; (b) to share with the applicant a written copy of the employer’s Article 23-A analysis (see our prior alert for a discussion of the Article 23-A analysis); or (c) to hold the prospective position open for at least three (3) business days from the date of the applicant’s receipt of both the inquiry and the analysis.
  • Requiring applicants or employees to disclose an arrest that, at the time of disclosure, has resulted in a non-conviction. A non-conviction includes termination of any arrest or criminal accusation, not currently pending, that was concluded by termination in favor of the individual, adjudication as a youthful offender, conviction of a non-criminal offense that has been sealed, or certain sealed convictions.

 

If the NYC Commission concludes that there is a per se violation, it may assess fines under the “Early Resolution Process.” Under this process, the employer admits liability and pays a fine based on its size and the number of its previous violations. Employer fines would conform to the following schedule:

Employer Size (at the time of the violation)

First Violation

Second Violation (within 3 years of the resolution date of the first violation)

4-9 employees

$500.00

$1,000.00

10-20 employees

$1000.00

$5,000.00

21-50 employees

$3,500.00

$10,000.00

Withdrawing Conditional Offers of Employment or Taking Adverse Employment Action
The Rules provide further guidance regarding the process by which employers may withdraw conditional offers of employment based on information learned from an applicant or employee’s criminal conviction history report. The employer must:

  • Provide a written copy of any inquiry made to collect information about a criminal history to the applicant, including but not limited to consumer reporting agency reports, internet searches, public records, written summaries of oral conversations.
  • Provide a written copy of the Article 23-A analysis to the applicant. Employers need not use the form drafted by the Commission for this purpose, but the material substance must not be changed. The Commission’s sample form may be found at: http://www1.nyc.gov/assets/cchr/downloads/pdf/FairChance_Form23-A_distributed.pdf.
  • Inform applicants that they will be given a reasonable time (no less than three business days) to respond to the employer’s concerns. The employer “must affirmatively request information concerning clarification, rehabilitation, or good conduct while engaging in the Article 23-A analysis. The Rules also provide the protocol for the employer’s duty to hold the position open while the applicant gathers this information. Because the three-day “reasonable time” period only begins once the applicant receives both the inquiry and notice of the inquiry, the “Legal Enforcement Guidance” set forth by the NYC Commission on Human Rights recommends that employers confirm receipt, “either by disclosing the information in person, electronically, or by registered mail. Such method of communication must be mutually agreed on in advance by the applicant and employer.” Thus, employers should advise applicants in the employment application itself that communications may be made via e-mail.
  • Consider any additional information provided by the applicant during this period.

 

Inadvertent Discovery or Voluntary Disclosure of Criminal Conviction History
An employer is not automatically liable where the employer, an employment agency, or an agent thereof inadvertently discovers an applicant’s criminal history prior to a conditional offer of employment, or where the applicant provides such information without solicitation. However, liability is created where the employer, employment agency, or agent thereof uses such discovery or disclosure to “further explore an applicant’s criminal history before having made a conditional offer or uses the information in determining whether to make a conditional offer.”

 

Internet Searches
Employers, employment agencies, or agents thereof cannot search for terms relating to criminal history, such as “arrest,” “mugshot,” “warrant,” “criminal,” “conviction,” “jail,” or “prison,” nor can they search websites that purport to provide information regarding arrests, warrants, convictions, or incarceration information for the purpose of obtaining criminal history.

 

Applicant’s Intentional Omission
The Rules provide that the employer, employment agency, or agent thereof “may revoke the conditional offer or take an adverse employment action” where a background check reveals that an applicant “intentionally failed to answer a legitimate question about their conviction history.”

 

Takeaway for Employers

Covered employers should review and revise their hiring practices, including but not limited to their interview questions, application forms, and background check procedures, to ensure that they comply with the FCA.

In order to expedite the application process so that the employer will not have to hold a position open for longer than necessary, employers should inform the applicant in the application form that by submitting the application, the applicant consents to receipt of communications via e-mail.
We remind employers that New York State Law also provides certain limitations on an employer’s right to consider criminal convictions in employment decisions.  Further, the U.S. Equal Employment Opportunity Commission has published guidance that recommends “banning the box” from applications due to the potential for disparate impact under Title VII.  (See our Client Alert here).  To further complicate the recruitment and hiring process, effective October 31, 2017, New York City employers will be prohibited from inquiring about or relying on a prospective employee’s salary history during the hiring process. Accordingly, employers, particularly those that operate in multiple jurisdictions, must make sure they are in compliance with all applicable, and ever-evolving, laws on recruitment, hiring, background checks, and criminal records.

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If you have any questions regarding New York City’s Fair Chance Act, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On July 19, 2017 the New York Workers’ Compensation Board (“WCB”) adopted final regulations for the New York Paid Family Leave Law (“PFLL”), which took effect immediately. The final regulations follow a 30-day period of comment and review, and make several changes to the previously proposed revised regulations issued in May 2017 (which revised the original regulations issued on February 22, 2017). Starting January 1, 2018, the PFLL will allow eligible employees to receive paid leave in certain circumstances, including bonding with a new child, caring for a family member with a serious health condition, or relieving family pressure when someone is called to active military service. For more information regarding the PFLL, see our alerts: http://putneylaw.com/cu_031017.html and http://www.putneylaw.com/cu_040516.html.

 

Key Provisions

Wage Deductions and Notification

The final regulations confirm that employers may begin carrying out wage deductions as of July 1, 2017. Importantly, retroactive deductions are generally not permissible. Thus, to the extent employees have already been paid for work performed in July, employers can begin making deductions in the next payroll, but cannot retroactively make “catch-up” deductions for the early July work. Employers do not need to notify employees of the deduction, but may choose to do so to avoid confusion.

Eligibility

The regulations were amended to clarify employee eligibility requirements. Beginning January 1, 2018, an employee who is regularly scheduled to work at least 20 hours per week is eligible to take PFL after 26 consecutive weeks of employment. The WCB noted that those consecutive weeks may be tolled where jobs have built-in breaks (i.e., a professor on semester break), such that those employees will not restart their period of employment for the purposes of eligibility for PFL.

 

Waiver

Employers are required to offer a PFL waiver to eligible employees whose regular employment will not meet the minimum eligibility criteria under the PFLL. The employee retains sole discretion as to whether or not to exercise the waiver. The WCB is expected to issue a sample waiver form.

PFLL and the New York City Earned Sick Time Act

The final regulations clarify the relationship between the PFLL and the New York City Earned Sick Time Act. The WCB states that the Workers’ Compensation Law permits employees to use accrued but unused vacation and personal leave to receive full salary during a period of PFL. The final regulations expressly permit employers to offer, and employees to elect, to use accruals of other paid time off, including paid time off under the NYC Earned Sick Time Act, to receive full salary during PFL. The WCB affirms that if the rules governing an employee’s use of sick time allow them to use the accrued time off to care for a seriously sick family member – as is required for employees covered by the New York City Earned Sick Time Act – such time falls within the PFLL’s regulations and an employee may elect to use such paid sick time concurrently with PFL and receive 100% of his or her salary during that period.

 

Incidental In/Out of State Work

The WCB confirms that employees working in New York State, with only incidental work outside the state, are covered by the PFLL. Conversely, employees working in another state who only incidentally work in New York are not covered. Service is deemed localized in New York if it is performed entirely within the state, or is performed both within and without the state, but the service performed out of state is incidental to the service within the state, or is temporary or transitory in nature, or consists of isolated transactions.

Takeaway for Employers

The final regulations for the PFLL take effect immediately. Employers may, but are not required to, make PFLL deductions from employees at rates established by the WCB. Although PFLL leave is not available until January 1, 2018, employers may immediately begin making employee deductions in order to help fund the cost of purchasing PFLL insurance which must be purchased prior to January 1, 2018.

In anticipation of the January 1, 2018 effective date, employers should review all applicable leave policies, such as FMLA, NYC Earned Sick Leave, disability leave, sick leave, military leave, and maternity/paternity leave policies to help ensure coordination with the PFLL. Employers should also consider adopting a system to appropriately track PFLL leave, particularly when PFLL overlaps with other required leave. Employers should also determine whether and when they will make deductions from employees, and, if so, should coordinate with their payroll department or outside payroll vendor. We have included a list of frequently asked questions under the PFLL for your convenience.

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

On June 12, 2017, the United States Department of Labor (the “DOL”) issued a Notice of Proposed Rulemaking to rescind recent changes to the so-called “Persuader Rule.” The revised rule would have required employers, attorneys and consultants to disclose all arrangements for legal services related to persuading employees to exercise their rights to union representation and collective bargaining, even when the attorneys and consultants limited their activities to advising employers and revising communications to be made to employees. The proposal to rescind comes as no surprise in the wake of the change in Presidential administrations as well as National Federation of Independent Business v. Perez, Case No. 16-cv-066 (N.D. Tex. November 16, 2016), in which the United States District Court for the Northern District of Texas permanently enjoined the DOL from enforcing the Persuader Rule. For more information on the Persuader Rule and the injunction thereof, please see our client alerts dated March 30, 2016, June 27, 2016, and November 18, 2016 at http://putneylaw.com/cu_033016.html, http://putneylaw.com/cu_062716.html and http://www.putneylaw.com/cu_111816.html.

 

The DOL proposed to rescind the Persuader Rule to address the various concerns raised by courts and regulated entities. The courts made clear that the Persuader Rule needed a clearer explanation of the DOL’s statutory authority to promulgate any rule requiring the disclosure of previously exempt activities. In light of concerns about the potentially chilling effect of the Persuader Rule on employers’ ability to obtain legal counsel and representation, the DOL also determined that it had not provided an adequately detailed analysis of how the disclosure of previously exempt activities will affect the furnishing and receiving of legal services in the regulated community. The DOL further determined that rescission was appropriate due to the DOL’s limited resources as the reporting requirements of the Persuader Rule would have increased the DOL’s investigation responsibilities fivefold.

* * *

Although the DOL is accepting comments until August 11, 2017, we expect that the Persuader Rule will be rescinded shortly thereafter. We will continue to provide updates in the event of any developments. Please do not hesitate to contact us with any questions on the rescission of the Persuader Rule.
212-682-0020 | PutneyLaw.com.

The United States Supreme Court unanimously ruled that the term “church plan” in the Employee Retirement Income Security Act (“ERISA”) includes a plan maintained by a church associated organization whose chief purpose is to fund or administer a benefits plan for employees of the church or church-affiliated nonprofit institutions. Advocate Health Care et al. v. Stapleton, et al., Docket No. 16-74 (June 5, 2017). As a result, all such plans including those of church related hospitals and healthcare institutions, whether established by a church or not, are exempt from the reporting and funding obligations of ERISA. The ruling is welcome news to church-related entities with pension plans who have faced massive litigation on the issue. This ruling will bring that litigation to an end.

ERISA is comprehensive federal legislation governing the administration and funding requirements of pension plans. In 1980, Congress amended the definition of church plan in ERISA such that a church plan was defined as a plan established and maintained by a church. (emphasis added.) In the ensuing decades, federal agencies including the IRS, the PBGC and the DOL all interpreted the statute to include plans that were maintained by church-affiliated organizations even if the plans had not been established by a church. In recent years, however federal courts including three appellate courts rejected this expansive definition of the term “church plan” in favor of a definition that limited the church plan exemption only to plans established and maintained by churches. The Supreme Court’s decision expressly reverses these rulings.

The cases before the Court involved three church-affiliated nonprofit institutions that ran hospitals. Each of the hospitals offered their employees defined-benefit pension plans but the plans had not been established by churches. Instead, the plans has been established by the hospitals themselves. The hospitals were sued for failing to satisfy the reporting and funding obligations of ERISA. The hospitals defended the claims, asserting that despite the fact that their plans had not been established by a church, they were entitled to the church plan exemption. The federal courts, including the Courts of Appeal for the Third, Sixth and Ninth Circuit rejected the hospitals’ interpretation of ERISA. The hospitals petitioned for Supreme Court review, which was granted in 2016. The Supreme Court sided with the hospitals and other church-affiliated entities. The Supreme Court’s analysis was textual and logical:

Premise 1: A plan established and maintained by a church is an exempt church plan.

Premise 2: A plan established and maintained by a church includes a plan maintained by a principal purpose organization.

Deduction: A plan maintained by a principal-purpose organization is an exempt church plan.

Slip Opinion at p. 7.

The Court’s ruling is welcome news to church-affiliated entities with pension plans. If you should have any questions concerning the decision or its impact on your plan, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

On May 30, 2017, New York City Mayor Bill de Blasio signed into law a “Fair Workweek” package of bills prohibiting retail and fast food employers from engaging in certain scheduling practices. The stated purpose of the laws is to allow employees to more accurately predict weekly income, as well as their day-to-day schedules, by restricting “on-call” scheduling. On-call scheduling occurs when an employer requires an employee to be available for work, to contact the employer, or to wait to be contacted by the employer in order to determine whether the employee must report to work. The laws will take effect after 180 days.

Retail Employers

Under the new law, “retail employer” means any employer that employs a retail employee at a retail business. A “retail business” refers to any entity with 20 or more employees that is engaged primarily in the sale of consumer goods at one or more stores within New York City. “Consumer goods” are defined as products that are primarily for personal, household, or family purposes, including but not limited to appliances, clothing, electronics, groceries, and household items. The number of employees working at a retail business includes all those performing work for compensation on a full-time, part-time, or temporary basis.

Retail employers are prohibited from engaging in the practice of on-call scheduling. They are further required to give advance notice of work schedules to their employees. Subject to certain exceptions, retail employers cannot cancel, change, or add work shifts within 72 hours of the start of the shift. Exceptions are limited to the following situations:

  • Employees may consent in writing to allow the employer to take otherwise prohibited action within the 72-hour period;
  • Employers may make changes where their operations cannot begin or continue due to:
    • threats to the retail employees or the retail employer’s property;
    • the failure of public utilities or the shutdown of public transportation;
    • a fire, flood, or other a natural disaster; or
    • a state of emergency declared by the President of the United States, governor of New York, or mayor of New York City.
  • Where the retail employee requests time off; or
  • Where two employees voluntarily trade shifts.

The law also requires a retail employer to: (1) post retail employees’ schedules 72 hours before the beginning of the scheduled hours of work; (2) upon request by a retail employee, provide a written copy of said employee’s work schedule for any week worked over the prior three years; or (3) upon request by a retail employee at the work location, provide the most current version of the work schedule for all retail employees at the work location. Retail employees must also be scheduled for no fewer than 20 hours of work during each 14-day period.

Retail employers with valid collective bargaining agreements in place at the time the law goes into effect will be subject to the law after the agreement’s expiration date.

Fast Food Employers

Certain fast food employers will be required to provide employees with an estimate of their work schedule upon hire and a work schedule 14 days in advance. The law will require a premium to be paid to employees for schedule changes made by the employer with less than 14 days’ notice to the employee (“schedule change premium”). Changes to schedules will include canceling, shortening, or moving shifts, adding additional hours to scheduled shifts, and adding shifts. The value of the schedule change premium depends on the amount of notice provided:

  • Less than 14, but at least 7 days’ notice – $10 for each change to the work schedule in which: (1) additional hours or shifts are added; or (2) the date or start or end time of a regular shift or on-call shift is changed with no loss of hours;
  • Less than 14, but at least 7 days’ notice – $20 for each change to the work schedule in which: (1) hours are subtracted from a regular or on-call shift; or (2) a regular or on-call shift is cancelled;
  • Less than 7 days’ notice to the employee – $15 for each change to the work schedule in which: (1) additional hours or shifts are added; or (2) the date or start or end time of a regular shift or on-call shift is changed with no loss of hours;
  • Less than 7 days’ notice but at least 24 hours’ notice to the employee – $45 for each change to the work schedule in which: (1) hours are subtracted from a regular or on-call shift; or (2) a regular or on-call shift is cancelled; and
  • Less than 24 hours’ notice to the employee – $75 for each change to the work schedule in which: (1) hours are subtracted from a regular or on-call shift; or (2) a regular or on-call shift is cancelled.

Exceptions are limited to the following situations:

  • Where the employer’s operations cannot begin or continue due to:
    • threats to the employees or the employer’s property;
    • the failure of public utilities or the shutdown of public transportation;
    • a fire, flood, or other a natural disaster;
    • a state of emergency declared by the President of the United States, governor of New York, or mayor of New York City; or
    • Severe weather conditions that pose a threat to employee safety, although where the employer adds shifts to an employee’s schedule to cover for or replace another employee who cannot safely travel to work, such employer shall provide the replacing or covering employee with a schedule change premium.
  • Where the employee requests in writing a change in schedule;
  • Where two employees voluntarily trade shifts; or
  • Where the employer is required to pay the employee overtime pay for a changed shift.

Potential for State Pre-emption

The New York State Labor Department is currently preparing regulations that are expected to preempt certain provisions of the New York City Fair Workweek laws. For example, the regulations are expected to cover all minimum wage workers instead of just retail and fast food workers. Specifics of the forthcoming regulations have not yet been released.

Takeaway for Employers

Retail and fast food employers must develop their schedules sooner and distribute these schedules to employees to ensure that their scheduling and recordkeeping practices are in conformance with the new laws.

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If you have any questions regarding scheduling requirements for retail and fast food employers or the forthcoming regulations from New York’s Labor Department, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

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.

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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.