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United States District Court Grants Preliminary Injunction Against Department of Labor’s Overtime Rule

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.

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United States District Court Permanently Blocks Department of Labor’s Persuader Rule

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.

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New York City Council Passes the Freelance Isn’t Free Act

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.

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New York Department of Labor Limits Use of Debit Cards by Employers for Payment of wages

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.

* * *

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

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EEOC Issues Final Enforcement Guidance on Retaliation and Related Issues

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.

* * *

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

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National Labor Relations Board Rules Student Assistants are Employees and Can Unionize

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.

* * *

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

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Mayor de Blasio Signs Executive Order Requiring Large Retail Establishments Receiving Financial Assistance to Enter into Labor Peace Agreements with Unions

On July 14, 2016, New York City Mayor Bill de Blasio signed an executive order, effective immediately, that requires large retail establishments which receive at least $1 million in government assistance and operate on a city development project to enter into labor peace agreements with unions; thereby making it easier for their workers to unionize.

Specifically, the executive order applies to retail and food service businesses that have 10 or more employees and occupy 15,000 square feet or more in development projects. These businesses must agree, “at a minimum,” to maintain a “neutral posture” with respect to unions’ efforts to represent workers. The union must agree to refrain from “picketing, work stoppages, boycotts or other economic interference.”

The “labor peace clause” that allows the workers to unionize would remain in effect for the longer of (1) 10 years after the project began or (2) the term of financial assistance from the city.

Possible Legal Challenges

The executive order may conflict with National Labor Relations Act (“NLRA”) rights by requiring covered employers to enter into a labor peace agreement with a union even before the employer hires any employees. We anticipate that there may be legal challenges to the executive order on the basis that the federal NLRA preempts the executive order. Pending any anticipated challenges, the executive order stands and should be complied with by covered employers.

We will keep you apprised of any developments regarding the executive order.

Takeaway for Employers

The executive order does not apply to projects awarded financial assistance prior to July 14, 2016. Retail and food service employers should weigh the costs and benefits of entering into labor peace agreements before agreeing to contracts which would bring them within coverage under the executive order.

* * *

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

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Governor Cuomo Signs Executive Order Establishing Permanent Joint Task Force on Employee Misclassification and Worker Exploitation

On July 20, 2016, New York Governor Andrew Cuomo signed Executive Order No. 159, which established the “Joint Task Force on Employee Misclassification and Worker Exploitation.” The Joint Task Force will focus on state labor law violations in 14 targeted industries: nail salons; farming; cleaning; home healthcare; laundry; childcare; supermarkets; retail; trucking; construction; landscaping; car washes; janitorial services and waste disposal. The Joint Task Force will also involve coordinated enforcement efforts and investigations by 10 New York State agencies, including the Department of Labor, the Division of Human Rights and the Department of Health.

The Joint Task Force is the latest effort by New York State to crack down on unpaid wages, dangerous health and safety conditions, and other forms of worker exploitation. Previously, the Governor’s executive orders created temporary task forces to address worker exploitation and employee misclassification in specific industries. The Joint Task Force is a permanent entity that reflects a merger of those previous temporary task forces.

Takeaway for Employers

Employers, particularly those in the targeted industries, should continue to ensure that employees are correctly compensated and not exposed to dangerous working conditions. The Joint Task Force likely comes as welcome news to those employers in the targeted industries that have diligently complied with applicable workplace laws while facing competition from less conscientious employers.

* * *

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

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Connecticut Becomes the Ninth State to “Ban the Box” on Employment Applications

On June 1, 2016, Connecticut Governor Dannel Malloy signed Public Act No. 16-83, “An Act Concerning Fair Chance Employment” (the “Act”), which prohibits most employers from requesting criminal history information on an initial employment application. The Act, which covers any employer engaged in business in Connecticut that has one or more employees, goes into effect on January 1, 2017.

Under the Act, employers may not require a job applicant to complete an initial employment application containing any question related to the applicant’s prior arrests, criminal charges, or convictions. Unlike other ban-the-box legislation that prohibits inquiries into an applicant’s criminal history until after a conditional offer is made (such as New York City’s), the Act merely restricts inquiries “on an initial employment application.” The Act does not define “initial employment application” but the Connecticut Department of Labor appears to interpret the term literally to mean the employment application itself.

The Act does not apply when: (1) an employer is obligated pursuant to a federal or state law to ask about criminal history for the position in question; and (2) a position requires a security, fidelity, or equivalent bond. Furthermore, the Act does not impact several still-enforced State prohibitions on employers: (1) rejecting applicants or terminating employees because of criminal records subject to erasure under state law; and (2) rejecting applicants or terminating employees because of a prior conviction for which the individual has received a provisional pardon or certificate of rehabilitation.

Takeaway for Employers

Employers should revise job applications used in Connecticut to remove questions concerning an applicant’s prior arrests, criminal charges, or criminal convictions.

* * *

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

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EEOC Announces Revisions to its Proposal To Require More Pay Data From Large Employers

On July 13, 2016, the United States Equal Employment Opportunity Commission (“EEOC”) announced a revised version of its proposed rule to change the Employer Information Report, also known as the EEO-1 Survey (“EEO-1”). For more information about the EEOC’s proposed rule, please see our January 29, 2016 alert at http://putneylaw.com/cu_012916.html. The proposed rule only applies to employers with 100 or more employees.

Under the revised proposed rule, the due date for companies to submit the EEO-1 survey would be pushed back from September 30 to March 31. The 2016 EEO-1 report filing deadline will remain September 30, 2016.

The EEOC’s revised proposed rule also moves the “workforce snapshot” period from the third quarter to the fourth quarter, October 1st to December 31st. The “workforce snapshot” period is the pay period when employers count the total number of employees for that year’s EEO-1 report. Again, this change will not affect the 2016 EEO-1.

The EEOC’s new proposed rule also now specifies that it will require employers to report on income provided in Box 1 of the W-2 form. Box 1 includes income that is received between January 1st and December 31st of the relevant calendar year. Previously, the EEOC’s proposed rule did not specify which box on the W-2 it would use as the measure of individual compensation.

Takeaway for Employers

The public will have 30 days, until August 15, 2016, to submit comments to EEOC concerning the revised rule. Even with the revisions, if adopted, this rule will significantly increase the amount of time and effort necessary for employers to complete the EEO-1 form.

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

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Employers Cannot Shorten the Statute of Limitations for NJ LAD Claims

On June 15, 2016, the New Jersey Supreme Court, in Rodriguez v. Raymours Furniture Company, Inc., No. A-27-14, 074603, held that parties may not agree to shorten the two-year statute of limitations under the New Jersey Law Against Discrimination (“LAD”). “A private agreement that frustrates the LAD’s public-purpose imperative by shortening the two-year statute of limitations period for private LAD claims cannot be enforced.”

In Rodriguez, the plaintiff, Sergio Rodriguez, applied for a position with the defendant, and signed an employment application containing a contractual provision that required all applicants, if hired, to agree to waive the two-year statute of limitations under the LAD. Rodriguez also agreed that any potential LAD claims against the employer would have to be filed within six months from the date of the adverse employment action.

In July of 2011, Rodriguez filing a lawsuit in the Superior Court of New Jersey against Raymours in which he alleged that his discharge was based on an actual or perceived disability in violation of the LAD. He contended that he was fired two days after returning to his full work duties, and that other employees with less seniority or distinguishing features were retained. The trial court enforced the contractual provision shortening the statute of limitations for LAD claims to six months, and granted summary judgment to Raymours. The trial court found that the contractual provision itself was clear and unambiguous, and that shortening the statute of limitations was not unreasonable nor against public policy. On appeal, the Appellate Division affirmed; despite noting that the employment application was a contract of adhesion, it also found that the contractual provision was clear and unambiguous and was neither unreasonable nor against public policy.

The New Jersey Supreme Court unanimously reversed. The Court reasoned that the broad private right to contract may not contravene the public policy behind a statute like the LAD. The Court opined that the “LAD occupies a privileged place among statutory enactments in New Jersey” and that “it has long been recognized that the LAD seeks unequivocally to ‘eradicate’ discrimination.” As such, the Court found that “[r]estricting the ability of citizens to bring LAD claims is antithetical to that societal aspiration and defeats the public policy goal.” Thus, the Court held that the LAD’s two-year statute of limitations could not be amended by a private agreement. The Court also noted that its decision did not affect contractual provisions where parties agree to submit LAD claims to arbitration or other alternative dispute resolution processes.

Takeaway for Employers

Employers should review, and amend if necessary, any employment applications or agreements that contractually shorten the filing of NJ LAD claims to be less than the two-year statute of limitations period. Employers should also consider other measures to help protect themselves, such as implementing jury trial waivers and/or arbitration provisions.

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If you have any questions regarding the NJ LAD and the New Jersey Supreme Court’s decision, please do not hesitate to contact us.
212-682-0020 | PutneyLaw.com.

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United States District Court Grants Preliminary Injunction Against Department of Labor’s Persuader Rule

On June 27, 2016, the United States District Court for the Northern District of Texas granted a motion to enjoin the United States Department of Labor (the “DOL”) from enforcing its recently revised “Persuader Rule.” National Federation of Independent Business. v. Perez, Case No. 5:16-cv-00066-C (N.D. Tex. 2016). The revised Persuader Rule would have essentially required employees and third party consultants (including attorneys) to the DOL arrangements to “persuade” employees regarding their right to union representation and collective bargaining. For more information about the Department of Labor’s Persuader Rule, please see our alert dated June 23, 2016, at http://putneylaw.com/cu_062316.html.

The District Court held that the plaintiffs demonstrated a substantial likelihood of success on the merits on all of their claims. Specifically, the District Court found that the DOL’s Persuader Rule exceeds the DOL’s authority under the Labor-Management Reporting and Disclosure Act of 1959 by effectively eliminating the statute’s “Advice Exemption.” As such, the DOL lacked statutory authority to promulgate and enforce this new Advice Exemption interpretation. The District Court also found that the plaintiffs were likely to succeed on their claims that the DOL’s new Advice Exemption interpretation (1) is arbitrary, capricious and an abuse of discretion; (2) violates free speech and association rights protected by the First Amendment; (3) is unconstitutionally vague in violation of the due process clause of the Fifth Amendment; and (4) violates the Regulatory Flexibility Act. The District Court further concluded that the plaintiffs demonstrated a substantial threat of irreparable harm and that the balance of hardships weighs in plaintiffs’ favor and will not disserve the public interest. Thus, the District Court determined that a nationwide injunction is appropriate, pending a final resolution of the merits of the case.

Takeaway for Employers

Barring a reversal by the United States Court of Appeals for the Fifth Circuit, or the United States Supreme Court, it is unlikely that the DOL’s Persuader Rule will be implemented as intended. Regardless of this ruling, employers may wish to try and take advantage of the DOL’s statement that it will not enforce the new rule to open-ended or multi-year agreements entered into prior to July 1, 2016, even if activities undertaken (and payments made) pursuant to such an agreement occur after July 1. We will continue to provide updates in the event of any developments.

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