Archive for category: Client News

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.

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 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 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.

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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 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.

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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 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.

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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.

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:

* 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:

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.

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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.