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Employment Law Monitor

Insights on Recent Developments in Federal and State Labor & Employment Matters

New Employee Wage and Benefits Legislation That All New York State Employers Must Know

Posted in Employment Policies and Practices, Wage and Hour

On April 4, 2016, Governor Andrew Cuomo signed legislation in connection with New York’s 2016-2017 budget that will impact employers large and small throughout the State.  In addition to annual increases to the minimum wage that will ultimately reach $15.00 per hour, the legislation also provides for up to 12 weeks of paid family leave for qualifying employees.

Minimum Wage Increases

The timeframe for the increased minimum wages is determined by both an employer’s geographic location and size.  Specifically, wages will increase under the following schedule:

  • Employers Within New York City: On December 31, 2016, the minimum wage for “small” employers with 10 or fewer employees will increase to $10.50 per hour, while wages for “large” employers (11 or more employees) will rise to $11.00 per hour.  Small and large NYC employers will see minimum wages rise to $12.00 and $13.00 per hour by December 31, 2017, and then $13.50 and $15.00 per hour by December 31, 2018, respectively.  By December 31, 2019, however, all NYC employees will be entitled to $15.00 per hour in minimum wage.
  • Employers in Westchester, Nassau and Suffolk Counties: Employers in these 3 counties will be subject to a $10.00 per hour minimum wage on December 31, 2016.  This amount will increase by $1.00 every year until it reaches the $15.00 threshold on December 31, 2021.
  • All Other New York Employers: For employers outside of the noted high-density geographic region in and around NYC, the New York minimum wage will increase to $9.70 per hour on December 31, 2016.  It will then rise by increments of $0.70 every December 31 until the year 2020, by which time the minimum wage will have reached $12.50.  The New York Director of the Division of Budget and the Commissioner of Labor will establish a schedule for annual increases thereafter until the minimum wage reaches $15.00 per hour.

Tipped employees in the hospitality industry will have their minimum wage calculated by the greater of (1) two-thirds of the current minimum wage in their locality (rounded to the nearest $.05), or (2) $7.50.  Employers must ensure that these employees receive tips sufficient to bring their total wages (i.e., wages and tips) to meet or exceed the current minimum wage in effect for non-tipped employees in that geographic location.

Paid Family Leave

The April 4th legislation also provides up to 12 weeks of paid family leave for eligible New York employees who are employed by “covered” employers (as defined under New York law).  To qualify, employees must have worked at least 26 calendar weeks with their current employer and seek leave for any of the following reasons:

  • to provide care for a family member suffering a serious health condition;
  • to bond with the employee’s child during the first 12 weeks after birth (or the first 12 weeks after a child is placed with the employee for adoption or foster care); or
  • based upon a qualifying exigency under the federal Family and Medical Leave Act as a result of a qualifying family member’s “active duty” status with the United States military.

The amount of paid leave will increase each year starting January 1, 2018, where eligible employees will first be entitled to 8 weeks of paid leave, and ultimately 12 weeks by January 1, 2021.  Over that time, the amount of paid leave benefits will increase as follows:

  • January 1, 2018: 8 weeks of paid leave at 50% of the employee’s average weekly wage (capped at 50% of the New York average weekly wage);
  • January 1, 2019: 10 weeks of paid leave at 55% of the employee’s average weekly wage (capped at 55% of the New York average weekly wage);
  • January 1, 2020: 10 weeks of paid leave at 60% of the employee’s average weekly wage (capped at 60% of the New York average weekly wage); and
  • January 1, 2021: 12 weeks of paid leave at 67% of the employee’s average weekly wage (capped at 67% of the New York average weekly wage).

New York employers should begin preparing themselves now for these important changes to the minimum wage and paid family leave laws, including conducting a comprehensive review of their employee handbooks and policies and an internal audit of their compensation structures.  While the minimum wage and paid family leave requirements will take effect gradually over the next few years, New York employers must be ready to adopt them in order to avoid running afoul of their new statutory obligations.


U.S. Women’s Soccer Team Joins the Fight for Equal Pay

Posted in Harassment, Discrimination and Retaliation, Wage and Hour

On Wednesday, March 30, five players for the U.S. women’s soccer team officially joined the national fight for equal pay by submitting a wage discrimination complaint to the Equal Employment Opportunity Commission (“EEOC”).

The players filing the complaint include the most well-known female soccer players in the world — Carli Lloyd, Becky Sauerbrunn, Alex Morgan, Megan Rapinoe, and Hope Solo.  With such noteworthy names attached to the EEOC filing, it has already garnered significant media attention, bringing the equal pay issues confronted by women across the country to the forefront.  As goalkeeper Hope Solo explained:

“In this day and age, it’s about equality. It’s about equal rights. It’s about equal pay. We’re pushing for that. We believe now the time is right because we believe it’s our responsibility for women’s sports and specifically for women’s soccer to do whatever it takes to push for equal pay and equal rights. And to be treated with respect.”

The decorated U.S. women’s soccer team has plenty of accomplishments to brag about, including three World Cup championships, four Olympic gold medals, and generating nearly $20 million more in revenue than the men’s U.S. Soccer team in 2015.  However, the EEOC complaint alleges the women earn significantly less than their male counterparts for identical work.  For example, the EEOC filing cites that while the men would likely earn $263,320 each for winning twenty exhibition games in a season (the minimum required to be played in one year), the women would earn only $99,000 for the same triumph.  In addition, the men each earn between $5,000 and $17,625 for every additional game played beyond the minimum of twenty exhibition games, while the women earn nothing if they play more than twenty games in a season.

The EEOC complaint represents the first step in the litigation process to pursue the women’s discrimination claim.  From there, the EEOC will commence an investigation to determine whether there is probable cause to believe discrimination has occurred.  Both sides are required to cooperate with the EEOC in good faith in its investigation.  If the EEOC finds such cause, it may file a complaint for discrimination in an appropriate court on behalf of the women, or it can issue a “Notice-of-Right-to-Sue” letter, which would allow the women to file a formal court action for discrimination within ninety days.

The complaint filed by these high profile women only serves to highlight the need for further dialogue and discussion concerning equal pay for equal work.  We will post on future developments in this EEOC case as they occur.

Protect Your Employees’ Personal Information or You’re Putting Your Business at Risk

Posted in Employment Policies and Practices

For the past few years, data breaches have made news headlines and raised awareness for data privacy and cybersecurity.  Some of the most well publicized data breach stories have been the breaches of Sony, Target, Home Depot, Neiman Marcus, and Anthem.  While the news coverage of these data breaches has significantly raised awareness of data security and privacy issues, it could also leave businesses with the impression that cybersecurity is an issue primarily relevant only to multinational companies, large retailers, and insurance companies.  That is not the case.

All employers, regardless of the nature of their business, should be cognizant of cybersecurity issues, particularly as those issues relate to employee personal information.  Most employers, through the usual course of business, collect and maintain a tremendous amount of personal information from their employees.  For example, an employer typically has access to and maintains the following information about its employees:

  • Social Security numbers;
  • Contact information, such as postal address, email address, and phone numbers;
  • Financial information, such as bank routing numbers and 401(k) accounts;
  • Health and medical information obtained in connection with workers’ compensation claims or disability or medical leaves of absence; and
  • Medical, life, and other insurance information.

Depending upon the particular laws applicable to a given employer, some or most of this information qualifies as Personally Identifiable Information (PII) and is subject to data privacy protections and breach notification obligations.  For example, in New Jersey, PII includes Social Security numbers, driver’s license numbers, and financial account numbers in combination with a required security code, access code or password.  New York adds passwords, access codes, personal identification numbers (PINs), and mother’s maiden names to the list of PII.

Given the vast amounts of PII that employers maintain, all employers should review their data collection, storage, and security practices from both a legal and technological perspective to ensure that the PII of their employees is protected.  In addition to reviewing data security practices, employers should familiarize themselves with applicable data breach notification laws so as to be prepared in the event of a data breach, as the triggering events and notice requirements vary from state to state.

Failure to provide reasonable protection for PII or to comply with breach notification laws could result in government enforcement actions and liability to affected individuals.

Future posts on this topic will delve in to further detail as to employee monitoring and privacy rights and data breach notification obligations.

Supreme Court Holds That Unaccepted Offer of Judgment Does Not Moot Class Action

Posted in Employment Policies and Practices, Wage and Hour

As many employers facing wage and hour class and collective actions are aware, defendant employers often attempt to make an offer of judgment to a named plaintiff in an attempt to moot class and collective actions.   On January 20, 2016, in Campbell-Ewald v. Gomez, 136 S.Ct. 663 (2016), the United States Supreme Court ruled that an unaccepted settlement offer made under Federal Rule of Civil Procedure 68 has no force or effect. Creative defense attorneys have been using the offer of judgment strategy following both the Supreme Court’s 2013 ruling in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) and the resulting split among the circuit courts on the issue. However, the Gomez court found that Genesis never actually endorsed the use of the strategy as the plaintiff there did not contest whether the offer mooted her claim in the lower courts. Thus, Genesis did not expressly rule on the question of whether an unaccepted settlement offer moots a named plaintiff’s claim and defeats a class or collective action.  Gomez has now answered that open question.

In Gomez, the plaintiff alleged that he had received unsolicited advertising text messages in violation of the Telephone Consumer Protection Act. Prior to the deadline for class certification, defendants made a settlement offer that if accepted would have provided Gomez with full relief. Gomez did not accept the offer and Campbell-Ewald argued that the unaccepted offer rendered the class action moot and required dismissal of the lawsuit. Both the District Court and the Ninth Circuit Court of Appeals rejected defendant’s argument. The Supreme Court affirmed the Ninth Circuit’s ruling and held that the unaccepted offer did not moot the individual named plaintiff’s claim and, therefore, did not defeat the class action.  In so holding, the Court reasoned that an unaccepted offer of settlement is only a proposal with no legal effect and the “parties remain[ed] adverse.” Interestingly, the Court left open the question of whether the “result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.”

With this ruling, the Court has eliminated one often-used defense strategy for employers facing potentially costly class and collective actions. This case highlights the importance of avoiding class and collective actions in the first place by understanding wage and hour laws and regulations, and implementing strategies for avoiding such class and collective actions including, for example, using class and collective action waivers and arbitration agreements.

Third Circuit Decides Two Precedential Employment Cases to Close Out November 2015

Posted in Harassment, Discrimination and Retaliation, Wage and Hour

Over a span of two weeks at the end of last month, the Third Circuit Court of Appeals issued two key opinions concerning oft-scrutinized areas of employment law — rights attendant to employer-employee relationships and application of the Fair Labor Standards Act (“FLSA”).

In the first of those cases, Fausch v. Tuesday Morning, Inc., the Third Circuit adopted and utilized the Darden test to assess whether a temporary employee, who was hired, paid and assigned to work at a certain retailer through a temporary staffing agency, had an employment relationship with the defendant-retailer that could give rise to the employee asserting Title VII discrimination claims.  In a 2-1 decision, the Court vacated a lower court denial of the plaintiff-temporary employee’s Title VII discrimination claims and remanded the matter, ruling that there was sufficient evidence in the record to conclude that the defendant-retailer was the plaintiff’s “joint employer” along with the staffing agency.  In reaching this conclusion, the Court analyzed the relationship between the parties under common-law agency principles, an analysis commonly referred to as the “Darden test.” The Darden test, first set forth by the United States Supreme Court in Nationwide Mutual Insurance Co. v. Darden, demands that courts generally assess the level of control and supervision that an employer exercises over the employees in question through a multi-factor, fact-intensive inquiry. For example, as the Court of Appeals noted in Fausch, the most important factors of the Darden test include “which entity paid the [employees’] salaries, hired and fired them, and had control over their daily employment activities.”  In applying the Darden test to the facts at hand, the Court concluded that while the plaintiff was paid by the staffing agency, “he worked under the direct supervision and control” of the defendant-retailer who indirectly paid the plaintiff’s wages, had the power to “eject” the plaintiff from its store and provided the plaintiff’s “assignments, directly supervised him, provided site-specific training, furnished any equipment and materials necessary and verified the number of hours he worked on a daily basis.” Such “joint employer” status subjected the defendant-retailer to discrimination claims from the plaintiff-temporary employee in the same way as a traditional employee, thereby equipping temporary employees in the Third Circuit with an expanded set of legal rights in the workplace.

Less than one week after the Fausch ruling, in another split decision in Babcock v. Butler County, the Third Circuit adopted the “predominate benefit test” to determine whether an employer must compensate a prison guard for 15 minutes of unpaid time during his/her one hour meal break. In affirming the lower court’s dismissal of the plaintiff’s FLSA claims, the Court ruled that, notwithstanding minor restrictions on the plaintiff’s meal break, such as requirements that the employee obtain permission before leaving the premises, remain in uniform, remain “in close proximity to emergency response equipment” and otherwise remain “on call to respond to emergencies,” the employer was not obligated under the FLSA to compensate the plaintiff for the unpaid time.  In so holding, the Court applied the predominate benefit test and assessed, by weighing the benefits each party received from the meal break, whether the employee’s time during the meal break “is spent predominately for the employer’s benefit or for the employee’s.”  The Court compared the restrictions on the plaintiff’s meal break to a number of other considerations, including that the plaintiff could leave the premises with permission, could eat away from his/her post, and, most compellingly, that the existence of a collective bargaining agreement between the parties provided for “a partially-compensated mealtime and mandatory overtime pay if the mealtime is interrupted by work.” Weighing these factors, the Court concluded that, on balance, the plaintiff was the primary beneficiary of the break and the 15 minutes of unpaid time was therefore not compensable time under the law.

Employers and employees should take note of these recent developments as these decisions will certainly impact employer-employee relationships throughout the Third Circuit going forward.

5 Things to Know About the U.S. Department of Labor’s Proposed Changes to the Fair Labor Standards Act

Posted in Wage and Hour

On June 30, 2015, the United States Department of Labor (“DOL”) released proposed regulations that would modify certain provisions of the Fair Labor Standards Act (“FLSA”), including the so-called “white collar exemptions.”  The proposed regulations were published in the Federal Register on July 6, 2015.

Given that the comment period following the DOL’s June 2015 proposed rulemaking closed on September 4, 2015, changes to the FLSA could be issued at any time, although the DOL has indicated that the Final Rule revised regulations are likely to be issued in July 2016.

Below are five (5) key things to know about the DOL’s proposed changes to the FLSA:

  1. The DOL proposes increasing the salary threshold for exempt employees to the 40th percentile of weekly earnings for full-time salaried workers, or $970/week or $50,440/year in 2016.
  2. The DOL proposes increasing the total annual compensation needed to meet the “highly compensated” employee exemption to $122,148/year.
  3. The DOL proposes having a mechanism in the regulation for automatically updating the compensation/salary threshold going forward to ensure that the compensation/salary provides a meaningful test to measure the exemption.
  4. The effect of these changes will be to increase the number of employees who are entitled to overtime pay.
  5. Penalties for misclassifying employees as exempt include back wages, liquidated (double) damages, and attorneys’ fees and costs.

Employers are well advised to take steps now to address and prepare for these changes and possibly heightened labor costs.  Strategies exist for containing these costs, but they should be tailored to each particular employment situation.

United States Supreme Court Tees Up Sequel to “Hobby Lobby” Decision

Posted in Employment Policies and Practices

As we previously reported, in June 2014, the U.S. Supreme Court confirmed in Burwell v. Hobby Lobby that closely-held corporations with religious owners could “opt out” from the Affordable Care Act’s (“ACA” or “Act”) requirement that they pay for insurance coverage of certain birth control when the particular contraception conflicts with the owners’ religious beliefs. Less than five (5) months later, the U.S. Supreme Court has agreed to review whether the process for opting out of the Act’s contraception mandate is permissible under the Religious Freedom Restoration Act (“RFRA”).

Under the “opt out” procedure currently in place, employers seeking an exemption from the contraception mandate must submit a form to their insurance plan or the U.S. Department of Health and Human Services concerning their objections. Typically, contraception coverage is then arranged for the employee at no cost to the employer. Some employers have objected to this process, arguing that this procedure violates the RFRA and the “opt-out” process renders the employer morally complicit in arranging contraception access for its employees.

District courts across the country have upheld the “opt-out” procedure, finding it permissible under the RFRA. Appeals have followed in several circuits, with the majority of the circuits rejecting arguments that the opt-out procedure substantially burdens religious freedom. The Eighth Circuit, however, took a different approach in September of this year, upholding orders from two lower courts finding that the opt-out procedure violated the RFRA and further finding that courts (and the government) must defer to employers’ “sincere religious belief that their participation in the accommodation process makes them morally and spiritually complicit in providing abortifacient coverage.”

This is the fourth time in five years that the Supreme Court will consider a legal challenge to the ACA.

Elizabeth Now the 10th City in New Jersey to Require Paid Sick Leave

Posted in Employment Policies and Practices

On November 3, 2015, voters in Elizabeth, New Jersey overwhelmingly approved a paid sick leave law that will require private employers to provide paid sick leave to employees. The law is anticipated to take effect on March 2, 2016. Elizabeth is New Jersey’s fourth largest city and joins Bloomfield, East Orange, Irvington, Jersey City, Montclair, Newark, Passaic, Paterson and Trenton, who have all adopted similar paid sick leave policies.

Elizabeth’s paid sick leave law will mirror those in other New Jersey municipalities.   Because Elizabeth has yet to post or publish a full copy of the new law, it is anticipated that the new law will allow employees who provide food service, child care or home health care services, or who work for employers with ten (10) or more employees, to accrue up to forty (40) hours of paid sick leave each calendar year. Employers in Elizabeth with fewer than ten (10) employees will be required to provide up to twenty-four (24) hours of paid sick leave each year. All employees will accrue one (1) hour of paid sick time for every thirty (30) hours worked. These paid sick days can be used by employees to care for themselves or other family members.

Employers with operations in Elizabeth should monitor the City of Elizabeth’s website for a full copy of the ordinance, and should thereafter undertake review of their current paid sick leave policies to determine compliance with the ordinance, including any notice and posting requirements. We will continue to monitor the paid sick leave law in Elizabeth for further developments.

New York Labor Law Wage Deduction Amendments Extended Through 2018

Posted in Employment Policies and Practices, Wage and Hour

On the eve of  November 6, 2015 expiration date, New York Governor Andrew Cuomo signed legislation earlier this week (Assembly Bill A07594/S05623) extending the effective date for the expanded list of permissible wage deductions that New York employers can make pursuant to New York Labor Law Section 193.  The current version of Section 193, which was amended in 2012, includes a wide range of categories of wage deductions that employers can withhold from employee wages, subject to employee approval.  Such permissible deductions include discounted parking passes, daycare expenses and gym membership dues, among others.  Potentially most useful for employers is their right under the amended Section 193 to recover for overpayments of wages to employees that resulted from mathematical or other clerical errors.

Earlier this year, we wrote in detail about the interplay of Section 193 and an employer’s wholesale failure to pay wages, available here.  While multiple Courts have determined that a total failure to pay does not constitute a violation of Section 193, in any event, New York employers will continue to enjoy the increased flexibility afforded under the amended version of Section 193 through its new effective date of November 6, 2018.

Effective Immediately, The New York City Fair Chance Act Substantially Restricts Employers’ Use of Criminal Background Checks

Posted in Employment Policies and Practices

The New York City Fair Chance Act (FCA) goes into effect today, October 27, and applies to any employers in New York City with four or more employees. The FCA amends the New York City Human Rights Law and significantly limits how employers in New York City may use an applicant’s criminal history in making employment decisions.

As we previously posted, the FCA contains, among other things, the following pre-offer restrictions:

  • Employers are prohibited from, either directly or indirectly, indicating that there is any limitation for a position based on a person’s arrest or criminal conviction record; and
  • Employers cannot make any inquiry into an applicant’s arrest or criminal conviction record until after extending a conditional offer of employment.

The FCA also contains restrictions on an employer’s ability to revoke a conditional offer based upon the results of a criminal background check. New York State law already restricts the ability of an employer to revoke a conditional offer. Under New York State law, a conditional offer may be revoked only after the employer considers specific factors enumerated in the Correction Law § 753 and determines, based upon those factors, that:

  1. There is a direct relationship between one or more of the previous criminal offenses and the … employment sought or held by the individual; or
  2. The granting or continuation of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

The FCA goes further than the existing state law and requires employers in New York City to provide an individual whose conditional offer is being revoked with the “analysis and factors used to make the decision” on a form created by the NYC Commission on Human Rights, which can be found here.

The FCA and the New York City Stop Discrimination in Employment Act (which prohibits most employers from considering an applicant’s credit history and was discussed in a previous post here) have significantly changed the ability of employers in New York City to use background checks in making employment decisions. New York City employers are well advised to seek legal counsel before making any adverse employment decisions based upon the results of a background check.