On July 6, 2012, the Fourth Department Appellate Division held that the 2008 amendments to the Wicks Law, including a requirement that contractors and subcontractors participate in apprentice training programs approved by the Department of Labor in order for a project labor agreement ("PLA") to qualify for an exemption from the Wicks Law, are valid and constitutional.

The Wicks Law requires that governmental entities in New York prepare separate bid specifications and award separate contracts for the plumbing, heating and ventilation, and electrical components of those publicly-funded construction projects that exceed their monetary cost threshold.  This requirement is often fiscally and administratively burdensome to the public entity.

In 2008, to alleviate some of that stress, the formerly uniform monetary threshold was modified to a three-tier system with trigger amounts of $3,000,000 for the five New York City counties, $1,500,000 for Nassau, Suffolk and Westchester, and $500,000 for all other counties.  Labor Law Section 222 was adopted at the same time, providing for a full exemption from the Wicks Law requirements where the project is covered by a qualifying PLA.  The statute defines a PLA as:

a pre-hire collective bargaining agreement between a contractor and a bona fide building and construction trade labor organization establishing the labor organization as the collective bargaining representative for all persons who will perform work on a public project, and which provides that only contractors and subcontractors who sign a pre-negotiated agreement with the labor organization can perform project work.

In order for the PLA to qualify the project for exemption, it must provide that each contractor and subcontractor participate in apprentice training programs approved by the Department of Labor.

In Empire State Chapter of Associated Builders and Contractors v. M. Patricia Smith, both the three-tier threshold and the apprentice training program requirement were challenged as unconstitutional.  The three-tier threshold was attacked, in part, upon the premise that it was enacted with procedural deficiencies that violated the home rule provisions of the New York State Constitution.  However, the Court held that the enactment bore a direct and reasonable relationship to a substantial State concern, and was a valid exercise of legislative power under Article IX of the Constitution.

The apprentice training program requirement was challenged as exclusionary.  According to the plaintiffs, it unfairly burdened contractors and subcontractors by requiring them to maintain apprentice training programs of their own, for all public projects meeting the new thresholds.  They argued that the legislation served to disqualify out-of-state contractors from large public construction projects, and inhibited a disproportionate number of minority-owned and women-owned businesses from qualifying for work on such projects.  The Court disagreed with the plaintiffs' interpretation of Labor Law Section 222.  The Court held that the apprentice training requirement is not universal, and applies only to those projects where the government entity has elected to utilize a PLA.  Further, the Court also held that any contractor or subcontractor entering into a qualifying PLA is deemed to be participating in an apprentice training program.  The individual contractors and subcontractors need not maintain an apprentice training program of their own.

In the aftermath of the Fourth Department's decision, it would be economically prudent for governmental entities to examine the feasibility of a PLA that complies with Labor Law Section 222 for their next public construction project.

Yesterday, an amendment to New York’s wage deduction statute – New York Labor Law Section 193 – passed both the New York State Senate and Assembly.  The amendment is expected to be signed by Governor Cuomo.  This legislation, if enacted, would permit employers to make a wider range of payroll deductions than currently enumerated in Section 193.

As we previously reported, the New York State Department of Labor has over the last couple of years issued several opinion letters which significantly narrow its interpretation of Section 193.  To summarize, NYSDOL has taken the position that a wage deduction is not permissible unless it is very similar to those expressly recognized in the statute as lawful (e.g., payments for insurance premiums, pension, or health and welfare benefits).  This interpretation varies from the NYSDOL’s historical focus on whether the deduction is for the “benefit of the employee.”

The pending amendment to Section 193 would expand the enumerated list of permissible wage deductions to include, among other things, deductions for:  (1) discounted parking costs; (2) certain mass transit costs; (3) gym membership dues; (4) certain cafeteria, vending machine, and gift shop purchases; (5) pharmacy purchases made at the employer’s place of business; (6) tuition, room, and board payments for educational pursuits; and (7) day care costs.  Notably for employers, the legislation would also permit the recovery of wage overpayments and wage advances by payroll deduction under certain circumstances and subject to future NYSDOL rulemaking.

We will continue to monitor this development and will provide additional details on our blog if and when the amendment is signed into law.

Employers in New York are well aware that the state agency that has jurisdiction over employment discrimination and harassment claims under the New York Human Rights Law (“NYRHL”) is the New York State Division of Human Rights (“Division”). The Division also has jurisdiction under the NYHRL to investigate and adjudicate certain other types of discrimination claims outside the employment context, such as alleged housing discrimination. However, in a recent case handled by Bond, Schoeneck & King on behalf of the Ithaca City School District (“ICSD”), the Division’s overly broad interpretation of its jurisdiction was curtailed by New York’s highest court. On June 12, 2012, the New York Court of Appeals held that the Division does not have jurisdiction over discrimination and harassment complaints filed by public school students under the NYHRL.

The case began in 2006, when a parent of a middle school student filed a complaint with the Division, alleging that her daughter had been subjected to racial harassment by other middle school students. The complainant alleged that ICSD was liable for the harassment under Section 296(4) of the NYHRL, which provides:

It shall be an unlawful discriminatory practice for an education corporation or association which holds itself out to the public to be non-sectarian and exempt from taxation pursuant to the provisions of article four of the real property tax law . . . to permit the harassment of any student or applicant, by reason of his race, color, religion, disability, national origin, sexual orientation, military status, sex, age or marital status . . . .

ICSD commenced a proceeding in Supreme Court, Tompkins County, under Article 78 of the Civil Practice Law and Rules, seeking an order prohibiting the Division from exercising jurisdiction over the complaint on the ground that a public school district is not an “education corporation or association” under Section 296(4) of the NYHRL. The court denied ICSD’s petition, and held that the Division could conduct a hearing regarding the complaint.

A hearing was held before a Division Administrative Law Judge (“ALJ”). The ALJ issued a recommended decision finding ICSD liable for the harassment of the student by other middle school students. The Commissioner of Human Rights adopted the ALJ’s recommended decision regarding liability, but reduced the amount of the ALJ’s recommended damages award to the student and her mother.

ICSD appealed the Commissioner’s decision on several grounds, including the same jurisdictional ground upon which the initial Article 78 proceeding had been based. This time, the Supreme Court, Tompkins County, granted ICSD’s appeal and annulled the determination of the Commissioner. The court held that ICSD was not an “education corporation or association” under the NYHRL and that the Division therefore lacked jurisdiction over the complaint.

The Division appealed the decision to the Third Department Appellate Division, which reversed and held that the term “education corporation or association” should be interpreted broadly to include public school districts such as ICSD.

ICSD appealed the Third Department’s decision to the New York Court of Appeals. In a 4-3 decision, the Court of Appeals reversed the Third Department and held that a public school district is not an “education corporation or association” under the NYHRL and that the Division does not have jurisdiction over complaints filed by public school students for alleged discrimination or harassment. The Court of Appeals thoroughly analyzed the legislative history of the term “education corporation or association,” and determined that the legislature never intended that term to include public school districts.

The Court of Appeals rejected the Division’s argument that the term “education corporation or association” should be liberally construed, stating that “it is evident from the legislative history that the term ‘education corporation or association,’ the origins of which can be traced to the Tax Law, refers to only private, non-sectarian entities that are exempt from taxation under [article four of the real property tax law].” The Court of Appeals also observed that a public school district would never need to “hold itself out to the public to be non-sectarian and exempt from taxation” as stated in Section 296(4) of the NYHRL because all public school districts are non-sectarian and all public school districts are exempt from taxation by virtue of the fact that they are public entities.

Accordingly, although the Division can still exercise jurisdiction over employment discrimination and harassment claims filed against public school districts under the NYHRL, it can no longer exercise jurisdiction over discrimination and harassment claims filed by public school students.

As we noted in our June 17, 2010 blog post, social networking sites have become a popular tool for employers seeking information about job applicants during the hiring process.  However, employers' efforts to obtain information that enables them to access their employees' and applicants' private social media web sites have recently been subject to increased scrutiny by New York State and Federal legislators.

On April 13, 2012, New York State Senator Liz Krueger sponsored and introduced a bill that would prohibit employers, as well as their agents or representatives, from requiring employees or job applicants to disclose log-in names, passwords, or other means for accessing a personal account or service through an electronic communications device.  This includes information such as private social media account log-in names and personal e-mail account passwords.  This proposed legislation would also prohibit employers from discharging, disciplining, or otherwise penalizing an employee, or failing to hire an applicant, based on the refusal to provide information that would enable the employer to access personal accounts or services through an electronic communications device.  The New York Attorney General would have the authority under the proposed legislation to enjoin employers from committing such unlawful practices, and employers could be subject to a $300.00 fine for a first offense and a $500.00 fine for each subsequent offense.

This proposed legislation comes just weeks after U.S. Senators Charles Schumer (D-NY) and Richard Blumenthal (D-CT) sent open letters to the Equal Employment Opportunity Commission and the U.S. Department of Justice urging the agencies to investigate employers' practice of requiring applicants to provide Facebook and e-mail passwords as a condition for job interviews.

Efforts to enact legislation similar to the New York bill are currently underway in several states.  In fact, Maryland recently became the first state to enact legislation that prohibits employers from requiring that employees or applicants disclose user names, passwords, or other means for accessing a personal account or service through an electronic communications device.

As we indicated in our June 17, 2010 blog post, employers should be careful even when viewing publicly available information regarding applicants on social media web sites.  Because Facebook and other similar web sites potentially contain a plethora of information about job applicants that employers cannot consider during the hiring process (e.g., race, national origin, religion, marital status, sexual orientation, etc.), employers should exercise caution in using social media web sites to screen applicants.  Employers who choose to use social media in the hiring process should promulgate a clear policy and procedure for utilizing this tool, and should closely follow the developments in this area of the law.

On December 13, 2011, the New York Court of Appeals held that an employee who drives his employer's vehicle, and has an automobile accident with an uninsured driver while driving his employer's vehicle during the course of his employment, is entitled to recover uninsured motorist benefits from his self-insured employer, notwithstanding the exclusivity provision of the New York Workers' Compensation Law.

In Matter of Elrac, Inc. v. Exum, Birtis Exum was employed by Elrac, Inc., and had an automobile accident while driving a vehicle owned by Elrac.  The other vehicle involved in the accident was driven by an individual who did not have automobile liability insurance.  Elrac was self-insured for automobile liability purposes, pursuant to Section 370(3) of the Vehicle and Traffic Law, so it had not obtained an insurance policy to cover the vehicle that Exum was driving.

Under Insurance Law Section 3420(f)(1), every motor vehicle liability insurance policy must contain a provision requiring payment to the insured of damages up to $25,000 in the case of injury and up to $50,000 in the case of death, in the event that the insured has an accident with an owner or operator of an uninsured motor vehicle.  Because Elrac was self-insured, Exum sought to recover those damages directly from Elrac.  Elrac argued that Exum was barred by the exclusivity provision of the Workers' Compensation Law from recovering uninsured motorist benefits, because Exum's injuries arose during the course of his employment.

The Court of Appeals disagreed with Elrac, holding that Exum's claim for uninsured motorist benefits submitted to his self-insured employer was not barred by the exclusivity provision of the Workers' Compensation Law because "[t]he situation is as though the employer had written an insurance policy to itself, including the statutorily-required provision for uninsured motorist coverage."  The Court of Appeals reasoned that Exum would have been able to recover uninsured motorist benefits from an insurance company if Elrac had not been self-insured, and determined that those same benefits were recoverable directly from Elrac.  Based on this reasoning, the Court of Appeals affirmed the Appellate Division's decision to allow Exum to proceed with his claim.

A bill has been introduced in the New York State Legislature that would, if enacted, repeal the annual wage notice requirement imposed by the Wage Theft Prevention Act ("WTPA").  The bill would leave intact the requirement that employers provide a wage notice to all new hires, as well as the requirement that employers obtain signed written acknowledgments of the new hire wage notices.  At this point, the bill is in its infant stages, and no vote has been taken.

The Business Council of New York State has submitted a memorandum in support of the bill, and has created a web page for employers to join in the effort to convince the New York State Legislature to repeal the annual wage notice requirement.

Effective August 15, 2010, a person convicted of driving while intoxicated (DWI) in New York is required as a condition of his or her probation or conditional discharge to install and maintain an ignition interlock device on any vehicle he or she owns or operates. The ignition interlock is a breathalyzer designed to prevent the vehicle from starting if the driver registers an alcohol content level. The new statute (Vehicle & Traffic Law § 1198), which is a provision of Leandra’s Law, also specifically addresses the individual’s operation of an employer’s vehicle.

Employer Rights and Obligations Under Leandra’s Law

Under the statute, an employer is not required to allow the individual to drive its vehicles, or to install ignition interlock devices in its vehicles. Rather, the statute is intended to ensure the employer has notice of the restriction on the employee’s license, and to then provide the employer with the option to allow the employee to drive its vehicles without an ignition interlock. The employee has the burden to notify the employer and to request written permission from the employer to operate its vehicles. Such permission is limited to the operation of the vehicle in the course and scope of employment for business purposes, and only applies to an employer that is not owned or controlled, in whole or in part, by the employee. If the employer grants permission for the employee to drive its vehicles, the employee must notify the court and probation officer that the employer has granted permission, and the employee must carry the written permission while operating the employer’s vehicle.

The statute also prohibits a person from knowingly leasing a vehicle to any individual who is subject to Leandra’s Law, which raises additional practical issues for employers whose employees regularly travel on business. What is not clear is whether employers will violate this leasing prohibition by granting permission to employees to operate vehicles the employer leases directly from a third party, or whether a court would conclude that the employer is free to grant permission because the leased vehicle is the equivalent of an employer-owned vehicle.

No provision of the statute compels the employer’s consent, and in many circumstances it may be reasonable and prudent to deny the employee permission to drive the employer’s vehicles (whether owned or leased). An employer that receives a request for permission should be mindful of the potential vicarious liability it would face under Vehicle & Traffic Law Section 388, if the employee injures a third party while driving in an intoxicated condition. There is also a potential for punitive damages arising from the employer’s knowing consent to the operation of its vehicle by an individual with a restricted license.

Discrimination Based on Criminal Conviction

Other than denying permission, any employment action based on the employee’s disclosure of a DWI conviction must be carefully considered. The New York Human Rights Law and Correction Law prohibit discrimination against an employee based on a criminal conviction unless: (i) there is a direct relationship between the individual’s criminal offenses and the specific employment sought or held: or (ii) the employment would create an unreasonable risk to property or to the safety or welfare of specific individuals or the general public. The statutes require an individualized, multi-factor evaluation by the employer before making an adverse employment decision based on an employee’s criminal conviction record.

Reasonable Accommodation Obligation

Alcoholism can be a covered disability, but the mere fact that an individual has been convicted of DWI and is subject to an ignition interlock restriction will not establish his or her disabled status under either state or federal law. However, to the extent the employee: (i) asserts that he or she suffers from a disabling condition, such as alcoholism; (ii) contends that he or she is able to perform the essential functions of the position; and (iii) identifies the ignition interlock as a potential reasonable accommodation; the employer will need to evaluate its obligations under the Americans with Disabilities Act and the New York Human Rights Law.