We have posted previously on the amendments to New York Labor Law Section 195, the so-called Wage Theft Prevention Act, which creates certain employer obligations to notify employees of their wage rates and other information. As the April 9, effective date approaches, employers should be preparing to provide the following notifications and information.

Notification at Time of Hire

Whenever a new employee is hired, Section 195 now requires employers to provide the following information to each new hire before the new hire begins work:

• Rate or rates of pay
• Basis of pay (e.g. hourly, shift, day, week, salary, piece, commission, or other)
• Allowances, if any, claimed against the minimum wage (e.g., tips, meals, lodging)
• Identification of the regular pay day.
• Name of employer (including any doing business as name)
• Address and phone of employer
   

Acknowledgement of Receipt by Employee

In addition, the statute requires employers to obtain an employee acknowledgement of receipt of the information. That acknowledgement must be in English and the employee’s primary language. The acknowledgement must include an affirmation by the employee that the employee accurately identified to the employer his/her primary language, and that the notice was in the language so identified. In order to comply with this requirement, the employer will have to ask each employee what his/her primary language is before the notice is provided. Due to non-discrimination concerns, employers should not obtain this information before an offer of employment is made.

Commissioner’s Templates

The statute requires the Commissioner of Labor to prepare dual language templates for the notice and acknowledgement. The statute does not state that employers must use them, but if they do, they will not have any liability for mistakes made in the primary language. As of this date, the templates are not available.

Electronic Notices

According to a 2010 New York Department of Labor opinion letter on the pre-amendment Section 195, notice and acknowledgement may be electronic if:

1. the employee can access a computer and print a copy of the notice at any time and at no cost;
2. affirmative steps are required by the employee to acknowledge receipt of the notice (i.e., an employer cannot rely on passive receipt of an e-mail); and
3. the acknowledgement includes statements ensuring that the employee has received and reviewed the notice and that the employee is aware that his/her actions have legally significant consequences.

Annual Notices

The statute also requires employers to provide notices to all employees on or before February 1 of each subsequent year of employment. The annual notice content and acknowledgement requirements are identical to the requirements for a new hire notice.

Wage Statement Requirements

The amendments to Section 195 also mandate the inclusion of certain information in all employee wage statements. Nothing in the statute prohibits an electronic statement. There are no acknowledgement or primary language requirements.

For all employees the following information is required with every payment of wages

• Name of employee
• Name of employer
• Employer’s address and phone
• Rate or rates of pay
• Basis of rate of pay (hourly, shift, day, week, salary, piece, commission or other)
• Gross wages
• Deductions
• Allowances, if any are claimed as part of the minimum wage (tips, meals, lodging)
• Net wages

For non-exempt employees, the following additional information must be provided.

• Regular hourly rate or rates
• Overtime rate or rates
• Number of regular hours worked
• Number of overtime hours worked

Notification of Changes

Finally, whenever any of the information provided in either the new hire notice or the annual notice is changed, the employer must notify the employee in writing at least 7 calendar days before the change. This notification is not necessary if the changed information is reflected in the employee wage statement described above. Nothing in the statute prohibits electronic notification of changes, and there is no primary language requirement.
 

On December 21, 2010, New Jersey Governor Chris Christie signed legislation establishing a 2% cap on the aggregate increase in base salary per year that can be provided in an interest arbitration award. The New Jersey law may serve as a model for a similar effort in New York. Since he has taken office, New York Governor Andrew Cuomo has vowed to introduce changes to reduce the cost of State and Local government. He has stated that “New York is at a crossroads, and we must seize this opportunity, make hard choices and set our state on a new path toward prosperity…We simply cannot afford to keep spending at our current rate. Just like New York's families and businesses have had to do, New York State must face economic reality.” In order to achieve his cost saving measures, Governor Cuomo has introduced legislation calling for a 2% cap on property taxes. In addition, he has established by Executive Order a Mandate Relief Redesign Team as well as theSpending And Government Efficiency (Sage) Commission which will conduct a rigorous and comprehensive review of mandates imposed on local taxing districts and government spending “with the goal of saving taxpayer money, increasing accountability and improving the delivery of government services.”

With Governor Cuomo calling for such wide-reaching changes, and groups such as the New York Conference of Mayors (NYCOM) calling for the Governor to implement changes to Interest Arbitration (e.g., redefining “ability to pay”, prohibiting the consideration of non-economic items, limiting the number of times that a union can consecutively go to interest arbitration), it is possible that legislation similar to that signed by Governor Christie in New Jersey will be introduced in New York. In fact, former Gubernatorial candidate and Suffolk County Executive Steve Levy has already publicly embraced New Jersey’s 2% interest arbitration cap, and has indicated that he plans to call on the New York State Legislature to enact similar legislation. According to Mr. Levy, such a cap would, “save the county of Suffolk between $7 million and $10 million per year for the police force alone, considering the police union received a 3.5 percent increase in the most recent round of mandatory arbitration.”
 

What Does the New Jersey Legislation Provide?

The 2% cap – which mirrors New Jersey’s 2% cap on property tax increases – provides that an arbitrator shall not render an award which, on an annual basis, increases base salary items by more than 2% of the aggregate amount expended by the public employer on base salary items. The legislation provides that the aggregate monetary value of the interest arbitration award does not have to be distributed in equal annual percentages over the life of the agreement. Therefore, the monetary value of an award may exceed 2% in an individual contract year, provided that the monetary value of the award in the other contract year(s) is adjusted so that the aggregate monetary value of the award over the term of the agreement does not exceed the maximum 2% increase.

As defined by the new legislation, “base salary” means “the salary provided pursuant to a salary guide or table and any amount provided pursuant to a salary increment, including any amount provided for longevity or length of service.” Also included in an employee’s “base salary”, and therefore subject to the 2% cap, are “any other item agreed to by the parties, or any other item that was included in the base salary as understood by the parties in the prior contract.” The legislation specifically excludes from “base salary non-salary economic issues such as pension, health and medical insurance costs.” Non-salary economic issues are defined by the legislation as any economic issue that is not included within the definition of base salary. The legislation also prohibits an arbitrator from awarding “base salary items and non-salary economic issues which were not included in the prior collective negotiations agreement.”

In addition to the 2% cap, the legislation makes several other changes to the overall interest arbitration process: capping the fees that an arbitrator can receive; randomizing the arbitrator selection procedure if the parties cannot agree to an arbitrator; requiring that arbitrators receive yearly ethics training; allowing a party to file a petition with the Public Employment Relations Commission (PERC) alleging that the other side is not negotiating in good faith; and vesting PERC with the ability to assess the non-prevailing party the cost of all legal and administrative costs associated with the filing and resolution of the petition.

The entirety of the legislation, not just the 2% base salary cap, sunsets after 39 months. The legislation also establishes an eight-member task force designed to study the effect and impact of the changes made by the legislation. This task force will presumably make a recommendation as to whether the changes to the interest arbitration process should be continued once the legislation sunsets.
 

An appellate court in California recently held that an employee’s email exchanges with an attorney via the employee’s work email account were not protected by the attorney-client privilege, Holmes v. Petrovich Development Co. According to the Court’s opinion, when Gina Holmes began working for Petrovich Development Co., she read and signed the company’s employee handbook, which contained a policy regarding use of the company’s technology resources. The policy advised employees that: (1) the company’s technology resources, such as computers and email accounts, were for business purposes only; (2) employees had no expectation of privacy in the information or messages “created or maintained” on the company’s technology resources, including any emails sent or received on a company email account; and (3) the company could “inspect all files or messages … at any time for any reason at its discretion” and would periodically monitor files and messages. When Holmes got into an argument with the CEO about becoming pregnant a month after being hired, she exchanged two emails with an attorney via her company email account in which she explained her situation and asked about her rights. The next day, and after meeting with the attorney, Holmes quit her job claiming a hostile work environment and constructive discharge.

Holmes subsequently brought suit against the company. The trial court granted summary judgment dismissing some of her claims, and a jury found for Petrovich on the remaining claims, including invasion of privacy.  On appeal, Holmes argued, among other things, that the trial court erred in permitting the e-mails to her attorney to be entered in evidence, contending they were protected by the attorney-client privilege. Such communications between an attorney and client can be privileged. For example, in Stengart v. Loving Care Agency, Inc., emails sent by an employee at work via her personal email account were held to be privileged where the employer’s policy permitted employees to use company computers for “occasional personal use.” In Holmes, however, the Court held that because Holmes had been advised of the company’s technology resources policy before the emails were exchanged, but nonetheless chose to engage in an email exchange via her company email account, Holmes’ emails with the attorney were not privileged. As the Court held: “… the e-mails sent via company computer under the circumstances of this case were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by [her employer]. By using the company’s computer to communicate with her lawyer, knowing the communications violated company computer policy and could be discovered by her employer due to company monitoring of e-mail usage,” the emails lost any protection they otherwise would have had.

While the question of whether attorney-client communications over an employer’s computer network are protected is not a settled issue, and turns on the facts of the case, the lesson to employers from the Holmes case is clear. Employers should institute and disseminate to employees an appropriate technology resources policy that makes clear employees have no right to privacy in the emails they send or receive via an employer email account and that such emails can be monitored by the employer at any time.
 

The United States Department of Labor announced recently that its Office of Labor-Management Standards will begin collecting data on employers and their representatives who are involved in representation cases before the National Labor Relations Board. The initiative, termed the Persuader Reporting Orientation Program or “PROP,” may be part of the Department of Labor’s efforts to stem the tide of union losses in organizing campaigns. We reported previously on the Agency’s plan to revise the longstanding interpretation of the “advice exception” to reporting obligations under the Labor-Management Reporting and Disclosure Act (“LMRDA”) 29 U.S.C. § 433.

Pursuant to PROP, the Office of Labor-Management Standards will review certain petitions filed with the National Labor Relations Board. It will then send what the Agency calls an “orientation letter” to the employer and its representative, “informing them of their potential reporting obligations under the LMRDA.” Under the LMRDA, an employer is required to file an annual report with the federal government in which it discloses agreements (and associated payments), where a purpose of the agreement is to persuade employees with respect to their right to organize. A willful failure to file such reports can result in criminal liability.
 

An employer may be less likely to spend money on third party advisors in connection with an organizing campaign if it is required to disclose those expenditures. The Agency’s efforts to increase disclosure thus appear to be designed to provide a disincentive for employers to use third parties to assist in opposing an organizing campaign.

Coincidentally, the day after the Department of Labor announced the PROP initiative, the United States Bureau of Labor Statistics issued a press release indicating that the percentage of unionized private sector workers in the United States had dropped to 6.9% in 2010, the lowest level since records have been kept. New York, however, is the most heavily unionized state in the nation, with 24.2% of public and private sector employees represented by unions. North Carolina has the lowest percentage, 3.2%.
 

On December 15, 2010, we reported that former New York Governor David Patterson signed the Wage Theft Prevention Act (the “Act”) into law on December 13, 2010. Because the Act states that it shall take effect 120 days after it is signed into law, we reported the effective date as Tuesday, April 12, 2011. However, it appears that Governor Patterson signed the Act twice – first on December 10, 2010 and then again during a public ceremony on December 13. Because the Act was first signed into law on December 10, 2010, the effective date is actually Saturday, April 9, 2011. As a result, employers must implement the Act’s new notice, employee acknowledgment and record retention requirements by April 9, 2011. Because implementation may require significant changes in current policies and procedures, employers should begin a review of payroll and wage notification practices now.

As many employers are aware, under the Federal Worker Adjustment and Retraining Notification (“WARN”) Act, employers must provide affected employees with 60 days’ written notice of a plant closing.  In Collins v. Gee West Seattle, the Ninth Circuit Court of Appeals had the opportunity to decide whether employees who left their employment after learning that their company was closing “voluntary departed” under WARN, thereby excusing the employer from sending out WARN notices.

In that case, Gee West, a car dealership that employed approximately 150 employees, experienced severe financial losses in July 2007, and decided to sell the company. Despite its efforts, the business was not sold, and on September 26, Gee West announced that it was closing 11 days later, on October 7. After the announcement, employees stopped going to work, and only 30 employees were present the day the plant closed.
 

The employer argued that it was not required to give WARN notice because at the time of the closing there were only 30 employees who suffered an employment loss -- not 50 as required by WARN. (The statute's 60-day notice requirement applies where the shutdown of a plant results in “an employment loss at the single site of employment during any 30-day period for 50 or more employees”). According to the employer, the other 120 employees had “voluntarily departed” prior to the closing and therefore had not suffered an employment loss.  WARN defines an employment loss as a termination of employment for reasons other than, among other things, a voluntary departure.

The Ninth Circuit rejected the employer's  argument, finding that “[e]mployees’ departure because of a business closing … is generally not voluntary, but a consequence of the shutdown and must be considered a loss of employment when determining whether a plant closure has occurred.” Therefore, Gee West was required to give 60-day notice to all 150 affected employees who the company reasonably expected would lose their jobs as a result of the closing on October 7.

In light of this case, employers should be aware that even if an employee’s departure after the announcement of a plant closing seems “voluntary,” a court may view it differently, and determine whether WARN applies based on the number of employees at the time of the announcement, not the actual closing.
 

On December 22, 2010, the Departments of Labor, Health and Human Services, and Treasury (collectively, the "Departments") issued their fifth set of answers to several frequently asked questions ("FAQs") about the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act ("PPACA"). The FAQs also address the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA") and the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") nondiscrimination rules for wellness programs. The FAQs are described below.

The Patient Protection and Affordable Care Act

The PPACA encompasses many different approaches to reducing the number of Americans with little or no health insurance coverage. The legislation includes mandates on employers, individuals, and providers, amendments to the Internal Revenue Code, and many other changes.

Cost Control for Preventive Care Benefits

The PPACA generally requires that group health plans cover recommended, in-network preventive services without any employee cost sharing. The Departments issued interim final regulations on July 14, 2010 addressing the requirement, but there have been lingering issues about a plan's ability to control costs. The FAQs confirm that the PPACA allows plans to steer enrollees toward more cost-efficient service providers through value-based insurance designs ("VBID"). The FAQs provide an example of a permissible VBID. The PPACA would allow a group health plan to have no copayment for preventive services performed at an in-network ambulatory surgery center, but have a $250 copayment for the same services performed at an in-network outpatient hospital, because the outpatient hospital is a higher-value setting. The Departments add that further guidance is forthcoming.
 

Automatic Enrollment for New Employees

The PPACA requires employers with more than 200 full-time employees to automatically enroll new full-time employees in the employer's health plan. However, the FAQs clarify that employers are not required to comply with this mandate until the Employee Benefits Security Administration promulgates regulations, which will be sometime before 2014.

Notice of Plan Modifications

The PPACA requires group health plans to provide 60 days notice to enrollees before making material modifications to the plan's terms or coverage if they were not reflected in the most recent summary of benefits and coverage. However, the FAQs explain that employers are not required to comply with this mandate until the Departments issue standards for plans to follow for compiling and providing a summary of benefits and coverage.

Varying Coverage Based on Age

The PPACA provides that group health plans providing dependent coverage for children cannot vary such coverage based on age (except if they are 26 or older). The FAQs point out, however, that the PPACA permits varying coverage based on age that applies to all enrollees, including employees, spouses, and dependent children. An example in the FAQs suggests that a plan could charge a copayment for non-preventive care to all enrollees age 19 and over, but waive it for those under 19. However, it could not charge a copayment to dependent children age 19 and over, but waive it for those under 19.

Grandfathered Health Plans

The PPACA provides that group health plans existing as of March 23, 2010, called "grandfathered plans," are not subject to certain PPACA provisions as long as they do not make specific plan changes outlined in PPACA regulations. A plan that makes such changes would lose its grandfather status. The FAQs address the scenario where a grandfathered plan has a fixed cost-sharing requirement other than a copayment, such as a deductible or out-of-pocket spending limit, which is calculated based on a formula that includes a fixed percentage of an employee's compensation. The FAQs conclude that, if the formula remains the same as it was on March 23, 2010, a compensation increase that causes a cost-sharing increase under the formula would not cause the plan to lose grandfather status, even where the cost-sharing increase exceeds the PPACA regulatory threshold.

Mental Health Parity and Addiction Equity Act of 2008

If plans provide mental health and substance use disorder benefits, the MHPAEA generally requires that financial requirements and treatment limitations for such benefits cannot be more restrictive than for medical and surgical benefits.

Small Employer Exemption

Group health plans subject to ERISA and the Internal Revenue Code are exempt from the MHPAEA as a "small employer" if they have 50 or fewer employees, preempting any State insurance law definition of small employer. The FAQs note, however, that for nonfederal government plans the PPACA applies, and it defines "small employer" as one that has 100 or fewer employees.

Increased Cost Exemption

The Departments explain in detail how the cost exemption works. The MHPAEA provides that if a plan makes changes to comply with the MHPAEA and incurs a 2% or greater cost increase in the first year the MHPAEA applies to it, or a 1% or greater cost increase in any year after the first year, then the plan is exempt from the MHPAEA the following year (that is, the year after the cost increase was incurred). The exemption lasts for one year, and then the plan must comply again. However, the plan could incur another cost increase of 1% or greater due to compliance-related changes and be exempt the following year. When calculating the cost increase percentage, the plan should include increases in the plan's portion of cost sharing as well as non-recurring administrative costs (for example, adjusting computer software), which should be appropriately amortized. Plans must further demonstrate that cost increases are directly attributable to MHPAEA compliance rather than utilization or price trends, random claim experiences, or seasonal variations in claims processing. The FAQs clarify that, until the Departments issue regulatory guidance on how the increased cost exemption will be implemented, plans can follow the procedures outlined in their earlier 1997 regulations to claim the exemption.

HIPAA and Wellness Programs

HIPAA regulations generally prohibit discrimination in eligibility, benefits, or premiums based on employee health. Where wellness programs require employees to meet a certain health standard (such as losing weight) to obtain a reward (such as lower premiums), they must satisfy HIPAA's nondiscrimination requirements. There are five requirements: (1) the total reward cannot exceed 20% of the total cost of coverage; (2) the program must be reasonably designed to promote health or prevent disease; (3) the program must provide employees an opportunity to qualify for the reward at least once per year; (4) the reward must be available to all similarly situated employees, which means there must be a reasonable alternative standard for employees with a health condition that makes it unreasonably difficult for them to satisfy the original standard; and (5) the alternative standard must be published in all plan materials. The PPACA incorporates these nondiscrimination rules, except that it changes the maximum reward from 20% of the total cost of coverage to 30%. The Departments intend to propose regulations before 2014 that implement this percentage change, as well as consider other nondiscrimination rules.

Independent Wellness Programs

The FAQs clarify that the nondiscrimination rules only apply to wellness programs that are part of a group health plan and not those that are operated independently as a separate employment policy. The FAQs list examples of independent programs, which include subsidizing healthier cafeteria food and gym memberships, providing pedometers (to encourage walking and exercise), and banning smoking in the workplace. Note, however, that these independent programs may still be subject to Federal or State nondiscrimination laws.

Meeting Health Standard as Condition of Reward

The FAQs explain that the nondiscrimination rules only apply to wellness programs that require employees to meet a certain health standard to obtain a reward. The FAQs provide two examples of programs that do not contain such a standard and thus are not subject to the nondiscrimination rules. In the first example, a group health plan offers, as part of its wellness program, an annual premium discount of 50% of the cost of coverage to employees that attend a monthly health seminar. The FAQs conclude that, because employees do not have to meet a health standard to obtain the discount, the nondiscrimination rules are inapplicable -- including the rule limiting the reward amount to 20% of the cost of coverage. In the second example, a group health plan offers, as part of its wellness program, to reimburse employees for their monthly gym membership fee. The FAQs conclude that the nondiscrimination rules are inapplicable because the employees are not required to meet a health standard to obtain the reimbursement.
Application of the Nondiscrimination Rules

The FAQs provide an example of how to apply the nondiscrimination rules. The example is a group health plan that offers, as part of its wellness program, a discount of 20% of the cost of coverage to employees that achieve a cholesterol count of 200 or lower. The plan also states that if the employee has a health condition making it unreasonably difficult for them to satisfy the cholesterol count within a 60-day period, then the plan will create a reasonable alternative standard. The FAQs conclude that, although the plan requires employees to meet a health standard and is therefore subject to the nondiscrimination rules, it does not violate them because the total reward does not exceed 20% of the total cost of coverage, and the reward is available to all similarly situated individuals because it includes a reasonable alternative standard.

 

Miriam Regalado and her fiancée Eric Thompson worked for North American Stainless (NAS). Regalado filed a sex discrimination charge against NAS with the EEOC. Three weeks later, NAS fired Thompson. Those were the facts presented to the United States Supreme Court when it unanimously decided on January 24, that Thompson could bring a Title VII retaliation claim against NAS even though Thompson never engaged in Title VII protected activity. The Supreme Court’s holding in the case, Thompson v. North American Stainless, LP, effectively broadens the scope of Title VII’s anti-retaliation provisions to protect individuals who have a significant association with or relation to employees who have engaged in protected conduct.

Of course, Title VII makes it illegal for an employer to “discriminate” against an employee who files a charge with the EEOC. But Thompson never filed a charge, Regalado did. The Court surmounted this difficulty by finding that Title VII’s anti-retaliation provision should be construed to prohibit a broad range of employer conduct – a range of conduct much broader than actions which affect the terms and conditions of employment of the employee who filed the charge. Quoting from its decision in Burlington N. & S.F.R. Co. v. White, 548 U.S. 53 (2006), the Court reiterated that “discrimination” under the anti-retaliation provision includes any employer action that “well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The Court then concluded logically that “a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancée would be fired.” The Court acknowledged that its decision might create difficulty in determining precisely which types of relationships will be sufficient to conclude that retaliation against the third party would dissuade the individual who engaged in protected activity, but declined to provided a bright line rule. It stated that firing a close family member will “almost always” meet the standard, and retaliating against a “mere acquaintance” will almost never meet it, but declined to provide further guidance.
 

Finding that the firing of Thompson could be illegal retaliation against Regalado, did not, however, end the inquiry. After all, it was Thompson, not Regalado, who sued for retaliation. To answer the question of whether Thompson could bring a claim against NAS, the Court had to determine what the term “person aggrieved” means in the Title VII provision which permits a “person aggrieved” to bring an action in court. In deciding that question, the Court rejected NAS’s argument that it means the employee who was retaliated against. Instead, the Court concluded that the term means anyone with an interest which Title VII arguably seeks to protect. Thompson fell within this zone of interests because Title VII is designed to “protect employees from their employers’ unlawful actions.” Because, assuming NAS’s motive was retaliatory, NAS tried to punish Regalado by harming Thompson, Thompson was within the Title VII zone of interests. So even though it was Regalado, not Thompson, who suffered illegal retaliation when Thompson was fired, Thompson was still a “person aggrieved” who was allowed to sue. It thus appears that the zone of interests test can be satisfied any time the employer’s action against a third party constitutes prohibited retaliation, thereby allowing the third party to bring a claim.

The significance of the Court’s decision is obvious: the holding invites more retaliation claims by persons “associated with” an employee who has engaged in Title VII protected activity. Essentially, the Court has created a new protected classification, the definition of which is unclear. As a result, an employer must now carefully consider the potential for a retaliation claim any time it takes any adverse employment action against someone, particularly family members, “associated with” an employee who has engaged in protected activity.
 

We have previously posted on the early retirement incentive for employees represented by collective bargaining units affiliated with the New York State United Teachers (“NYSUT”) who belong to either the New York State Employee Retirement System or the New York State Teachers Retirement System (“TRS”), are at least 55 years of age, and have attained at least 25 years of creditable service (“55/25 Legislation”). The 55/25 legislation allows eligible employees to retire without the reduction in retirement benefits that would normally apply to retirement system members who are on Tiers 2, 3, or 4 who do not have 30 years of service.  The legislation recently survived another court challenge to its constitutionality.

Two days after the 55/25 Legislation was signed into law, the Empire State Supervisors and Administrators Association (“ESSAA”), a union that represents primarily administrators and supervisors in public school districts, and one of its local unions, challenged the 55/25 Legislation in court. The ESSAA contended that the statute violates its members’ rights to equal protection and freedom of association under the United States and New York State Constitutions, by limiting eligibility only to individuals who are employed in positions represented by collective bargaining units affiliated with NYSUT.
 

The trial court found the legislation constitutional, and the ESSAA appealed to the Appellate Division, Third Department. On January 20, 2011, the Appellate Division unanimously affirmed the trial court’s decision. The Appellate Division held that a rational basis exists for distinguishing between employees in NYSUT-affiliated bargaining units and employees not in NYSUT-affiliated bargaining units. Specifically, the Appellate Division accepted the argument, advanced by NYSUT and the State, that replacing administrators and supervisors (the vast majority of the employees in ESSAA bargaining units) is not as financially advantageous as replacing older classroom teachers. Supervisors and administrators are usually replaced by individuals closer in seniority (and salary) to the incumbents, while older classroom teachers are usually replaced by newer teachers who can be paid significantly less than the incumbents.

For those teachers who retired under the 55/25 Legislation, TRS has indicated that payment of the unreduced retirement benefit is subject to the final outcome of any appellate process. Accordingly, those teachers who retired under the 55/25 Legislation must wait and see whether the Appellate Division’s decision is appealed, and if so, whether the Court of Appeals accepts the appeal and affirms the Appellate Division. The ESSAA has 30 days from the date of the Appellate Division’s decision to decide if it will apply for permission to appeal to the New York Court of Appeals.
 

The New York State Department of Labor’s Hospitality Industry Wage Order, which is intended to combine and replace the Wage Orders formerly applicable to the Restaurant Industry and Hotel Industry, became effective on January 1, 2011. The Department of Labor has issued a notice to employers that it will exercise discretion with regard to enforcement until February 28, 2011, in order to allow employers sufficient time to come into compliance, but expects that employees covered by the Wage Order will be paid any additional wages owed to them by March 1, 2011 or the next regularly scheduled pay day after March 1, 2011. The additional wages must be computed retroactively to January 1, 2011. Employers covered by the Wage Order are required to post a notice to employees regarding the implementation period and their right to retroactive payment of wages.

The Wage Order makes several changes to the rules governing the payment of wages to employees in restaurants and hotels. Some of the significant changes are described below.
 

Tip Credit

Under the former Restaurant Industry Wage Order, employers were required to pay food service workers at least $4.65 per hour, as long as the tips received by those workers added to their hourly wages equaled or exceeded the minimum wage of $7.25 per hour. Under the new Hospitality Industry Wage Order, food service workers must receive an hourly wage of at least $5.00 per hour, as long as the amount of their tips added to their hourly wages is sufficient to equal or exceed the minimum wage. Service employees who do not work in resort hotels must be paid at least $5.65 per hour (up from a minimum of $4.90), as long as the amount of their tips added to their hourly wages is sufficient to equal or exceed the minimum wage. In resort hotels, service employees may be paid a minimum of $4.90 per hour (up from $4.35) as long as the weekly average of their tips is at least $4.10 per hour.

In order to pay the reduced minimum wage to a tipped employee, employers must notify the employee of any tip credit that will be taken as part of its new hire notice. If any changes are made to the employee’s hourly wage, a new notice must be provided containing the same information.

If a tipped employee works in a non-tipped occupation for two hours or more in a day, or for more than 20% of his or her shift during a day, the employer is not entitled to take any tip credit for any hours worked during the day, and must pay at least the full minimum wage of $7.25 per hour for all hours worked.

Tip Pooling and Tip Sharing

Employers covered by the Wage Order may require directly tipped food service workers to share their tips with other food service workers who participated in providing the service to customers and may set the percentage to be given to each occupation. Employers may also require food service workers to participate in a tip pooling arrangement. Only certain types of employees are eligible to receive shared tips or distributions from a tip pool. Those occupations include: (1) wait staff; (2) counter personnel who serve food and beverages; (3) bus persons; (4) bartenders; (5) service bartenders; (6) barbacks; (7) food runners; (8) captains who provide direct food service to customers; and (9) hosts who greet and seat guests. Employers are required to keep detailed records relating to tip sharing or tip pooling arrangements for at least six years.

Call-In Pay

The Wage Order provides that an employee who reports for duty by request or permission of the employer must be paid at his or her “applicable wage rate” for at least three hours if called in for one shift, six hours if called in for two shifts, or eight hours if called in for three shifts. The phrase “applicable wage rate” is defined as the employee’s regular or overtime rate of pay, whichever is applicable, minus any customary and usual tip credit. This is a change from the former Wage Orders, which required payment at the “applicable minimum wage rate.”

Spread of Hours

Under the Wage Order, any employee whose spread of hours from the beginning to the end of the work day exceeds ten is entitled to an additional hour of pay at the basic minimum hourly wage rate, regardless of the employee’s regular rate of pay. Therefore, employers are no longer permitted to a take a credit toward this spread of hours payment for wages paid to an employee in excess of the minimum wage for the other hours worked in the day.

Uniforms

The uniform maintenance allowance amounts remain the same under the Wage Order, but two exceptions have been created. First, under the “wash and wear” exception, an employer is not required to provide any uniform maintenance allowance if the uniforms: (1) are made of “wash and wear” materials; (2) can be washed and dried with other garments; (3) do not require ironing, dry cleaning, daily washing, commercial laundering, or other special treatment; and (4) are furnished in sufficient number consistent with the average number of days per week worked by the employee. Second, an employer is not required to provide any uniform maintenance allowance if it informs the employee in writing that it will launder the uniforms free of charge and the employee chooses not to use the employer’s laundry service.

Meal Credit

The amount of credit that an employer in the hospitality industry may take for providing an employee with a meal has been increased from $2.10 to $2.50 per meal.
 

Last month we posted on the EEOC’s GINA regulations and discussed the inadvertent disclosure exception and family medical history. This post follows up by discussing the impact of the regulations on FMLA certifications and by providing some recommended affirmative steps employers should take now.

As we discussed last month, the regulations recognize that employers may inadvertently obtain genetic information when they request that health care providers complete certification forms to support a leave under the Family and Medical Leave Act (“FMLA”) or an accommodation under the Americans with Disabilities Act (“ADA”). The regulations, however, create a “safe harbor” for employers who use the following language when requesting medical information to certify an employee’s own serious health condition under the FMLA:
 

The Genetic Information Nondisclosure Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. ‘Genetic Information’ as defined by GINA, includes an individual’s family medical history, the results of an individual’s or family member’s genetic tests, the fact that an individual or an individual’s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual’s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.

Employers should not use the “safe harbor” language when they are requesting information to certify a family member’s serious health condition, as opposed to the employee’s own serious health condition. GINA includes an additional exception that allows employers to ask for “family medical history” when seeking certification of a family member’s serious health condition.

In light of the new GINA regulations, employers should take affirmative steps to reduce the risk of inadvertently obtaining genetic information about their employees, including the following:

• Update FMLA certification forms to include “safe harbor” language, when appropriate.
• Include “safe harbor” language on other requests for medical information, such as requests for documentation of an employee’s need for an accommodation and fitness-for- duty certification.
• Inform health care providers not to gather family medical history or other genetic information during fitness-for-duty examinations or during medical examinations to certify an individual’s ability to perform his or her job.
• Educate HR personnel, managers and supervisors about what constitutes protected genetic information and how to avoid making inadvertent requests for such information.
• Ensure that internal policies and procedures comply with the new GINA regulations.
• Review workplace “wellness programs” to ensure that the health assessment and other forms do not require the disclosure of genetic information without the employee’s prior voluntary, knowing, and written authorization.
• Post the new EEO poster which contains added information about GINA.
• Ensure that the genetic information, like medical information, is maintained in a confidential file, separate from the employee’s personnel file.
   

Sensibly, the EEOC does not make any effort to conceal its enforcement “playbook.” To the contrary, it publishes an annual Performance and Accountability Report so that employers and other stakeholders will have a better understanding of how the agency has used, and intends to use, its financial and human resources. The 2010 Performance and Accountability Report, released in mid-November 2010, contains the EEOC’s assessment of its performance as the federal agency with the broadest responsibility for enforcing the civil rights laws. Based on information contained in the report, a few general observations about the direction of the Agency can be made.

1. The EEOC’s Financial and Human Resources Continue To Grow.

For fiscal year 2010, the EEOC received a $367.3 million appropriation (a 7% annual increase). Most of this increased funding was used to add personnel. EEOC employed 2,385 FTE employees during 2010 (an 11% increase since 2007) and plans to grow its work force by 8% in 2011 to 2,577 FTE employees. More resources and more employees should result in more aggressive enforcement efforts by the EEOC.

2.  Greater Resources Will Enhance EEOC's Strategic Enforcement Initiative.

In April, 2006, the EEOC launched a program designed to identify, investigate, and litigate “systemic cases” – cases involving an allegedly discriminatory pattern, practice, or policy which has a broad impact on an industry, profession, company, or geographic location. This systemic initiative is one of the EEOC’s top priorities, because such cases affect large numbers of individuals.

At the close of fiscal year 2010, the EEOC was conducting 465 systemic investigations, involving more than 2,000 charges, and had completed work on 165 systemic investigations – resulting in 29 settlements or conciliation agreements that recovered $6.7 million. Systemic cases are highly complex and require greater resources (for example, expert analysis by statisticians, industrial psychologists, and labor market economists). As a result, it is likely that the EEOC will devote a substantial portion of its expanding resources and staff to its systemic initiative. The message for employers is simple. Review your written employment policies and your unwritten employment practices to insure compliance with recent changes in the law.

3.   Employers Should Seriously Consider The EEOC’s Mediation Program.

Despite its expanding resources and personnel, the EEOC has continued to struggle to meet its time target for resolving private sector discrimination charges. During fiscal year 2010, only 38.3% of the private sector charges filed with the EEOC were resolved in less than 180 days - substantially less than the EEOC’s 2010 target (48%) and much worse than its performance in 2005 (66%). In fact, the Office of Inspector General has identified the continued rise in private-sector charge inventory as one of the most significant management challenges facing the EEOC. In its defense, however, EEOC did receive a record number of discrimination charges during fiscal year 2010 (99,922).

Delays in investigating and making a determination on pending discrimination charges can have a significant monetary impact on employers. Considering that the standard remedy for disparate treatment discrimination is back pay and benefits, an employer’s potential financial exposure escalates during the time that a discrimination charge is pending before the EEOC. For that reason, an employer defending a discrimination charge should seriously consider using the EEOC’s mediation program – which has earned praise from both charging parties and employers. Indeed, during fiscal year 2010, 96.7% of all participants reported that they would use the EEOC’s mediation program in the future. Participating in the EEOC’s mediation program might produce a timely and successful resolution and will not derail or substantially delay the EEOC’s investigative process should mediation not prove successful.

A version of this post was previously published in the Rochester Business Alliance, Regional Chamber of Commerce Newsletter for January/February 2011.