New York Court of Appeals Holds that Out-of-State Entities Can be Liable for Aiding and Abetting Discrimination Under the New York Human Rights Law

May 28, 2017

By Richard S. Finkel
Out-of-state entities with the power to dictate a New York employer's hiring and retention policies take notice:  you can be subject to liability under the New York Human Rights Law ("NYHRL") if you "aid and abet" discrimination against individuals who have a prior criminal conviction, even if you are not the direct employer of those individuals.  In Griffin v. Sirva, Inc., the New York Court of Appeals held that while liability under Section 296(15) of the NYHRL (which prohibits employment discrimination based on prior criminal convictions) is limited to an aggrieved party's employer, liability can extend beyond a direct employer under Section 296(6) of the NYHRL "to an out-of-state non-employer who aids or abets employment discrimination against individuals with a prior criminal conviction." In Griffin, the plaintiffs were employees of Astro, a New York moving company.  The plaintiffs had prior criminal convictions for sexual offenses against children.  After the plaintiffs were hired, Astro entered into a moving services contract with Allied, a nationwide moving company based on Illinois.  As a result of that contract, a large majority of Astro's work was thereafter performed on behalf of Allied. The contract required Astro to adhere to Allied's Certified Labor Program guidelines, one of which required that employees who perform work in a customer's home or place of business pass a criminal background check.  Under Allied's guidelines, employees with prior sexual offense convictions automatically failed the screening.  Pursuant to the contract with Allied, Astro would have been subject to escalating penalties if it used unscreened labor.  Accordingly, the plaintiffs were screened and when their convictions were identified, Astro fired them. The plaintiffs filed suit in the U.S. District Court for the Eastern District of New York against both Astro and Allied, alleging that their terminations based upon their prior criminal convictions violated the NYHRL.  Allied, which was not the plaintiffs' direct employer, moved for summary judgment on the NYHRL claims.  The District Court granted its motion, holding that:  (1) Section 296(15) of the NYHRL applies only to employers and that Allied was not the plaintiffs' employer; and (2) Section 296(6) of the NYHRL (the "aiding and abetting" provision) could not be used to impose liability on Allied because Allied did not participate in firing the plaintiffs. The plaintiffs appealed the District Court's decision to the Second Circuit Court of Appeals, which posed the following three questions to the New York Court of Appeals regarding the interpretation of Section 296(15) and 296(6) of the NYHRL:  (1) Does Section 296(15) of the NYHRL, prohibiting discrimination in employment on the basis of a criminal conviction, limit liability to an aggrieved party's "employer"?  (2) If liability under Section 296(15) is limited to an aggrieved party's employer, what is the scope of the term "employer" for purposes of that provision?  (3) Does Section 296(6) of the NYHRL extend liability to an out-of-state non-employer who aids or abets employment discrimination against individuals with a prior criminal conviction?  The Court answered the first question by holding that liability under Section 296(15) is limited to an aggrieved party's employer.  The Court answered the second question by holding that common law principles of an employment relationship should be applied, "with greatest emphasis placed on the alleged employer's power to 'to order and control' the employee in the performance of his or her work."  The Court answered the final question by holding that an out-of-state non-employer who engages in conduct that aids or abets employment discrimination against individuals with a prior criminal conviction -- for example, by imposing contractual terms on a New York employer prohibiting the use of employees with certain types of criminal convictions from performing work under the contract -- can be held liable under Section 296(6) of the NYHRL if the employer is determined to have violated Section 296(15) of the NYHRL by complying with the terms of the contract. While the plaintiffs' appeal to the Second Circuit regarding the dismissal of their claims against Allied was pending, their claims against Astro (their direct employer) proceeded to a jury trial.  The jury found that Astro did not violate the NYHRL by firing the plaintiffs due to their prior criminal convictions.  Therefore, in this particular case, it does not appear that Allied will be subject to liability.  However, the interpretation of Section 296(6) of the NYHRL set forth by the New York Court of Appeals can certainly be used in future cases to impose liability on an out-of-state non-employer who imposes contractual terms on a New York employer that cause the New York employer to violate Section 296(15) of the NYHRL.

New York Publishes Revised Proposed Regulations for Paid Family Leave

May 25, 2017

By Kerry W. Langan
Yesterday, May 24, 2017, the New York Workers’ Compensation Board (the “Board”) issued another set of proposed regulations implementing the New York Paid Family Leave Law (PFL).  The initial proposed regulations were published on February 22, 2017, as discussed in a previous blog article.  During the comment period that followed, the Board received 117 formal comments.  With the newly proposed regulations, the Board provided a detailed assessment of those comments and its responses.  The release of the new proposed regulations opens a new 30-day comment period. The new proposed regulations contain very few revisions of significance.  There are many minor changes, but no major changes to the overall scheme of the program.  A few aspects of the commentary and changes are worth noting:
  • The regulations were revised to allow an employer to charge an employee’s accrued paid leave “in accordance with the provisions of the FMLA” when FMLA is run concurrently with PFL.  It appears that the intent was to allow an employer to require an employee who takes concurrent FMLA and PFL leave to use accrued paid time off.  Recall, under the earlier regulations, an employer was prohibited from requiring an employee to use accrued paid time off.  The problem is that the new proposed language says “in accordance with the FMLA” and under the FMLA framework, while employers are generally permitted to force the substitution of accrued paid leave, they are prohibited from doing so when an employee is concurrently receiving disability or workers’ compensation benefits.  This is because such benefits are paid, rendering the FMLA substitution provisions inapplicable.  PFL, like disability and workers’ compensation, is a form of “paid” leave.  Thus, it could be argued that the FMLA rule allowing for employers to force the use of paid leave may be inapplicable.  This is just one example of the complex interplay between the state and federal statutes that employers will be required to carefully work through when developing new leave policies.  Hopefully, the Board will provide additional guidance to clarify this issue.
  • The PFL eligibility criteria has been updated so that the eligibility of employees who work 20 hours or more per week is measured based on number of weeks in employment, which must be at least 26, and the eligibility of employees who work less than 20 hours per week is measured based on the number of days worked, which must be at least 175.  The earlier regulations considered any employee who worked less than five days per week to be part-time and required the employee to have worked 175 days of employment to be eligible for PFL.  This revision takes into account that some full-time employees work longer days for fewer than five days a week, and allows them to become eligible after 26 weeks, rather than 175 days.
  • The proposed regulations were revised to clarify that an employee using intermittent leave must give the employer separate notice for each day of PFL.  This change is important because the prior set of proposed regulations permitted employees who wanted to take intermittent PFL to only provide notice to the employer once.  This is inconsistent with what is required under the FMLA and would have caused issues when FMLA and PFL are run concurrently.
  • Comments from unionized employers called for “more detail about how a collectively bargained plan can take the place of an employer plan, and which sections of the regulations can be changed by agreement, and which cannot.”  While the Board made no changes to the proposed regulations, it points to Section 211(5) of the Workers' Compensation Law (governing disability benefits) and explains that an employer and union must apply to the Board in order to have a CBA fulfill the employer’s PFL responsibility, and that an assessment must be paid to the Board.  It also added two examples of the types of rules than can be changed by agreement.  First, unionized employees can establish eligibility through time worked at any employer covered by the CBA.  Second, the CBA can provide that the union, not the employer, be responsible for time records and payroll deductions.  Notably, as stated in our earlier blog article, the collectively bargained plan must provide benefits at least as favorable as the PFL law, including the length of leave and amount of payment.  This requirement may make it unlikely that existing or future CBAs qualify for an exemption from this law.
  • Lastly, although no change was made to the proposed regulations, the Board addressed concerns about employers starting to take payroll deductions on July 1, 2017 when the PFL law does not go into effect until January 1, 2018.  The Board noted that because the law establishes January 1, 2018 as the date upon which benefit payments begin, it is necessary that employers be permitted to take payroll deductions in advance to offset the cost of acquiring the mandated insurance policies.  (The Department of Financial Services has been tasked with setting the maximum employee contribution by June 1st).  The bottom line is that employers are allowed, but not required, to start taking payroll deductions on July 1, 2017.  If an employer chooses not to do so, the employer will not be able to take deductions in excess of the maximum weekly contribution to retroactively cover the cost of providing PFL benefits.
Bond’s team of employment attorneys will continue to study these proposed regulations and provide additional analysis on this blog.  Given the paucity of significant changes from the originally proposed regulations to the regulations proposed yesterday, we expect the final regulations will very closely mirror these proposed regulations.  Therefore, employers should soon begin the process of drafting new policies so that they are ready for roll out in advance of the January 1, 2018 effective date.

Mayor De Blasio Signs Legislation Banning NYC Employers From Asking Job Applicants About Compensation History

May 10, 2017

By Christopher J. Dioguardi
In an April 11 blog post, we explained a piece of legislation that will soon ban nearly all New York City employers from (1) asking job applicants about their compensation history and (2) relying on a job applicant’s compensation history when making a job offer or negotiating an employment contract.  At the time we reported on that legislation, Mayor De Blasio had not yet signed it.  New York City employers should be aware that Mayor de Blasio has now signed that legislation into law and it will take full effect on October 31, 2017.

New York City Law Protecting Freelance Workers Goes Into Effect on May 15, 2017

May 9, 2017

By Richard G. Kass
A new New York City law covering freelance workers goes into effect on May 15, 2017.  The law, informally called the “Freelance Isn’t Free Act,” gives non-employee independent contractors the right to a written contract upon request.  Penalties are imposed for failing to provide a contract on request, failing to pay freelancers timely and in full, and for retaliating against freelancers who exercise their rights under the law. The purpose of the law is to provide protection to individuals who do not fit the legal definition of “employee,” and whose income is reported on a 1099 form instead of a W-2. The law covers only those independent contractors that consist of one person, whether or not they are incorporated or use a trade name.  The law covers only those freelancers whose contracts with the hirer in any 120-day period exceed $800 in value.  Sales representatives are excluded, but sales representatives are covered by an even stricter law, Section 191-a of the New York Labor Law.  Lawyers and medical professionals are also excluded.  The law applies to the private sector only. Written contracts with freelancers must include an itemization of the services to be provided, and the amount, rate, timing, and method of compensation.  Unless the contract states otherwise, the presumption will be that the freelancer is entitled to payment within thirty days of the completion of the work.  The written contract required by this law need not be extensive.  In many cases, a few short sentences should suffice. There is no penalty for simply failing to provide a contract.  Penalties are imposed only if the hirer refuses to provide a written contract after the freelancer requests one.  It would be prudent, though, for hirers to provide written contracts to freelancers as a matter of routine. The penalty for failing to provide a written contract upon request is $250.  The penalty for failing to pay a freelancer as promised is double damages.  The penalty for retaliation is the value of the contract.  In each type of case, the freelancer’s attorneys’ fees can also be awarded.  Hirers who are found to have engaged in a “pattern or practice” of violating this new law can be fined up to $25,000.

SEIU Local 500 Withdraws Petition to Represent Resident Advisors at George Washington University

May 3, 2017

By Subhash Viswanathan
Yesterday afternoon, SEIU Local 500 made a request to Region Five of the National Labor Relations Board ("NLRB") to withdraw its petition to represent a bargaining unit of Resident Advisors ("RAs") at George Washington University.  The Regional Director of NLRB Region Five granted the request.  So, the election to determine whether the RAs wished to join a union (which was scheduled to occur today), has been canceled.  At least for now, this means that the issue of whether RAs at institutions of higher education are employees who are entitled to unionize will not be presented to the full NLRB or a federal appellate court for a decision.

Adding Inevitability to the Often Disfavored Inevitable Disclosure Doctrine

April 28, 2017

By Howard M. Miller
In a prior blog post, we used the Star Wars Universe as the backdrop for a discussion about obtaining a preliminary injunction in the context of a noncompete agreement.  But we left a discussion of the inevitable disclosure doctrine for another day.  Today is that day. By way of background, the inevitable disclosure doctrine typically plays out as follows.  A key employee of a company who possesses all manner of company secrets leaves for a competitor without a trail, digital or otherwise, of actually taking records with him or her to the competitor.  Nonetheless, even in the absence of physical copying, the company’s secrets are still in the employee’s head.  In the words of the Seventh Circuit Court of Appeals in the case of PepsiCo, Inc. v. Redmond, this leaves the company in the predicament of a "coach, one of whose players has left, playbook in hand, to join the opposing team before the big game." Common experience tells us that, even assuming good faith, the former employee simply cannot help using confidential information to lure away his/her former employer’s customers or otherwise help the new employer gain a competitive advantage.  For example, if the employee knows the confidential pricing for a specific customer, how would he/she not use that information in a sales pitch for the new employer?  Indeed, that would likely be a primary reason for the competitor’s recruitment of the employee in the first instance. As is often the case, however, gut feel of misuse or misappropriation of a trade secret is not necessarily accompanied by direct proof of it.  Even when there is proof, using it may not be so easy.  For example, when a loyal customer reports an improper solicitation by the former employee, do we really want to drag that customer in to testify in a hearing on a preliminary injunction? This all begs the question:  How can the company convince a judge to issue a temporary restraining order and preliminary injunction barring the employee’s use of confidential information without proof of the employee’s misconduct?  Enter the inevitable disclosure doctrine. The inevitable disclosure doctrine, at its core, is a rule of pragmatics.  It recognizes the practical reality that once employees have knowledge of a company’s confidential business information, it is impossible to compartmentalize that knowledge and avoid using it when they go to work for their new employer in the same industry. The doctrine in New York has roots going back to 1919, in the case of Eastman Kodak Co. v. Powers Film Products, Inc.  In the 1990s, the doctrine hit its peak in two contexts.  First, in Lumex, Inc. v. Highsmith, the U.S. District Court for the Eastern District of New York held that when the departing employee had signed a noncompete agreement, the doctrine supplied the missing element of actual proof of use of trade secrets on a motion for a preliminary injunction even when the departing employee acted with the utmost good faith.  Second, in DoubleClick Inc. v. Henderson, the New York State Supreme Court in New York County held that, even in the absence of a noncompete agreement, when the departing employee left with physical or electronic files, the inevitability of use of the trade secrets in such a circumstance springs from the already proven misconduct of the employee. The decisions in Lumex and DoubleClick seemed to usher in a more welcoming attitude towards the doctrine.  But that was somewhat short-lived.  The doctrine receded from its high water mark when employers attempted to broadly use it as a substitute for a noncompete agreement.  In Earthweb v. Schlack, decided by the U.S. District Court for the Southern District of New York, the employer sought to enjoin its former employee from working for a competitor even though the parties’ agreement contained no such prohibition.  The Court held that in absence of evidence of actual misappropriation of confidential information, it would not essentially draft a noncompete for the parties under the guise of inevitable disclosure.  The Appellate Division, Third Department, reached a similar result in Marietta Corp. v. Fairhurst, where the Court refused to use the inevitable disclosure doctrine in a manner that would convert a nondisclosure agreement into a noncompete agreement. Most recently, on December 30, 2016, the U.S. District Court for the Southern District of New York, in Free Country Ltd. v. Drennen, declined to use the inevitable disclosure doctrine to enjoin the solicitation of customers in the absence of a noncompete agreement. The issue now is whether the inevitable disclosure doctrine has lost its teeth and, if it hasn’t, how can an employer actually use it to stop its trade secrets from being used when it can’t prove misappropriation.  The short answer is that the inevitable disclosure is not dead.  It still has its power when used in its proper context. If a company truly wants to protect itself from competition from former employees who possess its confidential information, there is simply no substitute for a narrowly crafted noncompete agreement.  The inevitable disclosure doctrine can be used quite effectively to enforce such a noncompete agreement on an application for a preliminary injunction. The narrower the scope of the restriction, the more receptive a court will be to enforcing it.  Before drafting a noncompete, there ought to be a careful discussion of what the employer is really worried about in terms of an employee leaving.  More often than not, the concern is about the employee working for a limited group of competitors and/or soliciting a limited group of major customers.  In such circumstances, to increase the likelihood of success of enjoining a former employee, a noncompete agreement should actually list the specific group of competitors where the employee would be prohibited from working in the same or similar capacity and/or a specific list of customers whose solicitation would be prohibited.  The noncompete itself may also have a clause stating that if the employee were to work for one of the listed competitors or attempt to solicit a listed customer it would be inevitable that the employee would use confidential information.  A high level executive, particularly one with access to legal counsel to review and negotiate the agreement, would be hard pressed to later dispute that which he/she expressly acknowledged. Finally, for those high level executives for whom it is absolutely critical that a noncompete be enforceable, the agreement should provide for the payment of compensation during the period of noncompetition.  This was done effectively in Lumex. Employers are well served to use narrowly crafted noncompete agreements for a limited class of employees whose departure could damage the company’s legitimate business interests.  The inevitable disclosure doctrine, for all of its long and winding permutations, can still be a powerful tool -- not a substitute -- for enforcing a noncompete agreement.

NLRB Region Five Rules that Resident Advisors at George Washington University are Employees Who May Unionize

April 24, 2017

By Subhash Viswanathan
On April 21, 2017, the Acting Regional Director of Region Five of the National Labor Relations Board ("NLRB") issued a Decision and Direction of Election holding that Resident Advisors ("RAs") at George Washington University are employees under the National Labor Relations Act ("NLRA") who are entitled to vote in a union representation election.  This decision comes on the heels of the NLRB's recent decision in Columbia University, holding that graduate and undergraduate student assistants are employees who are also entitled to unionize.  This ruling by NLRB Region Five could potentially open the door for unions to organize RAs at other private institutions of higher education. The representation petition at George Washington was filed by Local 500 of the Service Employees International Union ("SEIU").  SEIU sought to represent a bargaining unit of all full-time and regular part-time RAs at George Washington, which consisted of approximately 110 individuals.  As a condition of becoming an RA, an individual must be a full-time undergraduate student enrolled in a degree-granting program, and must have completed his or her first year of studies.  RAs at George Washington are expected to be in good academic and judicial standing.  George Washington argued that RAs should not be considered "employees" under the NLRA for two principal reasons:  (1) its requirement for RAs to be undergraduate students is necessary for the RAs to develop a "peer-to-peer mentoring relationship" with their assigned residents; and (2) RAs are an important part of George Washington's residence life program, which is an extension of its academic program. The Acting Regional Director of NLRB Region Five rejected George Washington's arguments after a hearing on these issues, finding that the RAs have an employment relationship with the University.  The Acting Regional Director determined that RAs perform services for the University, are subject to the University's control, and perform their services in exchange for payment.  The RAs at George Washington receive a stipend of $2,500 for the academic year, less applicable tax withholdings, as well as free on-campus housing valued at $12,665 per year.  The RA position description at George Washington sets forth four main categories of job duties, along with a list of particular expectations for each category of job duties.  The Acting Regional Director also found that RAs are subject to discipline, up to termination, if they fail to comply with George Washington's policies or if they fail to remain in good academic or judicial standing.  One particular piece of evidence that the Acting Regional Director found to be significant was that RAs at George Washington are required to sign a four-page document entitled "Resident Advisor Employment Agreement," which describes the University's "expectations and employment terms" for RAs. According to the Acting Regional Director, the mere fact that being an RA might be part of the educational experience of an undergraduate student at George Washington does not preclude a determination that the relationship is principally an economic relationship.  The Acting Regional Director wrote:  "Employment experiences can simultaneously be educational or part of one's personal development, yet they nonetheless retain an indispensable economic core." A representation election will be scheduled in the coming weeks for the RAs at George Washington to determine if they wish to be represented by SEIU for purposes of collective bargaining.  George Washington has the right to seek review by the NLRB and potentially by a federal appellate court if SEIU wins the election.  At this point, two of the three occupied seats on the NLRB are filled by Democratic appointees who are pro-union.  There are also two vacancies on the NLRB.  When those vacancies are filled by President Trump, it is expected that the NLRB will have its first Republican majority in approximately nine years.  Therefore, this ruling by NLRB Region Five may not be the last word on this important issue for institutions of higher education.

A \"Fair and Balanced\" Look at a Salary Claw-Back Against an Alleged Serial Sexual Harasser

April 20, 2017

By Howard M. Miller
One of underlying themes of the now defunct “O’Reilly Factor” was that the liberal elites have brought about the “wussification” of America.  In Mr. O’Reilly’s world, personal responsibility has given way to excuses and coddling, begging the question:  where is good old fashioned comeuppance when it is needed?  We can answer that question. While Mr. O’Reilly was a lynchpin to Fox News’ highly rated nightly line-up, he was still an employee subject to all of the common law duties and liabilities as everyone else.  As an employee, he owed his employer a duty of loyalty.  Employed in New York, Mr. O’Reilly is subject to “the mother of all” employer remedies, the so-called “faithless servant doctrine.”  Under this doctrine, if Fox News decided to play the very type of hard-ball championed by Mr. O’Reilly, it could -- if it proves the misconduct -- recoup from him every stitch of compensation paid to him during the period of time that he was allegedly sexually harassing Fox employees, every penny owed to him as part of any “parachute,” and punitive damages.  Fox may also be able to recoup from Mr. O’Reilly the investigative costs it recently paid to its outside law firm. In New York, the faithless servant doctrine is more than one hundred years old.  This doctrine, a subspecies of the duty of loyalty and fiduciary duty, requires an employee to forfeit all of the compensation he/she was paid from his/her first disloyal act going forward.  The doctrine has a deliberate harsh deterrent purpose and public policy goals.  Important here, the fact that Mr. O’Reilly brought in millions of dollars of revenue to Fox is irrelevant to a salary forfeiture against him, if the disloyal acts can be proven. The doctrine has been applied in the specific context of sexual harassment.  In Astra USA Inc. v. Bildman, the Massachusetts Supreme Court interpreted and applied New York law, holding that New York’s Faithless Servant Doctrine permitted an employer to recover compensation it had paid to a high level executive who had been the subject of numerous sexual harassment complaints by other employees.  Under Astra, the doctrine can reach misconduct that does not involve theft or financial damages to the employer.  In upholding a $7 million complete forfeiture, the court aptly stated:  “For New York . . . the harshness of the remedy is precisely the point.” The Astra court relied on the New York Appellate Division, Second Department’s decision in William Floyd Union Free School District v. Wright (argued by the author of this article without any “spin” or “pinhead” elocution).  In that case a multi-million dollar forfeiture was obtained by a public school district against two high level employees who had stolen from it.  In language now cited in other cases, the Court held:  “Where, as here, defendants engaged in repeated acts of disloyalty, complete and permanent forfeiture of compensation, deferred or otherwise, is warranted under the Faithless Servant Doctrine.” Despite Astra and William Floyd, disloyal employees have tried to limit the scope of the forfeiture.  On June 2, 2016, the Appellate Division, Third Department added strength and vigor to the faithless servant doctrine in a case where an employee committed repeated acts of theft.  In City of Binghamton v. Whalen (also argued without spin by the author of this article), the Court reaffirmed the strict application of the faithless servant doctrine:  “We decline to relax the faithless servant doctrine so as to limit plaintiff’s forfeiture of all compensation earned by the defendant during the period of time in which he was disloyal.”  The Court specifically noted that the faithless servant doctrine is designed not merely to compensate the employer, but to create a harsh deterrent against disloyalty by employees. Published reports indicate that Mr. O’Reilly is parachuting out of Fox with tens of millions of dollars.  Under the earnest moral convictions and biblical brimstone that were the hallmark of Mr. O’Reilly’s long tenure with Fox, he should forfeit it all back if the allegations of sexual harassment can be proven by Fox.  Mr. O’Reilly famously closed his show with a “word of the day.”  We offer two such words:  “Faithless Servant.”

New York City Employers Will Soon Be Banned From Asking Job Applicants About Compensation History

April 11, 2017

By Christopher J. Dioguardi
On April 7, 2017, the New York City Council approved legislation that will ban almost all employers in New York City from (1) asking job applicants about their compensation history and (2) relying on a job applicant’s compensation history when making a job offer or negotiating an employment contract, unless that applicant freely volunteers such information.  Mayor de Blasio has not yet signed the bill, but he is expected to do so; once he does, the new legislation will become effective 180 days from that date.  Job applicants who allege a violation of this provision may file a complaint with the New York City Commission on Human Rights or directly in court. This law will even prohibit employers from conducting searches of publicly available records for the purpose of obtaining an applicant’s salary history.  Employers will be permitted, however, to ask about an applicant’s salary and benefits expectations.  Further, if a job applicant volunteers his or her compensation history, the law will not prohibit employers from verifying and considering such information. The ban will also not apply to:  (1) actions taken pursuant to any law that authorizes the disclosure or verification of salary history; (2) internal transfers or promotions; and (3) public employee positions for which compensation is determined pursuant to procedures established by collective bargaining. New York City is not the first to pass such a law.  In the last 8 months, Massachusetts, Puerto Rico, and Philadelphia have all implemented similar bans on questions about compensation history.  Proponents of these laws argue that the bans will help erase pay inequity and will especially help those who have been historically underpaid.  Opponents argue that such government action constitutes unconstitutional infringement on free speech rights. In any case, New York City employers should put their Human Resources personnel, and any others involved in the hiring process, on notice about the imminent change in law.  All employers, not just those with employees in New York City, should be mindful of the trend of lawmakers seeking to keep compensation history out of the hiring process and should expect this trend to continue.

Strike Two: Trump\'s New Travel Ban Halted By The U.S. District Court in Hawaii

March 17, 2017

By Joanna L. Silver
Late Wednesday, just hours before President Trump’s new travel ban was scheduled to take effect, the U.S. District Court for the District of Hawaii granted a temporary restraining order that prevents the implementation of Executive Order 13780.  Recall, President Trump issued Executive Order 13780, entitled, “Protecting the Nation from Foreign Terrorist Entry into the United States” (“EO 13780”), on March 6, 2017.  The temporary restraining order issued by the U.S. District Court in Hawaii prohibits the federal government from enforcing EO 13780 on a nationwide basis. As you know from our March 7, 2017 blog post, EO 13780 sought to suspend the entry of non-immigrants from Iran, Libya, Somalia, Sudan, Syria and Yemen for an initial 90-day period if they were not physically present in the U.S. on March 16, 2017, did not have a valid visa at 5:00 pm EST on January 27, 2017, and did not have a valid visa on March 16, 2017.  EO 13780 also sought to suspend the entire refugee admission program for 120 days and to cap the admission of refugees to no more than 50,000 for fiscal year 2017.  As a result of the decision of the U.S. District Court in Hawaii on March 15, foreign nationals hailing from any of the restricted countries may continue to travel to the U.S. until further notice. At a rally in Nashville, Tennessee on Wednesday evening, President Trump criticized the ruling issued by the U.S. District Court in Hawaii and further declared that his administration will fight to uphold EO 13780, including the travel ban, all the way to the Supreme Court, if necessary.  Given the fluidity of this situation, we continue to advise that individuals from the restricted countries who are presently in the U.S. forego any unnecessary international travel at this time.

FAQs About Employee Travel Time -- Is It Compensable?

March 14, 2017

By Jessica C. Moller
There are few things more confusing to employers than the nitty-gritty rules of what is and is not compensable time for non-exempt employees under the Fair Labor Standards Act (FLSA).  There are also few things more costly to employers than when a mistake is made and a non-exempt employee is not paid for time he/she should have been paid for.  With the continuous onslaught of FLSA lawsuits being filed every day, it is important for employers to be familiar with the rules that affect their obligation to pay non-exempt employees. Here are some answers to common questions that are often asked with regard to the compensability of time non-exempt employees spend traveling in connection with work. 1.  Do employees have to be paid for the time they spend commuting to work? Ordinarily, travel from home to an employee’s regular place of work, or from work to home, does not count as “time worked.”  Once an employee’s work day ends, the time the employee spends traveling from his/her last job site to home is considered ordinary commuting time for which the employee will generally not be owed wages.  If an employee has a regular work site, but he/she is required to report to a different work site on occasion, the time spent traveling from home to the different job site (or from the job site back home at the end of the work day) is also not compensable, as long as the different job site is within the same general locality as where the employee regularly works.  For employees who do not have regular work sites and instead travel to different work sites each day, all home-to-work and work-to-home travel time is generally considered non-compensable commuting time, even if the distances traveled are long and the time spent commuting is substantial. 2.  What if the employee uses a company car -- do you have to pay for the employee’s commuting time then? Generally, no.  An employee’s home-to-work and work-to-home travel in a company-owned vehicle is not generally considered to be hours worked, as long as:  (1) it is a vehicle of a type normally used for commuting; (2) the employee is able to use his/her normal route for the commute; (3) the employee does not incur any additional costs using the company vehicle; (4) the home-to-work and work-to-home travel is within the company’s normal commuting area; and (5) the use of the vehicle is subject to an agreement between the company and the employee. 3.  Do you have to pay an employee for travel during the work day? Once an employee arrives at his/her regular work site and begins work for the day, the employee’s travel during the course of the work day is compensable.  For example, the time the employee spends traveling between two work sites will count as “time worked,” just as will the time an employee spends traveling between other places for work-related reasons during his/her work day.  Such travel time therefore is compensable as work time for both minimum wage and overtime purposes. 4.  Do you have to pay an employee for time spent traveling on an overnight trip? Whether or not travel in connection with overnight trips is compensable work time generally depends on when the travel occurs.  If an employee goes on an overnight trip for work and the travel occurs outside of the employee’s regularly scheduled work hours, generally the travel time will not be deemed work time.  If, however, the time the employee spends traveling is during his/her regular work hours, that travel time will generally count as "time worked" -- even if the travel occurs on a day that the employee would not ordinarily have worked!  For example, if an employee regularly works 9:00 a.m. to 5:00 p.m. Monday to Friday, but travels for work from 4:00 p.m. to 10:00 p.m. on Sunday, the employee would have to be paid for the hour from 4:00 p.m. to 5:00 p.m. because that time overlaps with the hours during the days that the employee regularly works, even though Sunday is not a regular work day for that employee.  The hours from 5:00 to 10:00 p.m. need not be paid because they are outside the hours that the employee regularly works.  This rule may seem counterintuitive, but it what is currently required under the law. 5.  Does it matter whether the employee uses public transportation or drives himself/herself for the overnight work trip? Yes.  If an employee uses public transportation to get to the distant location, whether or not the travel time is compensable will be determined as set forth in Question 4 above.  If the employee is not offered the option of using public transportation and is required to drive himself or herself, the entire time spent driving is compensable.  However, if an employee is offered the option of using public transportation and instead chooses to drive himself or herself to the distant location, the employer can count as compensable “work time” either the actual time spent driving or the hours that overlap with the employee’s regular work hours as set forth in Question 4 above. Take the following scenario, for example.  Employee A regularly works Monday to Friday from 9:00 a.m. to 5:00 p.m. and has to travel from New York City to Syracuse for an overnight trip.  The employer offers the employee the option of air travel, which would require the employee to take a flight departing New York City at 4:00 p.m. on Sunday and arriving in Syracuse at 5:05 p.m. that same day.  The employee instead opts to drive the 5 hours from New York City very early on Monday morning instead of flying to Syracuse on Sunday.  In this scenario, the employer has the option of paying the employee for either the one hour from 4:00 p.m. to 5:00 p.m. on Sunday since it overlaps with the employee’s regular work hours of 9:00 a.m. to 5:00 p.m., or the five hours the employee spends driving on Monday morning before his/her regular workday would otherwise begin. 6.  Do you have to pay an employee for the entire time he/she is away on an overnight work trip? If, while on an overnight trip for work, a non-exempt employee performs work outside of his/her regularly scheduled work hours, the time the employee spends doing that work will count as “time worked” and has to be compensated just as it would had the employee worked that time under ordinary circumstances.  But time that the employee spends idly or on personal activities will not count as “time worked” and will not have to be compensated. 7.  What about one-day work trips to a different city that do not require an overnight stay -- do you have to pay an employee for the entire day? Different rules apply when an employee usually works in a single location, but goes on a special one-day work trip to a different city than where he/she regularly works.  In that circumstance, if the employee uses public transportation to get to the destination city, the employee does not have to be paid for time he/she spends commuting from home to the train station or airport (whichever applies), because that is considered to be the employee’s ordinary commuting time.  But the employee does have to be paid for all of the time he/she spends at the airport or train station (yes, flight delays and the like will be deemed compensable), and actually traveling between the train station or airport to the other city, regardless of whether or not the travel occurs during the employee’s regular work hours.  If the employee instead drives himself/herself to the destination city instead of taking public transportation, the time spent driving would be compensable as work time.  If, however, the driving employee first drives to his/her regular work location before or after driving to the destination city, that home-to-work travel to the regular work location would be considered the employee’s ordinary commute and therefore non-compensable.  Regardless of whether public transportation is used or the employee drives to the destination city for a one-day work trip, the time the employee spends for meal breaks (assuming he/she is not working during those breaks) and any idle time (i.e., time spent neither working nor traveling) outside of his/her regular work hours is not compensable and does not count as “time worked.” 8.  Are these rules the same under the FLSA and any state-specific wage and hour laws? The wage and hour rules are not necessarily the same from state to state, so it is always important to be mindful of any state-specific laws that could affect an employer’s obligation to pay its non-exempt employees.  For employers with operations in New York State, the New York State Department of Labor has indicated that it interprets the relevant New York Labor Law provisions and accompanying state regulations “in line” with the FLSA’s “travel time” rules, but that is not a guarantee that the state and federal laws will always be in congruity.  It is always possible that the New York State Department of Labor could take an inconsistent position on a particular “travel time” issue, so it is important to always double check and not just assume that the federal rules apply.

New York's Paid Family Leave Proposed Regulations: A Primer for Employers

March 13, 2017

By Mara D. Afzali

On February 22, 2017, the New York State Workers’ Compensation Board unveiled proposed regulations concerning the state's new Paid Family Leave (PFL) law.  The PFL law was passed as part of the 2016 state budget and will eventually require virtually every New York employer to provide employees with up to 12 weeks of paid leave:  (1) for the birth, adoption, or placement of a new child; (2) to care for a family member with a serious health condition; or (3) for a qualifying exigency arising from a family member's military service (as defined in the federal Family and Medical Leave Act).  This program will be funded through employee payroll deductions.  PFL is not intended to cover an employee's own serious health condition; rather, PFL is intended to complement the already existing state disability insurance program.  The basics of the PFL law can be found in our earlier blog article on this subject. The Workers' Compensation Board will be accepting comments on the proposed regulations for 45 days from the date of their release -- until April 7.  Click here to review the proposed regulations and to access an online link to submit comments.  The state also recently launched a website providing information about PFL for employers and employees and set up a new helpline.  Notably, however, the details on this new PFL website reflect the program as it would exist under the proposed regulations, meaning the information there is not yet final (despite how it appears). The proposed regulations contain a great deal of detail to digest, but several significant points will immediately catch the attention of employers:

  • First, the state proposes a system where employees apply directly to the employer's insurance carrier for PFL benefits.  The employer merely completes one section of a claim form before it is submitted to the carrier by the employee.  The insurance carrier makes the final determination -- not the employer.  The proposed regulations provide specific details on the format, contents, and timing of claims and decisions on claims.  This is significant because the insurance carrier's determination will have an impact beyond just the payment of benefits to the employee:  it will also require the employer to protect the employee's job, and to maintain his/her health insurance benefits for the duration of the leave.  Additionally, for employers and employees covered by the Family and Medical Leave Act (FMLA), FMLA and PFL benefits will typically run concurrently (more on this below).  Therefore, employers will be faced with a situation where they are making a leave decision simultaneously with an insurance carrier for the same exact leave.  There could be a situation where the employer denies leave, and the carrier approves it.  (Consider, for example, a situation where the employer believes the medical certification is not sufficient, but the carrier disagrees.)  Additionally, the proposed regulations do not include any key employee exceptions like FMLA.  Thus, no matter the size of the employer or the role played by the employee, once the carrier approves the leave, the employer must grant it and guarantee reinstatement at the conclusion of the leave.
  • Second, the proposed regulations set up an arbitration system for the purpose of appealing claims denials.  The arbitrator is appointed by the State Workers’ Compensation Board.  The proposed regulations do not appear to contemplate a situation where the employer could appeal because it believes the benefits were wrongly awarded.  Moreover, it is easy to anticipate the complications that could arise if an arbitrator reverses a claims denial.  If the employer denied the time off because the claim was denied and the purpose for the leave has long passed, what is the employee’s remedy?  On the other hand, if the employee already took the time off but used paid time off, do they receive PFL benefits on top of the wages already received?  Must the employer restore the employee’s paid time off that was used?  All of this is unclear.
  • Third, employers cannot require employees to use accrued paid time off (such as PTO, sick, or personal time) for the requested PFL time.  It can offer the option and then, if the employee elects this option, seek reimbursement from the insurance carrier.  If the employee elects to use accrued paid time, the employee is still entitled to be reinstated.  If an employee declines this option, he or she can effectively save PTO to be used after his or her return from PFL (which is likely inconsistent with the reason the employer offered various forms of PTO in the first instance).
  • Fourth, state disability and PFL will not run concurrently.  This means that in the case of maternity leave, it appears that an employee could conceivably collect disability payments for the first 6-8 weeks of leave (which would not be a PFL-covered absence), and then transition to PFL for an additional 12 weeks job-protected paid leave, for a total of 18-20 weeks off with partial pay.
  • Fifth, the regulations do allow PFL and FMLA leave to run concurrently (as mentioned above).  However, this will hinge on the employer designating the leave as FMLA leave by providing the notice required under the federal FMLA regulations.  Employers need to remember to provide the FMLA designation notice.  The insurance carrier's acceptance of a claim for PFL benefits does not automatically cause FMLA leave to run concurrently.  Also related to the interplay with FMLA, the differing eligibility standards between PFL and FMLA sets up a situation where a new employee becomes eligible after only working 26 weeks for the employer, and can immediately take up to 12 weeks of job-protected leave.  Then, once the employee returns to work and reaches the FMLA threshold of 1,250 hours in 12 months, the employee will be eligible for another 12 weeks of job-protected leave.

A few other aspects of the proposed regulations will also interest employers.  Under the proposed regulations, disability insurance carriers will be required to offer PFL coverage in conjunction with their existing disability insurance policies.  Employees who are covered by a disability insurance policy will automatically be covered for purposes of PFL effective January 1, 2018.  Carriers who choose to get out of the disability insurance business in New York, so as to avoid administering the PFL insurance program, must notify New York State by the earlier of July 1, 2017 or within thirty days of the date the community rates for premiums are published by the state (or within 180 days of discontinuing coverage, if discontinued after 2018).  Employers who are self-insured for disability purposes have the option of either self-insuring for PFL benefits or obtaining alternative coverage.  The employer must make the election to self-insure by November 30, 2017. Unionized employers with leave provisions in their collective bargaining agreement that are at least as favorable to employees as the PFL program are exempt from the law.  However, it is not clear who will make the determination of whether the CBA’s benefits are sufficiently favorable.  Additionally, public employers are only covered if they elect to opt-in. These are just a few highlights.  There is much more detail covered in the 48 pages of proposed PFL regulations.  Employers should take the time to review these regulations and submit comments to the Workers' Compensation Board on how the proposed provisions will impact their workplace. It is possible that many aspects of the regulations will change between now and when they are finalized.  Due to the unknown, we do not recommend that employers begin drafting and revising leave policies on the basis of these proposed regulations.  However, we do recommend that employers take an inventory of current leave practices and policies and begin to anticipate how they might need to change.  Once the final regulations are published, it will be critical for employers to quickly respond.  Among other things, employers will be required to provide written details of how PFL benefits are administered to employees.  Those written details will need to reflect the processes set forth in the final PFL regulations. We will continue to analyze these proposed regulations and provide additional updates on how they might impact your workplace.  Stay tuned to our blog for further updates.