Employers who have employees in New York are required to issue annual notices under the Wage Theft Prevention Act ("WTPA") to all New York employees between January 1 and February 1, 2014.  This is the third year that the WTPA annual notice requirement has been in effect. As we have summarized in previous blog posts, the annual notice must contain the following information:

• the employee's rate or rates of pay (for non-exempt employees, this must include both the regular and overtime rate)
• the employee's basis of pay (e.g., hourly, shift, day, week, salary, piece, commission, or other)
• allowances, if any, claimed as part of the minimum wage (e.g., tips, meals, lodging)
• the regular pay day; and
• the name (including any "doing business as" name), address, and telephone number of the employer.

The annual notice must be provided to each employee in English and in the primary language identified by each employee, if the New York State Department of Labor ("NYSDOL") has prepared a dual-language form for the language identified by the employee.  At this point, the NYSDOL has prepared dual-language forms in Chinese, Haitian Creole, Korean, Polish, Russian, and Spanish.  The English-only and dual language forms created by the NYSDOL are available on the NYSDOL's web site.  If an employee identifies a primary language other than one of the six languages for which a dual-language form is available, the employer may provide the annual notice in English only.  Employers are not required to use the NYSDOL's forms, but employers who create their own forms must be sure that all of the information required by the WTPA is included. Employers are required to obtain a signed acknowledgment of receipt of the annual notice from each employee.  The acknowledgment 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.  Signed acknowledgments must be maintained for at least six years.

Employers should be advised that the New York State Department of Labor ("NYSDOL") adopted new Regulations last week, amending the state’s Minimum Wage Orders.  A Notice of Adoption of these changes was published in the State Register on December 11, 2013, and the corresponding amendments will take effect on December 31, 2013. These amendments follow enactment of recent state legislation to raise the minimum wage in New York to $8.00 per hour, also effective December 31, 2013.  Accordingly, the new Minimum Wage Orders reflect this change, as well as future scheduled raises in the state minimum wage to $8.75 per hour as of December 31, 2014, and to $9.00 per hour as of December 31, 2015. Notably, the new Minimum Wage Orders also increase the minimum salary basis amounts for employees to qualify for the executive and administrative exemptions to $600.00 per week (up from $543.75 per week), inclusive of board, lodging, and other allowances and facilities.  This amount is also slated to increase to $656.25 as of December 31, 2014, and to $675.00 as of December 31, 2015. Finally, employers should take note that the amended Minimum Wage Orders impose other pay-related changes for employees in certain industries, including changes to the amount of allowances that may be taken for the provision of meals, lodging, and (where applicable) tips.

New York State has enacted several changes to the laws regarding unemployment insurance.  The changes are the result of the insolvency of the State’s Unemployment Insurance Trust Fund and the State’s need to repay the federal government $3.5 billion borrowed to cover increased costs incurred during the recession.  The New York State Department of Labor ("NYSDOL") has issued two fact sheets -- one directed toward employers and one directed toward claimants -- concerning these changes in the law.  Certain of the important revisions affecting employers are identified below.

1. Under the new law, the payment of severance to an employee, in an amount exceeding the maximum weekly benefit (which is currently $405 per week), will preclude an employee from receiving unemployment insurance benefits.  However, unemployment insurance benefits will be available if the severance is not paid out until thirty days after the employee’s last day of employment.
2. The law has been amended to provide that employers who submit incomplete or late submissions to NYSDOL regarding the agency’s request for information concerning a claim for benefits will not be relieved of any charge to its account, even where the agency later determines that the employee was ineligible for benefits or received an overpayment.  Employers must complete fully and return the agency’s request for information by the date specified by NYSDOL.
3. The new law increases an employer’s contributions based on the Federal Unemployment Tax Act.  Specifically, under current law, this employer tax is based upon the number of employees and the employer’s experience rating.  However, the tax is assessed only on the first $8,500 of each employee’s earnings.  Beginning January 1, 2014, the tax will be assessed on the first $10,300 of each employee’s earnings and this amount will rise gradually each year moving forward.
4. Finally, the law requires employees to be “actively seeking work” in order to be eligible for benefits.  Currently, the law eliminates benefits only for those who are not capable of work, or are not “ready, willing and able to work.”  The revised law defines “actively seeking work” as being “engaged in systematic and sustained efforts to find work."  The revised law also requires the agency to promulgate regulations on the issue and to set standards of proof necessary to establish these work efforts.

On October 16, our firm conducted a webinar, which provided a detailed explanation of the wage deduction regulations promulgated by the New York State Department of Labor ("NYSDOL") on October 9.  If you wish to view a recording of the webinar in its entirety and print out a copy of the PowerPoint slides from the webinar, you can click here.

The New York State Department of Labor (“NYSDOL”) just published final regulations on its website, governing employee wage deductions under Section 193 of the Labor Law.  According to NYSDOL, the final Section 193 regulations are effective today – October 9, 2013 – and will be codified at and replace the existing 12 N.Y.C.R.R. Part 195.  As we previously reported, these regulations were published in draft form earlier this year and made available for public comment.  The final regulations contain only minimal changes from this earlier draft version. Most notably, the final Section 193 regulations retain and set forth detailed procedures which employers must follow when seeking to recover wage overpayments and advances by payroll deduction.  As the Section 193 regulations are now in force and effective, it is imperative that employers establish and implement the correct procedures before attempting to recover overpayments and advances by payroll deduction.  An employer’s failure to follow these mandatory procedures will create a presumption that the deductions were illegal. Among other things, the final regulations also list specific prohibited deductions, impose precise requirements for obtaining proper “authorization” from employees, and provide guidance on what types of deductions may be deemed permissible “similar payments for the benefit of the employee.” We will be following up soon with more detailed guidance on these and other issues under the final Section 193 regulations, and encourage you to check back for an updated post.

Beginning on October 29, 2013, an amendment to New York State’s smoking law prohibits smoking anywhere on the grounds of a general hospital or residential health care facility.  The amendment also prohibits smoking in areas within 15 feet of any building entrance or exit, and within 15 feet of any entrance to or exit from the grounds of a general hospital or residential health care facility.  Although there is a narrow exception for patients of residential health care facilities and their visitors or guests, there is no exception for employees of general hospitals or residential health care facilities.  Therefore, general hospitals and residential health care facilities should take immediate steps to notify their employees of the new smoking restrictions and ensure that their employees comply with those restrictions effective October 29, 2013.

The amendment, signed into law by Governor Cuomo on July 31, 2013, modifies New York Public Health Law Section 1399-o, Subdivision 2, which governs smoking in outdoor areas.  As a result of the amendment, general hospitals and residential health care facilities must prohibit their employees from smoking on their grounds and within 15 feet of all entrances to or exits from their grounds.  However, depending on how the law is eventually interpreted, smoking might be permitted in employees' private vehicles parked on the grounds of general hospitals and residential health care facilities due to a “private automobile” exception in a pre-existing, unmodified provision of the smoking law.  The Department of Health has not yet issued guidance on this issue, or on the new law generally.

Prior to the amendment, the only outdoor areas subject to the law were certain outdoor areas of schools and railroad stations.  The smoking law’s restrictions on smoking in indoor areas (including indoor areas of general hospitals and residential health care facilities) are contained in a separate section and are not modified by the amendment.

As noted above, the law contains an exception for patients of residential health care facilities and their visitors or guests.  This narrow exception permits these individuals to smoke in a designated smoking area that is at least 30 feet away from any building structure (other than a non-residential structure wholly contained in the designated smoking area).  This exception does not apply to patients of general hospitals and their visitors or guests.

The New York Court of Appeals, in Barenboim v. Starbucks Corp., recently clarified the types of employees who may participate in tip-pooling arrangements and the extent to which employers may exclude otherwise tip-eligible employees from participating in a tip pool under the New York Labor Law.

Background

Under Starbucks’ tip policy, baristas and shift supervisors share tips collected each week.  Two separate lawsuits were filed in federal court against Starbucks, challenging the policy as it applied to certain categories of employees.  In one case, baristas, who take and deliver orders, stock product, and clean tables, alleged that shift managers could not lawfully participate in the tip pool because their supervisory duties rendered them ineligible for tips.  In the other case, a group of assistant managers argued that because they perform some customer service-related duties and lack “full” managerial authority, Starbucks improperly excluded them from the tip pool.  The U.S. District Court for the Southern District of New York ruled in favor of Starbucks in both cases, and the plaintiffs in both cases appealed.

Noting that the cases raised novel questions of state law, the U.S. Court of Appeals for the Second Circuit certified two questions to the New York Court of Appeals, the state’s highest court:

1. What factors determine whether an employee is an “agent” of his employer for purposes of N.Y. Labor Law Section 196-d and, thus, ineligible to receive distributions from an employer-mandated tip pool?
2. Does New York Labor Law permit an employer to exclude an otherwise eligible tip-earning employee under Section 196-d from receiving distributions from an employer-mandated tip pool?

The Court's Analysis of the Issues

Citing the New York State Department of Labor’s January 2011 Hospitality Industry Wage Order, the Court held that employees are tip-eligible even if they have managerial responsibility as long as they provide personal service to customers as a principal part of their jobs, rather than just on an occasional or incidental basis.  However, an employee who has “meaningful authority” or control over subordinates is ineligible to participate in a tip pool.

The Court explained that “meaningful authority might include the ability to discipline subordinates, assist in performance evaluations or participate in the process of hiring or terminating employees, as well as having input in the creation of employee work schedules, thereby directly influencing the number and timing of hours worked by staff as well as their compensation.”  The Court left it to the Second Circuit Court of Appeals to apply those principles to the specific facts of the baristas’ case.

With respect to the second issue, the Court concluded that Section 196-d of the New York Labor Law does not create an affirmative right for all tip-eligible employees to participate in tip-sharing arrangements.  Although the Court stated that “there may be an outer limit to an employer’s ability to excise certain classifications of employees from a tip pool,” the Court found no evidence to suggest that Starbucks’ policy, as applied to assistant managers, reached that limit.

Impact on Employers

The Court’s decision provides some clarity regarding employees’ eligibility to participate in tip pools.  However, because the Court did not apply the “meaningful authority” standard to the facts of the baristas’ case, the analysis remains somewhat unclear.  Additionally, the Court did not identify which exclusions of tip-eligible employees might be considered unlawful.  Accordingly, employers should consult with counsel before implementing tip-sharing arrangements.

The New York City Council passed the Earned Sick Time Act on June 27, 2013, overriding Mayor Bloomberg's veto.  Under the Act, private sector employers with 20 or more employees within New York City will be required to offer at least 40 hours of paid sick leave per year to each employee beginning on April 1, 2014.  Private sector employers with less than 20 employees within New York City will be required to offer at least 40 hours of unpaid sick leave per year to each employee beginning on April 1, 2014.  Beginning on October 1, 2015, private sector employers with 15 or more employees within New York City will be required to offer at least 40 hours of paid sick leave per year to each employee, and private sector employers with less than 15 employees within New York City will continue to be required to offer at least 40 hours of unpaid sick leave per year to each employee.  These implementation dates could be postponed if economic indicators based on a financial index maintained by the Federal Reserve Bank of New York do not meet certain conditions.  The Act does not cover independent contractors, work study students, public sector employees, and certain types of hourly professional employees.

The Act provides that an eligible employee will earn at least one hour of sick leave for every 30 hours worked.  However, employers are not required to permit employees to use accrued sick leave until 120 calendar days after the commencement of employment.  Part-time employees are also covered by the Act, and will earn sick leave at the same rate.  Employers may provide employees with a faster accrual of sick leave than what is required by the Act, and may permit employees to use sick leave within their first 120 calendar days of employment.

Under the Act, accrued sick leave may be used for absences due to:  (1) the employee's own health condition; (2) the employee's need to care for a spouse, domestic partner, child, parent, or the child or parent of a spouse or domestic partner; or (3) the closure of the employee's place of business due to a public health emergency or the employee's need to care for a child whose school or child care provider has been closed due to a public health emergency.  An employer may require documentation that sick leave was used for one of these purposes only if the absence is for more than three consecutive work days.  The Act prohibits employers from retaliating against employees for their use of sick leave or for filing a complaint alleging a violation of the Act.

The number of employees that an employer has is determined by counting all compensated workers during a given week, including full-time, part-time, and per diem employees.  If the number of employees fluctuates, the size of the employer may be determined for the current calendar year based upon the average number of employees who worked for compensation per week during the preceding calendar year.  In chain businesses, the total number of employees in the group of establishments must be counted.

Employers may require reasonable notice from an employee who intends to use sick leave.  If the sick leave is foreseeable, the employer may require up to seven days' notice.  If the sick leave is not foreseeable, an employer may only require notice as soon as practicable.

If an employee is transferred from one location to another location within New York City, but continues to be employed by the same employer, the employee is entitled to keep his or her accrued sick leave.  However, an employer is not required to provide financial or other reimbursement to an employee upon termination, resignation, retirement, or other separation, whether voluntary or involuntary, for accrued unused sick leave.

The Act does not apply to any employee covered by a valid collective bargaining agreement, as long as the provisions of the Act are expressly waived in the collective bargaining agreement and the agreement provides for a comparable benefit to covered employees in the form of paid days off.  For employees in the construction or grocery industry who are covered by a valid collective bargaining agreement, there is no requirement that the agreement provide for a comparable benefit to covered employees in order for such employees to be exempt from the provisions of the Act -- it is sufficient that the collective bargaining agreement expressly waive the provisions of the Act, regardless of whether a comparable benefit is provided.

The New York State Department of Labor (“NYSDOL”) quietly published draft rules on its website regarding employee wage deductions under Section 193 of the New York Labor Law.  The rules will be open for public comment until July 6, 2013.

The draft rules cover a number of deduction-related issues.  For example, the rules specify what is required for employers to obtain sufficient “authorization” from employees for otherwise permissible wage deductions.  Among other things, employees must be provided with written notice of “all terms and conditions” of the deduction, the benefit(s) of the deduction, and the details of the manner in which the deduction will be made.

The rules also illustrate what types of deductions may be allowed under Section 193’s “catch-all” provision, permitting “similar payments for the benefit of the employee.”  New York employers will recall that, in recent years, NYSDOL has narrowly interpreted this provision to exclude many common types of deductions favored by employers and employees alike.  The draft rules suggest that NYSDOL will be closely scrutinizing wage deductions for such “similar payments” and that this provision will still be narrowly interpreted by state regulators.

Notably, the rules also include an enumerated list of illegal wage deductions, including deductions for “employee purchases of . . . attire required for work,” “unauthorized expenses,” and “political action committee” contributions.  Several of these prohibitions are consistent with recent NYSDOL interpretation of Section 193, but the blanket ban on political action committee contributions would contradict recent opinion letters indicating that such deductions would be lawful if permitted by federal election law.

Finally, the draft rules specify detailed procedures and requirements that employers must follow in order to lawfully deduct for wage overpayments and for wage or salary advances now permitted under Section 193.  An employer’s failure to follow these provisions will create a presumption that the deduction in question was illegal.

To reiterate, these are only draft rules which NYSDOL has proposed and are not yet in effect.  We will be reporting further during the rule-making process and public comment period.  We encourage you to check back for updates.

New York State's 2013-2014 budget -- approved on March 29, 2013 -- includes a three-stage increase in the state's minimum wage.  Effective December 31, 2013, the minimum wage will increase from $7.25 per hour to $8.00 per hour.  Effective December 31, 2014, the minimum wage will increase to $8.75 per hour, and effective December 31, 2015, the minimum wage will increase to $9.00 per hour.

These minimum wage increases do not apply to tipped food service workers and service employees who are covered by the New York State Department of Labor's Hospitality Industry Wage Order.  However, the Commissioner of Labor is authorized under the legislation to promulgate a wage order increasing the hourly minimum wage for such tipped employees.

Employers are eligible for a minimum wage reimbursement credit for each employee who:  (1) is between the ages of 16 and 19; (2) is paid at the applicable minimum wage rate; and (3) is a student during the period in which he or she is paid at the applicable minimum wage rate.  During the period of time when the minimum wage is $8.00 per hour, the reimbursement credit is $0.75 per hour for each hour worked by an eligible employee (which is the entire amount of the increase from the current $7.25 per hour minimum wage).  During the period of time when the minimum wage is $8.75 per hour, the reimbursement credit is $1.31 per hour for each hour worked by an eligible employee.  During the period of time when the minimum wage is $9.00 per hour, the reimbursement credit is $1.35 per hour for each hour worked by an eligible employee.  If the federal minimum wage is increased to above 85% of the state minimum wage, however, the reimbursement credit will be reduced to the difference between the federal minimum wage and the New York minimum wage.

The minimum wage reimbursement credit has been criticized because it may create an incentive for employers to hire teenage student employees over adult non-student employees.  Although the legislation creating the reimbursement credit prohibits employers from discharging a non-eligible employee and hiring an eligible employee "solely for the purpose of qualifying for this credit," critics maintain that this provision will be difficult to enforce and point out that nothing in the legislation precludes employers from gradually replacing non-eligible employees with eligible employees through normal attrition rather than by discharging employees.  The reimbursement credit may also create an incentive for employers to keep student employees between the ages of 16 and 19 exactly at the minimum wage because payment of those employees above the minimum wage may result in loss of the reimbursement credit under the language of the legislation.

Based on this criticism, a bill has been introduced in the State Senate to repeal the minimum wage reimbursement credit.  The bill has been referred to the Senate Committee on Investigations and Government Operations.

Employers who have employees in New York are required to issue annual notices under the Wage Theft Prevention Act ("WTPA") to all New York employees between January 1 and February 1, 2013.  Although a bill was introduced in the New York State Legislature to repeal the annual notice requirement in early 2012 (which was the first year that the annual notice requirement was in effect), the bill passed in the Senate but remains dormant in the Assembly.  Therefore, the WTPA annual notice requirement continues to be in effect.

As we have summarized in previous blog posts, the annual notice must contain the following information:

• the employee's rate or rates of pay (for non-exempt employees, this must include both the regular rate and overtime rate);
• the employee's basis of pay (e.g., hourly, shift, day, week, salary, piece, commission, or other);
• allowances, if any, claimed as part of the minimum wage (e.g., tips, meals, lodging);
• the regular pay day; and
• the name (including any "doing business as" name), address, and telephone number of the employer.

The annual notice must be provided to each employee in English and in the primary language identified by each employee, if the New York State Department of Labor ("NYSDOL") has prepared a dual-language form for the language identified by the employee.  At this point, the NYSDOL has prepared dual-language forms in Chinese, Haitian Creole, Korean, Polish, Russian, and Spanish.  The English-only and dual-language forms created by the NYSDOL are available on the NYSDOL's web site.  If an employee identifies a primary language other than one of the six languages for which a dual-language form is available, the employer may provide the annual notice in English only.  Employers are not required to use the NYSDOL's forms, but employers who create their own forms must be sure that all of the information required by the WTPA is included.

Employers are required to obtain a signed acknowledgment of receipt of the annual notice from each employee.  The acknowledgment 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.  Signed acknowledgments must be maintained for at least six years.

This article, authored by Mark Moldenhauer, originally appeared in the December 10, 2012 issue of the Buffalo Law Journal.

With calendars flipped to December, many companies are putting the final touches on holiday party plans.  These celebrations offer an opportunity to unwind, socialize, and reflect on the achievements of the past year, all outside of the hectic business environment.  Employers need to be aware, however, that holiday functions also raise a host of potential legal problems, especially when alcohol is served.  So while the trimmings and trappings deserve due attention, prudent employers should also consider ways to minimize the chance for a legal hangover.

1.  Boughs of Holly Are Fine -- Forget the Mistletoe!

Some people tend to exude an excessive amount of cheer during the holiday season.  Stories abound about executives dancing provocatively with interns or messengers flirting with the CEO’s spouse.  While no one wants to bah-humbug the festivities, it is important for employers to keep in mind that many of the same rules that apply in the workplace must be enforced at holiday parties.  This includes policies that prohibit sexual and other forms of harassment.

If you rely on a vendor or banquet facility to coordinate the event, be explicit that you intend this to be a professional function (yes, ask the DJ for a set list).  While gag gifts and "roasting" speeches might be popular, a fine line exists between good-natured ribbing and public humiliation.  Ideally, any gifts and planned remarks should be vetted and approved in advance.  Few things ring in the New Year worse than a hostile work environment or discrimination lawsuit.

2.  Take It Easy on the Eggnog

Whether it is loosening inhibitions or causing problems after-the-fact, alcohol is frequently the cause of holiday party problems.  As the sponsor, an employer must be keenly aware of the risks posed by serving alcohol and consider different options to reduce those risks.

In New York and several other states, “social hosts” are generally not liable for alcohol-related accidents or injuries suffered off-premises by third parties.  This is not the case in every state, so an employer should familiarize itself with the applicable law where the function is being held.  Also keep in mind that when revelers cross state lines, a claim might arise in one jurisdiction even though the host would not be liable to third parties in the state where the party actually occurred (for instance, a party in New York followed by an accident in New Jersey).  In addition, employees and guests under the age of 21 must never be served alcohol.  Many states, including New York, specifically allow claims against social hosts when alcohol is served illegally.  For this and other reasons, employers should insist that bartenders check ID or use some other system to ensure that they are not giving alcohol to underage attendees.

As for injuries suffered after the party by inebriated employees or guests, courts will typically find that a person’s voluntary intoxication caused his or her injury.  This includes situations where an employee or guest gets hurt in a motor vehicle accident.  Of course, this does nothing to lessen the non-legal consequences of someone becoming injured or worse while driving home from a holiday party.

On-premises injuries are a different story.  An employer has a duty to prevent harm to those on its property and in areas under its control, which could include an off-site facility that the employer leases for its holiday party.  If the employer learns that an employee or guest is intoxicated or otherwise acting inappropriately, reasonable steps should be taken to prevent the situation from escalating.

An employer-sponsored holiday party will almost certainly be considered as relating to employment, even if attendance is voluntary.  As a result, the exclusive remedy for an employee who suffers an injury at the party will normally be workers’ compensation benefits.  That said, injuries caused solely by alcohol consumption are normally deemed non-compensable under most workers’ compensation laws, including New York’s.  Also, injuries suffered in a car accident during an employee’s drive home will not likely be covered since commuting is generally considered outside the scope of employment for workers’ compensation purposes.

3.  Make Your List . . . and Check it Twice

 Without a doubt, holiday parties have their advantages, including the positive impact on employee morale.  Employers are encouraged, however, to do some advance planning in order to at least reduce potential risks.  Taking proactive steps will hopefully allow everyone to enjoy themselves, both during and after the party.

In addition to the measures discussed above, consider taking the following steps to help ensure that your festivities remain safe and jolly:

• Arrange transportation to and from the event or notify employees and guests that the company will cover cab fare;
• Coordinate discounted rates for employees and guests with nearby hotels;
• If the party is on the employer’s premises, hire a professional bartender or caterer and confirm that they carry sufficient liability insurance;
• Instruct bartenders to serve conservatively, “cut off” anyone who appears intoxicated and prohibit employees and guests from serving drinks;
• Limit the amount of alcohol served by providing non-alcoholic options, reducing the hours of open bar, giving attendees vouchers for drinks or using a cash bar;
• Recruit spotters to watch for excessive drinking and other inappropriate behavior;
• Serve foods that are rich in starch or protein to slow the absorption of alcohol and avoid salty foods that encourage people to drink;
• Contact your insurance carriers to discuss whether current policies provide sufficient coverage and, if not, purchase a product that will;
• Consider alternative formats which discourage heavy drinking, such as a breakfast or lunch function or a party with significant others and children;
• Advise employees that attendance is strictly voluntary and refrain from activities that can be viewed as compensable work under the Fair Labor Standards Act;
• Schedule the party on a day that will not conflict with any employee’s religious observances; and, last but not least,
• Remember:  “Holiday Party” not “Christmas Party”!  Most workplaces are incredibly diverse and comprised of individuals who celebrate a variety of religious and secular holidays.  Do not engender feelings of exclusion by emphasizing one particular set of traditions or beliefs.