In a decision issued yesterday, the New York State Industrial Board of Appeals (IBA) revoked the regulations regarding payment of wages by debit card and direct deposit. While the full decision is available here, the upshot is that the IBA concluded that the Commissioner exceeded his “rulemaking authority and encroached upon the jurisdiction of the banking and financial services regulators.”
Accordingly, the regulations governing the payment of wages by debit card and direct deposit, which were set to go into effect on March 7th, are revoked. Employers need not act to come into compliance with those regulations.
An appeal is possible. Stay tuned.
Pursuant to new regulations that take effect on March 7, 2017, New York employers will be required to satisfy certain notice requirements and obtain employees' informed consent before paying wages by debit card or direct deposit. (Additional information concerning those regulations can be found here.) In connection with those regulations, this week the New York State Department of Labor posted model templates for written notice and consent for public comment and feedback.
The notice and consent for payroll debit cards can be found here.
The notice and consent for direct deposit can be found here.
Comments and feedback can be submitted to regulations@labor.ny.gov through February 10, 2017. The Department indicates that after making any changes from such comment and feedback, it will post updated templates prior to the March 7 effective date of the rule, along with translations into additional languages specified during the rulemaking process.
As expected, this morning, the New York State Department of Labor published its final rule increasing the salary threshold applicable to exempt executive and administrative employees in New York State. While the ultimate fate of the USDOL’s regulations remains unclear, New York employers now know that the salary threshold applicable to exempt executive and administrative employees will increase effective December 31st. As previously reported, under New York’s Labor Law, the salary threshold for executive and administrative employees (NY law does not set a salary threshold for professional employees and thus the federal salary of $455 applies) is currently $675 per week -- 75 times the current minimum wage of $9.00 per hour. With the minimum wage set to gradually increase in coming years (at different rates depending on geography), the New York State Department of Labor has implemented corresponding increases in the applicable salary threshold. The first of these increases will take effect in just three days. Specifically, the increases to New York's salary threshold for executive and administrative employees are as follows: Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties
$727.50 per week on and after 12/31/16;
$780.00 per week on and after 12/31/17;
$832.50 per week on and after 12/31/18;
$885.00 per week on and after 12/31/19;
$937.50 per week on and after 12/31/20
Employers in New York City"Large" employers (11 or more employees)
$825.00 per week on and after 12/31/16;
$975.00 per week on and after 12/31/17;
$1,125.00 per week on and after 12/31/18
"Small" employers (10 or fewer employees)
$787.50 per week on and after 12/31/16;
$900.00 per week on and after 12/31/17;
$1,012.50 per week on and after 12/31/18;
$1,125.00 per week on and after 12/31/19
Employers in Nassau, Suffolk, and Westchester Counties
$750.00 per week on and after 12/31/16;
$825.00 per week on and after 12/31/17;
$900.00 per week on and after 12/31/18;
$975.00 per week on and after 12/31/19;
$1,050.00 per week on and after 12/31/20
$1,125.00 per week on and after 12/31/21
A chart summarizing these thresholds is available on the NYS DOL website. What does this mean? It means that if you have any exempt executive or administrative employees who are currently paid less than the applicable salary threshold set forth above, you must increase their salary to at or above that threshold or reclassify them as nonexempt. But fear not -- you have three days. What a perfect way to end the year -- a significant change imposed on New York employers with virtually no notice. Happy New Year everyone!
You read that right -- not to be outdone by its federal counterpart -- the New York Department of Labor recently proposed significant changes to the salary threshold applicable to exempt executive and administrative employees in New York State -- changes all New York employers should be aware of. As you know, both state and federal law regulate exempt status and, to be exempt, an employee must satisfy the requisite tests under both. While employers are preparing for changes at the federal level that will go into effect on December 1st -- raising the salary threshold for most executive, administrative and professional employees to $913.00 per week -- the New York State Department of Labor has taken the opportunity to propose significant increases to New York's salary threshold. Currently, the salary threshold for executive and administrative employees (NY law does not set a salary threshold for professional employees) is set at $675.00 per week -- 75 times the current minimum wage of $9.00 per hour. With the minimum wage set to gradually increase in coming years (at different rates depending on geography), the Department of Labor has proposed corresponding increases in the applicable salary threshold. As a result of these proposed increases, New York's salary threshold will overtake the federal threshold in coming years. (Note: because the $913.00 per week federal salary threshold will be indexed, it will be adjusted every three years with the first such adjustment occurring in 2020.) Specifically, the Department of Labor has proposed the following increases to New York's salary threshold for the executive and administrative exemptions: Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties
$727.50 per week on and after 12/31/16;
$780.00 per week on and after 12/31/17;
$832.00 per week on and after 12/31/18;
$885.00 per week on and after 12/31/19;
$937.50 per week on and after 12/31/20
Employers in New York City"Large" employers (11 or more employees)
$825.00 per week on and after 12/31/16;
$975.00 per week on and after 12/31/17;
$1,125.00 per week on and after 12/31/18;
"Small" employers (10 or fewer employees)
$787.50 per week on and after 12/31/16;
$900.00 per week on and after 12/31/17;
$1,012.50 per week on and after 12/31/18;
$1,125.00 per week on and after 12/31/19;
Employers in Nassau, Suffolk, and Westchester Counties
$750.00 per week on and after 12/31/16;
$825.00 per week on and after 12/31/17;
$900.00 per week on and after 12/31/18;
$975.00 per week on and after 12/31/19;
$1,050.00 per week on and after 12/31/20;
$1,125.00 per week on and after 12/31/21;
After a 45-day public comment period, the Department of Labor will likely move toward finalizing these proposed changes. As if business owners, executives, and human resource professionals did not have enough to deal with.
New York’s Election Leave Law requires employers to post a voting leave notice at least ten (10) working days before "every election." This year, the general election will be held on November 8, 2016. Therefore, employers must, if they have not already done so, post a notice no later than today, October 25, 2016.
A sample of the notice required under the New York Election Law can be found on the New York State Board of Elections web site. This notice must be posted at least ten (10) working days before the election “conspicuously in the place of work where it can be seen as employees come or go to their place of work” and must remain in place until the polls close on Election Day. The Election Law requires the notice to be posted before “every election” – not just general elections – so employers should consider whether to keep this notice posted throughout the year.
In addition to posting the notice, employers should also make sure to afford employees voting leave when obligated to do so. Under New York Election Law § 3-110, registered voters are entitled to take up to two (2) hours of paid time off from work if they do not have “sufficient time" outside of their working hours to vote. If the registered voter has four (4) consecutive hours either between the opening of the polls and the beginning of the working shift, or between the end of the working shift and the closing of the polls, it will be assumed that the voter has sufficient time to vote. (For general elections, the polls in New York State open at 6:00 a.m. and close at 9:00 p.m.).
However, the voter is not automatically entitled to take paid time off to vote if he or she does not have four consecutive hours at the beginning or at the end of the working shift. The voter must still show that the time he or she has at the beginning or at the end of the working shift is not sufficient to vote. If the voter can make such a showing, the voter will be entitled to take only as much paid time off (up to a maximum of two (2) hours) that, when added to the voting time the voter has outside working hours, will enable the individual to vote. Furthermore, New York’s Election Leave Law requires employees to notify the employer at least two (2) working days, but not more than ten (10) working days, prior to the election of the need for voting leave. For this year’s general election, requests for time off to vote should be made between Tuesday, October 25, 2016 and Friday, November 4, 2016. The employer may designate that this paid leave be taken off at the beginning or the end of the working shift, unless there is another mutually-agreed upon time.
On September 7, 2016, the New York State Department of Labor adopted regulations governing the payment of employee wages by any method other than cash or check, including direct deposit and payroll debit cards. The purpose of the new rules, which will become effective on March 7, 2017, is to ensure that workers who are paid via payroll debit cards have access to their wages in full without being subjected to hidden fees.
At least seven business days before taking action to pay employees via payroll debit cards, employers must satisfy certain notice requirements and obtain employees’ informed consent. For example, employers must provide employees with:
a plain language description of all of the employee’s options for receiving wages;
a statement that the employer may not require the employee to accept wages by payroll debit card or direct deposit;
a statement that the employee may not be charged for any fees for services that are necessary for the employee to access his/her wages in full; and
if offering the option of payroll debit cards, a list of locations of fee-less ATMs within a reasonable travel distance from the employee’s workplace or residence (a link to a website containing such information is sufficient).
Additionally, if employees are covered by a collective bargaining agreement which provides the method(s) of payment by which employees must be compensated, the employer must obtain the union’s approval before paying employees by payroll debit card.
Under the new rules, employers will not be able to pass the costs associated with payroll debit cards onto employees, nor will they be able to accept kickbacks from card issuers, card sponsors, or third parties for delivering wages via payroll debit cards. Significantly, employees who choose to receive their wages via a payroll debit card will:
have access to at least one (1) fee-less ATM within a reasonable travel distance from where the employees work or live;
have access to unlimited withdrawals from a fee-less ATM; and
not incur fees for: checking their balance; maintenance; account inactivity; overdraft; contacting customer service; receiving written statements or transaction histories; closing an account; card replacement (at reasonable intervals); taking action necessary to receive wages or hold the payroll debit card; or point of sale transactions.
Unsurprisingly, business spokespersons predict that New York employers will shy away from using payroll debit cards once these new requirements become effective. One advocate described the new rules as “unworkable.”
It is worth noting that the new rules will not apply to employees working in a bona fide executive, administrative, or professional capacity who earn in excess of $900 per week, nor will they apply to employees working on a farm not connected with a factory.
On August 3, 2016, Governor Andrew Cuomo signed a law legalizing fantasy sports in New York. The timing is critical to the industry, as it may enable major fantasy sports providers to reopen operations in New York by the beginning of the National Football League season in September. Football is easily the most popular U.S. sport for fantasy sports.
It’s hard to anticipate the full impact of the new law on New Yorkers’ level of participation in fantasy sports. But it’s safe to predict that many thousands of them will be back in the game soon. Most of these participants are employees somewhere, and many will be tempted to research or set their lineups during work time instead of performing their regular jobs. With this in mind, here’s a fantasy sports primer for New York employers.
Overview of Fantasy Sports
Americans have participated in fantasy sports for more than 30 years. Originally, the concept was for a group of friends, perhaps co-workers, to get together at the beginning of the season for a particular professional sports league and select a team of players from among those actually playing in the league. Each fantasy team earns points based on the real-life performance of their “players.” Then, in essence, whichever team has the most points over the course of the season wins the fantasy league.
The internet facilitated the expansion of fantasy sports, making it much easier to administer leagues, including those with participants from various geographic locations.
Over the past few years, a new breed of fantasy sports has rapidly emerged. So-called “daily” fantasy sports (popularly abbreviated as “DFS”) contests have been developed to enable people to pick a new team or teams as often as each day, rather than be stuck with the same players over the course of a whole season. Technically, the name of this sub-category of fantasy sports is something of a misnomer. DFS has developed to have contests ranging from only a small subset of a particular league’s games in a single day to a number of games spread out over a whole week. But the key distinction is that the winner is determined based on a much shorter period than an entire season.
Because the results of DFS contests are based on so few games within a sport, they more closely resemble betting on particular games. As a result, this type of fantasy sports has drawn legal attack in a number of states even though the traditional season-long fantasy games have been generally tolerated with little challenge. In fact, since 2006, a federal law has seemingly carved out fantasy sports from prohibitions on internet gambling. However, the Unlawful Internet Gambling Enforcement Act does not itself make fantasy sports of any variety legal under state laws.
Scope of the New Fantasy Sports Law
Fundamentally, the New York law specifically declares that “interactive fantasy sports are not games of chance.” In other words, the Legislature has found that, based on the skill involved in these games, playing them is not gambling in New York.
The law is not technically limited to DFS. Rather, it encompasses more traditional fantasy sports games as well, even though the earlier-created season-long fantasy sports have not been subject to much scrutiny in the past.
Now, any person or entity that wishes to operate any fantasy sports contests in New York where entry fees are paid must register with the New York State Gaming Commission. The law provides for temporary permits to be issued to operators who had already been providing fantasy sports games prior to November 10, 2015 (when the New York State Attorney General had declared daily fantasy sports to be illegal).
Significantly, this law specifically prohibits the following people from playing fantasy sports where an entry fee is paid:
Any member, officer, employee or agent of a fantasy sports operator or registrant;
Certain family members living in the same household as a member, officer, employee, or agent of a fantasy sports operator or registrant;
Anyone with non-public confidential information about fantasy sports contests;
Any athlete whose performance may be used to determine the outcome of a fantasy sports contest;
Any sports agent, team employee, referee, or league official associated with any sport or athletic event on which contests are based;
Anyone located in a state where fantasy sports contests are prohibited; and
Any minor under the age of 18.
The legislation also includes various safeguards intended as consumer protection measures and imposes a 15% state tax on gross revenues earned by fantasy sports operators. The tax revenue will go into the State Lottery Fund.
Notably, this new law may not finally resolve the legal status of fantasy sports in New York. Despite the Legislative declaration that fantasy sports are not games of chance, the New York Constitution does still generally prohibit “gambling” other than state-operated lotteries, pari-mutuel betting on horse races, and casino gambling as specifically authorized by the Legislature. In addition, it also remains debated whether federal law permits or prohibits particular forms of fantasy sports.
Effect on Employee Productivity
Various estimates suggest that more than 50 million people played fantasy sports in the U.S. and Canada in 2015. Millions of those people play DFS, with exact numbers increasingly difficult to estimate due to ongoing restrictions to access from state to state. It is likely that millions of New Yorkers had played DFS before the State Attorney General shut down the major contest providers late last year. Indeed, the New York State Legislature declared in the new statute that “the internet has become an integral part of society, and interactive fantasy sports a major form of entertainment for many consumers.” Undoubtedly, the number of people playing DFS in New York State will increase exponentially (from near zero under the recent moratorium) when the major contest providers reopen in the state.
DFS is, by its nature, typically more time consuming than traditional season-long fantasy sports. Even casual players can spend hours in a day researching the best matchups for that day’s/week’s games. It is this research, and the reality that it affects DFS performance, that has enabled the New York Legislature to find that fantasy sports are games of skill. DFS players who don’t conduct some meaningful level of research are essentially throwing their money away in the long run. So the motivation to spend time selecting teams is clear.
What does this mean? DFS players have to make time to play. Some, perhaps many, will do so at work, using their employer’s equipment, or when they should be sleeping to rest up for the next day. This can lead to lost work time, lost productivity while working, and even risk to computer systems through viruses or other malware. Thus, employers may soon come to prefer that their employees avoid DFS, even to a greater degree than traditional fantasy sports.
What can employers do if DFS or other fantasy sports become a problem for their employees?
Restrictions on Employers
Section 201-d of the New York Labor Law generally prohibits employers from taking adverse employment action against applicants and employees based on their recreational activities. The Labor Law specifically defines “recreational activities” as “lawful, leisure-time activity, for which the employee receives no compensation and which is generally engaged in for recreational purposes, including but not limited to sports, games, hobbies, exercise, reading and the viewing of television, movies and similar material.”
Based on this definition, it’s not clear whether playing daily fantasy sports would qualify as a recreational activity. DFS didn’t exist when the term was defined, and season-long fantasy sports were not nearly as prevalent as they are today. Various aspects of the definition could be questioned regarding this form of entertainment.
First, to be covered by Section 201-d, the activity has to be “lawful.” As discussed above, there is still some question as to the legality of fantasy sports, especially DFS, notwithstanding the new state law purporting to legalize them.
Second, is participation a “leisure-time activity, for which the employee receives no compensation”? Many people participating in fantasy sports are compensated, some quite handsomely. However, the compensation does not come from the employer. So, does this mean that the law only applies to people who are unfortunate enough never to win?
Third, are daily fantasy sports “generally engaged in for recreational purposes”? Fantasy sports are just a hobby for many participants. But, for many others, DFS is actually a business venture. Does this mean the individual’s motivations for playing determine their protection under the law?
Even assuming an employee would be considered to be engaging lawful recreational activities when playing fantasy sports, the Labor Law does allow employers to put some restrictions on their participation. The law only protects employees for engaging in recreational activities outside work hours, off of the employer's premises, and without use of the employer's equipment or other property. So, employers can prohibit employees from playing DFS or other fantasy sports while at work and while using company computers, for example.
Finally, Section 201-d also has a general exception that eliminates employee protection for activity that “creates a material conflict of interest related to the employer's trade secrets, proprietary information or other proprietary or business interest.” This exception might create an argument, for example, that employers in the sports industry or with clients or customers in that industry could prohibit certain employees (even if they are not specifically prohibited from playing under the fantasy sports law) from participating in DFS altogether based on the risk of jeopardizing business relationships or enabling “insider trading.”
Conclusion
Employers across New York should be prepared for the impact of fantasy sports in the workplace, particularly the re-introduction of daily fantasy sports. Most employers will at least want to ensure that DFS players are still getting their work done and not compromising company electronic systems and equipment.
At a minimum, computer usage policies should be reviewed and revised if necessary. For example, generic prohibitions on using company internet access for “gambling” arguably may no longer encompass fantasy sports. Accordingly, new provisions addressing fantasy sports, including DFS, may be warranted.
Some employers in related industries should take special precautions to advise employees (and other related parties) that they are prohibited from playing fantasy sports based on their relationship to the sports or contests involved.
Ultimately, if you experience a particular problem with employees based on their participation in fantasy sports, you will need to navigate not only New York Labor Law Section 201-d as addressed above, but other standard sources of employee protections, such as employment contracts, collective bargaining agreements, and anti-discrimination laws. It is highly recommend that you consult with an experienced labor and employment attorney before taking any disciplinary action based on fantasy sports or other “off-duty” conduct.
Employers in New York are familiar with the requirement, imposed by the Wage Theft Prevention Act, that every new hire must be provided with notice of their rate of pay (including overtime rate of pay if applicable), how the employee will be paid (i.e., by the hour, shift, day, etc.), the regular payday, and information regarding the employer. Employers are obligated to provide an additional written notice anytime that information changes, unless the employee's wage rate is increased and the next pay stub reflects the increase. Each time notice is given, the employer is required to obtain a signed acknowledgment from the employee, and must keep that signed acknowledgement on record for six years. Upcoming changes to the white collar exemptions under the Fair Labor Standards Act may implicate a need to issue new notices if employees are reclassified from exempt to non-exempt. As the law currently stands, employees must earn a minimum salary of $455.00 per week ($23,660 per year) to qualify for one of the white collar exemptions (administrative, executive, or professional) under the FLSA. New York currently has a higher salary threshold of $675.00 per week ($35,100 per year) for an employee to qualify for the administrative or executive exemptions. The current threshold for employees to meet the "highly compensated employee" exemption under the FLSA is $100,000 per year. Starting on December 1, 2016, however, these thresholds will rise substantially. The increased salary threshold for the administrative, professional, and executive exemptions will be $913.00 per week ($47,476 per year). The new threshold for the highly compensated employee exception will be $134,004 per year. These thresholds are set to increase every three years after that, with the first increase taking effect on January 1, 2020. This change will force many employers to reclassify employees who are currently exempt, but do not meet the new salary threshold, as non-exempt. Any such reclassification will affect the rates those employees are paid, how they are paid, and their eligibility for overtime pay. Given this impact, what legal obligation will the reclassification trigger? You guessed it -- the WTPA’s notice requirement. Accordingly, employers should be mindful of this notice requirement when reclassifying employees in order to comply with the updated regulations, or when making any other changes to employee’s rates or method of payment. Although the "pay stub exemption" may apply in some limited instances, the best practice is to provide employees with formal written notice that complies with the WTPA when making any such changes.
After a nearly eight-month delay, the New York State Department of Labor once again published draft Regulations governing the payment of employee wages via payroll debit cards, direct deposit, and other means. As we previously reported, these proposed Regulations would impose several new requirements for New York employers, even for those who merely pay employees by direct deposit. These proposed Regulations – now NYSDOL’s third version – are currently open for public comment.The most recent version is almost identical to the version last proposed in October 2015, with NYSDOL making only two substantive changes: (1) the newly-proposed Regulations make clear that the requirement to provide employees with a “list of locations” -- where they can access and withdraw their wages -- only applies to the use of payroll debit cards; and (2) the newly-proposed Regulations remove language included in the October 2015 version, which provided that, when paid by check, employees must have at least one means of no-cost local access to the full amount of wages through check cashing or deposit of a check at a financial institution (but NYSDOL nevertheless stated that employers must still “ensure that employees are able to access their wages in order for payment to be effective in accordance with the requirements of Section 191 of the Labor Law”). Notably, NYSDOL reiterated that the proposed Regulations will not be effective until six months after they are published and adopted in final form.The reason for the eight-month delay on the part of the NYSDOL in issuing these revised draft Regulations is unclear, but it is expected that final rule-making will now proceed in a timely manner.
One of the many joys of parenthood is the opportunity to relive one’s childhood. To a parent who grew up on the old-school comic books, the steady roll-out by Marvel Studios of big budget super-hero movies offers a unique bonding opportunity with one’s children, which can take place over a uniquely unhealthy massive bowl of movie theater popcorn (with the glee from the experience outweighing the fear of the hyper-caloric intake). My kids frequently ask me about my favorite superhero. To me it is undoubtedly Hulk, a character who metes out just-desserts -- an admirable goal for a management-side employment lawyer (the side of angelic innocence). Hulk is not Hulk unless provoked. As Bruce Banner he is a quintessential good guy, just like all of us in the world of Human Resources. That brings us to Hulk’s relationship with employment law. We need a Hulk when our employees steal from us, harass other employees, take our trade secrets, and secretly compete against us. But in the real world where does one find a muscle-bound green skinned superhero that is pretty much indestructible? Enter the faithless servant doctrine. 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 applies to a wide-array of employee misconduct, including unfair competition (Maritime Fish Products, Inc. v. World-Wide Fish Products, Inc., 100 A.D.2d 81, 474 N.Y.S.2d 281 (1st Dep't 1984)), sexual harassment (Astra USA Inc. v. Bildman, 455 Mass. 116, 914 N.E.2d 36 (2009)), insider-trading (Morgan Stanley v. Skowron, 2013 WL 6704884 (S.D.N.Y. 2013)), theft (William Floyd Union Free School District v. Wright, 61 A.D.3d 856, 877 N.Y.S.2d 395 (2d Dep’t 2009)), and off-duty sexual misconduct (Colliton v. Cravath, Swaine & Moore, LLC., 2008 WL 4386764 (S.D.N.Y. 2008)). As the faithless servant doctrine becomes more well-known, the full breadth of its power continues to be litigated. Specifically, just how much damage can this doctrine inflict? Disloyal employees have argued that forfeiture under the doctrine should be limited to a so-called “task-by-task” apportionment. Under this argument, if an employee earns for example $200,000 a year and steals $20,000 over five months in four separate transactions, the remedy is a return of the stolen funds and a salary forfeiture of a day’s pay on each of the four days of misconduct. But, whatever superficial appeal this argument may have, once the employee steals we enter Hulk’s world, and Hulk does not deliver justice with surgical precision. Rather, in the immortal words of Captain America, Hulk “smashes.” In William Floyd Union Free School District v. Wright, 61 A.D.3d 856, 877 N.Y.S.2d 395 (2d Dep’t 2009) (argued by the author of this article), the Second Department rejected the task-by-task apportionment argument, holding: “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.” The forfeiture in that case included all salary and deferred compensation, including paid health and life insurance in retirement. Turning back to our hypothetical, the faithless servant doctrine requires not only the return of the $20,000 stolen, but also forfeiture of all of the salary paid to the employee after the first theft and any related deferred compensation, such as contractual payments owed upon retirement. Despite the William Floyd decision, disloyal employees have tried in earnest to limit the scope of the forfeiture. On June 2, 2016, the 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 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 also to create a harsh deterrent against disloyalty by employees. The Court ordered the disloyal employee to pay back $316,535.54 (which was all of the compensation earned by the employee during the nearly six-year period of disloyalty), and held that the employer was relieved of the obligation to provide the disloyal employee with health insurance benefits earned through his employment. The City of Binghamton decision solidifies the Hulk-like power of the faithless servant doctrine -- a remedy that serves up justice with “smashing” deterrent impact.
On May 18, the New York State Division of Human Rights adopted a new regulation prohibiting employment discrimination based on an individual’s relationship or association with a member of a protected category covered by the New York Human Rights Law. The proposed rule was published in the State Register on March 9. The agency did not receive any public comments regarding the proposed rule, and adopted the rule without making any changes. According to the Division, the purpose of the new regulation is to confirm long-standing precedent supporting anti-discrimination protection for individuals based on their relationship or association with members of a protected class. The new regulation applies to employment discrimination and all other types of discrimination protected under the New York Human Rights Law, including housing, public accommodations, access to educational institutions, and credit. In order to prove a claim of employment discrimination in this context, an individual must prove that he or she was subjected to an adverse employment action based on the individual's known relationship or association with a member of a protected class. This latest expansion of the protections afforded by the New York Human Rights Law underscores the importance of basing all employment decisions on legitimate reasons that can be supported by objective facts, and documenting the legitimate reasons for those decisions. Supervisors should also be trained to apply workplace policies and standards fairly and uniformly among all employees, to further reduce the risk of discrimination claims.
On April 4, 2016, Governor Cuomo signed legislation, as part of the 2016-2017 state budget, enacting a $15.00 minimum wage plan and a 12-week paid family leave benefit.
Minimum Wage Increase
The legislation includes a historic increase in the minimum wage (currently $9.00 per hour) that will ultimately reach $15.00 per hour for all workers in New York State. The increases vary based on employer size and geographic location as follows:
For large employers (11 or more employees) whose employees work in New York City, the state minimum wage will increase to $11.00 per hour on December 31, 2016, $13.00 per hour on December 31, 2017, and $15.00 per hour on December 31, 2018.
For small employers (10 or fewer employees) whose employees work in New York City, the state minimum wage will increase to $10.50 per hour on December 31, 2016, $12.00 per hour on December 31, 2017, $13.50 per hour on December 31, 2018, and $15.00 per hour on December 31, 2019.
For employers with employees working in Nassau, Suffolk, and Westchester Counties, the state minimum wage will increase to $10.00 per hour on December 31, 2016, $11.00 per hour on December 31, 2017, $12.00 per hour on December 31, 2018, $13.00 per hour on December 31, 2019, $14.00 per hour on December 31, 2020, and $15.00 per hour on December 31, 2021.
For all employers with employees working outside of New York City and Nassau, Suffolk, and Westchester counties, the state minimum wage will increase to $9.70 per hour on December 31, 2016, $10.40 per hour on December 31, 2017, $11.10 per hour on December 31, 2018, $11.80 per hour on December 31, 2019, and $12.50 per hour on December 31, 2020. The minimum wage will continue to increase to $15.00 thereafter on an indexed schedule to be set by the Director of the Budget in consultation with the Commissioner of the Department of Labor. These increases will be published on or before October 1st of each year.
The legislation also includes a safety measure allowing the Division of Budget, beginning in 2019, to conduct an annual analysis to determine whether there should be a temporary suspension or delay in any scheduled increases. These minimum wage increases do not affect the timing and amounts of the minimum wage increases for fast food workers that were incorporated into the Hospitality Industry Wage Order effective December 31, 2015.
Paid Family Leave
In addition to a gradual increase in the minimum wage, a paid family leave program was enacted that will eventually result in eligible employees being entitled to up to 12 weeks of paid family leave when they are out of work for the following qualifying reasons: (1) to care for a family member with a serious health condition; (2) to bond with a child during the first 12 months following birth or placement for adoption or foster care; or (3) because of a qualifying exigency arising out of the fact that the employee’s spouse, domestic partner, child, or parent is on active duty (or has been notified of an impending call or order to active duty) in the armed forces.
In order to be eligible for paid family leave, employees must work for a covered employer – as defined under the New York Disability Law – for 26 or more consecutive weeks. Family leave benefits will be phased in as follows:
Beginning on January 1, 2018, eligible employees will receive up to 8 weeks of paid family leave in a 52-week calendar period at 50% of the employee’s average weekly wage, capped at 50% of the state average weekly wage;
Beginning on January 1, 2019, eligible employees will receive up to 10 weeks of paid family leave in a 52-week calendar period at 50% of the employee’s average weekly wage, capped at 50% of the state average weekly wage;
Beginning on January 1, 2020, eligible employees will receive up to 10 weeks of paid family leave in a 52-week calendar period at 60% of the employee’s average weekly wage, capped at 60% of the state average weekly wage; and
Beginning on January 1, 2021 and each year thereafter, eligible employees will receive up to 12 weeks of paid family leave in a 52-week calendar period at 67% of the employee’s average weekly wage, capped at 67% of the state average weekly wage.
Like with the minimum wage increase, the legislation includes a safety measure whereby the Superintendent of Financial Services has the discretion to delay the scheduled increases listed above.
Family leave benefits may be payable to employees for family leave taken intermittently or for less than a full workweek in increments of one full day or one-fifth of the weekly benefit. Significantly, employers are not required to fund any portion of this benefit. Rather, the program is funded entirely through a nominal employee payroll deduction. The maximum employee contribution will be set by the Superintendent of Financial Services on June 1, 2017 and annually thereafter.
Entitlement to paid family leave is also subject to certain medical certification and notification requirements. Paid family leave benefits must be used concurrently with leave under the Family and Medical Leave Act. In addition, employees are prohibited from collecting disability and paid family leave benefits concurrently.
In addition to paid leave, this legislation contains a provision for the continuation of health benefits which provides as follows: “In accordance with the Family and Medical Leave Act (29 U.S.C. §§ 2601-2654), during any period of family leave the employer shall maintain any existing health benefits of the employee in force for the duration of such leave as if the employee had continued to work from the date he or she commenced family leave until the date he or she returns to employment.”
Lastly, employees who take paid family leave must be restored to their current position or to a comparable position with equivalent pay, benefits, and other terms and conditions of employment.
Clearly, there are a lot of questions that remain unanswered regarding the paid family leave program. However, covered employers should begin to prepare for the implementation of this legislation.
