In a victory for Home Care employers, the U.S. District Court for the District of Columbia issued consecutive decisions which struck down two regulations issued by the U.S. Department of Labor (“USDOL”) that would have eviscerated the “companionship exemption” contained in the Fair Labor Standards Act (“FLSA”). The two USDOL regulations enacted in late 2013 were prevented from taking effect, as scheduled, on January 1, 2015, by two related decisions on December 22, 2014 and January 14, 2015, which vacated both regulations on the ground that they “conflicted with the [FLSA] statute itself.” Each of the two challenged regulations would have imposed greater overtime obligations on Home Care employers, by sharply reducing the reach of the FLSA “companionship exemption,” which, for 40 years, had excluded most Home Care work from federal overtime laws. Specifically, the exemption excludes from federal minimum wage and overtime obligations companionship and live-in “services which provide fellowship, care and protection to a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs,” unless the work is performed by a Registered Nurse or similarly trained professional. In the first of the two decisions, the District Court struck down a USDOL regulation that would have eliminated the companionship exemption unless the Home Care worker is employed directly by the patient or household itself, rather than by an Agency. Since the vast majority of Home Care workers are employed by Home Care Agencies, this new regulation would have had sweeping impact, had it taken effect. In striking down the regulation, the Court held that “Congress intended the exemption to apply to all employers who provide companionship and live-in domestic services. . . .” It curtly rejected the new regulation as contrary to the statute, noting that “Congress surely did not delegate to the [USDOL] here the authority to issue a regulation that transforms defining statutory terms . . . based on who cuts a check, rather than what work is being performed.” Shortly thereafter, on January 14, 2015, the Court addressed a second USDOL regulation which redefined – and significantly narrowed – the type of work that would be covered under the companionship exemption, restricting it to only those companions who provide “care” or assist with “activities of daily living” during less than 20% of their total hours. Since Home Care is routinely intended to provide significant assistance with activities of daily living (such as driving, meal preparation, dressing, feeding and bathing), this regulation virtually eliminated the companionship exemption. The Court rejected the regulation on the ground that it contradicts the FLSA itself. The statutory exemption refers to “care” and services for the elderly and disabled “who are unable to care for themselves.” The Court determined that the USDOL regulation would “write out of the exemption the very ‘care’ the elderly and disabled need . . . .” In a closing flourish, the Court scolded the USDOL for usurping Congressional authority:
Redefining a 40-year-old exemption out of existence may be satisfyingly efficient to the Department of Labor, but it strikes at the heart of the balance of power our Founding Fathers intended to rest in the hands of those who must face the electorate on a regular basis.
Taken together, the two decisions wholly restore the previously-existing companionship and live-in exemptions from federal minimum wage and overtime laws. An appeal to a higher federal court may well follow, so the two decisions may not be the final word on the USDOL Regulations. It remains prudent to continue to follow this issue closely for further development, and to consult counsel if needed. In addition, Home Care Agencies in New York should take note that, even in the absence of the applicability of federal minimum wage and overtime laws, New York law requires that home care employees be paid a minimum wage of $8.75 per hour, and requires that hours over 40 in a work week be paid at 1½ times the State minimum wage (i.e., $13.125 per hour) rather than 1½ times the employee’s regular rate.
Happy New Year! On December 29, Governor Cuomo signed the bill eliminating the requirement under the Wage Theft Prevention Act that employers in New York provide annual wage notices to their employees. Although the bill currently provides that it will go into effect 60 days after it is signed (which would mean that it would take effect after the February 1 deadline to provide the wage notices for 2015), the Governor's approval memo accompanying the bill specifically notes that an agreed-upon chapter amendment will "accelerate the effective date of the notification rule changes in section 1 of the bill to remove the notice requirement on employers for the 2015 calendar year."
We will provide an update once the expected chapter amendment is enacted in January.
The minimum wage for employees in New York will increase from $8.00 per hour to $8.75 per hour effective December 31, 2014. The minimum wage for New York employees will increase again to $9.00 per hour effective December 31, 2015.
Employers in New York should also keep in mind that the minimum salary under state law for employees to qualify for the executive and administrative exemptions will increase from $600.00 per week to $656.25 per week effective December 31, 2014. The minimum salary under state law to qualify for the executive and administrative exemptions will increase again to $675.00 effective December 31, 2015.
New York employers who have already begun preparing to send out annual wage notices to their employees under the Wage Theft Prevention Act can safely stop their preparations. The bill eliminating the annual wage notice requirement was delivered to the Governor yesterday and it is expected that the Governor will sign it. The bill, as currently drafted, provides that the legislation will go into effect 60 days after it is signed into law, which would mean that it would take effect after the February 1 deadline to provide the wage notices for 2015. However, Bond's Government Relations lawyers brought this concern to the attention of the Governor's office in early December, while the Governor's office and the Legislature were discussing potential chapter amendments to the bill, and it is our understanding that one of the agreed-upon chapter amendments that will be enacted early in the next legislative session will eliminate the annual wage notice requirement immediately. So, we expect that employers will not have to issue the notices in 2015.
We will provide an update as soon as the Governor signs the bill, and another update once the expected chapter amendments are enacted in January. This is certainly great news for employers in New York, who will no longer have to engage in the costly and time-consuming process of issuing wage notices to all employees between January 1 and February 1 of each year.
Nearly six months ago, we reported that the New York Legislature passed a bill eliminating the requirement under the Wage Theft Prevention Act that employers provide an annual wage notice to their employees between January 1 and February 1. We monitored the bill regularly, hoping that we would be able to report that the Governor had signed the bill and that employers would be relieved of this onerous requirement in 2015. Unfortunately, the bill has not yet been delivered to the Governor, so at least as of now, the annual wage notice requirement remains in effect.
Based on the information we have been able to obtain, it appears that the Governor's office and the Legislature are currently discussing potential revisions to the bill that are unrelated to the elimination of the annual wage notice requirement. Aside from the elimination of the annual wage notice requirement, the bill that was passed on June 19 also increased the penalties for an employer’s failure to provide a wage notice upon hiring a new employee and for an employer’s failure to provide appropriate wage statements to employees, imposed significant consequences on employers who are found to be repeat offenders, and added provisions to the Limited Liability Company Law and the Construction Industry Fair Play Act. It is our understanding that amendments to some of those other provisions are being contemplated.
It is still possible that the bill will be signed by the Governor before the end of the legislative term. However, if the legislation goes into effect 60 days after it is signed into law (which is how the bill is currently drafted), it is already too late for the law to go into effect in time to relieve employers of the obligation to distribute the annual notice by February 1, 2015. Our firm has brought this issue to the attention of the Governor's office.
At this point, employers in New York should prepare to send the annual wage notice to their employees between January 1 and February 1, 2015. If the Legislature and the Governor give a nice holiday gift to New York employers by finding a way to eliminate this requirement for 2015, we will certainly let you know.
On November 6, Erie County Executive Mark Poloncarz signed an Executive Order, which requires all contractors, prior to entering into a contact with the County, to submit an Erie County Equal Pay Certification stating their compliance with federal and state equal pay laws. The order applies to all bids, requests for proposals, and other contract solicitations issued by County offices, departments, and administrative units on and after January 1, 2015.
Under the Executive Order, equal pay laws, which mandate that men and women are paid equally for the same work, include the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, Federal Executive Order 11246, and Section 194 of the New York State Labor Law (collectively referred to as the “Equal Pay Laws” in the Executive Order). The required certification must include a declaration that there have been no adverse findings against the contactor under the Equal Pay Laws within the last five years and a disclosure of any pending claims against the contractor. The Erie County Law Department will create the Equal Pay Certification form that contractors will be required to sign.
Additionally, the County’s Division of Equal Employment Opportunity (the “Division of EEO”) is required under the Executive Order to establish a procedure for monitoring and periodic auditing of contractors to ensure compliance with the Equal Pay Laws and the certification requirements. This increased oversight is significant, because a County contract may be immediately terminated and/or the contractor may be disqualified from participating in future County contracts if the contractor files a false or misleading certification or violates any provision of the Equal Pay Laws during the term of the contract.
When the Division of EEO establishes a procedure for compliance monitoring and auditing, and when any other guidance becomes available, we will follow and report on those developments.
With that first real chill in the air, the holiday season is suddenly upon us. For parents, it is a time to relive our childhood, watching with our children all of those holiday specials ranging from It's the Great Pumpkin, Charlie Brown to Santa Claus is Comin' to Town. Unfortunately, for members of our misfit profession, “tis the season” is not so much about being jolly, but more about defending lawsuits. And speaking of lawsuits, a daily perusal of employment law blogs and periodicals reveals that there is no shortage of new and innovative ways to sue an employer. The seemingly endless tide of profligate litigation makes me shiver like Linus in the Pumpkin Patch about what would happen if the Department of Labor, the EEOC, or the plaintiff’s bar set its sights on Santa and his manufacturing plant in the North Pole. For this reason, I offer the following guidance to Mr. Kringle d/b/a Santa on how to clean up some glaring employment law violations. (Disclaimer: Our guidance to Mr. Kringle is not intended to be legal advice nor should it be a substitute for him retaining local counsel familiar with the laws in his local jurisdiction. I would also include the obligatory tax advice disclaimer, but I believe Mr. Kringle is tax-exempt.) I will discuss individual lawsuits below. However, my main concern in terms of liability is in the arena of the class action. I say this with all due love and affection, “Mr. Kringle, your workshop is a treasure-trove of wage and hour violations.” The elves work, quite obviously, more than 40 hours a week. They work through meal periods and weekends and holidays. Where is their overtime pay? While efficiently furnished, I don’t see any punch clock for your employees. Can we say liquidated damages and attorneys’ fees? Your workplace is also quite literally an accident waiting to happen. The elves have no protective equipment. There is an Abominable Snowman on the shop floor. Can we all say, “OSHA”? Mr. Kringle, despite your big heart, your workplace is rife with harassment and discrimination. For example, there is Rudolph’s red nose and the universally known harassment and bullying to which he has been subjected (“used to laugh and call him names”). The un-remedied mocking of Rudolph makes for a great holiday gift for the plaintiff’s lawyer who signs up Rudolph and his “slam dunk” suit. (We make no representations as to whether any plaintiffs-side lawyers are on the "Nice List" and worthy of such a gift). I think it is imperative that all of your reindeer immediately receive anti-harassment training. So too with poor Hermey. The Seinfeldesque “Anti-Dentite” environment that you have condoned is ripe for litigation and is otherwise an insult to dentists world-wide. That leads us to our Faragher defenses. Are your EEO policies translated into “Elfish” and properly distributed with a clear record of same? Of additional concern, have you taken care to make sure that the post-toy delivery workplace celebration does not cross the proverbial “line” of appropriateness and result in more than just hangovers at the workshop the next day? Finally, we need a word about the Island of Misfit Toys. Notwithstanding that the public may want all lawyers permanently deposited in this desolate place, it is nonetheless illegal to segregate your workforce on the basis of such protected characteristics as being a cowboy who rides an ostrich. And, who among us wouldn’t want to ride an ostrich? Of course, Mr. Kringle is not the only one staring down the barrel at punitive damages. Yes, I’m talking to you, Mr. Burgermeister Meisterburger. Making toys is plainly a recreational activity under state labor laws and interfering with concerted activity in this regard will get you an unfriendly knock on the door from the NLRB. So, to our clients and blog subscribers, I wish you all a joyous holiday season in front of a warm fire surrounded by friends and family, without any visions of EEOC complaints or Department of Labor audits dancing in your heads.
Under a bill passed by the New York Legislature, employers in New York will not have to issue annual wage notices to employees in 2015 and beyond. On June 19, 2014, a bill was passed in both the New York Assembly and Senate that eliminates the requirement contained in the Wage Theft Prevention Act that employers provide a wage notice to all employees by February 1 of each year. This is certainly a welcome development for employers in New York who found the annual wage notice requirement to be extremely burdensome and costly. The bill also increases the penalties for an employer's failure to provide a wage notice upon hiring a new employee and for an employer's failure to provide appropriate wage statements to employees, and imposes significant consequences on employers who are found to be repeat offenders. If Governor Cuomo signs the bill, the legislation will take effect 60 days after it is signed.
The bill does not change the requirement that employers provide a wage notice upon hiring a new employee. The Department of Labor has issued templates for wage notices that can be used by employers for this purpose. The bill increases the damages that can be recovered for an employer's failure to provide the initial wage notice within ten business days of an employee's first day of employment to $50.00 per work day that the violation occurred up to a maximum of $5,000.00 (up from $50.00 per work week up a maximum of $2,500.00). The bill also increases the damages that can be recovered for an employer's failure to provide appropriate wage statements to employees to $250.00 per work day that the violation occurred up to a maximum of $5,000.00 (up from $100.00 per work week up to a maximum of $2,500.00). An employer who is faced with a claim that it failed to provide the required wage notice or wage statement can still avoid liability by establishing that it made complete and timely payment of all wages due to the employee who was not provided the wage notice or wage statement.
If an order to comply has been issued to an employer who has previously been found to have violated the wage payment laws or to an employer whose violation is found to be willful or egregious, the employer will be required to report certain data regarding the wages paid to employees and the hours worked by employees (without employee identifying information), which the Department of Labor will publish on its web site. Employers who are found to have committed a wage payment violation for the second time in a six-year period could be liable for a maximum civil penalty of $20,000, which is double the maximum civil penalty that can be imposed for a first violation in a six-year period.
The bill also provides that an employer similar in operation or ownership to a prior employer who has been found to have violated the wage payment laws will be liable for the prior employer's violations. This provision prevents an owner (or owners) of a business entity from avoiding liability by dissolving the business entity and creating a new one that has essentially the same business purpose.
The bill adds a provision to the Limited Liability Company Law providing that the ten members of a limited liability company ("LLC") with the largest percentage ownership will be personally liable for all wages and salaries due to employees of the LLC. This new provision of the Limited Liability Company Law is similar to Section 630 of the Business Corporation Law, which provides that the ten largest shareholders of a corporation are personally liable for all wages and salaries due to employees of the corporation.
The bill also adds a provision to the Construction Industry Fair Play Act, requiring construction contractors and subcontractors who have been found to be in violation of the wage payment laws to notify all of its employees regarding the nature of the violations. The notification must be made by an attachment to the pay checks of all employees at all work sites.
On the whole, this legislation (if it is signed by the Governor) will be a positive development for employers in New York, who will no longer have to engage in the costly and time-consuming process of issuing wage notices to all employees between January 1 and February 1 of each year.
On March 13, 2014, President Obama issued a memorandum directing the Secretary of Labor to update and streamline the Fair Labor Standards Act (“FLSA”) overtime regulations. In the memorandum, President Obama noted that the regulations regarding exemptions from the FLSA’s overtime requirements, particularly for executive, administrative and professional employees (the white-collar exemptions), are outdated and should be updated to address the changing nature of the workplace. President Obama also stated that the regulations should be simplified so that they are easier for employers and employees to understand and apply.
Although the memorandum does not provide specific guidance, it is expected that the Department of Labor’s revised regulations will include an increase in the salary threshold necessary to qualify for the white-collar exemptions (currently $455.00 per week). If such an increase is proposed, it could bring the federal regulations in line with the salary threshold necessary for employees in New York to qualify for the executive and administrative exemptions. The salary threshold for employees in New York to qualify for the executive and administrative exemptions was recently increased to $600.00 per week on December 31, 2013 (up from $543.75 per week), and is scheduled to increase annually on December 31, 2014 ($656.25 per week) and December 31, 2015 ($675.00 per week).
Any changes to the FLSA regulations that the Department of Labor proposes are subject to the normal rulemaking process, which includes a notice and comment period. We will post updates on this blog throughout the rulemaking process.
On February 12, 2014, President Obama signed an Executive Order requiring that all new federal contracts and subcontracts contain a clause specifying that the minimum wage to be paid to workers under those federal contracts and subcontracts must be at least $10.10 per hour beginning January 1, 2015. The federal contracts and subcontracts covered by this Executive Order include procurement contracts for services or construction and contracts for concessions. This new $10.10 minimum wage will also apply to disabled employees who are currently working under a special certificate issued by the Secretary of Labor permitting payment of less than the minimum wage. Beginning January 1, 2016, and annually thereafter, the minimum wage for federal contractors will be increased by the Secretary of Labor based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, and rounded to the nearest multiple of five cents. The Secretary of Labor is required to publish the new minimum wage at least 90 days before the new minimum wage is scheduled to take effect. For tipped employees, the hourly cash wage that must be paid by a federal contractor must be at least $4.90 beginning on January 1, 2015. In each subsequent year, the federal contractor minimum wage for tipped employees will be increased by 95 cents until it equals 70 percent of the federal contractor minimum wage in effect for non-tipped employees. If an employee’s tips, when added to the hourly wage, do not add up to the federal contractor minimum wage for non-tipped employees, the federal contractor will be required to supplement the employee's hourly wage to make up the difference. The Secretary of Labor is expected to issue regulations by October 1, 2014, to implement the provisions of the Executive Order.
On January 27, 2014, the U.S. Supreme Court issued a unanimous decision clarifying the meaning of "changing clothes" under the Fair Labor Standards Act ("FLSA"). In Sandifer v. United States Steel Corp., the Supreme Court adopted a fairly broad definition of the phrase "changing clothes," which should provide employers with some comfort that provisions of a collective bargaining agreement excluding clothes-changing time from compensable hours worked will likely be applied to time spent by employees donning and doffing most forms of protective gear. In general, the FLSA requires employers to pay employees for time spent donning and doffing protective clothing and equipment, if the employer requires employees to wear such protective clothing and equipment, and if the employee must change into and out of the protective clothing and equipment at the work site. However, Section 203(o) of the FLSA provides that such time is not compensable if the employer and the representative of the employer's employees have agreed to a provision in their collective bargaining agreement to exclude from hours worked "time spent in changing clothes or washing at the beginning or end of each workday." In Sandifer, a group of U.S. Steel employees contended that even though their collective bargaining agreement excluded time spent "changing clothes" from compensable work time, they should nevertheless be compensated for such time because many of the items they were required to wear were protective in nature. The employees argued that the items they were required to wear should not be considered "clothes" under the FLSA because those items are intended to protect against workplace hazards. The employees also argued that, by putting on those protective items over their own clothes (rather than substituting those protective items for their own clothes), they were not engaged in "changing" clothes under the FLSA. The Supreme Court refused to interpret the phrase "changing clothes" as narrowly as the employees urged. With respect to the definition of "clothes," the Supreme Court examined the dictionary definition of the term that existed at the time Section 203(o) of the FLSA was enacted, and held that the term includes all items that are designed to cover the body and are commonly regarded as articles of dress. The Supreme Court further held that the definition of "clothes" does not necessarily exclude items that are worn exclusively for protection, as long as those items are designed to cover the body and are regarded as articles of dress. With respect to the definition of "changing," the Supreme Court again examined the dictionary definition of the term that existed at the time Section 203(o) was enacted, and held that the term can mean either substituting or altering. Accordingly, the Supreme Court concluded that time spent by employees altering their garments by putting on and taking off articles of dress constituted "changing clothes" under the FLSA, and that the employees were not entitled to compensation for such time based on the exclusion set forth in the collective bargaining agreement. Applying these definitions, the Supreme Court considered 12 items of protective gear: a flame-retardant jacket, a pair of pants, and a hood; a hardhat; a snood (which is a hood that covers the neck and upper shoulder area); wristlets; work gloves; leggings; metatarsal boots; safety glasses; earplugs; and a respirator. The Supreme Court found that the first nine items qualified as "clothes," but the last three did not. Thus, the Supreme Court was left to consider the question of whether courts should tally the minutes spent donning and doffing each item, in order to deduct the time spent donning and doffing the non-clothing items from non-compensable time. Recognizing that "it is most unlikely Congress meant Section 203(o) to convert federal judges into time-study professionals," the Supreme Court stated that courts should analyze whether the time period at issue can, on the whole, be characterized as "time spent in changing clothes or washing." The Supreme Court articulated a "vast majority" standard for courts to use in their analysis:
If an employee devotes the vast majority of the time in question to putting on and off equipment or other non-clothes items (perhaps a diver's suit and tank) the entire period would not qualify as 'time spent in changing clothes' under Section 203(o), even if some clothes items were donned and doffed as well. But if the vast majority of the time is spent in donning and doffing 'clothes' as we have defined that term, the entire period qualifies, and the time spent putting on and off other items need not be subtracted.
The Supreme Court concluded that the employees of U.S. Steel spent a vast majority of the time in question donning and doffing items that fell within the definition of "clothes," and that their time was non-compensable under the terms of the collective bargaining agreement. Although courts addressing this issue in the future will be bound by the broad definition of the phrase "changing clothes" set forth in the Supreme Court's Sandifer decision, courts will be left to analyze on a case-by-case basis whether employees spend a "vast majority" of the time in question donning and doffing items that qualify as clothes or non-clothes items.
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.
