On Dec. 3, 2024, the U.S. Department of Labor’s Wage and Hour Division (WHD) released a Notice of Proposed Rulemaking to phase out the issuance of Fair Labor Standards Act (FLSA) Section 14(c) certificates that allow employers to pay employees with disabilities subminimum wages.

The proposed rule would end the issuance of new Section 14(c) certificates and would only allow certificate holders to apply for renewals for three years after the effective date. At the end of the three-year phase out period, all Section 14(c) certificates will expire and all workers that were paid subminimum wages under Section 14(c) certificates will be required to be paid at or above the minimum wage. The WHD has emphasized that this rule will not require workers to leave their places of employment or require current certificate holders to alter any additional services they provide to these employees.

The FLSA created a guaranteed, non-waivable, federal minimum wage which is currently $7.25 per hour “except as otherwise provided.” Pursuant to Section 14(c)(1) of the FLSA, the Secretary of Labor has a limited power to issue certificates that allow employers to pay subminimum wages if it is determined that the certificates are necessary to prevent the curtailment of employment opportunities for individuals with disabilities. The WHD proposed this new rule to phase out the issuance of Section 14(c) certificates because it has determined that this statutory condition is no longer met.

The WHD based this determination on several factors. First, since the FLSA was signed into law in 1938 and since the most recent substantive revisions to Section 14(c) were made in 1989, the WHD noted that there have been significant steps to promote employment opportunities for individuals with disabilities through advances in technology, community advocacy and legislation.

Second, the WHD cited the steady decline in current certificate holders and subminimum wage employees as evidence of a lack of curtailment of employment opportunities for individuals with disabilities. According to data gathered by the WHD, there were 424,000 workers paid subminimum wages under Section 14(c) certificates and 5,612 certificate holders in 2001, compared to 40,579 workers paid subminimum wages and 801 certificate holders in 2024.

Third, the WHD noted that 33 states have already prohibited or further restricted the payment of subminimum wages to individuals with disabilities.

Finally, the WHD cited several studies suggesting misuse of Section 14(c) certificates and indicating that the work done by the employees working under those certificates often lacks opportunities for advancement or does not provide transferable skills. Based on those studies, the WHD concluded that the use of Section 14(c) certificates may have the counterproductive effect of curtailing employment opportunities for individuals with disabilities.

The WHD has invited the public to comment on all aspects of the proposed rule. The public comment period will be open until Jan. 17, 2025.

If you have any questions, please contact Subhash Viswanathan, any attorney in Bond’s labor and employment practice, or the Bond attorney with whom you are regularly in contact.

*Special thanks to Gavin Gretsky for his assistance in the preparation of this memo. Gavin is not yet admitted to practice law. 

On Jan. 20, 2024, The New York City Council amended the City’s Earned Safe and Sick Time Act (ESSTA), to create a private right of action for employees claiming violations of ESSTA. The new law amends Section 20-924 of the New York City Administrative Code and allows employees to commence a civil action alleging a violation of ESSTA within two years of the date the employee knew or should have known of the alleged violation. The new law becomes effective March 20, 2024.

Currently, the sole redress for employees alleging violations of ESSTA is to submit an administrative complaint to the New York City Department of Consumer and Worker Protection (DCWP). The new amendment will allow employees to file both an administrative complaint with the DCWP and a civil action in a court of competent jurisdiction for the same alleged ESSTA violation. Employees are not required to file an administrative complaint with the DCWP prior to commencing an action in court for alleged ESSTA violations.

If an employee files both a civil suit and a DCWP complaint against the employer for the same alleged ESSTA violation, the DCWP will stay its investigation until it receives notice that the civil suit has been withdrawn or dismissed without prejudice. Once DCWP receives notice of a final judgment or settlement of the civil action, DCWP may dismiss the complaint unless it determines that the complaint alleges a violation that was not resolved by such judgment or settlement. The employee must notify DCWP within 30 days after the time for any appeal has lapsed that such complaint is withdrawn, dismissed without prejudice, or resolved by final judgment or settlement.

Employees who prove a violation of ESSTA may recover:

• Three times the wages that should have been paid pursuant to ESSTA or $250, whichever is greater, for every instance where an employee is not compensated properly by the employer for safe and sick time taken.
• $500 for every instance where an employee requested safe and sick time that was (a) wrongfully denied by the employer and not taken by the employee; (b) wrongfully conditioned upon a requirement that the employee search or find a replacement worker prior to approval; or (c) wrongfully subjected to a requirement that the employee work additional hours to make up for the original hours for which the employee was scheduled, without the mutual consent of the employer and employee.
• Full compensation for wages and benefits lost, plus $500 and equitable relief as deemed appropriate, for every instance of retaliation and interference.
• $2,500, full compensation, including wages and benefits lost; and equitable relief, including reinstatement, as deemed appropriate for each instance of unlawful discharge from employment.
• $500 for each employee covered by a policy that does not provide or allow for the use of safe and sick time pursuant to ESSTA.

In addition, the amendment permits an employee to seek injunctive relief and declaratory relief, attorney’s fees and costs, and any other relief that the court deems appropriate.

The amendment also expands ESSTA’s civil penalty provisions for entities found to be in violation of provisions regarding the accrual and use of sick or safe time or retaliation, on a per employee basis, of up to $500 to be paid to the city for the first violation. Subsequent violations that occur within two (2) years of any previous violation, entities will be liable of up to $750, not to exceed $1,000 for each succeeding violation.

If you have any questions about the information presented in this news alert, please contact Lance Willoughby-Hudson, any attorney in Bond’s labor and employment practice or the Bond attorney with whom you are regularly in contact.

On Jan. 17, 2024, the New York State Appellate Division, Second Department decided a pivotal case for employers after years of uncertainty. In Grant v. Global Aircraft Dispatch, Inc., the Second Department decided against following Vega v. CM & Associates Construction Management, LLC, a First Department decision that carried steep consequences for employers in New York for violations of New York Labor Law Section 191 (Section 191).

Read More >> Second Department Weighs in on Employees Fully Paid But Who Seek Liquidated Damages for Not Being Paid Weekly: You Can’t Get Something for Nothing

On Dec. 27, 2023, the New York State Department of Labor (NYSDOL) published a Notice of Adoption of its proposed regulations in the State Register, which means the minimum weekly salary to qualify for the executive and administrative exemptions will officially increase effective Jan. 1, 2024. The NYSDOL did not make any changes to its proposed regulations, so the following increases will occur:

Read More >> Update: The NYSDOL’s Proposed Regulations Increasing the Exempt Salary Levels Have Been Adopted as Final Regulations

Effective on Jan. 1, 2024, the minimum hourly wage in New York will increase from $15 to $16 in downstate New York (New York City and Nassau, Suffolk and Westchester counties), and from $14.20 to $15 in upstate New York. In all regions of New York, the minimum wage will increase by $0.50 on Jan. 1, 2025, and by another $0.50 on Jan. 1, 2026.

Read More >> Reminder: The New York Minimum Wage Will Increase on Jan. 1, 2024

New York State's pay transparency law becomes effective on Sept. 17, 2023. Labor Law § 194-b requires employers to disclose salary and wage ranges for advertised jobs and promotions. 

The law applies to employers with four or more employees and covers jobs that will be physically performed, at least in part, in New York State, as well as remote-work positions that report to a supervisor in New York.

Read More >> Reminder: Pay Transparency Law Takes Effect Sept. 17, 2023

The following article by Bond attorney Alice Stock was published by Law360

Can an employer give employees a wage increase or benefits improvement during a union organizing campaign or while negotiating a first collective bargaining agreement after a union has won an election? At present, in most situations, it will be unlawful for an employer to do so.

Read More >> Conflicting NLRB Stances Create Employer Compliance Plight

On March 3, 2023, a bill amending the New York State pay transparency law was signed into law by Gov. Hochul, reflecting changes that the governor requested in exchange for her approval of the law in December 2022. The effective date of the amendments are the same as the original version of law, Sept. 17, 2023.

Read More >> New York State Pay Transparency Law Amendments Signed into Law

On Feb. 22, 2023, the Supreme Court of the United States (SCOTUS) decided Hewitt v. Helix Energy Sols. Grp., Inc.[1] In granting certiorari, the Court addressed the following question: Is a supervisor, who makes over $200,000 annually, calculated on a daily rate, considered a “Highly Compensated Employee” (HCE) who is overtime exempt under the FLSA? In a 6-3 decision, the Court ruled that the supervisor is not an HCE and is not overtime exempt.

Read More >> Supreme Court Limits “Highly Compensated Employee” Exemption under the Fair Labor Standards Act (FLSA): A Review of Hewitt v. Helix Energy Sols. Grp., Inc.

On Dec. 21, 2022, Gov. Kathy Hochul signed the Warehouse Worker Protection Act (WWPA), S.8922/A 10020, into law. This new legislation aims to protect warehouse distribution workers from undisclosed or unlawful work speed quotas and includes protections for workers who fail to meet these quotas. The law takes effect 60 days after its signing, i.e., Feb. 19, 2023.

Read More >> Governor Hochul Signs Warehouse Worker Protection Act Into Law

On Dec. 30, 2022, Gov. Hochul signed a bill (A.286/S.1997) that amends New York Labor Law § 167. Originally enacted in 2009, Section 167 restricts “healthcare employers” from requiring nurses to work beyond their regularly scheduled hours, with four limited exceptions, where the overtime is during or due to:

Read More >> New York Amends Its Labor Law Restricting Mandatory Overtime for Nurses

New York City’s Earned Safe and Sick Time Act (ESSTA or Act) provides covered employees with the right to use safe and sick leave as it accrues for a delineated list of circumstances. On Aug. 11, 2022, the New York City Council introduced a proposal to amend the ESSTA’s definition of “employee.” Under this proposal, certain independent contractors would qualify as employees and receive benefit coverage under the Act. The proposal would require hiring entities to engage in detailed analyses of individuals providing services to determine wither they are independent contractors or employees.

Read More >> Earned Safe and Sick Time Act Proposal