Today, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction preventing the U.S. Department of Labor from implementing its regulations revising the white collar exemptions.  Therefore, the increase in the minimum salary level to $913.00 per week that was expected to go into effect on December 1 will not occur on that date. In granting the injunction, the Court held that Congress intended the executive, administrative, and professional exemptions to be based on an employee's duties -- not on an employee's salary level.  Specifically, the Court stated:  "After reading the plain meanings together with the statute, it is clear Congress intended the EAP [executive, administrative, professional] exemption to apply to employees doing actual executive, administrative, and professional duties.  In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level."  Although the USDOL has imposed a minimum salary level requirement to qualify for the white collar exemptions since the 1940s, the Court nevertheless determined that the increase in the minimum salary level from $455.00 per week to $913.00 per week was so large that "it supplants the duties test."  The Court stated:  "If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change." So, what does this mean for the future of these regulations?  Although this is only a preliminary injunction that prevents the implementation of the regulations until a final determination is made, this could very well be a permanent end to the regulations.  A final determination is unlikely to be issued before the inauguration of President Trump, and it seems less likely that the USDOL under the Trump administration will be inclined to continue to vigorously defend the regulations in this litigation.  A more likely outcome is that the USDOL may rescind and reissue the regulations with a less drastic salary increase, or perhaps even not reissue the regulations at all. This development leaves many employers wondering what to do about the employees who have already been told that they will be reclassified from exempt status to non-exempt status beginning next week and the employees who have been told that they will receive salary increases beginning next week in order to maintain their exempt status.  The employees who have been told that they will be reclassified from exempt to non-exempt status can certainly be told at this point that they will remain exempt employees (assuming, of course, that their duties continue to qualify them for one of the white collar exemptions).  In addition, from a legal standpoint, nothing would preclude an employer from rescinding the salary increases that were scheduled to go into effect next week for employees who were told that they would receive a salary increase to maintain their exempt status (unless the employer has entered into an employment contract that binds the employer to providing the salary increase).  Obviously, from a human resources standpoint, this will require clear and prompt communication regarding the reason why the salary increase is being rescinded. Employers in New York should also keep in mind that the New York State Department of Labor has proposed a gradual increase to the minimum salary levels to qualify for the executive and administrative exemptions.  If these proposed regulations are adopted, the first salary increase will occur on December 31, 2016.  Employers outside of New York City, Nassau, Suffolk, and Westchester Counties will be required to pay a minimum salary of $727.50 per week to executive and administrative employees.  Employers in New York City who employ 11 or more employees will be required to pay a minimum salary of $825.00 per week to executive and administrative employees.  Employers in New York City who employ 10 or fewer employees will be required to pay a minimum salary of $787.50 per week to executive and administrative employees.  Employers in Nassau, Suffolk, and Westchester Counties will be required to pay a minimum salary of $750.00 per week to executive and administrative employees.  These amounts will increase each year.  There is still no minimum salary under New York law to qualify for the professional exemption even under the new proposed regulations.  We will provide an update regarding whether these proposed regulations become final regulations.

As we previously reported, 21 states filed a lawsuit on September 20 against the U.S. Department of Labor in the U.S. District Court for the Eastern District of Texas, challenging the USDOL’s revisions to the white collar exemptions under the Fair Labor Standards Act.  On that same day, several business groups filed their own lawsuit in the same Court, also challenging the USDOL's white collar exemption regulations.  As we quickly approach the effective date of the new regulations (December 1), many employers are wondering:  what is the status of those lawsuits and how do those lawsuits affect our plans to communicate with our employees about changes that will be made? The short answer to the first question -- the status of the lawsuits -- is that the Court has not issued a decision yet.  On October 12, the 21 states filed a motion for a preliminary injunction, and on October 14, the business groups filed a motion for summary judgment.  On October 19, because of the similarities in the allegations and the common underlying purpose of the two complaints, the Court consolidated the two cases.  This morning, November 16, the court held oral argument with respect to the states' motion for a preliminary injunction.  The U.S. District Judge, Amos L. Mazzant, III, stated at the end of oral argument that the Court hopes that a ruling on the motion for a preliminary injunction will be issued on Tuesday, November 22.  The USDOL's deadline to file a response to the business groups' motion for summary judgment is November 18, and the business groups will have until November 21 to file a reply.  So, a decision on the motion for summary judgment is also not expected at least until November 22 at the earliest. The answer to the second question -- what effect the lawsuits will have on a New York employer's plans to communicate changes to its employees -- is that it may not be feasible for employers to wait and see whether the Court issues an injunction before communicating with their employees.  Employers will need to comply with the new regulations (assuming there is no injunction) effective at the beginning of the work week that encompasses December 1.  For employers that have Monday through Sunday work weeks, that date will be Monday, November 28 -- right after Thanksgiving weekend.  Therefore, employers that want to provide their employees with as much advance notice as possible may find it difficult to wait and see whether the Court issues a decision on November 22 before letting their employees know that they will be converted from exempt to non-exempt status effective November 28. Employers may want to consider including some language in their communications to employees to let them know that the changes in classification will occur unless there are developments prior to the effective date of the changes that either delay or prevent the new regulations from being implemented.  However, even in the absence of such language, nothing would preclude an employer from restoring the status quo if a preliminary injunction is issued by the Court.

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 October 4, 2016, the Occupational Safety and Health Administration issued a press release and announced that it was proposing changes to 18 separate regulations “as part of an ongoing effort to revise provisions in its standards that may be confusing, outdated or unnecessary.”  A summary of the proposed changes can be accessed here.  The proposals run across a wide spectrum from the technical (i.e., allowing ex-rays to be maintained in digital format); to the procedural (i.e., making the process safety management standard the same for construction and general industry); to the completely understandable (i.e., eliminating any uses of employee social security numbers in exposure monitoring); to the somewhat odd (i.e., eliminating feral cats from the definition of “vermin” in the shipyard equipment regulation).  On the last point, the agency press release noted that “OSHA recognizes that feral cats pose a minor, if any, threat, and tend to avoid human contact, and OSHA proposes to remove the term ‘feral cats’ from the definition of vermin in the standard.”  The deadline for submitting comments to any of the proposals is December 5, 2016.

Since 1989, the federal Worker Adjustment and Retraining Notification (“WARN”) Act has required covered employers to give written notice in advance of certain workforce reductions affecting at least 50 employees.  Twenty years later, a New York law expanded the coverage to reductions potentially affecting as few as 25 employees. If your business is planning or considering downsizing at these levels, then a review of the WARN Act needs to be undertaken early in the process. When Are WARN Notices Required? The federal WARN Act requires employers with 100 or more employees to provide 60 days’ advance written notice in the event of a “mass layoff” or “plant closing,” as defined in the law.  New York State’s WARN Act covers employers with as few as 50 total employees, and requires 90 days’ notice.  Some other states also have mini-WARN laws, not addressed here, that may differ and should be reviewed with respect to reductions in force in those states. The “employer” for WARN purposes can extend across a “business enterprise” to encompass more than one legal entity.  So, you need to consider total employees across affiliated companies before concluding that you are not a covered employer based on the size of your workforce. Covered employers may need to give WARN notices (to employees, their unions where applicable, and certain government officials) in the following circumstances:

• “Plant Closing”:  where an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an “employment loss” for 50 (25 in New York) or more employees during any 30-day period.
• “Mass Layoff”:  where there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for:  (a) 500 (250 in New York) or more employees, or (b) for 50-499 (25-249 in New York) employees if they make up at least 33% of the employer's active workforce.
• “Relocation” (New York WARN):  where all or substantially all of the industrial or commercial operations of an employer will be removed to a different location fifty miles or more away from the original site of operation and 25 or more employees suffer an employment loss.

Despite the reference to a 30-day period in the definitions of plant closing and mass layoff above, there are additional provisions that allow for the aggregating of employment losses for up to a 90-day period in some cases in determining whether WARN notices must be provided. The New York WARN Act also specifically requires notice for certain “covered reductions in hours,” but any such covered reduction would seemingly also qualify as a “mass layoff” based on the definition of “employment loss.” Generally speaking, “employment loss” for WARN purposes includes:  (a) employment terminations other than a discharge for cause, voluntary departure, or retirement; (b) layoffs exceeding 6 months; and (c) a reduction in an employee's hours of work of more than 50% in each month of any 6-month period. When May Notice Not Be Required Under the WARN Acts? Before you send out WARN notices, here are some potential exceptions to consider:

• “Part-time employees” don’t count.  For WARN purposes, this specifically means employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week.  (But part-time employees are entitled to receive notice where otherwise required to be issued.)
• Independent contractors don’t count.  But make sure that the individuals who are classified as independent contractors truly are independent contractors rather than employees.
• New York’s Shared Work Program may provide an exception to New York WARN obligations based on reductions in hours.  Where applicable, the Shared Work Program permits an employer to reduce the hours of work of its employees, up to a maximum of 60%, with employees supplementing lost income with partial unemployment insurance benefits.
• No notice is required if the employer offers to transfer employees to a different site of employment within a reasonable commuting distance.
• No notice is required if the plant closing is of a temporary facility or if the plant closing or mass layoff results from the completion of a particular project or undertaking and the affected employees were hired with the understanding that their employment was limited to the duration of the facility or project or undertaking.  In some cases, seasonal employment may also qualify for an exception from the notice requirement.
• Notice might not be required where employees retain employment with another company in the context of the sale of a business.
• “Faltering companies” may get some relief from the full notice period.  This applies only to plant closings and is limited to situations where a company has sought new capital or business in order to stay open and giving notice would ruin the opportunity to get the new capital or business.
• An “unforeseeable business circumstances” exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required.  The employer still must give as much notice as possible.
• Full notice is not required where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought, or storm.
• Employers do not have to give notice when permanently replacing an economic striker as defined under the National Labor Relations Act.

All of the above should be considered narrow exceptions.  Employers should only rely on them upon consultation with counsel experienced in applying the WARN Acts. What Happens If WARN Notices Aren't Issued? If an employer should have given notice under WARN and does not, then it may be held liable for damages to each employee who should have received notice for up to 60 days’ pay and benefits, plus civil penalties and attorneys’ fees. Is It Too Late To Comply With WARN? If your company is contemplating downsizing in numbers that could trigger WARN issues, you should immediately consider whether or not notices should be issued.  Depending on timing and business considerations, it may be better to issue late notices rather than no notices.  In other cases, it might be advisable to delay implementing the reduction in force to permit full notice to be provided.  And sometimes you might even determine that notices aren’t required under the WARN Acts in the first place. If you find your company in a position to navigate these complex issues, please contact your labor and employment counsel at Bond for further guidance.

On September 29, the U.S. Department of Labor announced the issuance of its final rule implementing Executive Order 13706, which requires certain Federal contractors to provide at least 56 hours of paid sick leave per year to all employees (both hourly and salaried employees) working on Federal contracts.  The final rule was published in the Federal Register on September 30 and applies to new or replacement contracts that result from solicitations issued on or after January 1, 2017 (or are awarded outside the solicitation process on or after January 1, 2017). Coverage under the final rule is nearly identical to regulations for Executive Order 13658, which requires payment of a higher minimum wage to employees of certain Federal contractors.  Coverage applies to four types of contracts (including subcontracts):

• Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
• Service contracts covered by the McNamara-O’Hara Service Contract Act (SCA);
• Concessions contracts, including any concessions contracts excluded from the SCA; and
• Contracts in connection with Federal property or lands and related to offering of services for Federal employees, their dependents, or the general public.

As stated in a prior blog post, paid sick leave may be used for employees' own healthcare, care of family members or loved ones, and for purposes resulting from being a victim of domestic violence, sexual assault, stalking, or to assist a family member or loved one who is such a victim.  The regulations create a regulatory scheme similar in complexity to the Family and Medical Leave Act, with detailed notice and recordkeeping rules. The final rule contains a few changes from the proposed rule discussed in our prior blog post.  The modifications include:

• An option to provide employees with the 56 hours of paid sick leave at the beginning of each year, rather than accruing throughout the year.  Under the accrual method, employees would accrue 1 hour for every 30 hours worked on a Federal contract.
• The addition of a provision specifying that contractors who grant PTO that meets the requirements in the final rule do not have to provide separate paid sick leave even if the employee uses all of the time for vacation.
• A grace period until January 1, 2020, or the termination date of the labor agreement, whichever is sooner, for contractors with a collective bargaining agreement that provides at least 56 hours of paid leave time for health-related reasons.
• The ability for contractors to fulfill their obligations jointly with other contractors by utilizing multi-employer plans to provide access to paid sick leave.
• Confirmation that a contractor will not have to reinstate accrued sick leave that was paid out to an employee upon separation from employment if the employee returns within 12 months.

Additional information is provided on the Department of Labor’s Wage and Hour Division landing page for the final rule.

On August 25, 2016, the U.S. Equal Employment Opportunity Commission issued its final “Enforcement Guidance on Retaliation and Related Issues.”  Along with the final guidance, the EEOC issued a Q&A publication and a Small Business Fact Sheet. Since 1998, the Supreme Court and lower courts have issued a number of significant rulings regarding employment related retaliation.  The guidance illustrates where the EEOC is in agreement with lower court rulings and, significantly, where the EEOC’s interpretation of the law differs from that of the courts.  It should come as no surprise that the EEOC takes a broad view of the protections afforded by the anti-retaliation provisions of the EEO laws it enforces.  The final guidance offers employers insight into how the EEOC will handle retaliation charges and suggests “promising practices” for employers to follow to avoid such charges.  Some issues of note include: The EEOC takes an expansive view of protected participation activity. The basic premise of “retaliation” has not changed.  Retaliation occurs when an employer takes a materially adverse action against an individual because the individual engaged in protected activity.  Protected activity includes participating in an EEO process (participation activity) or opposing discrimination (opposition activity). Both the courts and the EEOC recognize that participating in administrative proceedings or lawsuits to enforce rights under the EEO laws is protected participation activity.  However, the EEOC goes a step further, taking the position that participation in an employer’s internal complaint process is also protected participation activity.  This is significant because participation activity is so broadly protected.  Indeed, an employee need not have a reasonable good faith belief that discrimination actually occurred for participation activity (i.e., filing an internal complaint) to be protected.  According to the EEOC, even complaints made in bad faith or which contain false or malicious allegations are protected participation activity.  Further, it is the EEOC’s position that employers can be liable for retaliation if they discipline an employee for such bad faith actions taken in the course of participation. A wide range of actions are considered "materially adverse." Relying on Supreme Court precedent, the EEOC makes clear that in the context of a retaliation claim, a much broader range of employer actions will be considered “materially adverse” than in the context of a discrimination claim.  For purposes of a retaliation claim, a materially adverse action is “any action that might well deter a reasonable person from engaging in protected activity.”  Work-related threats, warnings, reprimands, negative or lowered performance appraisals, and transfers to less prestigious or desirable work or work locations all likely meet this standard.  Note, however, that an employer’s actions need not be work-related to be considered “materially adverse actions.”  According to the EEOC, prohibiting only employment-related actions would not be effective in preventing retaliation because the employer could retaliate by taking action not directly related to the employee’s employment or by causing the employee harm outside of the workplace. The EEOC lists the following examples of materially adverse actions:  disparaging an employee to the media, making false reports to government authorities, filing a civil action, threatening reassignment, scrutinizing work or attendance more closely, removing supervisory responsibilities, requiring re-verification of work status or initiating action with immigration authorities, terminating a union grievance process, and taking or threatening to take adverse action against a close family member. There is a lower standard for actionable "retaliatory harassment." The EEOC recognizes that sometimes retaliatory conduct is characterized as “retaliatory harassment.”  The standard for establishing “retaliatory harassment” differs significantly from the standard for establishing a discriminatory harassment claim.  To constitute unlawful retaliation, harassing conduct does not have to be severe or pervasive enough to create a hostile work environment.  If the alleged harassing conduct is reasonably likely to deter protected activity, it would be actionable retaliation, even if not sufficiently severe or pervasive enough to create a hostile work environment. The ADA's interference clause is interpreted more broadly than the anti-retaliation clause. In addition to retaliation, the Americans with Disabilities Act prohibits interference with the exercise of ADA rights.  According to the EEOC, the interference clause is much broader than the anti-retaliation clause, “reaching even those instances when conduct does not meet the ‘materially adverse’ standard required for retaliation.”  However, the EEOC notes that in its view, the interference provision does not apply to any and all conduct an individual finds intimidating.  Rather it only prohibits conduct that is reasonably likely to interfere with the exercise or enjoyment of ADA rights.  Examples of such conduct include:

• Coercing an individual to forego an accommodation to which they are entitled;
• Intimidating an applicant from requesting an accommodation for the application process by indicating they would not be hired as a result of the request;
• Threatening an employee with termination if they do not “voluntarily” submit to a medical examination or inquiry otherwise prohibited by the ADA;
• Issuing a policy purporting to limit an employee’s rights to invoke ADA protections (e.g., a fixed leave policy that states “no exceptions will be made for any reason”);
• Interfering with a former employee’s right to file an ADA lawsuit by stating that a negative reference will be given if a suit is filed; and
• Subjecting an employee to unwarranted discipline, demotion, or other adverse treatment because the employee assisted a co-worker in requesting a reasonable accommodation.

The guidance includes some suggested "promising practices" for employers. The final guidance includes “promising practices” which the EEOC posits may help reduce the risk of violations.  However, the EEOC is careful to advise that adopting these practices will not insulate an employer from liability or damages for unlawful actions.  The “promising practices” include:

• Maintaining written policies which include examples of retaliation, steps for avoiding actual or perceived retaliation, a complaint procedure, and a clear explanation that engaging in retaliation will result in discipline, up to and including termination;
• Training all managers, supervisors, and employees on the anti-retaliation policy;
• Establishing a process for reminding the parties and witnesses involved in an EEO matter of the anti-retaliation policy, and providing advice to managers and supervisors alleged to have engaged in discrimination on how to avoid engaging in retaliatory conduct or conduct which may be perceived as retaliatory;
• Following up with employees, managers and witnesses while an EEO matter is pending to ask if there are any concerns regarding potential or perceived retaliation; and
• Reviewing proposed employment actions, preferably by a designated human resource or management official, to ensure that employees and witnesses are not subject to retaliation.

On September 20, 21 states filed a lawsuit against the U.S. Department of Labor in the U.S. District Court for the Eastern District of Texas, challenging the USDOL's revisions to the white collar exemptions under the Fair Labor Standards Act.  In the lawsuit, the states are seeking a declaratory judgment that the USDOL violated the Administrative Procedure Act and the Tenth Amendment to the U.S. Constitution by promulgating the new regulations, and an injunction preventing the USDOL from implementing the new regulations. The first claim for relief is that the application of the new regulations to state employers violates the Tenth Amendment to the U.S. Constitution.  The Tenth Amendment provides that "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or the people."  According to the complaint, enforcing the new regulations against the states "infringes upon state sovereignty and federalism by dictating the wage that states must pay to those whom they employ in order to carry out their governmental functions, what hours those persons will work, and what compensation will be provided where these employees may be called upon to work overtime."  The states allege that they will be forced to eliminate or alter employment relationships and cut or reduce services and programs as a result of the increased cost associated with compliance with the new regulations. Although the first claim for relief appears to relate only to the application of the new regulations to state employers, the other claims for relief under the Administrative Procedure Act are asserted not only on behalf of state employers, but also on behalf of private employers.  The second claim for relief is that the issuance of the new regulations exceeds the USDOL's statutory jurisdiction and authority under the FLSA, because Congress intended that an employee's duties -- not salary -- be determinative of exempt status and because there is no Congressional authorization for automatic increases to the minimum salary level every three years.  The third claim for relief is that the USDOL circumvented the required rulemaking procedures by mandating automatic increases every three years instead of going through the appropriate notice and comment procedures each time the salary level will be increased.  The fourth claim for relief is that the USDOL's issuance of the new regulations was arbitrary and capricious, and the fifth claim for relief is that the USDOL's issuance of the new regulations was an improper delegation of legislative power. As of now, employers should continue to plan as if the new regulations will become effective on December 1.  Many employers will have significant decisions to make about whether to increase certain employees' salaries to retain the employees' exempt status and whether to reclassify certain employees from exempt to non-exempt.  Those decisions should be made soon, and employers should plan on moving forward with those decisions beginning with the pay period that encompasses December 1.  If an injunction is issued between now and late November that delays or prohibits the implementation of the new regulations, employers can always put their plans on hold pending a final outcome of the lawsuit.

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 26, 2016, the National Labor Relations Board issued a decision in Total Security Management Illinois 1, LLC, in which it held that an employer who is engaged in negotiations for an initial collective bargaining agreement with a recently certified union must provide the union with notice and an opportunity to bargain prior to imposing discipline on an employee within the bargaining unit.  By doing so, the NLRB effectively reinstated its prior decision in Alan Ritchey, Inc., which had previously been invalidated by the Supreme Court in NLRB v. Noel Canning. Prior to Alan Ritchey, employers had been able to continue to impose discipline consistently with past practices while initial negotiations with a recently certified union were ongoing, and they were able to do so without providing notice and an opportunity to bargain.  Employers can no longer comfortably do so without risking a violation of the National Labor Relations Act.  Instead, employers who are engaged in negotiations with a recently certified union will need to provide the union with notice and an opportunity to bargain over any discipline that will materially alter an employee’s terms of employment (i.e., termination, suspension, demotion, etc.). However, the duty to bargain will not apply to discipline that does not materially alter the terms of employment (i.e., a verbal or written warning).  The obligation also does not apply if the employer and the recently certified union have separately agreed on a disciplinary process. Employers who are in the process of negotiating an initial collective bargaining agreement with a recently certified union should be mindful of this obligation going forward.

The National Labor Relations Board, in Columbia University, issued a 3-1 decision yesterday holding that graduate, and undergraduate, student assistants are common law employees within the meaning of the National Labor Relations Act and therefore are eligible to organize and bargain collectively under federal labor law.  In so doing, the Board overruled its prior determination in Brown University.  Board Member Miscimarra wrote a lengthy dissent, arguing that the educational nature of the relationship between student and educational institution should dictate that student assistants are not employees and therefore they should not be eligible to organize and bargain collectively. After much speculation, and following an invitation for briefing in December 2015, the NLRB rejected the Brown holding that graduate assistants cannot be statutory employees because they are “primarily students and have a primarily educational, not economic, relationship with their university.”  The Board first noted that it has the statutory authority to treat student assistants as statutory employees.  The Board applied a common law test and indicated that when student assistants perform “work” at the direction of a college or university, for which they are compensated, a common law employment relationship will be deemed to exist and the students will be eligible to organize and bargain collectively. The Board indicated that the new test will apply to all student assistants, including graduate assistants engaged in research funded by external grants (and subject to the conditions of those grants).  The Board also determined that the petitioned-for bargaining unit at Columbia -- which included graduate students, terminal Master’s degree students, and undergraduate students -- constituted an appropriate unit and that none of the petitioned-for classifications consisted of temporary employees who should be excluded from the unit.  Finally, the Board remanded the case to the Regional Director for consideration of whether student assistants not currently performing their assistant duties should be eligible to vote based upon a continuing expectation of future common law employment. The Board’s decision was long the subject of speculation and has been anticipated by many commentators.  In the wake of the decision, colleges and universities should anticipate increased organizing activity on their campuses and will have the obligation to bargain with units comprised of student assistants if they are recognized after an NLRB election.  Given the breadth of the Board’s decision, and the potential units that could be petitioned for by unions, this decision has the potential to represent a significant challenge if broad units of student assistants are voted in and certified under NLRB procedures.