On July 15, 2014, the Occupational Safety and Health Administration ("OSHA") issued a policy memorandum to its Regional Administrators, explaining in greater detail the agency’s Temporary Worker Initiative ("TWI").  The TWI, which was launched on April 29, 2013, is an initiative intended to prevent work-related injuries and illnesses among temporary workers.  Employers who have temporary employees hired through staffing agencies should be aware that OSHA has a particular focus on the health and safety of those temporary employees, and should ensure that those temporary employees are provided with proper protective equipment and training to minimize any potential workplace hazards. Perhaps the most interesting portion of the memorandum is the agency’s explanation that “in general, OSHA will consider the staffing agency and host employer to be ‘joint employers’ of the workers in this situation” and, thus, that both employers will be responsible for protecting the safety and health of the worker.  OSHA noted that these “obligations will sometimes overlap” and that -- depending on the circumstances of any violations of the Act -- the agency will “consider issuing citations to either or both of the employers.”  Notably, while the memorandum states that a host employer will normally have “primary responsibility for determining the hazards in their workplace and complying with worksite-specific requirements,” it adds that the temporary agency or staffing firm also has a “duty to diligently inquire and determine what, if any, safety and health hazards are present at their client’s workplaces.”  The memorandum includes the following example:  “If a staffing agency is supplying workers to a host where they will be working in a manufacturing setting using potentially hazardous equipment, the agency should take reasonable steps to identify any hazards present, to ensure that workers will receive the required training, protective equipment, and other safeguards, and then later verify that the protections are in place." The memorandum indicates that additional bulletins and a compliance directive regarding the TWI will be issued.

On July 31, 2014, President Obama signed the "Fair Pay and Safe Workplaces" Executive Order, which requires bidders on federal procurement contracts for goods and services (including construction) in excess of $500,000 to disclose labor law violations that have occurred within the three-year period immediately preceding the bid.  In addition, the Executive Order requires federal contractors to provide individuals who perform work under the federal contract with information regarding hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  The Executive Order also prohibits federal contractors with contracts in excess of $1,000,000 from entering into mandatory pre-dispute arbitration agreements with their employees or independent contractors to resolve complaints under Title VII of the Civil Rights Act ("Title VII") or tort claims arising out of alleged sexual assault or harassment. For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each bidder must disclose whether there has been any administrative merits determination, arbitral award or decision, or civil judgment against the bidder within the preceding three-year period for violations of any of the following labor laws and Executive Orders:

• the Fair Labor Standards Act;
• the Occupational Safety and Health Act;
• the Migrant and Seasonal Agricultural Worker Protection Act;
• the National Labor Relations Act;
• the Davis-Bacon Act;
• the Service Contract Act;
• Executive Order 11246 (Equal Employment Opportunity)
• Section 503 of the Rehabilitation Act;
• the Vietnam Era Veterans' Readjustment Assistance Act;
• the Family and Medical Leave Act;
• Title VII;
• the Americans with Disabilities Act;
• the Age Discrimination in Employment Act;
• Executive Order 13658 (Minimum Wage for Federal Contractors); and
• equivalent state laws.

A bidder's disclosure of labor law violations will not necessarily automatically disqualify the bidder from receiving the federal contract, but the information will be considered in determining whether the bidder is a responsible source that has a satisfactory record of integrity and business ethics.  Federal contractors are also obligated to require prospective subcontractors to disclose labor law violations within the preceding three-year period, and are required to consider the information obtained in awarding subcontracts.  During the performance of a federal contract, each federal contractor subject to the Executive Order is required to update its own labor law violation disclosure and to obtain an updated labor law violation disclosure from each subcontractor every six months. Federal contractors who are awarded procurement contracts for goods and services (including construction) in excess of $500,000 are also required to provide each individual performing work under the contract with a document containing information regarding the individual's hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  Employees who are exempt from the overtime compensation requirements of the Fair Labor Standards Act need not be given information regarding their hours worked.  Compliance with any state or local requirements that the Secretary of Labor has determined are "substantially similar" to the requirements of the Executive Order (such as, presumably, the requirements of the Wage Theft Prevention Act) will be deemed compliance with the terms of the Executive Order.  If a federal contractor is treating an individual performing work under the federal contract or subcontract as an independent contractor, the federal contractor must provide the individual with a document informing the individual of this status. Finally, the Executive Order provides that for all contracts where the estimated value of the supplies acquired and services required exceeds $1,000,000, federal contractors and subcontractors must agree that the decision to arbitrate claims under Title VII or tort claims arising out of alleged sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after the dispute arises.  Thus, federal contractors and subcontractors may not enter into mandatory arbitration agreements with employees or independent contractors to resolve Title VII claims or sexual assault/harassment tort claims before a dispute actually arises.  This prohibition does not apply to employees who are covered by a collective bargaining agreement, nor does it apply to employees or independent contractors who entered into a valid arbitration agreement prior to the contractor or subcontractor bidding on a contract covered by the Executive Order. The Executive Order directs the Federal Acquisition Regulatory ("FAR") Council (in consultation with the Department of Labor and the Office of Management and Budget) to amend the Federal Acquisition Regulation to identify considerations for determining whether serious, willful, or pervasive violations of the labor laws demonstrate a lack of integrity or business ethics.  In addition, the Secretary of Labor is directed to develop guidance and processes to implement the provisions of the Executive Order.  The Executive Order will apply to all solicitations for contracts as set forth in any final rule issued by the FAR Council.

On July 14, 2014, the U.S. Equal Employment Opportunity Commission ("EEOC") issued its Enforcement Guidance on Pregnancy Discrimination and Related Issues.  The purpose of the Enforcement Guidance is to explain the EEOC’s current interpretations of the Pregnancy Discrimination Act of 1978 ("PDA") and the interplay between the PDA and the Americans with Disabilities Act ("ADA").  This interplay is important because although pregnancy by itself is not a disability under the ADA, it is often accompanied by one or more medical impairments which would entitle an employee to the ADA’s protections. Perhaps the most significant take-away from the new Enforcement Guidance concerns those situations when the PDA and ADA do not overlap, i.e., when pregnant employees do not have ADA-covered disabilities.  The EEOC’s interpretations make clear that it views pregnancy as a preferred status for enforcement and litigation purposes, such that pregnancy alone can give rise to certain job protections that would not be afforded to comparable non-pregnant co-workers. As an amendment to Title VII of the Civil Rights Act of 1964, the PDA prohibits discrimination on the basis of an applicant's or employee’s pregnancy, childbirth, or related medical conditions.  It requires that women affected by pregnancy be treated the same as non-pregnant employees who are “similar in their ability or inability to work.”  Courts generally interpret this to mean that employers need not adjust their normal policies and practices to accommodate work restrictions caused solely by pregnancy.  This is unlike under the ADA, which affirmatively requires that employers reasonably accommodate otherwise qualified individuals who are unable to perform the essential functions of their jobs due to disabilities. Despite earlier court decisions, the EEOC Enforcement Guidance instructs that employers must generally honor work restrictions for pregnant employees, even if no ADA-covered condition exists to require a workplace accommodation.  Similarly, if an employer provides light duty assignments to employees who experience on-the-job injuries (as many employers do to lower workers’ compensation costs), it is the EEOC’s position that pregnant employees must be given the light duty option.  This is the EEOC's view even if light duty work is not available to similarly situated employees whose job restrictions result from an injury suffered outside of the workplace. The EEOC issued its Enforcement Guidance less than two weeks after the U.S. Supreme Court decided to hear the case of Young v. UPS, Inc.  The Fourth Circuit held in Young that the PDA does not require pregnancy-related accommodations or light duty assignments since this would effectively grant non-disabled pregnant employees preferential treatment relative to co-workers who are not otherwise covered by the ADA or an employer’s light duty policy (such as an individual who suffered a temporary, off-the-job injury) – a result which was never intended by Congress.  Critics view the Enforcement Guidance as an attempt by the EEOC to politicize a question of judicial interpretation in advance of the Supreme Court ruling. The Enforcement Guidance also describes the EEOC’s position on other pregnancy-related issues affecting the workplace, which will be discussed in a future blog article.  In the meantime, as we noted in our January 2, 2013, blog post, the issue of accommodating pregnancy-related limitations will continue to be one of the EEOC’s top enforcement priorities.  Accordingly, prudent employers should evaluate their internal policies and practices for compliance with current legal standards, and ensure that those policies and practices are being applied in a consistent and non-discriminatory manner. The EEOC has also issued a Questions & Answers to summarize its new Enforcement Guidance, as well as a Fact Sheet for Small Businesses.

On July 22, 2014, Governor Cuomo signed a bill that amends the New York Human Rights Law by adding a new Section 296-c entitled, “Unlawful discriminatory practices relating to interns.”  The amendment prohibits employers from discriminating against unpaid interns and prospective interns on the basis of age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status, with respect to hiring, discharge, and other terms and conditions of employment.  The amendment further prohibits employers from retaliating against unpaid interns who oppose practices forbidden under the Human Rights Law or who file a complaint, testify, or assist in a proceeding brought under the Human Rights Law.  The amendment also makes it unlawful for employers to compel an intern who is pregnant to take a leave of absence, unless the pregnancy prevents the intern from performing the functions of the internship in a reasonable manner.  The amendment also prohibits employers from subjecting interns to sexual harassment or any other type of harassment based on a protected category. This legislation was introduced following a 2013 case in which the United States District Court for the Southern District of New York dismissed a sexual harassment claim asserted by an unpaid intern who alleged that her boss had groped her and tried to kiss her.  In that decision, the Court was bound by the language of the statute that existed at that time and the court decisions interpreting that language, which provided that the Human Rights Law only applied to paid employees and did not apply to unpaid interns.  The purpose of the legislation is to give unpaid interns the same right to be free from workplace discrimination and harassment as paid employees. Employers who have unpaid interns or expect to have unpaid interns in the future should consider revising their anti-discrimination and anti-harassment policies to explicitly provide that discrimination and harassment against interns will not be tolerated, and that complaints made by interns regarding alleged unlawful harassment will be investigated in the same manner as complaints made by employees.  In addition, as we noted in a 2010 blog post, employers should also make sure that unpaid interns truly qualify as unpaid interns, and would not be considered "employees" who are entitled to the minimum wage and overtime protections of the Fair Labor Standards Act and New York wage and hour laws.

As expected, President Obama signed an Executive Order today which amends Executive Order 11246 to prohibit federal contractors from discriminating against employees or applicants based on their sexual orientation or gender identity.  The prohibition against discrimination based on sexual orientation is not new to federal contractors who operate in New York State, because the New York Human Rights Law already prohibits employment discrimination based on sexual orientation.  Nevertheless, all federal contractors in New York should take this opportunity to review their policies and practices to ensure compliance with the new Executive Order.  Specifically, all anti-discrimination and anti-harassment policies should specifically list sexual orientation and gender identity among the protected categories, and all solicitations for employees should include a statement that qualified applicants will receive consideration for employment without regard to sexual orientation or gender identity (in addition to the other protected categories). The Secretary of Labor has been directed to issue regulations implementing the amendments to Executive Order 11246 within 90 days.  The amendments to Executive Order 11246 will apply to federal contracts entered into on or after the effective date of the regulations issued by the Secretary of Labor.

We originally addressed this topic on November 9, 2012, discussing the National Labor Relations Board's scrutiny of employer handbooks containing employment-at-will provisions.  Since these disclaimers are widely used in handbooks – as well as employment applications and offer letters – the NLRB’s sudden focus on such provisions was potentially significant.  Employers drew some comfort from two 2012 Advice Memoranda issued by the NLRB’s General Counsel’s Office (Case 32-CA-086799 & Case 28-CA-084365), but both of those Advice Memoranda warned employers that “the law in this area remains unsettled.” Fast forward to July 2014.  Is there anything new on this topic and if so, should employers be concerned?  In fact, there have been two noteworthy developments this year. First, on February 25, 2014, the General Counsel’s Office issued a memorandum on “Mandatory Submissions to Advice” which noted there should be “centralized consideration of certain issues” by the General Counsel's Office.  The memo went on to cite “cases involving ‘at-will’ provisions in employer handbooks” as an area identified for such centralized oversight.  Accordingly, the NLRB’s 26 regional offices will submit cases involving at-will provisions to the General Counsel’s Office for guidance, to the extent that prior NLRB case law precedent or earlier Advice Memoranda do not definitively resolve the legal issues being faced.  In sum, look for continuing developments coming straight from Washington, D.C., on this subject. Second, the General Counsel’s Office recently found the following at-will policy of Lionbridge Technologies in Redmond, Washington, did not obstruct employees from organizing a union or interfere with other concerted activity under Section 7 of the National Labor Relations Act:

Employment at [the Employer] is on an at-will basis unless otherwise stated in a written individual employment agreement signed by the [Senior Vice President of] Human Resources.  This means that employment may be terminated by the employee or [the Employer] at any time, for any reason or for no reason, and with or without prior notice. No one has the authority to make any express or implied representations in connection with, or in any way limit, an employee’s right to resign or [the Employer’s] right to terminate an employee at any time, for any reason or for no reason, with or without prior notice.  Nothing in this handbook creates an employment agreement, express or implied, or any other agreement between any employee and [the Employer]. No statement, act, series of events or pattern of conduct can change this at-will relationship.

(Brackets in original). In finding the above provision to be lawful, the GC’s Office reasoned:

• the language, on its face, did not expressly limit any union organizing or concerted activity;
• the employer did not promulgate the disclaimer in response to union organizing or concerted activity;
• the employer had not applied the policy unlawfully;
• employees could not reasonably construe the provision to prohibit union organizing or concerted actions;
• the language did not threaten discipline for employees seeking to unionize to change their at-will status; and
• the policy did not ask employees to waive any rights they held under Section 7.

In concluding the policy was lawful, the General Counsel’s Office essentially aligned with what employers have long intended regarding their at-will disclaimers:  such provisions have everything to do with providing a rock-solid defense to claims by ex-employees for breach of an implied employment contract and nothing whatsoever to do with inhibiting union organizing or other concerted activity.  While the latest news from Washington, D.C., is clearly favorable and pro-employer, employers should nevertheless carefully review any at-will policy to ensure it is lawful, in light of the NLRB’s continued interest in scrutinizing such provisions.

On June 30, 2014, the U.S. Supreme Court held, in Burwell v. Hobby Lobby Stores, Inc., that a for-profit corporation is a “person” that has religious rights under the Religious Freedom Restoration Act of 1993 ("RFRA").  Therefore, guidance under the Affordable Care Act ("ACA") that requires all 20 FDA-approved contraceptive measures to be covered with no employee cost sharing as a part of women’s “preventive services” does not apply to closely-held businesses where this mandate interferes with the ability to conduct business in accordance with their religious beliefs.  The Court determined that the $100 per day, per person, penalty that applies under the ACA for failure to satisfy the contraceptive mandate was a “substantial burden” on those corporations.  That burden could not be relieved by dropping health coverage and paying the (also substantial) $2,000 per employee annual penalty that would apply if even one employee got subsidized coverage on a state or federal exchange, according to the Court. The Court had difficulty reconciling ACA regulations that provide employees of nonprofit religious corporations access to contraceptives by requiring that insurers provide a contraceptive rider at no cost to the employer or employees.  This, the Court noted, provides a path to satisfying the government’s compelling interest in guaranteeing cost-free access to the challenged contraceptive methods.  However, the economies of this measure (saving the insurance companies the cost of undesired pregnancies) does not translate to self-funded health plans where the third-party administrator obtains no cost savings.  Third party administrators have no economic interest in the performance of self-funded plans, because all claims are paid from the general assets of employers, or from trusts. In New York, the Hobby Lobby decision would apply only to self-funded plans.  New York Insurance Law Sections 3221(l)(16) and 4330(cc)(1) require health insurance contracts to include a rider covering all FDA-approved contraceptive drugs and devices.  The exception for “religious employers” is both narrow and specific, requiring that all of the following conditions be met:

• The inculcation of religious values is the purpose of the entity;
• The entity primarily employs persons who share the religious tenets of the entity;
• The entity primarily serves persons who share the religious tenets of the entity; and
• The entity is a nonprofit organization.

One day after issuing its decision in Hobby Lobby, the Supreme Court issued orders in six other cases that were decided by various federal appellate courts relating to religious objections to covering contraceptive measures in employee health plans.  Those orders signify that the Court’s reasoning in Hobby Lobby may not necessarily be limited to the four methods of contraception that were challenged in that case (two “morning-after” type drugs and two intrauterine devices), and may extend to all 20 FDA-approved contraceptive methods. It remains to be seen how employees in a self-funded health plan maintained by a religious employer can obtain contraceptive coverage without cost, as the Supreme Court suggests.  Undoubtedly, the Obama Administration and the Department of Health and Human Services are puzzling over changes to the ACA guidance to achieve this goal without violating the RFRA.  

On June 26, 2014, the U.S. Supreme Court affirmed the decision issued by the U.S. Court of Appeals for the District of Columbia Circuit that President Obama's recess appointments to the National Labor Relations Board ("NLRB") on January 4, 2012, were unconstitutional.  The Supreme Court's decision in NLRB v. Noel Canning means that the NLRB did not have a valid quorum of three members from the date of the recess appointments to early August of 2013, when four new members were sworn in after being confirmed by the Senate.  Every decision issued by the NLRB during that approximately 19-month time period without a valid quorum has been rendered invalid by the Supreme Court's Noel Canning decision.  It remains to be seen how the NLRB will deal with this development, but it may now have to reconsider and issue new decisions in each and every case that was decided without a valid quorum in place.  However, in light of the fact that the majority of the NLRB members is still staunchly pro-union, it would be unrealistic to expect significantly different outcomes in cases that were decided against employers. Although the Supreme Court affirmed the D.C. Circuit's conclusion that President Obama exceeded his authority under the Recess Appointments Clause of the U.S. Constitution, the Supreme Court disagreed with the D.C. Circuit's narrow interpretation of the Recess Appointments Clause.  The Recess Appointments Clause permits the President to "fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."  The D.C. Circuit held that the phrase "the Recess of the Senate" applies only to recesses that occur in between sessions of the Senate -- not to breaks in activity that occur during a session of the Senate.  The January 4, 2012, recess appointments were not made during a recess that occurred in between sessions of the Senate.  The D.C. Circuit also interpreted the phrase "Vacancies that may happen during the Recess of the Senate" to mean that the vacancy actually must arise during the Senate's inter-session recess in order for the President to have the authority to fill the vacancy without going through the Senate confirmation process.  None of the three vacancies that President Obama sought to fill on January 4, 2012 arose during the Senate's inter-session recess. The Supreme Court adopted a broader interpretation of the scope of the President's authority under the Recess Appointments Clause.  The Supreme Court held that the phrase "the Recess of the Senate" applies both to inter-session recesses (breaks that occur between sessions of the Senate) and intra-session recesses (breaks that occur in the midst of a formal session of the Senate) of substantial length.  The Supreme Court also held that the phrase "Vacancies that may happen during the Recess of the Senate" applies both to vacancies that first arise during a recess and vacancies that initially occur before a recess but continue to exist during the recess.  The Supreme Court nevertheless determined that President Obama's recess appointments during a three-day intra-session recess of the Senate were unconstitutional because the three-day recess was not of substantial length.  The Supreme Court held that a recess of less than ten days is presumptively too short to permit the President to make recess appointments, but left open the possibility that unusual circumstances might require the President to exercise recess appointment authority during a recess of less than ten days. Some of the NLRB decisions that have now been rendered invalid include:  (1) the NLRB's September of 2012 holding in Costco Wholesale Corp. that an employer's social media policy was overly broad and in violation of Section 8(a)(1) of the National Labor Relations Act ("NLRA"); (2) the NLRB's December of 2012 holding (and reversal of 50 years of precedent) in WKYC-TV, Inc. that an employer's obligation to check off union dues continues after the expiration of a collective bargaining agreement; (3) the NLRB's December of 2012 holding (and reversal of 35 years of precedent) in American Baptist Homes of the West d/b/a Piedmont Gardens that witness statements related to employee discipline are not necessarily shielded from disclosure to the union; and (4) the NLRB's July of 2012 holding in Banner Health System that an employer violated Section 8(a)(1) of the NLRA by asking employees not to discuss ongoing investigations with their co-workers. Although these decisions and many others will likely be revisited, it seems unlikely that the NLRB will issue significantly different rulings.  Accordingly, employers should assume at this point that the invalid decisions will be affirmed by the current NLRB.

On Friday, June 20, 2014, the Wage and Hour Division for the U.S. Department of Labor (“DOL”) announced a proposed rule that would extend the spousal leave protections afforded by the Family and Medical Leave Act (“FMLA”) to include all eligible employees in legal same-sex marriages – regardless of where the employees live. The FMLA provides eligible employees with the right to take unpaid leave for a variety of qualifying reasons and to various qualifying family members.  When focusing purely on FMLA leave for spouses, eligible employees may take FMLA leave to care for their spouse under the following circumstances:  (1) when time off is needed to care for a spouse with a serious health condition; (2) when time off is needed to care for a spouse who is a covered servicemember with a serious injury or illness; and/or (3) when time off is needed for a qualifying exigency related to the covered military service of a spouse. The FMLA regulations currently define the term “spouse” to mean a “husband or wife, as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized.”  This definition of spouse has historically excluded same-sex marriages because of certain definitions contained in Section 3 of the Defense of Marriage Act (“DOMA”), a federal law that permits states to refuse to recognize same-sex marriages granted under the laws of other states.  However, in June 2013, the United States Supreme Court declared Section 3 of DOMA unconstitutional in its U.S. v. Windsor decision.  What result did the Court’s Windsor decision have on the FMLA?  In sum, this decision enabled eligible employees in legal same-sex marriages residing in states that recognize their marriage to avail themselves of the various leave rights and protections to care for spouses offered under the FMLA. Despite the practical developments stemming from Windsor, many same-sex couples remain unable to take FMLA spousal leave.  For example, employees who are legally married in a state which recognizes same-sex marriages, but subsequently move to a state which does not, may not be entitled to seek FMLA spousal benefits because FMLA spousal benefits are governed by the state of the employee’s residence.  With its newly proposed rule, the DOL is attempting to rectify this inconsistency by revising the definition of spouse so that the FMLA regulations will look to the law of the state (or country) where the marriage was entered into, as opposed to the law of the state where the employee resides.  The DOL believes that this change from a “place of residence” rule to a “place of celebration” rule will allow all legally married couples, whether opposite-sex or same-sex, to have consistent FMLA rights, regardless of the state in which they reside. The DOL’s proposed rule would also permit eligible employees to take FMLA leave to care for their stepchild (child of the employee’s same-sex spouse) or stepparent (employee’s parent’s same-sex spouse) without establishing an in loco parentis relationship. Like all proposed administrative changes, this DOL rule is subject to a notice and comment period before it can be implemented.  We will continue to follow this FMLA issue and provide additional updates if and when a final rule is issued.

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.

In a decision issued last week, an Administrative Law Judge (“ALJ”) for the National Labor Relations Board (“NLRB”) ruled that an interim grievance procedure between an employer and a newly-certified union did not have to include an arbitration option in order to relieve the employer of the obligation to provide the union with notice and an opportunity to bargain before imposing significant discretionary discipline. As we previously posted, in late 2012, the NLRB issued a groundbreaking decision in Alan Ritchey, Inc., requiring for the first time that in the absence of a binding agreement addressing discipline, an employer must provide the union with a bargaining opportunity prior to issuance of significant discretionary discipline (i.e., suspension, demotion, or discharge).  This issue would ordinarily arise during the period after a union is newly certified, but before an agreement has been reached with the employer on an initial contract. The Alan Ritchey decision did not specifically address whether an interim grievance procedure had to offer an arbitration option if internal grievance efforts failed to resolve any disagreement over the proposed discipline.  There was no binding agreement between the employer and the union in the Alan Ritchey case and, recognizing the significant change in the law that the decision entailed, the NLRB decided to apply the new requirement on a prospective basis only. In Medic Ambulance Service, ALJ Cracraft found that an interim grievance procedure did not require an arbitration option to satisfy the Alan Ritchey requirements.  In Medic Ambulance, while negotiations for an initial collective bargaining agreement were underway, the employer and the newly certified union agreed to follow the first two steps set forth in the grievance/arbitration section of the employer’s expired agreement with a prior union.  The parties also expressly agreed, however, that the third step (arbitration) would not be available until a new contract was signed. ALJ Cracraft found that the agreement regarding the first two grievance steps constituted an agreed-upon interim grievance procedure that relieved the employer of its obligation to bargain with the union prior to imposing significant discretionary discipline.  The General Counsel for the NLRB contended that the procedure did not satisfy the Alan Ritchey requirements because it did not include an arbitration option, but ALJ Cracraft summarily rejected that argument:

Surely if the Board intended to mandate arbitration as a part of an interim grievance procedure, its decision would have clearly provided such guidance.  Thus, in disagreement with the General Counsel, I find that Alan Ritchey does not specifically require that an interim grievance procedure contain an arbitration component.

Having concluded that arbitration was not a required element of an interim grievance procedure, the ALJ held that the two-step “grievance only” procedure was sufficient to relieve the employer of its obligation to provide the union with notice and an opportunity to bargain before it terminated several employees. The ALJ's Medic Ambulance decision offers a welcome constraint to the far-reaching scope of the NLRB's Alan Ritchey decision.  Employers should be cautioned, however, that the ALJ's decision is not binding precedent and the union may still pursue an appeal to the NLRB.

For the first time in New York State, a Regional Director for the National Labor Relations Board ("NLRB") has asserted NLRB jurisdiction over a New York charter school, and ordered an election for a unit of approximately 35 teachers at the school.  The decision, Hyde Leadership Charter School Brooklyn, Case No. 29-RM-126444, preempts the New York Public Employment Relations Board ("PERB") from asserting jurisdiction, and conflicts with prior PERB decisions holding that charter schools are public entities for labor relations purposes. The Hyde Leadership decision involved a representation petition for teachers at a charter school in Brooklyn, New York.  On April 14, 2014, the United Federation of Teachers, Local 2 (the "Union"), filed a petition with PERB seeking certification for a unit of approximately 35 teachers at the school.  That same day, the school filed a representation petition with the NLRB seeking an election for the same unit of employees.  Because the National Labor Relations Act excludes “any state or political subdivision thereof,” the NLRB was tasked with deciding the public or private nature of the charter school. To establish jurisdiction over the Hyde Leadership school, the NLRB would have to determine that the school was not a “political subdivision” of the state under the Supreme Court’s standard set forth in its NLRB v. Natural Gas Utility District of Hawkins County decision.  Under the Hawkins County decision, an entity is a political subdivision if it is created directly by state so as to constitute a department or administrative arm of the government, or if it is administered by individuals who are responsible to public officials or to the general electorate. Applying the Hawkins County standard to the Hyde Leadership school, the NLRB acknowledged the blend of public and private characteristics embedded in New York charter schools and the New York State Charter Schools Act (“Charter Schools Act”).  Factors suggesting a public character include:  the Board of Regents, a public entity, issues the charter and can revoke the charter upon discovering certain problems such as fiscal mismanagement; the school is funded almost entirely with public funds; the language of the Charter Schools Act refers to charter schools as independent and autonomous public schools and states that charter school employees are public employees for purposes of New York’s public employment relations law; the charter schools are subject to certain public officers laws; and New York City charter schools are subject to audit by the city comptroller. However, factors suggesting a private character include:  private individuals create and submit the charter agreement for approval (although this can optionally be done in conjunction with a public entity); except for laws specified in the Charter Schools Act, the charter schools are exempt from “all other laws and regulations governing public or private schools”; the charter schools are non-public for designation of textbooks, health services, student transportation, and other services; charter school employees are employees of the “education corporation” that runs the charter school, not the public school district; and there is no requirement that the board of directors for the charter schools be appointed or elected by any public entity or include any public officials. The Regional Director weighed the factors and concluded that the Hyde Leadership school was not a political subdivision under the Hawkins County test and therefore was subject to NLRB jurisdiction.  Specifically, the Regional Director held that the charter school was not “created by the state” because private individuals applied to establish the charter school, and it was not an “administrative arm of the government” because the governance and control of the charter school “vested solely in the private incorporators” rather than in the public entities.  Moreover, the school was not administered by individuals who are responsible to public officials or the general electorate, as none of the school’s governing trustees are appointed by public officials. Accordingly, the Regional Director asserted NLRB jurisdiction over the school and directed an election.  Although this does not establish a “bright line” rule that all New York charter schools will necessarily be subject to NLRB jurisdiction (and the Union may still challenge the Regional Director's decision), the factors that contributed to the holding are largely statutory, and may compel a similar conclusion for other charter schools in New York.