12

February, 2021

NYC Upends Employment at Will – Revolutionary Change in the Fundamentals of US Employment Law

By Tracey I. Levy

Employment “at will” — the ability to fire an individual for any reason or no reason at all and the individual’s right to quit at any time — has been the bedrock principle of the employment relationship in the United States throughout its history.  Collective bargaining agreements modify that relationship, contractually, in the union context.  Individual employment agreements may similarly include contractual limitations on the employment at will doctrine.  Employment laws modify employment at will by precluding employers from terminating an individual for a discriminatory, retaliatory, or similarly unlawful reason.

But now New York City has gone one step further and abolished the concept of employment at will in its entirety in the discretely targeted area of the fast food industry (defined as fast food chains with 30 or more operating establishments nationally).  While the law thereby will have limited application in its current form, the radical shift that the New York City law presents cannot be understated.  We are unaware of any other state, city or locality that has superseded the principle of employment at will for an entire industry, thereby requiring private employers to demonstrate “just cause” before taking any significant, adverse employment action against an individual employee.

New York City’s new law expands on prior restrictions requiring “predictive scheduling” for hourly fast food workers to now provide that, absent “just cause” or a “bona fide economic reason,” once such employees successfully complete a 30-day probationary period they cannot be “discharged”, which means not only that they cannot be fired, but that they cannot be suspended indefinitely, laid off, or subjected to more than a 15% reduction in their scheduled work hours.  While “discharged” is thus defined quite broadly, the new law defines “just cause” quite narrowly, as an employee’s “failure to satisfactorily perform job duties or misconduct that is demonstrably and materially harmful to the fast food employer’s legitimate business interests.”  The law then builds on that definition to provide that, absent “egregious” behavior, the just cause standard cannot be satisfied unless the employer already has in place a written progressive discipline policy that was provided to the employee, and the employer followed its progressive discipline process.  Disciplinary actions taken more than a year prior to the discharge effectively expire, as the law says they cannot be considered part of the progressive discipline process.  Finally, employers need to be careful with their documentation, as they must provide the impacted employee with a written explanation of the precise reason for discharge within five days, and they effectively waive the right to later defend their action based on any reason that is not included in that written explanation.

To assert that termination was due to a “bona fide economic reason,” the employer must show through its business records that, in response to reduced production volume, sales or profit, it needs to fully or partially close its operations or make technological or organizational changes.  When invoking this standard as a reason for discharge, employees must be let go in reverse order of seniority, so that the longest tenured employees are the last to go and the first to be rehired.  For a twelve-month period following such a discharge, the employer has to make “reasonable efforts” to reinstate former employees before it can offer shifts to other employees or hire anyone new.

Employees are entitled to reinstatement if they are found to have been discharged without just cause, plus the employer must bear the cost of the employee’s reasonable attorneys’ fees and may be liable for back pay and punitive damages.  As a further penalty, the employer will be liable for schedule change premiums, as provided under the existing predictive scheduling law, for each shift the employee loses as a result of having been discharged without just cause.  Alternatively, the law makes arbitration available as an option to employees, beginning in January 2022, and provides that a losing employer must reimburse the city for the cost of the arbitration.

The broad definition of “discharge”; narrow definition of “just cause”; precise policy, notice and documentation requirements; and heavy financial costs imposed on a losing employer collectively provide fast food employees with unprecedented job protection, likely greater than that provided anywhere else in the country.  Even well-intentioned employers that are indisputably contending with employees presenting persistent attendance issues, repeated underperformance, or offensive behavior may find themselves tripped up by the procedural requirements of the law, particularly the five-day window to thoroughly document the precise reason for discharge.  Similarly, by defining a work schedule reduction of more than 15% as a “discharge”, the new law brings the full weight of the documentation and enforcement provisions down on employers endeavoring to adjust work schedules to meet business needs.

Finally, the law’s recognition of seniority as the sole basis for determining employee selections in the event of a downsizing or restructuring deprives employers of necessary flexibility in making selection decisions.  The longest tenure does not consistently equate with the best performance and skillset, yet the law fails to recognize the relevance or legitimacy of those factors in reviving a struggling business.

While the applicability of this law is limited to a discrete industry, its import is manifold greater.  Government-mandated paid sick leave was unheard of in the private sector when it was adopted by San Francisco in early 2007, and in the subsequent 14 years such laws have proliferated to 13 states, the District of Columbia, and discrete localities in at least five other states.  The precedent has been set, and absent responsive action by the business community, it may not be long before employment at will fades away as past history.

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22

January, 2021

Even Small Employers Have Data Protection Requirements Under the NYS “Shield” Act

By Alexandra Lapes

New York employers responding to the pandemic may have overlooked data privacy requirements that took full effect in March 2020 as part of the Stop Hacks and Improve Electronic Data Security (“Shield”) Act.  The Shield Act requires any business handling the “private information” of New York residents to comply with broadened data breach notification requirements, and for the first time it sets specific standards covered businesses and employers should take to maintain reasonable data security safeguards.  The Act explicitly requires small employers to implement a data security program that contains reasonable administrative, technical, and physical safeguards, and to provide notice to affected individuals and proper authorities in the case of a data security breach.  The Act defines a small business as any person or business with less than 50 employees; less than three million dollars in annual revenue for the past three years; or less than five million dollars in year-end assets.

The type of “private information” held by organizations that may trigger the provisions of the Shield Act is defined broadly to include any of the following data elements:

  • social security number;
  • driver’s license number or non-driver identification card number;
  • account number;
  • credit or debit card number, in combination with any required security code, access code;
  • password or other information that would permit access to an individual’s financial account;
  • account number, credit or debit card number if the number could be used to access an individual’s financial account without additional identifying information;
  • biometric information; or
  • a username or e-mail address in combination with a password or security question and answer that would permit access to an online account.

If any one of those data elements is “accessed” or “acquired” by an unauthorized party and can be linked back to an individual’s “personal information,” meaning name, number, personal mark or other individual identifier, it falls under the Shield Act.  Encrypted data falls outside the scope of the Shield Act, unless the data is encrypted with an encryption key that has been “accessed or acquired” by an unauthorized party.

When implementing the security obligations required of all covered employers under the Act, small employers are allowed greater flexibility and will be deemed compliant if the security program is reasonable based on the size and complexity of the business. Small businesses should consider implementing appropriate measures within the following:

  • administrative safeguards, such as designating one or more employees to coordinate a data security program, identify foreseeable internal and external risks on a regular basis, track and assess the sufficiency of safeguards in controlling identified risks, and train employees in security programs, including preparing and preserving documents of compliance activities;
  • technical safeguards, such as assessing risks in network and software design, using the latest versions of software, two-factor authentication implementation, prevention and response to attacks or system failures, and regularly testing and monitoring the effectiveness of system controls and procedures; as well as
  • physical safeguards, such as assessing risk of storage and removal of private information, detecting and preventing intrusions, and physically securing access to information and disposal of that information in a reasonable amount of time.

Small employers must also consider administrative safeguards with regard to third party providers who have access to private data.  These safeguards should be documented so that the employer can demonstrate the reasonableness of its efforts to secure private information.

Small employers should also consider encrypting any and all private information of New York residents to which they have access, and storing the key to the encryption separately from the private information itself.  In doing so, they can significantly minimize the risk of data theft and similarly minimize their obligations and liabilities under the Shield Act.

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30

November, 2020

Three Key Employment Items to Address Before the New Year

By Tracey I. Levy and Alexandra Lapes

As the new year quickly approaches, employers should aim to update their policies and practices to stay legally compliant and prepare their workforce for the new year.   In particular, employers in New York, Connecticut and New Jersey need to ensure they are complying with harassment prevention training requirements, have updated their sick and safe leave and their harassment and discrimination prevention policies, and have updated their procedures to meet new notice, payroll, and tracking requirements.

1. Training

This is year two for meeting the annual New York State and New York City interactive sexual harassment prevention training requirements.  Employers that have not yet conducted training this year should make that a priority before year-end to remain in compliance at both the state and city levels.  Note, for new hires, New York City requires employers with 15 or more employees to conduct initial training within their first 90 days, and all other New York employers are subject to the state’s requirement for training to be conducted as soon as practicable after hire.  When conducting the training, employees must be provided with a copy of the employer’s sexual harassment prevention policy, training materials, and a notice of employee rights.

Connecticut employers are also required to conduct sexual harassment prevention training, and the Connecticut Commission on Human Rights and Opportunities recently extended that deadline to January 1, 2021.  Employers with three or more employees must train all their employees, while the smallest employers need only train those in a supervisory role.  Meeting this training obligation will satisfy an employer’s legal requirements for the next ten years as to existing employees, but on an ongoing basis, new hires need to be trained within six months after they are hired.

2. Policies

Employers should review and revise their employee handbook policies on sick and safe leave, harassment prevention, and anti-discrimination, to ensure compliance with recent changes in the law.

  • Sick and safe leave
    • New York State adopted a state-wide paid sick leave law (in addition to the pandemic-related paid leave law), that requires employers to provide up to seven days of paid sick leave per year, depending on the size of the employer.
    • New York City expanded its paid sick leave law to mirror and expand upon the state law provisions. The amendments will require New York City employers to update their paid leave policies to reflect the new updated accrual amounts and eliminate certain eligibility and waiting period requirements, as well as to add “domestic violence” as an additional basis for taking leave.
    • While Westchester County has its own paid sick leave law, the county has posted a notice on its website that the state law now governs paid leave and employers should refer to the state law for their rights and obligations. Note that there is no similar notice with regard to the Westchester County paid safe leave law, and employers should therefore assume that the safe leave law’s separate paid leave requirements are still in full force.
  • Harassment and discrimination prevention
    • Employers in New York State should update their harassment prevention policies to reflect the State Human Rights Law’s new definition of sexual harassment.
    • New York State employers must also update their policies to provide employees with appropriate notice of their rights and remedies with regard to reproductive health decisions, including a prohibition against discrimination and retaliation based on an employee’s or an employee’s dependent’s reproductive health decision-making.

3. Notice Requirements

The following payroll and tracking procedures must be put in place, in addition to meeting new notice and posting requirements.

  • Payroll and Tracking
  • New York State employers must:
    • Maintain paid sick leave records for no less than six years; and
    • Be prepared to timely provide employees with a summary of the amount of sick leave accrued and used upon request.
  • New York City employers must additionally provide:
    • Accrual, usage, and paid sick leave balance information to employees each pay period;
    • Written notice by January 1, 2021 (see notice link here) of employees’ paid sick leave rights at hire and to current employees of organizations with 100 or more employees, and conspicuously post that notice; and
    • Retain compliance records for at least three years.
  • Westchester County employers must additionally provide:
    • A Notice of Employee Rights and a copy of the County’s Safe Leave Law to all new hires; and
    • Display the required Safe Time poster both in English and Spanish, in a conspicuous location.
  • New Jersey employers with 10 or more employees must ensure they have:
    • Updated their payroll statements to ensure that they each specify: the employee’s gross and net wages; the employee’s rate of pay; and, for hourly employees, the number of hours worked during the pay period.
  • Job Protection
  • New Jersey employers must have conspicuously posted (as of April 1, 2020), two notices regarding employee misclassification.
  • Connecticut employers must provide information on the illegality of sexual harassment and remedies available to new hires within three months of their start date and send this information to each employee.
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