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  We are unaware of any other state, city or locality that has superseded the principle of employment at will for an entire industry, thereby requiring private employers to demonstrate “just cause” before taking any significant,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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30

December, 2020

Extension of FFCRA Credit Helps NYS Employers

By Tracey I. Levy

As a post-script to our last blog post, the latest federal COVID-19 relief package, which was signed into law on December 27, 2020, includes a short-term extension of the FFCRA tax credit that offers some additional financial relief for New York State employers.  As we previously discussed, the paid leave requirements of the FFCRA are set to expire December 31, 2020, and the new COVID-19 relief package allows those requirements to sunset.  However, those employers that voluntarily elect to continue to provide the paid leave that was available under the FFCRA, under that law’s eligibility requirements, can continue to claim a federal payroll tax credit through March 31, 2021 to offset the cost of that leave.  New York employers do not have an option with regard to providing COVID-19 leave, and therefore the extension of the FFCRA credit may be a valuable benefit to manage the associated costs.

There are some notable limitations on which employers can benefit from the federal tax credit:

  • Large Employers

Employers with more than 500 employees are subject to the New York State paid leave requirements, but were not subject to the FFCRA paid leave requirement and therefore cannot claim the credit;

  • Multiple Quarantines for the Same Employee

To the extent the reasons for leave under the FFCRA and New York State law have overlapped, the FFCRA tax credit was limited to a total of ten days of paid leave, per employee.  However, the New York State law does not appear to place a limit on the number of times an employee can receive paid leave, provided each leave is in accordance with a government-mandated quarantine or isolation order.  Once an employer has claimed the FFCRA tax credit for an employee, it appears that it cannot be claimed again for a repeat occurrence of quarantine.

New York State employers should consult with their tax advisor with regard to the availability of the tax credit in specific circumstances.

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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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30

March, 2020

US DOL Issues Poster, Guidance – Answers Some Open Questions Regarding Emergency Paid Sick Leave

By Tracey I. Levy

The U.S. Department of Labor has issued a mandatory poster and updated its initial guidance to answer many more of employers’ questions with regard to the application of the Emergency Paid Sick Leave law, which takes effect April 1, 2020.  The poster must be posted in a conspicuous place on the employer’s premises or on a website for employee information, or emailed or direct mailed to all employees.

The DOL’s guidance includes the following key points, many of which we had referenced in our last HR Strategy article on the new federal and New York State emergency paid sick leave laws.

Exception for Small Businesses:

Employers with fewer than 50 employees can demonstrate that providing Emergency Paid Sick Leave or Emergency FMLEA will jeopardize the viability of their business as a going concern, and thereby claim an exemption from the laws’ requirements, if an authorized officer of the business determines that:

  • Providing the paid leave would cause the business’s expenses and financial obligations to exceed available revenues, such that the business would cease operating at a minimal capacity;
  • The absence of covered employees would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities; or
  • The business lacks sufficient workers who are able, willing, qualified and available at the time and place needed to cover for the employee(s) requesting paid leave and the work the requesting employees would perform is needed for the small business to operate at minimal capacity.

It remains unclear what documentation an employer will need to maintain to meet this legal standard, so employers seeking the exemption may want to err on the side of saving any potentially relevant financial records, communications and notes of their deliberative process.

Counting the 500-Employee Threshold

The federal emergency paid leave laws apply only to employers with fewer than 500 employees.  Only individuals employed in the United States (including all 50 states, the District of Columbia, or any Territory or possession of the U.S.) are included in that number.  Multi-national entities with a relatively small U.S.-employee presence therefore are covered by the federal laws as to their U.S. employees, even if they have more than 500 employees globally.  Also, full-time and part-time employees count equally toward meeting that threshold, as do employees on leave, temporary employees (even if they are employed through a temp agency), and day laborers supplied by a temporary agency.  Only independent contractors are excluded from the headcount.

Documenting Leave is Requested for a Qualifying Reason

The DOL has referred employers to the Internal Revenue Service for forms, instructions and information on what documentation is required to support an employee’s request for leave and what documentation must be retained to support the employer’s claim of a tax credit.  The IRS has not yet issued that guidance, but employers can check https://www.irs.gov/coronavirus for updates.

Generosity is Permissible, but Not Reimbursable

For higher-earning employees, employers may choose to pay them above the statutory cap for leave taken as Emergency Paid Sick Leave or Emergency FMLEA.  However, employers cannot claim a tax credit for payments in excess of the statutory cap.

Employers may also permit (but may not require) employees to apply their regular accrued, paid leave time under the employer’s policies to supplement the amount received for Emergency Paid Sick Leave or Emergency FMLEA.  For example, an employee who is receiving two-thirds of salary as Emergency Paid Sick Leave may request to use accrued, paid leave in one-third of a day increments to augment the federal law benefit.  In this situation, as well, the employer tax credit is limited to payments up to the statutory amounts.

Intermittent Leave May Be an Option

Employees must take Emergency Paid Sick Leave in full-day increments.  With that caveat, employers may permit an employee to use Emergency Paid Sick Leave and Emergency FMLEA on an intermittent basis (rather than in a single block of time) in select circumstances.  Intermittent leave may be authorized for an employee who is caring for a child whose school or child care center has been closed due to COVID-19 precautions, regardless of whether the employee is reporting to the workplace or working remotely.  If leave is being taken under any of the other five Emergency Paid Sick Leave categories, the guidelines provide that, unless the employee is working remotely, intermittent leave is not available.

Paid Leave is Not Required for Furloughed Employees or if the Workplace Has Been Closed

Employees are only eligible for paid leave if they are still working as of the date the leave is requested.  If the entire worksite has been closed or the requesting employee has been laid off, even temporarily, and the employee is therefore not doing any work for the employer, even remotely, then the employer is not required to provide any amount of paid COVID-19-related leave under the federal laws.  If an employer closes a worksite while an employee is already on covered paid leave, the employee must be paid for leave take only up to the date of closure.

Emergency FMLEA Counts as FMLA Time

For employers who are covered by the federal Family and Medical Leave Act, leave previously taken within the employer’s designated 12-month period counts against, and may thereby reduce, the leave available under Emergency FMLEA.  Similarly, to the extent an employee takes leave in the next eight months for Emergency FMLEA, the leave taken will count against the employee’s 12-month FMLA leave entitlement.

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8

March, 2020

Managing Workplace Epidemics: Coronavirus Concerns in Westchester County and New York City

By Tracey I. Levy, Esq. and Alexandra Lapes, Esq.

As the global Coronavirus situation is expanding rapidly and hitting close to home, Westchester County and New York City employers should review their communicable disease plans and implement preventative measures to limit the potential effect of illness in the workplace.

Key strategies for employers in preparing and responding to a Coronavirus outbreak are:

  1. Implement a communicable disease policy

If your organization has not done so already, HR professionals should devise a communicable disease policy and prevention plan in case the outbreak directly impacts their workplace.  An effective policy should identify and communicate the organization’s objectives and address workplace safety precautions, such as employee travel restrictions, mandatory reporting of exposure, reporting to public health authorities, employees quarantined or in isolation, and facility shutdowns.

Employers should also establish policies to encourage employees who feel sick to stay home, post reminders on proper handwashing and coughing/sneezing practices and make hand sanitizers and tissues available throughout the workplace. Remind employees of relevant policies that may provide them with paid time off in these circumstances, including time off under Westchester County’s Earned Sick Leave Law and New York City’s Earned Sick and Safe Time Act, as discussed below.

  1. Make sure not to discriminate

Because of the heightened risk that COVID19 presents for individuals with underlying medical conditions, in the course of implementing a communicable disease policy or administering a response to the current Coronavirus threat employers may learn, inadvertently or otherwise, of latent disabling conditions impacting some of their employees.  Employers should treat all such information as confidential, and take care not to engage in any actions that could be perceived as discriminating based on a disability.

Employers also should avoid, and take measures to prevent, any harassment or discriminatory actions that target individuals who may be associated with an ethnic or religious group, or who have relatives from a particular country, that has been more substantially impacted by the spread of the virus.  Employment policies should be consistent with public health recommendations, as well as local, state, and federal workplace laws.

  1. Consider alternative work arrangements

Encourage sick employees to stay home and focus on their health, and recovering employees or those who have been asked to self-quarantine to do so.  Consider flexible work schedules to limit the number of workers in the same work area or worksite, reduce exposure during commutes on mass transit at peak times, and reduce face-face contact.  Use virtual work environments to replace in-person meetings with video or telephone conferences. Leverage remote access solutions where logistically possible to enable healthy employees to stay productive in the event the workplace or specific individuals are subject to a quarantine.

  1. Advise employees before traveling

Employers should continuously check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which an employee may need to travel.  Advise employees to check themselves for symptoms before travelling and notify their supervisor if they need to stay home.  If an employee becomes sick while travelling or on temporary assignment, ensure the employee understands to notify a supervisor and promptly call a local health care provider.  New Yorkers can call the State hotline at 1-888-364-3065, and for Westchester County COVID-19 information call 211.

  1. Manage employee benefits and compensation

Non-exempt employees must be paid overtime compensation if they work in excess of 40 hours in a workweek while covering for other employees absent due to the Coronavirus.  Time spent working from home or through other remote work arrangements also is compensable.

Most employees in Westchester County and New York City will be eligible for up to five days of paid sick leave, under local paid sick leave laws, if they personally contract the Coronavirus, their workplace is closed due to a public health emergency, they are caring for a family member who has contracted the virus, or they are caring for a child whose school or childcare provider is closed due to a public health emergency.

Employers should consider whether, independent of any available paid leave time, they want to continue to pay employees for all or some portion of the time that they are unable to or are precluded from working because of the Coronavirus.  While some organizations have suggested leave donation plans as a means of encouraging sick employees to stay home if they have exhausted their paid time-off benefits, such programs need to be carefully considered.  If not appropriately structured, the donated time can have tax consequences for the donor and the recipient.  Further, the benefits of such a program for small and mid-size employers may prove to be few or fleeting in the context of a pandemic, as donated time may benefit the first to fall ill, but then leave little in the bank for the donors and others who later contract the disease.

New York State Paid Family Leave is available for employees who may need to care for a close family member with a serious health condition.  However, the state defines a “serious health condition” as an “illness, injury, impairment, physical or mental condition requiring inpatient care in a hospital, hospice, or inpatient/outpatient residential health facility;” or “continuing treatment or supervision by a health care provider.”  Under this definition, care of a family member who is hospitalized due to Coronavirus or who has complications from the virus due to an underlying medical condition, such as asthma or respiratory disease, likely would be covered.  Care of a family member who experiences milder Coronavirus symptoms, more akin to the flu, likely would not be covered.

  1. Stay informed on changes to state and local law

Local paid sick leave laws in Westchester County and New York City present some additional challenges for employers.  The laws permit employers to require employees to provide documentation from a health care provider after three consecutive sick days, but employers may not require the health care provider to specify the medical reason for sick leave.  Employers need to balance this provision against the need to be informed, for public safety reasons, if an employee has been diagnosed with the Coronavirus or is being quarantined so as to take appropriate precautions to prevent the further spread of the virus throughout the workplace.  Also, the National Centers for Disease Control and Prevention advises employers not to require medical certification at this time to validate employees who are sick with acute respiratory illness, as they anticipate healthcare providers and medical facilities may be extremely busy and not able to provide such documentation.

Notably, while it has been widely reported that New York State Governor Cuomo plans to amend New York State’s paid sick leave bill to deal with the Coronavirus, there currently is no state-wide paid sick leave law in New York.  Paid sick leave at the state level is simply proposed legislation that needs to make its way through the legislative process and, even if enacted, as proposed the law would not take effect until April 2021.

  1. Employee morale and business continuity

Lastly, employers should endeavor to communicate information to employees about their organization’s communicable disease plan, efforts to reduce the risks of contagion in their workplace, and policies and benefits for those who are directly impacted by the Coronavirus.

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