MINIMUM WAGE INCREASES SCHEDULED FOR NEW YORK EMPLOYEES

Q.  My company conducts operations in several locations throughout New York State. What do I need to know about the upcoming minimum wage increases and new salary threshold requirements for our administrative and executive level employees?

A.  Employers in New York State should prepare to ring in the New Year with yet another increase in the minimum wage, as well as substantial increases in the salary thresholds for exempt executive and administrative employees. In 2016, as part of a sweeping overhaul of the state’s wage and hour law, the New York Department of Labor amended the rules to provide for annual increases across the spectrum of wages, with the third phase set to go into effect on December 31, 2018.

Minimum Wage Increases

The increases in the general minimum wage depend on the employer’s location and number of employees. For example, in New York City, the minimum wage requirement for employers with 11 or more employees will rise from $13 to $15 per hour, with no additional increases planned for the following years.  For New York City employers with fewer than 11 employees, the minimum wage will increase from $12 to $13.50, with an additional increase to $15 slated for December 31, 2019.

The minimum wage requirements increase more gradually for employers outside of New York City. In Nassau, Suffolk, and Westchester counties, employers must raise wages for hourly employees from $11 in 2018 to $12 in 2019.  Employers in all other counties are required to raise the minimum wage from $10.40 to $11.10 per hour.  These increases outside of New York City will continue at the same rate and on the same date annually, with the final increase effective December 31, 2021.  On that date, the statewide minimum wage settles at $15 per hour, regardless of the employer’s location or number of employees.

In addition, the law provides a separate schedule of increases for employees in the fast food industry. Effective December 31, 2018, New York City fast food workers must receive a minimum wage of $15 per hour, while those workers in the rest of the state will see incremental increases annually before arriving at the statewide $15 per hour minimum wage at the close of 2021.

Employers should note several points regarding these changes. First, the applicable minimum wage rate is based on where the employee works, rather than the location of the employer’s headquarters.  Notably, for employees working in more than one location, employers must pay wages based on the applicable rate for the location where a given hour is worked.  In those cases, the employer must record the location worked and the commensurate wage, although the law allows the employer to use a hybrid overtime rate based on the applicable rates for the different locations.

Increases to Salary Threshold for Exempt Status

In addition to changes to the minimum wage, employers must ensure that their employees classified as exempt under the executive or administrative exemption meet the new salary threshold for exempt status. For non-hourly executive and administrative employees, the minimum salary necessary to claim the overtime exemption will rise significantly, again depending on the employer’s size and location.  Regarding the location, it is thus far unclear whether the applicable salary threshold is determined by the location where the work is performed, or some other factor such as the location of the employer’s primary place of work.

Assuming the employee works in one location, on December 31, New York City employers with 11 or more employees must raise salaries for exempt employees from $975 per week in 2018 to $1,125 per week. Along the same timeline, for employers with fewer than 11 employees, the weekly salary threshold increases from $900 to $1,102.50.  In Nassau, Suffolk, and Westchester counties, the salary threshold for exempt status rises from $825 to $900 per week, with further increases yearly until salaried employees in those counties reach the $1,125 threshold in 2021.  For all other counties, the salary threshold increases from $780 to $832 per week at the end of this year, with two additional increases scheduled before arriving at $937.50 at year end 2020.

Employers with employees earning salaries that fall below the new threshold on the effective date have several options going forward. If feasible, the simplest solution for employers in most cases is to raise salaries for exempt employees up to the threshold.  Alternatively, to mitigate the financial burden of the new law, employers might consider reclassifying these employees as non-exempt, track hours worked, and pay them overtime for hours worked over 40 in a workweek.

Given the scope of these changes, every employer in New York should conduct a thorough analysis of its workforce to ensure compliance with the new laws and to assess the financial impact of these changes. For exempt workers earning salaries near the new threshold, employers should carefully analyze the particular circumstances in light of the options discussed above before deciding the most prudent course of action.  Finally, employers in counties outside New York City (and small employers in the City) should mark their calendars in preparation for additional increases annually over the next several years.

Rogers Stevens

 

#MeToo: Is Your Company Covered?

Q.  Are there any steps we should take to protect our company from liability in the #MeToo era?

A.  A year ago, sexual assault allegations against movie mogul Harvey Weinstein rocked the entertainment industry and quickly led to the rise of the #MeToo movement, sparking an upsurge of reports and claims of sexual harassment in workplaces across America. In many cases, the alleged misconduct is not new. But the intensity, tone, and tenor of the claims — and the sheer volume of allegations — has been dramatically different and has had significant effects on businesses caught in the cross-hairs.

Public sentiment has also shifted: A CNN poll conducted in December 2017 found that nearly 70 percent of Americans described sexual harassment as a “very serious problem.” That’s almost double the 36% of Americans who expressed similar views in a CNN/Time poll conducted in 1998. As high-profile, credible women have come forward in virtually every industry, more women have been emboldened to share their stories.

Alleged perpetrators are not the only ones being called to account; so are other corporate actors who allegedly enabled, covered up, or failed to prevent the wrongdoing. Sexual harassment claims against high-ranking corporate actors can expose companies to enormous costs, including reputational harm, consumer boycotts, drops in market capitalization, loss of corporate opportunities, and legal expenses for internal investigations, government proceedings, employment lawsuits, securities class actions, and shareholder derivative suits.

It’s vital that businesses and individual directors and officers understand their potential exposure to loss arising out of sexual misconduct claims and the availability and limitations of their insurance coverage.

Read Full Article Here.

Pamela S. Palmer and Susan K. Lessack*

* This publication was prepared by Marsh in conjunction with Pepper Hamilton LLP. Copyright © 2018 Marsh LLC. All rights reserved. It is reprinted here with permission.

OSHA MEMORANDUM CLARIFIES EMPLOYER’S RIGHT TO CONDUCT POST-ACCIDENT DRUG AND ALCOHOL TESTING

Q.  Are there any limitations on my company’s ability to require employees to submit to drug and alcohol testing after an accident?

A.  In May 2016, OSHA published a final rule that, among other things, amended the Occupational Safety & Health Act (OSH Act) to prohibit employers from retaliating against employees for reporting a work-related illness or injury. In the preamble to that final rule, OSHA cautioned that a blanket rule that mandates drug/alcohol testing after every accident, injury or illness could be seen as retaliatory. Instead, before requiring an employee to submit to post-accident testing, OSHA said  that there must be a “reasonable possibility” that drug or alcohol use caused or contributed to the reported injury or illness.  Thus, for example, it would not make sense to test an employee who reported a repetitive strain injury from typing, since drug or alcohol use is not likely to be involved.

Fast forward to October 2018. OSHA recently issued a memorandum clarifying the Department’s position on post-accident drug and alcohol testing.  First, the Department stated that many employers who conduct post-accident testing “do so to promote workplace safety and health.”  While blanket post-accident policies still are not permitted, the Department stated that a post-accident testing policy would only violate the OSH Act “if the employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.”

The Department further stated that most instances of workplace drug testing are permissible, including:

  • Random drug testing;
  • Drug testing unrelated to the reporting of a work-related injury or illness;
  • Drug testing under a state’s workers’ compensation law;
  • Drug testing under another federal law, such as a U.S. Department of Transportation rule; and
  • Drug testing to evaluate the root cause of a workplace incident that harmed or could have harmed an employee. However, the Department warned that, if the employer chooses to use drug testing to investigate an incident, the employer should test all employees whose conduct could have contributed to the incident, not just the employee who reported an injury.

Under this new interpretation, most forms of post-accident testing should now pass muster, so long as the policy specifies that all employees whose acts may have contributed to a workplace accident will be tested.

The Department also addressed safety-incentive programs, stating that incentive programs that reward workers for reporting near-misses or hazards, and encourage involvement in a safety and health management system are “always permissible.” Rate-based safety incentive programs (which focus on reducing the number of reported injuries and illnesses by offering prizes or bonuses based on injury or accident-free periods, or evaluating managers based on their work unit’s number of injuries) are permissible “as long as they are not implemented in a manner that discourages reporting.”  If a rate-based incentive program penalizes an employee for occurrences and/or reports of workplace injuries or illnesses, the program must include adequate precautions to ensure that employees feel free to report an injury or illness, such as (a) an incentive program that rewards employees for identifying unsafe conditions; (b) training to reinforce reporting rights and responsibilities and emphasize the employer’s non-retaliation policy; and (c) a mechanism to accurately evaluate employee willingness to report injuries and illnesses.

–Tracey E. Diamond

 

Westchester County Paid Sick Leave Law Effective April 10, 2019

Q: I am an employer in Westchester County.  What do I need to know about the new paid sick leave law?  If I have employees in both Westchester County and New York City, can I have one paid sick leave policy that covers everyone?

A: Westchester County recently enacted its Earned Sick Leave Law (“ESLL”), which goes into effect on April 10, 2019.  While the law is similar in many aspects to New York City’s Earned Safe and Sick Time Act (“ESSTA”), there are some important differences.  Employers who want one policy to cover employees in both locations (referred to below as a “dual policy”) can opt to offer the more generous benefit.  Alternatively, employers can create a policy with carve-outs that are applicable to subsets of employees (referred to below as a “carve-out policy”).  As explained below, the key differences between the laws are whether the law covers safe time as a permissible use of sick leave, and the definition of family member.

All Westchester County employers are subject to the ESLL – like the ESSTA, employers with five or more employees must provide paid sick time, while employers with fewer than five employees may but are not required to make the sick time paid. The ESLL covers any person employed in Westchester County for more than 80 hours in a calendar year.

Under both laws, employees earn one hour of sick leave for every 30 hours worked, up to a cap of 40 hours per year. Accrued/unused leave must be carried over to the following year.

Both laws require that employees begin earning sick leave at the beginning of employment, and allow employers to impose a 120-day waiting period after commencement of employment before sick leave can be used.

Both laws provide for the following uses of sick leave: (1) care or treatment of an employee’s mental or physical illness, injury or health condition, or preventative medical care; (2) care or treatment of an employee’s family member’s mental or physical illness, injury or health condition, or preventative medical care; and (3) closure of an employee’s place of business due to a public health emergency or an employee’s need to care for a child whose school or childcare provider has been closed due to a public health emergency. In addition, the ESSTA allows sick leave to be used for “safe time,” which is time associated with when an employee or an employee’s family member has been the victim of a family offense matter (crimes such as harassment, stalking, or assault between members of the same household), sexual offense (crimes such as sexual abuse or rape), stalking, or human trafficking.  The ESLL does not require sick leave to be used for these purposes.  Thus, a dual policy should include the use of sick leave for safe time, while a carve-out policy should only apply safe time to NYC employees

Both laws define “family member” broadly, to include an employee’s child (including the child of an employee’s spouse or domestic partner), spouse, domestic partner, parent (including the parent of an employee’s spouse or domestic partner), sibling, grandparent, grandchild, and any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship. Additionally, the ESLL includes the following as family members: persons formerly married to or in a domestic partnership with one another regardless of whether they still reside in the same household, persons who have a child in common (regardless of whether they have been married, domestic partners, or have lived together at any time), and persons not related by blood or affinity who are or have been in an intimate relationship with the employee, regardless of whether they have lived together at any time.  The ESLL does not define “intimate relationship,” though future guidance could address the issue.  A dual policy should consider “family member” to include all of the above categories, while a carve-out policy should specify that the additional ESLL definitions only apply to Westchester employees.

Both laws allow employers to require reasonable documentation of the use of sick time if an employee is absent for more than three consecutive work days. The ESSTA also allows such documentation for absences of more than three consecutive work days for safe time.

Unlike the ESSTA, the ESLL allows a private right of action. Employees can file complaints with the Department of Weights and Measures – Consumer Protection (the Westchester agency that will enforce the law), or bring a civil lawsuit.  Employees  may recover either three times the wages that should have been paid for each instance of undercompensated sick leave taken, or $250, whichever is greater.  Employees can also recover $500 for each instance where the employees have been unlawfully denied requested sick time.  Recovery of back pay (if applicable) and reasonable attorneys’ fees also is available.

Both laws have notice requirements. The ESSTA requires that a written notice of employee rights be provided to employees upon commencement of employment.  A form notice is available at http://www.nyc.gov.  The ESLL requires that employers provide employees with a copy of the law and a written notice of rights by June 28, 2019, or at the commencement of employment, whichever is later.  Both laws also have posting and three-year recordkeeping requirements.

To prepare for the new law, Westchester County employers should review their current sick leave policies and determine whether revisions are needed. If employers do not have sick leave policies, they should prepare to implement compliant policies by April 2019.

Jessica Rothenberg

Employers Must Comply with Detailed Requirements When Having a Third Party Perform Background Checks

Q: Are there certain rules an employer must follow when conducting background checks on employees and prospective employees?

A: The Fair Credit Reporting Act (“FCRA”) is an often overlooked federal law that imposes stringent technical requirements on employers wishing to procure a “consumer report” from a third party “consumer reporting agency” for hiring or other employment purposes. Individual FCRA lawsuits and class actions are on the rise and failure to comply with the FCRA can result in harsh financial penalties.  This blog post provides a brief overview of the FCRA.

The FCRA’s definition of a “consumer report” is quite broad and includes, but is not limited to, credit reports, criminal history reports, and driving records obtained from a “consumer reporting agency.” Nearly every third party background check provider will qualify as a “consumer reporting agency” under the FCRA.  Before obtaining a consumer report to be used for employment purposes, employers are required to provide applicants and employees with a written disclosure stating that the employer plans to conduct a background check and employees/applicants must provide written authorization for the employer to obtain a consumer report prior to the employer actually obtaining the consumer report. The disclosure and authorization must be in a stand-alone document and cannot be part of the employment application.

After obtaining a consumer report, but prior to taking any adverse action based on the consumer report (e.g., not hiring an applicant because of her criminal record), the employer must provide an applicant with a “pre-adverse action” notice that includes a copy of the consumer report at issue and written notice of an applicant’s rights under the FCRA. The purpose of this requirement is to give the applicant the opportunity to correct any wrong information in a consumer report prior to the employer taking adverse action. Although the FCRA does not specify how long in advance the pre-adverse action notice must be given prior to taking adverse action, a period of at least five (5) business days generally is considered appropriate.

If an employer eventually decides to take adverse action, the employer must provide oral, written, or electronic notice of the adverse action and provide the applicant with certain information required by the statute. Although a written adverse action notice is not required by the FCRA, it is a good business practice to provide written notice so that documentation of compliance with FCRA requirements is available in the event of litigation.

A willful violation of the FCRA can result in statutory damages of $100 to $1,000 per violation, punitive damages and attorneys’ fees. Even if an employer is merely negligent in violating the FCRA, an applicant can still sue for any actual damages plus attorneys’ fees.

Before conducting any employment-related background checks or taking any adverse action based on a consumer report, be sure to also consult local and state laws. Certain states (such as California) have requirements in addition to those imposed by the FCRA. In addition, certain states restrict an employer’s use of the results of a background check. For example, Pennsylvania law only permits employers to consider criminal convictions “to the extent to which they relate to the applicant’s suitability for employment in the position for which he has applied.”

Employers should consult with legal counsel before implementing any type of background check program.

–Lee Tankle