NYC Predictable Scheduling Law To Have Wide-Ranging Effects on Retail and Fast Food Employers

Q.  I heard there is a new law in New York City that covers retail and fast food establishments. What do I need to know?

A.  Effective November 26, 2017, retail and fast food employers will be subject to strict new laws that govern scheduling. The law is meant to provide retail and fast food employees with more predictability around scheduling by requiring employers to provide schedules a certain amount of time in advance, and prohibiting on-call shifts, among other provisions. Retail employers are simply prohibited from violating the law, while the law provides that fast food employers are required to pay employees premiums of varying amounts for some violations.

Retail

In the retail context, the law covers any retail business with 20 or more employees that is engaged in the sale of consumer goods. Consumer goods are defined as products primarily for personal, household, or family purposes, such as appliances, clothing, electronics, groceries, and household items.

Employers are required to provide employees with a written work schedule at least 72 hours before the first shift on the work schedule. In addition, employers will be prohibited from: (1) scheduling an employee for an on-call shift; (2) canceling a regular shift within 72 hours of the scheduled start of the shift; (3) requiring an employee to work with fewer than 72 hours’ notice, unless the employee consents in writing; and (4) requiring an employee to contact his/her employer to confirm whether to report for a regular shift fewer than 72 hours before the start of a shift.

The law permits employees to trade shifts. Moreover, employers may change schedules with fewer than 72 hours’ notice in the case of certain emergencies.

Fast Food

In the fast food context, the law will cover any fast food establishment whose primary purpose is serving food or drink, where patrons order and pay before eating, and that is part of a chain that has 30 or more establishments nationally.

Unlike in the case of retail establishments, fast food employers may make changes to work schedules. But it will cost them money to do so.

Employers are required to provide employees with at least 14 days’ notice of their schedules. If employers make changes to the work schedule with less than 14 days’ notice where additional hours or shifts are added, or the date, start time, or end time is changed with no loss of hours, the employer must pay the employee $10 for each such change.  If the employer makes changes to the work schedule with less than 14 days’ notice where hours are subtracted from a shift or a shift is cancelled, the cost to the employer rises to $45 for each such change.

If changes are made with less than 7 days’ notice but with no loss in hours, the employer must pay the employee $15 for each change. If changes are made with less than 7 days’ notice and the change results in lost hours or a shift is cancelled, the employer must pay the employee $75 per change.

Like in retail, fast food establishments may make changes in the case of certain emergencies. In addition, the employer may make changes without penalty if  the employee requests the change in writing, or if employees voluntarily trade shifts subject to an existing employer policy.

Fast food employers will also be prohibited from requiring employees to work consecutive shifts that involve both the closing and opening of a restaurant. Employers must provide a minimum of 11 hours of time off between shifts when the first shift ends on the previous calendar day or spans two calendar days.  The law provides an exception if the employee requests or consents to work such hours in writing, but even in such a scenario, the employer must pay a premium of $100 for each such shift.

Finally, the law requires fast food employers to offer shifts to current employees before hiring additional employees. The law establishes a specific procedure for offering the shifts, which involves posting a notice with detailed information about the shifts.  Employers are required to offer hours to current employees until the point at which the employer would be required to pay overtime, or until all current employees have rejected available hours, whichever comes first.

Recommended Action for Compliance

As is clear from the description above, the law is extremely onerous for retail and fast food employers, and particularly so for fast food employers. Given the high premiums employers must pay for violations of the new law, it is essential for employers to begin preparing for the law significantly in advance.  Employers should conduct a detailed review of their scheduling procedures and systems, and revise them to make scheduling more predictable (and in line with the upcoming law).  Given the unpredictable nature of the fast food industry, particularly in New York City, it will be nearly impossible for employers to avoid paying any premiums under the law.  However, with advance preparation, employers can certainly take steps to minimize the premiums that will be paid.

We expect that many employers will take the potential premiums into account when setting hourly pay rates for those employees who are paid above the minimum wage. Employers who would otherwise pay a higher hourly rate may decide to pay a lower rate to account for the potential premium payments.

While the law provides for many exceptions based on consent (as well as request) from employees, consent is often an amorphous concept in the world of employment litigation. We strongly recommend obtaining written consent (rather than verbal consent) so there is a record.  It is unclear under the law whether employers must get written consent for each instance, or whether a blanket written consent suffices.  To balance administrative ease and risk management, we recommend having a blanket written consent form that each employee can fill out (with check boxes for the various kinds of consent), and then if possible, confirming each instance of consent via email or text.  It is a good idea to partner with an employment lawyer to ensure that your consent forms are in compliance.

-Jessica Rothenberg

Comp Time in Lieu of Overtime

Q.  An employee worked several hours of overtime last week. Can I offer him compensatory time off, to use in the future, rather than pay him overtime?

A.  Currently, unless you are a public-sector employer, the answer is no. Under the Fair Labor Standards Act, employees who are not exempt must be paid overtime pay (one and one-half times their regular pay rate) for all hours worked over 40 in a work week.

That may soon change, however.

Just yesterday, the House of Representatives passed a bill that would amend the Fair Labor Standards Act to allow certain employees to take paid time off rather than receive overtime pay when working more than 40 hours in a week.  Dubbed the Working Families Flexibility Act, the Bill would allow employees to accrue up to 160 hours of compensatory time in a year, at a rate of 1.5 hours for each hour of overtime worked.

The Bill contains some guidance on how to administer such a policy. The employer may provide compensatory time to employees in lieu of overtime pay only if the arrangement is agreed to through a collective bargaining agreement or  in a written agreement between the employer and employee.  The employee must be allowed to use the comp time within a reasonable period after the request, so long as the comp time does not “unduly disrupt the operations of the employer.”

To become eligible to participate in a comp time program, employees will have to have worked at least 1,000 hours of continuous employment in the 12-month period preceding the date of the agreement or receipt of comp time.

Any unused comp time would have to be paid back by the employer at the end of the year (or upon 30 days of notice by the employee in the case of accrued time in excess of 80 hours). Significantly, an employee who has accrued compensatory time off also must be paid for the unused comp time upon termination, regardless of whether the termination was voluntary or involuntary.  In this way, comp time would need to be handled differently from accrued vacation time, which is not necessarily subject to pay upon termination, depending on state law.

It remains to be seen whether this Bill will become actual law, or if it does, whether it will be modified to pass the Senate. If it does pass through the Senate, however, the President has pledged to sign it.

If this option becomes available to private-sector employees in the future, employers will have to take a hard look at their processes to determine whether offering comp time in lieu of overtime makes sense for their organization. While some employers may applaud this initiative as a cost-saving method and a way to provide flexibility to employees, others may see such a program as an administrative burden.

– Tracey E. Diamond

Layoffs and Business Closures: What to Consider Before Taking Action

Q: Unfortunately, I need to lay off some employees, and possibly close my business. What steps do I need to take to ensure I am in compliance with legal obligations?

A: There are many factors and obligations to consider when laying off multiple employees and/or closing a business. It is best to consider these aspects as early as possible, even if you think layoff/closure is only a possibility.

Obligation for Advance Notice

One of the most important steps is to determine whether the layoff/closure is covered by The Worker Adjustment and Retraining Notification Act (“WARN Act”), or a state equivalent. The WARN Act is a federal law, and applies to employers with 100 or more employees.  Employees who have worked less than 6 months in the last 12 months and/or who work less than 20 hours per week are not counted toward the 100.

The WARN Act requires covered employers to give 60 days’ advance notice of a mass layoff or site closure to employees, the State dislocated worker unit, and the chief elected official of the local government unit in which the layoff occurs. For mass layoffs, employers must give notice if 500 or more employees will be laid off during a 30-day period.  Employers must also give notice if 50 or more employees are laid off, and that group makes up at least one-third of the employer’s workforce.  Similarly, for site shutdowns, employers must give notice if a shutdown will result in an employment loss for 50 or more employees during any 30-day period.  An employment loss is defined as: (1) a termination; (2) a layoff exceeding 6 months; or (3) a reduction in hours of more than 50% in each month of any 6-month period.

Many states impose additional requirements upon employers. In New York, for example, the state WARN Act applies to employers with 50 or more full-time employees in New York State, and covered employers are required to provide 90 days of advance notice.  The obligation for notice is triggered by a layoff of 25 or more employees if that comprises at least one-third of full-time workers, or layoffs of 250 or more full-time employees at a business with 50 or more employees.  New Jersey’s rules mirror the federal law, but the penalties are different.  Pennsylvania does not have any state law requirement.

Ensuring No Discrimination in Layoffs

In addition to WARN Act considerations, when planning a layoff involving multiple employees, it is important to ensure that the company has documented, well-thought out reasons for the layoff, and that it has protected itself against potential claims of discrimination. One helpful way to do so is to analyze the protected categories that the laid-off employees fall under, and determine whether there is any disparate impact upon one particular group.  For example, would the layoff impact more women than men?  Would it impact more workers over 40 than under 40?

When courts examine claims of discrimination in a layoff, they often look at the following factors:

  • whether the business criteria utilized to select employees for termination makes sense, and whether that criteria was applied consistently;
  • whether procedures in personnel policies related to terminations were followed;
  • whether the employees’ responsibilities were fully eliminated – if not, what happened to the responsibilities; and
  • whether anyone was hired to fulfill the terminated employees’ duties.

It is important for employers to think about these types of factors before a layoff is implemented to ensure that the layoff is non-discriminatory, and can be vigorously defended if the need arises.

Proper Payout and Recordkeeping

Prior to the effective date for a layoff/termination, employers should ensure that they have reviewed all obligations (both legal and under employer-specific policies, such as handbooks and employment agreements) relating to termination pay. For example, some employee handbooks provide that unused, accrued PTO will be paid out upon termination, and some employees may be owed severance pay under an employment agreement.  When drafting severance agreements (which employers may want to consider regardless of whether they are obligated by contract to pay severance), employers should ensure that such agreements comply with legal requirements for releases, as well as any requirements by third parties such as insurance carriers.  For example, the Older Workers Benefit Protection Act (“OWBPA”) provides that for a valid release of age discrimination claims, the release must contain specific language, and the employee must be given a specific amount of time to consider the release and revoke their signature.  Employers should also be careful to abide by state laws governing the timing of final pay.

Employers are obligated to maintain many types of records, including employment records, post-layoff/closure. While recordkeeping obligations vary by state, generally they range from 3 to 7 years.

– Jessica Rothenberg

 

 

A New Year’s Present for New York Employees: Minimum Wage and Exempt Status Salary Threshold Increases

Q: As a New York employer, what do I need to know about the increases to the minimum wage and the exempt salary threshold?

A: This is a timely question, since both the minimum wage and exempt salary threshold increased, effective December 31, 2016.

 Minimum Wage

The minimum wage for many New York employers increased to $9.70/hour. The minimum wage for large employers in New York City (11 or more employees) increased to $11.00/hour, and to $10.50/hour for small employers in New York City (10 or less employees).  The minimum wage for employers in Nassau, Suffolk, & Westchester Counties is now $10.00/hour.

And that’s not the end. The minimum wage will increase each year until it reaches $15 in each location, pursuant to the following schedule:

Location 12/31/17 12/31/18 12/31/19 12/31/20 2021*
NYC – Large Employers $13.00 $15.00
NYC – Small Employers $12.00 $13.50 $15.00
Nassau, Suffolk, & Westchester Counties $11.00 $12.00 $13.00 $14.00 $15.00
Remainder of New York State $10.40 $11.10 $11.80 $12.50 *

Starting in 2021, the annual increases will be published by the Commissioner of Labor on or before October 1.

If an employee works in two or more different minimum wage locations, the employer may pay either the highest rate for all hours worked, or pay each hour worked in each location at the applicable minimum wage for that location.

Fast food workers and tipped food service workers are subject to different minimum wage rates and increases.

Overtime Exempt Salary Threshold

In addition to the minimum wage increases, the overtime exempt salary thresholds for New York administrative and executive employees were increased to a salary of $825/week ($42,900 annually) for large employers in New York City, $787.50/week ($40,950 annually) for small employers in New York City, $750/week ($39,000 annually) for employers in Nassau, Suffolk, and Westchester counties, and $727.50/week ($37,830 annually) for employers in other New York counties.

New York employers should be mindful that even though the federal increases in the exemption salary thresholds have been blocked for the time being, the New York increases are higher than the existing federal thresholds, and thus New York employers must follow the state’s higher thresholds. Thus, New York employers need to increase salaries for those exempt employees who do not meet the new threshold, or reclassify them as non-exempt.

The salary thresholds for exempt status in New York will continue to increase each year until they reach $1,125/week, pursuant to the following schedule:

Location 12/31/17 12/31/18 12/31/19 12/31/20 2021
NYC – Large Employers $975.00 $1,125.00
NYC – Small Employers $900.00 $1,012.50 $1,125.00
Nassau, Suffolk, & Westchester Counties $825.00 $900.00 $975.00 $1,050.00 $1,125.00
Other New York Counties $780.00 $832.50 $885.00 $937.50

Jessica Rothenberg

Checking it Once and Checking it Twice: FMLA Leave and Holiday Pay

Q.  Are we required to pay holiday pay to employees who are on FMLA leave? Does the holiday extend an employee’s FMLA time off?

A.  With the holidays fast approaching, these are timely questions! With respect to holiday pay, the FMLA regulations state that employers must follow their own established policies in place for other forms of leave. So, if the employer’s policy is that employees on any type of unpaid leave of absence are not eligible for holiday pay, then no holiday pay is required for employees on FMLA leave during the holiday week.  On the other hand, if your company pays holiday pay to employees who are on vacation the week of the holiday, for example, and the employee is substituting vacation for unpaid leave, then the employer must pay holiday pay to the employee on FMLA leave.  It is therefore critical that the employer’s policy clearly states whether and under what conditions holiday pay will be paid, including when an employee is on leave.  If you do not have a policy, or your policy is not clear, now would be a good time to put an updated policy in place.

Even if the employee is entitled to holiday pay, the fact that the employee receives pay for a holiday does not extend the employee’s leave entitlement. Thus, if the employee is paid for Christmas Day, for example, the employee does not then receive 12 weeks and one day of FMLA leave. The entitlement is still 12 weeks.

The answer to your question about whether a holiday extends an employee’s leave entitlement depends on several factors. If the holiday occurs within the week that an employee is out on leave for the entire week, or longer, then the entire week is counted as a week of FMLA leave, regardless of the fact that a holiday happened to fall during that week.  If an employee is using FMLA leave in increments of less than one week, however, the holiday will not “count” against the employee’s FMLA entitlement unless the employee was otherwise scheduled and expected to work on the day of the holiday. Moreover, if your company closes for one or more weeks (i.e., a school closing two weeks for winter break), the days the employer is closed for business do not count against the employee’s FMLA leave entitlement.

Let’s assume, for example, that your Company is closing on Monday, December 26 for Christmas this year. If your employee is on FMLA leave for the entire week of December 26, then the December 26 holiday would count as an FMLA day.  Now, let’s say that the employee normally works on Mondays and takes intermittent leave on Tuesdays and Wednesdays.  Under that scenario, you may not count December 26 as FMLA leave.  The employee should be paid for the holiday (assuming he or she is otherwise eligible for holiday pay under your policy).  If your business was closed for the entire week of December 26, however, then that week would not count against the employee’s FMLA entitlement.

-Tracey E. Diamond