Allegations of sexual harassment and misconduct against business leaders, politicians and artists, have become a front page staple of newspapers across the country.  Many are shocked by the allegations and claim to wonder how they could have stayed secret for so long.  Despite the numerous cases of sexual harassment filed each year in courts throughout the country, rendering the allegations a matter of public record, a bipartisan group in Congress is blaming the increased use of nonpublic arbitrations for keeping allegations quiet.  As a result, they seek passage of a bill intended to prohibit sexual harassment and gender discrimination cases from being resolved privately in arbitration.

The bill, Ending Forced Arbitration of Sexual Harassment, would prohibit businesses from enforcing predispute arbitration agreements of sex harassment and discrimination claims covered under Title VII of the Civil Rights Act of 1964, as amended.  A “predispute arbitration agreement” is defined by the bill as “any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.”  It targets arbitration agreements that an employee might be asked to sign as a condition of getting hired or remaining employed.  The bill does not seek to eliminate predispute arbitration agreements in connection with other types of discrimination claims.

The bill does not address class action waivers, which increasingly have been included in arbitration agreements and require that claims be asserted individually and not on a class basis.  Class action waivers can exist outside the context of arbitration, but they are not addressed in the bill. The bill also does not address the use of confidentiality agreements following the settlement of sexual harassment claims.

The New York City Human Rights Law (“NYCHRL”) was amended back in May 2017 to prohibit employers and employment agencies from inquiring into the salary history of job applicants Employers and employment agencies had six months to prepare for that ban, which takes effect on October 31, 2017.

Although we previously covered the amendment in May 2017, a quick summary of its material provisions is in order:

  • The salary history inquiry ban applies to all employers and employment agencies, regardless of size, that are hiring job applicants in New York City. This also includes situations where the job is located outside of New York City, although interviews occur in New York City.  Consequently, the law affects employment outside of New York City as well.

On October 17, 2017, the New York City Council passed a bill amending the New York City Earned Sick Time Act (which took effect on April 1, 2014)  to require paid time off for victims of family offense matters, sexual offenses, stalking and human trafficking, and their family members.  The amendment would take effect 180 days after Mayor Bill de Blasio signs it into law, which he is expected to do.

Reasons for Using Safe Time

Once passed, the law, which would be renamed the “Earned Safe and Sick Time Act,” would require employers to allow employees to use safe time for the following reasons:

To be exempt from state and federal overtime requirements, an employee must satisfy both a salary test and  a duties test.  In May 2016, we blogged about the Department of Labor’s issuance of a Final Rule modifying the so-called “white-collar” employee exemptions to overtime under the federal Fair Labor Standards Act (“FLSA”).  The proposed Final Rule increased the minimum salary that must be paid to exempt employees from $455 per week ($23,660 per year) to approximately $913 per week ($47,476 per year), and provided for subsequent annual revisions/increases.  The Final Rule did not make changes to the duties test, which still must be satisfied for the exemptions to apply.  The Final Rule was supposed to be effective on December 1, 2016, but on November 22, 2016, a federal court in Texas issued a nationwide preliminary injunction blocking the Final Rule from taking effect.  On September 6, 2017, that injunction was made permanent, and the minimum salary threshold under federal law will remain at $455 per week at least until new regulations are issued by the Trump administration’s Department of Labor.

Despite the low salary threshold under federal law, employers in many states, including New York, are still required to pay substantially more in salary under state and local wage and hour laws.  At around the time the Final Rule was to take effect, New York State adopted final regulations providing for annual increases to the minimum salary threshold necessary for exemption under New York’s Minimum Wage Act.  Those annual increases took effect on December 31, 2016, with further increases scheduled for December 31, 2017.  The following chart illustrates these scheduled increases over the next few years:

Minimum Salary Required 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21
NYC – Large Employers of 11 or more $825.00 $975.00 $1,125.00 $1,125.00 $1,125.00 $1,125.00
NYC – Small Employer of 10 or less $787.50 $900.00 $1,012.50 $1,125.00 $1,125.00 $1,125.00
Long Island & Westchester $750.00 $825.00 $900.00 $975.00 $1,050.00 $1,125.00
Remainder of New York State $727.50 $780.00 $832.50 $885.00 $937.50 TBD

As of December 31, 2017, a large employer (one having 11 or more employees) in New York City will have to pay its exempt employees at least $975.00 per week, which is even higher than the amount under the voided federal Final Rule.  By December 31, 2018, that same employer will be required to pay $1,125.00 per week to its white collar employees.  Although the Trump administration will ultimately revise the federal minimum salary thresholds to keep pace with inflation, those inflation-based increases would still be substantially less than what New York law requires.

Because states are entitled to set a higher minimum salary threshold than what federal law requires, an employer with employees in different states will have to pay those employees differently even though all may be performing the same duties and functions.  In New York, unless the employee is earning the minimum salary threshold required under New York Law, an employer will have to pay him or her overtime for hours worked over 40 in a workweek, while paying similarly situated employees in another state just his or her salary.

For the time being, employers that do business in New York will have to navigate the different and complex requirements imposed by state and local law, and as a result, have no reason to celebrate the death of the Final Rule.

 

Some states, such as Connecticut, provide for unpaid family and medical leave greater than that provided by federal FMLA. New York is about to join California in providing paid family leave.

Beginning on January 1, 2018, New York State will provide employee-funded paid family leave for qualifying employees.  The New York State Paid Family Leave Benefits Law (PFLBL) provides full and part-time private sector employees with job-protected paid leave in certain situations after having worked for the employer for a specified period of time.  Paid family leave will be covered by an employer’s disability insurance policy, and the premium for this coverage will be paid through employee payroll deductions.  Although not yet required, employers have been permitted to take such deductions since July 1, 2017.

On July 19, 2017, New York State adopted final regulations further implementing and clarifying the PFLBL.

Earlier this year, we blogged about the United States Supreme Court’s decision to consider whether requiring employees to agree to arbitration and a waiver of their rights to assert claims through class actions violated the National Labor Relations Act (NLRA).  During the Obama administration, the U.S. Department of Justice supported the position of the National Labor Relations Board (NLRB) that requiring class action waivers as a condition of employment violated the NLRA.  Now, the Justice Department has switched sides and is supporting business, acknowledging in an amicus brief filed with the Supreme Court on June 16 that “[a]fter the change in administration, . . . [it] reconsidered the issue and has reached the opposite conclusion.”

The cases being considered by the Supreme Court are National Labor Relations Board v. Murphy Oil USA, Case No. 16-307,  Epic Systems Corp. v. Lewis, Case No. 16-285, and Ernst & Young LLP v. Morris, Case No. 16-300.  The Supreme Court’s decision will directly affect violations of employment laws, like the Fair Labor Standards Act (FLSA) and Title VII of the Civil Rights Act of 1964, as amended.   Oral argument in these cases is scheduled for October 2017.

Although courts of appeal are split on the issue, the Second Circuit Court of Appeals (which covers New York, Connecticut, and Vermont) has previously held that class action waivers do not violate the NLRA.  As a result, such waivers are currently legal in New York, Connecticut and Vermont.

On June 1, 2017, the U.S. Court of Appeals for the Second Circuit, which covers Connecticut, New York and Vermont, upheld a National Labor Relations Board (“NLRB”) finding that Whole Foods Market Group, Inc.’s no-recording policy was overbroad and violated the National Labor Relations Act (“NLRA”).

In Whole Foods Market Group, Inc. v. NLRB, Whole Foods’ employee handbook contained a provision that prohibited employees from recording conversations, phone calls, and meetings, without first obtaining managerial approval.  The court concluded that this no-recording policy violated the NLRA.  The NLRA deems it an unfair labor practice “to interfere with, restrain or coerce employees in the exercise of their rights [to, among other things, engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection.]  Whole Foods insisted that its policy was not intended to interfere with employees’ rights to engage in concerted activity or to prevent them from discussing their jobs, and that it was merely a general prohibition against recording in the workplace.  Whole Foods argued that its policy was “to promote employee communication in the workplace” by assuring employees that their remarks would not be recorded.

The Second Circuit found, however, that the seemingly neutral policy was overbroad and could “chill” an employee’s exercise of rights under the NLRA.  In other words, the policy prohibited recording regardless of whether the recording involved an exercise of those rights.  As a result, “’employees would reasonably construe the language to prohibit’ recording protected by [the NLRA].”  Despite finding that Whole Foods’ policy violated the NLRA, the Second Circuit said that “[i]t should be possible to craft a policy that places some limits on recording audio and video in the work place that does not violate the [NLRA].”  Such a policy might be acceptable if it was narrow in scope, and furthered a legitimate safety concern.

President Trump’s 2018 budget, released on May 23, proposes to merge the Office of Federal Contract Compliance Programs (OFCCP) with the Equal Employment Opportunity Commission (EEOC) by the end of FY 2018.  The proposed merger purports to result in “one agency to combat employment discrimination.”  The Trump administration asserts that the merger would “reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.”

Both business groups and employee civil rights organizations have opposed the measure, albeit for different reasons.  The OFCCP is a division of the U.S. Department of Labor, while the EEOC is an independent federal agency.  Although both deal with issues of employment discrimination, their mandates, functions and focus are different.  The OFCCP’s function is to ensure that federal government contractors take affirmative action to avoid discrimination on the basis of race, color, religion, sex, national origin, disability and protected veteran status.  The OFCCP, which was created in 1978, enforces Executive Order 11246, as amended, the Rehabilitation Act of 1973, as amended, and the Veterans’ Readjustment Assistance Act of 1975.  The EEOC administers and enforces several federal employment discrimination laws prohibiting discrimination on the basis of race, national origin, religion, sex, age, disability, gender identity, genetic information, and retaliation for complaining or supporting a claim of discrimination.  Its function is to investigate individual charges of discrimination brought by private and public sector employees against their employers.  The EEOC was established in 1965, following the enactment of Title VII of the Civil Rights Act of 1964.

Business groups oppose the OFCCP’s merger into the EEOC due to concerns that it would create a more powerful EEOC with greater enforcement powers.  For example, the OFCCP conducts audits, which compile substantial data on government contractors’ workforces, while the EEOC possesses the power to subpoena employer records.  Combining these tools could provide the “new” EEOC with substantially greater enforcement power.  Civil rights and employee organizations oppose the merger, believing that overall it would result in less funding for the combined functions currently performed by each agency.

Employers’ engagement of independent contractors has increased substantially in recent years.  Short-term projects and the gig economy have fueled the need for workers, who are not looking (or are unable) to find permanent employment, but otherwise possess critical skills or talents desired by start-up and well-established companies.  In light of this reality, New York City enacted the “Freelance Isn’t Free Act” (“FIFA”), which took effect on May 15, 2017.   FIFA applies to all engagements between the “hiring party” and independent contractor that have a value of $800 or more.

FIFA mandates a written agreement between the parties setting forth, among other things, the services to be provided as well as the rate and method of payment.  In addition, it requires that compensation for services be paid no later than 30 days after the completion of such services if the agreement fails to specify when payment is due.  FIFA prohibits a hiring party from conditioning timely payment on the freelance worker’s agreement to accept less compensation than the amount the parties agreed to prior to the commencement of services.   A hiring party is barred from retaliating against a worker for “exercising or attempting to exercise any right guaranteed” under FIFA.  In addition to preventing the harassment, discipline or denial of a work opportunity as retaliation, FIFA prohibits the hiring party from denying a “future work opportunity” to a worker who has engaged in protected activity.

A claim for violating FIFA may be filed with the newly created Office of Labor Standards or by filing a civil action within the appropriate statute of limitations.  A lawsuit for unlawful payment practices or retaliation must be brought within 6 years, while a claim for failing to provide a written contract in accordance with the law is subject to a 2 year limitations period.   In a civil action alleging that the hiring party failed to provide a written contract, the worker must allege that he or she actually requested a written contract before the work began.  FIFA provides for the recovery of reasonable attorneys’ fees and costs, statutory damages of $250, an amount equal to the value of the underlying agreement,  double damages, and injunctive relief for unlawful payment practices.

On May 4, 2017, Mayor Bill de Blasio signed a New York City Council bill that prohibits employers from inquiring about a prospective employee’s “salary history” during any stage of the employment process.  In addition, the new law prevents employers, who happen to be aware of a job candidate’s salary history, from relying on it in making compensation determinations.  The law is aimed at eliminating gender wage gaps, but protects all job applicants, regardless of gender.

The law defines “salary history” broadly to include all wages, benefits or other compensation, but does not include inquiring into a prospective employee’s revenue, sales, or other production reports.  Although employers will not be permitted to ask applicants what they were paid in prior jobs, they are permitted to inform applicants about the job position’s proposed or anticipated salary.  In addition, employers and job candidates can discuss compensation expectations as long as there is no disclosure of prior salary history.

The Local Law amends the Administrative Code of the City of New York, and the New York City Commission on Human Rights will likely issue regulations and guidance to further the law’s purpose.  The law will take effect on October 31, 2017.  Stay tuned for more developments.