On July 19, 2017, the New York State Workers’ Compensation Board (“WCB” or the “Board”) issued its final regulations (“Final Regulations”) for the New York State Paid Family Leave Benefits Law (“PFLBL” or the “Law”). The WCB first published regulations to the PFLBL in February 2017, and then updated those regulations in May (collectively, the “Prior Regulations”).

While the Final Regulations did clarify some outstanding questions, many questions remain, particularly pertaining to the practical logistics of implementing the Law, such as the tax treatment of deductions and benefits, paystub requirements, certain differences between requirements that pertain to self-funding employers and those employers intending to obtain an insurance policy, and what forms and procedures will apply.

As we previously reported, when the PFLBL becomes effective on January 1, 2018, most employees working in New York State will be eligible for paid family leave (“PFL”) benefits. Employers are not responsible for actually providing pay to employees during a period of PFL; rather, employee payroll deductions will fund an insurance policy, which will either be managed by a third party or self-funded by the employer, from which employees will receive PFLBL benefits.

On the same day the Final Regulations were published, the WCB also issued an Assessment of Public Comment (the “Assessment”), which addresses certain public comments to the Prior Regulations. The State has also published two fact sheets – one for employees and one for employers – outlining the basic elements of the PFLBL.

The following summary addresses the updates in the Final Regulations, as compared to the Prior Regulations, as well as some additional insight from the Assessment.

Collective Bargaining Agreements. The Final Regulations clarified that employers that have employees or classes of employees subject to a collective bargaining agreement (“CBA”) are not required to supply such employees with PFL coverage in accordance with the terms of the Law, but only so long as the CBA:

  1. provides paid family leave benefits at least as favorable as those provided in the Law; and
  2. does not include a provision whereby otherwise-eligible employees may waive their rights to paid family leave or otherwise opt-out of the law (except in accordance with the opt-out provisions in the Law for employees who will not become eligible for PFL).

The Final Regulations specify that, except as noted above, a CBA may, indeed, contain paid family leave provisions that differ from the requirements in the Final Regulations. Where a CBA does not provide a different rule, however, the Final Regulations and the Law will govern.

Employee Contributions. The WCB declined to amend the Final Regulations with respect to whether employers must begin employee payroll deductions prior to January 1, 2018. In the Assessment, the Board confirmed that deductions under the Law were permitted to begin on July 1, 2017, but there is no requirement to make deductions prior to January 1, 2018; thus, in 2017, payroll deductions for employee contributions is a permissive choice that employers may make.

Further, the Assessment noted that the Law does not require notification that deductions will begin; however, it is generally best practice to notify employees prior to deducting from employees’ wages. Neither the Assessment nor the Final Regulations address whether as of January 1, 2018, an employer may opt to pay the contributions on its employees’ behalf, or whether alternatively, employers must deduct from employee’s paychecks for this contribution.

Interaction Between Qualifying Leave and Benefits in 2017 and 2018. The Board received a comment asking whether an employee who took leave to bond with his or her child in 2017 will still be eligible for up to the full 8 weeks of PFL in 2018, notwithstanding the leave already taken. The Board stated in the Assessment that employees will, indeed, be eligible for up to 8 additional weeks of leave in 2018 under NYPFLBL, even if the employee exhausted all applicable leave under federal law and the employer’s policies in 2017.

The Law limits the use of PFL and New York State short-term disability benefits (“STD”) in a 52-week period to a total of 26 weeks, which essentially reduces an employee’s eligible for STD based on the amount of PFL used. On the positive side, the Assessment noted that in 2018, the 52-week lookback period includes leave taken in 2017. Thus, an employee who has utilized STD in 2017 will have his or her 26-week allocation during the applicable 52-week period reduced by any STD utilized during 2017 (so long as it was used within the applicable 52-week look-back period).

Waivers of PFL. The Final Regulations revised employers’ requirements to offer a waiver from PFL deductions from permissive to mandatory. The language previously stated that employees who do not meet the PFLBL eligibility requirements “may” be provided the option for a waiver – the “may” has been changed to “shall.” The Assessment clarified that it is the employee’s choice of whether to complete a waiver, not the employer’s.

Coverage Outside New York. The Assessment confirmed that the PFLBL applies to employees who work in New York State. If an employee works outside of New York State, and only “incidentally” works in New York, those employees are not covered by the Law.[1]

Calculation of Daily Benefits. The Final Regulations amended the calculation of benefits when an employee is taking PFL in daily increments (rather than weekly increments). Under the Prior Regulations, if an employee worked a partial week prior to beginning PFL, then, in calculating the level of benefits to which the employee would be eligible for the day(s) off based on the eight weeks prior to taking leave, the employee’s weekly rate could be reduced by the day(s) the employee did not work in that final week. For example, the 8 week period could include a partial week of work, thus reducing the employee’s average wages. The Final Regulations use the same 8-week period as calculating an average weekly wage, which will exclude the final partial week of leave.

Positions with Breaks in Service – Impact on Eligibility. The Final Regulations added a paragraph to the “Eligibility” section, so as to clarify how to calculate consecutive weeks of service for positions that inherently contemplate breaks in service, such as professors who have semester breaks. For such positions, the 26-consecutive week period requirement may be tolled during periods of absence that are due to the nature of that employment. In other words, with respect to such individuals’ employment, the breaks in service would not be considered weeks worked when considering whether the individual had worked at least 26 weeks in the prior 52-week period (for eligibility purposes), but also would not re-start the period of employment to determine eligibility under the Law.

Returning Surplus Contributions. The Board received two comments seeking clarification regarding the requirement to return surplus contributions. The Final Regulations provide that employers shall use the employee contributions to provide PFL benefits, which “means to pay for a policy or self-insure.” The Assessment states that employers are required to return to employees any “surplus amount withheld that exceeds the actual cost” of the annual premium of the PFL policy. No changes were made to the Final Regulations.

Interaction with New York City Earned Sick Time Act (“ESTA”). The Assessment confirms the language in the Prior Regulations that employees may elect to use paid time off (such as vacation, personal days, or sick time) to receive full salary during PFL, but that it is not mandatory. As the PFLBL does not cover an employee’s own illness, PFL would only run concurrently with sick leave under ESTA for purposes of caring for an employee’s family member.

For a summary of the PFLBL, the Final Regulations, and the Assessment, please see this Act Now Advisory.

___________

ENDNOTE

[1] While the Law, Final Regulations, and Assessment do not define “incidentally,” the New York State PFLBL website indicates that employees must work 30 or more days in a calendar year New York to be covered.

When: Thursday, September 14, 2017 8:00 a.m. – 4:30 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Immigration
  • Global Executive Compensation
  • Artificial Intelligence
  • Internal Cyber Threats
  • Pay Equity
  • People Analytics in Hiring
  • Gig Economy
  • Wage and Hour
  • Paid and Unpaid Leave
  • Trade Secret Misappropriation
  • Ethics

We will start the day with two morning Plenary Sessions. The first session is kicked off with Philip A. Miscimarra, Chairman of the National Labor Relations Board (NLRB).

We are thrilled to welcome back speakers from the U.S. Chamber of Commerce. Marc Freedman and Katie Mahoney will speak on the latest policy developments in Washington, D.C., that impact employers nationwide during the second plenary session.

Morning and afternoon breakout workshop sessions are being led by attorneys at Epstein Becker Green – including some contributors to this blog! Commissioner of the Equal Employment Opportunity Commission, Chai R. Feldblum, will be making remarks in the afternoon before attendees break into their afternoon workshops. We are also looking forward to hearing from our keynote speaker, Bret Baier, Chief Political Anchor of FOX News Channel and Anchor of Special Report with Bret Baier.

View the full briefing agenda and workshop descriptions here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

Today marks the 27th Anniversary of the Americans with Disabilities Act (ADA).  Unfortunately for businesses, two recent developments in the context of website accessibility suggest that there is no reason to celebrate and every reason to believe the ever-increasing wave of demand letters and lawsuits in this area will continue unabated.

First, in Lucia Marett v. Five Guys Enterprises LLC (Case No. 1:17-cv-00788-KBF), the U.S. District Court for the Southern District of New York has finally issued a decision directly speaking to the applicability of Title III of the ADA (Title III) to websites, denying Five Guys’ motion to dismiss, and holding that Title III does indeed apply to websites.  Facing a class action lawsuit brought by serial plaintiff, Lucia Marett, Five Guys sought to dismiss the claim that its website (which, among other things, allows customers to order food online for delivery or pick up at its brick and mortar stores) violated Title III and related state/local statutes because it is inaccessible to the blind, on the grounds that Title III does not apply to websites and, even if it did, the case was moot because Five Guys was in the process of updating its website to provide accessibility.  The Court rejected Five Guys’ arguments.  Citing both the text and the broad and sweeping purpose of the ADA, the Court held that Title III applies to websites – either as its own place of public accommodation or as a result of its close relationship as a service of Five Guys’ restaurants (which the court noted are indisputably public accommodations under Title III).  Further, the court was unmoved by Five Guys’ ongoing efforts to make its website accessible because they had yet to successfully do so and there was no absolutely clear assurance that further accessibility issues would be avoided.  The fact that the Court leaves open the possibility that a website conducting business only in cyber-space might have to comply with Title III is troubling as, to date, that position had remained an outlier, being only adopted by a couple of district courts.

Second, the Trump Administration has finally released its first Unified Regulatory Agenda and – in accordance with its goal of reducing the number of federal regulations – the private sector website accessibility regulations, most recently earmarked for 2018, have been marked as “Inactive.”  The potential for website accessibility regulations has long been one of the factors mitigating against website accessibility lawsuits.  With no reasonable expectation for such regulations in the near future, the courts will continue to serve as the primary forum for the development of this body of law.

These developments, taken in tandem with the recent post-trial verdict for Plaintiff’s in the Winn-Dixie litigation and the recent Hobby Lobby decision further devaluing various jurisdictional and due process defenses may create a perfect storm further emboldening an already aggressive plaintiff’s bar to continue to push website accessibility demands and lawsuits.  Indeed, in recent weeks we have not only seen another surge in the number of such actions being filed, but regular players in this space are using these decisions to push for greater settlement values, and new “copycat” players are starting to enter the fray.

Given the current climate, the best way for companies to try and avoid these litigations remains promptly taking legitimate and comprehensive steps to make their websites accessible.  This is particularly true for companies whose websites are tied to brick and mortar places of public accommodation but, now, may in some contexts and jurisdictions apply equally to cyber-only businesses.  Companies interested in taking such steps should conduct website accessibility audits (both user-based and code-based; and not simply running an automated scanning tool); add website accessibility obligations into vendor agreements; adopt and implement a website accessibility policy; and conduct training for necessary parties.  To the extent such efforts do not prompt plaintiffs to target other websites, they will certainly improve companies’ leverage for settlement negotiations and/or strategies for defending against litigations.

Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

On March 28, 2017, the New York Court of Appeals heard oral arguments in Griffin v. Sirva, Inc., to answer three questions that had been certified by the U.S. Court of Appeals for the Second Circuit: (1) does the NYSHRL’s prohibition of employment discrimination based on workers’ criminal records limit liability to an aggrieved party’s “employer”; (2) if so, is the scope of the term “employer” limited to a worker’s direct employer, or does it include other entities who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does the portion of the NYSHRL that prohibits aiding and abetting the discriminatory acts of another apply to a non-New York entity that requires its New York agent to discriminate in employment based on a worker’s criminal history.

Griffin illustrates a concern faced by employers in a variety of industries, who subcontract certain types of work to employees of a separate business entity on an independent contractor basis. Among other tasks, companies may engage contractors to provide cleaning services, security, delivery of goods, installation of purchases or, as in Griffin, packing and moving services.  Such subcontracted services may be performed in a variety of settings, ranging from the company’s premises to its customers’ homes.  With increasing concerns regarding workplace violence, companies often choose to conduct their own criminal background checks on these contract workers, either personally or through an outside vendor, in an attempt to protect the company’s employees, customers, and property. This concern is particularly heightened when, as in Griffin, the contract workers in question will be performing services in the homes of a company’s customers.

In these types of scenarios, a question often arises regarding whether the company that engaged the contractors can be liable for violating state or city laws prohibiting discrimination based on criminal convictions, by virtue of requiring the background check, even though that company was not the workers’ direct employer. In resolving this question, courts typically rely on the concept of joint employment, analyzing the extent to which the company is involved in the hiring or firing of the contractors, or in exerting control over their working conditions. Presumably anticipating this sort of analysis, the parties in Griffin (including the State of New York, which filed an amicus curiae brief and was permitted to participate in oral argument) focused their briefing and arguments on whether a company that performs background checks on its contract workers should be deemed an employer under the NYSHRL.  Through its questions at oral argument, however, the court appeared to indicate that there may be a simpler resolution in this type of case, which does not require addressing the complex question of whether the company requiring the background checks is the workers’ employer or joint employer.

In addition to directly prohibiting discrimination based on criminal history, the NYSHRL states that it is “an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under [the NYSHRL], or to attempt to do so.” “Person” is defined as including “one or more individuals, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers.” Based on this expansive language, several judges seemed to indicate that the NYSHRL’s “aiding and abetting” provision was sufficiently broad to encompass third parties who conduct background checks on contractors, regardless of whether such entities would otherwise be considered the contract workers’ employer or joint employer.  Assuming the “aiding and abetting” provision covers such conduct, multiple judges noted that imposing liability under that provision would be simpler than wrestling with the joint employment issue.  Further, the judges expressed concern that expanding liability under the main section of the NYSHRL to non-employers would render the “aiding and abetting” provision superfluous.

While it is premature to predict how the Court of Appeals may ultimately rule in Griffin, particularly given the recent unexpected death of one of the court’s seven members, Judge Sheila Abdus-Salaam, companies who engage workers on an independent contractor basis should be aware that potential joint employment issues may not be their only concern with regard to such workers. Regardless of whether a company exerts sufficient control over its contract workers to be deemed a joint employer, if the company operates in a jurisdiction whose anti-discrimination laws allow for “aiding and abetting” liability, that provision may serve as an alternative basis of potential liability for a company that conducts criminal background checks on contract workers engaged through a separate business entity.  Specifically, because the NYSHRL, NYCHRL, and NJLAD each include broad provisions that prohibit any person or entity from aiding, abetting, inciting, compelling, or coercing any acts that violate those laws, businesses that operate in New York State, New York City, or New Jersey should ensure that any background check requirement imposed on another entity’s workers complies with all applicable “ban-the-box” and anti-discrimination laws (e.g., NY State Correction Law Article 23-A, the NYC Fair Chance Act, and the NJ Opportunity to Compete Act), in order to avoid potential liability under the applicable “aiding and abetting” provisions in those jurisdictions.

Our colleagues Judah L. Rosenblatt, Jeffrey H. Ruzal, and Susan Gross Sholinsky, at Epstein Becker Green, have a post on the Hospitality Labor and Employment Law Blog that will be of interest to many of our readers in the retail industry: “Where Federal Expectations Are Low Governor Cuomo Introduces Employee Protective Mandates in New York.”

Following is an excerpt:

Earlier this week New York Governor Andrew D. Cuomo (D) signed two executive orders and announced a series of legislative proposals specifically aimed at eliminating the wage gap in gender, among other workers and strengthening equal pay protection in New York State. The Governor’s actions are seen by many as an alternative to employer-focused federal policies anticipated once President-elect Donald J. Trump (R) takes office. …

According to the Governor’s Press Release, the Governor will seek to amend State law to hold the top 10 members of out-of-state limited liability companies (“LLC”) personally financially liable for unsatisfied judgments for unpaid wages. This law already exists with respect to in-state and out-of-state corporations, as well as in-state LLCs. The Governor is also seeking to empower the Labor Commissioner to pursue judgments against the top 10 owners of any corporations or domestic or foreign LLCs for wage liabilities on behalf of workers with unpaid wage claims. …

Read the full post here.

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

by Donald S. Krueger & D. Martin Stanberry

New York state courts appear primed to resolve important questions about competitive bidding for public contracts in New York City and the ability of contractors to successfully challenge city officials’ actions that directly affect the wage and benefit components of their bids.

Under New York law, a contractor awarded a public contract by the state or a municipality must pay the “prevailing rate” for wages and fringe benefits to their workers performing services under that contract. These prevailing rates are established by the fiscal officer of the municipality awarding the contract.  In New York City, that responsibility falls to the Comptroller.

New York has two laws that guide the fiscal officer’s prevailing wage determinations. New York Labor Law § 220, et. seq., (“Article 8”) controls the prevailing wage rates for “laborers, workmen and mechanics” and New York Labor Law § 230, et. seq., (“Article 9”) governs the prevailing wage rates for “building service employees” such as movers, watchmen, porters, groundskeepers and others. Notably, the standards governing the establishment of prevailing wage rates under Articles 8 and 9 are different. Article 8 expressly permits the prevailing wage rates to be set based upon the wages established in a collective bargaining agreement covering 30% or more of the relevant labor pool. Article 9 however, does not contain that same explicit language, thereby suggesting something more is required.

This very issue was addressed last year by New York Supreme Court Judge Alice Schlesinger, who found that New York City Comptroller John C. Liu’s decision to establish “abnormally high” prevailing wages for movers based solely on the wage rates in a single union contract was arbitrary, capricious and void. Metropolitan Movers Assoc. v. Liu, as Comptroller of the City of New York, 32 Misc.3d 175 (2011).  Specifically, Judge Schlesinger found that New York City Comptroller John C. Liu abused his discretion under Article 9 by relying solely on Teamsters local rates (ranging from $30.63-38.90 per hour) while ignoring the much lower average rate ($19.19 per hour) found in a survey conducted by his office.  Although the court found Comptroller Liu had violated Article 9’s statutory mandate, Judge Schlesinger expressly noted that the Comptroller is free to rely on collectively bargained rates so long as those rates are consistent with other rates examined; in other words, so long as those collectively bargained rates truly are the prevailing wages for that type of worker.

Dissatisfied with Judge Schlesinger’s ruling, the City of New York has appealed the decision. Significantly, the appellate court’s findings will influence not only the fiscal officers’ future wage determinations, but also the merits of challenging such determinations through legal recourse. A decision is pending.

In the interim, at least one business is not waiting for the appellate court’s decision.  Because of the brief period in which a business may challenge such determinations, and seizing upon the Metropolitan Movers Association’s initial success, on October 31, 2011, Mega Protective Services Inc., brought an action challenging the Comptroller’s prevailing wage rate established for security guards pursuant to Article 9.  See Mega Protective Services Inc. and Alante Security Group v. John C. Liu, Index No. 11112411 (October 31, 2011).

Looking at the matter from a broader policy perspective, it is undeniable that the Comptroller’s prevailing wage rate is a significant factor influencing a business’ likelihood to participate in the bidding process for public contracts. Therefore, ensuring the prevailing wage rate is set at the appropriate level guarantees that all qualified bidders, large and small, can compete for public contracts. If the prevailing wage is too burdensome, otherwise qualified businesses may choose to forego bidding altogether, a result which undercuts the competitiveness of the bidding process as well as the City’s fiscal integrity.

Similarly, arbitrary wage rates may undermine strategic efforts by the City to encourage small businesses to bid on public contracts.  Initiatives such as the Minority and Women-Owned Business Enterprise Program (“M/WBEs”), created specifically “to promote fairness and equity in City procurement processes by providing services designed to strengthen the ability of certified M/WBEs to increase their capacity and effectively contribute to the City’s economy”, are undermined by arbitrarily determined prevailing wage rates because they end up pricing the contract out of the business owners reach.