The New York City Commission on Human Rights (“Commission”) recently issued a 146-page guide titled “Legal Enforcement Guidance on Discrimination on the Basis of Disability” (“Guidance”) to educate employers and other covered entities on their responsibilities to job applicants and employees with respect to both preventing disability discrimination and accommodating disabilities. The New York City Human Rights Law (“NYCHRL”) defines “disability discrimination” more broadly than does state or federal disability law, and the Guidance is useful in understanding how the Commission will be interpreting and enforcing the law.

The basic principles of the NYCHRL’s prohibition against disability discrimination are as follows:

  1. Employers may not discriminate against a qualified job applicant or employee on the basis of an actual or perceived physical or mental disability;
  2. Employers may not discriminate against an applicant or employee based upon his or her association with an individual with an actual or perceived disability;
  3. Employers must provide applicants and employees, upon their request, with a reasonable accommodation to perform the essential duties of the job, if the disability is known or should have been known by the employer, unless, among other reasons doing so would result in undue hardship; and
  4. The cooperative dialogue law, which becomes effective October 15, 2018, will require employers to engage in and document a “cooperative dialogue” with a person who has requested an accommodation or who the employer “has notice may require such an accommodation.” As the Guidance makes clear, the Commission generally construes these four tenets and the myriad employer responsibilities they embody liberally. For example, as set forth in the chart below, the NYCHRL prohibits a wide range of conduct.

Prohibited Conduct under NYCHRL

Prohibited Conduct Definition Example(s)
Disparate Treatment Treating a job applicant or employee with a disability or perceived disability differently from other applicants or employees without a disability. Refusal to hire an otherwise qualified applicant as a sales clerk because the individual has a speech impediment (assuming the applicant can still be easily understood).

 

Harassment A single or repeated incident that “creates an environment or reflects or fosters a culture or atmosphere of stereotyping, degradation, humiliation, bias, or objectification,” of an individual because of his or her actual or perceived disability. Under the NYCHRL, the severity or pervasiveness of the harassment is only relevant to damages. A supervisor calls an employee who has cerebral palsy a “spaz,” and states that he would not have hired him or her if he knew that the employee’s disability was “this bad.”
Discriminatory Policies/Practices Policies or practices that exclude workers with disabilities from whole job categories or specific positions without an individualized assessment of the candidate and the essential requisites of the job, unless the employer can demonstrate a legitimate non-discriminatory justification for the exclusion policy.

 

A policy that requires employees to be “100%” healed to return to work and that does not allow for consideration of a reasonable accommodation. (An employer cannot require an employee with a disability “to have no medical restrictions if the employee is able to perform his job with or without a reasonable accommodation.”)

 

Actions Based on Stereotypes and Assumptions Reliance on stereotypes or assumptions when taking adverse action, without regard to an individual’s specific ability or circumstance. Refusal to hire an applicant:

Who uses a wheelchair, because of concerns that the applicant may be unable to attend off-site meetings; or

Whose cancer is in remission, because of concerns that the cancer will recur.

 

Neutral Policies that Have a Disparate Impact

 

Policies or practices that are facially neutral, but more harshly affect one group, unless the policy or practice bears “a significant relationship to a significant business objective of the employer.” “No fault” absence or maximum leave policies;

A policy that, without exceptions, penalizes employees who exceed a permissible amount of sick leave.

Associational Discrimination Taking adverse action against individuals who associate with people who have disabilities based on unfounded stereotypes and assumptions.

 

Firing an employee who volunteers as an aide to people who are HIV-positive out of fear that the employee will contract the disease;

Refusing to hire an applicant with a disabled child because of concerns that the applicant may be an unreliable employee.

Disability Inquiries: What May Employers Ask Applicants and Employees?

 Applicants

The NYCHRL prohibits job postings, applications, interviews, and other selection processes that “directly or indirectly suggest an intent to discriminate” based on disability. For example, employers should not ask an applicant if he or she has or has had a disability, or inquire as to the details of the applicant’s disability. Nor should an employer request medical documentation regarding a disability. The Guidance also cautions employers against adopting a range of practices and policies, from height and weight standards to employment tests, unless the job requirement for which the criterion or test is being used is significantly related to an important business objective.

However, employers may require an applicant to take or pass a medical exam or test after the applicant receives a conditional offer of employment, as long as this requirement is applied consistently to all prospective employees, the test is job-related, and it is not used to screen out individuals with a disability.

The Guidance also cautions employers against asking applicants questions concerning gaps in their work history, “as this may lead to inquiries relating to an applicant’s disability,” or the disability of an individual with whom the applicant is associated.

To avoid potentially improper questions, the Guidance advises employers to focus their application and interview inquiries on the applicant’s ability to perform “the essential requisites of the job, with or without an accommodation,” and to present such questions in a “yes or no” format.

Finally, the Guidance reminds employers that they are required to provide reasonable accommodations to prospective employees during the application and interview processes, such as screen-reading software for a visually impaired applicant.

Employees

Generally, an employer should avoid inquiries into an employee’s disability or perceived disability unless the employee makes a request for a reasonable accommodation or the employer “has notice” of the disability, for example, where a job applicant arrives for an interview in a wheelchair, or an employee shows up for work one day using crutches or wearing a hearing aid. However, within narrowly defined parameters, an employer may inquire about an employee’s disability or require a medical exam when an employee who has been on medical leave wants to return to work. With the focus of any such inquiry limited to information that is necessary to assess the employee’s ability to work, an employer may inquire about the employee’s disability if the employer:

Has reason to believe the employee’s ability to perform essential job functions is impaired;

Is concerned that the employee will pose a direct threat to the safety of him/herself or others; or

Engages in a “cooperative dialogue” to determine whether and what kind of an accommodation should be provided for the employee.

Notably, employers may require all employees to undergo periodic medical examinations, but only if the policy is uniformly applied, the exam is “narrowly focused” on assessing the employees’ ability to perform their job functions, and the test is administered in the same manner to all employees.

New York City Law on Requests for Reasonable Accommodation

Under the NYCHRL, all requested accommodations are presumed to be reasonable. As a result, an applicant or employee need not prove that the requested accommodation: (1) is necessary; (2) does not pose an undue hardship to the employer; or (3) is readily feasible. However, an employer can require medical documentation to support a request for an accommodation, although it cannot require a specific type of documentation.

To overcome the presumption of reasonableness, an employer must show that: (i) there is no accommodation that would enable the applicant or employee to perform the essential duties of the job; (ii) the proposed accommodation would impose “undue hardship” on the employer; or (iii) the applicant or employee was offered and rejected a different accommodation that was reasonable. The mere fact that the accommodation will cause the employer to incur an expense does not constitute undue burden. Rather, the Commission weighs the cost involved in the context of other considerations, including the size of the employer and the duration for which the accommodation is needed.

Further, the NYCHRL imposes a duty on employers to provide reasonable accommodations to applicants and employees both when the disability is known and when the employer should have known about the disability, even if the applicant or employee did not request an accommodation. If the employer suspects or should suspect that the individual may need an accommodation, the employer should not ask the individual if he or she has a disability. Rather, the employer should “ask if there is anything going on that the employer can help with” and inform the person of the support services provided by the employer to individuals with disabilities.

The Guidance instructs employers to assess requests for a reasonable accommodation on a case-by-case basis, and offers some specific suggestions for reasonably accommodating the needs of a disabled applicant or employee. For example, employers can make their online application process accessible to individuals with visual impairments, or allow an employee with anxiety to bring his or her service dog to the office. Employers can also provide a quieter workspace to reduce noisy distractions for an employee with a mental health condition.

The Guidance also discusses leaves of absence as a reasonable accommodation. It advises that a paid or unpaid leave of absence is an appropriate accommodation mostly “in circumstances in which no other accommodation can be made,” or where, under the facts of the situation, it is the “preferred” accommodation. The Commission advises that, absent special circumstances, an employer should seek an accommodation that allows an employee to remain working.

Finally, the Guidance encourages employers to include information on their reasonable accommodation policies and processes in an employee handbook.

Compliance

Employers should review current policies and practices, including application forms and accommodation request forms, to ensure that they are consistent with the Guidance, particularly with respect to the procedures and documentation requirements under the new “cooperative dialogue” law. Additionally, employers should update employee handbooks to reflect any modifications in company practices concerning accommodation and the cooperative dialogue process. Employers also should train managers and supervisors on their obligations with respect to avoiding disability discrimination and following the reasonable accommodation process, including the substantive and documentation requirements imposed under the cooperative dialogue law.

Finally, employers should ensure that Human Resources and supervisory personnel understand the potential interplay of the cooperative dialogue law with another recently enacted statute – the Temporary Schedule Change for Personal Events Law – which became effective on July 18, 2018. Many requests for accommodation involving proposed changes to the hours or location of work will implicate both laws, and will require the employer to document the requests and employer responses in a particular manner.

This post was written with assistance from Alison Gabay, a 2018 Summer Associate at Epstein Becker Green.

A legislative bargain requires give-and-take from all stakeholders. On June 28, 2018, Massachusetts Governor Baker signed House Bill 4640, “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday” (the “Act”). This “grand bargain” gradually raises the minimum wage, provides for paid family and medical leave, makes permanent the Commonwealth’s annual tax holiday, and phases out Sunday and holiday premium pay requirements. While Massachusetts employers must now adjust to an increased minimum wage and new paid family medical leave program, retailers with eight or more employees may see those costs mitigated by the gradual elimination of Sunday and holiday premium pay mandates.

Currently, Massachusetts retailers must provide premium pay of 1.5 times the regular hourly rate to non-exempt employees who work on Sundays or certain holidays designated by state law. The holidays covered by the premium pay laws are New Year’s Day, Memorial Day, Independence Day, Labor Day, Columbus Day, and Veterans Day. The premium pay requirements do not apply to employees who are exempt from overtime pay mandates under Massachusetts law, specifically executive, administrative, and professional employees who earn more than $200 per week.

The Act will reduce, and ultimately remove, Massachusetts’ Blue Law premium pay requirement in accordance with the following schedule:

Effective Date Premium Pay Rate
January 1, 2019 One and four-tenths (1.4)
January 1, 2020 One and three-tenths (1.3)
January 1, 2021 One and two-tenths (1.2)
January 1, 2022 One and one-tenth (1.1)
January 1, 2023 No premium pay

Though covered employers will no longer be required to offer premium pay for Sunday and holiday work, the other provisions in the Blue Law remain unchanged. As such, retail employers may not require employees to work on Sundays or holidays, nor may employers discriminate or take adverse action against employees who refuse to work such shifts.

The phase out of premium pay is intended to provide relief for retailers; however, it also appears to create a subtle complication that may raise costs for Massachusetts retailers over the next four years. Under federal and state law, employers must pay non-exempt employees one-and-one-half premium pay for all hours worked over 40 in a week. Premium pay for work on Sundays and holidays may be creditable toward overtime compensation, but only if it is at least one-and-a-half times that employee’s “regular rate” of pay for the given workweek.

The “grand bargain” legislation thus reduces premium pay below this one-and-one-half-times threshold, such that it is no longer excluded from the overtime pay calculation, and therefore, the Massachusetts premium pay can no longer be used to satisfy the federal and state overtime pay requirements. As such, if an employee works more than 40 hours in the workweek, and some of those hours fall on a Sunday or qualified holiday, Massachusetts retailers may be required to provide the employee with both (1) the Sunday or holiday premium, and (2) overtime (above and beyond the premium pay already provided). To further complicate matters, the premium pay received for time worked on the Sunday or holiday will need to be incorporated into the employee’s regular rate of pay, which will affect the calculation of the employee’s overtime rate of pay. Note also that employees’ entitlement to decline Sunday/holiday work (and not be retaliated against) stays in effect as part of the grand bargain. It remains to be seen whether this fact, when considered along with the elimination of premium pay, will impact the number of employees willing to work on Sundays/holidays.

While state lawmakers may choose to revise the statute as it pertains to this complication, overall, the elimination of premium pay should still come as a welcome relief to many Massachusetts retailers, especially those directly competing with stores across the border in New Hampshire. Given that the first reduction in pay is set to take effect in a matter of months, covered employers should notify their employees about the reduction, ensure overtime calculations comply with federal and state laws, and confirm payroll systems are updated to reflect these changes.

This post was written with assistance from Eric I. Emanuelson, Jr., a 2018 Summer Associate at Epstein Becker Green.

On May 30, 2018, Vermont Governor Phil Scott signed bill H.707, titled “An Act Relating to the Prevention of Sexual Harassment” (the “Act”). Effect on July 1, 2018, the Act provides expansive protections for employees and prospective employees, as well as some groundbreaking employer obligations and potential penalties for violations of the law.

Among its key provisions, the Act:

  • Applies to all persons “hired to perform work or services,” thereby covering independent contractors and unpaid interns;
  • Prohibits employers from requiring any employee or prospective employee, as a condition of employment, to sign an agreement that waives “a substantive or procedural right or remedy available to the employee with respect to a claim of sexual harassment.” In effect, this provision bans employment agreements requiring that sexual harassment claims be resolved through arbitration;[1]
  • Prohibits employment agreements that prevent or restrict an employee or prospective employee from “opposing, disclosing, reporting, or participating in an investigation of sexual harassment;”
  • Requires that all sexual harassment settlement agreements contain specific statements (discussed below) describing when a claimant-party has the right to disclose information about his or her allegations and the settlement;
  • Mandates that a sexual harassment settlement agreement may not prohibit the claimant-party from working for the employer “or any parent company, subsidiary, division, or affiliate of the employer;”
  • Directs the development of a public education and outreach program, including the establishment of a hotline and web portal for the reporting of sexual harassment complaints to the Vermont Human Rights Commission or the Attorney General’s Office;
  • Requires the Attorney General’s Office to develop a streamlined reporting system;
  • Provides the Attorney General broad powers to investigate and enforce the law, including, among other things, the authority to conduct an inspection of an employer’s records, and in certain circumstances (described below), require the employer to conduct employee training; and,
  • Directs the Office of Legislative Affairs to develop “mechanisms” for essentially voiding non-disclosure agreements in prior settlements where, in a separate, later claim, the alleged harasser is “adjudicated by a court or tribunal of competent jurisdiction to have engaged in sexual harassment or retaliation in relation to a claim of sexual harassment.”

Further, consistent with existing law, which mandates that employers must adopt an anti-harassment policy, the new Act reiterates that employers:

  • Must provide all new hires with a copy of their written policies on sexual harassment, and again distribute copies to all employees if the policies are revised; and
  • Are encouraged, but not required, to provide sexual harassment prevention training to all employees as well as supervisors and managers.

Inclusion of Required Statement in Sexual Harassment Settlements

As noted above, the Act imposes limits on the extent to which a sexual harassment settlement agreement can require confidentiality. Under the new law, employers must expressly state in such settlement agreements that the agreement does not prohibit or restrict the claimant from:

  • Testifying, assisting, or participating in an investigation of a sexual harassment claim conducted by any state or federal agency:
  • Complying with a discovery request or testifying in a proceeding concerning a claim of sexual harassment; and
  • Exercising “any right” the claimant has under State or federal labor relations laws “to engage in concerted activities with other employees for the purposes of collective bargaining or mutual aid and protection.”

The statement also must make clear that the claimant “does not waive any rights or claims that may arise after the date the settlement agreement is executed.”

The State’s Powers to Audit Employers and Enforce the Law

As stated above, the Act grants the Attorney General broad authority to conduct inspections and collect data. Specifically, the Act authorizes the Attorney General’s Office, on 48 hours’ notice to the employer, to “enter and inspect any place of business, question any person who is authorized by the employer to receive or investigate complaints of sexual harassment, and examine an employer’s records, policies, procedures, and training materials related to the prevention of sexual harassment.” This authority includes the right to examine all documents related to sexual harassment claims, including the number and details of such complaints and their resolution.

If, after inspection, the Attorney General’s Office or the Human Rights Commission determines that action is “necessary to ensure the employer’s workplace is free from sexual harassment,” either office can, among other remedies, order the employer to provide annual sexual harassment education and training for up to three years.

Finally, the previously described directive to the Office of Legislative Affairs to explore “mechanisms” which would allow the Attorney General to void non-disclosure agreements in prior settlements after a subsequent finding of sexual harassment in a separate case would be a significant development in this area of the law should it actually be developed and implemented.

______________

[1] Arguably, mandatory arbitration of sexual harassment claims already was banned in Vermont under another law, which bars arbitration agreements that prevent a person from “seeking or obtaining the assistance of the courts in enforcing his or her constitutional or civil rights.” It should be noted that this arbitration ban, along with others, such as the one recently enacted in New York, may be preempted by the Federal Arbitration Act. With the increase in these kinds of laws, it is likely that, at some point, there will be a court challenge to at least one of them on preemption grounds.

This post was written with assistance from Alison Gabay, a 2018 Summer Associate at Epstein Becker Green.

Our colleagues , at Epstein Becker Green, have a post on the Hospitality Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Ninth Circuit’s Decision Holds That Salary History Is Not a Defense to Equal Pay Claims.”

Following is an excerpt:

The federal Equal Pay Act (“EPA”) mandates equal pay for equal work regardless of sex.  Employers that pay men and women different wages for the same work are strictly liable for violations of the EPA unless they can show that one or more of four exceptions apply to explain the wage disparity. The four statutory exceptions are seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.”  The Ninth Circuit recently took up the question of the meaning of the fourth, catchall exception – “any factor other than sex” – in order to consider whether an employer may rely, in whole or in part, on an employee’s prior salary as a basis for explaining a pay differential in Aileen Rizo v. Jim Yovino. …

Read the full post here.

On March 7, 2018, the New York City Council formally introduced “The Stop Sexual Harassment in NYC Act,” a package of 11 bills, aimed at strengthening protections against, and remedies for, sexual harassment in the workplace. As discussed below, four of these bills, if enacted, would significantly expand the obligations of many employers to prevent sexual harassment and would increase all private NYC employers’ vulnerability to sexual harassment claims.

Mandatory Sexual Harassment Training

Int. 632 would require all private NYC employers with 15 or more employees to conduct annual, “interactive” training on sexual harassment for all full-time and part-time employees who work more than 80 hours in a calendar year in NYC. The training could be in person or through an online program.

Specifically, the annual, interactive training for employees must include the following:

  • An explanation of sexual harassment as a form of unlawful discrimination under local, state and federal law;
  • A description of what sexual harassment is and is not, using practical examples;
  • A description of the employer’s internal complaint processes, if any, available to employees to address sexual harassment claims;
  • A description of the complaint process available through the Commission on Human Rights (“Commission”), the New York State Division of Human Rights and the federal Equal Employment Opportunity Commission, including contact information;
  • An explanation, with examples, of what constitutes “retaliation” under the New York City Human Rights Law (“NYCHRL”); and
  • A discussion of the importance of bystander intervention.

In addition to this general training requirement, NYC employers would also be required to train their supervisors and managers annually on subjects such as their role in the prevention of harassment and retaliation, and how to address sexual harassment complaints.

The bill defines “interactive training” as “participatory teaching whereby the trainee is engaged in a trainer-trainee interaction, use of audio-visuals, or other participatory forms of training as determined by the commission.” The bill further directs the Commission to develop online training modules for small, medium and large workplaces that would satisfy the training requirement, and to allow for the electronic provision of certification each time an employee completes a training module.

Additionally, covered employers would be required to maintain records, for three years, of all training, including a signed employee acknowledgement that must include (i) the date, time, title, duration and location of the training; (ii) whether the training was conducted live or online; and (iii) the name of the person(s) who conducted the training.

If passed, Int. 632 will take effect on September 1, 2018. Penalties for violations of the law would range from $100-$500 for the first violation and from $500-$2,000 for each succeeding violation. However, an employer would be able to avoid a penalty for a first-time violation if the employer could prove within 60 days of the issuance of the notice of violation that it has complied with the law. 

New Sexual Harassment Poster

Int. 630 would require all employers in New York City to post a sexual harassment rights and responsibilities poster in English and Spanish, and to provide new hires with an information sheet on sexual harassment, which would both be created by the Commission and made available to employers.  If passed, Int. 630 would take effect 120 days after enactment and would carry civil penalties for non-compliance.

More Time to File a Complaint

Int. 663 would lengthen the statute of limitations for harassment claims arising under the NYCHRL. Instead of the current one-year statute of limitations, aggrieved employees would be permitted to file complaints up to three years from the date of the alleged harassment. This longer statute of limitations would apply to claims “based on unwelcome conduct that intimidates, interferes with, oppresses, threatens, humiliates or degrades a person based in whole or in part on such person’s gender.”  This bill would take effect immediately upon enactment.

Expanded Employer Coverage under the NYCHRL

Currently, the NYCHRL applies to employers with four or more employees. Int. 657 would eliminate that employee threshold with respect to gender-based harassment claims, thereby subjecting all NYC employers to potential liability for sex harassment under the NYCHRL.[1]

Conclusion

We will continue to monitor these bills as the legislation proceeds and provide updates on any significant developments.

[1] New York State expanded sexual harassment and discrimination protections to all employees in 2015.

On November 2, 2017, three Republican Representatives, Mimi Walters (R-CA), Elise Stefanik (R-NY), and Cathy McMorris Rodgers (R-WA), introduced a federal paid leave bill that would give employers the option of providing their employees a minimum number of paid leave hours per year and instituting a flexible workplace arrangement. The bill would amend the Employee Retirement Income Security Act (“ERISA”) and use the statute’s existing pre-emption mechanism to offer employers a safe harbor from the hodgepodge of state and local paid sick leave laws. Currently eight states and more than 30 local jurisdictions have passed paid sick leave laws.

The minimum amount of paid leave employers would be required to provide depends on the employer’s size and employee’s tenure. The bill does not address whether an employer’s size is determined by its entire workforce or the number of employees in a given location.

Number of Employees Amount Of Sick Leave For Employees With Five Or More Years Of Service Amount Of Sick Leave For Employees With Fewer Than Five Years Of Service
1,000 or more

 

20 days 16 days
250 to 999

 

18 days 14 days
50 to 249

 

15 days 13 days
Fewer than 50

 

14 days 12 days

In addition to paid leave hours, employers would be required to offer at least one of the following flexible workplace arrangements: (1) a compressed work schedule that allows employees to increase their daily hours so as to qualify for a four-day workweek, (2) a biweekly work program that permits employees to work a total of 80 hours over a two-week period, (3) a telecommuting program, (4) a job-sharing program, (5) flexible scheduling, or (6) a predictable schedule. Employees would become eligible to participate in a flexible workplace arrangement once they have worked for the employer for 12 months and at least 1,000 hours.

The bill would not affect state paid family leave insurance programs, such as one about to take effect in New York, nor would it affect job-protection coverage afforded by the Family and Medical Leave Act. If signed into law, the bill would become the first ever federal paid leave law.

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.

On April 27, 2017, the Ninth Circuit[1] issued an opinion in Aileen Rizo v. Jim Yovino that provides employers with guidance on how to lawfully implement facially-neutral business policies using prior salary information to set a new employee’s salary, without running afoul of the federal Equal Pay Act (“EPA”). While there has been some backlash regarding this recent decision, the Court’s ruling was consistent with its prior holding in Kouba v. Allstate Insurance Co.[2] when it vacated the lower court’s decision that denied Defendant Jim Yovino’s (“County”[3]) motion for summary judgment, and directed that the lower court consider the County’s hiring procedures in light of certain factors set forth in the Kouba case (as detailed below).

In 2009, Plaintiff Aileen Rizo (“Plaintiff”) began working for the Fresno County School District. Her starting salary was determined using the school district’s standard salary schedule, “Standard Operating Procedure 1440[4],” which was routinely and uniformly applied to all management-level employees, including Plaintiff. Based on the County’s application of this facially neutral policy, which is based on an employee’s prior salary, Plaintiff’s pay was lower than those of her colleagues with higher past salaries, including her male coworkers.

The pay disparity between Plaintiff and her male coworkers was undisputed by the County in this case. But, the County argued that its use of prior salary falls squarely under one of the affirmative defenses to the EPA – i.e., that prior salary amounts to an “other factor other than sex.”[5]

Plaintiff responded by arguing that if an employer’s pay structure is based “exclusively on prior wages,” then any resulting pay differential between men and women cannot be interpreted to be based on “any other factor other than sex.” Her position was consistent with Tenth and Eleventh Circuit decisions and the EEOC’s stance on this topic. Plaintiff further claimed that the use of prior salary alone can’t be considered a “factor other than sex” because it perpetuates existing pay disparities and further undermines the purpose of the Equal Pay Act. The lower court agreed with Plaintiff and found that women’s earlier salaries are likely to be lower than men’s because of historical gender bias; but, the District Court also acknowledged that its decision potentially conflicted with the 1982 decision in Kouba.

On appeal, the Ninth Circuit vacated the District Courts decision and held that its earlier decision in Kouba was controlling in the present case.  In its opinion, the Ninth Circuit held that the Kouba decision “allow[s] an employer to base a pay differential on prior salary so long as it showed that its use of prior salary effectuated some business policy and that the employer used the factor reasonably in light of its stated purpose and its other practices.”  Here, the County offered four business reasons for it policy: (1) the policy is objective, in the sense that no subjective opinions as to the new employee’s value enters into the starting-salary calculus; (2) the policy encourages candidates to leave their current jobs for jobs at the County, because they will always receive a 5% pay increase over their current salary; (3) the policy prevents favoritism and ensures consistency in application; and (4) the policy is a judicious use of taxpayer dollars.

The matter was remanded to the District Court for (1) an evaluation of the four business justifications offered by the County regarding its gender-neutral preset pay scale, and (2) a determination of whether the County’s use of employees’ prior salary is “reasonable in light of [its] stated purpose” under the standard set forth in Kouba.

Many states, including California, recently revised their state law equal pay protections to address the use of prior pay in hiring decisions, and whether it perpetuates prior pay discrimination. In particular, California’s equal pay law now includes a provision that expressly prohibits the use of prior salary “by itself [to] justify any disparity in compensation.” Interestingly, California’s amendment, which was passed prior to the Ninth Circuit’s decision, was not addressed at all in the decision. But, arguably here, all allegedly discriminatory decisions were made prior to the amendment’s passage.

In light of these new state and local laws’ prohibitions and/or restrictions on the use of prior pay as a determinant in setting an applicant’s salary, even if the Ninth Circuit finds that the federal Equal Pay Act permits the use of pay history for this purpose (under certain circumstances), in many jurisdictions, state and local laws will prohibit it. Employers should be aware both of the split in the circuits on this issue, and also of any applicable amendments to state and local equal pay laws that may impact their ability to rely on prior pay in setting an applicant’s rate of pay.

[1] The panel included Circuit Judges A. Wallace Tashima and Andrew D. Hurwitz and the Honorable Lynn S. Adelman, U.S. District Judge for the Eastern District of Wisconsin, sitting by designation.

[2]Kouba v. Allstate Insurance Co. ( 9th Cir. 1982) 691 F.2d 873.

[3] As Defendant Jim Yovino was sued in his official capacity as the Fresno County Superintendent of Schools, the Ninth Circuit utilized the word “County” when referring to the Defendant. For simplicity, we utilize the same term.

[4] To determine a candidate’s salary using “Standard Operating Procedure 1440,” the County applies a 5% increase to an individual’s most recent prior salary, then places the candidate on a “step” of the County’s salary schedule based on that calculated amount. This schedule consists of twelve “levels,” each of which contains ten “steps.”

[5] Under the EPA, a wage disparity is permissible if an employer can plead and prove an affirmative defense based on one of the following exceptions: (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.

Amid challenges regarding Philadelphia’s upcoming law prohibiting employers from requesting an applicant’s salary history, the City has agreed not to enforce the upcoming law until after the court has finally resolved the injunction request.

The law, which was set to become effective May 23, 2017, has been challenged by the Chamber of Commerce for Greater Philadelphia (the “Chamber”). The Chamber’s lawsuit alleges that the pending law violates the First Amendment by restricting an employer’s speech because, among other reasons, “it is highly speculative whether the [law] will actually ameliorate wage disparities caused by gender discrimination.” It is also alleged that the law violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and Pennsylvania’s Constitution as well as its “First Class City Home Rule Act” by allegedly attempting to restrict the rights of employers outside of Philadelphia.

On April 19, a judge for the Eastern District of Pennsylvania stayed the effective date of the law, pending the resolution of the Chamber’s motion for a preliminary injunction. Prior to resolving the injunction, the parties will first brief the court on the Chamber’s standing to bring the lawsuit. This issue, regarding whether the Chamber is an appropriate party to bring this lawsuit, will be fully briefed by May 12, 2017, before the law is set to become effective. However, there are several other issues to be resolved as part of the lawsuit. The City’s decision to stay enforcement of the pending law until all issues are resolved is intended to help employers and employees avoid confusion during the pendency of the lawsuit.

Although the City of Philadelphia will not enforce this law in the interim, employers with any operations in Philadelphia should review their interviewing and hiring practices in case the lawsuit is decided in favor of the City. Further, employers in Massachusetts and New York City will also be subject to similar restrictions on inquiring about an applicant’s salary history when those laws go into effect. Massachusetts’ law is scheduled to become effective in July 2018, and New York City’s law will become effective 180 days after Mayor de Blasio signs the law, which may occur as soon as this week.

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.