NYC Employers Take Notice: Notice Requirements Pursuant to the “Stop Sexual Harassment Act” Take Effect September 6, 2018

While a slew of laws relating to sexual harassment are set to take effect in New York City and New York State this fall, the most imminent provision-applicable to all New York City employers-is set to take effect on September 6, 2018.

The provision requires all employers with employees working in New York City (regardless of size) to conspicuously display an anti-sexual harassment rights and responsibilities poster in both English and Spanish and distribute a factsheet on sexual harassment to new hires. Instead of distributing the fact sheet, employers have the option of including such information in an employee handbook. This provision is just one of the many new requirements employers must follow under the Stop Sexual Harassment Act, which was enacted by Mayor Bill de Blasio on May 9, 2018.

While only employment attorneys would enjoy making the required notice and factsheet from scratch, employers need not fear-the New York City Commission on Human Rights recently published both the required notice and factsheet, which can be found here and here.

This provision applies to New York City employers only, but all employers in New York State should take note that Governor Cuomo’s newest anti-sexual harassment requirements take effect on October 9, 2018. For the first time, the state is mandating both a written policy and annual training for all employers. For more information regarding the New York State provisions, see our blog post.

The First “Me Too” Verdict in New York Should Send A Strong Message to Managers and Employers

On Friday, July 27, after a 3 week trial in Manhattan, a jury awarded $1.25 million in damages to Enrichetta Ravina, a former professor at Columbia University Business School, who claimed that she was denied tenure and forced to resign in retaliation for complaining that a senior professor, Geert Bekaert, had sexually harassed her.  Professor Bekaert will owe her $500,000 in punitive damages, and Columbia will owe $750,000 in punitive damages.

Ravina first prevailed Thursday on her retaliation claims against Bekaert and against Columbia based on his conduct.  The jury also held Thursday that Bekaert, but not Columbia, could be held liable for punitive damages.  Jurors rejected Ravina’s gender discrimination claims against both.  The money verdicts then came in on Friday.

Interestingly, the jury found that there was no sexual harassment or gender discrimination.  The verdict was on the retaliation claims.  The jury also did not give the plaintiff the back pay and front pay she had sought.  They awarded only punitive damages, against both defendants. Continue Reading

Ninth Circuit Rules that California Employees Can Trade Away Meal Period Rights

In a noteworthy decision last week, the Ninth Circuit ruled that fast food workers in California can voluntarily bargain away some of their meal period rights in exchange for discounted meals. The unanswered questions are how much employees can trade away, and in exchange for what.

The case (Rodriguez v. Taco Bell) challenged Taco Bell’s policy of offering discounted food to employees to be eaten during their meal breaks, as long as the employees agreed to remain in the store. Taco Bell’s reason for adopting the policy was apparently to prevent employees from leaving the premises and giving the food to friends or family. California law requires that during employees’ required meal breaks, employees must be relieved of all duty and be free to leave the premises.

The Court rejected the employee’s argument that by being required to remain in the store, the employee was “under the control” of Taco Bell and the meal period was invalid. The Court noted that purchasing the discounted food was “entirely voluntary,” and Taco Bell did not interfere in how the employee spent the meal break.

The obvious question is how far the reasoning in this case can be extended. The California Supreme Court held years ago that an employer is not liable if employees voluntarily choose not to take their meal break. Does this mean that employees can trade away their right to take meal periods or rest breaks in exchange for a company gift card, for example? What about a monthly bonus? Employees in California can waive their meal periods under certain circumstances. Can they also trade them away, and be required to work an eight-hour shift with no meal period, in exchange for a benefit?

In our view, a significant expansion of this case is unlikely. California courts are simply too protective of employee rights (or perhaps paternalistic, depending on your viewpoint) to permit employees themselves to trade away significant rights. The Court in this case suggested that if the employee had been “under the control” of Taco Bell during the meal period, even voluntarily as part of receiving discounted meals, the practice would have been struck down. Indeed, California law provides that even if an employee prefers to work (and be paid) during his/her meal period, an employer can only do so if the nature of the job makes it necessary.

Still, this case does provide an opportunity that California employers may use to their advantage. Companies might consider ways to lessen the inconvenience that comes with certain legally-protected employee rights (such as the right to leave the premises during a meal period) in exchange for a benefit. Employers should just be aware that any limitation on employee rights will be viewed with suspicion by California courts.

Fall is Coming! New York’s New Anti-Sexual Harassment Laws Just Around the Corner

As the summer reaches its peak, New York employers may be more concerned with juggling employee vacation schedules than drafting new policies. But with New York’s recent anti-sexual harassment legislation coming into effect this October, and continuing into the spring for New York City, employers need to begin rolling out new policies and ensuring that training is in place to meet these new standards. This alert provides a brief summary of the new requirements so that employers aren’t left without guidance during the dog days of summer.

New York State
On April 12, 2018, Governor Cuomo signed into law New York State’s newest anti-sexual harassment requirements, which will come into effect on October 9, 2018. For the first time, the state is mandating both a written policy and annual training for all employers.

New York City
For employers operating within the five boroughs with 15 or more employees, effective April 1, 2019, these employers will have to comply with Mayor de Blasio’s Stop Sexual Harassment in New York City Act. Like the New York State legislation, this law requires employers to complete annual employee training on sexual harassment. There is no requirement in this law regarding a written policy.

To read the advisory on the Kelley Drye website, click here.

When Arbitration is in Play, Class Action is off the Table

In the decision rendered by the Supreme Court in Epic Systems Corp. v. Lewis, employers are able to enforce individual arbitration proceedings if arbitration was agreed to in an employment contract. Settling a Circuit split on the issue, the Supreme Court decision affirmed the Fifth Circuit holding in Murphy Oil, and remanded the Ninth and Seventh Circuit decisions in Ernst & Young, LLP v. Morris and Epic Systems Corp. v. Lewis. Justice Gorsuch, writing for the majority, found that “as a matter of law the answer is clear. [ . . . ] Congress has instructed federal courts to enforce arbitration agreements according to their terms–including terms providing for individualized proceedings.” (Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018) (slip op., at 2).

The Court, when looking at the Arbitration Act and the National Labor Relations Act (“NLRA”), decided the two provisions could be read in harmony. “When confronted with two Acts of Congress allegedly touching on the same topic, this Court is not ‘at liberty to pick and choose among congressional enactments’ and must instead strive ‘to give effect to both.’” (Id., slip op. at 10) (quoting Morton v. Mancari, 417 U.S. 535, 551 (1974). The Court was unable to find any “clear and manifest” intent, as required by Morton, of Congress to displace the Arbitration Act with the NLRA.

The Court found that their holding was consistent with the prior decisions in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991) and NLRB v. Alternative Entertainment, Inc., 858 F. 3d 393, 413 (CA6 2017) finding that the Fair Labor Standards Act and Age Discrimination in Employment Act do not displace the Arbitration Act. The Court likened the employee’s theory to an “interpretive triple bank shot” that “raise[s] a judicial eyebrow.” (Epic Systems Corp., slip op., at 15). Justice Gorsuch also reminded the employees that Congress “does not, one might say, hide elephants in mouseholes.” (Id., quoting Whitman v. American Trucking Assns., Inc., 531 U.S. 457, 468 (2001). Therefore, the Court sided with the employers and held that “Congress has instructed that arbitration agreements like those before us must be enforced as written.” (Id., slip op., at 25). Continue Reading

Arbitration Face Off between California and the Federal Government leaves California employers in Limbo

AB 3080, a bill inspired by the #MeToo movement that would bar employers from inserting binding arbitration clauses into contracts as a condition of employment, passed the California State Assembly on May 31, 2018. The bill is not the law yet – it still must get through the Senate and be signed by Governor Brown, who vetoed a similar bill in 2015. Further, its future may already be in jeopardy as it comes on the heels of the momentous decision in the U.S. Supreme Court Epic Systems Corp. v. Lewis, in which the Court held that employers can include provisions in arbitration contracts that bars workers from suing collectively.

In Epic, the Supreme Court upheld the enforceability of arbitration agreements containing class and collective action waivers of wage and hour disputes. It resolved the circuit split between the Sixth, Seventh, and Ninth Circuits – which held class action waivers violate the right to “concerted activities” under Section 7 of the National Labor Relations Act (NLRA) – and the Second, Fifth and Eighth Circuits, which held that class action waivers were enforceable under the Federal Arbitration Act. In its 5-4 decision, the Supreme Court in Epic found that Congress enacted the FAA “in response to a perception that courts were unduly hostile to arbitration.” In doing so, it not only instructed courts to enforce agreements to arbitrate, but it “also specifically directed them to respect and enforce the parties’ chosen arbitration procedures.” The majority also rejected the employee’s argument that the NLRA’s reference to the right to engage in “other concerted activities for purposes of collective bargaining or other mutual aid or protection” supersedes the FAA’s command to enforce arbitration agreements. The Court emphasized that while the NLRA grants employees “the right to organize unions and bargain collectively,” it does not provide “express approval or disapproval of arbitration” and “does not mention class or collective action procedures.” The Court held that the FAA mandates the enforcement of arbitration agreements, and that the right to pursue class or collective relief is not protected concerted activity under Section 7 of the NLRA. Continue Reading

Technology Ahead of Laws and Regulations – Or Is It?

For decades, technological innovation has changed our world at a rapid pace. Across industries and departments, businesses have a plethora of new and exciting technology and tools they can utilize to deliver products and services more effectively and efficiently to their customers. This is especially true of today’s human resources department and function. Recent trends have shown an increasing number of technology innovations aimed at HR professionals that offer to help more effectively recruit employees, manage workforce productivity, and address employee and labor relations issues as they arise. However, as businesses begin to adopt these new methods of workforce management, human resource professionals must stay ahead of the curve to ensure this technology is being used effectively and, in some cases, legally.

Technology Ahead of Laws and Regulations – Or Is It?
It’s generally accepted that technological advancement will outpace the legislatures and courts tasked with regulating that technology. But that isn’t to say the legislatures and courts won’t catch up. Just recently, we have seen social media enter the spotlight as the newest target of potential government regulation. And with the European Union enacting the General Data Protection Regulation, companies must be vigilant in how they collect and maintain job applicant information, or face the possibility of severe fines. As fast as new technology is introduced to the market, regulators are working to act just as quickly to mitigate potential harm from that technology.

However, one thing that may be lost in the shuffle is the unintended consequences of some of these technologies, and how that may expose businesses to potential claims under existing laws. Take for example a business that decides to shift its recruiting efforts from a more human-driven approach to a process that uses data to steer the course. There is a trove of data points that a company can collect on a job applicant, such as experience and education. But if HR allows these data points to drive the recruiting and interview process, they may be allowing this data to exploit innate biases, albeit unintentionally. If a data-driven process leans too heavily on quality of education, the process may filter out those candidates who may not have had a ready access to high-quality education, but still may be a good fit for the job. HR professionals need to be careful in implementing these types of processes and work to eliminate these issues, otherwise they may face heightened scrutiny.

Technology Reacting to New Laws
This past year has seen a flood of new employment laws, mainly at the state and local level, as well as the wide-reaching implications of the seismic #MeToo movement. These developments have not gone unnoticed by the technology sector. New software will help HR departments manage the various state and local employee leave laws, help employers implement employee schedules that comply with scheduling laws, and even assist companies in conducting internal investigations of employee complaints. But for each new technological advancement, there is a potential pitfall.

To illustrate this point, let’s consider a company that implements new software in order to guide and streamline the employee complaint process. This software will surely be more efficient and provide a place to store all of the information regarding the investigation. But HR professionals cannot allow the process to create a “one size fits all” approach to these investigations, providing nothing more than a checklist to mark off as the investigation moves along. Professionals must work to integrate the technology to augment their investigation process, not replace it, since a subpar investigation process can expose a business to liability down the road.

Key Takeaways
There is no doubt that technology has the potential to simplify the jobs of HR professionals in today’s fast-paced world. But that business must integrate that technology in a way that makes sense for them, and utilize professionals who can use it effectively.

Relief for Taxpayers Affected by the Reduced 2018 HSA Deduction Limits

The IRS recently released guidance providing that taxpayers may, for 2018, treat $6,900 as the maximum deductible health savings account (“HSA”) contribution for family coverage under a high deductible health plan. This change is relevant to employers who sponsor a high deductible health plan and individuals who have contributed or have had contributions made on their behalf to an HSA for 2018.

As you may recall, the maximum had been abruptly reduced earlier this year to $6,850 as a result of a change in the inflation adjustment calculations under the Tax Cuts and Jobs Act. The new IRS relief comes in response to reports of administrative and financial burdens triggered by the mid-year change, which left individuals, employers and administrators scrambling to respond as HSA participants who either had already made the maximum HSA contribution for 2018 or elected to make pre-tax HSA contributions based on the $6,900 limit faced potential tax penalties due to excess contributions.

Employers who have already adjusted deferral elections made under a cafeteria plan to reflect the inflation-adjusted $6,850 maximum need not take further action. However, individuals who receive distributions of excess HSA contributions based on the inflation-adjusted $6,850 maximum will have a choice to make as to whether they want to repay that amount to their HSAs, rely on an exclusion from gross income afforded to a return of excess contributions or, if attributable to employer contributions, apply the distribution to qualified medical expenses. Employers who sponsor a high deductible health plan may want to inform their employees of this issue either directly or through their relevant service providers.

To read the advisory on the Kelley Drye website, click here.

Has the California Supreme Court Doomed the Gig Economy?

On Monday, the California Supreme Court adopted a new standard for determining whether a worker qualifies as an employee for the purposes of wage-hour law. To the surprise of almost no one, the standard does not bode well for many companies operating in the Golden State.

In a highly-anticipated opinion, Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court held that in order for a worker to be properly classified as an independent contractor rather than an employee, the company bears the burden to show that the individual is performing work that is “outside of the hiring entity’s business.” This standard threatens to put an end to much of the independent contractor workforce in California.

The Court adopted what is known as the “ABC” test of evaluating whether workers classified as independent contractors in fact qualify as employees. The test starts with the presumption that all workers are employees, and utilizes three factors, all of which must be satisfied for an independent contractor classification to pass muster. The first factor – whether the worker is “free from the control and direction” of the company – essentially reflects the current legal standard and is not controversial. Continue Reading

The New Jersey Paid Sick Leave Law is Here

(This blog post was updated 5/2/2018 to reflect changes in the law that was enacted.)

On March 26th, the New Jersey Assembly passed legislation that requires employers in New Jersey to provide earned sick leave to their employees. The legislation was then passed by the New Jersey Senate on April 12th, and Governor Phil Murphy signed it into law on May 2, 2018. He tweeted out that he believes that enacting the law will “support working families and strengthen our economy.”

What is the New Law?

The new Paid Sick Leave law allows New Jersey workers to accrue paid sick leave for every 30 hours worked. The number of hours of leave that can be accrued per year is capped at 40 hours. There is no minimum amount of time an employee must be employed before they are able to start accruing paid sick leave. Employers are required to give employees the same pay rate and benefits for earned sick leave that the employees would regularly receive for working hours. Employers may offer to pay workers for their unused earned sick leave in the final month of the year. The sick leave can be used for physical and mental illness, to care for an ill or injured family member, to attend a school-related event for a child, to obtain services if the employee or a family member is a victim of domestic or sexual abuse, or circumstances arising from a public health emergency. Employers are prohibited from retaliating or discriminating against an employee for using their paid sick leave. Employers also must not discipline, discharge, demote, suspend, or take any other adverse action against employees who are using their sick leave.

Why was this Law Enacted?

The intent of the new law is to ensure an employee does not have to choose between a paycheck and going to work sick. Governor Murphy tweeted “No one should lose a day’s pay due to sickness or because a loved one has fallen ill.” When signing the bill he stated, “There is no reasons anyone should have to choose between economic security and their health. After today, New Jerseyans will no longer have to face such a choice. I am proud to sign into law one of the strongest earned leave protections in the country for every hardworking employee who deserves the basic right of a paid sick day.”

Who has to Comply?

The new law preempts all existing municipal and county sick leave laws. However, if an employer is already offering full paid leave that is accrued at a rate equal to or greater than that in the new policy, they will be in full compliance with the new law. Employers are permitted to create more generous policies that provide additional leave time.

Any exceptions?

  • Small businesses: Even small businesses must comply with the new legislation. There is no exception for small employers, regardless of number of workers employed. A motion was made by Assemblyman Robert Auth (R-Passaic) before the Assembly to exempt employers with less than 10 employees from the new legislation, but that motion was tabled.
  • Exempt workers: The new legislation does not cover per diem health care workers, construction workers covered by a collective bargaining agreement, or public employees who are already provided with sick leave with full pay.

When Will the Law Go into Effect?

The law will go into effect 180 days after it was signed by Governor Murphy, October 29, 2018.

If you have any questions about the new law, feel free to contact Jennifer Fischer (jfischer@kelleydrye.com) or Mark Konkel (mkonkel@kelleydyre.com).

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