On September 7, 2016, the New York Department of Labor adopted a final regulation which details the four permissible methods for paying employee wages, and outlines the strict notice and consent requirements for paying wages by direct deposit or payroll debit cards (the “Regulation”).  A link to the Regulation can be found by clicking here.  The Regulation takes effect on March 7, 2017.

The Regulation, part of the New York Labor Law, provides clarification and specificity as to the permissible methods of paying employee wages, which include cash, check, direct deposit and payroll debit cards.  Critically, the Regulation includes specific guidance on paying wages by direct deposit and payroll debit cards.  By way of example, employers in New York who wish to pay employee wages by direct deposit or payroll debit card must provide employees with a written notice which identifies the following:

  • A plain language description of all of the employee’s options for receiving wages;
  • A statement that the employer may not require the employee to accept wages by payroll debit card or by direct deposit;
  • A statement that the employee may not be charged any fees for services that are necessary for the employee to access his or her wages in full; and
  • If offering employees the option of receiving payment via payroll debit card, a list of locations where employees can access and withdraw wages at no charge to the employees within reasonable proximity to their place of residence or place of work.

Likewise, under the Regulation employers must obtain written consent from employees to make payment by direct deposit or payroll debit card.  Consent, however, is not required for individuals employed in a bona fide executive, administrative or professional capacity whose earnings exceed $900 per week.  The Regulation also specifies that when paying wages by direct deposit in New York, an employer must: (i) get written consent from the employee; (ii) maintain a copy of the employee’s consent for six (6) years following the last payment of wages by direct deposit; and (iii) the direct deposit must be made to a financial institution selected by the employee.

The majority of the Regulation, however, addresses payment by payroll debit cards, and the Rule is among the nation’s most comprehensive.  A “payroll debit card” is defined as a “card that provides access to an account with a financial institution established directly or indirectly by the employer, and to which transfers of the employee’s wages are made on an isolated or recurring basis.”  With regard to such payroll debit cards, an employer must ensure that it has consent from the employee and such consent must be received at least seven (7) days prior to taking action to issue the payment of wages by payroll debit card.  Further, in order to pay employees by payroll debit card, an employer must also provide local access to one or more automated teller machines that offer withdrawals at no cost to the employee and provide at least one method to withdraw up to the total amount of wages for each pay period or balance remaining on the payroll debit card without the employee incurring a fee.  Critically, the Regulation prevents an employer from charging an employee fees in connection with the use of a payroll debit card.  Pursuant to the Regulation, an employer or agent shall not charge, directly or indirectly, an employee a fee for items including:

  • Application, initiation, loading, participation, or other action necessary to receive wages or to hold the payroll debit card;
  • Point of sale transactions;
  • Overdraft, shortage or low balance status;
  • Account inactivity;
  • Maintenance;
  • Telephone or online customer service;
  • Accessing balance or other account information online;
  • Providing the employee with written statements, transaction histories or the issuer’s policies;
  • Replacing the payroll debit card at reasonable intervals;
  • Closing an account or issuing payment of the remaining balance by check or other means;
  • Declined transactions at an automated teller machine that does not provide free balance inquires;
  • Any fee not explicitly identified by type and dollar amount in the contract between the employer and the issuer or in the terms and conditions of the payroll debit card the employer provides to the employees.

Moreover, the Regulation provides the following restrictions on the payment of wages with a payroll debit card:

  • The wages paid with a payroll debit card must not be linked to any form of credit, including a loan against future pay or cash advance on future pay;
  • An employer cannot pass any of its costs associated with the payroll debit card to its employees, nor can an employer receive a kickback for delivering wages via payroll debit card;
  • An employer or its agent shall not deliver the payment of wages by payroll debit card unless the agreement between the employer and the issuer requires that the funds on a payroll debit card shall not expire, but the account may be closed for inactivity provided “reasonable notice” is given to the employee;
  • At least 30 days before any change in the terms and conditions of a payroll debit card takes effect, an employer must provide written notice in the employee’s primary language of the change, which must be in at least 12-point font; and
  • Where the employee is covered by a valid collective bargaining agreement that expressly provides the method by which the wages are to be paid to employees, the employer must have the approval of the union before paying wages via payroll debit card.

Importantly, the Regulation prevents an employer from engaging in any unfair, deceptive or abusive practices in relation to the method or payment of wages to an employee.  Likewise, an employer may not condition continued employment upon the payment of wages by direct deposit or payroll debit card, nor can they discriminate against any employee on that basis.

The Regulation is comprehensive and imposes significant new wage payment requirements on employers.  Employers should review their current payroll practices and agreements with payroll providers prior to the Regulation’s effective date to ensure they comply in all respects with the new rule.  Likewise, employers should review applicable collective bargaining agreements as to not run afoul of the new Regulation.

Earlier this month, Morristown joined the growing number of New Jersey cities that require employers to provide paid sick time to their employees.  Effective October 4, 2016, the new ordinance (“Ordinance”) requires that certain private employers provide employees who work at least 80 hours in a calendar year with up to 40 hours of paid sick time per year.

The Ordinance provides that eligible employees may take paid sick time to address the employee’s own illness or to care for a sick family member.  A family member includes biological, adopted, or foster children, stepchildren, parents, grandparents, spouse, domestic partner, civil union partner, and siblings.  The employee may be asked to confirm in writing that the paid sick time was used for an authorized purpose under the Ordinance, and an employer may require an employee to provide “reasonable documentation” — including a doctor’s note — after the employee uses paid sick time for 3 consecutive days or 3 consecutive instances.  An employer, however, cannot request information about the illness.

The Ordinance applies to all private employers who operate within Morristown but specifically excludes employees governed by a collective bargaining agreement.  While the Ordinance applies to all private entities regardless of size, an employer with fewer than 10 employees may cap paid sick leave at 24 hours per calendar year.  One notable exception to the small-employer rule is child care, home health care, and food service employees who are entitled to up to 40 hours of paid sick time per calendar year, regardless of the number of the size of the employer.

Paid sick time accrues at the rate of 1 hour for every 30 hours worked, starts to accrue on an employee’s first day of employment, and may be used by an employee after his or her 90th day of employment.  While accrued but unused paid sick time may be carried over from one calendar year to the next, the employer is not required to offer more than 40 hours of paid sick leave in a calendar year.  The Ordinance also does not require the employer to pay the employee for accrued but unused sick time at the time of an employee’s separation.

Finally, the Ordinance mandates employers comply with certain notice and posting requirements.   Employers must provide individual written notice to each employee about his or her rights under the Ordinance and must display a poster containing the relevant information in a “conspicuous and accessible place” in each business establishment where employees are employed.  The notice(s) must be in English and “any language that is the primary language of at least 10% of the employer’s workforce.”  An employer cannot retaliate against an employee for requesting or using paid sick leave under the Ordinance.  This includes threats, discipline, suspension, demotion, and/or termination.

The Second Circuit recently invoked a 17th century fable in reviving an employee’s retaliation claim against her employer even where the employer had no retaliatory intent.  In Vasquez v. Empress Ambulance Service, SDNY, 15-CV-3239, the Plaintiff, Andrea Vasquez, an Emergency Medical Technician, alleged that she was subjected to sexual advances by her dispatcher in part by sexually explicit text messages.  Vasquez complained to her employer, who immediately launched an investigation.  Unbeknownst to Vasquez or her employer, the dispatcher manufactured false text messages which showed that Vasquez was the aggressor.  Indeed, one of the messages displayed a “racy photo” that Vasquez allegedly sent the dispatcher, though the photo did not contain Vasquez’s face.  The employer credited the dispatcher’s story, and Vasquez was fired.  She subsequently commenced a lawsuit.

Southern District Judge Naomi Reice Buchwald dismissed Vasquez’s retaliation claims, finding that the employer could not have retaliatory intent because the employer was unaware that the text messages were manufactured.  On August 29, 2016, the Second Circuit reversed, citing a 1679 fable authored by Jean de La Fontaine, entitled the “Monkey and the Cat”.  According to the fable, a mischievous monkey lured an unsuspecting cat to fetch chestnuts from a burning hearth under the auspices that they will share the chestnuts.  The monkey, however, stole the chestnuts, leaving the cat with nothing but burnt paws.  In citing the fable, the Second Circuit held, “The employer plays the credulous cat to the malevolent monkey and, in doing so, allows itself to get burned – i.e., successfully sued”.  The Second Circuit held that an employer exposes itself to liability where it automatically credits one employee’s accusations over another, and refuses to consider contrary evidence easily ascertained.  This case serves as a lesson to employers in New York to conduct careful investigations of any claims of employee misconduct, lest they be left with burnt paws.


As we have previously explained, certain employers with 50 or more full-time employees (or equivalents) will incur a penalty from the IRS if they fail to offer health insurance coverage to their full-time employees and their dependents that meet certain standards under the Affordable Care Act (“ACA”).  Now that the ACA has been in effect for several years, employers are beginning to receive Federally Facilitated Marketplace Notices (“Marketplace Notices”) from the health insurance marketplaces (where employees may purchase insurance and receive tax credits to subsidize their purchase in the event his or her employer fails to offer insurance).  A sample Marketplace Notice can be found here.

These Marketplace Notices explain that the employer may be subject to a fee for failing to offer affordable coverage that meets the minimum value standards required under the ACA.  Because employers only have a limited amount of time to respond to a Marketplace Notice, it is important that employers are aware that these notices are being issued and how to appeal a notice issued in error.  This blog discusses employers’ rights with respect to Marketplace Notices and how an employer may limit its employer-mandate liability exposure under the ACA.

The ACA requires the marketplaces to send notices to employers if an employee received an advance payment of a tax credit after purchasing insurance from a marketplace.  The employer then has 90 days of the date of the Marketplace Notice (not date of receipt) to appeal if the employer believes the notice has been sent in error.  While the marketplaces cannot fine employers, a successful appeal is helpful in defending against a penalty assessed by the IRS against the employer for failing to provide affordable coverage to its employees.

In deciding whether to appeal these types of notices, the employer should confirm whether it offered the employee in question affordable coverage that provides minimum value under the employer’s health plan.  The employer should also verify that the employee is in fact employed by the organization and a full-time (or equivalent) employee.  Because an employer must be able to establish that it offered coverage to its employee to prevail on appeal, it is important that employers maintain files with respect to the employer’s requirements under the ACA.

Assuming the employer confirmed it offered the appropriate insurance to its employee(s), an employer may challenge a Marketplace Notice in one of two ways: (1) complete the Employer Appeal Request Form found here; or (2) submit a letter with the business name, the employer ID number, the employer’s primary contact name, phone number, and address, as well as the reason for the appeal.  The employer should also include the date of the marketplace notice, when received, and the employee’s information.   The Appeal Request form or letter and a copy of the marketplace notice should be sent to the Department of Health and Human Services, Health Insurance Marketplace, 465 Industrial Blvd., London, KY  40750-0061.  After the appeal is filed, the employer will receive a letter confirming receipt of the appeal and instructions for submitting additional information if necessary.  Questions about a specific appeal should be directed to the Marketplace Appeals Center at 1-855-231-1751 Monday through Friday between 9:00 a.m. and 7:00 p.m. Eastern Time.

Finally, employers should be aware that the Marketplace Notices are sent to the address provided by the employee.  If an organization has multiple locations, the notice will be sent to the address provide by the employee which may not be the preferred address for the employer.  Because of the short amount of time to appeal, employers should take steps to establish a system that ensures the appropriate person or department within the organization timely receives these notices.

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”), which has been widely hailed as the “most significant expansion” of federal intellectual property law since the passage of the Lanham Act 70 years ago. This post provides a brief overview of the DTSA and discusses the provisions most likely to impact businesses and trade secret owners.

      a.  Summary

The DTSA amends the Economic Espionage Act, 18 U.S.C. §§ 1831 et seq. (the “EEA”), to create a private civil cause of action for trade secret misappropriation. As stated in the official summary of the DTSA, under the new law “[a] trade secret owner may file a civil action in a U.S. district court seeking relief for trade secret misappropriation related to a product or service in interstate or foreign commerce. The bill establishes remedies including injunctive relief, compensatory damages, and attorneys’ fees. It sets a three year statute of limitations from the date of discovery of the misappropriation.” (Summary: S. 1890 – 114th Congress (2015-2016), at Sec. 2.) Although closely aligned with the Uniform Trade Secrets Act (“UTSA”), adopted in some form by every state except New York and Massachusetts, the DTSA explicitly does not preempt preexisting state laws protecting trade secrets. (See 18 U.S.C. § 1838.)

Other provisions of the DTSA (not discussed in this post), require “the Department of Justice [to] submit to Congress and publish a biannual report on trade secret theft outside the United States” and the “Federal Judicial Center [to] develop, update, and submit to Congress best practices for seizing information and securing seized information.” (Id., at §§ 4, 6.)

     b.  Ex Parte Seizure

One of the more controversial provisions of the DTSA empowers a district court “upon ex parte application but only in extraordinary circumstances, [to] issue an order providing for the seizure of property necessary to prevent the propogation or dissemination of the trade secret that is the subject of the action.” (18 U.S.C. § 1836(b)(2)(A)(i).)

Although seizure might be an invaluable remedy to a trade secret owner, to obtain it they must meet a high burden, both factually and financially. As the text makes clear, ex parte seizure will be granted “only in extraordinary circumstances” and the requesting party must also provide security for the payment of damages resulting from wrongful, excessive, and even attempted seizure. (Id. at § 1836(b)(2)(A) and (B) (setting forth requirements for issuing seizure order and listing required elements of seizure order itself).) If the requirements are met, however, “[a]ny materials seized … shall be taken into the custody of the court” pending a hearing that must be scheduled within seven (7) days or “at the earliest possible time”. (See 18 U.S.C. § 1836(b)(2)(B)(v) (emphasis added).)

     c.  Damages

The DTSA increases the maximum penalty for trade secret theft (currently $5 million) to the greater of $5 million or 3 times the value of the stolen trade secret. A court may also award “exemplary damages” (triple damages and/or attorneys’ fees) upon a finding that the trade secret was “willfully and maliciously misappropriated”. (See 18 U.S.C. § 1836(b)(3)(B).) A variety of other remedies are available under the DTSA, including “an injunction to prevent any actual or threatened misappropriation” and, “[i]n exceptional circumstances that render an injunction inequitable,” the court may condition future use of the trade secret(s) upon the payment of a reasonable royalty. (See 18 U.S.C. § 1836(b)(3)(A)-(B).)

     d.  Whistleblower Immunity and Notice Requirement

The DTSA includes a whistleblower immunity provision that grants civil and criminal immunity “under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local governmental official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” (18 U.S.C. § 1833 (b)(1)(A)-(B).)

Businesses and trade secret owners should familiarize themselves with these provisions of the DTSA because “[i]f an employer does not comply with the [whistleblower immunity and] notice requirement…, the employer may not be awarded exemplary damages or attorney fees … in an action against an employee to whom notice was not provided.” (18 U.S.C. § 1833(b)(3)(C).)

     e.  New Definitions (And Some Old Ones, Too)

The EEA’s definition of “trade secret” remains unchanged under the DTSA, which adds definitions for, among other things, “misappropriation” and “improper means” that are similar to those found in the UTSA. (See 18 U.S.C. § 1839(5)-(6) (defining “misappropriation” and “improper means,” respectively).) A key distinction, however, is that unlike the UTSA, the DTSA expressly exempts reverse engineering and independent derivation from its definition of “improper means.” (See 18 U.S.C. § 1839(6)(A)-(B).)


     Trade secret owners and employers desiring to protect their valuable intellectual property rights should familiarize themselves with the DTSA. Although it is, in many respects, substantially similar to the UTSA already adopted by a majority of states, the remedies afforded under the DTSA – ex parte seizure of assets, treble damages and attorneys’ fees – will likely incentivize parties to file suit in federal court. Critically, however, the panoply of remedies under the DTSA is not available to an employer/trade secret owner that fails to incorporate a proper whistleblower immunity notice into their agreement with the misappropriating party. Employers and trade secret owners faced with the threat of misappropriation should be certain to incorporate a proper immunity notice in their confidentiality and trade secrets agreements with employees and contractors.