Recently, Governor Andrew Cuomo signed two significant bills expanding the scope of anti-discrimination laws in the New York workplace. Specifically, on July 10, 2019, Governor Cuomo signed Senate Bill 6549, prohibiting employers from inquiring about applicant and employee salary history, and Senate Bill 5248B, expanding pay protections under the New York Equal Pay Act.

Expansion of Equal Pay Protections

The recently enacted New York Senate Bill 5248B, which goes into effect on October 8, 2019, expands anti-discrimination protections under the New York Equal Pay Act by mandating equal pay among all protected categories under the New York State Human Rights Law – not just sex. Specifically, employers may not pay an employee who is a member of a protected class less than an employee outside of the same protected class in the same establishment for: (a) equal work performed under similar working conditions and on a job requiring equal skill, effort, and responsibility or (b) substantially similar work, when considering skill, effort, responsibility, and working conditions. Indeed, these equal pay protections now apply to the protected categories of age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, or domestic violence victim status, or other status protected by law.

The new law contains the previously enacted permissible factors for wage differentials, which are compensation differences based on a: (a) seniority system; (b) merit system; (c) system which measures earnings by quantity or quality of production; or (d) bona fide factor other than the protected status, such as training, experience, or education. The employer, however, must be able to demonstrate that the bona fide factor is job-related, consistent with business necessity, and cannot be based upon or derived from a pay differential based on status within a protected class.

According to the current state of the law, which Senate Bill 5248B confirms, an employee may still prevail on a discrimination claim when he or she demonstrates that: (a) the employer’s practice causes a disparate impact on the basis of status within one or more protected class or classes; (b) an alternative employment practice exists that would serve the same business purpose and not produce such a pay differential; and (c) the employer refused to adopt such alternative practice.

Importantly, an employee bringing such a suit can currently seek liquidated damages of up to 300% of unpaid wages for willful violations, as well as the ability to recover attorneys’ fees. The new law also authorizes the New York Department of Labor to assess penalties for pay inequities among protected classes of up to $500 per violation.

As a result of the passage of this law, New York employers should review their compensation and benefit programs to assess whether any potentially improper pay differentials exist. If any differentials exist, employers should be prepared to justify the differential among employees performing equal or substantially similar work. Employers should contact counsel with any questions or if any assistance is needed in conducting pay equity audits.

Salary History Inquiry Ban

Pursuant to New York Senate Bill 6549, which will take effect on January 6, 2020, employers of all sizes are prohibited from:

  • Relying on the wage or salary history of a job applicant in determining whether to offer employment or in determining the wages or salary of such applicant;
  • Orally or in writing, seeking, requesting, or requiring the wage or salary history from an applicant or current employee as a condition to be interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion;
  • Orally or in writing, seeking, requesting, or requiring the wage or salary history of an applicant or current employee from a current or former employer, current or former employee, or agent of the applicant or current employee’s current or former employer;
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliate against an applicant or current employee based upon prior wage or salary history;
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliate against an applicant or current employee because such individual did not provide wage or salary history in accordance with the law; and
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliate against an applicant or current or former employee because the individual filed a complaint with the New York Department of Labor alleging a violation of the law.

Notably, the law contains carve outs for the following disclosures:

  • Applicants and current employees are permitted to voluntarily, and without prompting, disclose or verify their salary history, including for the purposes of negotiating compensation; and
  • Employers may confirm wage or salary history if at the time an offer of employment with compensation is made, the applicant or current employee responds to such offer by providing prior wage or salary information to support higher compensation than what was offered by the employer.

The law specifically states that it shall not be interpreted to take away any right or remedy of any applicant or current or former employee under any other law, collective bargaining agreement, or employment contract. The law explicitly also provides that it does not supersede any federal, state, or local law that was enacted prior to the effective date of the law that requires the disclosure or verification of salary history to set an employee’s compensation.  This is significant because, as we previously reported, salary history inquiry laws have been passed in New York City, Suffolk County, Westchester County, and Albany County.  That being said, Westchester County’s law will be void on the effective date of Senate Bill 6549 because the Westchester County law provides for nullification upon the effective date of statewide legislation.

The law provides legal remedies to individuals seeking redress for any violation of this law and the ability to bring a civil action on behalf of similarly situated persons. Employers who violate this law may be liable for injunctive relief, compensatory damages, and reasonable attorneys’ fees.

On April 25, 2019, Judge Tanya Chutkan of the United States District Court for the District of Columbia ruled in National Women’s Law Center et al v. Office of Management and Budget et al., Civil Action No. 17-cv-2458 (D.D.C.) (“National Women’s Law Center”) that employers subject to Equal Employment Opportunity Commission (“EEOC”) EEO-1 reporting requirements (employers with more than 100 employees and federal contractors with 50 or more employees with a federal contract, subcontract or purchase order exceeding $50,000) must provide employee pay equity data (“Component 2” information) for fiscal years 2017 and 2018 by September 30, 2019.

Subject employers have had to provide data on gender, race, ethnicity, etc. (“Component 1” information) for over 50 years.  In 2016, the Obama Administration ruled that employers would also have to provide summary pay equity data, which is expected to include the number of employees in each pay band listed on the EEO-1 form. In August 2017, the Trump Administration’s Office of Management and Budget (“OMB”) stayed this requirement after concluding that the update would be “unnecessarily burdensome.”  Various advocacy groups sued, leading to the above-referenced court decision.

At this point, subject employers must provide 2017 and 2018 Component 2 information by September 30, 2019.  The EEOC has indicated that it will make the Component 2 portal available to all employers by mid July 2019, at which time the EEO-1 Component 2 Survey will be presented.  Although employers should note that the Department of Justice filed a Notice of Appeal in National Women’s Law Center on May 3, 2019, this appeal does not stay the district court’s order and employers should begin gathering Component 2 information.

On March 1, 2019, New Jersey became the first state to enact legislation, Senate Bill No. 1567 (“An Act concerning pre-tax transportation fringe benefits”), requiring employers with 20 or more employees to offer pre-tax transportation benefits (“NJ Transit Law”).  The significance of this New Jersey legislation is that the state is requiring employers to offer a fringe benefit to employees that, starting in 2018, has lost its federal tax benefit for employers under the 2017 Tax Cuts and Jobs Act (“TCJA”).

Federal law allows an employee to set aside pre-tax wages that can only be used for the purchase of certain eligible transportation services.  Such “qualified transportation fringes,” as defined under Section 132(f) of the Internal Revenue Code, include cost of transit passes, commuter vehicle travel, qualified parking and qualified bicycle commuting up to a monthly limitation of $265 in 2019, subject to cost-of-living adjustments.

Before the enactment of the TCJA, the cost of the benefit was deductible by the employer (i.e., reducing its overall income in a given year) and was also not taxable as income to the employee.  With the enactment of the TCJA, effective January 1, 2018, while the benefit is still not treated as income to the employee, now the employer’s cost of offering such benefit to the employee cannot be deducted from the employer’s annual income.

This reversal of the federal tax benefit would have a chilling effect on any employer previously motivated by the federal tax break to offer fringe transportation benefits.  The New Jersey Legislature has stepped in to make offering such benefits mandatory for employers of a certain size, despite the less favorable tax treatment under federal law.

“Employee” and “employer” are defined under the NJ Transit Law as under the “unemployment compensation law,” (R.S.43:21–1 et seq.).  For unemployment benefit purposes, an “employer” is any for-profit or non-profit entity which has one or more individuals paid at least $1,000 in a calendar year.  An “employee” refers to anyone who provides paid-for services to an “employer,” unless the employer can demonstrate that the individual is an independent contractor under the “ABC test.”  Generally, under the “ABC test,” an individual does not qualify as an “employee” if: (a) the individual is free from the employer’s control or direction over the performance of the work; (b) the work is either outside the usual course of the employer’s business or is performed outside of all of the employer’s places of business; and (c) the individual is customarily engaged in an independently established occupation or business. R.S. 43:21-19(i)(6).

The NJ Transit Law only requires the employer to offer benefits related to transit passes and commuter vehicles, and not qualified parking or bicycles.  It also does not apply to employees covered by a collective bargaining agreement until the expiration of an existing agreement.  The bill provides for a public awareness campaign by the New Jersey transit authorities about the new law.

The penalty to an employer for failure to comply with the NJ Transit Law is $100 – $250 for a first-time violation, with a 90-day grace period to cure.  After 90 days, each additional 30 day period of violation is subject to a $250 penalty.  Costs of recovery and interest may also be charged.

The good news for employers is that the new law, while effective immediately, remains inoperative for a year from March 1, 2019 while the Commissioner of Labor and Workforce Development adopts rules and regulations for administration and enforcement.  During this waiting period until March 1, 2020, employers should be gearing up to comply with the new transportation fringe benefit rules in New Jersey.

 

On March 26, 2019, the New York State Court of Appeals, New York’s highest Court, issued a highly anticipated decision that has major impacts for the home health care industry in New York.  The question before the Court was whether “live-in” home care aides are entitled to be paid for every hour of a 24 hour shift, even if they receive adequate sleep and meal breaks.  Notwithstanding the Department of Labor’s position that such aides are only entitled to 13 hours of pay, in recent years Courts in the First and Second Department Appellate Divisions held that the aides are entitled to 24 hours of pay irrespective of sleeping/meal time.  The Court of Appeals reversed, and potentially saved the home care industry from complete collapse.

Since 1972, home care aides in New York have been subject to the Department of Labor’s minimum wage order (the “Wage Order”).  In summary, the Wage Order provided that a “residential employee” was not available for work, and thus not entitled to pay, for time that they were sleeping and/or eating.  Because questions arose regarding the application of the Wage Order to home care aides, in March, 2010, the DOL issued an opinion letter stating that live-in home care aides are not deemed to be working during normal sleep or eating hours, and thus should be compensated for 13 hours of a 24 shift, the remaining 11 hours excluded from the calculation of compensable hours as 8 hours for sleeping, and 3 hours for meals.

Two class actions entitled Andryeyeva v. New York Health Care, Inc. and Moreno v. Future Care Health Servs., Inc were brought by individuals on behalf of themselves and others similarly situated in the Supreme Court, Kings County.  Similarly, a matter entitled Tokhtaman v. Human Care, LLC, was brought in the Supreme Court, New York County.  In each action, the Plaintiffs, live-in home care aides, challenged the DOL’s interpretation of the Wage Order, and claimed that they were entitled to compensation for every hour of a 24 hour shift, irrespective of whether they were sleeping and/or eating.  The Plaintiffs argued that because they are “on call”, and thus available for work at any moment, the DOL’s exclusion should not apply.

The First Department in Tokhtaman, followed by the Second Department in Andryeyeva and Moreno, agreed with the Plaintiffs, and ignoring long standing precedent that gives deference to DOL interpretations of wage statutes, held that live-in aides should be compensated for each and every hour of a 24 hour shift regardless of the time spent sleeping and eating.  These decisions, if upheld, would have had a devastating impact on the home care industry.  Recognizing this, as a direct result of the Appellate Divisions’ decisions, on October 25, 2017, the New York Department of Labor issued an emergency order (the Emergency Order) amending the Wage Order to explicitly exclude sleep times and meal periods from hours worked.  The DOL made clear that it issued the Emergency Order “to prevent the collapse of the home care industry, and avoid institutionalizing patients who could be cared for at home, in the wake of recent State Appellate Court decisions. . .” (The Emergency Order was ultimately invalidated by the New York County Supreme Court on the grounds that the DOL failed to establish an “emergency situation”).

The defendants in Andryeyeva and Moreno appealed to the New York Court of Appeals which consolidated the appeals for disposition.  On March 26, 2019, the Court of Appeals reversed the Appellate Divisions, citing the State’s long standing policy of giving judicial deference to agency determinations.  The Court held, among other things, “Plaintiffs mistakenly argue, and the Appellate Division erroneously concluded, that once a worker is physically present at the designated work site, they are thus able to work if called upon and so are ‘available for work’”.  The Court gave credence to the DOL’s expertise in interpreting wage orders, and handling labor law violations as well as its “historical efforts to ensure that its policies reflect the realities of the diverse industries and occupations over which it has administrative oversight”.

The significance of the Court of Appeals’ ruling cannot be understated.  As recognized by the DOL in issuing the Emergency Order, the fate of the home care industry was threatened if Andryeyeva and Moreno were upheld.  Home care providers simply could not afford to pay the millions that were claimed by the Plaintiffs in Andryeyeva and Moreno and numerous related cases, the effect of which would be felt far and wide, not just by the home care agencies, but their employees, and most importantly, the patients.

The Court of Appeals’ decision did not end the cited litigations, however.  The Court referred the actions back to the Supreme Court, where the litigants will likely conduct the fact specific analysis of whether employees were indeed provided with adequate sleep and/or meal time.  But in the meantime, at a minimum, home care providers now have the guidance they require to ensure that they are compensating their employees correctly pursuant to the Wage Order.

On March 18, 2019, Governor Phil Murphy signed Senate Bill 121 into law.  The new law prohibits the use of arbitration clauses and jury waivers that relate to claims of discrimination, retaliation, and harassment in employment contracts.  Additionally, the law prohibits employers from enforcing nondisclosure provisions that relate to any claims of discrimination, retaliation, or harassment within employment contracts and settlement agreements.  The law took effect immediately and applies to all agreements entered into, renewed, or modified on or after March 18, 2019.

The law explicitly states that any provision within an “employment contract” (which is undefined as noted below) that “waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.”  As a result, any “employment contract” that requires an employee to waive his or her right to a jury or arbitrate a claim of discrimination, retaliation, or harassment is void as a matter of law.  Significantly, the law does not define “employment contract” thereby leaving this language up for interpretation by courts (i.e., plaintiffs’ attorneys can argue that “employment contract” also refers to settlement and severance agreements).  Employers are anticipated to challenge this provision as being preempted by the Federal Arbitration Act.  Notably, the aforementioned provision does not apply to employees that are subject to collective bargaining agreements.

Moreover, certain nondisclosure provisions are now deemed unenforceable against current or former employees.  A nondisclosure provision that is subject to the new law is defined as “[a] provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment[.]”  Despite the fact that the law deems these nondisclosure provisions unenforceable, and although not entirely clear, it appears that the law still allows employees and employers to enter into agreements containing such provisions if that is the parties’ preference.  Notably, however, every settlement agreement with an applicable nondisclosure provision must “include a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

Therefore, employees and employers may still choose to insert nondisclosure provisions into settlement agreements relating to discrimination, retaliation, and harassment claims, but employees are now permitted to disregard these provisions if they so choose.  The law provides a remedy to employers that find themselves in that predicament by releasing the employers from their nondisclosure obligations under the agreement so long as the employee publicly reveals enough information that the employer is “reasonably identifiable.”  As such, the new law renders any mandatory nondisclosure provisions wholly unenforceable.

In addition, the law contains an anti-retaliation provision, which prohibits employers from retaliating against an employee that does not want to enter into an agreement with an applicable nondisclosure provision.  The law also provides for the award of an employee’s reasonable attorneys’ fees and costs if an employer attempts to enforce a nondisclosure provision that is subject to the law.

Finally, the law also explicitly states that an individual, who is not subject to a collective bargaining agreement, cannot prospectively waive any of his or her rights or potential remedies under the New Jersey Law Against Discrimination (“LAD”) or “any other statute or case law[.]”