Mark Goldstein contributed to the content of this post.
2013, a hectic year for labor and employment practitioners in New York, yielded mixed results for employers and, in too many instances, presented more questions than answers. Among the highlights, two federal district courts issued unprecedented decisions attempting to clarify the legal boundaries of unpaid labor in the workplace. And on the legislative front, the New York City Council continued its torrid expansion of the New York City Human Rights Law (“NYCHRL”), already one of the nation’s broadest anti-discrimination statutes.
With 2013 almost fully behind us, however, it is time for New York state and city employers to brace for the impact of several of the more pressing employment law issues on the 2014 horizon:
Minimum Wage Moving On Up, Up, Up‼
Perhaps most importantly, New York state’s minimum hourly wage will increase, effective December 31, 2013, from $7.25 to $8.00 (meaning that the minimum overtime rate will correspondingly spike to $12.00). Effective December 31, 2014, the minimum wage will rise to $8.75, and then to $9.00, on December 31, 2015.
In a related vein, the New York State Department of Labor (“DOL”) is expected to soon finalize regulations outlining the impact of these minimum wage increases for tipped employees. The Department’s recently promulgated proposed guidance, which the final regulations will likely mirror, leaves the minimum wage for tipped workers in the hospitality industry unchanged (currently, $5.00 per hour for food service workers and $5.65 for service employees). The minimum hourly rate for tipped employees outside of the hospitality industry, however, is expected to rise slightly.
Finally, the minimum salary for exempt employees is also on the rise. Effective December 31, exempt executive and administrative employees must receive at least $600 per week. Like the minimum wage rate for hourly employees, the minimum salary for exempt workers will increase on both December 31, 2014 and December 31, 2015, to $656.25 and $675 per week, respectively.
New Pregnancy & Sick Leave Guidelines For City Employers
First, on January 30, 2014, the most recent amendment to the NYCHRL takes effect, obligating city employers to reasonably accommodate an employee’s “pregnancy,” as well as her “childbirth” and “related medical condition[s],” as long as the accommodation enables her to perform her position’s essential functions.
And a bit more than two months later, on April 1, 2014, the New York City Earned Sick Time Act will require NYC businesses that employ 20 or more workers to provide employees with up to 40 hours of paid sick leave every year. Implementation for NYC companies that employ between 15 and 20 workers is delayed until October 2015.
Administrative Regulations Take Center Stage
On November 18, 2013, New York became the 15th state to partner with the United States Department of Labor to combat workplace misclassifications of employees as independent contractors. Over the next few years, employers statewide can, consequently, expect heightened scrutiny, from both federal and state regulators, regarding the use of appropriate classifications.
And beyond the DOL’s misclassification initiative, employers should brace for the implementation of regulations mandating stricter compliance with the state’s unemployment insurance compensation system. As we more fully detailed here, the Unemployment Insurance Integrity Act, passed in 2011, required that all states adopt measures, on or before October 21, 2013, to implement and enforce its provisions. A bill signed by Governor Andrew Cuomo last March more than complies with this directive. Specifically, employers must now respond to an initial claim for unemployment benefits by the date specified in the notice, with untimely or inadequate responses forgiven only for good cause. As a corollary, the new law provides that an employer who responds tardily or insufficiently to the DOL will not be relieved from charges to its account resulting from an overpayment of benefits, even where the claimant is ultimately found ineligible for benefits or was overpaid.
And, effective January 1, 2014, a departed employee is precluded by law from receiving unemployment benefits for any week in which s/he receives severance pay greater than the maximum benefit rate, with lump sum severance payments allocated on a weekly basis. A claimant, however, will remain eligible for unemployment benefits where s/he gets the severance pay at least 30 days after the last day of employment. Employers should therefore review and revise, as appropriate, the unemployment compensation-related provisions of their severance proposals and agreements.
Finally Settling The Need To Pay “Unpaid” Interns?
Later in 2014, the Second Circuit Court of Appeals will rule on dueling appeals regarding the use of unpaid interns in the workplace and what circumstances, if any, require employers to pay interns. In ruling, the Second Circuit should clarify whether and how much deference should be given to United States Department of Labor regulations governing intern classification. According to the DOL, an intern must be classified as an employee unless the employment relationship meets each of the following six criteria: (1) the internship is similar to training given in an educational environment; (2) the internship experience is for the benefit of the intern; (3) the intern does not displace regular employees; (4) the employer derives no immediate advantage from the intern’s activities; (5) the intern is not necessarily entitled to a job at the conclusion of the internship; and (6) the employer and the intern understand that the intern is not entitled to wages.
The Second Circuit’s highly anticipated ruling should significantly impact the future structure and use of internship programs.
Keep Your Eye On Proposed Legislation
Tangentially related to the Second Circuit’s impending ruling, the New York State Legislature will continue to ponder a bill to make it illegal to subject an unpaid intern to unlawful discrimination or harassment. The proposed regulation stems from a federal court decision, issued in early October 2013, ruling that interns, because they do not receive compensation, have no right to relief under the New York City Human Rights Law for workplace discrimination and harassment.
In 2014, anticipate a heavy push for New York to become the first state to outlaw workplace bullying. Proposed legislation is already pending, so this will be a hot-button issue in Albany. If adopted, the bill will have a major impact on workplace discourse and dialogue, and may spur litigation over otherwise trivial workplace slights.
Finally, both state and city legislators are mulling legislation to completely prohibit employers from using information in a job applicant’s or employee’s credit report in reaching hiring and other employment decisions. The state bill, termed the “Credit Privacy in Employment Act,” has already passed the Assembly and is set for debate by the Senate in January 2014.
What Does This Mean For My Company?
New York employers can and indeed should expect a bevy of changes over the next year. From the use of unpaid labor to paid sick leave to workplace bullying, the New York employment law landscape remains in flux and is as dynamic as ever. Employers should therefore consult with experienced counsel immediately to discuss these issues and prepare a cogent plan of action to face them, head-on.
Be sure that this is a New Year’s resolution that you actually keep!
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