Reminder for NYC Employers: Workers Can Start Using Accrued Paid Sick Leave July 30

As we have previously discussed here and here, the New York City Earned Sick Time Act took effect April 1, 2014, requiring employers with five or more workers to provide paid sick leave to all employees who perform more than 80 hours of work in NYC in a calendar year. Employers with fewer than five workers are required to provide comparable unpaid sick leave benefits. Now, almost four months after the law took effect, employers are reminded that all workers who were employed as of April 1 may begin using accrued sick leave, whether paid or unpaid, on July 30, 2014. Employees hired after April 1 may begin using accrued sick leave 120 calendar days after the start of employment.

Employers are also again reminded that they must distribute the requisite Notice of Employee Rights to all new hires upon commencement of employment. Notices must be provided in both English and, if made available by the Department of Consumer Affairs, the employee’s primary language. More information about the Act’s requirements, and copies of the Notice in a multitude of dialects, can be found here.

Flexible Working For All

This post was written by Joanna Powis.

From 30 June 2014, the statutory right to request flexible working was extended to all employees with 26 weeks’ continuous service. The right was previously limited to employees with caring responsibilities.

It is important to remember that the rules are limited to a right to make a flexible working request. Prior to 30 June 2014, employers had a broad discretion to reject a request for legitimate business reasons. We examine below whether this is still the case. We also look at how the flexible working request procedure has changed and some tricky issues that may arise as a result of employers receiving more flexible working requests.

Simplified procedure

The good news for employers is that the procedure that needs to be followed when dealing with a flexible working request is far less prescriptive under the new legislation. The complex statutory procedure has been abolished and instead, employers are required to comply with the ACAS Code of Practice – Handling in a Reasonable Manner Requests to Work Flexibly. ACAS has also produced guidance which supplements the Code.

In summary, the Code provides that once the employee has made a written request, the employer has three months to consider it, discuss it with the employee and notify them of the decision and, if the request is rejected, give the employee the right to appeal. Employees should be allowed to be accompanied to any meetings.

There is no longer a requirement on the employer to explain the reasoning behind its decision, but it is still advisable to do so, not least because it may avoid an appeal and/or a subsequent claim. Remember that in order to avoid a discrimination claim, the reasoning should be unrelated to protected characteristics (e.g. age, disability, sex).

Refusing a request

The position remains that an employer can only refuse a request to work flexibly on one or more of the eight specific (but relatively broad) grounds set out below:

  • The burden of additional costs
  • Detrimental effect on ability to meet customer demand
  • Inability to reorganise work among existing staff
  • Inability to recruit additional staff
  • Detrimental impact on quality
  • Detrimental impact on performance
  • Insufficiency of work during the periods the employee proposes to work, or
  • Planned structural changes

Under the legislation (which remains the same), the test of whether or not one of the specific grounds applies is a subjective one. If the employer considers that one of the grounds applies, then the test is satisfied. However, the new Code confuses matters. The Code imposes an obligation on employers to act reasonably in making a decision whether to accept a flexible working request. This obligation appears to apply to the decision itself, as well as to the procedure followed in coming to the decision – meaning that employees could argue that the Code introduces an element of objectivity to the test.

For example, the Code provides that requests should be considered carefully by weighing up the benefits of the requested changes against any adverse business impact. Employers who are unable to demonstrate they have gone through this thought process leave themselves open to claims that they have not dealt with the request reasonably. In the future, we are likely to see more claims challenging the basis of the decision itself.

Prioritising requests

It remains to be seen whether employers will be flooded with flexible working requests as a result of the recent changes. Many employers have considered flexible working requests outside of the statutory scheme for some time. However, it can probably be assumed that, at least as a result of the publicity generated by the changes, there will be some increase for employers. A tricky question is how employers should deal with multiple requests. For example, can an employer give priority to requests it considers are made for more ‘worthwhile’ reasons (e.g. how do you prioritise a request for a later start time to accommodate childcare arrangements over the same request to accommodate reduced commuting costs)? What can an employer do if it grants a request then a couple of months later receives another request which it considers ‘more deserving’?

The ACAS guidance explains that employers faced with multiple requests are not required to make value judgments about the most deserving, but there is nothing preventing an employer from doing so (provided it does not act in a discriminatory way). Indeed, in order to properly consider the benefits of the requested change to each employee (as expressly required by the Code), employers will arguably have to apply some form of value judgment. There are some circumstances in which it might be legitimate to apply value judgments to prioritise one request over another (e.g. prioritising a request made by a disabled employee, the refusal of which could amount to a failure to make reasonable adjustments), but it should be avoided where possible.

The Guidance says that requests should be considered in the order in which they are received. This isn’t much help to the employer who receives a request it can no longer accommodate because it previously granted a ‘less deserving’ request. In this situation, the best option would be to speak to affected employees about the issue and see if a compromise can be reached. Failing that, the Code is clear that the correct approach is “first come, first served”.

Take aways

  • Check whether your flexible working policy needs updating - it probably does. References to the old prescriptive procedural requirements should be removed. Consider whether to set out how multiple requests will be dealt with.
  • Make sure you follow the Code and Guidance when dealing with new flexible working requests. Remember that the old procedural rules still apply to flexible working requests made prior to 30 June 2014.
  • If you are not sure whether a request can be accommodated, consider trialling the request, or a variation of the request, over a certain period. Make sure details of the trial period, and how it will end, are properly documented.
  • Remember that the main risk of refusing a request is not usually the maximum compensation payable for failure to comply with the flexible working regime (eight weeks’ pay currently capped at £464 per week), but a claim for discrimination with potentially unlimited compensation.
  • Take a consistent approach to dealing with requests to reduce the risk of discrimination claims.

Selecting a Retirement Age: Is 65 just a number?

This post was written by Eleanor J. Winslet.

Summary

The EAT has issued a decision in the well-known and long-running retirement case of Seldon v Clarkson Wright and Jakes, which dealt with the question:

Was the retirement age of 65 PROPORTIONATE to achieve the firm’s stated aims of retention of staff and workforce planning?

Following the removal of the default retirement age, employers need to justify any retirement policy in place by showing that it is a proportionate means of achieving a legitimate aim.  In Seldon, the EAT has found that it was proportionate for the firm to select a retirement age of 65, even though using a higher age could have a less discriminatory effect.  The reasoning in this case may be useful to employers setting a retirement age, or considering other policies which may be potentially age-discriminatory (e.g. benefits policies).  

We discuss this in more detail and also consider essential points when deciding on a retirement age.

Background

More than seven years ago, Mr Seldon raised a claim of age discrimination because he had to retire from the solicitors’ practice that he worked for at age 65.  The firm’s defence was that having a retirement age of 65 in place was a “proportionate means of achieving a legitimate aim” and therefore allowable under the legislation in place at that time.  Protracted litigation ensued, and the Supreme Court eventually decided that the firm had legitimate aims in place, namely:

  • Retention of Staff – i.e. ensuring that associates were given the opportunity to become partners rather than leave the firm
  • Workforce Planning – having a sense of when vacancies would become available by having a retirement age in place
  • Congeniality – avoiding the awkwardness of having to dismiss a long-standing and senior figure for performance reasons (NB: this aim was not ultimately relied on by the firm as justification for the age chosen)

Having reached a decision on one prong of the test for justification, the Employment Tribunal had to decide whether the age of 65 itself was proportionate.  The Tribunal found against Mr Seldon.  It stressed that in this case a balance needed to be achieved between the interests of the practice, the partners, and the associates who aspire to partnership.  It found that there was a narrow range of ages that would be proportionate to achieve the two aims of retention of staff and workforce planning, but that 65 was within this range.  Mr Seldon appealed again to the EAT.

The EAT found that the age of 65 was proportionate.

It noted that determining whether a particular age is proportionate is fact-sensitive to the particular business, but in this case the Tribunal had considered this appropriately. 

One of the arguments raised by Mr Seldon was that the given age of 65 could not be proportionate because it was possible for another age to have been used (e.g. 68 or 70), which would have met the legitimate aims just as well.

The EAT confirmed, however, that the fact that it would be less discriminatory for the firm to have chosen another age did not prevent the age of 65 from being appropriate in this case.  If this were the case, it would be impossible for a given age to be proportionate as there would always be a less discriminatory choice.

How does this decision help employers?

While it may be challenging to decide on a specific retirement age for a given business, it is helpful to note that the precise age is not completely critical. It was remarked throughout the case that a retirement age needs to be decided on the basis of the needs of the particular organisation.  If, for example, the firm had no trouble retaining associates regardless of partners being retired or not, this may well have undermined the legitimate aim of workforce retention. 

The EAT repeated the list of factors used by the ET when weighing up whether a retirement age of 65 was appropriate in this case, which may be useful when thinking about justifying a retirement age:

  • The partners had consented to the retirement age of 65 in the partnership deed where it was set out
  • The retirement age for partners was the same as for other staff
  • The State Pension Age
  • At the time, the default retirement age was 65
  • There had been a number of European cases where a retirement age of 65 was upheld

The Tribunal also considered that the congeniality aim, while not contested, might be a factor to consider when looking at proportionality for the other two aims.

It is possible that the ET and EAT may have reached a different decision if Mr Seldon had been retired following the removal of the default retirement age (of 65), which provided a useful benchmark.  However, this was not the only factor looked at and the case suggests that an age of 65 may well be justifiable if this appears to be appropriate for the given organisation. 

Key points when thinking about setting a retirement age

  • Think about what legitimate aims are relevant to your organisation: e.g. is there a need to incentivise junior staff to stay with the employer?
  • Give careful consideration to which age you will set by reference to the particular legitimate aim: e.g. for succession planning, the higher the retirement age the higher the detriment for junior staff, the lower the age the higher the determent for potential retirees.  The respective needs must be balanced as far as possible.
  • Document any deliberations about possible legitimate aims and the rationale for selecting a certain age, but bear in mind that these will be discloseable in the event of litigation.
  • Make sure that you act consistently whether or not you decide to put a policy in place.

Obama's NLRB Recess Appointments Deemed Unconstitutional: >100 Decisions Impacted

Amanda D. Haverstick and Joel S. Barras have posted a new article on Forbes.com.

In a ruling issued today, a unanimous U.S. Supreme Court decided that President Obama’s January 4, 2012, recess appointments of three National Labor Relations Board (NLRB or Board) members violated the Constitution.  The ruling is of great significance:  it invalidates every single decision—of which there are more than a hundred—that the Board handed down from January 2012 through summer 2013 (the period the Board included the three Presidential appointees, before he appointed replacement members that the Senate properly confirmed).

To read the full article, please visit Forbes.com.

New York Discards Annual Wage Notice, But Adds Other Worker Wage Protections

This post was written by Cindy S. Minniti and Mark S. Goldstein.

Starting in 2015, New York employers will no longer have to provide annual wage notices to existing employees – assuming Governor Andrew Cuomo signs a bill passed on June 19, 2014 (Bill) by the New York State (NYS) Assembly and Senate, as he is expected to do.  Elimination of the annual wage notice (Wage Notice) requirement will come as welcome news for employers, but it is also accompanied by related perks for employees and increased penalties for repeat offenders of the NYS wage and hour laws.

The annual Wage Notice duty was imposed on employers as part of the Wage Theft Prevention Act (WTPA or Act), passed in 2010 to remedy supposed abuses of the state’s wage payment laws.  As enacted, the WTPA required, among other things, that, between January 1 and February 1 of each year, all NYS employers provide written notice to existing employees detailing certain wage-related information, including the basis for the employee’s pay rate, whether the employer intended to claim an allowance, the employee’s regular payday, and identifying information about the employer.  The Bill eliminates this cumbersome requirement.  Pundits expect Gov. Cuomo to approve the Bill in the coming days.

But the remaining WTPA provisions remain intact, and the Bill actually bolsters several other wage-related safeguards.  For one, the Bill increases the penalties on employers that fail to distribute a Wage Notice to new employees.  The original Act authorized the NYS Department of Labor (DOL) to levy a $50 penalty – per workweek, per worker – on an employer that failed to provide a proper Wage Notice.  As amended by the Bill, the Act now authorizes the DOL to impose a $50 penalty – per workday, per worker – on an employer that fails to provide a proper Wage Notice within the first 10 days of employment, up to a maximum of $5,000.  Newly hired employees may also now recoup up to $5,000 – doubled from that permitted in the original incarnation of the Act – from employers that fail to distribute WTPA-compliant Wage Notices (although an employer may still evade such liability by proving that it made complete and timely payment of all wages to the affected employee(s)).

Template, DOL-approved Wage Notice forms for distribution to new hires, in a multitude of languages, can be found here.

The Bill also proposes other changes to protect employees against wage theft, including:

  • An amendment to the New York Limited Liability Company Law specifying that the 10 members of an LLC with the largest ownership interests may be held personally liable for any unpaid wages.  This provision mirrors a similar provision in the Business Corporation Law, pursuant to which employees may recover unpaid compensation from the 10 largest shareholders of a corporation.
  • New successor employer liability, whereby an entity similar in operation and ownership to an entity that previously violated the Labor Law will be held accountable for the acts and liabilities of its predecessor.  This provision effectively precludes companies from re structuring an entity, or dissolving and creating a new entity with the same business purpose, to sidestep wage-related liability.
  • A provision requiring an employer to report specific employee and wage data to the DOL (to be published on the DOL’s website), in cases where the DOL issues an order directing payment of wages to an employer who has previously been found in violation of the Labor Law, or whose violation is deemed willful or egregious.
  • A provision doubling the maximum civil penalty, from $10,000 to $20,000, for employers that commit a second Labor Law violation within a six-year period.
  • A requirement that construction contractors and sub-contractors that violate the Labor Law must notify all their employees of the violation(s).
  • A provision clarifying that the DOL’s investigation of an administrative wage and hour complaint will automatically cover the six-year period preceding such complaint, unless the DOL states otherwise.
  • The creation of the Wage Theft Prevention Enforcement Account to allocate monies collected from certain wage and hour violations.

What Does This Mean for My Company?

The Bill presents a mixed bag for employers.  While eradication of the annual Wage Notice requirement is a boon, employers must now, moreso than ever, ensure that new hires receive a Wage Notice in a timely fashion.  And the amendment to the Limited Liability Company Law expands the universe of individuals who can be held personally liable for unpaid wages or other compensation.  Given that the Bill takes effect a mere 60 days after Gov. Cuomo signs it into law, employers should consult with counsel immediately about their new wage-related obligations and any necessary revisions to company policies and practices.
 

New Jersey Employers Can Now Contractually Shorten Limitations Periods for Employee Lawsuits and Set Other Procedural Terms for Resolving Disputes

This post was written by John T. McDonald and Don A. Innamorato.  

On June 19, 2014, the Appellate Division of the Superior Court of New Jersey affirmed an employer’s right to control the manner for resolving employment disputes, including permitting an employer to shorten the applicable statute of limitations for state law wrongful termination claims, such as claims under the NJLAD, to six months.

In Rodriguez v. Raymours Furniture Company, Inc., No. A-4329-12T3 (N.J. Super. App. Div. June 19, 2014), a discharged employee brought claims for disability discrimination in violation of the New Jersey Law Against Discrimination (NJLAD) and retaliation for filing a workers compensation claim in violation of common law nine months after he was terminated.  While the statutory limitations period for both of these claims is two years, the employer had included language in the employment application shortening the limitations period to six months.

The two-page application contained the following language in all capitals, just above the signature:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH [THE DEFENDANT] MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT.  I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.

The plaintiff signed and dated the application and he was subsequently hired.  Based on these facts, the employer argued that the plaintiff’s claims should be dismissed because he previously agreed to and failed to meet a six-month limitations period.  The court agreed.

Rejecting the plaintiff’s public policy argument, the court noted that it is already established law that jury waivers and arbitration agreements are enforceable in the employment context, despite the effect of economic pressure on an employee seeking a job on relative bargaining power.  See e.g., Young v. Prudential Ins. Co. of Am., Inc., 297 N.J. Super. 605 (App. Div. 1997); Martindale v. Sandvik Inc., 173 N.J. 76 (2002).  Accordingly, there was no basis to disallow a contractual limitations period, provided it was reasonable.  Given the fact that the NJLAD allowed employees a period of six months to elect whether to bring their discrimination claims before the New Jersey Division of Civil Rights rather than in court, the Appellate Division was “hard pressed” to find the limitations period unreasonable. In addition, the court found determinative the fact that the employment application was simply written and of minimal length, and the operative language was conspicuous as it was in all capitals, right above the signature.

Employers should be aware of the distinction between New Jersey laws and federal anti-discrimination laws in this context.  Unlike New Jersey anti-discrimination laws, federal laws such as the Americans with Disabilities Act and Title VII do not permit an employee to file a claim in court without first filing a complaint with the Equal Employment Opportunity Commission (EEOC).  The court noted that a contractual limitation (i.e., six months) could not be enforced as to federal discrimination claims because it would abrogate the EEOC’s exclusive jurisdictional period.

As the volume of employment litigation continues to rise, employers should continue to evaluate contractual provisions that may assist in controlling the costs associated with defending such claims.  Arbitration provisions, jury waivers, and now reducing certain limitations periods are all tools that employers should consider. 

Health Care Employers Take Note: New Weapons Are Available When Defending False Claims Act Suits

Jean F. Kuei and Michael R. Kleinmann have posted a new article on Forbes.com

The qui tam provisions of the False Claims Act (FCA) allow employees to bring whistleblower claims, on behalf of the government, against employers for alleged fraudulent acts harmful to the government.  A carrot encouraging whistleblowers to bring these suits is that they may share in a substantial part of any government recovery.  Qui tam suits of this type have grown increasingly popular.  They have been particularly troublesome for health care industry employers, largely because much of the evidence needed to defend against the suits is confidential patient health care information (PHI) protected by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  Fortunately for employers, a recent line of cases permits employer counterclaims against whistleblowers who do not properly protect confidential employer information.  Employers may even recover attorneys’ fees associated with such counterclaims.

To read the full article, please visit Forbes.com.

Proliferating State & Local Pregnancy Accommodation Laws Make Modifying ADA/FMLA Procedures A Must For Most Employers

Amanda D. Haverstick has posted a new article on Forbes.com.

A recent explosion in state and local workplace pregnancy protections has dramatically increased the number of employers required to reasonably accommodate pregnant employees.  Fourteen jurisdictions now impose such a duty, with many going far beyond that required by any federal law.  Employers need to review and/or modify their existing disability and leave programs to account for these new requirements. 

To read the full article, please visit Forbes.com.

Reminder for NYC Employers: Intern Workplace Protections Take Effect June 14

Many businesses are already familiar with at least some of the employment-related risks associated with implementing and operating unpaid internship programs. As we detailed here, in light of guidance promulgated by the U.S. Department of Labor slightly more than four years ago, such programs now implicate and may trigger a host of wage and hour concerns.

On top of these burgeoning concerns, on June 14, a landmark New York City law – designed to protect interns from illicit workplace misconduct – takes effect. As we more fully detailed here, the impending law, ratified in April by Mayor Bill de Blasio, outlaws unlawful discrimination, harassment, and retaliation against unpaid interns based upon such interns' membership in one of the many protected classes enumerated by the New York City Human Rights Law. Akin to other provisions of the city's anti-discrimination ordinance, the law applies to all employers with four or more employees.

Employers should thus consult with counsel about the new law and, for those organizations that operate internship programs, any necessary revisions to handbooks and personnel policies.

Reminder for NYC Employers: Pregnancy Rights Notices Must Be Distributed to All Existing Employees by May 30

This post was written by Mark S. Goldstein.

Slightly less than four months ago, on January 30, 2014, an amendment to the already-expansive New York City Human Rights Law (“NYCHRL”) took effect, requiring NYC employers to provide reasonable accommodations due to an employee’s pregnancy, childbirth, or related medical condition. Such accommodations may include, among other things, bathroom breaks, leaves of absence for childbirth-related disabilities, breaks to facilitate increased water intake, periodic rest for those who stand for long periods, and assistance with manual labor.

Employers are reminded that they must distribute, to all existing employees by May 30, 2014 (and to all new hires upon commencement of employment), written notice of the right to be free from discrimination on the basis of pregnancy, childbirth, or a related medical condition. In order to facilitate distribution of the notice, the New York City Commission on Human Rights, the agency tasked with enforcing the NYCHRL, has created a poster and information card summarizing such rights. And because neither the law nor the Commission specifies the precise form that the notice should take, employers are encouraged to disseminate both the poster and the information card in order to satisfy their obligations. Copies of the poster and information card, in a multitude of dialects, can be found here and here, respectively. Although employers may, but are not required, to display the poster and information card in a visible location in the workplace, this alone will not satisfy the law’s notice provision.

Employers should therefore consult with counsel immediately about the new law, attendant obligations, and any necessary revisions to company policies.
 

IT'S THE TIME OF THE SEASON (TO EXAMINE YOUR UNPAID INTERNSHIP PROGRAM)

Cindy Schmitt Minniti and Mark S. Goldstein have posted a new article on Forbes.com.

Summer is coming and, with it, barbeques, pool parties, and, for many high school and college students, unpaid internships. Although a long-standing staple of the American business landscape, unpaid internship programs have come under intense scrutiny in the past several years from pundits and practitioners who claim that interns should be treated and, more importantly, paid like traditional employees.

To read the full article, please visit Forbes.com.

WHEN THE WHISTLE BLOWS... Recent Developments in Whistleblower Retaliation Law and How Employers Can Guard Against Costly Claims

Sara A. Begley and Amanda D. Haverstick have posted a new article on Forbes.com.

The past year has seen significant developments in the whistleblower arena. Employee retaliation claims have spiked, employers have paid out large sums, and regulators have stepped up enforcement efforts. Employers need to understand the legal provisions that protect their whistleblowing employees and take steps to shield themselves from retaliation claims.

To read the full article, please visit Forbes.com.

NLRB Ruling Could Allow Unions to Usurp Company Email Accounts

Joel S. Barras and Samantha M. Kagan have posted a new article on Forbes.com.

If you think that your company’s email accounts are the company’s to control, think again!  The NLRB has announced that it will decide whether employers must permit employees to use workplace email in their collective action to improve wages, hours and working conditions – possibly handing unions a major weapon in their efforts to unionize.  The case, Purple Communications, Inc., is attached here.  Interested parties are invited to submit briefs by June 16, 2014.

To read the full article, please visit Forbes.com.

OSHA Establishes Protocols For Dodd-Frank Whistleblowers - Employers Should Take Note And Prepare Immediately

The Occupational Safety & Health Administration has issued a long-awaited rule governing the administration of employee whistleblower complaints under the Consumer Financial Protection Act of 2010 and related consumer protection laws. The rule clarifies the protocol with which parties to a whistleblower proceeding must comply, and establishes the framework for challenging the agency’s findings and administrative orders. 

To read the full article, please visit forbes.com.

Reminder for NYC Employers: Paid Sick Leave Notices Must Be Provided to Existing Employees by May 1

With the New York City Earned Sick Time Act almost one month old, employers are reminded that they must distribute the requisite Notice of Employee Rights to all existing employees by May 1, 2014 (and to all new hires upon commencement of employment). Notices must be provided in both English and, if made available by the Department of Consumer Affairs, the employee’s primary language. Employers may use any delivery method that reasonably ensures receipt of the Notice. More information about the Act’s requirements, and a copy of the Notice in a multitude of dialects, can be found here.