Crossing your T’s and Dotting your I’s: Employers’ Compliance with Recent Labor and Employment Law Developments

by Stephanie Messas, 10 09 2014

As an employer, the rapidly evolving host of state and federal laws that regulate a company’s relationship with its employees may seem overwhelming. Here is a brief summary intended to acquaint you, the employer, with a few major developments in federal and New York State and city employment and labor laws.

1. Deductions from Employee Wages

The Law: The Fair Labor Standards Act (the “FLSA”) applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. It governs wage and hour laws of nonexempt employees (while the FLSA governs both exempt and nonexempt employees, nonexempt are entitled to overtime pay. Exempt employees are not. Most employees covered by the FLSA are nonexempt but not all). It requires you, the employer, to pay nonexempt employees at least the federal minimum wage and overtime for an employee that works more than 40 hours in a week. Employees that are exempt from the law are not entitled to overtime or the federal minimum wage, but employers cannot improperly dock their pay either.

Permissible Deductions: The FLSA allows for some permissible deductions such as when an exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability or for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness.

Impermissible Deductions: Employers cannot deduct en exempt employee’s wage because of the “quality or quantity” of the work. This means that an exempt employee must receive a full weekly salary when any work is performed during the week (the number of hours or days worked is immaterial) and when work is unavailable but the employee is ready, available, and able to work.

New York Labor Law: Section 193 of the New York Labor Law (“Section 193”) was amended to expand the types of wage deductions that are permitted under New York State law. Section 193 now expressly permits employers to make wage deductions to recover overpayment and advances in certain circumstances, pending regulatory guidance from the New York State Department of Labor.

Bottom Line: Employers should not make improper deductions, even to exempt employees as you will lose the exemption if the company has an “actual practice” of making improper deductions from salary. You should consult counsel if considering making any wage deductions permitted by Section 193, and list any impermissible deductions in the Company’s employee handbook.

2. Healthcare Exchange Notice Requirement

The Law: The Patient Protection and Affordable Care Act (the “ACA”) requires employers of all sizes to provide their employees a written (email or hardcopy) notice of the availability of coverage, whether the employer provides coverage or not, through public health insurance exchanges.

The Notice must include – A description of the existence of, and services provided by, public exchanges; – The employee’s possible eligibility for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements; – Information regarding possible loss of employer contribution toward the cost of employer-provided coverage if employees purchase a qualified health plan through the exchange; and – Contact information for customer service resources within the exchange.

Bottom Line: Many employers neglect to distribute such notices because the ACA does not appear to impose any separate penalty for ignoring the requirement. However, lack of explicit penalties does not translate into a lack of consequences and it is recommended that all employers comply with such requirement.

3. New York Paid Sick Leave Act

The Law: The New York City Earned Sick Time Act (the “ESTA”) which came into effect on April 1, 2014, requires most private employers to provide up to 40 hours of paid or unpaid sick leave per year to employees working in New York City which they can use for the care and treatment of themselves or a family member. By law, employers who must provide sick leave must give written notice to new employees when they begin employment and should have provided such notice to existing employees by May 1, 2014.

Application of the ESTA: – ESTA covers employers with five (5) or more employees who are hired to work more than eighty (80) hours a calendar year (employers with less than 5 employees must provide unpaid leave).
-Upon the date of hire, covered employees are entitled to begin accruing sick leave at a rate of one hour for every 30 hours worked, with a maximum of five days (40 hours) of sick leave per calendar year.
-Employers are not obligated to allow use of the sick leave until after 120 days following the date of hire.
-Employees cannot lose accrued sick leave which carries over to the next year; however, such carried over accrued sick time does not add to additional sick leave days. The employee simply does not need to accrue sick leave and can take his or her time when needed. – Employers who give at least five (5) days of part time off (sick leave and/or vacation) does not need to worry about the carry over policy when an employee has in effect used such part time off in any given year. – “Family member” includes grandparents, grandchildren and siblings (along with spouses and children), although the employee must describe the reasons for the sick leave. – ESTA imposes a notice and record keeping requirements on employers.

Bottom Line: Employers who violate the ESTA may be subject to monetary damages, penalties and equitable relief. It is of utmost importance that employers know the law, have a system for accurately calculating accrued sick leave and inform their employees of the same.

4. The New York City Human Rights Law

The Law: The New York City Human Rights Law (the “NYCHRL”) protects employees from discrimination based on traits (such as race) and retaliation for having engaged in protected activity (such as making a complaint of discrimination).

Recent Legal Development: In the case of Mihalik v. Credit Agricole Cheuvreux North America, Inc ., the Second Circuit Court of Appeals confirmed a broad construction of the NYCHRL holding that while certain conduct may not be actionable under federal or state law, that very same conduct may lead to a viable claim under the more lenient standards of the NYCHRL. It may still be difficult for employees to prove an actionable discrimination claim but the case makes it more challenging for employers to obtain summary judgment dismissing claims asserted under the NYCHRL.

Bottom Line: Companies should have detailed, written anti-discrimination policies (acknowledged by all employees in writing) in place; annual recorded training sessions of all supervisors and employees alike regarding compliance with such policies; and an efficient reporting system for inappropriate workplace behavior, including but not limited to, responsible individuals to whom to report and written records of any such complaint.

5. Social Media Policy

Background: If a company has more than a few employees, an employee handbook is a necessary reference tool not only for employees to quickly obtain their workplace policies but for employers as it provides some protection.

Recent Legal Development: The explosion of social media is hardly news to either employers and/or employees. Indeed, various recent rulings, including one by the National Labor Relations Board, attempt to define the legal boundaries between employees’ rights to express themselves (some activities are protected by federal labor laws and blanket restrictions are illegal) and employers’ right to protect their confidential information, online image and presence and/or reputation. However, this area of the law is still murky at best thus prompting companies to have written comprehensive social media policies (which should be included in employee handbooks), and in some industries, thorough training regarding the content and information which employees may share online. Such policies should include at the very least: (i) use of personal social media at work (Facebook, Twitter, Instagram); (ii) use of personal social media about the employer; and (iii) who retains control of the company’s online social media accounts (including passwords).

Bottom Line: Social media can be a valuable marketing and professional tool to recruit and develop competent teams, connect employees, encourage team building, and increase productivity. However, it is in employers’ best interest to develop clear and specific parameters that best protect the company and are in compliance with federal and state laws.

Conclusion

While this article is not intended to offer a detailed exposition of the statutes and regulations themselves, if your business has employees or is considering hiring employees, we would be happy to answer any questions regarding these developments to help your business comply with these laws and/or provide you with sample notices, authoritative information and references to fuller descriptions on these statutes and regulations.

Disclaimer

No Legal Advice or Attorney-Client Relationship

The information and materials available in this article are for informational purposes only and are not intended to and do not constitute legal advice, a solicitation for the formation of an attorney-client relationship, or the creation of an attorney-client relationship. The information provided may not apply to your particular facts or circumstances; therefore, you should seek legal counsel prior to relying on any information that may be found in this article. Furthermore, information provided in the article may not reflect the most recent and/or all developments in the law.

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