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January 27, 2014

Curing Common Misconceptions about COBRA

By Kristine Sova
www.sovalaw.com

Confusion abounds whenever the subject of COBRA arises, especially with smaller employers and owner-operated businesses. The most common misconception I've encountered is that an eligible employee simply receives COBRA benefits because he/she is eligible without the employer (or someone designated by the employer) having to actually facilitate COBRA benefits. This is simply wrong.

COBRA isn't a complicated law, but it doesn't get the attention it deserves, particularly from smaller employers, who probably (and logically) assume they don't have any continuing obligations to employees when they're parting ways at the end of the employment relationship.

To correct this and other misconceptions, some COBRA basics are in order.

What is COBRA?

COBRA (short for the Consolidated Omnibus Budget Reconciliation Act) is a federal law that gives workers and their families who lose their group health benefits under certain circumstances the right to choose to continue their health insurance benefits for a limited period of time. What are those circumstances? Voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. In COBRA speak, these are known as "qualifying events."

Does COBRA apply to all employers?

No, COBRA does not apply to all employers. COBRA generally only applies to group health plans of employers with 20 or more employees on more than half of its typical business days in the prior calendar year. Both full and part-time employees are counted to determine whether a plan (and thus the employer) is subject to COBRA. Each part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.
The above applies to the federal law, COBRA. Some states have their own version of COBRA, which usually apply to group health plans of employers with fewer than 20 employees.

Are all employees eligible for COBRA?

Not all employees are eligible for COBRA. To be eligible for COBRA coverage, the employee must have been enrolled in his/her employer's health plan when he/she worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his/her health care coverage.

What are COBRA benefits?

The benefit provided by COBRA is the opportunity for an employee (and his/her covered family) to temporarily extend health coverage (called continuation coverage) at group rates when coverage under the plan would otherwise end. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since employers usually pay a part of the premium for active employees while COBRA participants generally pay the entire premium for coverage (and sometimes a 2% administrative charge). COBRA coverage is ordinarily less expensive, though, than individual health coverage.

COBRA benefits are generally available for a maximum of 18 months, although certain qualifying events, or a second qualifying event during the initial period of COBRA coverage, may extend COBRA benefits by up to another 18 months.
Who is responsible for notifying an employee of COBRA coverage when the employee is no longer eligible for health coverage? (This is where most small businesses and owner-operated businesses trip up, so take note.)

Short answer: Employers and "plan administrators," or just the employers, where no "plan administrator" has been designated.

Long answer: When an employee is no longer eligible for health coverage, the employer has to provide the employee with a specific notice regarding his/her rights to COBRA continuation benefits.

Employers must also notify their "plan administrator" within 30 days after an employee's termination or after a reduction in hours that causes an employee to lose health benefits. The "plan administrator" is the person (or entity) responsible for the management of the plan, and is specifically designated by the terms of the plan. If the plan does not make such a designation, the employer (as plan sponsor) is generally the plan administrator.

The plan administrator (or employer if no "plan administrator" has been designated) must then provide notice to the employee of his/her right to elect COBRA coverage within 14 days after the administrator (or employer) has received notice from the employer.

Is that all there is to COBRA?

COBRA doesn't end here. COBRA sets forth a number of other requirements relating to notifications, timing of elections, and payment of premiums, among other topics, all of which may place further obligations on employers.

February 13, 2014

How Employers Should Handle Workplace Romances

By KRISTINE A. SOVA
sovalaw.com

With Valentine's Day approaching, and workplace romance as pervasive as ever, what better topic for this week's post than options for employers seeking to handle workplace romances between employees?

The Bad and the Ugly of Workplace Romance

When a workplace romance ends, it can have all kinds of repercussions, regardless of whether it ends on a sour note or on a seemingly good note. A dumped co-worker might attempt to woo back his/her former lover, and those attempts could be viewed as contributing to a hostile work environment if the attention is no longer welcome.

Worse is when the relationship involves a supervisor or a higher-ranking colleague. In those instances, the subordinate or lower-ranking employee could claim that the romantic advances were never welcome, and that any "consent" to the relationship was the result of coercion, fear of being fired or demoted, or in response to a promised promotion or other preferential treatment.

That's not all. Concerns regarding workplace romance extend beyond the demise of a relationship, and include issues like: public displays of affection; inappropriate sharing of confidential company information between romantic partners; inappropriate gossiping among co-workers; less productivity from the couple and their colleagues; claims of favoritism; poor employee morale; and damage to the business because the pairing may be seen as unprofessional.

With this much at stake, what options do employers have?

Workplace Romance Policy

One option is a workplace romance policy. Some workplace romance policies ban workplace dating entirely, while some only prohibit supervisors from dating people who report directly to them. Others also forbid romances between employees with significantly different rank.

Regardless of what is prohibited by a workplace romance policy, the policy should state that romantic relationships between co-workers are not the company's business unless the office romance affects the workplace.

Employers should also keep in mind that workplace romance policies can sometimes backfire. There is always the possibility that employees will date and keep it a secret. Furthermore, if harassment does occur, the victim may not come forward for fear of being disciplined for breach of the workplace romance policy.

Love Contracts

Another option is a "love contract" (or consensual relationship agreement). A love contract is a relationship agreement that, in theory, allows employees to disclose office romances while at the same time insulating employers from liability in the event that the romantic relationship ends.

The terms of love contracts are fairly robust, and typically include terms addressing: the voluntary nature of the couple's relationship; compliance with the employer's anti-discrimination and anti-harassment policies; termination of the relationship; retaliation; workplace behavior; and modification of reporting relationships.

The notion that love contracts help mitigate sexual harassment litigation risks is a big draw for employers. Love contracts, however, do not entirely insulate employers from liability, and the romantic relationships most likely to cause problems for an employer (i.e., affairs) are those in which the participants will be least likely to self-report and sign a love contract. The greater benefit of love contracts is that they help employers maintain a functional office environment, for example, by reminding the couple to behave professionally and securing the couple's agreement to keep public displays of affection out of the workplace.

Employers who ultimately do opt for love contracts must recognize that requiring love contracts is no substitute for having a well-implemented policy against sexual harassment, appropriate training (for all levels of staff and management), and a sound enforcement program. On balance, most employers would probably be better served trying to create a culture of compliance and respect in the workplace than having employees sign contracts.

February 28, 2014

Some of Your Salaried Employees May Be Entitled to Overtime Pay

By Kristine Sova
www.sovalaw.com

Many employers mistakenly believe that overtime pay only applies to hourly workers. The reality is that many salaried employees are also entitled to overtime pay.

Generally speaking, unless employees are considered "exempt," the law requires that any hours worked in excess of 40 per workweek be compensated at a rate of not less than time and one-half of their regular rate of pay. This holds true for employees who receive a salary, provided that they do not fall within one of the available exemptions. The exemptions are defined by federal and state law, and while they apply generally to white-collar workers whose primary functions are executive, administrative, professional, or in other narrowly-defined categories, the standards under federal and state law are not always the same, with the latter usually being stricter.

Two of the most relied-upon exemptions are the administrative and executive exemptions. The requirements for these two exemptions, detailed below, include the requirements under both federal and New York state law.

The Executive Exemption

• The employee must be compensated with a salary that is greater than or equal to $600.00 per week;
• The employee's primary duty must be managing the business/organization, or managing a particular department or other subdivision of the business/organization;
• The employee customarily and regularly direct the work of at least two other full-time employees (or the equivalent);
• The employee's suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees have particular weight; and
• The employee customarily and regularly exercises discretionary powers.

The Administrative Exemption

• The employee must be compensated with a salary that is greater than or equal to $600.00 per week;
• The primary duties of the employee must be office or other non-manual work that relates directly to management or business operations, either to the employer or the employer's customers/clients;
• The employee's primary duties include the exercise of discretion and independent judgment to matters that are significant to the operation of the business/organization; and
• The employee regularly and directly assists an employer or an employee employed in a bona fide executive or administrative capacity; or performs, under only general supervision, work along specialized or technical lines requiring special training, experience or knowledge.

Although these two exemptions are two of the most popular exemptions, the requirements present real hurdles to employers looking to claim these exemptions. Employees who are not properly exempt, even when paid a salary, will be entitled to overtime wages for hours worked over 40 in a workweek.

With wage-and-hour litigation and investigations still at a high, employers should confirm that they are correctly classifying (and paying) their salaried employees. This is particularly important when it comes to salaried employees because damage awards have a tendency to skyrocket based on the inherent circumstances of claims involving salaried employees. Any damage award will be based off of the salary and, for that reason, will result in a higher rate of pay. In addition, most employers do not keep a record of hours worked by their (properly or improperly classified) salaried employees. That fact alone won't preclude a damage award. Rather, in the absence of records, it's highly likely that a damage calculation will be based on the employee's typically inflated recollection of hours worked.

March 25, 2014

Three Things to Consider Before Using a Timecard App

By Kristine Sova
sovalaw.com

There are steps employers can take to reduce the risk that non-exempt employees will assert unpaid wage claims for the time they spend checking and responding to e-mail (and other communications) during what would normally be the employee's personal time (http://sovalaw.com/blog/2013/08/21/yes-you-do-have-to-pay-employees-for-checking-e-mail-outside-of-work/). This post discusses whether a mobile timecard (or timesheet) application is a good way to track the amount of time employees spend on off-site and/or after-hours work communications.

The answer? They can be. Here we highlight three practical and legal considerations for employers thinking about rolling out a timecard app at work.

1. Not All Timecard Apps are Wage-Hour Law Compliant - Federal, state and local laws have different requirements when it comes to hours worked by employees and the recording of those hours of work.

For example, New York Labor Law requires employers to provide certain employees with an uninterrupted meal period at a certain point during their shifts (http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$LAB162$$@TXLAB0162+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=19117366+&TARGET=VIEW), and a second meal period to another group of employees. While nothing in the New York Labor Law's general recordkeeping requirements (http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$LAB195$$@TXLAB0195+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=19117366+&TARGET=VIEW) states that employers must record the actual time that an employee takes a required meal break, the New York State Department of Labor's opinion (http://labor.ny.gov/legal/counsel/pdf/Meal%20Periods%20%28Sec.%20162%29/RO-10-0132%20Meal%20Periods.pdf) is that "a contemporaneous record of the meal period would go a long way towards providing that one was given."

If you're a New York employer, then, you'll want to make sure a timecard app records the start and stop of multiple meal periods if you're required to give them. What you're likely to find, though, is that most timecard apps only record the start and stop time of a single meal period.

2. Not All Timecard Apps are Available on Both Android and iPhone - When you're considering an app's features (and whether those features comply with applicable wage-and-hour laws), also keep in mind that many applications are available only for Android, or iPhone, but not both. If you're looking for an app available on both platforms, this means a smaller pool of apps to select from. If you'd be satisfied with different apps for each platform, this means making sure both applications comply with applicable wage-and-hour laws.

3. A Timecard App Isn't a Substitute for Best Practices - Even if you require your employees to record their time with a timecard app, it doesn't mean that they'll do so. Sometimes employees forget. Therefore, even with a timecard app, you'll want to make sure that you follow best practices to minimize the possibility employees are performing off-the-clock work, such as those outlined here (http://sovalaw.com/blog/2013/08/21/yes-you-do-have-to-pay-employees-for-checking-e-mail-outside-of-work/).

Links:

Yes, You Do Have to Pay Employees for Checking E-Mail Outside of Work:
http://sovalaw.com/blog/2013/08/21/yes-you-do-have-to-pay-employees-for-checking-e-mail-outside-of-work/

Meal period:
http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$LAB162$$@TXLAB0162+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=19117366+&TARGET=VIEW

General recordkeeping requirements:
http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$LAB195$$@TXLAB0195+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=19117366+&TARGET=VIEW

Opinion:
http://labor.ny.gov/legal/counsel/pdf/Meal%20Periods%20%28Sec.%20162%29/RO-10-0132%20Meal%20Periods.pdf

April 18, 2014

Dos and Don'ts of Comp Time

By Kristine A. Sova
sovalaw.com

If you're a private employer and you allow employees to take compensatory (or comp) time, you might be making a big mistake.

Comp time is when employers allow employees to bank overtime hours for use as vacation time or other paid time off at a later date instead of immediately paying the employee overtime for hours worked in excess of 40 per workweek. While this may seem like a win-win situation for employers and their employees, more often than not, it's an unlawful practice.

It need not be so, though, and here we offer some tips for private employers in New York looking to offer comp time.

Non-Exempt Employees Must be Paid Overtime

If an employee is non-exempt under either federal or New York law, the employee must be paid overtime wages. The federal Fair Labor Standards Act (FLSA) specifically prohibits the payment of comp time in lieu of overtime wages by private employers to their non-exempt employees. Further, while comp time is not per se unlawful under the New York Labor Law (https://labor.ny.gov/legal/counsel/pdf/Other/RO-09-0161%20-%20Compensatory%20Time.pdf), New York's requirements regarding the frequency of payment of wages )http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW) have the effect of prohibiting payment of comp time to all non-exempt employees.

Non-Exempt Does Not Mean Hourly

Hourly wages are not synonymous with non-exempt status. As discussed previously in my blog (http://sovalaw.com/blog/2014/02/27/some-of-your-salaried-employees-may-be-entitled-to-overtime-pay/), some of your salaried employees may be non-exempt and therefore entitled to overtime wages. If you're going to offer comp time to exempt employees, make sure you first review the job duties of your employees to confirm which occupations are actually exempt from overtime pay under federal and state law.

New York Overtime Laws Still Apply to Some Occupations Exempt under the FLSA

Some occupations that are exempt from overtime under the FLSA are still entitled to overtime under the New York Labor Law. While these occupations must be paid overtime, New York Labor Law requires an overtime rate of one-and-a-half times the state minimum wage for their overtime hours, regardless of the amount of their regular rate of pay. This is another reason to review the job duties of the occupations in your business before offering comp time.

New York Does Not Permit Payment of Comp Time to All Exempt Employees

New York's requirements regarding the frequency of payment of wages (http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW) also have the effect of prohibiting payment of comp time to exempt employees who earn less than $900/week. This is a small but important point to remember since the threshold for the salary-basis exemptions under New York Labor Law is actually a lower amount ($600/week at the time of this posting).

Be Thoughtful About Using Comp Time with Exempt Employees

Although the permissibility of comp time is limited, some private employers in New York will still find it useful to reward exempt employees earning over $900/week with extra time for working extra additional hours. Providing hour-for-hour time off may not be advisable, however. If comp time is offered regularly, employees may come to expect it every time they work additional hours. In addition, some employees may take advantage by working additional hours unnecessarily so they can bank extra days off in the future. If you do offer comp time, make sure to outline the rules clearly in a written policy.

Links:

Not per se unlawful: https://labor.ny.gov/legal/counsel/pdf/Other/RO-09-0161%20-%20Compensatory%20Time.pdf

Frequency of payment of wages: http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW

Prior post: http://sovalaw.com/blog/2014/02/27/some-of-your-salaried-employees-may-be-entitled-to-overtime-pay/

May 9, 2014

Is Your Worker an Independent Contractor or Employee?

By Kristine Sova
www.sovalaw.com

Last week, I spoke to a group of arts administrators at a professional development session hosted by ArtsWestchester (https://artswestchester.org/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=8a5694904e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-8a5694904e-62893717) and the EASL Section (http://www.nysba.org/Sections/Entertainment_Arts_Sports/Entertainment_Arts___Sports_Law_Section.html?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=8a5694904e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-8a5694904e-62893717) on the distinction between employees and independent contractors. We covered a lot of information during the session, including:

• the hefty financial consequences of misclassification,
• the need to conduct preventative internal audits to make sure you're not misclassifying your workers, and
• the independent contractor tests utilized by various administrative agencies like the Internal Revenue Service and the New York Department of Labor's Unemployment Insurance Division.

Knowing those tests, though, is only so helpful to an organization or business that wants to know if a particular worker is an employee or an independent contractor. This is because how a particular worker should be classified requires a comprehensive fact-and-circumstances inquiry unique to the organization.

How comprehensive, you might ask? Click here for the kinds of questions I would ask and you'll see: http://sovalaw.com/blog/wp-content/uploads/2014/05/Independent-Contractor-Questionnaire.pdf?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=8a5694904e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-8a5694904e-62893717.

The questions are based on factors that the IRS and NY DOL would consider if either or both of them were to audit your workforce. Use the questions as a starting point for your own internal audit, and consult with an employment attorney once you have gathered your answers for an opinion on whether the worker in question is really an independent contractor.

June 5, 2014

How to Address Sick Leave Abuse

By Kristine Sova
www.sovalaw.com

It is summertime, and that means an influx of employees calling in sick on Mondays and Fridays when they're really not sick. Summertime sick time is one example of sick leave abuse, which often translates into administrative headaches and lost dollars for employers.

How can an employer remedy sick leave abuse, whether it's during the summer or throughout the rest of the year?

While it's important to make sure that your organization has a lawful policy and procedure to address sick leave abuse, in many cases, remedying sick leave abuse requires more than simply enforcing an HR policy. Here are some additional tips.

Determine if Abuse Really Exists, and Then Hone in on the Problem

The first step is to determine if sick leave abuse really exists by tracking and evaluating absences, including late arrivals and early departures, possibly in conjunction with an employee survey. Do any trends reveal themselves - such as a higher absenteeism rate in a particular department or under a particular supervisor?

The goal here is to find out why employees are really taking off from work under the guise of being sick. In some cases, employees may need more flexibility or more time off, but in some cases, a department or team may really be burnt out or suffering from low morale because of a problem supervisor.

Craft Solutions to Address Core Issues

Once you've identified the root of any sick leave abuse problems, any solutions under consideration for implementation should address the core issues.

For example, if you find that only workers with limited child care options are taking extra sick leave, the appropriate solution may be to implement an emergency child care or on-site child care program, rather than modify your organization's sick leave policy.

Or, you may discover that workers generally need more flexibility with their time off from work, in which case, use of a single paid time off (PTO) bank - instead of segregated sick, personal and vacation days - may be the appropriate solution. A single PTO bank allows employees more flexibility in how they use their time off, resulting in fewer unplanned absences.

However, it may turn out that you simply have one or more problem employee(s) on your hands. In that case, counseling or disciplinary action may be the way to go, provided such is lawful.

These are only three examples of how sick leave abuse can be managed, but they illustrate that, as is often the case with workplace issues, the solutions are as varied as the sources of the problems. and usually require facts-and-circumstances inquiries. If you have a sick leave abuse problem in your workplace that you would like to address, you may want to consult with an employment attorney.

July 10, 2014

Interview Questions Not to Ask

By Kristine A. Sova
www.sovalaw.com

Employers sometimes forget that it's not just employees who can sue them, but applicants as well. With the cost of defending a claim of discrimination at several hundred thousand dollars, and new laws in place (http://sovalaw.com/blog/2013/06/04/final-days-for-nyc-employers-to-check-their-hiring-practices-before-unemployed-law-goes-into-effect/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=c872c1132e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-c872c1132e-62893717) that provide increased hiring protections for candidates, it is more critical than ever for employers to conduct lawful employment interviews.

As most employers know by now, it is unlawful to discriminate against a person on the basis of a protected characteristic, such as race, color, sex, marital status, religion, creed, national origin, disability, age, and sexual orientation when making employment decisions. This includes hiring decisions, and by extension, the interview, when otherwise seemingly innocent questions like, "Where did you grow up?", can be used to support a claim that a hiring decision was based on a protected characteristic.

There are a number of questions, frankly, that employers should not ask during interviews. Some of them will vary by jurisdiction, but for the most part, they are the same. While not a comprehensive list, below are some examples of questions of which employers should steer clear:

• Is this your maiden name?

• What's your spouse's name?

• Do you wish to be addressed as Miss? Mrs.? Ms.?

• Do you have, or plan to have, kids?

• Are you a U.S. citizen?

• What is your native language?

• How long have you lived here?

• How did you acquire your ability to read, write or speak a foreign language?

• What clubs do you belong to?

• What religion do you practice?

• Which religious holidays do you observe?

• How old are you? What is your birth date?

• What are the ages of your children?

• What year did you graduate?

• Do you have any disabilities?

• Have you had any recent illnesses?

• Have you ever been arrested?

Keep in mind that, while a good start, simply avoiding asking the questions above won't insulate an employer's hiring process from challenge. Not only are there many more forbidden questions, but the hiring process involves much more than just the interview, such as job advertisements, application forms, background checks, and testing materials, each of which is fraught with legal land mines. If you or your hiring managers have been "guilty" of asking the questions above, you should consider consulting with an employment attorney to review your hiring process and to train your hiring managers on the dos and don'ts of that process.

August 25, 2014

Will Telecommuting Be More Costly for Your Business in the Long Run?

By Kristine A. Sova
www.sovalaw.com

Telecommuting is increasingly popular among startups and small businesses, and not surprisingly so. Much has been written extoling the benefits of allowing employees to telecommute, and it's very much the norm at companies earning high ranks on "best places to work" lists. Above and beyond the feel-good benefits to employees, telecommuting also provides cost-sensitive startups a means by which they can attract and retain better talent in exchange for an offset in overhead expenses like office space and compensation.

However, to the extent that cost is a compelling factor in a startup's decision to utilize remote workers, I caution them to think again.

One practical problem for an employer based in one state is that it can't entirely prevent a remote worker from suing the employer in the state where the employee is working. Most laws permit employees to file claims where the work is performed. Futher, while an employer can try to limit where suits are filed by including a venue provision in a contract, there's no guarantee the choice-of-venue provision will be enforced. Being hauled into court outside the employer's jurisdiction will add to the fees and costs of defending the suit, such as additional attorneys' fees and costs of travel.

Similarly, choice-of-law clauses in contracts, which specify that the law of the state of the employer's principal place of business will apply, may not always be enforced either. This is especially true when remote workers are involved. This means that employers have to understand the law in all the states where telecommuting employees are working for them, even if just to confirm that a particular law will or will not apply to the employment relationship.

Case in point: A federal court subjected a Virginia company to Pennsylvania's anti-discrimination law, which applies to employers with 4 or more persons in their employ within Pennsylvania, on the basis of a single employee working remotely from Pennsylvania because that employee hired contractors to service the company's clients in Pennsylvania.

The best advice for businesses looking to "save" with telecommuting is to understand the law of each jurisdiction and conduct appropriate due diligence before hiring remote workers to work from those states. Knowing if your business will be subject to the laws of another state will allow you to undertake a more meaningful cost-benefit analysis of a possible telecommuting relationship. Ultimately, you may find that once you factor in costs like ensuring your wage-and-hour and other human resources policies comply with the laws of multiple states that the perceived savings of telecommuting employees is non-existent.

September 24, 2014

Hiring Your First Worker? Read On.

By Kristine Sova
www.sovalaw.com

Whether you're working with independent contractors or hiring your first employee, building a business team brings with it a whole new area for compliance: labor and employment law.

Labor and employment laws cover everything from payroll and workers compensation to workplace posters to preventing discrimination and harassment in the workplace.

Unfortunately, there is no single government agency that oversees or enforces labor and employment laws, which in turn means there isn't a central government source for the small or new employer to turn to for purposes of determining which laws do or do not apply to them. Further complicating matters for the small or new employer is the fact that different laws apply to employers of different sizes. The magic number is not the same, and it's not always a "high" number like 15 or 20. Many of the laws, particularly at the state or city level, apply to employers with only a single employee.

While these factors don't make it easy for young businesses to achieve compliance with labor and employment laws, the unfortunate truth is that difficulty is not a defense to a claim that a business violated the law. Here, we offer three early markers to assist young NYC businesses in identifying when they should be active in their labor and employment law compliance efforts.

Marker Number 1: Before you hire your first worker.

Once you've decided to hire your first worker (as either an employee or independent contractor), you should be talking to a labor and employment lawyer. A number of New York State labor laws, predominantly affecting wages, apply to employers with only one employee, as do a number of payroll obligations, such as tax withholding, wage reporting, and unemployment insurance contributions. The federal Immigration Reform and Control Act, which requires employers to verify the eligibility of their employees to work in the U.S., and the NYC Earned Sick Time Act, which mandates providing sick time to employees, also apply to employers with only one employee.
While these same laws and obligations don't apply to independent contractors, too often independent contractors are misclassified and are really employees. A check-in with counsel before hiring any worker can help ensure that a young business wards off the many problems attendant with misclassification, and otherwise assist with compliance with the applicable laws.

Marker Number 2: Before you hire your fourth employee.

NYC employers should talk to a labor and employment lawyer about further compliance measures before they hire their fourth employee. At four employees, more labor and employment laws apply, including the New York State Human Rights Law and the New York City Human Rights Law, both of which prohibit discrimination and harassment in the workplace, and also require accommodation of disabled and pregnant employees.

Marker Number 3: Before you hire your fifteenth employee.

NYC employers should talk to a labor and employment lawyer about additional compliance measures before they hire their fifteenth employee. At fifteen employees, federal anti-discrimination laws such as Title VII and the Americans with Disabilities Act apply. At twenty employees, still more laws will apply, including the federal Age Discrimination in Employment Act and two additional provisions of the New York State Labor Law requiring blood donation leave and bone marrow donation leave.

October 22, 2014

How to Recoup Overpaid Wages from Employees

By Kristine Sova
www.sovalaw.com

Many employers logically assume that if they overpay an employee, they should be able to recoup that overpayment by simply adjusting an employee's future paychecks. While that's the case under the federal Fair Labor Standards Act (FLSA), it's not always the case under state law.

Many states have statutes or regulations that permit recoupment under certain conditions, while other states have statutes or regulations that flat out prohibit recoupment through paycheck deductions. In this post, we address New York State law for employers looking to recoup wage overpayments.

Recoupment Allowed Only Under Certain Circumstances

Under New York law, in order for an employer to recover an overpayment made to an employee by way of payroll deduction, the overpayment must be the result of a mathematical or clerical error. Further, the law permits employers to recoup such overpayments only under the following conditions:

•Employers may only recover overpayments made in the 8 weeks prior to the issuance of a Notice of Intent, described below, but may make deductions to recover overpayments for a period of 6 years from the date of the original overpayment.

•Employers are limited to one deduction per wage payment to recover an overpayment.

•If the overpayment is less than or equal to the net wages in the next wage payment, the entire amount may be deducted; otherwise, the overpayment deduction is limited to 12.5% of the employee's gross wages, so long as the deduction does not reduce the employee's wages below the New York State minimum wage (currently, $8.00/hour).

•Employers must provide affected employees with a Notice of Intent in order to commence making deductions to recoup the overpayment. If an employer will be recouping the entire overpayment in the next wage payment, the Notice must be provided at least 3 days before making the deduction. In all other cases, the Notice must be provided at least 3 weeks before the deductions may commence.

•The Notice of Intent must contain: (1) the amount overpaid in total; (2) the amount overpaid per pay period; (3) the total amount to be deducted; and (4) the date of each intended deduction together with the amount of each anticipated deduction. The notice must also inform the employee of his/her right to contest the overpayment, provide the date by which the employee must contest the overpayment, and include the procedure for the employee to contest the overpayment and/or terms of recovery.

Employers Must Establish a Specific Procedure for Challenging Any Planned Recoupment

New York Labor Law is specific as to what the procedure must entail. The procedure must:

•Provide an employee with one week from the date of receipt of the Notice of Intent to challenge the proposed deduction(s).

•Require an employer to respond to the employee within one week of receipt of the employee's response. The employer's response must address the issues raised by the employee and contain a clear statement indicating the employer's position regarding the overpayment (specifically, whether or not the employer agrees with the employee's position, together with a reason why the employer agrees or disagrees).

•Provide the employee written notice of the opportunity to meet with the employer within one week of receiving the employer's response to discuss any disagreements that may remain regarding the anticipated deductions.

•Require the employer to provide the employee with written notice of the employer's final determination regarding the deductions within one week of this meeting. In making a final determination, the employer must consider the agreed-upon wage rate paid to the employee and whether the overpayment appeared to the employee to be a new agreed-upon rate of pay. Further, when making a final determination regarding the amount of the deduction to be made per pay period and the date such deduction(s) will commence, the employer must also consider the issues raised in the employee's request regarding the amount of each deduction.

Where employees avail themselves of this procedure, employers must wait at least 3 weeks after issuing the final determination before commencing deductions.

The procedure is slightly different where the entire overpayment may be recouped in the next wage payment after the overpayment. In those cases, the employee must challenge the proposed deduction within 2 days of receipt of the Notice of Intent. Should the employee challenge the proposed deduction, the employer must postpone the deduction and fully follow procedures outlined above.

The same parameters apply to employers looking to recoup an overpayment, not from a future payroll deduction, but from a separate transaction. In other words, employers cannot circumvent the law's requirements by simply requiring an employee to pay the employer back by writing a check for the overpayment.

Employers who fail to follow the parameters outlined above create the presumption that the contested deduction was impermissible and in violation of the New York Labor Law.

November 25, 2014

More Myths About Hiring Independent Contractors

By Kristine Sova
www.sovalaw.com

In a prior post titled Top Myths About Hiring Independent Contractors, we identified three common misconceptions about the use of independent contractors. The absence of clear-cut rules about the kinds of workers who are and aren't appropriately classified as independent contractors continues to result in the misclassification of independent contractors by employers. Here, we identify three more common misconceptions about classifying workers as independent contractors that almost always lead to liability for employers.

Myth #4: There are some workers who are always independent contractors.

IT professionals and web designers are always independent contractors, right? Wrong. While more often than not there are probably certain types of workers at a certain type of startup who are more likely to be independent contractors, there is no one type of worker that will always be an independent contractor. In all cases, determining whether a worker is an employee or independent contractor is a fact-and-circumstances inquiry.

Myth #5: Commission-only workers are independent contractors.

How a worker is compensated is just one factor that is considered when determining whether a worker is an employee or an independent contractor. This includes commission-only payments, which in New York, can be used to compensate employees, not just independent contractors. (If you operate a New York business with commissioned employees, be aware that the New York Labor Law requires employers to have written employment agreements with their commissioned employees. The law is also specific as to what terms must be included in those employment agreements.)

Myth #6: Probationary, temporary, or seasonal workers are independent contractors.

Some businesses hire probationary, temporary, or seasonal workers and classify them as independent contractors, reasoning that because the relationship will be short-lived, the worker need not be placed on payroll. The length of the relationship is not grounds alone to treat a worker as an independent contractor. Rather, the whole relationship must be considered. Further, if a short-term worker is performing work substantially similar to the work performed by your business's employees, it's likely the short-term worker is also an employee.

These three misconceptions all involve clear-cut rules. As a whole, they serve as a reminder that there is no shortcut for determining whether a worker is an employee or independent contractor. Rather, how a particular worker should be classified requires a comprehensive inquiry unique to the worker and the business. If you'd like to learn more, please read Is Your Worker an Independent Contractor or Employee? (http://sovalaw.com/blog/2014/05/08/is-your-worker-an-independent-contractor-or-employee/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=3c373927ba-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-3c373927ba-62893717), which outlines the kinds of factors that are considered when determining whether a worker is an employee or independent contractor.

January 15, 2015

Discretionary Bonuses: What Are They, and Why Should You Care?

By Kristine A. Sova
www.sovalaw.com

The federal Fair Labor Standards Act defines a "discretionary bonus" as a sum paid by an employer in recognition of an employee's services during a given period of time (for example, a calendar year) if:

the very fact that the bonus payment is to be made and the amount of the bonus payment are at the sole discretion of the employer at or near the end of the period; and
the bonus payment is not issued according to any contract, agreement or promise that causes the employee to expect the bonus.
Put more simply, a discretionary bonus is typically one that an employee would have no reason to expect to receive from an employer.

Consider the following examples:

If an employer announces to employees in January that it intends to pay them a bonus in June, the employer has abandoned its discretion regarding the fact of payment by promising a bonus to its employees, and such a bonus is non-discretionary.
If an employer promises to sales employees that they will receive a monthly bonus computed on the basis of allocating five dollars for each item sold whenever, in the employer's discretion, the financial condition of the company warrants such payments, the employer has not abandoned discretion with regard to the fact of payment, but has abandoned its discretion with regard to the amount of the bonus. Such a bonus is also non-discretionary.
The difference between discretionary and non-discretionary bonuses matters because non-discretionary bonuses must usually be included in any overtime pay that may be owed to a non-exempt employee. This is the rule under federal law and under New York law, and it may be the rule in other jurisdictions as well.

The overtime calculation is a relatively simple calculation if the bonus covers only one weekly pay period. However, under many bonus plans, the bonus covers a period of time longer than a workweek. In the latter scenario, the bonus must be apportioned back over the workweeks of the period during which it may be said to have been earned, and an employee must receive additional compensation for each workweek that he/she worked overtime.

Where it is impossible to allocate the bonus among workweeks of the period in proportion to the amount of the bonus actually earned each week, some other reasonable and equitable method of allocation must be used. If you are uncertain of what that method should be, or how to calculate overtime payments in general, you should consult an employment lawyer knowledgeable about the wage-and-hour laws where you conduct business.

February 11, 2015

Three Things to Consider Before Making Employee Loans

By Kristine Sova
www.sovalaw.com

If your company is considering developing (or revising) an employee loan policy, or even just making a one-off loan to a stellar employee, read on. Unbeknownst to many employers, there are a number of laws and regulations that impact almost every facet of the loan - from who can receive one to how your company will be repaid.

1. Governance Laws Restrict Who You Can Issue Loans To

For example, the Sarbanes-Oxley Act of 2002, which applies to publicly-traded companies or companies preparing for their initial public offering, places restrictions on which employees may receive personal loans. So, too, do some laws affecting non-profit organizations. For this reason, you'll want to speak to a corporate lawyer with experience in corporate governance and/or a regulatory lawyer with experience in non-profit organizations to review the parameters of any loan policy you may adopt or loan you may make.

2. Employee Loans Have Tax Consequences

Depending on how a loan is structured, it can have adverse tax consequences for an employee. For example, interest-free and below-market loans may result in the spread between the reduced or non-existent rate and the market rate of interest being treated as taxable compensation to the employee. You'll want to speak with an accountant or tax lawyer to navigate this and other tax issues relating to employee loans.

3. Labor Laws Restrict Repayment Methods

The easiest way to collect loan payments is through payroll deductions, but applicable wage-and-hour laws may either restrict your ability to do so, or specify parameters within which those deductions can be made. For example, the New York Labor Law permits employers to make deductions from an employee's wages for repayment of a wage/salary advance, but only if the employer follows certain rules requiring written authorization and adoption of a dispute resolution procedure as well as rules relating to the timing and duration of the deduction. Furthermore, under the New York Labor Law, if payment of interest or loan fees is contemplated, those monies may not be repaid through a wage deduction, or even by a separate transaction.

These are only three, of many, legal issues to consider before making an employee loan. Once you have the legal implications sorted out, and still want to move forward with an employee loan, your company should consider developing a written employee loan policy to ensure consistent treatment of employees. In addition to the issues above, you'll want to consider and address the following in any policy: circumstances for making a loan, employee eligibility, total and individual loan maximums, and length of loans.

March 13, 2015

Who Should Investigate a Harassment Claim?

By Kristine Sova
sovalaw.com

Most employers know that an investigation needs to be conducted whenever the employer knows or suspects harassment or discrimination is occurring or has occurred in its workplace. Although much has been written by others offering tips and guidelines on how to conduct an effective investigation, less has been written about an equally important issue: that is, who should conduct the investigation.

Handling complaints of harassment and discrimination is difficult for any business, and in all instances, the investigator should be a qualified and disinterested person. This person could be you (the "you" being a founder or manager in a startup or small business) or a human resources representative, but only so long as neither person is the one who has been accused of harassment, is not close friends with the person making the complaint, the harasser, or any of the witnesses, or has some other conflict or bias relating to those involved or the complaint.

Sometimes, though, the complaint is especially sensitive, and special measures should be taken. By sensitive, I mean that the identity of the complainant, the identity of the accused, the nature and sensitivity of the allegations, the volume of complaints, the number of employees involved, the potential financial exposure, or the potential publicity present more of a high-stakes scenario for the employer. These types of cases warrant the hiring of an outside, independent investigator to conduct the investigation.

Why? Unlike you, another company employee or the company's regular legal counsel, an independent investigator has no formal ties to the organization, and is therefore, objective and neutral in a way that a person with ties to the organization or situation could never be. This is important because in harassment lawsuits, a successful defense often turns on the adequacy of the investigation, and the last thing any organization wants in a high-stakes scenario is for the investigation to be considered a sham by virtue of who conducted the investigation.

So where do you find an independent investigator? Employment lawyers, human resources/workplace consultants, and investigation firms usually offer investigative services, but choose carefully, and make sure that the investigator is qualified and experienced.

One final tip: Keep in mind that while your organization's regular legal counsel may play a role in selecting or recommending an independent investigator, if you will want your regular legal counsel to defend your organization in the event of a lawsuit, then your regular legal counsel should not serve as the investigator. As noted above, a successful defense often turns on the adequacy of the investigation, which, in turn, puts the investigation at issue in a lawsuit. If the investigation is at issue and your regular legal counsel is the investigator, then he or she will be conflicted out of representing your organization, because he or she will be witnesses in the litigation.

July 6, 2015

New York Employers Take Note: "Primary Beneficiary Test" to Determine Whether Interns Should Be Paid Under the Fair Labor Standards Act

By Kristine Sova
www.sovalaw.com

On July 2, 2015, the Second Circuit Court of Appeals answered the question: "[W]hen is an unpaid intern entitled to compensation under the FLSA?" The question was a matter of first impression in the Circuit, and the decision was a long-awaited one, because it addressed a question left unresolved since 2013 when two New York district court judges applied different tests in similar cases, the result of which were opposite outcomes (Glatt v. Fox Searchlight Pictures Inc., U.S.D.C., S.D.N.Y., Civil Action No. 11 Civ. 6784, and Wang v. The Hearst Corporation, U.S.D.C., S.D.N.Y., Civil Action No. 12 Civ. 0793).

On appeal, the Second Circuit considered whether to apply:

*the U.S. Department of Labor's (DOL) six-factor test for determining whether an internship at a for-profit institution may be unpaid under the Fair Labor Standards Act (FLSA, a variation of which had been applied by the district court judge in the Glatt decision), or

*another test whereby interns will be considered employees whenever the employer receives an immediate advantage from the interns' work, or

*a more nuanced "primary beneficiary test," as suggested by the district court judge in Wang and the employers on appeal, which considers whether the intern or the employer is the primary beneficiary of the relationship.

The panel adopted the primary beneficiary test, noting two salient features. The first is that it focuses on what the intern receives in exchange for his or her work. The second is that it accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.

In adopting this test, the court laid out seven non-exhaustive factors to consider when assessing whether an intern is an employee entitled to compensation under the FLSA:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee--and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.
5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.
6.The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The court noted that applying these considerations requires weighing and balancing all of the circumstances, and no one factor is dispositive. Every factor need not point in the same direction for the court to conclude that the intern is not an employee entitled to the minimum wage. In addition, courts applying the "primary beneficiary test" are permitted to consider relevant evidence beyond the specified factors in appropriate cases.

Perhaps most notable about the Second Circuit's decision is that the court declined to follow DOL's six-factor test, which employers had been advised to follow in the absence of explicit guidance out of the Second Circuit. (For an in-depth discussion of the DOL's six-factor test, click here: http://sovalaw.com/blog/2013/05/02/how-to-use-unpaid-interns-the-right-way-and-keep-litigation-at-bay/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=1bd1543a1a-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-1bd1543a1a-62893717.)

The Second Circuit's territory encompasses Connecticut, New York, and Vermont. Employers with operations or workers in those three states should be mindful that the "primary beneficiary test" may apply when determining whether an intern should be paid or unpaid under the federal Fair Labor Standards Act.

August 6, 2015

Which Equal Employment Opportunity Laws Apply to Your Business?

By Kristine Sova
www.sovalaw.com

Not all employers are covered by all of the various labor and employment laws that exist. It is important to know which laws apply to which company or organization, because coverage imposes important obligations on employers.

Here are the most common federal, New York state, and NYC equal employment opportunity (EEO) laws, along with a brief description of the law and the thresholds for coverage:

Title VII of the Civil Rights Act of 1964 (Title VII)

This federal law makes it illegal to discriminate against someone on the basis of race, color, religion, national origin, or sex. The law also requires that employers reasonably accommodate applicants' and employees' sincerely held religious practices, unless doing so would impose an undue hardship on the operation of the employer's business.

Covered employers: Generally, employers engaged in an industry affecting commerce that have 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

The Pregnancy Discrimination Act (PDA)

This federal law amended Title VII to make it illegal to discriminate against a woman because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.

Covered employers: Generally, employers engaged in an industry affecting commerce that have 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

The Equal Pay Act of 1963 (EPA)

This federal law makes it illegal to pay different wages to men and women if they perform equal work in the same workplace.

Covered employers: There are two coverage tests, but generally, employers with two or more employees that have an annual dollar volume of sales or business done of at least $500,000.

The Age Discrimination in Employment Act of 1967 (ADEA)

This federal law protects people who are 40 or older from discrimination because of age.

Covered employers: Generally, employers engaged in an industry affecting commerce that have 20 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

Title I of the Americans with Disabilities Act of 1990 (ADA)

This federal law makes it illegal to discriminate against a qualified person with a disability. The law also requires that employers reasonably accommodate the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless doing so would impose an undue hardship on the operation of the employer's business.

Covered employers: Generally, employers engaged in an industry affecting commerce that have 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

The Genetic Information Nondiscrimination Act of 2008 (GINA)

This federal law makes it illegal to discriminate against employees or applicants because of genetic information. Genetic information includes information about an individual's genetic tests and the genetic tests of an individual's family members, as well as information about any disease, disorder or condition of an individual's family members (i.e., an individual's family medical history).

Covered employers: Generally, employers engaged in an industry affecting commerce that have 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

New York State Human Rights Law

This state law makes it illegal to discriminate against someone on the basis of age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status. The law requires reasonable accommodation of religious practices and disabilities, provided that they do not impose an undue hardship on the operation of the employer's business.

Covered employers: Generally, employers with 4 or more employees.

New York City Human Rights Law

This city law makes it illegal to discriminate against someone on the basis of age, race, religion, creed, color, national origin, gender, gender identity, disability, marital status, partnership status, pregnancy, sexual orientation, alienage or citizenship status, arrest or conviction record, status as a victim of domestic violence, sexual violence, or stalking, unemployment status, and, beginning September 3, 2015, credit history. The law requires reasonable accommodation of religious practices and disabilities, provided that they do not impose an undue hardship on the operation of the employer's business.

Covered employers: Generally, employers with four or more employees.

***

Each of the above laws also makes it illegal to retaliate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.

Keep in mind that the list above does not include all labor and employment laws, such as wage-and-hour laws, leave laws, safety laws, and the like. Also keep in mind that there are a number of other factors that may impact whether or not a law will apply to a particular employer or not, such as whether or not to include a principal as an employee, as well as single employer and joint employer doctrines, which permit courts and administrative agencies to treat nominally separate, but highly integrated companies as a single employer for coverage purposes.

August 20, 2015

New York City Limits Credit History Use Beginning September 3rd

By Kristine Sova
www.sovalaw.com

Beginning September 3, 2015, it will be illegal for covered employers in New York City to request or use an employee's or applicant's consumer credit history to make employment decisions.

The Stop Credit Discrimination in Employment Act amends the New York City Human Rights Law, which applies to employers with four or more employees, and prohibits covered employers from requesting or using the consumer credit history of an applicant or employee for employment purposes. The law also prohibits covered employers from discriminating against applicants and employees with regard to hiring, compensation or other terms, conditions or privileges of employment based on the applicant's or employee's consumer credit history.

The new law defines "consumer credit history" as including:

-consumer credit reports (which includes any communication from a credit reporting agency that bears on a consumer's creditworthiness, credit standing, credit capacity or credit history);
credit scores; or
-other information an employer directly obtains from an applicant or employee about credit accounts, including:
*details about credit accounts, including the individual's number of credit accounts, late or missed payments, charged-off
debts, items in collections, credit limit and prior credit report inquiries; or
*bankruptcies, judgments or liens.

The new law allows employers to request consumer credit information from applicants and employee in limited circumstances, including when hiring for:

Positions where an employer is required by state or federal law or regulations or by a self-regulatory organization to use an individual's consumer credit history for employment purposes;
-Police officer or peace officer positions;
-Positions in which employees are required to be bonded under federal, state or city law;
-Positions in which employees are required to possess security clearance under federal or state law;
-Non-clerical positions having regular access to trade secrets, intelligence information or national security information;
-Positions having signatory authority over third party funds or assets valued at $10,000 or more;
-Positions that involve a fiduciary responsibility to the employer with the authority to enter into financial agreements valued at -$10,000 or more on behalf of the employer; and
-Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer's or client's network or databases.

Nothing in the new law prohibits employers from requesting or receiving consumer credit history information pursuant to lawful subpoenas, court orders or law enforcement investigations.

September 24, 2015

Three Common Ways Employers Violate Wage-Hour Laws



By Kristine Sova
www.sovalaw.com

Employers often run afoul of wage-hour laws in similar ways, three of which are discussed below. Luckily, these errors can often be remedied, in a prospective manner, through a simple change in policy or practice.

Refusing to Pay for Unauthorized Overtime

Many employers require employees to seek approval before working overtime. While that is an acceptable policy to have, employers get in trouble when they refuse to pay for unauthorized overtime.

The idea of having to pay for unauthorized overtime seems at odds with a policy requiring advance approval of overtime hours. However, it's not inconsistent with the wage-and-hour laws requiring payment for that time.

How so? The federal Fair Labor Standards Act (FLSA) defines the term "employ" to include the words "suffer or permit to work," which essentially means that if an employer requires (or even allows) employees to work, the time spent is hours worked for which an employee must be paid. As a result, time spent doing work not requested by the employer, but still allowed, is compensable time.

Treating Salaried Employees as Exempt from Overtime Pay Merely Because They Are Not Paid on an Hourly Basis

Some employers assume that all salaried employees are exempt from overtime. As I have also discussed (http://sovalaw.com/blog/2014/02/27/some-of-your-salaried-employees-may-be-entitled-to-overtime-pay/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=54e516ff48-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-54e516ff48-62893717), this is not true. Salary ≠ exempt, and an employee must qualify for the applicable FLSA and state law exemptions in order for his/her pay to cover all hours of work in a workweek.

For employers who may have misclassified any positions as exempt from the overtime pay, and had those positions frequently work in excess of 40 in a workweek, the scary truth is that hefty back wages may be due those employees.

Interested in knowing more? Click here (http://sovalaw.com/blog/wp-content/uploads/2015/06/fs17a_overview.pdf?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=54e516ff48-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-54e516ff48-62893717) for a fact sheet from the U.S. Department of Labor on the FLSA exemptions for executive, administrative, professional, computer, outside sales and highly-compensated employees.

Docking Hours of Certain Exempt Employees

Many of the FLSA exemptions require individuals to be paid on a "salary basis." Being paid on a "salary basis" means that an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee's work. This means that, under the FLSA, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked, subject to the exceptions below. If an employer makes deductions to an exempt employee's salary outside of these limited circumstances, the employer risks jeopardizing the employee's exempt status.

Deductions from pay are permissible only:

-when an exempt employee is absent from work for one or more full days for personal reasons;
-when an exempt employee is absent from work for one or more full days due to sickness or disability, but only if a formal policy is in place governing paid sick leave;
-when an exempt employee is absent from work for either partial or full days due to Family and Medical Leave Act (FMLA) leave;
-to offset amounts employees receive as jury or witness fees, or for military pay;
-for penalties imposed in good faith for infractions of safety rules of major significance; or
-for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.

There's one more exception to the requirement that an exempt employee must receive the full salary for any week in which the employee performs any work: employers are not required to pay the full salary in the initial or final week of employment.

October 28, 2015

Three Common Mistakes with Employee Handbooks



By Kristine Sova
www.sovalaw.com

Though there are many laws requiring employers to notify employees of certain workplace rights, there are actually no federal, New York State or New York City laws specifically requiring an employer to have an employee handbook. However, there are a number of reasons as to why creating and maintaining an employee handbook is a good idea and a best practice.

One good reason for a handbook is that a well-prepared one will answer many routine questions for employees. This saves management and HR time if employees know to look to the employee handbook for answers first.

Another good reason, particularly for young businesses without much HR experience, is that a well-prepared handbook will contain procedures that will provide a (hopefully legally-compliant) roadmap for how to address certain personnel issues (for example, a sexual harassment complaint, a request for reasonable accommodation, and so forth). Furthermore, a legally compliant and up-to-date employee handbook may provide legal protection if an employer's policies, practices or personnel decisions are ever challenged in court.

This all sounds great, right? Unfortunately, the flip side is that a poorly-worded, inconsistently implemented, and non-compliant handbook can actually create and invite employment litigation and may do more damage than good for an employer facing a lawsuit. With that in mind, be aware of three common mistakes businesses make when drafting their own employee handbooks:

-Using a "one-size-fits-all" template. Not all businesses are alike. Simply copying the contents of another company's employee handbook (or purchasing a low-cost, generic version online) is unlikely to satisfy your company's HR needs. Employee handbooks should be carefully and uniquely drafted to reflect the policies and procedures used by a particular business. In addition, "one-size-fits-all" handbooks generally do not factor in the size or locale of your business, making them much more likely to contain unlawful policies and procedures.

-Not following the policies in the handbook. A well-crafted employee handbook is well worded, an accurate reflection of the company's (lawful) policies and procedures, and consistently implemented by HR and management. If a company does not follow the policies and procedures it has laid out, the company can lose its ability to enforce them at a later date.

-Not engaging an employment attorney to review the handbook. An attorney well-versed in employment law is an invaluable resource for assessing the lawfulness of the policies and procedures stated in the handbook. Each year, the employment laws change, or new employment laws come into existence, and it's important to know that your document is legally compliant and up to date.

December 8, 2015

NYC's Commuter Benefits Law Effective January 1

By Kristine Sova
www.sovalaw.com

Beginning January 1, 2016, unless otherwise exempted, NYC employers with 20 or more full-time employees must offer full-time employees the opportunity to use pre-tax income to pay for their commutes. The Department of Consumer Affairs (DCA), the same agency responsible for enforcing the NYC Earned Sick Time Act (Paid Sick Leave Law), has the responsibility for enforcing NYC's Commuter Benefits Law.

Under the new law, a full-time employee is any employee who works an average of 30 or more hours per week in the most recent four weeks, any portion of which was in NYC.

The new law does not apply:

To federal, state or local governmental agencies/employers;
Where a collective bargaining agreement (CBA) exists between an employer and employees, except if the employer has 20 or more full-time employees who are not covered by the CBA, in which case the employer must offer these employees commuter benefits; or
Where the employer is not required by law to pay federal, state or city payroll taxes.

In addition to the exemptions noted above, the DCA also has authority to waive the requirements of the Commuter Benefits Law if an employer presents compelling evidence that complying with the new law would significantly harm the business's finances.

Employers must give their full-time employees a written offer of the opportunity to use pre-tax income to purchase qualified transportation fringe benefits and maintain a record of the offer and employees' responses. Employers may use the sample form available on the DCA website at http://www1.nyc.gov/assets/dca/downloads/pdf/about/CommuterBenefits-EmployerComplianceForm.pdf to document compliance. Records must be kept for two years.

The new law gives employers a six-month grace period (from January 1st to July 1st) to begin offering a commuter benefits program. Employers will not be subject to penalties for violations that take place before July 1. The law also gives employers 90 days to correct a violation before the DCA is authorized to seek penalties.

Employers who do not yet offer commuter benefits programs to their employees should consult their tax advisors to review any tax implications for their businesses and their employees.

January 28, 2016

New York's Increasing Expansion of Member and Shareholder Liability for Unpaid Wages

By Kristine A. Sova
www.sovalaw.com

Wage theft prevention remains a priority in New York so much so that, in recent years, the state has incrementally expanded the personal liability of Limited Liability Company (LLC) members and corporate shareholders for the unpaid wages due their organization's employees.

Early last year, Section 609 of New York's LLC Law was amended with the addition of two new subsections that specified that the 10 members of an LLC with the largest percentage ownership interests will be held, jointly and severally, personally liable for any unpaid wages owed to their LLC's employees. These new provisions in New York's LLC Law echoed a similar obligation long embodied in New York's Business Corporation Law, under which employees may recover unpaid wages from the 10 largest shareholders of a domestic corporation. This change took effect on February 25, 2015.

This month, however, the domestic incorporation limitation in Section 630 of New York's Business Corporation Law was removed, in effect rendering the 10 largest shareholders of domestic and foreign corporations, jointly and severally, personally liable for any unpaid wages owed to their corporation's employees so long as the unpaid services were performed in New York. This change took effect on January 19, 2016.

The definition of "wages" is broad under both statutes and includes all compensation and benefits, such as salaries, overtime, vacation, holiday and severance pay; employer contributions to or payments of insurance or welfare benefits; employer contributions to pension or annuity funds; and any other moneys properly due or payable for services rendered by an employee, including any related liquidated damages, penalties, interest, attorneys' fees or costs.

Personal liability, however, is not automatic under New York's LLC Law or Business Corporation Law. Before an employee can charge a member or shareholder for unpaid wages:

The employee must first provide written notice to the member/shareholder that the employee intends to hold the member/shareholder liable for the employee's unpaid wages under the LLC Law or Business Corporation Law. Employees must provide this notice within 180 days after termination of employment. However, if the employee demands and receives the opportunity to examine the corporation's books and records (available only under the Business Corporation Law) during that 180-day time frame, then the notice can be made within 60 days of examination.

The employee must also begin a lawsuit seeking a judgment against the LLC or corporation for unpaid wages, and attempt to execute the judgment. Once an execution is returned unsatisfied, the employee must commence a second lawsuit against the members/shareholders within 90 days.

June 4, 2016

Options for Compliance with the New Federal Overtime Rule

By Kristine A. Sova
www.sovalaw.com

Six months from now, on December 1, 2016, a new federal overtime rule goes into effect. The new overtime rule doubles the annual salary threshold that must be paid to an employee in order for the employee to qualify for an exemption from the overtime pay requirements. The current annual salary is $23,660 and the new annual salary is $47,476.

It's likely that your organization has at least a few white collar employees who satisfy one of the duties tests for exemption and earn between the old salary level and the new salary level. In light of the new rule, employers should evaluate these job categories to determine which employees do and do not work more than 40 hours per workweek.

Ultimately, employers may determine that changes to pay or hours are not necessary because the employee will never work any overtime. If the employee's salary will be kept the same (that is, less than $47,476 a year), the only change to be made is to re-classify the employee as non-exempt (and thus overtime eligible). In addition, employers should keep an accurate record of hours worked by such an employee.

If, after evaluation, an employer determines that there are employees likely to work more than 40 hours in a workweek, there are a few options to consider:

Raise Salaries

Employers may choose to raise the salaries of employees who meet the duties tests and who regularly work over 40 hours per workweek, particularly if their current salaries are close to the new salary level. These employees would remain exempt and no overtime would be due to the employees.

Pay a Salary plus Overtime

In lieu of raising salaries, employers may choose to continue paying employees a salary covering a fixed number of hours of work per workweek, on top of which overtime pay would be due.

One option is to pay employees a salary that covers 40 hours of work per workweek, and then pay overtime at time-and-a-half the employee's regular rate of pay for any hours over 40 in a workweek. This might be a preferred option for employees who work 40 hours per workweek and do not frequently work overtime, or for employees who do not consistently work the same amount of overtime.

A second option is to pay employees a salary for a certain number of hours in excess of 40 hours in a workweek. By doing so, an employer would pay an employee a salary to cover all straight time hours worked, one-half the employee's regular rate of pay for overtime hours included within the salary, and time-and-a-half the employee's regular rate of pay for overtime hours beyond those included in the salary.

For example, let's consider an employee who earns a fixed salary of $41,600 per year for a 50-hour workweek ($800 per workweek). The salary does not include the overtime premium. As the salary is for 50 hours per workweek, the employee's regular rate of pay is $16 ($800/50). In a normal 50-hour workweek, the employer would pay the employee the additional half-time overtime premium for the 10 hours of overtime ($8 per hour). In that normal 50-hour workweek, then, the employee would earn $880. If the employee worked more than 50 hours in a workweek, the employer would also owe overtime compensation at time-and-a-half the employee's regular rate (1.5 x $16 = $24/hour) for hours beyond 50 because the salary does not cover payment for those hours. Therefore, if the employee worked 52 hours in a workweek, the employee would earn $928, which is $880 plus 2 hours of overtime at a rate of $24/hour.

Another option is to pay employees a fixed salary that covers a fluctuating number of hours at straight time. This method permits employers to pay fluctuating workweek employees overtime at the one-half rate, instead of at the time-and-a-half rate. In order to do so, an employer must communicate to the employee that "the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek, whatever their number" and pay the employee a salary large enough to ensure that the employee always earns more than the minimum wage.

Adjust Wages

Another option is for employers to adjust the amount of an employee's earnings to reallocate it between regular wages and overtime, so that the total amount paid to the employee remains largely the same. For example, an employee who satisfies the duties test for the administrative exemption earns a salary of $37,000 per year ($711.54 per week). If the employee regularly works 45 hours per workweek, the employer may choose to instead pay the employee a regular hourly rate of $15 and pay overtime at a rate of time-and-a-half (1.5 x $15 = $22.50) for the 5 overtime hours worked each workweek. By doing so, the employer would pay the employee $712.50 per week.

Reorganize Workloads, Adjust Schedules and Redistribute Work Hours

Last, but certainly not least, employers may consider reorganizing workloads, adjusting employee schedules, and redistributing work hours (which may or may not include hiring new employees) to reduce or eliminate overtime hours.

December 10, 2016

NYC's Freelance Isn't Free Act Protects Independent Contractors

By Kristine Sova
www.sovalaw.com

Last month, NYC Mayor Bill de Blasio signed the Freelance Isn't Free Act (the Act) into law. The Act will be effective beginning May 15, 2017.

The Act extends significant protections to freelance workers, who are defined as "any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation." Excluded from this definition are commissioned salespersons, lawyers engaging in the practice of law, and licensed medical professionals.

Under the Act, a party who retains a freelance worker to provide any service where the contract has a value of $800 or more must enter into a written contract with the freelance worker. (The $800 threshold includes the aggregate value of all the contracts between the parties during the preceding 120 days.)

At a minimum, the contract must include the following information:

Names and mailing addresses of both parties,

Itemization of services to be provided by the freelancer, the value of those services, and the rate and method of compensation, and

The date on which the compensation is due or the method by which that date will be determined.

In the case where the date of payment or method of determining such date was not set forth in the contract, the Act makes it unlawful for the hiring party to pay the freelance worker more than 30 days after the completion of services. The Act also prohibits the hiring party from requiring, as a condition of timely payment, that the freelance worker accept less compensation than the contracted amount.

A freelance worker can bring an administrative claim with the NYC Office of Labor Standards or a legal claim in civil court against a hiring party who violates the Act. Such claims must be filed within 2 years of the alleged violations. Prevailing freelance workers will be awarded $250 in damages for prevailing on a claim based on a hiring party's failure to execute a contract or include all terms required in a contract. In addition, a freelance worker who prevails on this claim and any other claims for violations of the Act (including a retaliation claim for exercising his/her rights under the Act) will be awarded statutory damages equal to the value of the underlying contract. Double damages, injunctive remedies and other appropriate remedies may be awarded for prevailing on a claim based on unlawful payment practices, such as failure to pay or making late payments.

Hiring parties who are found to engage in a pattern or practice of violating the Act face a civil penalty of up to $25,000.

March 30, 2017

Scam Targets NY Payroll and HR Professionals

By Kristine Sova
www.sovalaw.com

On March 24, 2017, the New York State Department of State (DOS) distributed an alert about a scam targeting payroll and HR professionals. According to the DOS, cybercriminals posing as company executives are emailing payroll and HR professionals to request lists of employees and their personal information. These emails may appear legitimate because they contain the name of the company's chief executive officer. If a General Counsel receives such an email, one should not include any payroll data, such as W-2 forms and Social Security numbers, in a response, or better yet, should not respond at all.

The New York State Tax Department is aware of at least 37 businesses with New York employees that have fallen for this scam and believes more than 5,000 Social Security numbers may have been compromised.

May 10, 2017

NYC Mayor Signs Law Barring Inquiries into an Applicant's Salary History

By Kristine A. Sova
www.sovalaw.com

On May 4, 2017, Mayor Bill de Blasio signed into law an amendment to the New York City Human Rights Law that now restricts employers in New York City, with four or more employees, from inquiring into a prospective employee's salary history during the interview and hiring process. The restriction is part of a growing trend across jurisdictions to reduce the likelihood that women will be prejudiced by prior compensation levels and help break the cycle of gender pay inequity. The restriction takes effect on October 31, 2017.

Specifically, the law makes it an unlawful discriminatory practice for an employer to inquire about the salary history of a job applicant, or to rely on a job applicant's salary history in determining the salary, benefits, or other compensation to be offered to a job applicant. Employers are also prohibited from making salary inquiries to an applicant's current or prior employer (as well as their present or former employees or agents) for the purpose of obtaining the applicant's salary history, and from conducting a search of publicly available records or reports for the purpose of obtaining an applicant's salary history.

"Salary history" includes not only an applicant's current or prior compensation, but also benefits and any other form of compensation that he or she may have received.

The law contains a few exceptions, namely:

Without inquiring about salary history, employers may engage in discussion with the applicant about their expectations with respect to salary, benefits, and other compensation including, but not limited to, unvested equity or deferred compensation that an applicant would forfeit or have cancelled as a result of the applicant resigning from his or her current employer.

If an applicant voluntarily and without prompting discloses salary history to an employer, then the employer may consider such salary history in determining salary, benefits, and other compensation to be offered to the applicant. Further, the employer may verify the salary history.

The law does not apply to applicants for internal transfer or promotion with an employer.

The law also does not prohibit employers from verifying an applicant's non-salary related information or from conducting a background check. However, if in doing so, an employer inadvertently learns about the applicant's salary history, the employer cannot rely on that information for purposes of determining salary, benefits, or other compensation to be offered to the applicant.

August 10, 2017

New York Paid Family Leave: What Employers Need to Know Now and for January 2018

By Kristine Sova
www.sovalaw.com

New York's Paid Family Leave Benefits Law (PFL) will provide New York employees with up to 12 weeks of job-protected paid family leave to bond with a new child, care for a family member with a serious health condition, or address a qualifying exigency relating to the active military duty of a spouse, domestic partner, child, or parent. PFL benefits will be fully funded from employee contributions deducted from payroll. When fully implemented, qualifying employees will be entitled to income replacement of up to two-thirds of the employee's average weekly wage or up to two-thirds of the New York State average weekly salary, whichever is less.

The PFL is effective January 1, 2018, and benefits will increase annually until January 1, 2021. However, employers are permitted to begin making payroll deductions to fund PFL benefits as early as this month (July 2017).

Below are some answers to FAQs about the new law.

Which employees are eligible for PFL benefits?

PFL covers employees whose regular employment schedule is at least 20 hours per week and have worked at least 26 consecutive weeks before the first full day of PFL begins.

Part-time employees whose regular employment schedule is less than 20 hours per week will be eligible for PFL benefits after the employee has worked for 175 days for the employer. The 175 days are actual days worked, not calendar days.

Does an employee need to qualify for leave under the federal Family and Medical Leave Act (FMLA) in order to be eligible for PFL benefits?

No. Employees may be entitled to the benefits associated with PFL even if they do not qualify for leave under the FMLA.

What are the reasons that an employee may take PFL leave?

Eligible employees are entitled to a paid leave of absence from work in three situations:
1. PFL is available for an employee to bond with his/her newborn child during the first year of the child's life, or, in the case of adoption or foster placement, for the first year after the placement of a child with the employee.
2. PFL is available for an employee to care for a family member with a serious health condition. Both "family member" and "serious health condition" are defined in the PFL.
3. PFL is available to address a qualifying exigency relating to the active military duty (or an impending call or order to active military duty) of a spouse, domestic partner, child, or parent.

What paid benefits are provided under the PFL?

Paid benefits will be phased in over a period of 4 years as follows:
Effective January 1, 2018 - 8 weeks of paid leave in a 52-week period at 50% of the employee's average weekly wage, or 50% of the New York State average weekly salary, whichever is less
Effective January 1, 2019 - 10 weeks of paid leave in a 52-week period at 55% of the employee's average weekly wage, or 55% of the New York State average weekly salary, whichever is less
Effective January 1, 2020 - 10 weeks of paid leave in a 52-week period at 60% of the employee's average weekly wage, or 60% of the New York State average weekly salary, whichever is less
Effective January 1, 2021 - 12 weeks of paid leave in a 52-week period at 67% of the employee's average weekly wage, or 67% of the New York State average weekly salary, whichever is less

Are tips included when determining an employee's average weekly wage?

Yes.

Can an employee supplement PFL paid benefits with accrued vacation, sick, personal, or other paid time off?

Yes. Employers and employees can agree to allow the employee to supplement PFL benefits up to their full wages with accrued vacation, sick, personal, or other paid time off. Employers who do so may request reimbursement from the insurance carrier that provides PFL benefits to their employees.

What other benefits are associated with PFL?

PFL offers employees the following additional benefits:
• Job protection - An employee who has received PFL benefits must be reinstated to his/her prior position of employment, or to a comparable position with comparable pay, benefits, and other terms and conditions of employment, upon the conclusion of PFL leave.
• Benefits protection - An employee who receives health insurance through his/her employer is entitled to continued coverage during PFL on the same terms as if the employee had continued to work during the period of PFL.

Is PFL only available "as blocks of time"?

No. Employees may take PFL leave in minimum full-day increments, either in blocks of time or intermittently. If an employee takes leave in daily increments, he/she may only take a maximum of 60 days of PFL in a 52-week period if he/she works 5 or more days per week.

What impact does PFL have on other types of leave, such as FMLA?

If an employee qualifies for leave under both the PFL and the FMLA, the leave under both laws will run concurrently. Employers are obligated to provide employees with any requisite FMLA notices of same.

Employees receiving PFL benefits may not receive New York State disability benefits during the same time period. Employees who are eligible for disability benefits may only receive a combined amount of 26 weeks of disability and PFL benefits in a 52-consecutive calendar week period.

How are PFL benefits funded?

PFL benefits are intended to be fully funded by employees. The maximum employee contribution will be a small deduction from each employee's paycheck. Beginning January 1, 2018, the contribution will be 0.126% of the employee's weekly wage, up to and not to exceed the statewide average weekly wage. The amount is subject to change on September 1 each year.

All insurance carriers who provide short-term disability benefits must provide PFL benefits.

May an employer self-insure for PFL?

Yes, but only those employers who self-insure for statutory short-term disability benefits may do so and only if they elect to do so before September 30, 2017.

What notices and forms are associated with PFL?

Employers are required to provide employees with written guidance concerning their rights and obligations under the PFL, including how to file a claim for PFL. If an employer maintains an employee handbook or written policies regarding benefits and/or leave, then information concerning PFL must be included within the handbook or policies.

Employers must also display or post, in plain view, a notice concerning PFL in a form prescribed by the New York Workers' Compensation Board.

Employers must provide employees with the option to sign a waiver if their regular work schedule will never achieve the period required to become eligible for PFL benefits (see "Which employees are eligible for PFL benefits?" above.) The New York Workers' Compensation Board will develop a waiver form for employers to use.

What should employers do now to prepare for the PFL?

• Employers should determine how they will obtain PFL coverage. If you self-insure short-term disability benefits and would like to self-insure PFL benefits, you must elect to do so by September 30. Otherwise, contact your disability benefits insurance carrier to find out more about adding PFL coverage.
• Begin taking payroll deductions for PFL, or prepare to start doing so by January 1.
• Draft a PFL policy and determine how it will integrate with your business's current leave practices. Train HR and management professionals accordingly.
• Prepare for extended leave requests from employees. Not only are many more employees eligible for leave under the PFL than under the FMLA, but the paid aspect of PFL will likely result in more employees taking PFL than other forms of leave.

September 7, 2017

Employers Must Use Updated I-9 Form No Later than September 18, 2017

By Kristine A. Sova
www.sovalaw.com

In July, United States Citizenship and Immigration Services (USCIS) published a revised Form I-9 for employers to use. Employers must use the new form beginning no later than September 18, 2017.

Among the more notable changes to the form is the addition of Form FS-240 (Consular Report of Birth Abroad) to List C of acceptable documents.

The revised form does not change an employer's obligation to collect or retain I-9 Forms from every employee. Specifically:

Employers must complete the form to document verification of the identity and employment authorization of every new employee (both citizen and noncitizen) hired after November 6, 1986 to work in the United States.
The form must be completed and documents presented and verified within 3 business days of a new employee starting work for pay. However, if the employee is hired to work for less than 3 business days, then the form must be completed and documents presented and verified no later than the first day of employment.
Once an individual's employment ends, employers must retain the I-9 Form and any photocopies of documentation presented by the employee that may have been made for either 3 years after the date of hire (i.e., first day of work for pay) or 1 year after the date of employment ended, whichever is later.

The updated I-9 form (revision date July 17, 2017) may be downloaded at i-9-paper-version (1).pdf.

November 8, 2017

New York Paid Family Leave Forms Are Available

By Kristine A. Sova
http://www.sovalaw.com

The New York Workers' Compensation Board has prepared and released the forms necessary for implementing the New York Paid Family Leave Law, which goes into effect on January 1, 2018. The forms are available on the New York State website.

The available forms include the PFL-1 form, through which employees may request leave, and other forms specific to each covered purpose of paid family leave. The PFL-1 form is attached to the other specific forms pertaining to the sought-after leave:

PFL-2 - for employees requesting leave to bond with a newborn, adopted child or foster child,
PFL-3 and PFL-4 - for employees requesting leave for a family member's serious health condition,
PFL-5 - for employees requesting leave to assist family member(s) due to another family member's active military duty or impending active duty abroad
Also available on the New York State website are the waiver form for employees who will not reach eligibility as well as the Employer's Application for Voluntary Coverage (PFL-135 and PFL-136).

January 16, 2018

Drafting a Lactation Break Policy to Accommodate Nursing Mothers

By Kristine A. Sova
www.sovalaw.com

Federal and New York law both require covered employers to provide reasonable unpaid break time to nursing mothers to express breast milk. Federal law mandates that the breaks be provided for one year following child birth, and New York law mandates that the breaks be provided for three years following child birth.

These requirements beg the question: How much lactation break time is sufficient to be considered reasonable and actually accommodate a nursing mother?

Under New York law, breaks must be a minimum of 20 minutes in duration, or a minimum of 30 minutes when the lactation room is not in close proximity to the employee's work area. However, the number and frequency of breaks needed to express milk as well as the duration of each break will vary depending on the amount of time the employee is separated from the nursing infant and the mother's physical needs.

In most circumstances, it would be reasonable for an employer to provide unpaid break time at least once every three hours if requested by the employee. With a very young infant, though, the mother may need to express milk more frequently.

Further, since the break time includes not only the time actually spent expressing milk, but also set up, clean up and storage of milk, employers should be amenable to providing breaks longer than 20 minutes (or 30 minutes, as the case may be) if the mother's needs necessitate it. For example, mothers who must spend 20 minutes expressing milk may not have sufficient time to do so with a 30-minute break once one factors in the time needed to set up, clean up and store breast milk. The total length of the break will depend on additional factors, such as:

-How long it takes for the employee to express breast milk;
-How long it takes the employee to walk to and from the lactation space and whether she needs to wait to use the space;
-Whether the employee needs to get her pump and other supplies from another location (such as a locker room);
-Whether the employee needs time to set up her pump and how long the set up takes;
-The efficiency of the pump used;
-How long it takes the employee to clean the pump and other supplies and the location of the sink she can use for this purpose; and
-How long it takes the employee to walk to and from the location where she can store her expressed milk.

April 21, 2018

New York Employers Must Conduct Sexual Harassment Training On or Before October 9th

By Kristine A. Sova

A new law requires all New York employers to conduct mandatory sexual harassment training beginning October 9, 2018.

The law requires employers to provide sexual harassment training every year. At a minimum, the training program must:

Be interactive
Explain what constitutes sexual harassment
Provide examples of conduct constituting unlawful sexual harassment
Provide information on remedies available to victims under federal and state laws concerning sexual harassment
Provide information on employees' rights and all available forums for adjudicating sexual harassment complaints
By the October 9th deadline, employers must also implement a policy on sexual harassment, which must meet certain minimum requirements outlined in the new law.

The law also contains several other measures to combat sexual harassment, including:

Effective immediately, expanding the New York State Human Rights Law ("NYSHRL") to provide for employer liability for sexual harassment of non-employees, such as contractors, subcontractors, vendors, consultants or other individuals providing services under a contract in the workplace. This is a significant expansion of the NYSHRL, which previously protected only employees.

Effective July 11, 2018, prohibiting nondisclosure or confidentiality provisions in agreements that seek to settle claims relating to sexual harassment, unless it is the complaining party who seeks confidentiality and provided that the complaining party has 21 days to consider the nondisclosure provision and 7 days to revoke his/her acceptance of the nondisclosure provision.

Effective July 11, 2018, prohibiting mandatory arbitration for sexual harassment claims, unless such arbitration clauses are contained in collective bargaining agreements.

New York employers who operate in New York City are also expected to comply with the Stop Sexual Harassment in New York City Act, which was passed by the New York City Council on April 11, 2018 and is expected to be signed by Mayor de Blasio. The law contains its own training requirements aimed at sexual harassment prevention and applies to employers with at least 15 employees.

May 10, 2018

New Jersey Employers Must Provide Paid Sick Leave Beginning October 29th

By Kristine A. Sova
www.sovalaw.com

A new state law in New Jersey requires employers to provide paid sick leave to their employees. The new law goes into effect on October 29, 2018.

Under the new law, employers must provide employees with up to 40 hours of paid sick leave each benefit year. Employees will be able to accrue one hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours of sick leave time during the benefit year. Further, employees will be able to use their leave time for their own physical or mental condition, to care for a family member's physical or mental condition, to attend a school-related conference or meeting for the employee's child, to obtain services if the employee or a family member is a victim of domestic or sexual abuse, or for official workplace, school or childcare closures caused by a public health concern.

All employers must comply with the new law. There is no exception for small employers, regardless of the number of workers employed. However, the new law exempts the following specific categories of workers: per diem health care workers, construction workers covered by a collective bargaining agreement, and public employees who are already provided with sick leave with full pay.

The new law preempts all existing municipal and county sick leave laws. Employers with paid sick leave policies with terms more favorable to employees than those set forth in the new law will be in compliance with the new law.

The new law also addresses carry over of unused paid sick leave, notice requirements for an employee's use of leave, payout of unused paid sick leave on termination of employment, and recordkeeping requirements, among other requirements.

July 13, 2018

Should You Require Your Employees to Sign Arbitration Agreements with Class Waivers?

By Kristine A. Sova
www.sovalaw.com

In late May, the Supreme Court upheld the lawfulness of class action waivers in arbitration agreements (Epic Systems Corp. v. Lewis, 584 U.S. ____ (2018)). This means that employers are free to not only require employees to sign an agreement mandating that all of their employment disputes go to binding, private arbitration rather than courts, but also that employers can include waivers where employees lose their right to bring claims collectively as a class.

The decision in Epic has been touted as a victory for employers. Now that employers can have an arbitration agreement with a class action waiver (under federal law, at least), does it mean all employers should? Arbitration has its pros, the most notable being a private forum for the resolution of claims, but arbitration has its cons as well. Moreover, a pro for one employer might be considered a con for another. Consider the following pros and cons.

Pros of arbitration

-Private / confidential process
-No juries (juries tend to be employee-friendly, overly generous, and unpredictable)
-Less expensive than litigation in court, but not always the case once arbitrator fees are factored in
-Faster than litigation in court
-Less formal process
-More finality (avenues for appeal are very limited so this could be a con as well)
-Ability to select arbitrator (or arbitrators, as the case may be)

Cons of arbitration

-No formal rules of evidence and arbitrators may end up considering evidence that a judge would not consider
-Arbitrators have a tendency to "split the baby" and may issue an award to give the employee "something" rather than dismiss the case
-Arbitrator fees can be significant (this can add up if there is a class waiver and an employer has to deal with a multitude of individual claims

Class action waivers might not be a pro either when one considers the cost of defending individual claims. The considerations are complex. -
Therefore, if you're considering having your employees sign arbitration agreements with, or even without, class action waivers, you should definitely consult with counsel before doing so.

September 26, 2018

By October 9, New York State Employers Must Revise Their Sexual Harassment Policies

By Kristine A. Sova
www.sovalaw.com

By October 9, every employer in New York State is required to adopt a sexual harassment prevention policy that meets or exceeds certain minimum standards. Specifically, the policy must:

-prohibit sexual harassment consistent with guidance issued by the New York State Department of Labor in consultation with the New York State Division of Human Rights;
-provide examples of prohibited conduct that would constitute unlawful sexual harassment;
include information concerning the federal and state statutory provisions concerning sexual harassment, remedies available to victims of sexual harassment, and a statement that there may be applicable local laws;
-include a complaint form;
-include a procedure for the timely and confidential investigation of complaints that ensures due process for all parties;
-inform employees of their rights of redress and all available forums for adjudicating sexual harassment complaints administratively and judicially;
-clearly state that sexual harassment is considered a form of employee misconduct and that sanctions will be enforced against individuals engaging in sexual harassment and against supervisory and managerial personnel who knowingly allow such behavior to continue; and
-clearly state that retaliation against individuals who complain of sexual harassment or who testify or assist in any investigation or proceeding involving sexual harassment is unlawful.

It's important to note that these requirements go above and beyond language typically found in even the most robust "best practice" type sexual harassment policies. Therefore, all employers will want to review their policies for compliance.

Last month, the state issued a proposed model sexual harassment policy. A copy of the proposed policy is available at https://www.ny.gov/sites/ny.gov/files/atoms/files/StatewideSexualHarassment_PreventionPolicy.pdf. Employers have the option of adopting the final model policy in its entirety, or revising their policies to meet or exceed the new state standards (which may include adopting portions of the final model policy). The final policy is expected to be issued soon, but it is possible it may not be issued before the October 9 deadline.

About Kristine Sova

This page contains an archive of all entries posted to The Entertainment, Arts and Sports Law Blog in the Kristine Sova category. They are listed from oldest to newest.

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