Labor & Employment N.Y. ("LENY")

On December 21, 2010, the National Labor Relations Board proposed a new rule that would "require that employees of all employers subject to the NLRA be informed of their NLRA rights, as they are of other rights at the workplace." The proposed rule would apply only to private-sector employers subject to the NLRA, which currently excludes agricultural, railroad, and airline employers. The purpose of the proposed rule is "to increase knowledge of the NLRA among employees, to better enable the exercise of rights under the statute, and tho promote statutory compliance by employers and unions." The proposed rule can be found on the NLRB's website at Proposed NLRB Rule.

Although the Board has expressed that most employers who might fail to post the notice "would do so because they were unaware of the rule," the Board proposes the following sanctions for failure or refusal to post the required employee notices after being requested to do so: (1) finding the failure to post the required notices to be an unfair labor practice; (2) tolling the statute of limitations for filing unfair labor practice charges against employers that fail to post the notices; and (3) considering the knowing failure to post the notices as evidence of unlawful motive in unfair labor practice cases.

The proposed rule comes out of a 1993 petition to the NLRB by Charles Morris, Professor Emeritus of Law, Southern Methodist University. Similar postings are currently required under the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Occupational Safety and Health Act, the Americans with Disabilities Act, and the Family and Medical Leave Act, among others.

NLRB Member Brian Hayes dissented from the issuance of the proposed rulemaking, expressing his belief that "the Board lacks the statutory authority to promulgate or enforce the type of rule which the petitions contemplated and which the proposed rule makes explicit."

A Notice of Proposed Rulemaking was published in the Federal Register on December 22, 2010 and has a 60 day public comment period. No employer would have to post any notice unless and until the Board issues a final rule requiring such posting. According to the Board, any such notice of NLRA rights could be downloaded from its website and provided at no charge at regional offices.

The Labor and Employment Law Section's Annual Meeting will take place on Friday, January 28, 2011 and will be held at the New York Hilton. A reception and ticketed luncheon follows a half day continuing legal education program. Section Committee meetings will be held mid-afternoon.

The CLE portion of the meeting includes two plenary sessions and four concurrent workshops. The topics to be discussed include:

• Classification is Critical - Worker Misclassification Issues Under the New York State Labor Law, the Workers' Compensation Law, and the Internal Revenue Code
• "Client, You're Fired!" - Ethical Issues in Terminating a Client Lawyer Relationship
• Arbitration Awards - The End or the Beginning: Confirming, Vacating, and Modifying Awards
• To Compete or Not to Compete? Restrictive Covenants in the Internet Age
• Get Out of My Facebook! - Discipline for Off-Duty Conduct in the Public Sector
• The Obama Board Hits the Ground Running: Developments Since the Recent Appointments to the National Labor Relations Board

The luncheon features a Professor Leigh David Benin, Ph.D who will deliver a speech whose topic is entitled Remember New York's Triangle Fire One Hundred Years Later!

Click here for the full Meeting Program.

To register, visit Registration.

On appeal from a decision of Hon. Richard B. Lowe, III (New York County), the New York Court of Appeals once again refused to extend an exception to the employment-at-will doctrine by implying a limitation on the employer's right to dismiss from language in a Code of Ethics. In Sullivan v. Harnisch, 2010 WL 5156502 (Dec. 21, 2010), the Court of Appeals considered the wrongful discharge claim of a Chief Compliance Officer who, in accordance with his company's Code of Ethics, questioned the company's CEO, who he believed engaged in "front-running," when he sold off his own positions in a stock in advance of selling the positions on behalf of clients of the company. Shortly after his questioning of the CEO, he and the Assistant Compliance Officer were summarily terminated. The Compliance Officer alleged, among other causes of action, a claim for "breach of implied contract of employment," arguing that an "express limitation" on the employer's right to discharge him could be found in the company handbook which prohibited retaliation and also from the code of ethics language requiring the Compliance Officer to report complaints to the SEC. The Court of Appeals found "nothing in the record [that] supports the validity of a claim for breach of an implied contract." In so holding, the Court refused to extend the exception to the employment-at-will doctrine found in the case of Wieder v. Skala, 80 NY2d 628 (1992), in which the Court implied the right of an associate attorney not to be dismissed by a law firm for refusing to engage in an unethical act. "As hard as the result may seem, however, nothing in either [the code of ethics] protects the CCO from being terminated, even though the Code authorized Sullivan to make his complaint to the SEC." The case provides a good review of the law of New York since Wiener and Murphy that firmly holds New York as a staunch employment-at-will state.(

On December 13, 2010, Governor Paterson signed into law the Wage Theft Prevention Act (S.8380 and A.11726). The legislation, which takes effect April 9, 2011, requires employers to provide additional information to employees on wages, enhances penalties for violations of state wage law, and expands the scope of the New York wage statute's retaliation provision, among other things.

Additional Content in Wage Notice to Employees: The New York Labor Law currently requires employers to provide newly hired employees, both exempt and nonexempt, with written notice of their rate of pay, regular pay date and, if applicable, overtime rate of pay. The Act will require employers to provide the following additional information in the written notice: how the wage payment is calculated (e.g. hourly, salary, commission); allowances, if any, claimed as part of the minimum wage (e.g. tip, meal, or lodging); the employer's name and any "doing business as" names; the physical address of the employer's main office or principal place of business (and, if different, a mailing address); the employer's telephone number; plus other information deemed "material and necessary" by the Commissioner of Labor. For all nonexempt employees, the notice must also contain the employee's regular hourly rate and overtime hourly rate. In addition, the Commissioner has discretion to waive or alter the notification requirements for employers deemed "temporary help firms" under New York Labor Law.

Frequency of Wage Notice: The Act also changes the frequency with which employers must provide the written notice to employees. Under the Act, notice must be issued not only when an employee is hired (as is currently required), but also (i) on or before February 1 of every subsequent year, and (ii) at least seven days prior to any changes to the information contained in the wage notice, unless such changes are reflected in the wage statement employers must provide with each paycheck.

Language of Wage Notice to Employees: The Act specifies that the wage notice must be provided in English and, if applicable, the primary language of each employee. The Commissioner of Labor is directed to prepare template wage notices in English and additional languages chosen in the Commissioner's discretion. If an employee identifies as his or her primary language a language for which a template is not available from the Commissioner of Labor, an employer complies with this requirement by providing the notice in English.

Employee Acknowledgment of Receipt of Wage Notice: Under current law, employers must obtain, and maintain for six years, a signed and dated employee acknowledgment each time a wage notice is provided. The Act adds additional required elements to the acknowledgment--employees must affirm that (i) they accurately identified their primary language to the employer, and, (ii) the employer provided the notice in such language or, if the Commissioner of Labor has not made a template notice available in such language, in English.

Remedies for Failure to Provide the Written Wage Notice: If an employer fails to provide the written wage notice within 10 business days of an employee's date of hire, the Act permits both the employee and the Commissioner of Labor to bring an action against the employer. An employee may recover $50 for each work week in which a violation occurred, up to a maximum of $2,500, plus costs, reasonable attorney's fees and injunctive relief. The Commissioner, likewise, may recover $50 per workweek per employee, but there is no cap on damages in an action by the Commissioner. The Act provides employers with two affirmative defenses. An employer can avoid liability if it demonstrates that it: (1) paid all wages legally required; or (2) had a good faith, reasonable basis for not providing notice.

Wage Statements: The Act also requires employers to provide employees with additional information in the mandatory statement issued with every payment of wages. Currently, under New York regulations, the wage statement must list hours worked, rates paid, gross wages, allowances, if any, claimed as part of the minimum wage, deductions and net wages. The Act will require employers to include the following information in every wage statement (some of which was previously required by the regulations): dates of work covered; name of employee; name, address and phone number of employer; rate or rates of pay and basis thereof (e.g. hourly, salary, commission); gross deductions, allowances claimed as part of the minimum wage, and net wages. Under the Act, employers must provide non-exempt employees with the following additional information: regular rate of pay, overtime rate of pay, number of regular hours worked, and number of overtime hours worked. Employers must retain wage statements for six years.

Remedies for Failure to Provide Wage Statement: The Act also allows employees to bring civil actions against employers who do not furnish the requisite wage information with each pay stub. The Act calls for employers to pay $100 damages for each week the law is violated, up to $2,500, plus costs, attorney's fees and injunctive relief. The Commissioner of Labor may also bring such an action and assert claims for the same relief, except there is no similar cap on damages. In defending such actions, the Act affords employers the same two affirmative defenses that are available when defending wage notice claims.

Increased Damages for Failure to Pay Wages: The Act increases damages available for failure to pay wages. Currently, employees may recover, as liquidated damages for failure to pay wages due, 25% of unpaid wages. The Act increases liquidated damages to 100% of wages owed. The Act also clarifies that employees may recover prejudgment interest on unpaid wages.

Expanded Retaliation Provision: The Act also expands the retaliation provision of New York's wage statute. Under current law, an employee may bring a claim for retaliation against an employer that "discharge[s], penalize[s], or in any other manner discriminate[s] or retaliate[s] against an employee" that complains to the employer or the Department of Labor "that the employer has violated any provision of" New York's wage statute.

Under the Act, the provision is amended to prohibit retaliation against an employee (i) who complains to the employer, the Department of Labor, the New York Attorney General, "or any other person" that an employer "engaged in conduct that the employee, reasonably and in good faith, believes violates any provision of" the New York wage statute or any order by the Commissioner of Labor, or (ii) "because such employer . . . believes that such employee has made a complaint to his or her employer, or to the [Commissioner of Labor], or to the attorney general . . ., or to any other person that the employer has violated any provision of this chapter, or any order issued by the" Commissioner of Labor.

Additional Retaliation Remedies: The Act clarifies and expands the remedies available to employees asserting retaliation claims under New York's wage law. Currently, an employee bringing an action for a violation may seek "all appropriate relief," including "lost compensation," "damages," reinstatement to the employee's former position, and reasonable attorneys' fees. Under the Act, an employee may also seek an order "enjoining the conduct of any person or employer," liquidated damages of no more than $10,000, and an award of front pay in lieu of reinstatement.

Criminal Liability for Partnerships and LLCs: The Act expands criminal liability to partnerships and limited liability companies. The Act calls for criminal penalties of up to one year in prison and a $20,000 fine for failure to keep or furnish proper records or pay minimum wage or overtime compensation in accordance with New York Labor Law.

Postings of Wage Violations: The Act also empowers the Commissioner of Labor to require employers to post a summary of the employer's wage violations in the workplace and, for willful violators, to affix violations in an area visible to the general public.

Tolling Statute of Limitations: The Act does not alter the six year statute of limitations for wage suits, but does adds a tolling provision whereby the statute of limitations is tolled from the earlier of either the date an employee files a complaint with the Department of Labor or the date the Commissioner commences an investigation.

This post was authored by Matt Lampe, Craig Friedman, and David Krieger of Jones Day.

The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

On October 25, 2010, in Equal Emp’t Opportunity Comm’n v. Bloomberg, L.P., Judge Preska of the United States District Court for the Southern District of New York granted, inter alia, the defendant’s motion for summary judgment against the EEOC for failure to conciliate certain claims before bringing suit. By statute, the EEOC is permitted to sue only after exhausting good faith conciliation efforts. While the “contours of the conciliation process will vary” by case, the court stated that conciliation efforts are sufficient where the EEOC “1) outlines to the employer the reasonable cause for its belief that the employer is in violation . . . , 2) offers an opportunity for voluntary compliance, and 3) responds in a reasonable and flexible manner to the reasonable attitude of the employer.” Holding that the EEOC failed to meet this third requirement with respect to its Title VII retaliation claims against Bloomberg, the Southern District “conclude[d] that dismissal [was] the appropriate sanction” under the circumstances. The court denied, however, Bloomberg’s motion with respect to the EEOC’s conciliation efforts for its Title VII discrimination claims.

Although the conciliation process for the retaliation claims was “lengthier” than the process for the Title VII discrimination claims, the court noted that it was also “more vituperative” and that the EEOC’s approach to the process “reek[ed] of using [its] proposed agreement as a ‘weapon to force settlement.’” After the EEOC sent Bloomberg a letter of determination, Bloomberg counter proposed, stating that many of the EEOC’s proposals were “acceptable,” but that Bloomberg was “not in a position” to offer monetary relief to the individual plaintiffs. Bloomberg requested additional information about the EEOC’s determinations and additional time to investigate the merits of the claims. Bloomberg likewise stated that it was “not in a position” to create a class fund, but that it sought “further discussion” on the matter. The EEOC in turn responded that it would not engage in discussions until Bloomberg responded to the EEOC’s monetary requests, and additionally stated that Bloomberg’s request for information was “unnecessary” (and claimed that such information was protected by the deliberative process privilege). These were the “battle lines [that] were drawn,” and after a five month “vociferous letter-writing campaign” that “merely traded jib for jab” and one fruitless meeting, the EEOC declared that the conciliation had been unsuccessful.

The court reasoned that the vague information the EEOC offered about its retaliation claims was “insufficient for Bloomberg to be able to formulate a reasonable monetary counteroffer” to the EEOC’s demand of over $41 million. “In a complex case like this one, the EEOC cannot, when the employer reasonably asks for information to formulate a monetary counteroffer, make substantial monetary demands and require employers simply to pony up or face a lawsuit.” The court recognized the EEOC’s discretion in framing the conciliation negotiations, but rejected the agency’s focus on Bloomberg’s failure to provide a monetary offer “to the exclusion of other considerations.” Rather than “stonewall[ing],” the court stated that, even though the “EEOC need not prove its charges ‘to the employer’s satisfaction,’” the EEOC “should have done something in response to Bloomberg’s reasonable entreaties.”

The court was persuaded, through the parties’ “non-effort to conciliate” and “their more recent conduct of the litigation,” that further attempts at conciliation would be “futile.” Therefore, the court, citing to a handful of cases from different jurisdictions, disregarded the ordinary remedy—a stay to allow conciliation—and instead dismissed the retaliation claims for EEOC’s failure to conciliate in good faith.

In contrast, the court determined that the EEOC’s conciliation process for its discrimination claims was adequate. The court described Bloomberg’s position in that process as “effectively a demurrer;” Bloomberg “denied that its policies and practices violated the law,” “offered less than one percent of the amounts the EEOC requested” for the individual parties, and “essentially refused to discuss class-type relief at all.” Accordingly, the court held that the EEOC reasonably perceived that the parties’ differences were irreconcilable and that further negotiations would be futile.

Bloomberg also moved for summary judgment on grounds that the EEOC failed to adequately investigate the charges or to provide Bloomberg with adequate notice of the charges to allow for sufficient conciliation. Both arguments failed.

The court granted summary judgment to Bloomberg on the basis that some of the EEOC’s claims were time-barred. Of potential interest is the court’s decision that the charge-filing period under section 706, incorporated into section 707 by reference, was applicable to section 707 “pattern or practice” claims at least where, as in Bloomberg’s case, the “pattern or practice” claim involves allegations of “discrete discriminatory acts.” These cases are distinguishable from cases where courts have viewed pattern or practice charges as “inherently different” from individual charges because they lack an identifiable “single discriminatory event to which the charge-filing period can be tied.” Finally, the court also granted summary judgment to claims that were time barred under section 706’s charge-filing period, refusing to apply, as the EEOC urged, the “continuing violation” doctrine as an exception to the timely filing requirement.

On October 27, 2010 the Second Circuit Court of Appeals affirmed a district court's denial of class certification in Myers v. The Hertz Corporation. Myers was a Station Manager for a Hertz outlet at MacArthur Airport in Long Island, and sued Hertz on behalf of herself and others similarly situated for failure to pay overtime, in violation of the FLSA, and failure to pay wages in a timely manner in violation of section 191d of the New York State Labor Law. There was no dispute that Hertz had not paid Myers overtime. Instead, Hertz treated Myers and other Station Managers throughout the country as exempt "Executive" employees, because their primary responsibilities were managerial, involving supervision of other employees, enforcement of policies and management of inventory.

The issue on appeal was the lower court's denial of class certification of the state law claim under FRCP 23. The state law claim was not for overtime as such, but for failure to pay earned wages within the time specifications of NYS law. Therefore, it was derivative of the FLSA claim, meaning that an overtime violation had to be established before the court could address the state law claim.

Applying an abuse of discretion standard, the Second Circuit affirmed the denial of class certification, ruling that plaintiffs had failed to prove by a preponderance of evidence that common questions of law or fact would "predominate" over questions affecting only individual members of the class. In this case, the lower court would be required to examine the actual duties and responsibilities of every class member to determine whether they were an exempt "Executive" under the FLSA. The fact that Hertz classified all Station Managers as exempt was insufficient, under the facts of this case, to establish the "predominance" requirement for class certification (though the Court was quick to point out that it was not establishing such a rule for every "exemption" case). The fact that Station Managers had similar responsibilities throughout the country also failed to establish "predominance," since the record also established that each Hertz location was unique and there were variances from location to location. Thus, it was not an abuse of discretion for the lower court to conclude that Hertz's liability "might require 'individual factual analysis' to resolve."

The Court also addressed plaintiffs' contention that it was "legal error" for the lower court to focus on Hertz's affirmative defense in its analysis of the "predominance" issue. The Court noted that the applicability of the "Executive" exemption was the "mirror image" of plaintiffs' case in chief. There was no reason, therefore, to accord less weight to the affirmative defense. Moreover, it is well-settled that courts must consider potential defenses in assessing the predominance requirement.

On August 31, 2010, Governor Paterson signed into law the New York State Construction Industry Fair Play Act, (S. 5847-F and A. 8237-D). The law’s main purpose is to create a presumption that individuals employed by contractors in the construction industry are employees rather than independent contractors.

The Act created a new Article 25-B in the New York Labor Law that creates the presumption that a person hired by a contractor in the construction industry is an employee unless the following three conditions are met: “(A) the individual is free from control and direction in performing the job, both under his or her contract and in fact; (B) the service must be performed outside the usual course of business for which the service is performed; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue.”

In addition, the Act requires contractors to conspicuously post an onsite notice (to be published by the Commissioner of Labor) that, among other things, “describes the responsibility of independent contractors to pay taxes required by state and federal law, the rights of employees to workers’ compensation, unemployment benefits, minimum wage, overtime and other federal and state workplace protections, and the protections against retaliation and the penalties in this article if the contractor fails to properly classify an individual as an employee.” The notice must also include contact information for individuals to file complaints or inquire with the Commissioner of Labor about classification status.

Further, any contractor who willfully violates the law by misclassifying an employee as an independent contractor will be subject to civil and criminal penalties. Notably, the term “willfully violates” is defined as when “a contractor knew or should have known that his or her conduct was prohibited by this section.” The civil penalty is up to $2,500 for the first violation per misclassified employee and up to $5,000 for each subsequent violation per misclassified employee in the five-year period following the first violation. Any contractor who willfully violates the section can also be guilty of a misdemeanor punishable by no more than thirty days imprisonment or up to a $25,000 fine for a first offense, and imprisonment for not more than sixty days or $50,000 for any subsequent offenses.

The Act also prohibits retaliation against an individual who has made or threatens to make a complaint that rights have been violated under the article, for causing any proceeding to be brought under the article, or for testifying or providing information concerning a violation.

This post was authored by Matt Lampe and Kristina Yost of Jones Day.

The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

Employers and employees alike should be aware of the recent amendments to the New York False Claims Act, which were enacted on August 13, 2010, and which became effective on August 27, 2010.

Like the federal Fraud Enforcement and Recovery Act of 2009 (which amended the federal False Claims Act) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (which amended both the federal False Claims Act and the Sarbanes-Oxley whistleblower provisions, as well as created two new qui tam provisions for commodities and securities exchanges), the recent amendments to the New York False Claims Act increase the protections and incentives that are available to whistleblowers.

The amendments now permit qui tam plaintiffs to bring actions for tax fraud when the net income or sales of the defendant exceed one million dollars and where damage to the State exceeds $350,000. The scienter requirement is quite low—false tax returns submitted in “reckless disregard” of the law are sufficient. Because whistleblowers are awarded between fifteen to twenty five percent of the recovery or settlement in a case pursuant to the New York State False Claims Act, employees are now incentivized to report any tax law violations by their employers.

The amendments also strengthen the New York State False Claims Act’s retaliation provisions, which now protect a very broad group of potential whistleblowers, including: “any current or former employee, contractor, or agent of any private or public employer who [has been] discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment, or otherwise harmed or penalized by an employer, or prospective employer”.

Finally, the amendments protect employees who “obtain[] or transmit[] to the state, a local government, a qui tam plaintiff, or private counsel solely employed to investigate, potentially file, or file a cause of action under [the NYS False Claims Act], documents, data, correspondence, electronic mail, or any other information” in support of that action, even if the taking of such materials “may violate a contract, employment term, or duty owed to the employer or contractor.”

I suspect that many run-of-the-mill business tort and unfair competition cases may now invoke the New York State False Claims Act as a defense against claims of misappropriation of confidential information and documents. Thus, for example, in a restrictive covenant case, an employer seeking the return of confidential documents may now see former employees alleging that they were permitted to take such documents to support a potential case under the New York State False Claims Act, and that the initiation of the restrictive covenant case against the employee constitutes retaliation under that act.

It is estimated that New York State will recover more than $20 million per year due to increased whistleblowing resulting from the recent amendments.

The New York State Bar Association has come out in support of the amendments.

The Labor and Employment Law Section of the New York State Bar Association will celebrate its 35th Anniversary by holding its Fall Meeting at Longboat Key Club and Resort in Longboat Key, Florida. The Fall Meeting will begin Sunday, October 31, 2010 and conclude Wednesday, November 3, 2010.

Among the topics that will be addressed at the plenary sessions are:

• The Health Care Overhaul: What you Need to Know (for Now)
• National Labor Relations Board 2010
• Immigration Initiatives: Latest Legislative Updates & State Issues in Immigration
• Ethical Issues Surrounding the Third Party Payer Situations
• There Is Protected Activity, Now What?
• IThe Challenges of Prospectively Preventing and Handling Workplace Violence

Attendees will also be able to attend workshops covering the following issues:

• Severance / Termination: Checklists and Model Agreements
• A Review of Recent Decisions at PERB
• E-Discovery Under New York State Law
• Internal Union Elections, Discipline & Speech: The Challenge of Moving the Union Forward

For Brochure, Agenda, Registration and Hotel Accommodation Form, visit the Section’s website at Fall Meeting 2010.

On August 31, 2010, Governor Paterson signed a bill (A01470-B/S2311-E) into law that provides various employment rights for domestic workers, such as nannies. Our post from June 22, 2010 discussed an earlier version of the bill passed by the State Senate that provided slightly different protections.

The new law requires employers of domestic workers to pay the minimum wage, pay overtime for any hours worked beyond forty hours per week (or forty-four hours per week for live-in domestic workers), provide three days of paid vacation after one year of service to the same employer, and provide twenty-four consecutive hours of rest each week. If the domestic worker voluntarily chooses to work on the day of rest, the worker must be paid overtime for that day of work. The law also provides domestic workers with coverage under the Workers Compensation Law and adds a new section to the New York State Human Rights Law providing for protections from sexual and other forms of harassment. By November 1, 2010, the Commissioner Of Labor must report to the Governor and leaders of the State Senate and Assembly on the feasibility of giving domestic workers the right to organize and bargain collectively and on how to best provide educational materials on the new law. The new law will go into effect on November 29, 2010.

Further information on the new law, including its full text, is available here: http://assembly.state.ny.us/leg/?default_fld=&bn=A01470%09%09&Summary=Y&Actions=Y&Votes=Y&Memo=Y&Text=Y.

This post was authored by Matt Lampe and Kristina Yost of Jones Day.

The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.