New York Labor And Employment Law Report

New York Labor And Employment Law Report

Pooh Corner and a Zen Approach to Employment Law

Posted in Discharge and Discipline, Employment Contracts, Harassment

In prior blog articles, we’ve visited the battle field with Sun Tzu to learn the art of defending employment litigation, Santa’s Workshop for a holiday reminder that we can be sued for just about anything, and the major league baseball diamond with A-Rod for a lesson in swinging for the fences with the faithless servant doctrine.  Our next stop on the Employment Law Express is to confer with one of the foremost Zen-masters on a more peaceful approach to our day-to-day employment matters.  That master is none other than the venerable Winnie the Pooh.

Often thought of only as a cuddly focal point in children’s fiction, Pooh Corner offers a host of spiritual wisdom that has broad applications as to how we can best manage our day-to-day strife in the world of human resources.  So let’s take a careful look at some of the more astute Pooh-isms and what they tell us about how best to minimize the agita in our work. Continue Reading

U.S. Supreme Court Holds That DOL May Change Interpretations of Regulations Without Public Notice and Comment

Posted in Wage and Hour

On March 9, 2015, the United States Supreme Court ruled unanimously in two consolidated cases that a federal agency does not have to go through the formal rulemaking process, which includes providing public notice and an opportunity for comment, “when it wishes to issue a new interpretation of a regulation that deviates significantly from one the agency has previously adopted.”

The underlying issue in the two cases — Perez v. Mortgage Bankers Association and Nickols et al. v. Mortgage Bankers Association — began when the United States Department of Labor (“DOL”) changed its opinion regarding whether mortgage-loan officers are covered by the so-called “administrative exemption” of the Fair Labor Standards Act.  Prior to 2004, DOL’s Wage and Hour Division issued written advisory opinions that mortgage-loan officers are not eligible for the administrative exemption, and are entitled to payment of overtime for hours worked over 40 in a work week.  In 2004, DOL revised its white collar exemption regulations, but there was some ambiguity regarding whether mortgage-loan officers fell within the revised administrative exemption.  In 2006, DOL’s Wage and Hour Division issued a written advisory opinion that mortgage-loan officers qualify for the administrative exemption as revised in 2004.  However, in 2010, DOL’s Wage and Hour Division changed its mind and issued a written advisory opinion that mortgage-loan officers do not qualify for the administrative exemption.

The Mortgage Bankers Association challenged this 2010 administrative interpretation in federal court, alleging, among other things, that DOL’s interpretation was procedurally invalid in light of a previous decision by the U.S. Court of Appeals for the D.C. Circuit (Paralyzed Veterans v. D.C. Arena L.P.).  Under the so-called “Paralyzed Veterans doctrine,” an agency may not significantly revise its interpretation of a regulation without providing public notice and an opportunity for comment pursuant to the Administrative Procedure Act (“APA”).  The D.C. Circuit re-affirmed the doctrine in the Mortgage Bankers Association cases, holding that the 2010 administrative interpretation had to be vacated because DOL did not hold a notice-and-comment period.

The Supreme Court reversed the D.C. Circuit’s decision.  In an opinion penned by Justice Sonia Sotomayor, the Court held that the “Paralyzed Veterans doctrine” is contrary to the clear text of the APA’s rulemaking provisions, and it improperly imposes on agencies an obligation beyond the ‘maximum procedural requirements’ specified in the APA.”  Justice Sotomayor stated that although the D.C. Circuit was correct that the APA requires agencies to follow the notice-and-comment requirements when amending or repealing a substantive rule — in the same manner as issuing a substantive rule in the first instance — the D.C. Circuit “went wrong” when it applied the same reasoning to interpretations of rules.  In sum, “[b]ecause an agency is not required to use notice-and-comment procedures to issue an initial interpretive rule, it is also not required to use those procedures when it amends or repeals that interpretive rule,” unless “notice or hearing is required by statute.”

The implications of the Supreme Court’s decision reach far beyond the FLSA status of mortgage-loan officers.  The Supreme Court’s ruling paves the way for federal agencies to make significant changes to its interpretations of rules without notice to the public and an opportunity for public comment.  Although employers can still look to administrative interpretations (such as opinion letters issued by DOL’s Wage and Hour Division) for some guidance in complying with employment laws and regulations, employers should be diligent about keeping up with any changes to those administrative interpretations.

An Update on the U.S. Department of Labor’s Agenda

Posted in Wage and Hour

Jennifer Brand, Associate Solicitor of Labor, spoke at the American Bar Association Federal Labor Standards Legislation Committee’s Mid-Winter Meeting on February 26.  Ms. Brand provided an update on important USDOL initiatives and activities.  Ms. Brand discussed recent litigation involving interns and confirmed that the USDOL still believes the six factors outlined in its Fact Sheet #71 is the proper test to determine whether an unpaid internship is lawful.  Ms. Brand did acknowledge that as the workplace evolves, it may, in unusual situations, be appropriate to consider other factors.

Ms. Brand also discussed the USDOL’s appeal of the U.S. District Court for the District of Columbia’s order vacating two major provisions in the USDOL’s Home Care Rule originally intended to be effective January 1, 2015.  The new rule would have excluded third-party employers from relying on the companionship and live-in domestic worker exemptions and would have significantly narrowed the definition of companionship services.  It is anticipated the case will be heard in the May term.

Finally, Ms. Brand acknowledged that the highly anticipated proposed changes to the white-collar exemptions would not be published this month as the USDOL had previously suggested.  She further stated that they are “not imminent.”  Although she would not comment on specifics, she stated that the USDOL is examining the appropriate salary level test and whether the duties test needs to be revised.  Practitioners believe that the proposals will include, among other things, raising the salary level test and narrowing the duties test of the exemptions to make it more difficult to classify employees as exempt.  Some of the expected changes may include implementing a strict percentage of exempt and non-exempt duties and the possible elimination of the “concurrent” duties test whereby an employee may perform exempt and non-exempt duties at the same time.

NYS Acting Commissioner of Labor Accepts the Wage Board’s Recommendation to Increase the Minimum Wage for Tipped Employees in the Hospitality Industry

Posted in New York Law, Wage and Hour

New York State’s Acting Commissioner of Labor, Mario Musolino, issued an Order today, accepting most of the recommendations made by the Hospitality Industry Wage Board, including the recommendation to increase the minimum wage for all tipped employees in the Hospitality Industry to $7.50 per hour effective December 31, 2015.  The one recommendation that the Acting Commissioner rejected was the one that would have provided certain employers with some relief from this significant increase in labor costs — namely, the recommendation to allow employers to take $1.00 off the hourly minimum wage for tipped employees if the weekly average earnings of their employees (wages paid plus tips received) equals or exceeds 150% of the regular minimum wage in New York City or 120% of the regular minimum wage in the rest of the state. Continue Reading

The U.S. Department of Labor Announces a Revised Definition of “Spouse” Under the FMLA

Posted in Family and Medical Leave Act

The U.S. Department of Labor (“DOL”) today announced a change to the definition of spouse under the Family and Medical Leave Act (“FMLA”).  Under this new rule, which will be published later this week (on February 25, 2015), an employee in a legal same-sex marriage will be entitled to use FMLA leave to care for a same-sex spouse regardless of where the employee lives.  The DOL initially proposed the rule on June 20, 2014.

This change was triggered by the U.S. Supreme Court’s 2013 decision in U.S. v. Windsor.  In Windsor, the Court ruled that the federal Defense of Marriage Act (“DOMA”) was unconstitutional.  Prior to Windsor, and consistent with DOMA, the FMLA defined spouse as a marriage between a man and a woman.  This meant that same-sex married couples could not use FMLA leave to care for each other.  Immediately following Windsor, the DOL announced that an employee could take FMLA leave to care for a same-sex spouse, but only if the employee resided in a state that recognized same-sex marriage (i.e., a “state of residence” approach).  This interpretation meant that a category of same-sex spouses were still unable to use the protections of the FMLA:  those who married in a state recognizing same-sex marriage, but who lived in a state that did not.

This latest rule change, which takes effect on March 27, 2015, shifts to a “place of celebration” approach and ensures that same-sex spouses have the same rights as all spouses to exercise FMLA rights.  In other words, as long as the employee is legally married, and regardless of the legal status of same-sex marriage in the state the employee now resides, the employee can take FMLA leave:

  • to care for a same-sex spouse with a serious health condition;
  • to care for a stepchild who is the child of a same-sex spouse;
  • to care for a stepparent who is the same-sex spouse of the employee’s parent;
  • due to a qualifying exigency related to the same-sex spouse’s covered military service; or
  • to care for a covered servicemember who is a same-sex spouse.

Love is in the Air (and at the Office)

Posted in Harassment

Ahhh, Valentine’s Day, when love is all around.  But if one of Cupid’s arrows lands in your workplace, that warm and fuzzy feeling can quickly turn into headache and indigestion.

In your approach to managing office romance, consider the following:

  • A total ban on workplace romance may be a total disaster.  A blanket prohibition against co-workers dating each other may be legal, but it brings with it serious practical problems.  Love being what it is, an employer policy against romantic attraction has little chance of actually preventing it.  Add to this the morale problem of what may be viewed as a heavy-handed policy, and a total ban against dating may be more cure than needed.
  • Consider a more tailored tact.  Another approach is to have a policy articulating a ban on some, but not all, romantic relationships.  For instance, a policy might prohibit employees in a direct reporting relationship from being romantically involved.  If appropriate for your company’s culture, the policy could provide that no person at a certain management level and above (perhaps a Director level) may be involved romantically with any other employee, regardless of reporting lines.   In some workplaces, a ban on relationships between employees in certain functions, such as those designed to be financial checks and balances on each other, may be appropriate.  Yet another approach is a policy that does not prohibit relationships in any specific context but states that the company may find a romantic relationship incompatible with its legitimate business interests, depending on the circumstances.  In any policy, leave open the possibility that the company may disapprove of romantic relationships in contexts beyond any specifically discussed, including where the company deems there to be a conflict of interest or a risk of financial fraud or collusion.
  • Consider requiring disclosure of relationships.  It is generally a good idea to require that romantic relationships, or at least those where one person holds a supervisory role, be disclosed to higher management.  Often, it is not the existence of the relationship that creates the problem but the fact that higher management is not aware of the relationship until something — a conflict of interest or a harassment allegation — hits the proverbial fan.  A disclosure requirement is designed to avoid this.  An additional advantage of a disclosure requirement is that it provides another basis for adverse action against a non‑disclosing manager:  the reason for discipline or even termination is not necessarily the fact of the relationship but the failure to be honest about it.
  • Confirming that the relationship is consensual is often a good idea.  If, as a human resource professional, you become aware that employees are romantically involved, you should consider whether it is appropriate to confirm that the relationship is welcome.  If the relationship is between peers, this may be an unnecessary intrusion into private lives.  However, when the relationship involves employees of unequal power within the organization, it is critical.  This conversation need not be detailed or probing but only enough to ensure that the subordinate employee is comfortable with the situation and to inform him/her that, if that should ever change, he/she has a right to have the romantic attention stop immediately and to report it to human resources if it does not.  Find an appropriate way to document the conversation (which may be as simple as a confirming email or as formal as a letter signed by the employee, depending on the circumstance).
  • Do not be shy about confronting inappropriate behavior.  An employer has an interest in ensuring that a relationship does not become a distraction or offensive to others.  If your company love birds are indiscreet, the company can and should require them to keep their behavior professional at work.
  • Get legal advice before terminating or demoting.  Generally speaking, an employer acts lawfully when it demotes or even terminates an employee as a result of a consensual workplace relationship.  However, there are nuances.  If one gender tends to be fired or demoted by the employer when romances occur, the employer may be liable for gender discrimination.  And, an employee fired or demoted may have a sudden change of perspective and decide that the relationship was really harassment after all.  Other concerns arise if the relationship has soured and the employees are no longer able to work together.  A consultation with counsel is recommended to ensure that the company has fully accounted for any potential legal issues before taking action.

New York Hospitality Industry Wage Board Recommends Increase in Tipped Employee Minimum Wage

Posted in New York Law, Wage and Hour

On September 15, 2014, the New York State Commissioner of Labor assigned the three-member Hospitality Industry Wage Board (“Wage Board”) with the task of reviewing and making recommendations regarding what changes, if any, should be made to the minimum wage rates and tip credits for food service workers and service employees in the hospitality industry.  After conducting several meetings, the Wage Board voted on January 30, 2015, to recommend that the minimum wage rate for all tipped employees in the hospitality industry (regardless of whether they are classified as food service workers or service employees) be increased to $7.50 per hour effective December 31, 2015.  The webcast of the Wage Board’s January 30 meeting can be found here.

Governor Cuomo has expressed his support for the Wage Board’s recommendation, which will now be reviewed by the Commissioner of Labor.  If the Commissioner of Labor accepts the Wage Board’s recommendation, the Hospitality Industry Wage Order will be revised to reflect the increase.

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D.C. Court Strikes Down Two USDOL Regulations and Restores Full “Companionship Exemption” Under the FLSA

Posted in Wage and Hour

In a victory for Home Care employers, the U.S. District Court for the District of Columbia issued consecutive decisions which struck down two regulations issued by the U.S. Department of Labor (“USDOL”) that would have eviscerated the “companionship exemption” contained in the Fair Labor Standards Act (“FLSA”).

The two USDOL regulations enacted in late 2013 were prevented from taking effect, as scheduled, on January 1, 2015, by two related decisions on December 22, 2014 and January 14, 2015, which vacated both regulations on the ground that they “conflicted with the [FLSA] statute itself.”  Each of the two challenged regulations would have imposed greater overtime obligations on Home Care employers, by sharply reducing the reach of the FLSA “companionship exemption,” which, for 40 years, had excluded most Home Care work from federal overtime laws.

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OFCCP Issues Final Rule Protecting Workers From Discrimination Based on Sexual Orientation and Gender Identity

Posted in Employment Discrimination, Federal Contractors

In early December, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) announced the issuance of its final rule implementing Executive Order 13672, which amends Executive Order 11246 by prohibiting Federal contractors from discriminating against employees or applicants based on their sexual orientation or gender identity.  The final rule was published in the Federal Register on December 9, 2014, and will become effective April 8, 2015.

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Governor Cuomo Signs the Bill Eliminating the Annual Wage Notice Requirement

Posted in New York Law, Wage and Hour

Happy New Year!  On December 29, Governor Cuomo signed the bill eliminating the requirement under the Wage Theft Prevention Act that employers in New York provide annual wage notices to their employees.  Although the bill currently provides that it will go into effect 60 days after it is signed (which would mean that it would take effect after the February 1 deadline to provide the wage notices for 2015), the Governor’s approval memo accompanying the bill specifically notes that an agreed-upon chapter amendment will “accelerate the effective date of the notification rule changes in section 1 of the bill to remove the notice requirement on employers for the 2015 calendar year.”

We will provide an update once the expected chapter amendment is enacted in January.