United States: New York Enacts Significant New Employment Laws

In one of the most active legislative periods in recent times, New York State has enacted a host of new and amended laws addressing a variety of workplace issues. This Alert summarizes these key developments, including:

• Commissioned Salespersons: effective October 16, 2007, Section 191(c) of the New York Labor Law ("NYLL") has been amended to provide that unless the agreed terms of employment with regard to commissioned salespersons are in a signed writing, it will be presumed that the terms of the employment are as described by the commissioned salesperson. Employers should memorialize in a signed writing how wages, salary, drawing account (if any), commissions and all other monies earned and payable shall be calculated as well as describe what monies are earned and payable upon termination of employment.
• The weekly wage threshold that exempts certain executive, administrative and professional employees from the definition of "clerical and other workers" in Article 6 of the NYLL has increased to $900 and as a result, employers who fail to make timely benefits or wage supplement payments to employees earning less than $900 weekly will be subject to liability, including criminal sanctions.
• For any worker earning less than $900 weekly, employers will require their consent for direct deposit of wages.
• Employers will now be subject to civil monetary penalties for meal and rest period violations.
• Employers may no longer inquire into, or make an adverse employment decision based on, an applicant’s or employee’s having been convicted of a criminal offense when the conviction (i) has been sealed or (ii) is classified as a youthful offender adjudication.
• Employers are now required to provide a clean, private location for nursing mothers to express milk in the workplace.
• Certain employers will be required to grant three hours leave in any twelve month period for employees to donate blood.
• The spouse of a member of the armed forces, who has been deployed during a period of military conflict, must be provided up to ten days unpaid leave.

• Contractors and subcontractors on public works contracts must notify workers in writing of the prevailing wage rate for their particular job classification.

• A change to unemployment insurance benefits law, providing that a person’s last employer, who normally would be charged 100% of computed benefits, may apply to the New York State Department of Labor ("NYSDOL" or the "Department") to have benefits charges recalculated, if the employer can demonstrate that it paid the claimant less in total wages than the seven weeks of benefits.

New Amendment Requires Written Agreements for Commissioned Salespersons & Expands Scope of NYSDOL’s Jurisdiction and Enforcement Powers

A recent amendment to the New York Labor Law requires employers to memorialize the terms of employment of commissioned salespersons in a written agreement. The new amendments also have wide-ranging implications for employers in other respects as well, as they (i) increase the weekly wage threshold for purposes of determining whether an employee is subject to enforcement actions for payment of benefit and wage supplements, (ii) increase the weekly wage threshold that exempts employers from obtaining consent from certain employees for direct deposit, (iii) increase the availability of criminal sanctions for failure to pay benefits or wage supplements, and (iv) create civil penalties for employers that fail to provide meal and rest periods as provided for under New York law. See Assemb. S3674, 2007-2008 Reg. Sess. (N.Y. 2007).

The new legislation amends Labor Law Section 191(c) to provide that the terms of employment of a commissioned salesperson must be in a written agreement, and must describe how and when a commission is earned and payable. Until now, the Labor Law did not require that commissioned salespersons have written employment agreements. Effective October 16, 2007, however, employers will be required to reduce the terms of employment of commissioned salespersons to a written agreement signed by both employer and employee that includes a description of how wages, salary, drawing account (if any), commissions and all other monies earned and payable are calculated and how they will be paid if the employment relationship is terminated by either party. Employers must keep written employment agreements on file for at least three years.

Employers that do not have written agreements with commissioned salespersons run the risk of adverse findings by the NYSDOL when employees bring wage complaints, as the new law also creates a presumption that, in the absence of a written agreement, the terms of employment presented by the employee are accurate.

As in the past, NYLL Section 191(c) continues to require that the payment of commissions and all other monies earned shall be paid in accordance with the terms of the agreement, but not less frequently than once a month and not later than the last day of the month following the month in which the commissions are earned, except if regular monthly payments of monies are "substantial" then additional incentive earnings can, by the agreement, be paid less frequently than once a month.

Employers in New York are strongly encouraged to immediately memorialize commission and pay arrangements with all of their commissioned salespersons, and to ensure that such agreements include all of the required terms and are signed by both parties. Such agreements should include at-will language if the employees are at-will.

The new amendment extends the definition of "clerical and other worker" in NYLL Section 190(7) to any such worker earning less than $900 weekly, with the result that such employees will have enforcement actions for benefits or wage supplements. Currently, executive, administrative or professional employees who earn more than $600 per week fall outside the definition of a "clerical or other worker" for purposes of Article 6 of the NYLL. Increasing the weekly wage threshold to $900 narrows the pool of employees eligible to qualify as an "exempt" executive, administrative and professional employee for purposes of benefit and wage supplement payments, and enables the Department to investigate wage claims for those employees earning less than $900 weekly. The new definition goes into effect January 14, 2008.

The legislature’s stated purpose in raising the weekly earnings threshold is to allow for more effective enforcement and regulation by the Department by expanding its jurisdiction over more individuals. The new amendment does not affect the requirement that bona fide executive, administrative and professional employees be paid a minimum of $536.10 per week to be exempt from New York State overtime requirements.

Employee Consent for Direct Deposit

Section 192 of the NYLL, generally, requires that employers receive employee consent prior to directly paying or depositing net wages or salary of the employee into a bank or other financial institution. However, employees employed in an executive, administrative or professional capacity who earned more than $600 per week were exempt from this consent requirement. Under the new legislation, effective January 14, 2008, the threshold triggering this exemption will increase to $900. As a result, an affirmative consent will need to be obtained from employees earning less than $900 weekly in order to subject them to direct deposit.

Employers should revisit their pay practices for employees who earn between $600 and $900 per week and ensure that they have received proper consent to pay such employees' wages or salary via direct deposit.

The new amendments also expand the NYSDOL's jurisdiction and enforcement capabilities in general respects. First, employers will be subject to scrutiny for failure to timely provide benefits and wage supplements to a larger group of employees. Under Section 198-c of the Labor Law, employers that fail to pay or provide accrued or earned benefits or wage supplements to employees within 30 days after such payments are due will be guilty of a misdemeanor. Generally, benefits and wage supplements include, but are not limited to, reimbursement for expenses; health, welfare and retirement benefits; and vacation, separation or holiday pay. Prior to this amendment, the law did not apply to employees employed in an executive, administrative or professional capacity who earned more than $600 per week. Effective January 14, 2008, the pay threshold for exempt executive, administrative and professional employees increases to $900, thereby increasing an employers’ potential exposure to criminal sanctions under Section 198-c.

Second, employers will now be subject to civil monetary penalties, in addition to criminal penalties, for violations of NYLL Sections 161 and 162, which govern rest and meal period requirements, respectively. New York law requires that most employers allow every employee at least 24 consecutive hours of rest in any calendar week, as well as at least a thirty minute meal break period. N.Y. Lab. Law §§ 161, 162. While employers have been subject to criminal sanctions for violations of these provisions, the legislature found this a weak deterrent due to prosecutorial disinterest. Under the new amendments, Sections 161 and 162 are included as punishable offenses under Section 218 of the Labor Law. Effective immediately, failure to comply with New York's meal and rest period requirements may result in civil fines of up to $1,000 for the first violation, $2,000 for the second violation, and $3,000 for the third and subsequent violations.

New Restrictions On Inquiries and Consideration of Conviction Records

Effective November 1, 2007, New York employers may no longer inquire into, or make an adverse employment decision based on, an applicant’s or employee’s having been convicted of a criminal offense when the conviction record has been sealed pursuant to Section 160.55 of the Criminal Procedure Law or when the conviction is classified as a youthful offender adjudication under Section 720.35(1) of the Criminal Procedure Law. The new law, which is an amendment to Section 296(16) of the New York State Executive Law (the "Human Rights Law"), does not apply to the licensing activities of governmental bodies in relation to the regulation of guns, firearms and deadly weapons or in relation to an application for employment as a police or peace officer. See Assemb. A3379, 2007-2008 Reg. Sess. (N.Y. 2007). This change expands the protections from discrimination for exoffenders and is in keeping with New York public policy to provide employment opportunities to individuals who have already "served their debt to society" and reduce recidivism caused by lack of employment and income.

This amendment adds to the legal protections for exoffenders, including those implemented in July 18, 2007, when Sections 750, 751, and 752 of the Corrections Law were amended to make clear that the prohibition of discrimination based on past convictions applies not just to applicants but also to existing employees. See Assemb. A3208, 2007-2008 Reg. Sess. (N.Y. 2007). Thus, under the current law, employers are prohibited from making adverse hiring or employment decisions based on past convictions unless the offense has a direct relationship to the employment sought or held, or to the opportunity or job in question, or unless the granting or continuation of employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

New York employers have long been prohibited from inquiring into an applicant’s arrest record or record of criminal accusations to the extent the arrest or accusation was dropped or otherwise terminated in favor of the applicant, except as to applicants for police and peace officers. Currently, there is no prohibition of inquiries about pending arrests and criminal accusations.

All employers are advised to carefully review their application forms and hiring and background screening procedures to ensure compliance with these amendments.

New Protections For Nursing Mothers

Effective August 15, 2007, New York passed a law providing that employees shall have the right to express breast milk at work and requiring employers to make reasonable efforts to provide a location for a woman to express milk in privacy. As a practical matter, this means that employees should be given adequate break time to express milk at times when they need to do so and that employers should provide a private and sanitary room with appropriate seating and a milk storage refrigerator. Employers must provide either reasonable unpaid break time or permit an employee to use paid break or meal time for these purposes. Multi-use rooms and bathrooms are not appropriate facilities for purposes of the new law. The new law also prohibits employers from discriminating against employees who request and take time off to express breast milk at work. See Assemb. A1060, 2007-2008 Reg. Sess. (N.Y. 2007).

With this law, New York joins 13 other states that have similar laws requiring accommodations for and/or providing protection for nursing mothers. New York employers are advised to designate an appropriate room for purposes of their employees expressing milk and may wish to create a policy related to accommodation of nursing mothers.

Leave Must Be Granted To Donate Blood

An amendment to the NYLL now requires that an employer with more than twenty employees must grant three hours leave in any twelve month period to any employee who works twenty or more hours per week and seeks to donate blood. N.Y. Lab. Law § 202-j. The new law does not specify whether or not such leave must be paid.

The statute authorizes and directs the Commissioner of Labor to establish any necessary guidelines, including notice requirements, prior to its December 13, 2007 effective date. The new law also prohibits retaliation against any employee for requesting or obtaining leave under this section. An employer must provide time off for blood donation in addition to time off allowed under any other provision of law.

Leave To Certain Military Spouses

In August 2007, the New York legislature amended Labor Law Section 202-i, which requires an employer to allow up to ten days unpaid leave to the spouse of a member of the armed forces of the United States, national guard or reserves who has been deployed during a period of military conflict, to include the State of New York within the meaning of "employer" under the statute. The law applies to an employee who works an average of twenty or more hours per week, and to an employer that employs twenty or more employees, including individuals, corporations, and state and local governments. See Assemb. S1567, 2007- 2008 Reg. Sess. (N.Y. 2007).

This amendment is effective retroactive to August 16, 2006, the date § 202-i was originally added to the Labor Law. The law also prohibits retaliation against an employee for requesting or obtaining a leave of absence under this section. Employers may wish to include reference to this new leave law in their handbooks or military leave policies.

Public Works Employers Must Provide Additional Notification of Wage Rates and Supplements to Employees

Section 220 of the NYLL was amended to require contractors and subcontractors on public works contracts to provide written notification to laborers, workers or mechanics whom they employ of the prevailing wage rate for their particular job classification. This notification must be given to such workers on their first and every subsequent pay stub. Contractors and subcontractors are also required to provide workers with notification of the NYSDOL’s contact information at the beginning of the performance of each public works contract and following July 1 of each year. Such notification must contain a statement that it is the worker’s right to contact the NYSDOL or other representative of his or her choice if s/he is not receiving the proper prevailing rate of wages and/or supplements for his/her particular job classification. The law is effective February 24, 2008. See Assemb. A9052, 2007-2008 Reg. Sess. (N.Y. 2007).

The statute also sets forth civil penalties for violations of the above provisions of up to $50 for the first violation, $250 for the second violation, and $500 for each subsequent violation.

Allocation Of Unemployment Benefit Charges

Effective January 1, 2009, changes to Labor Law § 581 will go into effect providing that the last employer of a person who has filed a valid original claim for unemployment insurance benefits, and who would normally be charged for 100% of computed benefits for the first seven weeks of the claim, may apply to the Department of Labor to have benefits charges recalculated if the employer can demonstrate that it paid the claimant less in total wages than the seven weeks of benefits. If the employer so demonstrates, the Department would recalculate the charges to be borne by the last employer and other base period employers so that the last employer would pay in benefits an amount equal to or only slightly greater than it had paid the claimant in compensation. The remainder of the charges would be allocated among all base period employers on a proportional basis.

Under current rules, the last chargeable employer is required to pay 100% of unemployment insurance benefits for the first seven weeks of a claim, regardless of wages paid. The change in the law will be of particular benefit to employers that employ a lot of short term workers or have high turnover, like those in the staffing, retail, or grocery industries. See Assemb. A3626, 2007-2008 Reg. Sess. (N.Y. 2007).

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