United States: New York Employment Law Roundup: July, August, & September 2015

Today's New York employment law landscape is increasingly dynamic, with a constant stream of newly issued legislation and judicial opinions. To keep our readers current on the latest events, we share regular summaries of recent developments affecting Empire State employers. Here's what happened during the period from July–September 2015:

NYC Agency Issues Guidance on New Credit Check Law

As we previously reported, a new law recently took effect in NYC that, subject to a few narrow exemptions, bars employers from requesting or considering, for employment purposes, a prospective or current employee's "consumer credit history" (the Law). Now, the NYC Commission on Human Rights (NYCCHR), the agency tasked with enforcing the Law, has issued interpretive guidance that clarifies certain inherent ambiguities in the Law and constricts the already-narrow scope of the Law's exemptions (the Guidance).

After briefly explaining the legislative intent behind the Law, the Guidance, which can be found here, quickly turns to the Law's eight exemptions. Preliminarily, the NYCCHR notes that "[n]o exemption applies to an entire employer or industry. Exemptions apply to positions or roles, not individual applicants or employees." Against this backdrop, the Guidance then effectively takes the narrowest possible view of each of the exemptions, cautioning further that employers bear the burden of proving that any claimed exemption is applicable. Beyond tightening the scope of the Law's exemptions, the NYCCHR also takes the position that employers availing themselves of any exemption should inform affected applicants and employees of such exemption and also maintain an "exemption log" for five years from the date an exemption is used. The Guidance then proceeds to list eight pieces of information that should be included in such logs.

The NYCCHR closes the Guidance by reiterating the consequences of non-compliance, which include the broad remedies permitted by the NYC Human Rights Law (e.g., back and front pay, compensatory and uncapped punitive damages), as well as civil penalties of up to $250,000 for violations that are the result of willful, wanton, or malicious conduct.

Given the myopic view of the Law the NYCCHR has expressed in the Guidance, an immediate review of existing policies and procedures regarding credit checks – as well as of job positions to determine which are exempt under the Law – is a must for employers that perform credit checks on job candidates and/or current employees.

Commissioner of Labor Approves Fast Food Wage Hike

As we had anticipated, on September 10, the acting Commissioner of the New York State Department of Labor adopted a wage board proposal to increase the minimum wage to $15.00/hour for fast food workers. The increase will be phased in over three years for workers in New York City, and over five-and-a-half years throughout the rest of the state. Prudent restauranteurs should start planning for the change now by consulting with counsel about their options – which may include reducing workers' hours, cutting staff, and/or raising prices – to help offset the financial impact of the coming minimum wage hikes.

Federal Court Dismisses Volunteer's Wage and Hour Claim

As our readers know, the use of unpaid labor is one of the most hotly-litigated issues in the employment field right now. Earlier this summer, for instance, the Second Circuit Court of Appeals (the Second Circuit or the Court) issued a decision outlining the appropriate test for determining interns' employment status. On August 14, the Second Circuit again weighed in on the use of unpaid laborers – this time, volunteers – and, in the process, defined key language in one of the exemptions to the federal Fair Labor Standards Act (FLSA).

The facts of Chen v. Major League Baseball Properties, Inc. are relatively straightforward. In July 2013, Major League Baseball (MLB) hosted FanFest, a three-day, interactive baseball event, as part of that year's All-Star weekend. The event took place at the Javits Center in New York City, away from MLB's Park Avenue offices, and was staffed with approximately 2,000 unpaid volunteers. Following the event, the plaintiff, a FanFest volunteer, filed suit alleging that MLB violated the FLSA's minimum wage requirements by not treating and paying him and similarly-situated volunteers. The suit alleges that, although the plaintiff and other volunteers physically worked at FanFest, they were actually employees of MLB, which allegedly planned and controlled all aspects of the event.

In March 2014, the federal district court dismissed the plaintiff's complaint on the grounds that FanFest was a "seasonal amusement or recreational establishment . . . [that did] not operate for more than seven months in any calendar year" and, therefore, was exempt from the FLSA's minimum wage requirements. On appeal, the Second Circuit agreed. As a matter of first impression, the Court concluded that the term "establishment," as used under the FLSA, means a "distinct, physical place of business," as opposed to an integrated multiunit business or enterprise. Applying this definition, the court explained that the physical separation between FanFest and MLB's Park Avenue offices meant that FanFest and MLB were separate establishments for purposes of the FLSA exemption.

The Second Circuit also clarified the meaning of the terms "amusement" and "recreation." To this end, the Court adopted the U.S. Department of Labor's definition: "amusement and recreation establishments" are "establishments frequented by the public for its amusement or recreation." Applying this definition, the Second Circuit concluded that FanFest, a gathering for sports enthusiasts and for the purpose of entertainment, clearly fit within the definition of an amusement or recreation establishment.

Ultimately, in a decision that is particularly instructive for operators of short-term recreational events, the Court concluded that FanFest fell "plainly and unmistakably" within the "terms and spirit" of the exemption for seasonal amusement or recreational establishments, and it affirmed the district court's dismissal of the plaintiff's complaint.

NY Governor Announces Worker Exploitation Task Force

Undoubtedly encouraged by the successes of the nail salon task force and fast food wage board he established earlier this year, on July 16, Governor Andrew Cuomo announced the creation of a new statewide task force to study and address worker exploitation, including issues related to wage theft, trafficking, retaliation, and unsafe or unsanitary working conditions. Although the task force is not specific to a particular industry, the Governor was clear that "[e]nforcement efforts will focus on industries with the highest rates of employer non-compliance and where workers are least likely to come forward, for fear of retaliation." Initial target industries, Cuomo explained, include home health care, restaurants, retail, construction, super markets, janitorial services, and truck and waste disposal services.

The task force is composed of 10 State agencies, including the Departments of State and Labor, and it will work in partnership with an advisory committee comprised of both business community and organized labor members. The committee will meet monthly and provide its first set of legislative, regulatory, and administrative recommendations by December 2015 so that they can be considered during the 2016 legislative session in Albany.

What's the Takeaway for My Company?

The New York employment law landscape is as vibrant as ever. Employers statewide should brace for a slew of changes in the next year – if not in the next few months – that could dramatically impact their operations and workplace policies. It is more important than ever for employers to stay in regular contact with experienced counsel to discuss these issues and to prepare a cogent plan of action to face the ever-changing legal standards head-on.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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