The old adage, “if you can make it here, you can make it anywhere,” is no less applicable to employers operating in New York City than to Broadway performers. Companies doing business in the Big Apple over the last few years have had to implement an ever-expanding array of employment law mandates not seen in many other jurisdictions. This can be daunting for new and seasoned New York City employers alike.
In this article, we highlight some of the most recent and most critical employment-related laws for employers conducting or contemplating business in New York City to consider.
At the outset, it is imperative employers recognize that both state and city anti-discrimination laws, as well as wage and hour laws, generally are much more expansive than their federal counterparts. This is true not only in terms of the range of individuals protected, but also the scope of remedies and damages available to aggrieved individuals. For example, both the New York State Human Rights Law (SHRL) and City Human Rights Law (CHRL) protect more categories of individuals than federal discrimination law (e.g., sexual orientation and marital and domestic violence victim status) and generally apply lower standards of proof for claims.
Indeed, the CHRL, by virtue of the Local Civil Rights Restoration Act of 2005, is required to be “liberally construed” for the accomplishment of its “uniquely broad and remedial purposes.” To that end, claimants can prove claims of hostile work environment merely by showing they were treated “less well” than comparators, and respondents cannot defend against liability on the basis of having user-friendly complaint procedures that employees unreasonably decline to utilize. Further, the CHRL provides for uncapped emotional distress and punitive damages.
In addition, most New York State wage and hour laws provide six-year statutes of limitation, entitle employees to recover up to 100 percent liquidated damages plus attorneys’ fees, and include a host of unique restrictive rules resulting in extra compensation for workers (e.g., minimum reporting pay, spread-of-hours pay and other industry-specific worker protections).
Recruitment and Hiring Practices
Employers are well advised to pay special attention to the city’s increasing focus on recruitment and hiring practices, including with respect to: (1) consideration of “unemployment status”; (2) background checks involving criminal and/or consumer credit history; and (3) salary history inquiries.
Recent amendments to the CHRL, as outlined below, severely limit these inquiries and require a thoughtful, well-coordinated approach to onboarding to avoid violations and resultant damages and civil penalties.
Although on the books since 2013, a CHRL amendment prohibiting discrimination based on “unemployment” status, defined as not having a job, being available for work and seeking employment, remains under the radar for many employers. The law prohibits employers from basing any employment-related decision on an applicant’s unemployment status and bans job advertisements that require applicants to be currently employed.
While the law does not prohibit employers from inquiring into the circumstances surrounding separation from prior employment, or from considering “substantially job-related qualifications” such as up-to-date licenses, certificates and registrations, and minimum levels of education, training or experience, even the most well-intentioned employer could have a misstep. For example, an employer might fail to remove employment application questions that either directly or indirectly elicit information concerning unemployment status, or hiring managers and/or others inadvertently may make similar inquiries during the interview process.
Criminal and Credit Checks
More recently, the city amended the CHRL to substantially limit employers’ ability to conduct criminal and credit checks for both current employees and job applicants.
New York City’s Fair Chance Act (FCA), aka the “ban-the-box” legislation, prohibits employers from asking job applicants about criminal convictions, as well as pending criminal cases, before making a conditional offer of employment. (Arrests not pending are already off-limits under state law.) It also imposes additional requirements on employers before they may rescind an offer of employment or take any other adverse action based on criminal convictions revealed through a background check or otherwise.
As an initial matter, any such adverse employment action must be consistent with Article 23-A of the New York Corrections Law, which requires consideration of various enumerated factors to determine whether there is a “direct relationship” between the criminal offense(s) and the employment position at issue, or whether granting or continuing employment would involve an “unreasonable risk” to property or the safety or welfare of others. While many employers have long been aware of Article 23-A, the FCA goes further, requiring employers to: (1) perform a written analysis of the Article 23-A factors and choose which exception – direct relationship or unreasonable risk – they are relying upon; (2) provide the written analysis to the applicant or employee, along with all information the employer relied on to determine the applicant or employee has a criminal record; (3) allow the applicant or employee at least three business days to respond, while keeping the position open; and (4) engage in a “constructive conversation” with the applicant or employee to discuss the employer’s conclusions and how the applicant or employee can address the employer’s concerns.
The Stop Credit Discrimination in Employment Act (SCDEA) makes it an unlawful discriminatory practice for an employer to request or use an employee’s or applicant’s consumer credit history, at any point, both during and after the hiring process. “Consumer credit history” includes an individual’s creditworthiness, credit standing, credit capacity or payment history, as indicated by: (1) a consumer credit report; (2) credit score; (3) other credit account information obtained directly from the individual, including number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit and prior credit report inquiries; or (4) bankruptcies, judgments or liens. While there are certain “exemptions” from the SCDEA, they apply in very limited circumstances and have been narrowly construed by the City Commission on Human Rights.
For employers who routinely request background checks, or utilize third parties to do so, compliance with both the FCA and the SCDEA (in addition to the federal Fair Credit Reporting Act) requires thoughtful planning, coordination and training.
Salary History Ban
The city’s most recent restriction on pre-employment inquiries is a ban on inquiries into job applicants’ “salary history,” defined to include current or prior wages, benefits or other compensation. Effective October 31, 2017, this CHRL amendment makes it an unlawful discriminatory practice for an employer to inquire about an applicant’s salary history, either by asking the applicant directly or contacting his or her current or former employer, or an employee or agent of such employer. The law also prohibits employers from conducting any form of search for salary history through publicly available information.
The law further prohibits employers from considering an applicant’s salary history in determining the benefits and compensation the employer intends to provide. If, however, an applicant “voluntarily and without prompting” by the employer provides salary history, then such information can be used and the employer may verify the salary history. The law also does not prohibit the employer and applicant from discussing compensation and benefits being offered. For example, the employer may inform the applicant about the expected salary for the position at issue and discuss the applicant’s expectations with respect to compensation, including whether the applicant would forfeit any unvested equity or deferred compensation by leaving his or her current employer. Additionally, employers may inquire about “objective measures” of the applicant’s productivity, which could include reports concerning revenue or sales attributable to the applicant.
Paid Sick Leave
New York City employers still grapple with the Earned Sick Time Act’s (ESTA) requirements, which continue to be refined (and even expanded) by the Department of Consumer Affairs (DCA), most recently through amended rules effective March 4, 2016, and guidance in the form of FAQs.
Originally enacted in 2013, ESTA requires employers with five or more employees working in the city to provide up to 40 hours of paid sick time per year to eligible employees. Employers with fewer than five employees in the city must provide up to 40 hours of unpaid sick time per year. Eligibility requirements are minimal – the employee (whether full-time, part-time, temporary or seasonal) must work more than 80 hours in a calendar year. Sick time may be used for the employee’s own care or for the care of a family member.
In addition to specifying accrual rates, carryover, and notice and documentation requirements, ESTA mandates that employers maintain written sick leave policies that meet or exceed the law’s minimum requirements and distribute them to employees, as well as provide an additional Notice of Rights available from DCA. Rules promulgated by DCA dictate information that must be included in sick leave policies and establish significant recordkeeping requirements. DCA takes the position that it can impose penalties for ESTA violations on a “per employee” basis, which means an employer found to have a policy or practice of not providing sick time as required under ESTA or not allowing its use will be charged with a violation for each employee affected by that policy or practice.
For employers with PTO policies that allow time to be used for both sick leave and other purposes, and for employers operating in multiple jurisdictions (including New Jersey, where 13 municipalities currently have paid sick leave laws), coordinating policies to comply with ESTA’s requirements can prove difficult.
Commuter Benefits Law
City employers of 20 or more full-time, non-union employees must also offer tax-free commuter benefits to all full-time employees or face fines for non-compliance. The DCA has recently stepped up enforcement of this statutory requirement that became effective January 1, 2016.
Independent Contractor Issues
Think you can avoid these onerous requirements by engaging “independent contractors”? Think again. In addition to the heightened focus on worker misclassification, both nationally and statewide, the protections of the CHRL, for example, expressly apply to independent contractors who are “natural persons” and not themselves employers.
In a further effort to protect independent contractors, the city recently enacted the Freelance Isn’t Free Act, effective May 15, 2017, believed to be the first law of its kind in the nation to protect freelancers against nonpayment. The law gives freelancers (defined to include individuals hired or retained as an independent contractor, excluding sales representatives, attorneys and licensed medical professionals) the right to: (1) receive a written contract for work valued at $800 or more (with specific terms, such as an itemization of services to be provided, the value of such services and the rate, method and date of compensation, included); (2) be paid timely and in full; and (3) be free from retaliation.
Aggrieved freelancers may file a claim with the Office of Labor Standards or a complaint in court. Freelancers who succeed on a claim for nonpayment or untimely payment are entitled to double damages and attorneys’ fees. Civil penalties up to $25,000 may also be awarded where a hiring party is found to have engaged in a pattern or practice of violating the law.
New York City businesses should take heed of the above requirements in administering their operations and keep apprised of new ones as they arise. To succeed in New York, employers need more than business savvy – they will need to understand and comply with the City’s evolving and expanding employment laws.
Eve I. Klein is a partner in the employment, labor, benefits, and immigration law practice group of Duane Morris. Christina Joy F. Grese is special counsel in the group. Both are based in the firm's New York office.
Reprinted with permission from New York Law Journal, © ALM Media Properties LLC. All rights reserved.