By decision issued on June 13, the National Labor Relations Board (“NLRB”) overturned a business-friendly standard for determining whether workers are employees or independent contractors under the National Labor Relations Act (“NLRA”). The NLRA provides employees (but not independent contractors) with certain protections, including rights to organize and join unions. This shift is in the NLRB’s standards is of considerable relevance to companies that heavily rely on contract labor or gig workers.
Under the “new” standard, the NLRB will now consider the following factors in determining whether a worker is an employee or contractor in relation to an employer:
the extent of control which that the alleged employer may exercise over the details of the work;
whether or not the worker is engaged in a distinct occupation or business;
whether the work is usually done under the direction of the employer or by a specialist without supervision;
the skill required in the particular occupation;
who supplies the instrumentalities, tools, and the place of work for the person doing the work;
the length of time for which the person is employed;
the method of payment, whether by the time or by the job;
whether or not the work is a part of the regular business of the employer;
whether or not the parties believe they are creating the relation of employer and employee; and
whether the principal is or is not in business.
Takeaways: Employers that contract with labor, contractors or consultants should realize that it will now be easier for those workers to establish that they were employees under the NLRA and that, as employees, they should have received certain benefits, wages, and protections.
The WARN Act requires employers to provide written notice to their employees in advance of certain mass layoffs, business restructurings, or business closings that will result in employment losses for those employees. The purpose of the law, as its acronym suggests, is to provide the employees who are losing employment with sufficient advance notice so that those employees can prepare for the job loss and seek other employment.
The WARN Act’s application is triggered only in specific types of “plant closings,” “mass layoffs” and certain work relocation and work hour reductions. Further, the WARN Act applies to employers with 100 employees (but, in some states, like New York, the law applies to companies with just 50 employees). The advance notice must be provided not only to employees who will lose their employment, but also to local and federal government regulators. The notice of job loss must be provided to the affected employees at least 60 calendar days before the job loss, however, some states require more advance notice (e.g., NYS requires 90 days’ notice). (more advance notice is required in some states, like New York). Failure to provide adequate WARN notices, when required, could result in the employer being ordered to pay the employees’ lost wages (during the notice period) and benefits, and penalties to the government. Elon Musk has been embroiled in a number of WARN lawsuits as a result of his restructuring of Twitter.
Many employers will seek to structure their business reorganization in a manner to “avoid” the WARN Act’s obligations. One of the more challenging questions, thus, becomes whether the WARN Act is triggered by the specific layoff or business closing at issue. As indicated in the previous paragraph, the WARN obligations apply in “mass layoff” situations, however, they can also apply if an operating unit of a business is closing and the closure will result in job losses for a specific number of employees. The “operating unit” definition has been subject to litigation due to its potential for dual meanings.
In a recent case, the Second Circuit Court of Appeals opined that a buffet restaurant that was located within a massive casino constituted an “operating unit” under the WARN Act. When the casino closed that buffet and laid off 177 of the buffet’s employees, it failed to provide the employees with WARN notices. The employees filed a class action lawsuit seeking damages under the WARN Act. Due to the nature of the layoff, the only way that the employees would “win” is if they proved that their buffet was a discrete “operating unit” within the casino and that the number of employees being terminated triggered the WARN Act. The casino argued that the operating unit was not actually a discrete department, division, or segment of the bigger casino and that the number of employees being laid off from the buffet did not trigger WARN obligations. The Second Circuit noted that there were some factors to suggest that the buffet was its own separate entity, and not an operating unit of the casino (e.g., the buffet had its own entrance and managers that were separate from the casino). However, the Second Circuit ultimately ruled that there was also sufficient evidence to indicate that the buffet was an operating unit of the casino and, thus, the employees’ layoffs triggered WARN obligations.
Takeaways: When planning a layoff of “many” employees, reorganizing the business in a way that will result in layoffs, or closing/consolidating departments that also result in job losses, employers should consider whether or not the WARN Act applies and plan accordingly.
Q: Our employee notified us she is suffering depression after we tried to discipline her for disruptive and manic behavior towards her colleagues. Are we now stuck with this employee, or can we fire her?
A: It’s a common misconception that an employer cannot address performance or behavior-related concerns if an employee qualifies for protections under the Americans with Disabilities Act (“ADA”) (or whatever State-specific anti-discrimination law applies to protect employees with disabilities). But the fact is that employers can still hold an employee with a disability accountable for their conduct and performance. After hearing that a disability is a reason for inappropriate conduct, you can still discipline an employee, but you are also obligated to begin the interactive process to determine how you can best assist her with preventing a repeat of this conduct. In other words, you would proceed with two paths; one under the ADA and the other under your workplace conduct rules. Keeping them separate also helps stage the employer’s case should the employee try to sue later for any sort of disability discrimination.
Moreover, employees cannot use a disability as a shield from consequences of their behavior or performance if the disability is first being asserted only after the conduct occurred.
You can also inform the employee about your company’s accommodation policy and process. If the disability is not apparent, the ADA allows employers to request documentation from a medical care provider to support whether an employee has a disability, as well as the possible accommodations to put in place for the employee.
With instances of workplace violence on the rise, many companies have instituted zero tolerance policies with respect to aggressive, violent or threatening workplace behavior. If your company happens to have such a policy in place, you could very well have grounds to terminate the employee notwithstanding her ADA-covered disability. However, this type of situation is very fact-specific and should be discussed with legal counsel first, or a Forework HR specialist.
Whether or not interns are considered employees under the various employment and tax laws that may apply, initially, turns on whether the hiring enterprise is a for-profit business or a nonprofit business. Nonprofit businesses enjoy greater legal flexibility when retaining unpaid interns that are not considered employees under all the labor and employment laws. However, even nonprofits must ensure some key requirements are met before they can retain unpaid interns.
NON-PROFIT BUSINESSES
Students working in a not-for-profit organization or institution are exempt from the State Minimum Wage Act and the Minimum Wage Order for Miscellaneous Industries, so long as the organization is organized and operated exclusively for charitable, educational or religious purposes, the employee attends an institution of learning with courses leading to a degree, certificate or diploma, or the employees are completing residence requirements for a degree such as those required of medical and pharmaceutical students.
The work experience need not fulfill a curriculum requirement or even relate to the student’s field of study. Persons continue to be exempt during the periods when school is not in session (e.g., during the summer) if they were students during the preceding semester and have not yet graduated or completed the educational requirements of the program.
FOR PROFIT BUSINESSES
In general, an intern or a trainee will not be considered an employee (and, therefore, “exempt” from coverage of most employment laws and wage laws) unless each of the following criteria are met:
The training, even though it includes actual operation of the employer’s facilities, is similar to training provided in an educational program. For example, the internship program builds on a classroom or academic experience – NOT the employer’s operations.
The training is for the benefit of the intern.
The intern does not displace regular employees, and works under close supervision.
The activities of trainees or students do not provide an immediate advantage to the employer. On occasion, operations may actually be impeded.
The trainees or students are not necessarily entitled to a job at the conclusion of the training period and are free to take jobs elsewhere in the same field.
The trainees or students are notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.
Any clinical training is performed under the supervision and direction of people who are knowledgeable and experienced in the activity.
The trainees or students do not receive employee benefits., such as health and dental insurance.
The training is general, and qualifies trainees or students to work in any similar business. It is not designed specifically for a job with the employer that offers the program. Skills offered through the training must be useful and transferable to any employer in the field.
The screening process for the internship program is not the same as for employment, and does not appear to be for that purpose. The screening only uses criteria relevant for admission to an independent educational program.
Advertisements, postings, or solicitations for the program clearly discuss education or training, rather than employment, although employers may indicate that qualified graduates may be considered for employment.
On December 9, 2022, New York State amended the Nursing Mothers in the Workplace Act (the “Act”) to expand protections for lactating employees in New York State. The new requirements took effect on June 7, 2023. Similarly, at the federal level, the Providing Urgent Maternal Protections for Nursing Mothers Act (the “PUMP Act”) and the Pregnant Workers Fairness Act (the “PWFA”) took effect on April 28, 2023 and June 27, 2023, respectively. Employers need to “check the boxes” on several new requirements from these collective legal developments.
The PUMP Act requires employers to provide nursing employees with unpaid, reasonable break time every time the employee has such a need for one year after the child’s birth. Importantly, the employee must be completely relieved from duty for the break to be unpaid. For teleworking employees, employers must provide break time as if those employees were working on-site. The Wage and Hour Division of the U.S. Department of Labor offered several examples of what could constitute “reasonable break time,” including an example of an employee who takes four 25-minute breaks each day.
Insofar as New York State obligations are concerned, as a reminder, New York State has had a nursing mothers’ rights law since 2017. And New York City, for covered employers, goes even further than the State law.
On December 9, 2022, however, Governor Kathy Hochul signed legislation that would expand the State’s law to mostly track New York Cit’s requirements. Here’s what’s required for NYS employers now:
Upon the request of an employee, employers must designate a room or location for an employee to express breast milk that is (i) in close proximity to their work area; (ii) well lit; (iii) shielded from view; and (iv) free from intrusion from other persons in the workplace or the public. In addition, the room must contain, at minimum, a chair, a working surface, nearby access to clean running water and, if the workplace is supplied with electricity, an electrical outlet. The room cannot be a restroom or toilet stall. If the function of the room is not solely dedicated for lactation, it must be made available to a nursing mother when needed and cannot be used for any other purpose while being used by an employee to express milk. Employers must provide notice to all employees when the room has been designated for lactation. An employer must also provide access to refrigeration to store milk, if the workplace has access to refrigeration. Finally, the amendment clarifies that a nursing mother is entitled to take a lactation break “each time such employee has reasonable need to express breast milk.”
New York State employers are not required to comply to the extent these requirements are impractical because they would impose an “undue hardship” on the employer by causing significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business. However, employers are not relieved of making “reasonable efforts” to provide an alternative location (other than a restroom or toilet stall) where an employee can express breast milk in privacy. Note that if providing a lactation room would cause an undue hardship, the New York City law just requires a “cooperative dialogue” with the employee to identify an appropriate accommodation that meets their needs.
Unlike the New York City law, which only applies to New York City employers with 4 or more employees, the Act applies to employers of any size in New York State. In addition, the State law requires that employers provide employees with the Department of Labor’s written policy on the rights of nursing mothers to express breast milk in the workplace both upon hire and annually thereafter, and to employees upon returning to work following the birth of a child. The New York City law only requires employees to create and provide their own policy consistent with the City law.
New York employers should ensure that they are familiar with these legal requirements so that they can comply with the notice requirements and adequately respond to any request of employees who will need break time for lactation purposes. New York State also only recently published its model policy, so employers should ensure that they are using such policy and distributing it to employees as required.
Many employers are utilizing or considering same-day pay and daily pay-type arrangements that allow their employees early access to their wages, in exchange for a fee being paid by the employee to the same-day pay vendor. In addition to such arrangements having the risk of regulatory oversight due to payday loan terms that are imposed on unsuspecting employees, there are wage and hour and tax implications that are often overlooked by employers in their desire to provide cash-strapped employees with convenient wage access.
In this article, we discuss federal employment tax rules. As background information, the IRS expects employment taxes to be deposited by employers based on the date that the employee was actually paid, or “constructively” paid. From the IRS’s standpoint, an employee is considered to be in constructive receipt of wages when an amount is set apart or otherwise made available so that the employee may draw upon that amount at any time or when an employee has unfettered control over the date on which the employee actually receives their wages. Due to these “constructive receipt” concerns, employment taxes may be due to the federal government for same day pay on an earlier basis than most employers are paying such wages now.
This year’s “Green Book,” published by the Treasury Department maintains that employees with early access to wages via an on-demand pay arrangement may be in constant constructive receipt of their wages. Thus, the IRS affirmatively recognizes that this is a problem. As such, Treasury advises employers to withhold and pay employment taxes on employees’ earned wages on a daily basis.
To ease employers’ burdens associated with same day arrangements, the Treasury has proposed amending the Internal Revenue Code (“IRC”) to address these on-demand pay programs. The Treasury would treat any same-day pay as having been paid on a weekly pay period, so that employment tax deposits would be due to the IRS from that “weekly pay” date.
The Treasury’s proposal would amend the IRC as follows:
Code Sec. 7701 to provide a definition of an on-demand pay arrangement as an arrangement that allows employees to withdraw earned wages before their regularly scheduled pay dates.
Code Sec. 3401(b) to provide that on-demand pay arrangements are treated as a weekly payroll period, even if employees have access to their wages during the week
Code Sec. 3102, Code Sec. 3111, and Code Sec. 3301 to clarify that on-demand pay arrangements are not loans
Code Sec. 6302 to provide special payroll deposit rules for on-demand pay arrangements
If and until these changes are implemented, employers utilizing same-day programs are strongly cautioned to consult their accountants or tax attorneys to ensure that they do not run afoul of the employment tax rules.
As most employers know, for weeks, the New York State Legislature was considering passing a wage theft law (referred to as the “SWEAT” bill) that would have allowed alleged “victims” of wage theft to obtain a temporary lien against their employer’s (or alleged employer’s) assets upon the filing of a “wage claim.” (The term “wage claim” was not defined in the law and, thus it was unclear if a lawsuit had to be filed in order for the law’s provisions to be triggered, or whether a complaint to the Department of Labor would suffice). In other words, the law would have allowed a current or former employee to file a claim against their employer (or former employer) and immediately place a lien on that employer’s personal and real property. The lien, once filed, would be in the amount of the alleged claim (which could be a class claim), plus liquidated damages. In effect, the employee lien could prevent an employer from conveying, selling or transferring real or personal property while the employee lien is in place. The lien could impede a business’s attempts to sell the business or secure financing.
After weeks of hard lobbying by business groups, the legislative session ended before this bill was advanced. So, for at least several more months, employers can breathe a sigh of relief!
As many companies are struggling to attract talent, they are considering the reduction of a standard 5-day workweek to a 4-day workweek. This article highlights some considerations in that analysis.
The idea and experimentation of a four-day workweek in the United States has been commonly discussed since the 1990s, and given the COVID-19 pandemic and increase of working from home and hybrid office implementation, the discussion of a four-day workweek is picking up even greater traction. Here, we review some high level considerations for any employer considering the switch.
Employer Benefits of a Four-Day Workweek
Not only can employees improve their quality of life, but employers can benefit as well with the reduction of a five-day workweek through:
Increased sales
Reduced employee burnout and improved employee retention
Lower operating costs for an office
Larger applicant pool for all positions
Environmental benefits from reduced commuting and traffic congestion
Challenges Relating to a Four-Day Workweek
The change from 40-hour workweeks to 32-hour workweeks could lead to decreased pay and benefits.
10-hour workdays can be incompatible with wage regulations or prove too grueling for employees in some states.
The allowance of four-day workweeks is highly industry specific. For example, hospital employees, fire departments, and police officers taking 3 days off with no coverage seem impracticable. Also, there is a limit on how many items Amazon Warehouse employees can pick per hour and how many delivery locations a UPS driver can hit in a day, therefore possibly making four-day workweeks less efficient.
Strategies Successful Companies Implemented With a Four-Day Workweek
Prioritize and reevaluate tasks
Increase automation
Emphasize human creativity
Limit work-based social events
Reduce and shorten meetings
Set goals that are achievable within a shorter workweek
On January 25, 2022, New York Governor Kathy Hochul signed a bill into law that dramatically alters wage payment obligations for contractors and subcontractors. The stated purpose of the law is to alter the current wage theft law to expand the probability that exploited workers in the construction industry will be allowed to attain payment, collect unpaid wages, and collect benefits from work already performed.
Key Changes to Wage Theft Law
The new law has two main sections that alter the construction industry’s approach to wage theft:
Increased Liability for Construction Contractors: Construction contractors are now liable for any unpaid wages, benefits, damages, and attorney fees related to a civil or administrative action against a subtractor.
Additional Payment Clarification: Clarifications that a contractor can withhold payment to a subcontractor or lower tier subcontractor for failing to provide certain payroll records.
These two new sections increase liability for prime contractors of a construction project, making them liable for all subcontractors that they choose to use on the jobsite for up to three years.
Helpful Tips for Prime Contractors
Prime contractors can take-charge by self-policing themselves to avoid costly claims by:
Developing programs to allow all works on their projects to be paid timely and adequately.
Amending their contracts with subcontractors and lower tier contractors to incorporate expanded indemnity, extra insured provisions for wage theft actions, compliance provisions, and incorporating a vetting process to ensure compliance and adequate financial coverage for the prime contractor.
Providing training to their employees to allow for the acceptable inspection of subcontractor payroll records and apply the withholding of payments to their subcontractors if there is a potential violation.
Employers with 10 or more employees in New York will be required to automatically enroll their employees into a retirement savings program.
The New York Secure Choice Savings Program Act (the “program”) was enacted into law as part of the 2018-19 New York State Budget. The program was designed to create a system where employees that work for employers who do not already offer a retirement saving plan could voluntarily opt in to fund an individual retirement account (IRA) through payroll deductions. The program – as originally designed – never really took off because it was voluntary. However, recently, New York amended the program to make it mandatory for covered employers to enroll their employees into the savings program. Here, we describe the program, as amended, and where it stands.
Coverage and Applicability
Initially, the program applies to for-profit and non-profit employers in New York state that meet the following:
the employer had at all times during the previous calendar year at least 10 employees in New York,
the employer has been in business for at least 2 years, and
the employer does not offer a qualified retirement plan such as a 401(k) or 403(b).
All three of these requirements have to be met in order for an employer’s participation in the program to be mandatory.
A “qualified retirement plan” most often comes in the form of a 401(k) or 403(b), but the definition includes other types of retirement plans too.
The legislation contains a provision prohibiting an employer from terminating a employer sponsored retirement plan for purposes of participating in the Secure Choice Savings plan.Thus, employers who already have a qualified retirement plan in place are not required to participate in the State’s program.
What are Covered Employers Required to do?
A participating employer’s duties under the program are intended to be administrative. Participating employers must:
set up a payroll deposit retirement savings arrangement,
automatically enroll each employee who does not opt out of the program,
withhold and remit employee contributions to the program, and
disseminate the state’s employee informational materials (which have not yet been published).
This program is designed with the intention of not creating an employer-sponsored retirement plan subject to ERISA. Thus, unlike with a 401(k) plan, for example, participating employers will not have to perform nondiscrimination testing or the like for the plan.
For employees who do not elect a deferral amount, the default election will be 3% of wages. Additionally, the individual retirement accounts created under this program will be Roth which means they will be after tax contributions. Pre-tax contributions are not permitted.
To what Employees does this Apply?
This program covers all employees in the State who are at least 18 years old and who earned wages working for an employer in the State. Interestingly, the program does not distinguish between part-time and full-time employees, so all must be included. Nonetheless, employees can opt-out of participation in the program at any time.
When is this Effective?
This is unclear. The legislation technically became effective immediately, but it calls for enrollment of employees to begin no later than December 31, 2021. The implementing regulations and guidance from the State will need to be issued before the law’s requirements can even take effect. Additionally, participating employers must set up their payroll deposit arrangements within 9 months of the program opening for enrollment. However, the State may delay implementation of the program by up to 12 months if they determine it is necessary.
Operating and Maintaining the Program
The program is designed to be run by a 7-member New York Secure Choice Savings Program Board (the “Board”). This Board is a fiduciary of the program and they are tasked with designing and operating the program. The implementing legislation provides just a general framework for the Board to work within and leaves the Board to make many important decisions, such as the investment options offered to the participants.
It should be noted that participating employers are not fiduciaries under this program. This means they will face no liability with regard to investment returns, program design, and benefits paid to program participants.
Who is paying for this?
The legislation allows the State to pay administrative costs associated with the creation and management of the program until the program has sufficient assets to cover these costs itself. At that point, costs associated with the program–including any repayment of start-up funds provided by the State–must be paid out of money deposited in the program.
Will this impact the NYC auto-IRA law?
This is unclear, but it seems likely. Earlier this year, New York City (NYC) became just the second city to enact a mandatory auto-IRA law. The NYC legislation, however, provides that if the State enacts a retirement savings program that “requires a substantial portion of employers who would otherwise be covered employers to offer to their employees the opportunity to contribute to accounts through payroll deduction” the NYC program will be discontinued. Thus, there would seem to be pre-emption of the NYC law by the NYS law. However, there is some uncertainty because the NYC program applies to employers with 5 or more employees in NYC while the New York State program applies to employers with 10 or more employees in the State. Despite this difference, there is a possibility that New York City will discontinue its program.
Penalties for Noncompliance
The law does not specify a penalty, however, this might change once implementing regulations or guidance are issued.
