The New York State Department of Labor issued final regulations making amending and adding to long-existing regulations under  the New York WARN Act.  The revisions update the regulations to conform to certain statutory changes as well as provide clarification to other areas of the NY WARN law.

The final regulations became effective June 21, 2023 and are identical to the proposed regulations issued by the Department of Labor on March 29, 2023.

Among other notable changes, the revised regulations include a provision adding remote workers, whether inside or outside of New York, to the 50-employee count for the coverage threshold as an employer, as long as they are “based” at the employment site in New York.  In addition, the revisions provide a process for the Department of Labor to review and rule upon any employer requests to reduce the 90-day notice period based upon one or more exceptions in the NY WARN law. In the business transaction context, a purchasing business may now be held liable for failing to transfer employees, where such is a condition of the transaction. Employers considering restructuring or mass job terminations or layoffs should ensure that their counsel follows these updated regulations in determining whether WARN obligations apply to their particular situation.

With a new federal holiday on the books, many employers are questioning whether they need to pay wage premiums to employees who worked on Juneteenth.  In many industries, employees do work on holidays and it is customary to pay such employees a premium (such as time and a half) for working on a holiday.

As a general matter, there is no federal law that requires employers to pay employees premiums for working on any federal holiday.  Similarly, there is no obligation to pay non-exempt employees their regular wages if they are off on a holiday.  Therefore, employers are only obligated to pay holiday premiums to employees who work on a holiday, or to pay regular wages to employees who do not work on a holiday, if they wish to do so as a matter of company culture, benefits, and policy. 

In view of the above rules, companies that have policies that state that the company will pay a premium to any employee who works on a federal holiday are, by policy, obligated to paying premiums for employees who have worked on Juneteenth.  Conversely, companies that specifically identified by name those holidays that they will compensate to employees who work on those specific holidays, and who have not named Juneteenth as a paid holiday, are not required to pay wage premiums to employees who worked on Juneteenth.

Any changes in holiday pay policy should be communicated to employees in writing, especially in certain states, to ensure those changes are enforceable.

Q: One of our employees went home sick and never returned. After must back-and-forth, we fired him. However, he still has a company-issued laptop, with confidential patient information on it (we’re a medical practice).  What do we do to get the laptop back, and secure the confidential information on the computer from his further access or use?

A: Initially, employers probably cannot recoup the cost of the laptop by deducting earned wages from the employee’s last paycheck.  Many states prohibit such self-help measures.  And, the paycheck may not be sufficient to cover the cost of the laptop.  In addition, the potential HIPAA considerations in this case require that the employer secure the device itself or terminate the employee’s access.  Thus, here are the suggested steps when an employee who has a company-issued laptop departs or losses employment:

1. Remind the employee of any confidentiality and equipment-loaner agreements that they have signed during their employment. This notice can be done in writing or over the phone.
2. Notify the employee that any possession of confidential information and company equipment after the employment relationship has ended is unlawful and in violation of the agreement that the employee signed.  For HIPAA covered entities, the employee should also be reminded that they cannot view, print, copy or in any other way access PHI that might be stored on the company’s device.
3. Make arrangements for the employee to return the equipment.  Employers can even send messengers to their employee’s home to pick up the device.
4. If contents from the laptop are really in a cloud, the employer should shut the employee’s access to the cloud immediately and demand a certification from the employee that they have not made any copies of any confidential information on the laptop, printed any documents from computer, emailed to themselves protected documents, or somehow extrapolated PHI or other confidential information. 
5. When the computer is returned to the employer, review the usage history on the laptop to determine if/what the employee did with any confidential information in the days leading up to the termination and up until the device was returned.
6. If the employee fails to respond to the employer’s requests to return the property, the employer should consider criminal and civil avenues to enforce its rights. 

From facial analytic tools that assess employees’ attentiveness in meetings, to bots that screen applicants’ technology, to employee scheduling technologies, artificial intelligence is quickly infiltrating all aspects of business operations.  It is only natural that employers have begun to wonder if and how to AI can maximize their output and improve the bottom line. 

In the employment realm, the EEOC recently issued a “technical assistance” guidance document that explains the application of Title VII of the Civil Rights Act to automated systems that incorporate AI into a range of HR functions.  In the guidance, the EEOC warns that neutral tests or selection procedures, including algorithmic decision-making tools, that have a disparate impact on the basis of race, color, religion, sex or national origin must be job-related and consistent with business necessity; otherwise they are prohibited.  “Disparate impact” is, effectively, unintentional discrimination; a discriminatory result is reached without any intention to discriminate.  However, the guidance further states, “if an employer administers a selection procedure, it may be responsible under Title VII if the procedure discriminates on a basis prohibited by Title VII, even if the test was developed by an outside vendor.”

In addition to the federal EEOC guidelines, employers with employees in some states should be mindful of their state-specific laws for the use of AI in employment.  For example, in 2020, Illinois enacted the Artificial Intelligence Video Interview Act, which requires covered employers to: (1) obtain consent from job applicants before using AI, after explaining how the AI works and its evaluation standards; and (2) ensure proper control of video recordings and deletion upon request.

The same year, Maryland passed its AI-employment law, called H.B. 1202, which prohibits employers from using facial recognition technology during an interview for employment to create a facial template without consent (the law defines a proper consent). 

On July 5, 2023, New York City’s Department of Consumer and Worker Protection will begin enforcing Local Law 144, which regulates the use of AI in “employment decisions.” Before employers or HR departments use automated employment decision tools to assess New York City residents, they must generally: (1) conduct a bias audit; (2) notify candidates or employees residing in the city about the use of such tools; and (3) notify affected persons that they may request an accommodation or alternative process. Violations of the law are subject to civil penalties, which may accrue daily and separately for each violation.

Takeaways:  Initially, due to the remote nature of today’s workforce, employers must be mindful that they may be covered by the AI laws of the state where their employees work (even a single remote employee could trigger that state’s AI laws for the employer, in relation to that employee).  Secondly, employers should stay on top of these laws and ensure they are applying them to whatever AI technology they are using.  Now that we have entered the AI age, the technology will evolve rapidly over the next 10 years, and the law will evolve slightly behind.  Thus, it will be important to just monitor those legal developments if utilizing AI for employment purposes. 

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:

1. 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.
2. The training is for the benefit of the intern.
3. The intern does not displace regular employees, and works under close supervision.
4. The activities of trainees or students do not provide an immediate advantage to the employer. On occasion, operations may actually be impeded.
5. 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.
6. The trainees or students are notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.
7. Any clinical training is performed under the supervision and direction of people who are knowledgeable and experienced in the activity.
8. The trainees or students do not receive employee benefits., such as health and dental insurance.
9. 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.
10. 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.
11. 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.