Category: Employment Articles

Food Delivery Giants Seek to Block NYC Wage Law for Delivery Workers

Posted on by forework

Food delivery giants DoorDash and Grubhub asked a New York state court to block implementation of a New York City rule that would raise wages for delivery workers, arguing that the regulatory process was flawed.  The rule at issue would compel delivery companies to either pay workers $20 per hour they spend logged into food-delivery apps or $33 per hour spent making deliveries. The rule, which is set to take effect July 12, is the result of the New York City Council’s 2021 passage of Local Law 115, which authorized the City’s Department of Consumer and Worker Protection (“DCWP”) Bureau to study the pay and working conditions of food delivery workers and issue new minimum pay rules for the industry.

Grubhub and DoorDash accused the DCWP of neither studying the issue accurately nor applying its learnings fairly. The companies said that the rule was largely built on survey data of delivery workers that was subjective and biased.  “DCWP merely swept aside all criticism of the surveys claiming without citation to any authority … that it had ‘reviewed the methodological critiques provided in comments but was not persuaded that the survey is inappropriate,” the companies said. “These conclusory statements do nothing to remedy any … systemic methodological failures.”

The companies also criticized the City’s decision to exempt companies like Instacart that primarily service grocery and convenience stores, rather than restaurants, from the new wage rule. Local Law 115 directed the DCWP to study the working conditions of all food delivery workers, the companies said, not to target specific firms or subindustries for reform.

The companies also said that the rule’s goal of compensating workers for all time spent on call, not just time spent delivering food, was irrational. In contrast to employees, who, under the Fair Labor Standards Act, are entitled to pay while waiting for work assignments, the companies said app-based delivery workers are free to work for competitors, complete personal chores or just hang out between deliveries.

“App-based workers choose to log in to petitioners’ systems entirely on their own; they are not under the platform’s control; and they have independent authority to accept, deny, or ignore offers … as they please,” the companies said. “DCWP’s attempt to analogize its rule to FLSA requirements is irrational.” The companies asked the court to immediately block the city from enforcing its wage rule, as well as completely vacate and annul it.

U.S. Supreme Court Modifies Test for Religious Accommodations in the Workplace

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On June 29, 2023, the United States Supreme Court issued its decision in Groff v. Dejoy, in which the Court announced a heightened standard for employers attempting to demonstrate that an employee’s request for religious accommodation under Title VII would impose an undue hardship on its business.  All HR Departments and employer operators should take note of this decision because it is likely to require them to grant more religious accommodation requests than they had granted in the past.

In Groff, the Supreme Court held that an employer must demonstrate that an employee’s request for religious accommodation would impose a substantial difficulty or cost to its business operations before rejecting such request. This holding marks a departure from over 45 years of precedent, which held that any request for religious accommodation that created more than a de minimis cost – a low bar —would constitute an undue hardship on an employer.

In Groff, a former United States postal worker requested not to work Sundays because of his religious practices. The Postal Service denied the employee’s request, citing the requirements of the business and difficulties in scheduling, including needing to schedule other employees to cover the employee’s shifts, as an undue hardship. The District Court and the Third Circuit Court of Appeals sided with the employer, holding that the Supreme Court’s decision in Trans World Airlines allowed the employer to deny a religious accommodation where it could demonstrate that doing so would impose more than a de minimis cost, and therefore an undue hardship, to its business.

The Supreme Court disagreed with the Third Circuit’s reliance on this prior interpretation of Trans World Airlines, and instead explained that courts needed to determine whether an employer would be required to incur substantial difficulty or costs to implement an employee’s request for religious accommodation. Though employers have long been aware of their obligations to accommodate an employee’s religious beliefs under Title VII, they have understood their obligations to be something less than that of an undue burden under the Americans with Disabilities Act. The Supreme Court’s decision changes the standards by which employers will evaluate religious accommodation requests in a way that more employees are likely to qualify for religious accommodations when they previously would have been denied.

Covered Employers Must Update their EEOC Poster

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The Equal Employment Opportunity Commission (EEOC) has updated the mandatory jobsite poster “Know Your Rights: Workplace Discrimination is Illegal.”  The EEOC laws apply to employers with 15 or more employees.

The June 27, 2023 version of the EEOC’s poster includes the latest employee protections under the Pregnant Workers Fairness Act. The EEOC Know Your Rights poster summarizes the Federal laws prohibiting job discrimination based on a host of factors including retaliation or litigation activities. The poster also informs workers how they can file complaints if they feel they have experienced discriminatory practices.

While the laws requiring the EEOC posting do not indicate a deadline for updating it at your workplace, employers are urged to “display the new one within a reasonable amount of time” according to the EEOC Poster FAQs.

IRS Issues Warning about ERC Credits

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The Internal Revenue Service (IRS) is continuing to caution employers about claiming the Employee Retention Tax Credit (ERTC), noting that there have been aggressive and unlawful tactics by various ERC filing services.  The IRS is aware that a number of these providers are persuading ineligible businesses to seek and obtain the ERC credit.  As a result of these unscrupulous business practices, the IRS has committed to “step up” enforcement action regarding ERTC claims.  The IRS is expected to focus on employer eligibility, substantiation of financials underlying the eligibility determination and claim, and a review of any amended returns by the employer. Penalties range from 20% for errors in accuracy to 75% if the IRS detects fraud.

The statute for the ERTC permits civil action by the IRS for two years after the refund is issued. The statute of limitations for fraud or misrepresentation, however, extends to five years.

Reminder: NY Paid COVID Sick Leave is still in Effect

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A number of employers have inquired whether the New York State paid sick leave legislation is still in effect, in view of the lifting of the federal Public Health emergency.  Unfortunately, the New York Paid COVID Sick Leave, which is codified in the Supplemental Paid Leave and COVID-19 Paid Family Leave Law, does not have an expiration date.  Thus, unless the Legislature amends the law, employers will be obligated to continue providing and paying for COVID sick leave.  However, while the statute requires employers to provide “up to 14 days” (for “large” employers), note that the amount of leave granted to an employee is based on Centers for Disease Control and Prevention (CDC) isolation and quarantine guidelines, which are regularly changing (and the recommended amount of sick leave for infected employees is decreasing).

NY Legislature Passes Law to Seal Conviction Records, with Intent to Ease Hiring of Individuals with Criminal Convictions

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In the final days of the 2023 legislative session, the New York Legislature passed the “Clean Slate Act.” If signed by Governor Hochul, it will provide for the automatic sealing of the records of certain convictions after specified periods of time.  The measure would not take effect, however, until one year after signing. It is intended to increase employment opportunities for those with past criminal histories who have had no recent convictions. 

After taking effect this bill would immediately seal the records of criminal convictions under state law as follows: (a) Misdemeanors would be sealed three years from the individual’s release, or the imposition of sentence if there was no sentence of incarceration and (b) Felonies would be sealed after 8 years from release. Not eligible for sealing would be Class A-I felonies, for which a maximum sentence of life imprisonment may be imposed (e.g., murder, first-degree kidnapping, first-degree arson, and first-degree illegal narcotics possession) and convictions requiring registration as a sex offender.

Sealing would be automatic except where the convicted individual has a criminal charge pending or is on probation or under parole supervision when the statutory time period for automatic sealing elapses.

The bill would amend the New York State Human Rights law1 to prohibit employers from making any inquiry regarding or discriminating against individuals based upon automatically sealed conviction records.  Records automatically sealed under this bill could still be accessed and used under these circumstances, such as when the record is necessary to any entity authorized to conduct a fingerprint-based background check on job applicants who would be working with children, the elderly or vulnerable adults.

Notably, the Clean Slate Act would only seal convictions under New York’s penal law.  The Act would not seal criminal convictions under federal law or the criminal law of any state other than New York. Again, this Act is not final and there has been a lot of back-and-forth with the Governor’s office about this bill.  We will continue to monitor the status of this law and advise employers if compliance is necessary.

NY Considers a Ban on Non-Compete Agreements

Posted on by forework

On June 20, 2023, the New York State legislature passed Bill No. S3100A (the “Bill”), which would prohibit the use of non-compete agreements for all workers, irrespective of their wage bracket or job title. The Bill, which has now been sent to Governor Kathy Hochul, is expected to take effect 30 days after it is signed into law. However, it is not yet clear whether the Governor will sign off on this legislation.

If signed into law, the Bill would ban the use of a “non-compete agreements” between an employer and “any covered individual.”  The Bill defines “non-compete agreement” as any arrangement, or clause within an agreement, between an employer and an employee that limits or prevents the employee from seeking employment after their current employment has ended.  A “covered individual,” refers to anyone who performs work or services for another person in such a way that they are economically dependent on, and obligated to perform duties for, that person. This definition applies regardless of whether the individual is in a traditional employment or independent contractor relationship.

Importantly, the Bill states that the law shall be “applicable to contracts entered into or modified after” the effective date of the law.  Therefore, it seems that the law will not apply retroactively or invalidate existing non-compete agreements. 

The Bill explicitly states “Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  Furthermore, it allows any “covered individual” to bring a civil action in a court of competent jurisdiction against any employer or persons alleged to have violated this section. 

The Bill creates a two-year statute of limitations to bring an action and, if successful, an employee could recover a injunction against the enforcement of the noncompete agreement, their attorneys’ fees, lost wages, and liquidated damages (which will be capped at $10,000). 

Importantly, the Bill would not apply to agreements prohibiting the disclosure of trade secrets or confidential information, or agreements that prohibit solicitation of vendors or clients of the employer.

Business should oppose this bill by writing to the Governor.  Should the Bill pass, however, we will update our readers.

NYS Updates WARN Act Regulations

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WARN Act, New York WARN Act, mass layoffs, company restructuring

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.

Juneteenth and Paying for Holiday Pay

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juneteenth, payment of wage premiums for working on juneteenth, state specific requirements for holiday pay, employee compensation for working on specific holidays

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.

The HR Corner Q&A

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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?

retrieving company issues laptop from a departed employee, legal actions for non-compliance with return requests, prohibitions on deducting laptop cost from the employees paycheck

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.