Juz The Fax

NLRB Delays Posting Requirement ... Again!

2012-01-11T08:03:00.009-05:00

Effective April 30, 2012, employers covered by the National Labor Relations Act (the "NLRA") must post a Notice advising their employees of their Union rights. The Notice must be posted in a conspicuous place where other notifications of workplace rights and employer rules and policies are posted. The Notice may be downloaded here. The posting date has been postponed previously, and the April 30th date is the most recent, extended deadline imposed by the National Labor Relations Board.

The NLRA covers union and non-union employers engaged in interstate commerce, and applies to most employers in the private sector. There are some exclusions under the NLRA, such as for those employed by federal, state or local governments or who are independent contractors. If you are unsure as to whether you are covered by the NLRA, it is recommended that you contact counsel to determine whether the new Notice requirement is applicable to your situation.

Among other things, the new Notice advises employees of their right to organize, bargain collectively, strike and picket, and to not join or remain a member of a union. The Notice also lists acts that are illegal for an employer to take against an employee, including but not limited to prohibiting talk or solicitation in support of a union during non-work time, questioning an employee about union support, engaging in activities that discourage employees from supporting a union, and threatening to close the workplace if employees choose union representation.

Failure to post the Notice may result in an extension of the six-month limitations period in which an employee may file an Unfair Labor Practice Charge, and may be construed as evidence of an employer’s anti-union animus. The additional extension stems from a legal challenge to the posting requirement, and further extensions may be in the offing. However, it appears (at least to this writer) that the requirement is likely to survive the legal challenge. So, employers ... get ready!

NLRB Postpones Effective Date Of New Rule

2011-10-17T09:52:00.003-04:00

The National Labor Relations Board announced recently that it is postponing the effective date of its new, final rule requiring that all employers covered by the National Labor Relations Act post a notice informing employees of their right to organize. The new effective date is January 31, 2012. Apparently, implementation of the new rule was postponed in order to provide additional time for employers to prepare properly and to become better informed about its requirements. Stay tuned for more.

NLRB Says Employers Must Notify Workers Of Right To Unionize

2011-08-31T09:41:00.002-04:00

Last week, the National Labor Relations Board (the "NLRB") issued a final rule requiring that all employers covered by the National Labor Relations Act post a notice informing employees of their right to organize. The new rule also sets forth a list of various types of unlawful employer conduct. It will be an unfair labor practice if an employer fails to post the notice. The requirement to post is effective on November 14, 2011.

Prior to the new rule, employers were required to post notices of workers' rights only if a violation of labor law occurred. Interestingly, labor organizations are not required to issue information about the rights to refrain from joining a union and to opt out of union dues obligations. Not a particularly equal playing field, eh? If the government is going to require employers to post a notice of workers' rights, then the notice should cover all such rights, not just the ones favorable to organized labor.

This is an important development in the field of labor relations as posting of the notice may give rise to an increase in union organizing campaigns, thereby increasing employer costs in a variety of areas. Presumably, a form notice will be available for posting from the NLRB. We shall see.

Fun With The Marshall Tucker Band And Proposed Rulemaking By The NLRB

2011-08-23T09:21:00.006-04:00

Its been a while since I’ve posted ... life and business sometimes get in the way. You’ve probably missed my pithy commentary, so I apologize for the inconvenience.

Before I get to the legal stuff, I thought I’d share a fabulous experience I had last week with the Marshall Tucker Band (“MTB”). MTB first hit the music scene in 1973 with the release of its self-titled album (yes, it was on vinyl, no CDs or downloads back in the day). From then on the hits just kept on comin’ ... from “Can’t You See,” “This ‘Ol Cowboy,” and “Heard It In A Love Song,” MTB helped blaze the trail for the success and popularity of the Southern Rock genre of music.

Through a good friend, my wife and I were able to hang out backstage with the boys from MTB. It was an absolute blast. Everyone, from musicians, management and road crew were as nice and accommodating to us as could be; certainly, the term “southern gentleman” is applicable to each and every one of the folks in MTB. Doug Gray, the lead singer and an original member of the band, was gracious and generous with his time; hey, he signed my MTB CD (which I now treasure even more), took some photos with us, gave me his business card, hung out, and was simply amazing. For me, it was special since Doug is my favorite Southern Rock singer of all time; so, for him to spend time with us when he had a show to do was simply awesome. I’d particularly like to thank Doug, Dibby, Marcus, Pat, Rick, Chris, Stuart and Darryl for giving us such a great night; and of course, a big shout out to Doctor John, without whom the night would not have been possible. The show was the best I’ve seen in years! The only thing left is for MTB to be voted into the Rock & Roll Hall of Fame (the “Hall”). It’s a travesty that MTB has yet to be voted in, particularly when, IMHO, there are artists there already who pale in comparison to MTB both in quality of performance and songwriting. There’s a Petition circulating to get MTB into the Hall, and you can find it here. Please take a few minutes to help correct a musical injustice that has been ongoing for years and sign the Petition.

Now, for the legal stuff. The National Labor Relations Board (the “NLRB”) has issued proposed rulemaking that would cut the period for union representation elections (after a petition is filed) from an average of 38 days to as little as 10 days. This would severely limit an employer's ability to effectively communicate the impact of unionization to its workers. The NLRB has proposed other time reductions as well with respect to representation elections which also could impact adversely upon an employer’s ability to oppose compulsory unionization. The proposed rules appear to be a variant of what was "offered" in the Employee Free Choice Act which, of course, did not get through Congress. Given the current makeup of the NLRB, it seems that it is attempting to accomplish, through rulemaking, what the Obama administration failed to achieve through Congressional approval. In the poor economy we’ve encountered over the last few years, making it easier to unionize is likely to drive many small business into the garbage heap due to extraordinarily high costs of labor and benefits. Ironically, the very jobs which organized labor seeks to secure will likely be lost, thereby increasing unemployment and further eroding an already precarious economic environment. Once again, an example of your tax dollars hard at work.

Congress Gives Employers A Break

2011-06-06T09:36:00.008-04:00

Recently, Congress repealed the expanded 1099 information reporting requirements that were imposed by the Patent Protection and Affordable Care Act ... most of you know it as "Obama Care." The requirement mandated that payments totalling at least $600 in a single calendar year to a single entity be reported to the IRS. Reporting on Form 1099 was required when the payor was considered to be engaged in a trade or business and made the payment in connection with that trade or business.

Had this requirement remained, it likely would have wreaked havoc on small businesses. The mountains of paperwork would have been costly to create and process, and could have actually impeded business development and expansion. Indeed, the latter could have resulted in a loss of existing jobs or the inability to create new jobs. Congress did something right for a change in repealing the requirement. Let's hope this is not the end of its progress.

The Landscape Changes For New York Employers

2011-04-04T15:13:00.006-04:00

On April 9, 2011, the New York Wage Theft Prevention Act (the “WTPA”) takes effect. The new law amends the New York Labor Law in a number of significant respects. Among other things, the WTPA: (a) increases an employer's existing notice and wage statement requirements, including a mandate that an additional notice to employees be issued in accordance with Labor Labor Law Section 195(1) on or before February 1st of each subsequent year of employment; (b) quadruples the amount of liquidated damages an employee or the Commissioner of Labor can recover in an action for unpaid wages; (c) expands the substantive protections and the remedies available to employees under the anti-retaliation provisions of the Labor Law; (d) allows the posting of notices regarding employer violations; (e) imposes new criminal penalties against employers that fail to pay the minimum wage or overtime compensation due; and (f) expands the types of businesses subject to criminal penalties for nonpayment of wages to include partnerships, limited liability companies and the officers and agents of those entities. It is important that New York employers become well-acquainted with the requirements of the WTPA. It is suggested that New York employers contact their attorney for more in-depth information.

The Demise Of Public Sector Collective Bargaining?

2011-03-08T23:08:00.004-05:00

The major unrest in public sector collective bargaining, initiated in Wisconsin and having spread like wildfire across the nation, is a clarion call to organized labor and public employers. Stop the madness!

Both sides need to alter radically their positions at the negotiating table if the collective bargaining process is to have any meaning in the future. Antiquated notions of exploitation and “line in the sand,” hard bargaining have resulted in fiscal crises which threaten the general public both in terms of service cuts and increased taxes. In the public sector, neither side appears willing to admit that without employers, there are no jobs and without the unions there are no employees. They are necessary evils to each other. Until this basic precept is accepted by both parties, progress is unlikely to be achieved; the mayhem of recent times will probably continue ad infinitum and ad nauseum. In the meantime, the public suffers while obstinance reigns supreme.

More Certified Payroll Blues

2011-01-14T10:06:00.010-05:00

OK, just when I thought I had heard it all, the following little gem is offered for your consideration and amusement.

A subcontractor's certified payrolls for a particular project showed approximately $15 more per hour paid to its workers each week than the combined wage and cash supplement amount for the work classification in issue.

When the subcontractor's attorney was asked why his client paid about $15 more per hour than required, he responded: "Because the workers were at other jobs each week and my client listed those payments on the project's certified payroll." What? Are you kidding me? Surely, you jest! When the subcontractor's attorney was informed that such a practice was wholly unacceptable, and that the certified payroll had to be limited to payments made for the single project only, he replied: "you just don't get it, pay my client immediately." When he was informed further that if he backed out the amount paid on the other projects, there would likely be an underpayment to the workers, he said: "That's not the GC's problem." Uh, excuse me? It most certainly is the GC's problem as the general contractor is strictly liable for all underpayments by its subcontractors of prevailing wages and prevailing supplemental benefits. So, now the subcontractor is all bent out of shape because it won't be paid until satisfactory proof is submitted that its workers received all prevailing wages and benefits mandated by statute.

Oy vey! Can someone pass the Pepto, please?

The Certified Payroll Blues

2011-01-06T08:53:00.012-05:00

As it's the New Year, I thought I'd talk about one of my pet peeves ... certified payrolls. Yes, certified payrolls. Such a fascinating topic. It never ceases to amaze me that contractors routinely fail to complete properly a simple, certified payroll document for a public works project. A certified payroll document is fairly self-explanatory and straightforward, requiring (among other things) information as to work classification, days and dates worked, hourly rate paid, number of hours worked each day, and whether the hours worked were straight time and/or overtime. Simple, right? Apparently not. I have seen certified payrolls which don't even come close to providing the information required. Information is either missing or misplaced on the document; for example: (a) days and dates of work are not listed; (b) straight time hours are listed as overtime hours, and vice versa; and/or (c) a signed certification is missing. What gives? Then, the contractor looks like a deer caught in the headlights when given a hard time by governmental authorities.

It's really simple, folks. If the certified payroll process is not taken seriously by contractors, then they have only themselves to blame for any future problem attributable to those payrolls. Here, an ounce of prevention is worth a pound of good. Happy New Year!

Charter Schools Generally Not Subject To Labor Law Section 220

2010-11-26T09:37:00.010-05:00

In New York Charter School Ass'n v. Smith (Slip Op. 07375, Decided: October 19, 2010), the New York Court of Appeals ruled that charter schools are not public entities for purposes of Labor Law Section 220. The statute requires the payment of prevailing wages and prevailing supplemental benefits to workers on New York State public works projects.

The litigation arose from a change in the position of the New York State Department of Labor (the "NYSDOL") concerning charter schools. Prior to 2007, the NYSDOL had opined that charter schools were not public entities, and therefore not subject to Labor Law Section 220. However, the NYSDOL later changed its position and determined that the statute applied to all charter school projects.

In a 5-2 decision, the court held that while a charter school is a "hybrid of sorts," it is not a public entity. In so holding, the court stated: "Only four public entities are specifically identified under Labor Law [Section] 220(2): the state, a public benefit corporation, a municipal corporation or a commission appointed pursuant to law. By its terms, the statute does not expressly apply to educational corporations, and that includes charter schools." The court went on to state that a "charter agreement" is merely "an authorizing agreement under which an agency has determined that an applicant school is competent to be licensed as an educational corporation and nothing more ... [I]t is not a contract for public work involving the hiring of laborers, workers, or mechanics within the meaning of [Section] 220."

In making its determination, the court referenced its prior holding in Erie County Industrial Development Agency v. Roberts, 63 N.Y.2d 810 (1984), wherein a two pronged test was articulated for application of Labor Law Section 220; specifically: (1) the public agency must be a party to a contract involving the employment of laborers, workers or mechanics; and (2) the contract must concern a public works project. That test was not satisfied in the New York Charter School Ass'n case. Also, the court noted that charter schools are not governed by government appointees, are exempt from all state and local laws governing public schools under the Education Law, and that the Charter Schools Act expressly exempts a local school district and the state from liability for the debts or financial obligations of a charter school or its operators. All of these factors militated against a finding of public entity status.

Interestingly, at the end of its opinion, the court stated that Labor Law Section 220 could apply in a situation where a charter school acts in the place and stead of a public entity that is required to pay prevailing wages and prevailing supplemental benefits. Plainly, there's an exception to every rule.

A Reminder About CIFPA

2010-10-19T11:06:00.005-04:00

Just a reminder that New York's Construction Industry Fair Play Act ("CIFPA") becomes effective on October 26, 2010. CIFPA will change the landscape dramatically with respect to independent contractors in the construction industry. See my post here for further discussion of CIFPA. Next on the horizon ... expanding the restrictions of CIFPA to other industries. Stay tuned.

A Death Knell For Independent Contractor Status?

2010-09-21T07:39:00.005-04:00

On October 26, 2010, New York’s Construction Industry Fair Play Act (“CIFPA”) goes into effect. This new legislation was enacted due to the prevalence of worker misclassification in the construction industry, and represents a major change in how New York employers will classify independent contractors.

The statute creates a presumption of employee status in the construction industry, unless the person is a “separate business entity" (which requires satisfying all 12 criteria enumerated in the statute for that definition) or if three (3) other prescribed criteria are all met. Those criteria, as well as the text of the statute, can be found here. In short, well-recognized elements of employee status must be absent in order to be classified as a true independent contractor; this will require meeting all criteria set forth in one of CIFPA’s tests. It is irrelevant whether workers are bona fide independent contractors under the traditional common law test. Further, construction industry contractors will have to post a notice at each jobsite (which will be available from the New York State Department of Labor) containing information about employee rights under CIFPA (including anti-retaliation protections) and rights to workers' compensation coverage, unemployment insurance, minimum wage, overtime and the like.

CIFPA carries civil and criminal penalties both for the employer and for individual officers and shareholders who knowingly permit a willful violation of the statute. For those contractors performing public work, debarment and ineligibility to bid on public works contracts will be imposed upon a criminal conviction.

The bar for independent contractor status has been raised significantly, and it will likely be difficult to justify independent contractor status for most individual workers after CIFPA becomes effective.

Professional Ethics and Unemployment Insurance

2010-09-06T11:42:00.008-04:00

In Matter of Emery v. Memorial Sloan Kettering Cancer Center, the Appellate Division, Third Department recently affirmed a grant of unemployment insurance benefits for a nurse (who was also an attorney) who left her employment because she believed she could face professional disciplinary charges for falsely claiming to have witnessed patients signing informed consent documents. After an administrative Hearing, the employee was granted unemployment insurance benefits. That grant was upheld by the Unemployment Insurance Appeals Board and affirmed by the Appellate Division, which found that the employee had good cause to leave her employment.

Generally, unemployment insurance benefits are not provided to employees who leave their jobs voluntarily. One exception to this general rule is where an employee has good cause to leave the employment due to an employer policy or directive which could cause the employee to violate certain rules of professional ethics.

In the Emery case, the employer hospital enacted a policy requiring nurses to acknowledge that they had witnessed patients executing informed consent documents. The acknowledgement was necessary even if the nurse was not present when the documents were signed, but confirmed the signature later. When the employee objected to the policy on grounds that it could require nurses to engage in professional misconduct by acknowledging signatures which they did not witness, the employer advised that its policy would not change. After the employee was deemed to have resigned, the employer changed its informed consent policy to address the concerns raised by the employee initially; the consent forms were revised to include language where the nurse could acknowledge that he/she had not seen the patient sign the documents, but that the signature was confirmed with the patient later. Interestingly, the employer’s policy as first issued may have required the employee to violate attorney professional ethical standards as well; a sort of “one-two punch” given her dual role as a nurse and attorney.

I think the Court got it right in this instance.

New York's Legislature - Clueless, As Usual.

2010-07-10T06:07:00.018-04:00

Recently, both houses of the New York State Legislature passed legislation requiring licenses for plumbers and electricians working on public school projects having a value of $10,000, where licensure is mandated by the municipality in which the school is located. As it stands currently, there is no Statewide licensing of those trades in New York, and municipalities are free to set their own licensing requirements.

Proponents of the legislation claim that it’s necessary as a safety measure. That's a legitimate concern; however, it appears that the legislation is designed to limit competition by permitting localities to protect work in the trades for locally-based contractors. It is simply ridiculous to demand that plumbers and electricians obtain licenses in every municipality having licensing requirements, each with different rules. A better alternative is a single, Statewide licensing requirement for those trades. This would ameliorate concerns about safety and eliminate the overly burdensome task for contractors in having to obtain multiple licenses in separate jurisdictions within the State. Another alternative would be to modify the current legislation to allow reciprocity of licensing throughout the State; if a contractor is licensed in one local jurisdiction, then that should be sufficient for other municipalities.

The net effect of this legislation, if signed into law by the Governor, is that the pool of quality contractors is likely to be reduced greatly. Thus, locally-based contractors may have quite the monopoly on public school work in various jurisdictions, thereby resulting in higher bid prices and contract awards. Who pays for this? You guessed it ... the taxpayer. Logic and pragmatism appear to be concepts lost on the politicians in Albany.

Chaos At The NLRB

2010-06-18T07:33:00.012-04:00

There's major trouble in "them thar hills," folks. Yesterday, in a 5-4 decision, the U.S. Supreme Court held that the National Labor Relations Board (the "NLRB") lacked authority to issue nearly 600 decisions during the last two years when it had only two members.

The case is New Process Steel v. National Labor Relations Board (08-1457). It involved a steel processing plant that unilaterally withdrew recognition from the Machinists Union. The two-member Board ordered the employer to recognize the Union, abide by a collective bargaining agreement negotiated previously, and pay employees for lost income. On appeal, the employer challenged the authority of the NLRB to issue its decision with a two-member panel.

Section 3(b) of the National Labor Relations Act (the "Act") provides, in pertinent part, that "three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group [to which the NLRB has delegated powers]." Given that statutory language, the issue before the Court was whether two members constituted a quorum, or whether at least three members were required to issue a decision. By way of background, in 2007, there were 4 members of the NLRB and 1 vacancy. As a result of problems with Congressional confirmation of NLRB nominees and attrition due to the expiration of member terms, that Board delegated its authority to a three-member panel, of which two constituted a quorum ostensibly.

The Court, in New Process Steel, held that the NLRB lacked authority to issue a decision with less than three members, and stated that if Congress had intended for the NLRB to act with only two members, it would have said so in clear language. I think the Court missed it on this one since Section 3(b) of the Act contemplates that the NLRB can continue to operate in what amounts to an extraordinary circumstance with a two-member quorum. That's essentially what the dissent argued.

So, what does this all mean? Plenty! First of all, about 75 to 80 cases pending in the lower courts will be returned to the NLRB where those cases challenge the validity of the two-member NLRB decisions. Next, there are approximately 500 cases which may be void (i.e., those which did not raise the issue of legitimacy on appeal, and where the parties complied or are in the process of complying with the decision without appeal).

In my opinion, those who failed to challenge decisions based on the lack of authority issue likely have waived any right to overturn them on that ground now. Moreover, those parties who complied or are in the process of complying with a two-member NLRB decision are likely to now disregard that decision. This could mean that employees who were ordered reinstated may have their employment terminated, and employees whose terminations were upheld previously may attempt to get their jobs back. Also, the results of secret ballot elections certified by the two-member panel are likely to be called into question. And, what about those employers who were ordered to provide back-pay? Will they/can they now attempt to recoup those monies from the employees?

This is a real mess.

Good Try, But No Cigar!

2010-05-21T08:59:00.012-04:00

Creativity among attorneys is a critical component of the profession. Attorneys have an ethical obligation to represent their clients zealously and within the bounds of the law. One recent attempt at creativity, albeit an unsuccessful one, occurred in Capital Construction Management of NY LLC v. East 81st St. LLC, NYS Supreme Court, New York County (Decided: April 30, 2010).

In Capital Construction, a construction manager lacking a requisite New York City home improvement contractor's license, performed work or caused work to be performed for the rehabilitation and redevelopment of a condominium project. When the project owner had trouble paying the balance due for the work (i.e., approximately $700,000.00), the contractor and the project owner entered into a loan repayment agreement providing for additional interest.

Three checks issued to the contractor bounced, and the contractor sued to recover on the uncollected checks, but not for the work performed or on the loan repayment agreement. Instead, it moved for summary judgment in lieu of complaint based on the fact that the checks were instruments for the payment of money only. It's important to note that the existence of a valid home improvement license must be plead as an allegation since, in New York, the failure to possess a valid home improvement license required by the State or locality at the time of contract and performance of the work is an absolute bar to recovery. By moving for summary judgment in lieu of complaint on the checks rather than for the work or on the loan agreement, the contractor attempted to "end run" the requirement of a home improvement license, a claim on which it was unlikely to recover based on the facts of the matter.

The Court didn't buy the argument and held that allowing the contractor to circumvent licensing and related requirements in this instance would violate public policy. The Court stated: "[A] home improvement contractor must comply with two separate tests to advance a claim: (1) a valid license at the time of pleading, and (2) a valid license at the time of the contract and work. If the contractor cannot meet both tests its claim must be dismissed" [citation omitted]. Here, the contractor admitted that the checks were issued for work performed, and the Court simply would not permit itself to be misdirected by focusing on the uncollected checks rather than the lack of a requisite license. The contractor's Motion was denied.

I agree with the Court's decision here. However, I think this is a good example of an attorney being creative by pushing the envelope. While the argument failed to win the day, in many instances creative lawyering can broaden legal horizons and remedy injustice.

Is It Or Isn't It ... Marital Status Discrimination

2010-05-19T22:39:00.006-04:00

It's amazing what labor attorneys will talk about over a few beers. Recently, the issue came up as to whether an unmarried employee, receiving health benefits under a "single-person" plan, is entitled to a monetary differential equal to the difference between the cost of that benefit and the cost of a "family" plan provided to a married co-worker. The argument goes that since the employer pays more for the family health plan, the married employee receives more "value" in terms of a benefit based on a personal choice than an unmarried employee with no dependents. Is this discrimination based on marital status? If a monetary differential were paid to the unmarried employee, would there be parity between the parties since a health benefit is non-taxable to the worker while direct payment of a monetary differential is subject to taxation?

And, then, there is a most critical question ... why are attorneys discussing such things over beers when a baseball game is on the big screen tv?

The Next Great Bailout - Union Pension Plans

2010-04-05T21:45:00.004-04:00

Get ready, folks. The newest government bailout may come sooner than you think! Organized labor is pushing for legislation to bailout underfunded union pension plans. Currently, the average union pension plan has enough money to cover only 62% of its financial obligations. That puts most of them on the government's "critical" list.

Of course, taxpayers will again bear the burden for years of mismanagement and, in some cases, outright misappropriation of pension funds. Unlike prior bailouts of the auto industry and the financial sector, a bailout of union pension plans is unlikely to result in taxpayer recoupment given the continued decline in union affiliation. If organized labor prevails in ramming through the Employee Free Choice Act ("EFCA"), which could result in compulsory unionism for most employers, then it's possible that additional revenue would be available to repay the taxpayers due to forced participation in multi-employer pension plans. However, even that result may be impossible to achieve since EFCA could force many employers to close their doors due to the exceedingly high cost of union wages and benefits. In that case, the "bailout" could turn quickly into a permanent form of government subsidy. That's just what the doctor ordered for this troubled economy ... NOT!

Recess Appointments To NLRB Could Mean Trouble For Non-Union Employers

2010-03-29T11:21:00.008-04:00

President Obama's recess appointments of Craig Becker and Mark Pearce to the National Labor Relations Board (the "NLRB") could mean big trouble for non-union employers. Messrs. Becker and Pearce are pro-union attorneys, but it is the appointment of Mr. Becker which has received the most publicity. Republicans have held up Mr. Becker's confirmation for months fearing that he would circumvent Congress to make labor laws more union-friendly. That fear may become a reality since Mr. Becker appears to favor the proposed Employee Free Choice Choice Act which, among other things, includes provisions that deny employers the right to demand a secret ballot employee representation election and could result in compulsory unionism.

In addition to the NLRB appointments, the President made 13 other recess appointments to other government positions. It's not surprising that these appointments were made since Presidents of both parties have used them previously to fill hundreds of positions during their terms. What is surprising is the claim by Republicans that the appointments will serve only to widen the divide between the parties. After recent passage of the contentious and emotionally charged health care bill, the Republicans intimated that there would be no further cooperation with the White House for at least the rest of the year. How much more of a divide could there be than that?

Regardless, Congress and the White House should be ashamed of themselves given all of the recent political arm twisting, backstabbing and horse trading that we have witnessed. It's time for politicians to stop gambling with our health and financial lives in their high stakes, winner-takes-all poker game. The American people deserve much better than that.

Off Topic - The 2010 Census

2010-03-18T20:58:00.005-04:00

Well, folks, the 2010 Census is here. Billions of dollars (yes, that's Billion with a "B") of the taxpayers' hard earned money has been spent on the project, yet an obvious error exists which appears to have eluded many.

As you may know, delivery of the Census began earlier this week. The message insert from the Census Bureau dated March 15, 2010 states, in bold faced letters: "Please complete and mail back the enclosed census form today." Unfortunately, compliance with that request is impossible at this point in the time-line if one wishes to be accurate. You see, Question No. 1 on the Census Form asks: "How many people were living or staying in this house, apartment, or mobile home on April 1, 2010?" As written, one cannot respond to that question correctly until at least April 2, 2010; however, the Census Bureau asks that the form be completed and mailed back as early as March 15th. How can that be? How can one state presently the number of people living in a place as of April 1st when that date has yet to arrive? Didn't anyone at the Census Bureau bother to cogitate about such a basic consideration?

Given the enormous amount of money spent on this decennial venture (which is likely more than the gross national product of many small countries), such a blatant error is outrageous, yet hardly surprising. Like the $500 toilet seats of decades past, the ineptitude of government continues at the taxpayers' expense.

An Appointment That Should Not Be Kept

2010-02-12T15:41:00.005-05:00

Although Senate Democrats earlier this week lost their bid to advance the nomination of Craig Becker to the National Labor Relations Board (the "NLRB"), organized labor is calling upon President Obama to seat Mr. Becker as a "recess appointment." In effect, Mr. Becker would become a member of the NLRB without Congressional approval. Why could this be a somewhat Earth-shattering event in the field of labor relations, you say? I'm glad you asked. Mr. Becker, a Union attorney, favors the Employee Free Choice Act (the "EFCA"). As I've posted on this blog previously [check the archives], the EFCA is proposed legislation that denies employers the right to demand a secret ballot employee representation election, and could result in compulsory unionism; this could likely put many small to medium-sized employers out of business and increase an already high rate of unemployment. So, what organized labor could not achieve through Congressional action, it now seeks to force upon the Nation through political arm-twisting. Stay tuned.

Impact Of The Massachusetts Vote On EFCA

2010-01-20T13:05:00.006-05:00

Yesterday in Massachusetts, Scott Brown (the Republican) defeated Martha Coakley (the Democrat) in a special election to fill the unexpired term of the late Senator Ted Kennedy. As a result, the Democrats have lost their supermajority in the Senate which will likely undermine health care reform and other items on the Obama agenda.

One of the definitive upsides to the Brown victory is its impact on the Employee Free Choice Act ("EFCA"). Many, with the exception of organized labor, seem to agree that EFCA is dead in 2010 without a Democrat supermajority to move the legislation forward in the Senate. While organized labor is pushing the Democrats hard on getting EFCA signed into law, EFCA is likely to go nowhere in 2010 unless the Democrats come up with a compromise version that Republicans can support (i.e., no card check and no binding arbitration). Given the seemingly intransigent position of the unions on the proposed legislation, I doubt that such a compromise will be achieved.

Document, Document, Document!

2009-12-29T09:38:00.005-05:00

During the financial upheaval that has occurred over the last couple of years, more and more employers have been discharging workers. At one point, the rate of unemployment exceeded 10% nationwide. Regardless of whether the discharge occurs in an employment-at-will State, it is critical that the reasons for separation are documented. These days, it is simply not enough for an employer to fire someone without a reason. Granted, the laws in employment-at-will States generally provide that an employee may be fired for any reason or no reason, as long as it's not for a Constitutionally impermissible reason (i.e., race, gender, religion, national origin, etc.). However, firing someone simply because an employer "can," may give rise to claims of discrimination which are often very expensive to defend. Having a legitimate basis for the discharge may go a long way in helping to defeat claims of discrimination.

Documentation in this instance is key. By documenting poor work performance or misconduct at or about the time of the occurrence, employers create a paper trail which can be used later in the event the worker is fired and alleges that it was due to unlawful discrimination. Is it a pain in the posterior to do it? Perhaps. Certainly, employers typically have more important things to worry about in the grand scheme of things. On the other hand, can proper and timely documentation help save employers thousands of dollars (if not more) in the long run? In my opinion, absolutely!

New EPA Lead Rules

2009-11-25T08:22:00.003-05:00

The barrage of new regulations continues, this time from the Environmental Protection Agency (the "EPA"). Beginning in April, 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities and schools built before 1978 must be certified and follow specific work practices to prevent lead contamination. The new rules include pre-renovation advisement requirements as well as training, certification and work practice requirements.

This is quantum leap forward from the current practice of simply handing the homeowner a pamphlet about lead and having them provide written confirmation of receipt. The EPA has published a pamphlet about the new rules that can be found here.

A Happy Thanksgiving to all.

New I-9 Audits And A Dubious Fashion Statement

2009-11-20T16:18:00.008-05:00

Holy smokes, Batman! Yesterday (November 19, 2009), the Department of Homeland Security’s Immigration and Customs Enforcement Division ("ICE") announced that I-9 audit notices would be delivered immediately to approximately 1,000 employers throughout the country. The audit notice is essentially a Subpoena and compliance is mandatory.

Almost immediately after the announcement (if not before it was even issued), I received a telephone call from a client stating that it had been chosen as one of the lucky 1,000 and that representatives from ICE in "sweatsuits" (that's right folks, you read it correctly ... "sweatsuits") delivered an audit notice that morning for the client's I-9 forms. Sweatsuits? Are you kidding me? Sheesh! The decline and fall of civilization as we know it continues.

New Federal Posting Requirements

2009-11-12T11:56:00.004-05:00

Federal law requires postings in workplaces informing individuals of their rights under federal employment discrimination laws. The Equal Employment Opportunity Commission has published a notice revising its “Equal Employment Opportunity is the Law” poster to provide information concerning the Genetic Information Nondiscrimination Act of 2008 (“GINA”) as well as changes to other federal laws. GINA becomes effective on November 21, 2009, 18 months after its enactment.

GINA protects applicants and employees from discrimination based on genetic information in hiring, promotion, discharge, pay, fringe benefits, job training, classification, referral, and other aspects of employment. GINA also restricts employers’ acquisition of genetic information and strictly limits disclosure of genetic information. Genetic information includes information about genetic tests of applicants, employees or their family members; the manifestation of diseases or disorders in family members (e.g., family medical history); and requests for or receipt of genetic services by applicants, employees or their family members. It is suggested that employers may wish to update current handbook policies to incorporate language concerning GINA that is consistent with the new posting requirement. In addition, employers must comply with all other posting requirements mandated by federal and state laws. The new poster can be found at http://www.eeoc.gov/employers/upload/eeoc_self_print_poster.pdf.

More Amendments To New York's Labor Law

2009-10-13T10:01:00.003-04:00

Effective November 24, 2009, New York Labor Law Section 198 will impose an award of liquidated damages in a sum equal to 25% of any amount in underpaid wages found to be due after an administrative proceeding unless the employer can show a good faith basis for its belief that its underpayment was in compliance with the law. Liquidated damages will be available in a court action commenced by an employee under Labor Law Section 663 (as amended) to recover unpaid wages based on the same criterion. This is a wholesale reversal of the long-standing burden of proof by which liquidated damages were awarded only if the employee could establish that the employer’s underpayment of wages was willful. Will the automatic imposition of liquidated damages have a deterrent effect? Only time will tell; however, it will plainly increase the amount of damage awards.

Also effective on November 24, 2009 is an amendment to New York Labor Law Section 215 increasing monetary penalties against employers that have retaliated against employees who exercise their rights under the Labor Law. The new penalty range will increase to a minimum of $1,000 up to a maximum of $10,000. In addition to increasing the number of activities for which an employee may be subjected to retaliation, the amendment expands the universe of liability. Under prior law, only corporations could be held liable for retaliation; however, limited liability companies and partnerships will now be liable as well, with individual liability for their officers and agents.

Discrimination Based On Accent

2009-10-01T09:13:00.002-04:00

Many discrimination cases involve characteristics such as race, sex, national origin and religion. Here’s one with a bit of a twist ... discrimination based upon accent.

In Morales v. HT Rest NYC LLC (NYS Supreme Court, N.Y. Co. - Decided 9/22/09), Plaintiff alleged that she was denied employment as a waitress based on her accent. Plaintiff further alleged that in rejecting her for the position, Defendant’s representative told her "You have a Latin accent," "You don't speak White," and "You are Ghetto." Defendant never alleged that the Plaintiff was unqualified to perform the duties of a waitress.

In denying Defendant’s motion to dismiss the Amended Complaint against the Defendant restaurant, the Court cited to precedent for the proposition that while a justified concern over language skills is not evidence of discrimination, comments about a person’s accent may be probative of discriminatory intent. The Court noted that “[a]n adverse employment decision may be predicated upon an individual's accent when — but only when — it interferes materially with job performance” [citation omitted].

In this case, the Court held that refusing to employ Plaintiff as a waitress because of a Latin accent (without more) could be discrimination based upon race or national origin. Although the Defendant contended that it did not hire Plaintiff based on the nature of its business and the manner in which she spoke (rather than her accent), the Court held that such contention was a factual issue to be determined at a later time.

The Morales case treads fine lines between an employer's legitimate business interest with respect to a person's ability to communicate clearly, an individual's accent (which may be incapable of alteration), and the manner of speech.

New Notice Obligations For New York Employers

2009-09-14T18:06:00.001-04:00

Effective October 26, 2009, amendments to New York Labor Law Section 195 require employers to furnish written notification to all persons hired on and after that date of their regular rate of pay and regular pay day. The written notice to non-exempt employees (e.g., those who are eligible for overtime) must include a statement of the regular hourly rate as well as the actual overtime pay rate. Employers must obtain from each new hire a written acknowledgment/receipt of the required notice. Now, there's a nice, pre-Halloween present for you.

E-Verify Scheduled To Go Into Effect In Early September

2009-08-11T09:48:00.003-04:00

The new E-Verify regulations are scheduled to become effective on September 8, 2009. On that date, federal contractors will be required to start using the internet-based, government sponsored E-Verify system to confirm electronically that an employee is eligible to work in the United States. Although the system is free and voluntary, federal contracts will be awarded only to employers who use E-Verify to check employee work authorization. So much for the "voluntary" aspect as a practical matter. The rule will only affect federal contractors who are awarded a new contract after September 8, 2009, and federal contractors may not utilize the system to verify current employees prior to its effective date.

The system will be operated by the Department of Homeland Security. Given the dubious nature of that agency in recent years, I would not be surprised if a number of glitches and inaccuracies appeared in the system. If so, confusion will likely run rampant. Only time will tell. However, should the E-Verify system prove effective ultimately, private employers may consider using it as well. Stay tuned.

Federal Minimum Wage Alert!

2009-07-15T11:03:00.002-04:00

As I advised previously, the Federal Minimum Wage will increase from $6.55 per hour to $7.25 per hour, effective July 24, 2009. Typically, where a State minimum wage conflicts with the Federal minimum wage, employers are required to pay the higher of the two hourly wage rates. Employers confronting such a situation may wish to consult with labor counsel in their State.

No Mandatory Overtime For Nurses In New York

2009-07-06T10:43:00.003-04:00

New York's Restrictions on Consecutive Hours of Work for Nurses law went into effect on July 1, 2009. Under the new law, codified as Labor Law Section 167, health care employers are prevented from mandating overtime for nurses. There are certain conditions under which exceptions may be made. The new law may be found here.

Unfair Proposed Taxation of Heath Care Benefits

2009-06-26T11:05:00.002-04:00

You may know that there is a current push in Congress to tax employer provided health care benefits in order to help pay for reform of the health care system. A new wrinkle has now appeared. Congress is now considering limiting the proposed tax to non-union health care plans only. In short, health care benefits negotiated by labor unions under collective bargaining agreements may escape entirely any taxation that is imposed ultimately. Is this fair? Hardly. Does it help perpetuate class warfare and inappropriate government favoritism toward unions? You bet.

A "Preposterous" Case Of Worker Misclassification

2009-06-22T13:49:00.004-04:00

The prevalence of worker misclassification by employers continues to run rampant. While there are many legitimate cases where an individual is a true independent contractor, numerous instances exist where an employer misclassifies a person as an independent contractor rather than as an employee. The issue of whether the misclassification was intentional is left properly to the trier of fact. I leave it to you, dear reader, to speculate as to any underlying motivation.

In Hui Lin v. Great Rose Fashion Inc. (U.S. District Court, E.D.N.Y. - Decided: June 2, 2009), the Plaintiffs were garment workers who alleged that Defendants violated the Fair Labor Standards Act (the "FLSA") by failing to pay minimum wages and overtime. Plaintiffs further alleged that they were discharged ultimately from their employment in retaliation for pursuing their rights to such compensation. Defendants asserted that Plaintiffs were independent contractors since packing and trimming work was subcontracted out to other individuals who then employed Plaintiffs. Defendants further asserted that Plaintiffs lacked standing to maintain the action and that Plaintiffs were dismissed solely because economic conditions forced the garment factory to cease business. The Court denied both Defendants’ Motion to Dismiss and Plaintiffs' Motion for a preliminary injunction seeking reinstatement.

In a well-reasoned opinion, Judge Garaufis relies on the holding in Brock v. Superior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988) to detail the criteria used historically to distinguish an independent contractor from an employee. Typically, the inquiry is based upon: (1) the degree of control exercised by the employer over the workers; (2) the workers' opportunity for profit or loss and their investment in the business; (3) the degree of skill and independent initiative required to perform the work; (4) the permanence or duration of the working relationship; and (5) the extent to which the work is an integral part of the employer's business.

In denying Defendants’ Motion to Dismiss, the Court held that the workers were employees, not independent contractors and that they had standing to maintain the action. The Court used particularly harsh language in discrediting the defenses raised by Defendants and found the evidence presented by Defendants at Hearing to be "patently false." Indeed, the Court opined that Defendants’ independent contractor theory was “preposterous” given that the evidence showed that Plaintiffs were not in business for themselves, and were interviewed, hired, fired, assigned work and hours, supervised and managed by Defendants or others under their control.

Most interestingly, the Court chastised the Defendants severely by stating: “Defendants' contrived efforts to distance themselves from their workers and treat them as 'subcontractors' have failed. The Defendants' argument is nothing more than a transparent attempt to use a legal fiction to escape liability for their alleged labor abuses. The notion that these Plaintiffs acted as independent contractors outside the protection of the FLSA is so thoroughly without merit that it borders on an affront to the dignity of this court.”

WOW! Talk about a big time reprimand. Do you think the Court was ticked off just a little?

Jon & Kate Plus 8

2009-06-01T18:28:00.003-04:00

The Pennsylvania Department of Labor has opened an investigation into whether the reality TV series "Jon & Kate Plus 8" violated Pennsylvania's Child Labor Laws. Under Pennsylvania law, it appears that the question is whether the children are performing on a television production set under independent direction or whether their lives are simply being documented. In other words, is it "work" if a reality show has television cameras around and the children are merely living their lives rather than performing? The Learning Channel, which produces the show, claims that it fully complies with state laws and regulations. The result should prove interesting and may have a significant effect on the way reality television shows deal with children in the future.

Federal Minimum Wage To Increase On July 24, 2009

2009-05-27T10:16:00.004-04:00

The Federal minimum wage will increase from $6.55 per hour to $7.25 per hour, effective July 24, 2009. Generally, if there is a difference between a State and Federal minimum wage, the employer must pay the higher of the two hourly rates. Employers may wish to consider contacting their respective State Departments of Labor to determine their minimum wage obligations on and after July 24, 2009.

New COBRA Requirements Under The American Recovery And Reinvestment Act

2009-05-06T20:04:00.007-04:00

The recently enacted American Recovery and Reinvestment Act of 2009 (“ARRA”) contains amendments to COBRA which affect every employer that sponsors an employee group health plan and that has terminated or laid off an employee retroactive to September 1, 2008 through December 31, 2009. Among other things, the new amendments create additional COBRA notice requirements and affect payroll tax administration for purposes of implementing a temporary Federal subsidy with respect to COBRA premiums.

Under ARRA, most employees eligible for COBRA and who elect it must pay 35% of the applicable COBRA premium. Employers that provide group health coverage through insurance must pay the remaining 65% of the premiums, and will be reimbursed for that payment in the form of a credit subsidy against their quarterly federal employment taxes. Generally, the subsidy is available for up to 9 months. While the amendments apply only to those who are terminated involuntarily or laid off, the language of the statute appears to include an involuntary termination for cause, except for gross misconduct. In other words, terminating employment for most types of insubordination could trigger employer compliance with the new COBRA requirements. And, to add insult to injury, ARRA requires employers to locate former employees who previously declined COBRA coverage and to notify them in writing of their right to that coverage with the government subsidy.

The practical effects of all this are likely to be additional costs in business operation (notwithstanding the tax credit), a significant and adverse impact on cash flow, additional expenses in administering the notice provisions, and a reluctance to terminate employment to avoid such additional expenditures. Interestingly, it is possible that ARRA could have an unintended consequence as well: given the poor economy, employers may implement hiring freezes so that they don't have to contend with the additional costs imposed by ARRA should further layoffs be required. How's that for stimulus! Isn’t this fun, folks?

NYSDOL Allows Limited Use Of "4/10" Work Schedule

2009-04-07T09:33:00.002-04:00

WOW! In a surprising departure from long-held policy, effective April 1, 2009, the New York State Department of Labor (the "NYSDOL") permitted the use of a 4 day/10 hour work schedule for specific work classifications in certain geographic areas. The work classifications covered are listed on the "Job Classification Checklist" which is part of the new PW30R Form. The "4/10 Work Schedule" is applicable only to the specific job classifications in the areas/counties designated.

Before the NYSDOL will allow use of the 4/10 Work Schedule, an Application for Dispensation of Hours (Form PW30) must be in place which states the reason for use of the compressed Work Schedule. The contracting agency must affirm that the public works Project is of an important nature and that a delay in proceeding will result in serious disadvantage to the public. If a PW30 is not in place, a contractor must submit the application if it wishes to use the 4/10 Work Schedule. Once the PW30 is approved, then a PW30R form must be submitted on which the work classifications in the specified geographic area must be listed.

Given the current, precarious state of the economy, use of a compressed work schedule may prove beneficial to Project owners, employers and workers. More information, including a look at the required forms, may be found here.

U.S. Senator Voices Opposition to EFCA

2009-03-25T13:18:00.003-04:00

Senator Arlen Specter has voiced his opposition to the Employer Free Choice Act ("EFCA"). Assuming that the election result debacle in Minnesota is resolved in favor of the Democrats, Senator Specter could be the deciding vote against passage of EFCA in the Senate. There may yet be hope for employers on this issue. Stay tuned.

EFCA Introduced In Congress

2009-03-11T14:00:00.000-04:00

As I predicted previously, the Employee Free Choice Act ("EFCA") seems to be on its way to passage during the first 100 days of the Obama administration. The Bill was introduced officially in the House and Senate yesterday. Unions absolutely love EFCA, while business groups have mounted fervent opposition to it. For more on EFCA take a look at my prior post here.

Section 1983 Claims Dismissed Against Private Attorneys For Municipality

2009-03-03T10:45:00.002-05:00

A very interesting decision on the civil rights front was handed down recently by the United States District Court for the Eastern District of New York. The case is Westhampton Beach Associates LLC v. Strebel (08-CV-1493, Decided: 2/19/09).

In Westhampton, a real estate developer sued a municipality as well as the private attorneys and consultants retained to advise the municipality with respect to the development of a condominium complex. The Amended Complaint alleged violations of 42 U.S.C. Section 1983 which pertains to the deprivation of a Constitutional right, privilege, or immunity by a person acting under color of state law. In other words, the Constitutional deprivation must be the result of some action by the state or its representatives.

The Court dismissed the Section 1983 claims against the private attorneys and consultants hired by the municipality, concluding that they did not act under color of state law in providing advice to the municipal client or demanding changes in Project design. Smart decision since those in private practice are not generally functionaries of the government. Further, the Court held that the Amended Complaint failed to explain how the attorneys deprived the Plaintiff of a constitutionally guaranteed right, privilege, or immunity. Citing to case law in the Second Circuit, the Court affirmed that claims under Section 1983 must allege the personal involvement of each Defendant, and that Plaintiff had failed to do so as to the attorneys and consultants. The Court further relied upon substantial precedent in the Second Circuit holding that attorneys and consultants who provide advice to municipal entities are not acting under color of state law for purposes of Section 1983. Indeed, to find liability for private individuals in such a situation would likely have a chilling effect on the furnishing of legal and other professional advice and/or services to municipal clientele. Not to mention, malpractice insurance rates could likely go through the roof! Whew, what a relief!

Also, the Court dismissed the Amended Complaint as against the municipality, finding that the municipality's actions in evaluating the plan for the proposed Project did not violate the Plaintiff's Constitutional rights.

As an attorney in private practice who advises municipalities on various labor and employment issues (and who is within the class of persons who could have been affected directly by an adverse decision in this instance), I have but one thing to say about the Westhampton case ... YAY!

NYSDOL Approves Shared Work Program

2009-02-23T11:28:00.005-05:00

As an alternative to layoffs in these tough economic times, the New York State Department of Labor (the "NYSDOL") has approved a "shared work" program. It's a voluntary program in which employers facing a temporary decline in business may participate. The concept is simple. Instead of laying off a percentage of its workers to cut costs, an employer can reduce the hours and wages of all or a particular group of employees. The employees whose hours and wages are reduced can receive partial unemployment insurance benefits to supplement their lost wages. There are minimum qualification requirements for participation in the program, including submission of a plan by the employer which must be approved by the NYSDOL. This type of program may be helpful to those employers wishing to save money on eventual retraining costs, and that don't want to layoff key workers who may be unavailable for re-hire at a later time. More information can be found here.

A Small Victory With Big Benefits

2009-02-12T09:35:00.005-05:00

In an effort to avert the many problems associated with identity theft (such as potential misuse and inadvertent disclosure of sensitive, personal information), the New York State Department of Labor (the "Department") has implemented a policy by which contractors may now use only the last four digits of a workers' social security number for certified payroll purposes. While the Department reserves the right to request and receive worker social security numbers in their entirety during public work prevailing wage investigations, it will not insist that they be listed on certified payrolls as a matter of course. This is very good news since identity theft is running rampant. The potentially large benefits to be derived from this seemingly small change in policy should not be underestimated.

Emergency Proposed Rule For New York WARN Act

2009-02-03T12:44:00.001-05:00

As I told you here, the New York State Worker Adjustment and Retraining Notification Act is effective as of February 1, 2009. Generally speaking, the new statute requires New York employers to provide 90 days’ notice prior to a plant closing, mass layoff or relocation, and applies to private employers with 50 or more workers (in some cases excluding part-time employees) who layoff at least 25 employees.

The New York State Department of Labor has filed an Emergency Proposed Rule (retroactive to the statute's effective date) to govern the interpretation and implementation of the statute; they concern the applicability, timing and scope of Notice requirements as well as the enforcement authority of the Commissioner of Labor. Apparently, the Emergency Rule is temporary and not the final word since there will be a period for public comment. Complete documents related to the Emergency Rule are expected to be published in the New York State Register on February 11, 2009. A summary of the proposed Rule can be found here.

Outside Sales Reps Not Subject To FLSA Overtime Provisions

2009-01-21T21:00:00.001-05:00

In Novartis Wage and Hour Litigation (S.D.N.Y. Docket No. 06-MD-1794, Decided 1/12/09), the Southern District of New York held that members of a consolidated class action, who were outside pharmaceutical sales representatives, were not entitled to overtime pay under the Fair Labor Standards Act. (the "FLSA"). The Plaintiffs were employed by Novartis in various States (including New York and California), and sued claiming they were entitled to overtime under the FLSA as well as corresponding State wage and hour laws.

In granting Defendant's motion for summary judgment (and denying Plaintiffs' similar motion), the Court held that Plaintiffs, as outside sales representatives, were exempt from the FLSA's overtime requirements. To qualify for the outside sales employee exemption: (1) the employee’s primary duty must be making sales (as defined in the FLSA), or obtaining contracts or orders for services or the use of facilities for which a consideration is paid; and (2) the employee must be customarily and regularly engaged away from the employer’s place or places of business.

In Novartis, the Court held that Plaintiffs were exempt because they did not work under the direct supervision of the employer, and were compensated for the sales they made by means of incentive payments; these incentive payments were additions to their base salaries. Among other things, Plaintiffs called on physicians to provide information about the employer's pharmaceuticals, planned their own daily schedules in deciding when to visit each physician whose name appeared on a target list, had discretion with respect to utilizing the employer's prepared "scripts" and supporting materials, could tailor their presentations to each individual physician based upon a number of variables, worked out of their own homes rather than the employer's offices, and spent most of their day traveling in company-provided vehicles to visit physicians on their target lists. In short, Plaintiffs exercised sufficient independence and discretion to fall within the FLSA exemption.

The Court further held that even if Plaintiff's did not fall under the outside sales exemption, they would be exempt from overtime payments since they satisfied the test for exempt, administrative employees under both the FLSA and New York law. Specifically: (1) the average weekly salary of each Plaintiff was nearly four times the statutory minimum of $455 per week; (2) Plaintiffs engaged in work that was directly related to the management or general business operations of their employer and which was not manual labor; and (3) Plaintiffs exercised discretion and independent judgment with respect to matters of significance.

The Novartis case is an excellent primer with respect to exemption issues under the FLSA as well as New York and California law. It is recommended reading for all with an interest in these types of matters.

Today Is FMLA Day!

2009-01-16T14:07:00.001-05:00

That's right, folks. Effective January 16, 2009 (i.e., TODAY), new Federal regulations take effect with respect to the Family Medical Leave Act (the “FMLA”). The new regulations radically revise the notice and certification processes for employers to follow when FMLA leave is sought. The new regulations and required forms can be found here.

The WARN Act Is Coming, The WARN Act Is Coming!

2009-01-15T07:52:00.004-05:00

Effective February 1, 2009, the New York State Worker Adjustment and Retraining Notification Act (the "WARN Act"), will require New York employers to provide 90 days’ notice prior to a plant closing, mass layoff or relocation. The Notice must be provided to affected employees and their representative (i.e., a union), the New York Department of Labor, and the local workforce investment board at least 90 days before the event. The State WARN Act applies to private employers with 50 or more workers (in some cases excluding part-time employees) who layoff at least 25 employees. Violations are enforceable by the Commissioner of Labor and are subject to civil penalties in a maxiumum amount of $500 for each day of the violation and back wages. The new law will be codified as Labor Law Article 25-A, Section 860, et seq.

Jobless Rate Jumps Again

2009-01-09T11:38:00.003-05:00

The Labor Department announced that the nation's unemployment rate jumped to 7.2 percent in December. About 524,000 jobs were lost last month which is the highest level in 16 years. In addition to the steep decline in jobs, the average hourly work week has fallen to 33.3 hours; that's the lowest level in over 40 years. It's likely to get worse before it gets better. In an ironic twist, the dire job statistics may delay significantly organized labor's efforts to push forward its agenda of higher wages and compulsory unionism ... employers simply won't stand for it and the country may not be able to endure its adverse economic ramifications in the foreseeable future.

Stay tuned.

Employer Alert! Use Of E-Verify System Effective January 15, 2009.

2009-01-03T21:30:00.006-05:00

Happy New Year, folks and welcome to all the fun on the labor law front for 2009.

Here's the latest ... Beginning January 15, 2009 and pursuant to an Executive Order signed by President Bush, the Department of Homeland Security will require private employers who provide goods or services to the federal government to use the E-Verify system in order to confirm their workers' employment eligibility. E-Verify is an online government database against which employers can check a person's work status. The system cross-references employee I-9 forms with records from the Social Security Administration to identify mismatches in submitted social security numbers. It also indicates whether an employee is authorized to work in the United States. The new mandate will apply to federal prime contracts having a monetary value in excess of $100,000 (known as the simplified acquisition threshold); however, the rule will apply to federal subcontracts having a value above $3,000.

The rationale for imposing this rule is to provide a more stable and secure workforce by eliminating the use of illegal workers on federal projects. Until recently, use of the E-Verify system was voluntary as a matter of law, but it will now be mandatory. While the rule generally applies to new hires, employers may elect to use the E-Verify system for all employees hired after November 6, 1986 to ensure compliance with immigration laws. There are several exemptions such as for short-term contracts (i.e., those to be performed within 120 days).

The U.S. Chamber of Commerce and other employer groups have filed suit seeking to overturn the Executive Order and its implementing regulations on the ground that they contradict current law with respect to the voluntary nature of the E-Verify system. Let the games begin!

More Political Payback

2008-12-20T09:51:00.003-05:00

Following up on my last post about political payback, the President-Elect has nominated Rep. Hilda Solis for Secretary of Labor. She is a four-term, Democratic congresswoman from Los Angeles, California. Most telling about the nomination is the comment made by Ms. Solis at the news conference yesterday. She said "As secretary of labor, I will work to strengthen our unions." Of course, organized labor is thrilled with the proposed appointment.

So, non-union and merit shop employers take note ... it's time to gear up for a long and expensive 4 years (at least). The best offense in this situation is a good defense; by demonstrating to employees the advantages they now have under current methods of operations, it may be possible to avert disaster when the Employee Free Choice Act and its proponents come knocking on your doors.

Project Labor Agreements Likely On Federal Jobs

2008-12-05T08:00:00.005-05:00

Now that the election is over, it's pay-back time for the President-Elect. That means, in part, rewarding all the support given to him during the campaign by organized labor. Among the casualties are project labor agreements ("PLAs"). After he was elected, President Bush issued an Executive Order prohibiting PLAs on Federal public works jobs. That Executive Order is likely to be revoked in the first 100 days of the new Obama administration.

For the uninitiated, a PLA is generally a contract between a project owner (public or private) and labor unions requiring that the project be awarded only to contractors and subcontractors who agree to: (a) recognize unions as the representatives of their employees on that job; (b) use the union hiring hall to obtain workers; (c) pay union wages and benefits; and (d) obey the union's oftentimes restrictive work rules, job classifications and arbitration procedures. In exchange, the unions agree to labor peace by not engaging in strikes which could cripple the project.

On private jobs, PLAs typically reduce competition and increase construction costs since union rates (typically 30% higher than private rates which actually may be prevailing in the locality) must be paid. On public jobs, PLAs reduce competition for the work as not every contractor wants to have a relationship with a union, limited or otherwise; on public projects, union rates are typically used as the prevailing wage rate, regardless of how realistic that practice may be.

And so, it begins. PLAs are likely to be utilized on Federal projects, the Employee Free Choice Act is likely to be passed, and several other anti-competitive measures may be imposed to mollify organized labor. Who gets the short end of the stick in of all this? The taxpayers, that's who. Hey, if banks and big business are getting bailouts, why not the unions? Everybody just get in line ... "Next!"

NYSDOL Issues Proposed Workplace Violence Regulations For Public Employers

2008-11-30T22:14:00.002-05:00

On November 27, 2008, the New York State Department of Labor issued proposed regulations to implement the Workplace Violence Prevention Law of 2006, codified as New York Labor Section 27-b. A copy of the proposed regulations can be found here. While these are proposed regulations, I suspect that the regulations in final form will be similar if not idential. Accordingly, public employers should begin preparing their Workplace Violence Policy Statements, Risk Evaluation and Determinations, and Prevention Programs to ensure timely compliance.

Illegal Aliens May Recover Unpaid Wages

2008-11-18T18:00:00.007-05:00

Last week, the Appellate Division, Second Department, held that illegal aliens who provide false documentation to an employer may recover for unpaid wages if the employer violated the federal Immigration Reform and Control Act of 1986 ("IRCA"). The case is Coque v. Wildflower Estates Developers. This is an important case in New York as it penalizes employers who violate IRCA. As the Court stated: [W]here an employer is complicit in an illegal hire, foreclosing the employee from recovering damages for lost wages does not discourage violations of federal immigration law, but has exactly the opposite effect, from the employer's perspective."

The Coque decision further evidences the erosion in New York of the holding of the United States Supreme Court in Hoffman Plastic Compounds v. National Labor Relations Board, 535 U.S. 137 (2002) which prevented an award of backpay to an undocumented alien who had never been legally authorized to work in the United States. Indeed, in Balbuena v. IDR Realty, 6 N.Y.3d 338 (2006), the New York Court of Appeals held that the holding in Hoffman Plastic did not pre-empt worker protections under New York law. The decision in Coque continues the trend toward protecting undocumented and illegal immigrant workers.

New Requirements For New York Employers

2008-11-14T08:00:00.009-05:00

In New York, effective February 1, 2009, employers must post a copy of Article 23-A of the Correction Law relating to the use of prior convictions. Also, a copy of the statute must be given to individuals who are subject to background checks by the employer.

Article 23-A generally prohibits employment discrimination against persons having one or more criminal convictions, and requires employers to consider a number of factors before firing or refusing to hire such individuals. The statute is inapplicable to certain types of jobs where there is a specific legal bar against hiring those with criminal histories.

The new mandate requires that a copy of Article 23-A be posted in a visually conspicuous manner in an accessible location at the workplace.

The Employer Oppression Act

2008-11-05T14:52:00.006-05:00

Oops, I'm sorry ... I meant the Employee Free Choice Act ("EFCA"). Now that Mr. Obama has been elected, EFCA is likely to be high on his list of priorities. I verily believe that EFCA is one of the most insidious pieces of legislation to be proposed in quite some time. It's sort of like a stuffed teddy bear in a horror movie; all nice and cuddly on the outside, but giving no hint of the terrible evil within.

EFCA is a bill supported by organized labor which does away with secret ballot elections conducted and monitored by the NLRB in favor of a majority showing of union authorization cards. Essentially, it imposes compulsory unionism which may violate the National Labor Relations Act as well as Constitutional protections to freedom of association. Much has been written about the dubious tactics used by organized labor to "convince" workers to sign authorization cards. That issue is ameliorated somewhat under current law by permitting both a union and an employer to conduct informational election campaigns culminating in a secret ballot election held by the NLRB. EFCA would not only change the current landscape drastically, but would prevent employers from challenging the voluntary nature of worker authorization cards.

Given the election results, I predict that EFCA will be a hot topic in the coming months. It's high on the agenda of organized labor and, of course, payback from Mr. Obama will be expected in exchange for all the support given to him during the campaign. Employers had better worry about EFCA, big time! If enacted in its current form, EFCA is likely to cause severe economic hardships to employers with many of them going out of business or reducing their workforces due to: (a) the skryocketing cost of contractually mandated and inflated union wages and benefits.; (b) restrictive union work rules; and/or (c) a combination of both. Such an unfortunate situation would make good fodder for a horror movie remake which I call "A Nightmare on Main Street."

New York Lifts Moratorium On Apprentice Programs

2008-10-30T05:45:00.003-04:00

Finally! Effective October 15, 2008, New York lifted the moratorium on apprenticeship training programs. The moratorium was first put in place on August 28, 2007, during which time State approval of all new apprentice programs was suspended.

As a result many non-union and merit shop employers without such programs, or whose applications had yet to be approved, were precluded from performing certain public work requiring the existence of such a program. The only qualified contractors were mostly union shops, although a few (and I mean A FEW) non-union contractors with the foresight to have had their own State approved apprenticeship training programs at the time the moratorium was imposed were able to stay in the mix.

The Department of Labor has enacted Emergency Regulations for apprenticeship programs which, among other things, include the following:

Two-year probationary periods for new sponsor applications;
Three-year recertifications of all Apprenticeship Training programs;
Establishment of a written public comment period for all new trades and program applications;
Sponsors’ responsibilities for employer signatories; and
Job rotation requirements and acceptable documentation.

The Emergency Regulations are effective for 90 days, and the Department of Labor anticipates that they will be replaced with a Notice of Proposed Rulemaking in January, 2009. Stay tuned.

The Importance Of The Written Word

2008-10-17T10:00:00.005-04:00

It's axiomatic that a verbal agreement is as good as the paper on which it's written. Many of you have probably heard the adage "get it in writing." Well, unfortunately, many of you are not heeding that sage advice. I am confronted routinely with situations where construction work is performed on nothing more than a handshake. All goes well until the proverbial excrement hits the fan. Then, the parties align on opposing sides disputing such things as payment amounts, waivers of claims, etc., since each party may have a different recollection of the original understanding. In such situations, typically there is a paucity of documentary evidence. It gets messy and very, very expensive to sort it all out, if at all. Business relationships and friendships are destroyed and, in the end, nobody wins really.

The point here is that absent a written contract, disputes usually come down to a matter of credibility; essentially, it devolves into a "he said, she said" scenario. I don't think anyone should feel comfortable in such a situation. With a written agreement, the rights, obligations and remedies of the parties are (or at least should be) stated clearly. Granted, there is a great deal of litigation involving the interpretation of written agreements, but at least there's something to fight over. In cases where no writing exists, it seems many times as if those involved are competing for an Academy Award ... "I'm ready for my close up, Your Honor."

More On New York's WARN Act

2008-10-08T10:10:00.002-04:00

Please note that New York's WARN Act will become effective on Feb. 1, 2009. For a more detailed description of the new statute's requirements, see my prior post appearing here.

More On Licensing

2008-10-02T08:05:00.003-04:00

As I discussed here previously, the issue of uniform licensing for construction professionals has been the subject of much discussion lately. To that end, the Legislature of Dutchess County, New York, recently passed a law requiring all electricians in the County to be licensed. The bill is now before the County Executive for signature. I don't know whether it will be signed. However, it is noteworthy that during public comment a large number of County residents expressed support for such legislation. As a practical matter, if the nice person who cuts my hair needs a license from the State to do so, then the electrician who could possibly start a fire and/or blow up my house due to a misstep should be required to have one as well. Just my 2 cents.

Case Update - Implied Agreement Governs When Commission Earned And Becomes Wage Under Labor Law

2008-09-18T06:28:00.010-04:00

In Pachter v. Bernard Hodes Group, Inc., 10 N.Y.3d 609 (2008), the New York Court of Appeals (in answering two certified questions from the U.S. Court of Appeals for the Second Circuit) held previously that executives are employees for purposes of New York Labor Law Article 6, except where expressly excluded. The Court of Appeals also held that absent a governing written instrument, the time when a commission is "earned" and becomes a "wage" for purposes of Labor Law Article 6, is regulated by the parties' express or implied agreement; if no agreement exists, it is governed by the common-law rule that a commission is earned upon the employee's production of a ready, willing and able purchaser of the services. I discussed the case previously here.

In an appellate decision dated September 5, 2008, the Second Circuit, while not disturbing the substantive holdings of the New York court as to the certified questions, held that Plaintiff's cause of action for commissions earned could not be maintained because Plaintiff "knowingly acquiesced" over a period of years to the approach used by the Defendant employer when calculating her commissions. That approach consisted of reducing gross client receipts by a variety of business costs, uncollected debts, Plaintiff’s travel and entertainment expenses, and deducting one-half of the salary paid for Plaintiff’s assistant. Accordingly, Plaintiff’s “net” commission was less than it would have been otherwise, but for those deductions.

Such conduct, the Second Circuit held, "constituted, at the very least, an implied agreement between the parties. As this implied agreement does not violate section 193 [of New York's Labor Law] nor any other provision of article 6 of the Labor Law, the deductions in question did not violate that provision." The judgment of the trial court was reversed and the case remanded with instructions to dismiss the Complaint.

New York's WARN Act

2008-09-05T12:03:00.003-04:00

On September 2, 2008, New York's Governor Paterson signed a new law with respect to plant closings and mass layoffs. The new law, known as the State Worker Adjustment and Retraining Notification Act (“S-WARN”), requires that private employers with 50 or more workers must notify their employees and the Department of Labor at least 90 days prior to a plant closing or mass layoff. New York businesses that fail to file an S-WARN notice in the allotted time period will be subject to penalties of up to $500 per day for each violation. In addition, the new law provides the Commissioner of Labor with authority to order relief, including back wages and unpaid medical benefits, for employees who don't receive the required notice.

The S-WARN Act is more restrictive than its Federal equivalent which applies to companies that employ 100 or more workers and requires only 60 days notice. Accordingly, it supplants the Federal law and is now the new standard for compliance in New York.

The Employee Free Choice Act - Redux

2008-08-27T11:03:00.004-04:00

The proposed Employee Free Choice Act ("EFCA") may be making a comeback. The bill was passed last year by the House of Representatives, but never became law. Based on what I've gleaned from recent news, EFCA stands a good chance of reclamation if the Democrats win the White House in November.

EFCA is a bill supported by organized labor which could reverse the downward trend of steadily declining union membership by, among other things, allowing workers to bypass union elections and organize if a majority of them sign union authorization cards. In that circumstance, employers would be compelled to submit to binding arbitration if a collective bargaining agreement were not in place within 120 days. Not only would this force compulsory unionism upon employers, but it would change the landscape completely by eliminating the six week window period between a union's filing for an election and the actual vote. In essence, employers would be unable to engage in informational campaigns designed to persuade workers to vote against union membership. Given the shenanigans that some unions use currently (and have used historically) to convince workers to sign authorization cards, it appears that EFCA's card check provision will serve only to foster dubious worker authorizations without giving employers the chance to confirm their authenticity through elections conducted and monitored by the National Labor Relations Board.

Scary stuff for all employers, indeed.

What's the "Prevailing Rate"?

2008-08-18T08:02:00.010-04:00

I have received several recent inquiries from contractors as to the definition of "prevailing rate" in New York. Many of them don't understand the methodology as to how it's determined. So, here we go again, folks.

Prevailing rates in a locality are determined by virtue of collective bargaining agreements made between bona fide labor organizations and employers of the private sector, provided that those employers employ at least 30% of workers in the same trade or occupation in the locality where the work is being performed. Translation: the prevailing rate is typically the union rate for the work classification involved.

In determining which union is the appropriate labor organization for purposes of setting prevailing rates in the locality, the Department of Labor utilizes the collective bargaining agreements that were used in the previous year’s annual determination of prevailing rates, unless competent evidence is provided that the negotiated agreement does not cover 30% of workers in the same trade or occupation.

In somewhat of an ironic twist, the prevailing rate as determined by the Department of Labor may not be the actual, true prevailing rate in the locality where the work is being performed. If more than 50% of the contractors in a locality are paying "x" dollars per hour for a particular trade, then that should be the true prevailing rate for that classification instead of the "y" dollars per hour imposed by the union (which is typically a higher rate). Majority rules, right? Wrong! The Department of Labor does not see it that way. Granted, an employer may contest a prevailing rate determination by proving (via competent evidence) that the actual percentage of workers covered by a collective bargaining agreement in the locality is below the required 30% in the particular classification. Good luck with that!

Sound confusing? You bet! Is it fair? Probably not. Should contractors attempt to deal with the Department of Labor directly on prevailing rate matters without an attorney? It can be done, but I wouldn't recommend it. Translation: This is potentially dangerous stuff ... don't try this at home, kids.

To License Or Not To License

2008-08-06T07:51:00.003-04:00

Many counties in New York, and I presume other States as well, do not require the licensing of plumbers, electricians and other trades. That's bad news for unwary residential and commercial owners who rely on unlicensed tradespersons to perform critical work. Absent some State licensing requirement, together with continuing professional education, it is difficult to have confidence in the quality or safety of work being performed. Lawyers, doctors, architects and other skilled professionals are required to be licensed, why not the construction trades?

Granted, licensing alone does not guarantee that an individual is fully competent to perform the work. However, it is an additional measure evidencing that an individual possesses some requisite skill. Instead of local licensing requirements (which are imposed by some counties but not others), the prudent course would be to have statewide licensing for the trades. Together with continuing education requirements, this would bring uniformity to the construction process, avoid cronyism by local licensing boards, and ensure minimal levels of knowledge and skill by construction professionals.

Election-Of-Remedies Provision In Union Contract Is Not Discriminatory

2008-07-18T10:16:00.003-04:00

In Richardson v. Commission on Human Rights & Opportunities, et al. (2d Cir. - Decided: July 15, 2008), the United States Court of Appeals for the Second Circuit held that Title VII of the Civil Rights Act of 1964 did not forbid the inclusion of an election-of-remedies provision in a collective bargaining agreement. The court further held that adherence to such a provision did not constitute unlawful discrimination.

The Plaintiff was an African-American woman who had been employed by the State of Connecticut for 15 years. She had been involved in a series of ongoing disputes with her Supervisor, and eventually filed Charges of Discrimination with the Connecticut Commission on Human Rights and Opportunities (“CHRO”) alleging disparate treatment and retaliation by her Supervisor and others. She was later terminated from employment. Plaintiff’s Union filed a grievance with respect to the termination under the collective bargaining agreement. However, after Plaintiff later amended the charges to include race discrimination, the Union withdrew its appeal pertaining to the grievance on the basis that complaints of unlawful discrimination filed with CHRO were not subject to arbitration under the union contract. The Plaintiff thereafter filed another Charge, alleging this time that her Union’s refusal to seek arbitration of her grievance constituted an independent act of retaliation.

Interestingly, the case presented a conflict as between the Equal Employment Opportunity Commission (“EEOC”) and CHRO. The EEOC claimed that the Union had discriminated against Plaintiff because the provision of the union contract precluding arbitration of discrimination complaints violated Title VII. CHRO came to the opposite conclusion and asserted that the provision was not discriminatory.

The District Court granted Defendants’ motions for summary judgment, and the Second Circuit affirmed. In its decision, the Second Circuit held that the Union properly contracted to limit an employee’s legal recourse by agreeing that an aggrieved employee could either arbitrate a grievance or file a charge with the CHRO describing that grievance. Further, the court found that the Union did not discriminate against the Plaintiff by adhering to the election-of-remedies provision after the Plaintiff chose to file a charge with CHRO. In short, the Plaintiff could not allege a prima facie case of retaliation against the Union since she could not show that either agreeing to or adhering to the election-of-remedies provision constituted an adverse employment action.

The holding in Richardson makes sense. The union contract did not impact adversely on the Plaintiff’s right to pursue her claims of discrimination. She was free to do so, but could not simultaneously pursue arbitration of discrimination claims through the contractual grievance process. To do otherwise could result in duplicative claims and inconsistent determinations through arbitration and the courts based on common questions of law and fact. The court avoided that nightmare-like legal scenario in this instance.

Upcoming Increase In Federal Minimum Wage

2008-07-09T17:16:00.002-04:00

Effective July 24, 2008, the Federal Minimum Wage will increase to $6.55 per hour. The increase should not affect those employers located in areas where the State-mandated minimum wage is already higher than its current Federal equivalent and the upcoming increase.

Reminder - OSHA 10 Hour Course Required On New York Public Work

2008-06-25T13:21:00.003-04:00

Just a reminder that effective July 18, 2008, New York Labor Law Sec. 220-h will take effect. The new law requires that on all public works projects of at least $250,000.00, all laborers, workers and mechanics working on the site must be certified as having successfully completed the OSHA 10-hour construction safety and health course. Also, the new law mandates that the advertised bids and contracts for every public works project of at least $250,000.00 must contain a provision setting forth the OSHA training course requirement.

An "Executive" Is An "Employee" Under New York Labor Law

2008-06-17T10:57:00.004-04:00

Last week, the New York Court of Appeals held that executives are “employees” within the meaning of the State’s Labor Law. Accordingly, employers must comply with the provisions of New York Labor Law §193 with respect to the types of allowed deductions made from the wages of executive employees. The case is Pachter v. Bernard Hodes Group, and can be found here.

In Pachter, the Plaintiff was employed as a corporate Vice President who had elected to be compensated on a commission basis. The company specialized in providing recruitment, marketing and staffing services for other businesses. Typically, it would advance monies to media companies on behalf of its clients; it would later be reimbursed for same and would receive a fee for the Plaintiff’s services in arranging for the media advertisements.

In arriving at Plaintiff's commission income, the company paid the Plaintiff a percentage of the amount billed less certain charges. Gross client receipts were reduced by business costs, including finance charges for late payments, losses attributable to errors in placing advertisements, uncollected debts, and Plaintiff’s travel and entertainment expenses. Also, one-half of the salary paid for Plaintiff’s assistant was deducted from her percentage of billings. Accordingly, Plaintiff’s “net” commission was less than it would have been otherwise, but for those deductions.

After separating from the company, the Plaintiff commenced a federal court action alleging, among other things, that New York Labor Law §193 prohibited the company from deducting business expenses from her percentage of client billings in arriving at the net commission. Labor Law §193 prevents employers from making certain deductions from the wages of an “employee" which are not for the employee’s benefit. The statute limits the permitted deductions to “insurance premiums, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, payments for dues or assessments to a labor organization, and similar payments for the benefit of the employee.” The company defended on the ground that since the Plaintiff was an “executive” and not an “employee” as defined by statute, the deductions were permissible.

The Plaintiff prevailed at the trial level and the company appealed to the United States Court of Appeals for the Second Circuit. The New York Court of Appeals, in resolving one of two certified questions from the Second Circuit, held that the Plaintiff was an “employee” and disallowed the deductions. In so doing, the Court held that it was evident from the text and structure of Labor Law Article 6 that an executive is "within the ambit of the general definition of 'employee.'" The Court further held (in resolving the second certified question) that parties may agree as to when a commission is “earned;” however, in the absence of such an agreement, the common law principle is applied that a commission is earned when a person is produced who is ready and willing to enter into a contract. The parties in this case had such an alternate arrangement which superseded the common law.

Based upon a pragmatic reading of the statute, the decision in Pachter is not surprising.

No "Class-Of-One" Claims For Public Sector Employees

2008-06-10T10:35:00.004-04:00

Yesterday, the United States Supreme Court held that the “class-of-one” theory of Equal Protection does not apply in the public employment context. The case is Engquist v Oregon Department of Agriculture and can be found here.

In Engquist, the Court held that a public employee may not claim that he or she was arbitrarily treated differently from other, similarly situated employees (thereby violating Equal Protection) where there is no assertion that the different treatment was based on the employee’s membership in any particular class. In other words, absent an allegation of different treatment based upon class status (e.g., race, gender, national origin, religion, etc.), there can be no claim for a violation of Constitutional Equal Protection based solely upon the differing treatment. It's "members only." Period. End of story.

This is an interesting case as the Court noted that public sector employers have more leeway in managing operations than those in the private sector. Essentially, allowing a “class-of-one” theory to be applied in the public sector would likely interfere with the ability of government to manage its workforce, and could imbue every employment decision with Constitutional import. Here's my translation ... government and the taxpayer cannot afford to defend expensive lawsuits concerning minor, work-related matters (such as a personality conflict between an employee and a Supervisor) where the claim does not rise to generally accepted levels of workplace discrimination as defined by statute.

New York Court Of Appeals Rules That Workers Have Common Law Right To Sue For Davis-Bacon Wages

2008-06-06T10:58:00.003-04:00

Yesterday, the New York Court of Appeals (the State's highest court) ruled that workers have a common law right to sue for breach of contract to recover payments due as a result of the non-payment of prevailing wages on Federal public works projects. The case, which resolves a conflict between two cases from the Appellate Division, First Department, can be found here.

The court held that while there is no Federal private right of action under the Davis-Bacon Act (the "DBA"), the DBA does not specifically preempt or otherwise preclude workers from suing in State court for prevailing wages owed on Federal construction projects. The court opined that a finding of preemption, as urged by the Defendants, would have left the workers without any remedy since the Federal regulations implementing the DBA provide no administrative mechanism for the recovery of unpaid wages. Accordingly, the workers had no administrative remedies to exhaust, and could seek immediate relief in the New York courts.

Even More Aggressive Enforcement Of New York Prevailing Wage Laws

2008-06-05T12:39:00.006-04:00

New legislation has been enacted with respect to public contracts advertised or solicited after 4/27/08. The "Spota Bill," named after Suffolk County District Attorney Thomas Spota, is an exceedingly aggressive effort (eagerly supported and encouraged by organized labor) at enforcement of New York's prevailing wage laws.

Among other things, the Spota Bill requires the Department of Jurisdiction (usually the contracting agency) to collect and maintain payroll records for five years from the date of completion of the work. The Department of Jurisdiction must also designate in writing an individual to be responsible to collect certified payrolls and review them for facial validity; such person’s name must be posted in a conspicuous location at the project site.

Most importantly, the Bill also provides that: (a) a contractor that willfully fails to file payroll records with the Department of Jurisdiction is guilty of a Class E felony and subject to a civil penalty of up to $1,000 per day; (b) the filing of payrolls with the Department of Jurisdiction is a condition precedent to payment; (c) willful underpayments can be punished as a criminal offense ranging from a Class A misdemeanor for an underpayment of less than $25,000 to a Class C felony where the amount exceeds $500,000; and (d) second violators within a 5 year period must surrender their profits and forfeit their right to receive further payment on the project.

WOW! This is serious business, folks. Heretofore, contractor violations were generally misdemeanors which were not pursued typically, and filing certified payrolls with the Department of Jurisdiction (although required) was generally overlooked by all parties involved. Now, we're talking about charging contractors with felonies for violations. Every contractor performing or thinking of performing public work in New York needs to become aware of these new requirements to avoid the potential disaster which is now lurking on every public project.

The Excrement Hits The Fan On New York Public Work

2008-06-04T11:49:00.013-04:00

On July 1, 2008, the New Wicks Law goes into effect in New York State. The original Wicks Law was enacted in the early 1920's and required that any public works contract having a value of $50,000 or more be divided into separate contracts for general construction, plumbing, mechanical and electrical. Minor updates to the law were enacted in later years.

The New Wicks law does several things, and this is by no means an all-inclusive list. First, it abolishes the $50,000 overall threshhold, and applies new threshholds based upon the geographic location of the project. The new law applies as follows: (a) New York City (all 5 boroughs) - value of the entire project is $3 Million or more; (b) Nassau, Suffolk and Westchester Counties - value of the entire project is $1.5 Million or more; (c) remainder of New York State - value of the entire project is $500,000 or more. It also provides for the issuance of a "stop-bid order" where it becomes apparent that separate contracts are not being issued based on the new monetary threshholds. Oy!

Next, for projects below the applicable monetary threshhold, the new law requires bidders to submit a sealed envelope with their bid containing the names of the intended mechanical, electrical and plumbing subcontractors for the project as well as the agreed upon subcontract price for each such trade. After announcement of the winning bid, a change in the named subcontractor can be made only with the approval of the project owner based on a "legitimate construction need" as defined in the law.

In an interesting twist, albeit an anti-competitive one, a public owner may opt-out of the New Wicks Law entirely by requiring the use of a Project Labor Agreement ("PLA") in the bid documents. As I have commented here previously, PLAs are problematic for non-union contractors. Among other things, they require the non-union employer to use the union hiring hall to obtain workers, and to observe typically restrictive work rules, job classifications and arbitration procedures imposed by the union. Since the new law applies to public works projects, the usual PLA requirement of paying union wages and benefits for the project is not germane because the prevailing rate of wages and benefits on public work usually mirrors those of the union.

Importantly, if a PLA is used, contractors must have a current apprenticeship program. Inasmuch as most non-union contractors lack such programs, and given New York State's recent moratorium on the approval of new apprenticeship programs, non-union contractors (including many minority contractors and woman-owned business enterprises) essentially will have been legislated out of performing public work in New York.

Another provision of the new law allows public owners to establish qualification requirements (based on an established, but perhaps subjective list of criteria) for bidding and award. This is most onerous for non-union contractors, in my opinion, since it provides wide discretion with respect to qualification denial and is likely to preclude many from performing public work.

The New Wicks Law will be enforced by the New York State Department of Labor. It's my guess that many public owners will simply opt-out of the new law by requiring the use of PLAs on their projects. I wonder how that will square with the holding in Glens Falls Building and Construction Trades Council, 350 NLRB No. 42 (2007), where the National Labor Relations Board held that PLAs constitute prohibited "hot cargo agreements" under Section 8(e) of the National Labor Relations Act because they are not the subject of negotiated, collective bargaining.

At this point, this looks like a win for organized labor ... but I'm not sure that the ballgame is over entirely. Stay tuned.

REMINDER - Federal Minimum Wage To Increase

2008-06-02T10:37:00.004-04:00

Effective on July 24, 2008, the Federal minimum wage will increase to $6.55 per hour. For those in areas where the State minimum wage is higher than the newly increased Federal wage, there should be no change in the hourly rate as payments will continue to be made according to the higher, State mandated wage.

The "Gene, Genie"

2008-05-23T14:32:00.007-04:00

With all due respects to David Bowie. Earlier this week, the Federal Genetic Information Nondiscrimination Act of 2008 was signed into law. Employers are now prohibited from discriminating against current and prospective employees on the basis of genetic information. In addition, the new law prohibits insurance companies from determining eligibility or making changes to premiums based on genetic information. I continue to be astounded at how long it takes for positive legislation like this to plod through the halls of Congress before it finally gets enacted; apparently, it took over 10 years to do so. I wonder how long it will take for the several States to act similarly.

Death Takes A Holiday ... And Then Some

2008-05-22T10:48:00.005-04:00

In Adams v. Verizon New York Inc., et al., 04 Civ. 4314 (S.D.N.Y. - Decided: May 13, 2008), the court granted summary judgment dismissing Plaintiff’s claims as against the employer for breach of a collective bargaining agreement, and as against the Union for violating its duty of fair representation.

The Plaintiff was the administrator of the Estate of her son, a deceased employee of Verizon and a union member. During the course of his employment, the son developed an absentee problem, resulting in numerous, prolonged, and unapproved absences. He was disciplined on several occasions, but to no avail. Indeed, in 1999 he was absent for a total of 59 days. In 2001, he was absent for a total of 177 days. WOW! He was eventually placed in the employer’s Absence Control Program, but continued his absenteeism, albeit to a lesser extent than before. Ultimately, after being advised by his Supervisor that he was going to be suspended for yet another unapproved absence, the son announced that he was leaving and walked out. He left the company premises and did not return.

The Plaintiff alleged, among other things, that the employer breached the collective bargaining agreement by terminating her son’s employment without just cause. She further alleged that the Union violated its duty of fair representation. In granting summary judgment, the court held that the employer reasonably interpreted the son’s actions as an abandonment of his job, constituting just cause for the termination. The court further held that the Union had represented the son fairly in his grievance proceedings and acted within its discretion in declining to bring his claims to arbitration.

It never ceases to amaze me. Here, the employee was absent for 177 days in one year alone, and still there was an allegation that such excessive absenteeism failed to constitute just cause for discharge. Sheesh! In situations such as that in the Adams case, a reality check is in order for both Plaintiff and counsel.

An Alarming Statistic

2008-05-14T06:35:00.006-04:00

I read recently where the number of New York City construction projects halted for safety violations has grown to 79% since January, 2008. That's quite a jump. There is debate as to whether those stop work orders are based upon the existence of actual, dangerous conditions or very minor infractions involving paperwork and the like. Apparently, some believe that the New York City Department of Buildings has become exceedingly paranoid after several high-profile accidents (e.g., the recent crane disaster). Owners and contractors complain that the resulting delays are costing them millions of dollars. If there are, in fact, safety issues that must be addressed, then it's time to take action to ensure the safety of workers and the public. On the other hand, if the stop work orders are based on ministerial issues, they may need to be revisited. In either event, guess who will pay ultimately?

It's All In The Timing

2008-05-06T08:54:00.003-04:00

In Forde v. Beth Israel Medical Center (06 Civ. 901 - Decided: 4/22/08), the Southern District of New York granted summary judgment to the employer and dismissed the Amended Complaint in a pregnancy discrimination case. The case is interesting because it addresses the issue of the close proximity of employment termination to the Plaintiff's announcement of her pregnancy.

The Plaintiff was employed as the office manager for a staff physician. Apparently, there were significant deficiencies in the Plaintiff’s work performance, including her failures to file transcripts, answer requests for medical records, and to schedule and clear patients for surgeries. Some patients were given the wrong dates for their surgeries, while others were not scheduled for surgery in a timely manner. Numerous complaints were received about the Plaintiff’s work, and she was made aware of her work deficiencies on several occasions.

Plaintiff eventually learned that she was pregnant. She notified her employer of her pregnancy about a week later, after which she was terminated based on her prior poor work performance as well as newly discovered instances thereof. The Plaintiff sued based on allegations that the termination of her employment, made so soon after announcing her pregnancy, constituted unlawful discrimination.

The court granted the Defendants’ Motion for summary judgment dismissing the Amended Complaint. In so doing, the court found that Plaintiff’s poor work performance was generally undisputed and that a legitimate, non-discriminatory reason existed for the Plaintiff’s discharge. The court also found that while timing may be sufficient to establish a discrimination inference, the close proximity of termination to the Plaintiff's announcement of her pregnancy, in and of itself, was insufficient to demonstrate a pretext.

I like this one. In this case, timing is not everything.

Dancing With The Bar

2008-04-25T08:47:00.005-04:00

The New York Law Journal reports that a law firm has taken the highly unusual step of filing a preemptive lawsuit against a secretary who has demanded $9 Million to drop what the firm claims are false rape and sexual harassment charges against one of its partners. Here’s the kicker ... the firm has denied that the partner (who is married) raped the secretary, but admitted that she gave him a consensual "lap dance" in his office. But wait, it gets better. Apparently, the Complaint alleges that: "As she performed the 'lap dance,' [the partner] became aroused and ejaculated inside his underwear while he was wearing his underwear and pants, using a towel to clean up."

HELLO! What in blazes is going on here? This sounds like fodder for a bad TV show. Regardless of the merits of the Complaint (or the lack thereof), the conduct of the partner is wholly indefensible. I guess the law firm should have consulted a good attorney.

"But, I Was Told The Project Wasn't Public Work!"

2008-04-15T17:12:00.004-04:00

I hear about this a lot, so please pay close attention.

In considering submitting a bid, a contractor inquires of the Owner as to whether the project is "public work." Public work requires the payment of statutory prevailing wages and supplemental benefits to those working on the project. Typically, the prevailing rate of wages is the union rate in the locality in which the work is being performed, and is usually much higher than the regular, private wage rate paid by the contractor.

Generally, in determining whether a construction project is public work, two conditions must be fulfilled in order for the provisions of New York Labor Law Section 220 to apply: (1) a public entity must be a party to a contract involving the employment of laborers, workers or mechanics; and (2) the contract must concern a project which has the primary objective of benefiting the public.

Back to our story. The contractor is told by the Owner that the job is not public work, and obtains written confirmation of that fact from the Owner. The contractor proceeds with the work and is eventually informed by the New York State Department of Labor that the project is a public job. The contractor is further informed that it has underpaid its workers since the higher, prevailing wages and benefits should have been provided. In response, the contractor confidently produces the Owner's written confirmation as to the private nature of the work. Guess what? If the project is, indeed, "public work" as defined by statute, the contractor must pay the differential between what it actually paid and the prevailing wage (together with supplemental benefits), despite the Owner's written representation to the contrary. Penalties and interest may be imposed as well.

It's not always clear whether a project is public or private work. Bottom line ... be very careful out there.

The "No Jerk" Policy

2008-04-08T18:58:00.004-04:00

That's right, folks ... you read the title correctly. More and more employers are implementing a "no jerk" policy in the workplace. Sometimes it's known as a "no a**hole" policy. Essentially it's a code of conduct for employees requiring a showing of respect toward others as well as the avoidance of bad behavior under penalty of termination. Such policies generally make sense and are effective. Even one employee with a behavioral problem not attributable to a medical condition (i.e., your basic JERK) can cost a company a small fortune in lost productivity, poor morale and lost business, thereby resulting in lower wages for all.

Now, if only they had such a policy in Washington.

It's All In The Paperwork

2008-04-01T08:26:00.001-04:00

It happened, again! A client in the public sector called about a disciplinary matter involving an insubordinate employee. Apparently, the worker had engaged in a plethora of improper conduct over a period of several years. While there are certain time limitations regarding misconduct under New York’s Civil Service Law, there seemed to be enough activity which had occurred within the statutory period to prefer disciplinary charges based on the description given to me by the client. Then, I asked the $64,000 question ... “what documentary proof do you have?” There was silence on the other end of the phone, and then a lot of hemming and hawing about how everybody “knew” the employee was routinely late for work, insubordinate, etc. Oy vey!

Regardless of whether the situation involves public or private employment, the mantra for employee discipline is “document, document, document.” When faced with disciplinary issues, an employer generally does not want to rely solely or mostly on testimony as witness credibility then becomes the main focus of the inquiry. That can backfire (big time), particularly if the witness is a current employee who may be viewed by the other side as having a vested interest in testifying favorably for the employer in order to keep his/her job. Also, recollections can change drastically from the time of witness interviews to the point where sworn testimony is taken. It’s no fun when a witness changes his/her story in front of the trier of fact and doesn’t bother to tell the attorney. Phrases such as “what the !$%#” run rampant through one’s head on such occasions. Contrast that nightmare with a situation where documentary evidence exists in the form of disciplinary warnings or memoranda issued by a Supervisor which detail the misconduct and provide the employee with an opportunity to respond in writing. I think you get the picture.

Severance Pay Considerations

2008-03-24T09:15:00.001-04:00

Severance pay is one of those tricky items that can come back to bite an employer if care is not taken. In New York, for example, there is no statutory right to severance pay. However, if an employer either has a written policy or a regularized and well-known past practice of furnishing severance pay, then the employer is typically obligated to make the payment and apply the severance policy uniformly. If the employer maintains an unwritten, known past practice of providing severance, that’s generally just as binding as if a written policy existed. In short, by having a severance policy, written or unwritten, an employer may create an ERISA-protected benefit, any deviation from which could be unlawful.

New York employers may, however, retain discretion to vary the amount of severance in each individual case, and even award no severance pay at all, provided that such discretion is contained in the written severance policy or is part of the known, past practice. I am no fan of unwritten, past practices when it comes to employment policies as they are usually open to interpretation. This is true particularly in instances where the employer’s stated “understanding” of the policy differs markedly from that which may be provided by former and current employees. IMHO, an employment policy is as good as the paper upon which it is written.

In reviewing severance policies, employers may wish to consider whether to: (a) put the policy in writing if the policy is based purely on past practice; (b) retain discretion to vary the amount of severance or eliminate it altogether on a case by case basis; and (c) require the employee to execute an appropriately drafted Release as a condition for the severance payment. The matter of a Release is something which I find that most employers have ignored, often to their detriment.

The Revised I-9 Form

2008-03-20T11:30:00.004-04:00

As I advised previously, as of December 26, 2007, employers are required to use the revised I-9 Form for all employees hired on or after that date. Employers are not required to re-verify existing employees for whom they have a properly completed I-9 Form. Essentially, the revisions concern changes to the list of identity documents which are acceptable proof of an employee's eligibility to work in the United States.

The I-9 Form is a very important document which must be completed and retained by all domestic employers for each employee hired in the United States. The I-9 Form requires the employer to verify the employment eligibility and identity documents provided by the employee and to record the document information on the Form. Employers who fail to use the newly amended Form I-9 may be subject to applicable civil penalties.

The revised form can be downloaded here.

New Requirements For OSHA Certification On New York Public Work

2008-03-11T11:11:00.003-04:00

Last December, I posted on the newly enacted Labor Law Section 220-h, which becomes effective on July 18, 2008. As it is my practice to issue multiple posts as the effective date of pertinent legislation approaches, here's another reminder.

Labor Law Section 220-h applies to public works projects of $250,000 or more, and requires that all laborers, workers and mechanics working on any such project be certified as having completed an OSHA-approved construction safety and health course which is at least 10 hours long. It further mandates that the advertised bids and contracts for every public work project of at least $250,000 contain a provision setting forth this requirement.

The OSHA certification must be in place prior to the individual performing any work on the project. So, if a member of the workforce is scheduled to take the course but has yet to receive the OSHA certification, he or she cannot work at the public jobsite.

Rules and regulations concerning the new law will be promulgated by the New York State Department of Labor. I'll fill you in when they are published.

Go To The Head Of The Class

2008-03-08T11:27:00.006-05:00

An interesting decision was handed down recently by the United States District Court for the Eastern District of New York with respect to class action lawsuits involving wage claims under both Federal and State law.

In Guzman v. VLM, Inc., (E.D.N.Y., Case No. 07-CV-1126, Decided: March 2, 2008), the Plaintiffs (immigrant workers) were employed at a bakery located in Brooklyn, New York. They sued the employer for unpaid overtime under both the Fair Labor Standards Act (the “FLSA”) and New York Labor Law. Plaintiffs moved for class certification and Defendants cross-moved to dismiss. In granting class certification, the court exercised supplemental jurisdiction to permit certification under State law instead of under the FLSA. As a basic premise, supplemental jurisdiction permits a Federal court, in its discretion, to determine State law claims which are so related to the Federal claims that they form part of the same case or controversy.

By exercising supplemental jurisdiction, the Guzman court could determine the FLSA and New York Labor Law claims, thereby avoiding certain restrictions imposed by the FLSA. The main such restriction being the requirement that participants affirmatively “opt-in” to the class action. In contrast, the New York class action statute (CPLR § 903) provides that all persons are covered by a certified class action unless they specifically "opt out." Interestingly, Rule 23(c) of the Federal Rules of Civil Procedure (which was superseded in this instance by the class action provisions of the FLSA) is similar to the New York statute in that it does not require an “opt-in” for class participation.

The court found this “opt-out/opt-in” distinction to be important given that many members of the proposed class, primarily immigrant and/or undocumented workers, might be reluctant to “opt-in” because they feared retaliation. Further, the court determined that the use of supplemental jurisdiction was appropriate in the interests of judicial economy, convenience, and fairness since the State law and FLSA claims arose out of a common nucleus of operative facts. To this end, the court found that "the factual overlap between the federal claims and the state claims is virtually total," and stated that “there is no reason that FLSA’s collective action procedure is incompatible with maintaining a state law class action over the same conduct.”

In Guzman, the court took an exceedingly practical approach. Plainly, it would have been a waste of judicial resources to limit the case to the named Plaintiffs while a parallel case (seeking class action status) would likely have been commenced against Defendants in State court alleging virtually identical claims. Indeed, quite a legal morass could result if inconsistent determinations issued from the Federal and State courts based upon common factual circumstances.

While it remains to be seen as to whether Plaintiffs will prevail on the substance of their claims, the Guzman court implemented a logical and perfectly appropriate procedural methodology to achieve a pragmatic and legally defensible result.

The PLA Conundrum

2008-02-29T07:34:00.005-05:00

Ah, Project Labor Agreements ("PLA"). Unions love 'em, non-union contractors hate 'em. For the uninitiated, a PLA is generally a contract between a project owner (public or private) and labor unions which requires that the project be awarded only to contractors and subcontractors who agree to: (a) recognize unions as the representatives of their employees on that job; (b) use the union hiring hall to obtain workers; (c) pay union wages and benefits; and (d) obey the union's oftentimes restrictive work rules, job classifications and arbitration procedures. PLAs typically increase construction costs by reducing competition for the work ... since everybody on the project has to pay the same union rates, there is no room for competitive pricing. They also tend to limit the types of contractors who will bid on a PLA project ... not every contractor wants to have a relationship, limited or otherwise, with a union. Of course, unions claim that PLAs are a "good thing" because they result in labor harmony and the payment of area standard wages and benefits.

In July, 2007, the National Labor Relations Board (the "NLRB") issued its decision in Glens Falls Building and Construction Trades Council, 350 NLRB No. 42 (2007). The case considered the enforceability under the National Labor Relations Act (the "NLRA") of two PLAs made in connection with the construction of a power plant. In what was a bit of a surprise decision, the NLRB held that the PLAs constituted prohibited "hot cargo agreements" under Section 8(e) of the NLRA. A "hot cargo agreement" is an arrangement pursuant to which an employer agrees to cease or refrain from dealing with a company with which the union has a disagreement or dispute.

There is a construction industry proviso (i.e., an exception) stating that Section 8(e) does not apply to an agreement between a union and an employer in the construction industry relating to the contracting or subcontracting of work. The proviso has been interpreted generally as excluding PLAs from the purview of the NLRA. Not so in the Glens Falls case. There, the NLRB held that the PLAs were not protected by the proviso since it applied only to agreements within the context of collective bargaining relationships. Inasmuch as the PLAs were, essentially, adhesion contracts (i.e., take it or leave it agreements) which were not subject to negotiation, they did not come within the ambit of collective bargaining and thus violated the NLRA.

Based on the holding in Glens Falls, one would think that all PLAs are prohibited "hot cargo agreements." Hold on, baba looey ... not so fast. The case may be limited to its specific facts (which I won't go into here in order to save you from undue boredom). Suffice it to say that it remains to be seen whether the Glens Falls case will be broadly or narrowly construed. Nonetheless, the holding may impact adversely on the ability of a union to insist on a PLA. That, too, may be a "good thing."

Stay tuned.

Welcome New Subscribers

2008-02-21T14:47:00.002-05:00

Just a note to welcome Cow Bay Contracting, Inc. and Greenlights For Nonprofit Success as new subscribers to this humble, little blog. It's nice to know that folks are actually reading and (hopefully) benefiting from its contents.

Amendment To New York Labor Law Section 220 - EFFECTIVE FEBRUARY 24, 2008

2008-02-16T10:46:00.008-05:00

I know that I've posted about this issue a couple of times in the past, but here's one last post to make sure that everyone is on the same page. The new amendment to Labor Law Section 220 becomes effective on February 24, 2008.

The amendment is an addition to New York Labor Law §220(3-a)(a). It requires contractors and subcontractors to provide written notice to all laborers, workers or mechanics, on each pay stub, of the prevailing wage rate for their particular job classification. If the notice won't fit on the pay stub, the New York State Department of Labor (the "NYSDOL") advises that an accompanying sheet or attachment containing the information will suffice.

The amendment also requires contractors and subcontractors to post a Notice at the beginning of the performance of every public work contract on each job site. The Notice must include the telephone number and address for the NYSDOL as well as a statement informing laborers, workers or mechanics of their right to contact the NYSDOL if they are not receiving the proper prevailing rate of wages and/or supplements for their particular job classification. The required notification will be provided with each prevailing wage schedule and may also be obtained from the NYSDOL.

It is important to ensure that each worker receives a Notice on the pay stub or an accompanying sheet and that a Notice is posted at the job site. Failure to do either or both is a violation of the statute and could result in an inquiry by the NYSDOL. That's something which public works contractors do not want to happen.

Proposal To Further Expand FMLA Coverage

2008-02-11T17:24:00.000-05:00

In addition to the expansion of coverage for military families under the Family and Medical Leave Act (the "FMLA") which I discussed here previously, the U.S. Department of Labor (the "DOL") today published a proposal to update its regulations under the FMLA. Proposed changes include increased notice obligations for employers so that employees will better understand their FMLA rights, and revising the employee notice rules to minimize workplace disruptions due to unscheduled FMLA absences. A link to the proposed rules appears here.

The DOL has invited comment on the Notice of Proposed Rulemaking.

Agressive Enforcement Of Employee Misclassification

2008-02-11T08:20:00.000-05:00

As I posted here last year, New York Governor Eliot Spitzer signed Executive Order No. 17 which created an inter-agency strike force to address the problem of employers who classify employees as independent contractors or pay workers off the books as part of the underground economy. The Joint Enforcement Strike Force includes staff from: the Department of Labor, the Attorney General’s Office, the Department of Taxation and Finance, the Workers’ Compensation Board and the New York City Comptroller’s office.

Misclassification of workers occurs when an employer treats an individual as an independent contractor instead of as an employee. As a result, compliance with unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and wage and hour laws may be compromised.

Enforcement of employee misclassification issues is getting very aggressive in a variety of areas. Just look at the various agencies included in the State's task force. The message here is that you can run, but you can't hide.

Expanded FMLA Coverage For Military Families

2008-02-01T19:51:00.000-05:00

On January 28, 2008, President Bush signed the 2008 National Defense Authorization Act (the “NDAA”). The NDAA includes provisions which amend and significantly expand the Family Medical Leave Act of 1993 (the “FMLA”) with respect to the rights of military families having service members called to active duty in the armed forces. The NDAA took effect immediately.

Depending on whether a “serious illness or injury” is involved as defined by the new law, the NDAA permits an eligible employee (i.e., a spouse, son, daughter or parent) to take between 12 to 26 weeks of of FMLA leave to care for an injured service member. In addition, the NDAA creates a new category of employees entitled to FMLA leave to care for an injured service member. This new category, known as “next of kin,” is defined as the nearest blood relative to the service member. The NDAA contains several vagaries which will likely be addressed in regulations to be issued by the United States Department of Labor.

It’s nice to see the Feds finally get up to speed this issue. New York and a few other states were ahead of the curve in passing their own family military leave laws well-prior to the enactment of the NDAA.

Second Circuit Says "No" To Conditional Overtime

2008-02-01T09:01:00.000-05:00

In Chao v. Gotham City Registry, Inc. (06-2432-CV - Decided: January 24, 2008), the United States Court of Appeals for the Second Circuit held, in a case of first impression, that an employer policy requiring prior authorization for overtime work does not relieve the employer from paying overtime absent such pre-approval.

The Gotham City case involved a Petition for civil contempt brought by the United States Secretary of Labor (the “Secretary”) for an alleged violation of a Consent Judgment requiring the employer (a temporary staffing agency providing nurses to hospitals) to pay overtime to its nurses. Prior to the Consent Judgment, the employer had paid straight time for all hours worked in excess of forty hours per week, thereby violating the Fair Labor Standards Act (the “FLSA”). After the Consent Judgment and consultation with counsel, the employer implemented a policy requiring its nurses to obtain authorization prior to working any overtime hours; under the policy, overtime would not be paid absent the employer’s prior authorization. The purpose of the policy was to prevent the employer from paying for unwanted overtime hours worked. The Secretary claimed the policy violated the provisions of the Consent Judgment; however, the District Court denied the Petition for contempt and the Secretary appealed.

The Second Circuit affirmed the decision of the District Court. Initially, the court goes through an exhaustive analysis of the FLSA and the definition of the term “work.” The decision is worth reading for that alone. The court then notes that the nurses typically lacked the opportunity to obtain prior approval for overtime given the critical nature of their work; indeed, during the course of their assignments at client hospitals, the nurses were asked to work overtime by hospital staff. Ultimately, the court held, among other things, that an employer has a duty to exercise control over its workers and to ensure that unwanted work is not performed. The court stated: “[t]he mere promulgation of a rule against such [overtime] work is not enough. Management has the power to enforce the rule and must make every effort to do so.”

As to the issue of civil contempt, the court affirmed the District Court’s denial of the Petition on the ground that the employer had made adequate efforts to comply with the Consent Judgment. The court noted that it was difficult for the employer to maintain control over its nurses given that they worked off-premises. It found that the employer had taken reasonable steps to ensure compliance with its overtime policy such as consulting with counsel prior to its implementation, making the nurses aware of the rule, discouraging them from accepting overtime shifts without seeking prior approval, and discouraging its clients from offering overtime shifts. Also militating against a finding of contempt was the fact that the employer negotiated with its client hospitals to procure an overtime premium retrospectively when its nurses worked overtime.

Based on the holding in Gotham City, an employment policy providing for conditional overtime in the Second Circuit appears to be a thing of the past.

Employee "Notice" and Employment-At-Will

2008-01-25T09:59:00.000-05:00

Surprisingly, I've recently received several inquiries from employers and employees alike asking whether an employee is required to provide notice of resignation to the employer. In an employment-at-will state such as New York, the answer is "no."

The concept of employment-at-will is, among other things, that either the employer or the employee may terminate the employment relationship at any time. The situation may be different where there is a contractual obligation to provide notice. While it is good form and usually expected that an employee will provide sufficient notice to the employer (e.g., two weeks) to permit an orderly transition, there is generally no legal requirement that the employee do so.

Interestingly, while many employers expect to receive notice from their employees, many of them don't think twice about discharging a worker on the spot while providing 15 minutes for them to gather up their personal belongings before being escorted from the premises by security.

Go figure!

URGENT - Prevailing Wage Reminder

2008-01-17T09:22:00.000-05:00

A reminder that on February 24, 2008, amendments to New York Labor Law Sec. 220 will take effect requiring contractors and subcontractors performing public works construction to provide written notification to field employees of the prevailing wage rate for their particular job classification. The notification must be given to each worker on their first day of work and with every subsequent pay stub.

In addition, the workers must also be provided with contact information for the New York State Department of Labor (the “NYSDOL”) at the beginning of each public job and at various times thereafter. The notification must contain a statement advising the worker that he/she has a right to contact the NYSDOL to report violations if they are not receiving proper prevailing wages and supplemental benefits for their particular job classification. Violations of the statute can result in monetary civil penalties.

I have not seen anything regarding the amendment on the NYSDOL's website. Note that the Department of Labor is getting very aggressive in enforcing Labor Law Sec. 220, and contractors risk more than ever in failing to comply with its provisions.

Lawyer Joke ... Wednesday

2008-01-09T11:28:00.000-05:00

Ah, what the heck! I've decided to post 'em whenever I find 'em. Here's one, courtesy of my beloved wife, Kathy:

The real reason that we can't have the Ten Commandments posted in a courthouse is this: One cannot post "Thou Shalt Not Steal," "Thou Shalt Not Commit Adultery," and "Thou Shall Not Lie" in a building full of lawyers, judges and politicians .. it creates a hostile work environment.

Administrative Exhaustion And Prevailing Wage Claims

2008-01-07T12:32:00.000-05:00

In Dragone v. Bob Bruno Excavating, Inc. (2007 NY Slip Op 09481 - Decided 11/29/07), the Appellate Division, Third Department, affirmed the lower court’s decision dismissing the Plaintiff’s claims under Labor Law §220 on the ground that no private right of action for underpayment of prevailing wages exists until an administrative determination in the employee's favor has been made and has gone unreviewed or has been affirmed. Also, the Appellate Division reversed the lower court on the timeliness of Plaintiff's overtime claims under Labor Law Article 6.

Dragone worked as a laborer for several years until he was laid off in 2003. He brought an action against his former employer alleging failures to pay overtime compensation and the prevailing wage required by Labor Law § 220. The lower court denied Plaintiff's motion for summary judgment and partially granted the Defendants' cross-motion for summary judgment by dismissing the claims for unpaid overtime on statute of limitations grounds as well as the prevailing wage claims.

On appeal, the Appellate Division reversed the lower court on the overtime statute of limitations issue and affirmed dismissal of the Labor Law § 220 claims. As to the matter of overtime, the court held that the while the overtime claim under the federal Fair Labor Standards Act was time-barred (as the claim was asserted not asserted within the two year limitations period), the overtime claim under Labor Law Article 6 was timely since the underpayment occurred less than six years prior to the commencement of the action.

In affirming dismissal of the Labor Law § 220 claims, the court confirmed the well-settled rule in New York requiring administrative exhaustion prior to seeking judicial redress. Here, it appeared that the Plaintiff failed to pursue his prevailing wage claims by filing an administrative complaint with the New York State Department of Labor and, instead, sought to have those claims adjudicated by a court.

The moral of this story ... if you don't play by the rules, expect to be ejected from the game.

The EEOC Says "Gotcha!"

2007-12-27T10:32:00.000-05:00

It's a sad time for retirees. Yesterday, the Equal Employment Opportunity Commission (the "EEOC") issued a regulation permitting employers to reduce or eliminate health benefits for employees who turn 65 and become eligible for Medicare. The regulation allows employers to establish two classes of retirees: (a) those under 65 receiving comprehensive benefits; and (b) those 65 or over receiving limited to no benefits.

Employers are now free to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older. Discrimination, you say? Hold on to your hats, folks. To add insult to injury, the regulation creates an explicit exemption from age-discrimination laws for employers that scale back benefits of retirees 65 and over. I say "baloney!" If this isn't age discrimination, I don't know what is. Even though it looks, acts and smells like a duck, the EEOC says it isn't. Give me a break, will ya?

The employer lobby contends that having such a two-tiered system will save oodles of money for companies because Medicare picks up much of the tab and coverage for those 65 and over. Thus, those in the second tier have nothing to worry about. Excuse me, but has anyone over at the EEOC looked at the joke of a program that is Medicare? The infamous Part "D" alone, with its exclusions, exceptions and monetary thresholds is enough to make anyone's head spin. Many senior citizens still lack proper coverage and care even when they have Medicare. By issuing the new regulation, the EEOC merely exacerbates and validates an already broken system.

As an attorney who represents employers mostly, the EEOC's action is great news as it will result in tremendous cost savings. However, in my capacity as "Joe Citizen," I believe that this is an awful and disgraceful result; it merely serves to reaffirm this country's general view of senior citizens as unwanted, disposable beings who are undeserving of compassion and respect. To those who agree with the EEOC, I remind them that they, too, will reach 65 one day. How will they feel about all this then?

Wage Claim Retaliation Under New York and Federal Law ... The Differing Standards

2007-12-27T08:10:00.000-05:00

Higueros v. New York State Catholic Health Plan, Inc. (U.S. Dist. Ct., E.D.N.Y., 12/1/07), provides a generally good discussion of the differing standards concerning retaliation claims under the Fair Labor Standards Act (the "FLSA") (29 U.S.C. Sec. 215, et seq.) and New York Labor Law Section 215, et seq. In Higueros, the Plaintiff worked as a marketing and sales representative for the Defendant, and alleged that the Defendant employer failed to pay overtime compensation in violation of the FLSA and New York Labor Law. The Plaintiff further alleged that she was fired in retaliation for complaining to supervisors about the Defendant's failure to pay overtime. The Defendant's Motion to dismiss was granted in part and denied in part.

In dismissing the claim under the FLSA, the court relied on Second Circuit precedent in holding that: (i) FLSA Sec. 215(a)(3) required either the filing of a formal complaint with the employer, the institution of a proceeding, or testimony in a proceeding for protection to attach; and (b) the FLSA did not encompass informal complaints made to a supervisor. In Higueros, the Plaintiff admitted that she made only informal complaints to her supervisors about the Defendant's failure to pay overtime wages.

Interestingly, the court upheld the retaliation cause of action asserted under New York Labor Law Sec. 215 (1) on the grounds that the State statute is less specific as to what form an employee's complaint to management must take to qualify for protection against retaliation. Unlike the FLSA, New York Labor Law does not require a formal complaint. Accordingly, the Plaintiff's informal complaints to her supervisor were held to be sufficient under State law to survive the Motion to Dismiss.

This is the kind of stuff that gives lawyers fits. On the FLSA front, the statute's requirement of a formal complaint is appropriate to ensure the existence of objective evidence with respect to the employer's knowledge of the allegations and its subsequent actions to remedy the situation, if any. On the other hand, it penalizes those individuals who complain only to their supervisor based on either naivete or a fear of putting something in writing which the employee believes will come back to hurt them later. As to the New York statute, the problem is just the opposite. The lack of a requirement for filing a formal complaint benefits the employee greatly while putting the employer in the unenviable position of having to defend a claim based solely on testimonial evidence.

While I'd like to see more uniformity in the law, at least the attorneys are generating fees either way. That's a good thing, isn't it?

Employment-At-Will ...The New York Experience

2007-12-17T08:59:00.000-05:00

If I’ve said it once, I’ve said it a thousand times ... New York is an employment-at-will State. Accordingly, one can be fired for any reason or no reason, provided that the basis for the discharge does not violate the law. Such was the reaffirmation in Ferraro v. Seamen's Church Institute of New York and New Jersey, (Supreme Court, N.Y. Co. - Decided: December 3, 2007).

In Ferraro, the Plaintiff (a maintenance worker), sued his former employer for constructive discharge, defamation and intentional infliction of emotional distress. The Plaintiff alleged that his supervisor: (a) began verbally humiliating him in front of co-workers by calling him names such as "stupid," "blind" and "senile," and criticizing his job performance; (b) wrongly accused him of having stolen property from his employer; (c) assigned him tasks more difficult than those assigned to his co-workers and made him work longer hours; and (d) falsely reported to the employer that he possessed marijuana at work. Plaintiff resigned from his position after the accusation of drug possession was made because he claimed that the job had become intolerable.

The court granted Defendant's Motion to dismiss on all causes of action, and denied Plaintiff’s Cross-Motion to amend the Complaint. In granting dismissal, the court relied upon the well-settled principle in New York that an employment relationship is presumed to be terminable at any time by either party absent an agreement establishing a fixed duration. No such agreement existed between the Plaintiff and his employer. The court held that even the alleged constructive discharge (i.e., that Plaintiff was forced to voluntarily leave his employment due to the employer’s intentional creation of a work environment that was so difficult or intolerable that a reasonable person would feel forced to resign) was appropriate. It is noteworthy that the neither the Complaint nor the proposed Amended Complaint alleged that the constructive discharge was based on employment discrimination due to Plaintiff’s race, religion, gender, nationality, age or sexual preference. Had such allegations been in issue, perhaps the court would have denied the employer’s Motion to dismiss and allowed the matter to proceed.

While the holding in Ferraro is not Earth-shattering, it does confirm that a strict interpretation of the employment-at-will doctrine is alive and well, and living in New York.