Non-Competes – A Focus of New York Attorney General

Non-Competes – A Focus of New York Attorney General

Non-compete agreements clearly are the subject of scrutiny by the New York Attorney General’s office, which just issued guidance called “Non-Compete Agreements In New York State – Frequently Asked Questions” (“Guidance”). The Guidance, in the form of FAQs, generally describes New York common law regarding enforceability of non-competition provisions in employment contracts or standalone restrictive covenant agreements. It notes that a court has the ability to invalidate or modify an overly-broad non-compete. It also provides guidance to employees regarding whether to sign a non-compete, which it states is not a legal requirement but only a potential mandate of an employer. The Guidance includes a list of considerations for employees before they sign a non-compete. Further, it provides contact information within the New York Attorney General’s Office for individuals to obtain assistance to address unreasonable non-competes. Finally, the Guidance describes Attorney General-proposed legislation to prohibit non-competes for workers earning below $75,000 per year. The Attorney General issued the Guidance after a recent matter it handled in which it obtained prospective compliance by an employer regarding its use of non-competes. The matter is the subject of an Attorney General press release. It is imperative that employers who use restrictive covenants in employment...

New Fair Credit Reporting Act – Summary of Rights Forms

New Fair Credit Reporting Act – Summary of Rights Forms

The Consumer Financial Protection Bureau (“CFPB”), the Federal agency that administers the Fair Credit Reporting Act (“FCRA”), just issued new Summary of Rights forms. An employer conducting a background check on an employee or applicant through a consumer reporting agency must provide such employee or applicant a Summary of Rights notice when first obtaining consent to conduct the background check — together with a written disclosure about the use of the background check — and when taking adverse action based on the background check. Starting today, September 21, 2018, the new Summary of Rights form must be used. The CFPB also issued forms called Summary of Consumer Identity Theft Rights that must be provided to consumers by credit reporting agencies when the subject of an identity theft. A new law also requires credit reporting agencies to implement a “national security freeze” at no cost to a consumer that restricts prospective lenders from access to a consumer’s credit report. Other changes include a one year (instead of 90 days) notification of a fraud alert in a consumer’s file. The notification informs a lender that the consumer may have been the victim of identity theft, for which the lender must take additional...

New York Employers Fall Review

New York Employers Fall Review

In 2018, employers in New York encountered several important changes, including in the areas of anti-harassment and scheduling, warranting a Fall review of current employment practices and preparation for next year’s developments. Employers should take the time now to review current practices and prepare for the imminent future. NEW YORK CITY’S TEMPORARY SCHEDULE CHANGE LAW New York City’s Temporary Schedule Change Law (“TSC Law”) became effective July 18, 2018, and requires private employers to provide eligible employees with an allowance of a “temporary change” to their usual work schedule for certain qualifying “personal events” for up to two occasions per year (i.e., one business day twice per year or two business days on one occasion). Eligible employees are those who work at least 80 hours a year in New York City and have been employed by their employer for 120 or more days, with limited exceptions, including employees covered by collective bargaining agreements waiving the law. Temporary schedule changes may include paid time off, use of short-term unpaid leave, permission to work remotely, or working hour swaps or shifts. Qualifying “personal events” include: (a) an employee’s need to: (i) care for a minor child or care recipient (i.e., a person...

NYC Paid Sick/Safe Time Law Expands

NYC Paid Sick/Safe Time Law Expands

New York City’s Sick Leave Law was expanded on May 5, 2018, to include additional reasons for eligible employees to use NYC paid sick leave (called “safe leave”) including: to obtain services from a domestic violence shelter, rape crisis center, or other shelter or services program for relief from a family offense matter, sexual offense, stalking, or human trafficking; to participate in safety planning, temporarily or permanently relocate, or take other actions to increase the safety of the employee or employee’s family members from future family offense matters, sexual offenses, stalking, or human trafficking; to meet with a civil attorney or other social service provider to obtain information and advice on, and prepare for or participate in any criminal or civil proceeding, including but not limited to, matters related to a family offense matter, sexual offense, stalking, human trafficking, custody, visitation, matrimonial issues, orders of protection, immigration, housing, discrimination in employment, housing or consumer credit; to file a complaint or domestic incident report with law enforcement; to meet with a district attorney’s office; to enroll children in a new school; or to take other actions necessary to maintain, improve, or restore the physical, psychological, or economic health or safety of...

U.S. Supreme Court Issues “Epic” Decision for Employers Upholding Arbitration Agreements and Class Action Waivers

U.S. Supreme Court Issues “Epic” Decision for Employers Upholding Arbitration Agreements and Class Action Waivers

On May 21, 2018, the United States Supreme Court resolved the split amongst several Federal Circuit Courts by finding the Federal Arbitration Act (FAA) enables employers enforce class action waivers in arbitration agreements with their employees notwithstanding employees’ rights under the National Labor Relations Act (NLRA) to engage in “concerted activity.” The Court’s 5-4 decision, with the majority opinion authored by Justice Gorsuch, was rendered in In Epic Systems Corp. v. Lewis and companion cases Ernst & Young LLP et al. v. Stephen Morris et al. and National Labor Relations Board v. Murphy Oil, Inc. (all decided simultaneously). The Court ruled that Congress did not intend the NLRA to provide for class and collective actions, and although the NLRA provides employees the right to organize and bargain collectively, the statute does not dictate how claims must be adjudicated. Accordingly, the Court determined that the NLRA cannot be interpreted to provide employees with an implicit right to class and collective actions in contravention of the FAA, which explicitly confers upon employers and employees the ability to arbitrate and determine their chosen arbitration procedure. Instead, these laws must be interpreted consistently. The three companion cases involve employees challenging arbitration agreements containing class and...

Supreme Court Holds FLSA Overtime Exemptions Not to be Construed Narrowly

Supreme Court Holds FLSA Overtime Exemptions Not to be Construed Narrowly

On April 2, 2018, in Encino Motorcars, LLC, v. Navarro, the Supreme Court held that auto service advisors – those who “interact with customers and sell them services for their vehicles” – are exempt from the overtime pay requirements of the Fair Labor Standards Act (“the FLSA”). The Court’s decision will certainly affect auto service advisors, but its impact will not be limited to the auto dealership industry. The crux of the Court’s decision centered around Section 13(b)(10)(A) of the FLSA, which states that “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” is exempt from the FLSA overtime requirement. In a 5-4 decision, the majority found that a service advisor is “obviously a salesman” under the ordinary meaning of salesman, given that a salesman sells goods or services and service advisors “sell [customers] services for their vehicles.” The Court also found that service advisors are “primarily engaged in . . . servicing automobiles” due to their integral involvement in the servicing process. Thus, the Court held that sales advisors are exempt from the FLSA overtime pay requirement under Section 13(b)(10)(A). Significantly, in reaching its conclusion, the majority departed from the Supreme Court’s longstanding principle that FLSA...

DOL Adopts Primary Beneficiary Test to Determine Intern Status Under Wage Hour Law

DOL Adopts Primary Beneficiary Test to Determine Intern Status Under Wage Hour Law

On January 5, 2018, the Department of Labor (DOL) withdrew its six-factor test, established by a 2010 DOL guidance, used to determine whether interns and students are considered employees and, thus, covered by the Fair Labor Standard Act (FLSA), and, in its place, adopted a seven-factor test – listed in Fact Sheet 71 – applied by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. The abandoned six-factor test, issued under the Obama Administration, required that all of the criteria be met in order to find that an intern is not an employee under the FLSA. In 2015, the Second Circuit disregarded the DOL test in the Glatt ruling. In deciding against the unpaid interns at Fox Searchlight, the Second Circuit held that the six-factor test was too rigid. Subsequently, the Second Circuit ruled that in determining whether interns are classified as employees under the FLSA, the “economic reality” between the intern and the employer should be evaluated to determine which party is the “primary beneficiary” of the relationship. The Second Circuit applied a non-exhaustive list of seven factors to use in the “primary beneficiary” test, but cautioned that “[a]pplying these considerations requires weighing and balancing all of the...

Third Circuit Affirms that Short Breaks, Treated as Flex Time, are Compensable

Third Circuit Affirms that Short Breaks, Treated as Flex Time, are Compensable

On October 13, 2017, the Third Circuit held in Secretary United States Department of Labor v. American Future Systems, Inc., that under the Fair Labor Standards Act (FLSA), an employer was required to compensate employees for all breaks of twenty minutes or less that the employer treated as flex time for the employees. Facts and Analysis Defendant American Future Systems, d/b/a Progressive Business Publications (“Progressive”) employed sales representatives to sell its business publications. The sales representatives were paid on an hourly basis, but only when logged onto their computers. In 2009, Progressive eliminated its policy that permitted employees to take two 15 minute paid breaks per day and replaced it with a “flexible time” policy. The flexible time policy allowed sales representatives to “log-off the computer system at any time of the day, for any reason, and for any length of time, at which point, if they so choose, they may leave the office.” Employees were required to log off their computers if they were “not on an active sales call, recording the results of a call, engaged in training or administrative activities, or engaged in other activities that Progressive considers to be work-related.” If sales representatives were logged out...

New York Employers Mid-Year Review

New York Employers Mid-Year Review

In 2017, employers in New York encountered several important statutory changes affecting recruitment of applicants and retention of independent contractors. More legal change will come in 2018, warranting a mid-year review of current employment and hiring practices, as well as preparation for next year’s developments. Employers should take the time now to audit current practices and prepare for the imminent future. Pay Equity On May 4, 2017, Local Law 67 was enacted to prohibit all employers in New York City from inquiring about an applicant’s salary history (including current or prior wages, benefits, and other compensation), and from relying on an applicant’s salary history when determining his or her compensation package during the hiring process, including contract negotiations. The law applies to both public and private employers and employment agencies, and to their employees and agents (collectively, “employers”). Employers may, however, engage in communications with an applicant about his or her expectations as to salary, benefits, and compensation, including any deferred compensation or unvested equity which the applicant may forfeit as a result of leaving his or her current employer. In addition, if the candidate voluntarily (and without any prompting by the prospective employer), discloses his or her salary history to...

Federal DOL Rescinds Joint Employer and Independent Contractor Guidance

Federal DOL Rescinds Joint Employer and Independent Contractor Guidance

On June 7, 2017, the U.S. Department of Labor (“DOL”), Wage and Hour Division (“WHD”), announced that it was rescinding two significant and heavily-criticized Obama-era Administrator’s Interpretations, the first on joint employer liability under the Fair Labor Standards Act, 29 U.S.C. § 1801 et seq. (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 201 et seq. (“MSPA”) (the “Joint Employer AI”), and the second on independent contractor misclassification under the FLSA (the “Independent Contractor AI”). In its June 7th statement concerning the rescissions, the DOL made its intentions clear: Removal of the two administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act or Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the Department’s long-standing regulations and case law. The Department will continue to fully and fairly enforce all laws within its jurisdiction including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act. Although neither AI constituted a legal precedent, the January 2016 Joint Employer AI presented the DOL’s analysis of the joint employer principles under caselaw interpreting the FLSA and the MSPA. Gibbons issued an alert about the Joint Employer AI...