As previously announced, the New York City Council has introduced an expansive package of COVID-19 bills that, among other things, propose sweeping protections for “essential” workers. The significance of this proposed legislation cannot be understated as the City Council is proposing a mandated exception to the “at will” employment doctrine, which has served as the bedrock of modern employment law in the United States for over a century.

Significantly for NYC employers, the package includes proposed legislation that would require premium pay and termination protection for workers deemed “essential”. The proposed law would also create a presumption of coverage for non-employees under the NYC Earned Safe and Sick Time Act (“ESSTA”), unless the employer can demonstrate that certain factors are satisfied showing that the employee is a bona fide independent contractor.

Premium Pay for Essential Employees

Pursuant to Int. 1918-2020, most essential businesses in New York City (as defined pursuant to New York Executive Order 202.6 issued on March 18, 2020 and extended thereafter) that: (i) employ 100 or more persons; or (ii) permit 100 or more persons to work at or for such employer’s essential business, would be required to pay certain of their essential employees (defined as “any person employed or permitted to work at or for an essential business,” other than as specifically exempted as discussed below) a premium amount for each shift worked by such essential employee. In determining the number of persons performing work for an employer, all persons performing work on a full-time, part-time or temporary basis are counted. Real estate industry businesses assigned a North American Industry Classification System code beginning with 531 would be excluded from coverage under the proposed law. This includes lessors of residential and commercial real estate, property managers, offices of real estate agents, brokers and appraisers, and other activities related to real estate.

The required premium amount would be $30 for any shift of less than four hours, $60 for any shift of between four and eight hours, and $75 for any shift of greater than eight hours. The premium pay would be due at the same time as other wages owed for work performed during that work week and would be required to be separately noted on a wage stub or other form of written wage documentation provided to the essential employee for that pay period.

Notably, the term “essential employee” for purposes of this proposed law would not include any employee who is:

  • salaried;
  • covered by a collective bargaining agreement if such agreement expressly waives the provisions of the law and “provides comparable or superior benefits for essential employees;” or
  • covered by a program created pursuant to an emergency order issued by the governor of New York that provides comparable or superior benefits for essential employees.

Covered employers would be required to post a notice of rights under the law at any workplace or job site where any essential employee works, both in English and in any primary spoken language of at least 5% of the employees in a given location. They also would be required to retain records documenting compliance with the requirements of the law for a period of three years.

The NYC Office of Labor Standards would be responsible for administrative enforcement of the law, either pursuant to complaints filed by employees or by investigating an employer. An aggrieved employee could also pursue a private right of action, and the City’s office of corporation counsel would have authority to investigate and bring suit against an employer for violations of the law. Available remedies would include, as applicable, back pay, compensatory damages, injunctive relief, fines and civil penalties, and attorney’s fees.

“Just Cause” Termination Protections for Essential Employees

Under a separate proposed bill, Int. 1923-2020, all essential businesses regardless of size or industry would be prohibited, following a probationary period of no longer than 30 days from the time of hire of an essential employee (defined as “any person employed or permitted to work at or for an essential business”), from terminating or indefinitely suspending the essential employee, or reducing the essential employee’s work hours by 15 percent or more of the employee’s weekly work schedule, without “just cause.” Employees covered by a collective bargaining agreement that expressly waives the provisions of the law and “provides comparable or superior benefits for said employees” would be excluded from the “just cause” requirement.

For purposes of this proposed law, “just cause” is defined as “sufficient cause for discharging an essential employee, such as the employee’s failure to satisfactorily perform job duties or employee misconduct that is demonstrably and materially harmful to the essential employer’s business interests.” Factors that would be considered in determining whether just cause exists include whether:

  1. the essential employee knew or should have known of the essential employer’s policy, rule or practice;
  2. the essential employer provided relevant and adequate training to the essential employee;
  3. the essential employer’s policy, rule or practice was reasonable and applied consistently; and
  4. the essential employer undertook a fair and objective investigation.

Confusingly, the bill as drafted further states that “a termination would not be considered based on just cause unless the essential employer has utilized progressive discipline” (as defined in the law) within one year before the termination. However, the bill also states that “an essential employer would be permitted to terminate an essential employee immediately for a failure or misconduct constituting just cause.” The bill also indicates that it would not “preempt, limit or otherwise affect the applicability of any provisions of any other law, regulation, requirement, policy or standard,” though it is unclear how broadly this “carve out” language is intended to apply.

A covered employer terminating an essential employee would be required to “provide a written explanation, including any non-hearsay evidence to support the decision, to any terminated essential employee of the precise reasons for the just cause termination within one week of termination.”

Similar to the premium pay bill, administrative enforcement would be handled by the NYC Office of Labor Standards, and a private right of action would also be available to aggrieved employees. Available remedies would include, as applicable, back pay, reinstatement, fines, civil penalties, and attorney’s fees. Additionally, an employee would be permitted to bring an arbitration proceeding (either individually or on a class basis) before an arbitrator jointly selected by the employer and the employee from a panel chosen by a committee including both essential employers and essential employees and their advocates. In addition to the remedies noted above, an arbitrator also would be authorized to award punitive damages.

Presumption of Employment for Purposes of Coverage Under ESSTA

Int. 1926-2020 would amend the definition of “employee” under ESSTA to create a presumption that “any person providing labor or services for remuneration within the city of New York for more than 80 hours in a calendar year . . . shall be considered an employee, unless the hiring entity demonstrates that all of the following conditions are satisfied:

  1. The person is free from the control and direction of the hiring entity in connection with the performance of the labor or services, both under the contract for the performance of the work and in fact;
  2. The person performs labor or services that are outside the usual course of the hiring entity’s business; and
  3. The person is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the labor or services performed.”

Contractors and similar workers who do not qualify as employees based on the above factors would not be required to be covered under ESSTA.

Additionally, certain types of workers would be categorically excluded from falling under the presumption of employee status, including:

  • hourly professional employees;
  • federal, state, and city government employees; and
  • certain work study and scholarship student employees.

Any employer who was not previously subject to ESSTA but becomes covered by virtue of the law would be required to provide all covered “employees” with a notice of rights under ESSTA within 60 days of the enactment date.

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If enacted, all of the bills would take effect immediately, and the ESSTA presumption of employment bill would be retroactive to January 1, 2020. We will continue to monitor and report back on further developments.

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.