Law and the Workplace

UPDATED: NYC Council Passes Bill to Align ESSTA with New York State Paid Sick Leave Law

*** UPDATE: Mayor de Blasio signed the bill into law on September 28, and it will take effect on September 30, 2020, except as otherwise set forth below. ***

The New York City Council has passed a bill aimed at aligning the NYC Earned Safe and Sick Time Act (ESSTA) with the New York State paid sick leave law that takes effect on September 30, 2020. The bill would also impose a new requirement on employers to report the amount of paid sick and safe leave accrued and used during each pay period, as well as an employee’s total balance of ESSTA leave, on a pay statement or other document provided to the employee each pay period.

The bill includes an effective date of September 30, though employers would be permitted to restrict employees from using any additional paid sick and safe leave provided under the law (discussed further below) until January 1, 2021.

Among its key provisions, the bill would amend the amount of sick and safe leave that employers must provide under ESSTA to mirror that under the recently passed State sick leave law. That is:

  • employers with 4 or fewer employees and a net income of less than $1 million in the prior tax year would be required to provide employees with up to 40 hours of unpaid sick and safe leave;
  • employers with between 5 and 99 employees and employers with 4 or fewer employees and a net income of greater than $1 million in the prior tax year would be required to provide each employee with up to 40 hours of paid sick and safe leave per year; and
  • employers with 100 or more employees would be required to provide up to 56 hours of paid sick and safe leave per year.

Under the present (and initial) iteration of ESSTA, all employers must provide up to 40 hours of either paid or unpaid sick and safe leave, depending on number of employees.  The bill would also eliminate ESSTA’s current 120 day waiting period for newly hired employees to be able to utilize accrued leave.

Other changes under the bill include:

  • requiring an employer to cover any cost charged by a health care provider or other entity for providing a doctor’s note or other documentation to support the need for leave under ESSTA;
  • expanding upon the definition of prohibited “adverse action” taken against an employee for exercising or attempting to exercise rights under the law or interfering with an employee’s exercise of rights under law and its implementing rules;
  • requiring employers provide notice to employees of the changes under the law within 30 days of the bill’s effective date if passed into law; and
  • notably, creating a requirement that “the amount of safe/sick time accrued and used during a pay period and an employee’s total balance of accrued safe/sick time shall be noted on a pay statement or other form of written documentation provided to the employee each pay period.”

With regard to enforcement, the bill states that if the New York state paid sick leave law or any regulation issued thereunder “sets forth a standard or requirement for minimum hour or use of safe/sick time that exceeds any provision in this chapter, such standard or requirement shall be incorporated by reference and shall be enforceable by the [Department of Consumer and Worker Protection],” which is the City entity that presently enforces ESSTA.  In addition, the bill would authorize the City’s corporation counsel to investigate and bring civil actions for “pattern or practice” violations under the law, and would incorporate new civil penalties of up to $15,000 (as well as individual relief of up to $500 to each employee impacted) associated with such a civil action.

The bill is now before Mayor Bill de Blasio for consideration, and the Mayor has scheduled a hearing on the bill for September 28.  We will continue to monitor and report on developments with regard to this bill.

Reminder: New York State Paid Sick Leave Law Takes Effect September 30

As we previously reported, the New York State paid sick leave law will take effect, and covered employees will begin accruing leave time, on September 30, 2020. However, employees may be restricted from utilizing accrued sick leave until January 1, 2021.

As set forth in our previous blog:

  • Employers with 4 or fewer employees and a net income of less than $1 million in the prior tax year must provide employees with up to 40 hours of unpaid sick leave.
  • Employers with between 5 and 99 employees and employers with 4 or fewer employees and a net income of greater than $1 million in the prior tax year must provide each employee with up to 40 hours of paid sick leave per year.
  • Employers with 100 or more employees will provide up to 56 hours of paid sick leave per year.

Employees must accrue sick leave at a rate of at least 1 hour for every 30 hours worked (which is also the accrual rate set forth under the New York City Earned Safe and Sick Time Act and the Westchester County Earned Sick Leave Law).  Alternatively, employers may fulfill their obligation under the law by providing the full amount of sick leave in a lump sum at the beginning of each year.

The statute is silent on – and thus leaves unanswered – a few critical questions, including (i) how to determine employer size (i.e., state or nationwide basis); (ii) whether carryover obligations remain applicable to employers that choose to frontload sick leave in lieu of accrual; and (iii) whether it is permissible to require medical certification to support the need for leave (while this is permitted under the New York City and Westchester County laws when an employee’s absence exceeds three consecutive work days, the statewide law does not address this). The New York Department of Labor is expected to issue regulations and guidance relating to the law, though no such guidance has been made available as of the date of this posting.

As noted above, employers are not required to permit employees to use accrued sick leave until January 1st. Nevertheless, employers in New York State should review their existing policies and train relevant personnel now to ensure compliance with the new law before its effective date. We will continue to monitor and report on any further developments, including any guidance issued by the state.

DCFMLA COVID-19 Leave Extended through October 9, 2020

Quick Hit:  The temporary expansion of the DC Family and Medical Leave Act to provide D.C. employees up to 16 weeks of unpaid, job-protected “COVID-19 leave” has been extended through October 9, 2020.   The D.C. Office of Human Rights has published an updated notice reflecting the extended effective date, which employers “must post and maintain… in a conspicuous place and transmit it to employees working remotely.”  Note that should the Mayor extend the declared COVID-19 public health emergency beyond October 9, 2020, this leave expansion will likely be extended again.

More Detail: As we previously reported, the D.C. COVID-19 Support Emergency Amendment Act and the Coronavirus Support Clarification Emergency Amendment Act of 2020 (collectively, the “CSEA”) allow employees in the District to temporarily take unpaid, COVID-19 leave under an amendment to the D.C. Family and Medical Leave Act (“DCFMLA”).  The expansion of the law allows employees in the District who have worked for 30 days for an employer of any size to take up to 16-weeks of COVID-19 leave “if the employee is unable to work due to:

  • A recommendation from a healthcare provider to quarantine or isolate, including because the employee or an employee’s household member is high risk for serious illness from COVID-19;
  • A need to care for a family member or a member or an individual with whom the employee shares a household who is under a government or health care provider’s order to quarantine or isolate; or
  • A need to care for a child whose school or place of care is closed or whose childcare provider is unavailable to the employee.”

The law permits employers to obtain “reasonable certification of the need for COVID-19 leave,” as specifically set forth in the law:

  • If the leave is necessitated by the recommendation of a health care provider to the employee, a written, dated statement from a health care provider stating that the employee has such need and the probable duration of the need for leave.
  • If the leave is necessitated by the recommendation of a health care provider to an employee’s family member or individual with whom the employee shares a household, a written, dated statement from a health care provider stating that the individual has such need and the probable duration of the condition.
  • If the leave is needed because a school, place of care, or childcare provider is unavailable, a statement by the head of the agency, company, or childcare provider stating such closure or unavailability, which may include a printed statement obtained from the institution’s website.

Like other bases for DCFMLA leave, employees may elect, but are not required to use, other non-statutory paid leave provided by their employer (e.g., vacation time) while on COVID-19 leave.  In addition, the expansion provides that employees using the new leave “shall not be required, but may elect, to use leave provided under this section before other leave to which the employee is entitled under federal or District law or an employer’s policies, unless otherwise barred by District or federal law.”

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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.

Maryland Employers: New Employment Laws Become Effective October 1, 2020

As we previously reported, earlier this year Maryland passed a number of employment laws that, among other things, prohibit use of facial recognition technology, wage history inquires and hairstyle discrimination, and revise the state’s mini-WARN act.  These laws will take effect on October 1, 2020.  For more detail on the new laws, see our original post, which is available here.

Maryland employers should review become familiar with these new requirements and consult with counsel to ensure they will be in compliance with the new laws when they go into effect.

DOL Proposes New Rule on Independent Contractor Classification

The U.S. Department of Labor (DOL) published a proposed rule in the Federal Register on September 25, 2020 to clarify whether a worker is or isn’t an independent contractor for purposes of the Fair Labor Standards Act (FLSA).  The proposed rule adds a new Part 795 to Title 29 of the Code of Federal Regulations, entitled “Employee or Independent Contractor Classification Under The Fair Labor Standards Act.”

Here is a summary of proposed new Part 795:

  • It contains the DOL’s general interpretations of the text governing individuals’ classification as employees or independent contractors under the FLSA. The DOL’s Wage and Hour Division “intends the interpretations to be used by employers, employees, and courts to understand employers’ obligations and employees’ rights under the [FLSA].”  To the extent that prior administrative rulings, interpretations, practices, or enforcement policies relating to classification as an employee or independent contractor under the FLSA are inconsistent or in conflict with Part 795, they are rescinded.
  • Part 795 may be relied upon as part of the “safe harbor” defenses to liability and liquidated damages under the FLSA (29 U.S.C. §§ 259, 260).
  • Independent contractors are not employees under the FLSA. As such, the FLSA does not obligate an employer to pay minimum wage or overtime to an independent contractor.
  • “Economic dependence” is the “ultimate inquiry” as to whether a worker is or is not an employee or an independent contractor. An “employee” under the FLSA is an individual whom an employer suffers, permits, or otherwise employs to work.   An employer “suffers or permits” an individual to work as an employee if, as a matter of economic reality, the individual is economically dependent on that employer for work.  By contrast, an individual is an independent contractor if he or she is, as a matter of economic reality, in business for himself or herself.
  • The following factors guide the determination of whether an individual is properly classified as an employee or independent contractor. The factors are not exhaustive, and no single factor is dispositive.  However, the two “core factors” are the most probative, and they are afforded greater weight in the analysis than any other factor.  Given the greater weight afforded each of these two “core factors,” if they both point towards the same classification, there is a substantial likelihood that is the accurate classification:
    • Core factors:
      • The nature and degree of the individual’s control over the work. This factor weighs towards the individual being an independent contractor to the extent the individual, as opposed to the putative employer, exercises substantial control over key aspects of the performance of the work, such as by setting his or her own schedule, by selecting his or her projects, and/or through the ability to work for others, which might include the putative employer’s competitors.  In contrast, this factor weighs in favor of the individual being an employee under the FLSA to the extent the putative employer, as opposed to the individual, exercises substantial control over key aspects of the performance of the work, such as by controlling the individual’s schedule or workload and/or by directly or indirectly requiring the individual to work exclusively for the putative employer.  Requiring the individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the FLSA.
      • The individual’s opportunity for profit or loss. This factor weighs towards the individual being an independent contractor to the extent the individual has an opportunity to earn profits or incur losses based on his or her exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work.  While the effects of the individual’s exercise of initiative and management of investment are both considered under this factor, the individual does not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor.  This factor weighs towards the individual being an employee to the extent the individual is unable to affect his or her earnings or is only able to do so by working more hours or more efficiently.
    • Other factors:
      • The amount of skill required for the work. This factor weighs in favor of the individual being an independent contractor to the extent the work at issue requires specialized training or skill that the putative employer does not provide.  This factor weighs in favor of the individual being an employee to the extent the work at issue requires no specialized training or skill and/or the individual is dependent upon the putative employer to equip him or her with any skills or training necessary to perform the job.
      • The degree of permanence of the working relationship between the individual and the putative employer. This factor weighs in favor of the individual being an independent contractor to the extent the work relationship is by design definite in duration or sporadic, which may include regularly occurring fixed periods of work, although the seasonal nature of work by itself would not necessarily indicate independent contractor classification.  This factor weighs in favor of the individual being an employee to the extent the work relationship is instead by design indefinite in duration or continuous.
      • Whether the work is part of an integrated unit of production. This factor weighs in favor of the individual being an employee to the extent his or her work is a component of the putative employer’s integrated production process for a good or service.  This factor weighs in favor of an individual being an independent contractor to the extent his or her work is segregable from the potential employer’s production process.  This factor is different from the concept of the importance or centrality of the individual’s work to the putative employer’s business.
    • In evaluating economic dependence, the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible. For example, an individual’s theoretical abilities to negotiate prices or to work for competing businesses are less meaningful if, as a practical matter, the individual is prevented from exercising such rights.  Likewise, a business’s contractual authority to supervise or discipline an individual may be of little relevance if in practice the business never exercises such authority.

The DOL’s proposed rule marks a sharp departure—both with respect to the factors themselves and to whether actual practice matters more than theoretical practice or reserved rights—from the approach some states have taken, particularly recently, in determining whether or not a worker is an employee or a contractor.  Businesses analyzing their relationships with workers and service providers must consider both federal and state law—as well as local law, where applicable—prior to determining a legally compliant strategy, as workers are generally entitled to the greatest of any applicable protections.  That said, in jurisdictions where federal law supplies the guiding principles, the DOL’s proposed rule streamlines and provides greater clarity to a classification issue that continues to be top of mind for many businesses.

Public comments on the proposed rule are due on October 26, 2020.

DOL Updates FFCRA Regulations in Light of Recent SDNY Decision

On September 11, 2020 the U.S. Department of Labor (“DOL”) issued revised Families First Coronavirus Response Act (“FFCRA”) regulations in response to a federal court decision striking down certain portions of its previous regulations.

The FFCRA is a federal law that requires certain employers to provide: (1) two weeks of paid sick leave to employees who are unable to work for any of six qualifying reasons related to COVID-19, and (2) up to twelve weeks of expanded family and medical leave – at least ten of which must be paid – to employees who need to care for a child whose school, place of care, or child care provider is closed or unavailable due to COVID-19 related reasons. On April 1, 2020 the DOL issued temporary FFCRA regulations. Subsequently, on August 3, 2020, in response to a lawsuit brought by the State of New York challenging the regulations, a Southern District of New York court ruled that four parts of the regulations were invalid – specifically, the: (1) exclusion from coverage of employees whose employers do not have work available for them (such as those on furlough or temporary layoff), (2) requirement for employer approval for intermittent leave, (3) definition of “health care provider” for purposes of an employer’s ability to exclude such employees from FFCRA coverage, and (4) notice and documentation requirements for taking leave.

Below is a summary of updated regulations on each of these topics.

The Work-Availability Requirement

The revised regulations reaffirmed the DOL’s prior position that leave may only be taken under the FFCRA if there is work available to the employee from which to take leave. In response to the district court’s finding that the requirement was invalid because the work-availability requirement was only explicitly applied to three of the six qualifying reasons for FFCRA leave, the revised regulations now apply the work-availability requirement to all six reasons for leave, which, according to the revised regulations, was the DOL’s intent all along.

The revised regulations also explain the DOL’s reasoning for imposing this requirement. As an initial matter, the FFCRA uses the words “because of” and “due to” in identifying the six covered reasons for which an employee may take leave, which the Supreme Court has interpreted in the context of other statutes to require “but-for” causation. Under a “but-for” causation standard, leave is not available if the need for leave occurred due to another, non-COVID-19-related reason. For example, if there is no work to perform because the employer closed the worksite or conducted layoffs, any COVID-19-related reason would not be a “but-for” cause of the employee’s inability to work. In such a case, the regulations reiterate that leave is not available.

Nevertheless, the DOL emphasizes in the revised regulations that the work-availability requirement does not permit an employer to avoid granting FFCRA leave by claiming or creating a lack of work for an employee (such as furloughing an employee in response to a request for FFCRA leave). This is because the FFCRA contains anti-retaliation provisions, which prohibit employers from discharging, disciplining, or discriminating against employees for taking leave. Therefore, employers are prohibited from making work unavailable in an effort to deny FFCRA leave.

The Employer-Approval Requirement for Intermittent Leave

The revised regulations also reaffirm the DOL’s prior position that employer approval is required to take leave intermittently. The text of the FFCRA statute is silent with respect to intermittent leave, and the DOL thus exercised its rulemaking authority to address the issue by permitting intermittent leave in two situations:

  1. Where an employee is working in-person in the workplace, only when taking leave to care for a child whose school, place of care, or child care provider is closed or unavailable due to COVID-19 (as allowing intermittent leave for other reasons – for example, because the employee is under a COVID-19-related quarantine or isolation order – would be incompatible with Congress’s goal of slowing the spread of COVID-19); and
  2. When an employee is teleworking, for any of the six covered reasons for leave.

In either situation, the initial regulations stated that intermittent leave could only be taken if approved by the employer. The district court invalidated the employer-approval requirement on the basis that the DOL did not adequately explain its reasoning for imposing it. In response, the revised regulations explain the basis for the employer-approval requirement by stating that the employer-approval requirement is necessary to “balance[] the employee’s need for leave with the employer’s interest in avoiding disruptions.” The revised regulations also explain that requiring employer approval for intermittent FFCRA leave is consistent with its approach to intermittent leave under the Family and Medical Leave Act (“FMLA”).

Despite holding its ground on the employer-approval requirement, the DOL’s revised regulations go on to clarify what constitutes intermittent leave for purposes of a school closure, stating that “hybrid-attendance” situations constitute individual, separate FFCRA-qualifying events. As such, for example, if an employee requires leave every other week, only on certain days of the week, or only for a certain number of hours each day during the times when the employee’s child is not physically present in school, a new qualifying reason arises each time the school closes and, therefore, leave is not considered “intermittent” and employer approval is not required. On the other hand, if an employee whose child’s school is fully closed/remote learning only requests to take FFCRA leave for only certain periods of time, that would be a request for intermittent leave, requiring employer approval. Additional information about back-to-school and leave under the FFCRA is available on our blog here.

The Definition of “Health Care Provider”

The FFCRA excludes “health care providers” from eligibility for FFCRA leave. The revised regulations narrow the definition of “health care provider,” thereby expanding the number of employees who may be eligible for FFCRA leave.

The definition of “health care providers” included in the initial regulations was held invalid by the district court due to concerns that the definition was overly broad and prevented too many employees from using FFCRA leave. For example, under the original definition, many employees were excluded from coverage if they were employed at a hospital, medical school, or another place where medical services are provided, even if they were not in a role of providing patient care.

Under the revised regulations, it “is not enough that an employee works for an entity that provides health care services.” Instead, the revised regulations adopt a narrower definition of “health care provider,” which includes:

  1. Employees who are “health care providers” under the FMLA – such as medical doctors, dentists, nurse practitioners, social workers, and physician assistants, among others; and
  2. Employees who are “employed to provide diagnostic services, preventative services, treatment services, or other services that are integrated with and necessary to the provision of patient care” – such as nurse assistants, medical technicians, and laboratory technicians, among others.

However, employees such as IT professionals, building maintenance staff, human resources personnel, cooks, food service workers, records managers, consultants, and billers do not fall under the “health care provider” exclusion and therefore may now be eligible for FFCRA leave.

The Notice and Documentation Requirements

Finally, the regulations have been revised to require that employees provide notice of the need for FFCRA leave as soon as practicable, rather than prior to taking leave, as was required under the prior regulations.

The FFCRA statute permits employers to require that employees provide notice: (1) after the first workday of leave (for paid sick leave), or (2) as soon as practicable, when the necessity for such leave is foreseeable (for expanded family and medical leave). The DOL’s initial regulations listed the documentation that must be provided in order to take leave and stated that such documentation must be provided “prior to” taking leave. The district court held that this timing requirement – that notice be provided “prior to” taking leave – is inconsistent with the statutory text of the FFCRA.

The revised regulations do not modify the statute’s notice requirements noted above. However, they do clarify that documentation need not be provided “prior to” taking leave, but rather may be provided as soon as practicable, which, the revised regulations note, will in most cases be at the same time as an employee requests leave but which may not necessarily always occur before leave begins.

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Due to the “time-limited nature of the FFCRA leave benefits, the urgency of the COVID-19 pandemic and the associated need for FFCRA leave, and the pressing need for clarity in light of the [court decision],” the revised regulations take effect on September 16, 2020. Therefore, employers should immediately ensure that their policies and practices are up to date and consistent with the above.

Our team is closely monitoring the DOL’s FFCRA guidance and regulations and will continue to provide updates as they become available.

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.

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