Law and the Workplace

Mandatory Severance Pay for Mass Layoffs Looms in New Jersey

The New Jersey Senate has passed a bill that would amend the New Jersey Millville Dallas Airmotive Plant Loss Job Notification Act, more commonly referred to as the “NJ WARN Act,” to require severance payments and increase notification requirements for employees impacted by certain mass layoffs, transfers or terminations of operations.

Currently under the NJ WARN Act, employers with 100 or more full-time employees must provide 60 days’ notice to affected full-time employees in the event of a mass layoff or transfer or termination of operations. A mass layoff is defined as a reduction in force, during a 30-day period, that results in the termination of 500 or more full-time employees or the termination of 50 or more full-time employees representing at least one-third of an employer’s total workforce. Under the current law, employers are only required to make severance payments to affected employees if they fail to provide such employees with the required amount of notice of termination or layoff.

The pending bill, if enacted, would:

  • revise the definition of a “mass layoff” to mean a reduction in force, during a 30-day period, that results in the termination of 50 or more employees, regardless of full-time or part-time classification, at or reporting to an “establishment” (as defined in the bill);
  • require employers with 100 or more employees (regardless of full-time or part-time status) to provide at least 90 days’ notice to impacted employees before a mass layoff, transfer of operations to another location, or shutdown of an establishment;
  • require employers to pay severance of one week’s wages for every year of an impacted employee’s service in the event of a mass layoff or shutdown/transfer resulting in the termination of 50 or more employees in an establishment during any 30-day period, regardless of whether or not appropriate notice is provided to affected employees;
  • require employers who fail to satisfy the 90-day notice requirement to pay an additional four weeks of severance to affected employees; and
  • expand the definition of “establishment” to include either a single location or a group of all of an employer’s locations in New Jersey (currently, the NJ WARN Act defines an establishment as a single location or a group of contiguous locations which form an office or industrial park, or separate buildings across the street from each other).

Covered employees subject to a collective bargaining agreement or other severance plan or policy would be eligible for the statutory severance described above or any severance pay provided pursuant to the CBA or severance plan/policy, whichever is greater. Employees would not be permitted to waive the statutory right to severance except with the approval of a court or the Commissioner of Labor and Workforce Development.

In another notable change, the bill would broadly define an employer to include “any individual, partnership, association, corporation, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, and includes any person who, directly or indirectly, owns and operates the nominal employer, or owns a corporate subsidiary that, directly or indirectly, owns and operates the nominal employer or makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.” Accordingly, the law, if enacted, would impose liability on individuals acting in the interest of an employer, including individuals who own the employing entity or are responsible for the decision to effectuate the layoff.

The bill passed the state Senate with a vote of 27-13 on December 16, 2019 and a nearly identical bill awaits a state Assembly floor vote. We will continue to monitor and report on further developments regarding this bill.

New York State Department of Labor Publishes Guidance on Salary History Inquiry Law

The New York State Department of Labor (NYSDOL) has published guidance on the state’s salary history inquiry law, which went into effect on January 6, 2020.

As we previously reported, the law prohibits employers from:

  • Relying on the wage or salary history of an applicant in determining whether to offer employment to such individual or in determining the wages or salary for such individual;
  • Orally or in writing, seeking, requesting, or requiring the wage or salary history from an applicant or current employee as a condition of being interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion;
  • Orally or in writing, seeking, requesting, or requiring the wage or salary history of an applicant or current employee from a current or former employer, current or former employee, or agent of the applicant or current employee’s current or former employer;
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current employee based on prior wage or salary history;
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current employee because the individual did not provide wage or salary history in accordance with the law; or
  • Refusing to interview, hire, promote, otherwise employ, or otherwise retaliating against an applicant or current or former employee because the individual filed a complaint with the State’s department of labor alleging a violation of the law.

The guidance addresses and clarifies a number of details about the new law. Below are some of the key takeaways.

Prohibited Employer Practices

Under the law, applicants and employees are permitted to voluntarily disclose their pay history, including for the purpose of negotiating compensation. The guidance clarifies that if “an applicant voluntarily and without prompting discloses salary history information, the prospective employer may factor in that voluntarily disclosed information in determining the salary for that position.” However, employers may not rely on voluntarily disclosed salary history information “to justify a pay difference between employees of different or various protected classes who are performing substantially similar work,” because such reliance would violate the state’s Equal Pay Act.

In addition, employers may not pose “optional” salary history questions on a job application seeking a voluntary response. In fact, the guidance suggests that employers may consider proactively stating in job postings that it does not collect salary history information from applicants. Employers in New York City should also be mindful of the existing prohibition under the City’s salary history inquiry law from using applications with boilerplate salary history questions, even when the application includes a disclaimer that individuals applying for jobs in the City need not answer the question.

Coverage for Current Employees and Independent Contractors

The guidance makes clear that unlike other salary history bans (including the New York City law), the state law applies to current employees. Therefore, while employers cannot ask about pay from other jobs, they “may consider information already in their possession for existing employees (i.e. a current employee’s current salary or benefits being paid by that employer).” Employers in New York City should, of course, follow the state law with respect to current employees as this law is more protective than its City counterpart.

The guidance also clarifies that applicants (including part-time, seasonal and temporary workers, regardless of immigration status) are covered by the law; however, “bona fide independent contractors, freelance workers or other contract workers” are not covered “unless they work through an employment agency.” As we previously reported, the New York City Human Rights Law has recently been amended to expand protections under the law to freelancers and independent contractors. While the NYCHRL also contains prohibitions and limitations on employers’ ability to inquire or obtain salary history information about applicants, it remains to be seen whether and how such restrictions may be applied to independent contractors.

Forms of Covered Compensation

The guidance provides very little detail about which forms of compensation are covered by the law; it states broadly that employers cannot ask about “any information concerning an applicant’s salary history,” including “compensation and benefits.” On the other hand, the New York City law explicitly allows employers to ask candidates about deferred compensation or unvested equity than an applicant would have to forego in accepting a new job, and the NYC Commission on Human Rights’ guidance similarly allows employers to ask for the value of any counteroffers. Absent further guidance from the State to the contrary, inquiries about deferred compensation and unvested equity do not appear to be permitted under the state law.

Geographic Scope

The guidance clarifies that the law applies to jobs that are based in New York, regardless of whether the employer is based within or outside of the state, and even if the interview process takes place virtually, by telephone, or in another state.

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We will continue to report on updates regarding this law and any further guidance issued by the NYSDOL. In the meantime, employers in New York should review their job applications and hiring processes to ensure compliance with these new requirements.

New York City Extends Human Rights Law Protections and Training Requirements to Freelancers and Independent Contractors

NYC Commission on Human Rights

Effective January 11, 2020, the New York City Human Rights Law (“NYCHRL”) has been amended to expand protections under the law to freelancers and independent contractors.  Significantly, this includes the requirement that certain contractors now complete annual sexual harassment prevention training in the same manner as covered employees.  Contractors also are now eligible for reasonable accommodations under the law.  The amendments also clarify how the four-employee threshold for coverage under the NYCHRL is calculated.

Expanded Protections and Training Requirements

The new law amends Section 8-107(23) of the NYCHRL to state that “[t]he protections of this chapter relating to employees apply to interns, freelancers and independent contractors.”  (The law previously expanded provisions of the NYCHRL to interns by amendment in 2014.)  Thus, freelancers and independent contractors now have the same protections against discrimination, harassment and retaliation under the NYCHRL as employees, including, presumptively, the same right to seek recourse by filing claims with NYC Commission on Human Rights (the “Commission”) or bringing suit in court.

The Commission has issued guidance interpreting this expansion of protections to include the requirement that independent contractors and freelancers who work for an employer with 15 or more workers (including employees, interns, and contractors) and who work: (a) more than 80 hours in a calendar year, and (b) for at least 90 days (which do not need to be consecutive) must complete the annual sexual harassment prevention training already required of employees and interns under the NYCHRL.  Contractors who do not meet this 80 hour/90 day threshold do not need to be trained.  Previously, the Commission recommended such training for independent contractors, but did not require it.

The guidance states that “[i]ndividuals who must be trained do not need to take the training at each workplace where they work over the course of a year,” and “[i]ndependent contractors and freelancers may provide proof of completion of one sexual harassment prevention training to multiple workplaces and need not repeat the training at multiple workplaces.”

The guidance further states that contractors and freelancers now have the right to request and receive reasonable accommodations for needs related to disability, pregnancy, lactation, religious observances, and status as victims of domestic violence, sexual offenses, or stalking in the same manner as such accommodations are available to employees.

Changes to Determining Coverage Under the NYCHRL

The new law further amends the definition of a covered “employer” under the NYCHRL to provide that it does not include any employer “that has fewer than four persons in the employ of such employer at all times during the period beginning twelve months before the start of an unlawful discriminatory practice and continuing through the end of such unlawful discriminatory practice.”  Previously, the law did not clearly specify the period over which employee numbers should be considered in determining whether the four employee threshold had been met.

The amendments also now provide that the parent, spouse, domestic partner, or child of an employer who is employed by that employer must be counted in determining coverage.  Additionally, independent contractors working “in furtherance of an employer’s business enterprise” must also be included in the count for that employer, regardless of whether such contractors are themselves employers (previously, contractors with their own employees were not included in the determination of coverage).  It is noted that the four employee threshold does not apply, and employers of all sizes are covered by, the NYCHRL’s gender-based harassment provisions.

Impact of the Amendments on Employers

In addition to broadening sexual harassment training and reasonable accommodation obligations, these amendments will expand potential liability for employers faced with discrimination, harassment, or retaliation claims.

It is noted that, as of October 11, 2019, the New York State Human Rights Law (“State HRL”) expanded its protections against discrimination to contractors, subcontractors, vendors, consultants, or other persons providing services pursuant to a contract.  And, effective February 8, 2020, all employers within the state of New York will be covered by the state HRL, regardless of size (presently, the State HRL only applies to employers with four or more employees, except with regard to provisions regarding sexual harassment, which apply to employers of all sizes).

While the recently enacted City protections for contractors and freelancers are similar to those that have already been enacted at the State level, the NYCHRL amendments may nevertheless be significant for NYC employers because, in addition to the new training and reasonable accommodation requirements, the City law is distinct from the State law in the following ways:

  • While both the state HRL and the NYCHRL prohibit discrimination and harassment on the basis on several protected categories, the NYCHRL includes additional categories that are not covered under state law, including caregiver status and unemployment status.
  • The NYCHRL includes the NYC Fair Chance Act, which, among other things, prohibits inquiries into the criminal history of job applicants until after a conditional offer of employment has been made. It also sets forth strict limitations on the use of credit checks in the hiring process.
  • The NYCHRL also contains prohibitions and limitations on employers’ ability to inquire into or obtain salary history information about applicants. While New York state has also recently enacted a law regarding salary history inquiries, the state law makes clear that it does not apply to independent contractors or freelancers unless such individuals work through an employment agency.

It is unclear whether the Commission will issue further guidance on the scope of protections under the recent amendments, but we will continue to monitor and report on any further developments.

In the meantime, NYC employers who utilize independent contractors or freelancers should review and update their existing policies where necessary and ensure relevant personnel are trained on these new requirements.  Employers with 15 or more workers should also take steps to ensure that freelancers and independent contractors who meet the 80 hour/90 day threshold discussed above are provided with annual sexual harassment training as required under NYC law.

[Podcast]: Reductions in Force

In this episode of The Proskauer Brief, partners Harris Mufson and Evandro Gigante discuss considerations and best practices associated with reductions in force.  Companies that make a business decision to reduce its staffing should consider what goals they are looking to achieve. Is it cost reduction or a consolidation of positions?  Or is it to weed out lower performing employees?  These considerations will tend to inform whether the employer decides to do a voluntary reduction in force or involuntary reduction in force.  Tune as we discuss practical tips for employers considering a RIF.

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The Employment Law Landscape in 2020

2019 was a busy year for lawmakers across the nation, underscoring the need for employers to remain apprised of all the new laws that will be taking effect in 2020. Below we summarize some of the significant developments employers should be on the lookout for in the new year.

Sexual Harassment and Discrimination Laws

On August 12, 2019, Governor Andrew Cuomo of New York signed into law a bill that, as previously reported, significantly strengthened and expanded workplace anti-discrimination protections in New York State. For additional information regarding the developments already in effect, refer to our previous posts.

In terms of changes still to come, contracts and other agreements entered into on or after January 1, 2020, that prevent the disclosure of information relating to any future claim of discrimination on the basis of any protected characteristic will be unenforceable, unless the provision notifies the individual that it does not prohibit them from speaking with law enforcement, the Equal Employment Opportunity Commission, the New York State Division of Human Rights (“NYSDHR”), a local commission on human rights, or an attorney retained by the individual.   Likewise, effective February 8, 2020, the New York State Human Rights Law will be expanded to include all employers in the state, regardless of size. And, effective August 12, 2020, the statute of limitations for reporting claims of sexual harassment to the NYSDHR will be extended from one to three years.

California Governor Gavin Newsom signed AB 9 into law on October 10, 2019. The law, effective January 1, 2020, will extend the statute of limitations period for employees to file claims of discrimination, harassment, and/or retaliation with the California Department of Fair Employment and Housing (“DFEH”) from one to three years. After receiving a right-to-sue letter from the DFEH, employees will then have one more year to file a civil action in court.

On August 30, 2019, California enacted SB 778. The bill, effective immediately, has extended the time for employers with five or more employees to provide sexual harassment prevention training from January 1, 2020, to January 1, 2021. Covered employers are required to provide two hours of training to supervisory employees and at least one hour of training to all nonsupervisory employees in the state. In addition to training employees by January 1, 2021, employers are required to repeat the training every two years. The training must include, among other things, information regarding federal and state statutory provisions prohibiting sexual harassment and the remedies for such conduct, practical examples aimed at instructing supervisors in the prevention of harassment, and must be inclusive of harassment based on gender identity, gender expression, and sexual orientation. For additional information on California’s recent legislative activity, please refer to our previous post.

As we previously reported, Connecticut recently expanded employer obligations relating to sexual harassment training and notice requirements. Connecticut employers with three or more employees are now required to provide sexual harassment training to all employees by October 1, 2020. Previously, the law only required employers to provide such training to supervisory employees. The Act also requires employers with at least three employers to post a notice regarding “the illegality of sexual harassment and remedies available to victims of harassment” in a prominent and accessible place.”

Effective October 1, 2020, Oregon’s Workplace Protection Act will prohibit employers from entering into agreements with employees or applicants that contain a nondisclosure provision, non-disparagement provision, or any other provision that has the “purpose or effect of preventing the employee from disclosing or discussing conduct” related to discrimination and harassment on the basis of any protected category under state law, unless it is the complainant’s preference to have such provisions and the complainant is provided at least 7 days to revoke the agreement after signing. For additional information, refer to our original post.

Arbitration Agreements

In October 2019, California enacted AB 51 which prohibits employers from requiring applicants and employees to sign arbitration agreements. As enacted, the prohibition will only apply to arbitration agreements entered into on or after January 1, 2020. Although the statute expressly states that it does not intend to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (“FAA”), it has already been challenged on grounds of FAA preemption. A similar prohibition passed in New York was successfully challenged on grounds of FAA preemption earlier this year. For additional information, refer to our earlier posts.

Paid Leave Laws

In Nevada, SB 312, which will become effective on January 1, 2020, requires private employers with 50 or more employees in the state to provide certain employees working in the state with up to 40 hours of paid leave per year, to be used for any purpose, including non-medical, personal reasons. Temporary, seasonal, and on-call employees are exempt from coverage under the law. For additional information about the new law, refer to our earlier posts.

As we previously reported, effective January 1, 2020, employers in Duluth, Minnesota with at least five employees nationwide will be required to provide eligible employees with paid leave for their own medical needs, those of a family member, or other covered reasons. The City has issued its final rules and revised its FAQs to provide additional guidance on the Ordinance. Under the Ordinance, eligible employees will accrue one hour of paid sick leave for every 50 hours worked, up to a maximum of 64 hours. Employers may limit paid sick leave usage to 40 hours per year and can elect to frontload at least 40 hours of paid sick leave each year.

Employees in Washington D.C. will become eligible for paid leave benefits under the Universal Paid Leave Amendment Act beginning July 1, 2020. Employees in D.C. will be able to access up to eight weeks of paid leave to bond with a new child, up to six weeks of paid leave to care for a covered family member with a serious health condition, and up to two weeks of paid medical leave to care for the employee’s own serious health condition. For additional information, refer to our earlier posts.

And, finally, Maine was the first state to pass a law requiring employers to provide paid leave for any reason. The Act Authorizing Earned Employee Leave will go into effect on January 1, 2021, and it will require employers with more than 10 employees to provide employees with up to 40 hours of paid personal leave per calendar year. Under the Act, employees will accrue one hour of paid leave for every 40 hours worked. For additional information about the Act, refer to our original post.

Artificial Intelligence and Data Privacy

On August 9, 2019, the Artificial Intelligence Video Interview Act was signed into law in Illinois. The Act requires employers that use videotaped interviews to: (i) notify applicants that their video interviews may be analyzed by AI; (ii) provide applicants information regarding how AI works and what characteristics it will use to evaluate them; and (iii) receive written or oral consent to being evaluated by such AI. Under the Act, employers may only share applicants’ videos with individuals who have the requisite expertise or technological skill to evaluate an applicant’s fitness for a position. Additionally, applicants have the right to request that their videotaped interview—along with any copies of the video—be destroyed within 30 days of the receipt of such request.

New York State recently enacted the Stop Hacks and Improve Electronic Data Security Act (the “SHIELD Act”). The Act imposes new requirements concerning breaches of private information and also imposes additional substantive data security requirements on business that own or lease the private information of New York residents. While the Act’s breach notification provisions took effect on October 23, 2019, its new data security requirements will take effect on March 21, 2020.  For additional information, refer to our Client Alert, available here.

Recreational Marijuana and Pre-Employment Drug Testing

As we previously reported, effective May 10, 2020, New York City’s Fair Chance Act will be amended to prohibit employers from requiring applicants to submit to testing for the presence of marijuana as a condition of employment. The law, however, contains exceptions for those who apply to work in areas involving public safety, such as law enforcement personnel and construction workers.

Nevada followed suit with AB 132, which prohibits Nevada employers from refusing to hire a prospective employee on the basis of a pre-employment drug test that indicated the presence of marijuana. That law, effective January 1, 2020, also provides that where an employee is required to submit to a drug test within the first 30 days of employment, the employee has the right to take another test, at their own expense, to “rebut the results of the initial screening test.” Firefighters, emergency medical technicians, and other employees whose positions could affect the safety of others are exempted from the law.

Illinois became the eleventh state to legalize recreational use of marijuana when Governor Pritzker signed the Cannabis Regulation and Tax Act (“CRTA”), which takes effect on January 1, 2020. Under the CRTA, employers will retain the right to adopt and enforce zero tolerance or drug-free workplace policies. In addition, employers may consider an employee “to be impaired or under the influence of cannabis if the employer has a good faith belief that an employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance.” It should be noted, however, that under the Illinois Right to Privacy in the Workplace Act, employers are prohibited from discriminating against an employee because of their use of a “lawful product” outside the workplace. Effective January 1, 2020, marijuana will be considered a lawful product for purposes of the Act. Additionally, employees must be provided a “reasonable opportunity to contest” the basis of an employer’s “good faith belief” of their impairment due to marijuana. For additional information, refer to our original post.

Salary History Inquiries

Effective January 6, 2020, employers in New York State will be prohibited from relying on the wage or salary history of an applicant in determining whether to make an offer of employment or in determining wages. Additionally, employers will be prohibited from seeking an applicant or current employee’s salary or wage history from the applicant, current employee, or their current or former employer. For additional information on the new law’s requirements, please refer to our previous post.

New Jersey also enacted its own salary history inquiry ban. Effective January 1, 2020, it will be an unlawful employment practice for an employer to: (1) screen a job applicant based on the applicant’s salary history, including, but not limited to, the applicant’s prior wages, salaries or benefits; or (2) to require that the applicant’s salary history satisfy any minimum or maximum criteria. An employer may, however, consider salary history in determining salary, benefits, and other compensation for an applicant and may verify the applicant’s salary history where the applicant “voluntarily, without employer prompting or coercion” provides the employer such information. For additional information regarding these new requirements, please refer to our original post.

Effective March 13, 2020, employers in Cincinnati with 15 or more employees located within the City will be prohibited from inquiring about or relying on an applicant’s prior salary history in determining starting salary. The Prohibited Salary History Inquiry and Use Ordinance prohibits employers from: (i) inquiring about an applicant’s salary history or requesting reports or other information to determine or verify salary history; (ii) screening job applicants based on their current or prior compensation or salary history; (iii) relying on salary history in negotiating an employment contract, determining salary or compensation, and deciding to offer employment; or (iv) refusing to hire, retaliating, or disfavoring an applicant who chooses not to disclose their salary history. For additional information on the new law, please refer to our previous post.

Likewise, many municipalities have enacted their own bans on salary history inquiries, including Kansas City, Missouri, and Toledo, Ohio.

Supreme Court Docket

The Supreme Court is also poised to decide a very important issue for employers.  On April 22, 2019, the U.S. Supreme Court granted certiorari in three separate cases that raised the question of whether Title VII’s prohibition of harassment on the basis of sex extends to discrimination on the basis of sexual orientation or gender identity. Having heard oral arguments on October 8, 2019, the Supreme Court is expected to rule on this issue in 2020.

The Supreme Court is also expected to hear arguments in a pair of cases that will decide the scope of the ministerial exception to claims of discrimination under federal law.  The ministerial exception exempts religious employers from certain discrimination claims on the grounds that courts should not second guess these employers’ decisions as to who ministers their faith.

Given the legal requirements set to go into effect this coming year, employers should review their workplace policies and practices to ensure that they are prepared to comply. As always, Proskauer attorneys are available to advise on these new developments.

New Jersey Becomes the Third State to Prohibit Hairstyle Discrimination

New Jersey Governor Phil Murphy signed into law the Create a Respectful and Open Workspace for Natural Hair (“CROWN”) Act, which prohibits employers from discriminating against applicants or employees based upon hairstyle.

Effective immediately, the CROWN Act amends the New Jersey Law Against Discrimination to define “race” as inclusive of “traits historically associated with race” such as hair texture and protective hairstyles. The Act expressly defines “protective hairstyles” as including but not limited to braids, locks, and twists. The Act is applicable not only to employers, but also to housing and public accommodations.

New Jersey is now the third state to enact legislation addressing racial discrimination on the basis of hairstyle. As we previously reported, California and New York have also enacted laws to prohibit discrimination on the basis of hairstyle and appearance, while other jurisdictions (including Massachusetts, Michigan and the cities of Cincinnati and Toledo, Ohio) have passed or are considering similar legislation. Therefore, while employers in New Jersey should review their current appearance and grooming policies to ensure compliance with the new law, employers nationwide may also want to consider reviewing their current policies and practices as well.