- Employment Update
- New York City to Ban Employers from Inquiring about a Job Applicant’s Salary History
- Nationwide Injunction Blocks DOL Overtime Regulations from Taking Effect December 1, 2016
- Election Day Reminder for New York Employers: Your Employees May Be Entitled to Time off to Vote
- DOL Releases Final Rule Amending Overtime Regulations
- Corporate Alert
- Delaware Court of Chancery Clarifies Indemnification and Advancement Rights for Current and Former Directors and Officers
- Second Circuit’s Application of the Supreme Court’s Liability Standard for Statements of Opinion
- ERISA Alert
- IRS Allows Mid-Year Changes to Section 401(K) Safe Harbor Plans
- Employment Alert
- New York City’s Affordable Transit Act Went Into Effect January 1, 2016
- New York City Council Passes Bill Banning Discrimination Based On Caregiver Status
- New York Increases Minimum Wage—No Change To New Jersey’s Minimum Wage For 2016
- New Jersey
The New York City Council has passed legislation that would prohibit employers from making inquiries regarding the salary history of job applicants, and from relying upon job applicants’ wage history during the hiring process. The bill is scheduled to become effective in October 2017, 180 days after Mayor Bill de Blasio signed it into law.
What is Prohibited?
The bill, which applies to New York City employers with four or more employees, amends the New York City Human Rights Law to make it an “unlawful discriminatory practice” to:
- Make any inquiries about an applicants’ salary history; or
- Rely on an applicants’ salary history in determining the salary, benefits, or other compensation for that applicant during the application process.
The bill defines “inquiries” broadly and prohibits not only questions or statements made directly to job applicants, but also questions or statements made to any job applicants’ current or prior employer, and any searches of publicly available records for the purpose of obtaining information about salary history. It does not, however, include statements made to an applicant concerning a position’s proposed salary range.“Salary history” is defined to include an applicants’ current or prior wage, benefits or other compensation.
What is Permitted?
Employers are permitted to consider and verify salary information for the purpose of formulating salary, benefits and compensation where prospective employees voluntarily and without prompting disclose their salary history.Employers may also, without inquiring about salary history, engage in discussions with an applicant about his or her salary expectations.The bill does not bar employers from verifying an applicants’ background information; however, if the employer inadvertently learns about an applicants’ salary history during this process, the employer may not rely upon such information for determining compensation during the hiring process.
The bill does not extend to applicants for internal transfer or promotion with their current employer, or public employees whose salaries, benefits or other compensation are determined by collective bargaining agreements. Moreover, the law would not apply where federal, state, or local law specifically authorizes disclosure or verification of salary history or “specifically requires knowledge of salary history to determine an employee’s compensation.”
Four Proactive Steps Employers Can Take:
New York City employers should take the following steps to ensure that they are in compliance once the law takes effect:
- Review their policies and practices to ensure compliance with the new legislation.
- Train human resources personnel, and anyone involved in interviewing candidates, on the new law and the prohibition about asking job applicants about their salary history.
- Review their job application and background check forms to ensure that they do not include requests for salary history information, and make any necessary revisions.
- Document any instances where an applicant voluntarily discloses salary history.
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- Accurate Recordkeeping is Key: If the regulations are later upheld, they may be enforced retroactively, in which case employers could be liable for overtime payments to employees who were classified as exempt under the current regulations, but who are not exempt under the revised regulations. In the event of litigation attempting retroactive enforcement of the overtime rule, it will be difficult for employers to defend against claims if they do not have accurate records of the hours worked by employees. Accordingly, we recommend that employers who decide to hold off on complying with the revised regulations keep accurate records of the hours worked by any employee who is now considered exempt, but could be considered non-exempt under the revised regulations.
- State White Collar Thresholds Still in Effect: For now, employers are only required to abide by the minimum salary requirement established by the current FLSA regulations of $455 per week ($23,660 annually), however employers must also consider applicable state law that may set “white collar” salary thresholds higher than $455 per week. For example, the current salary threshold for the administrative and executive exemptions in New York is currently $675 per week ($35,100 annually).
Special thanks to Daniella M. Muller, Senior Attorney in the Employment Practice Group, for her assistance preparing this alert.
Election Day Reminder for New York Employers: Your Employees May Be Entitled to Time off to Vote
New York law requires employers to provide their employees with two (2) hours of paid time off to vote as follows:
- New York employers must allow employees to take up to two (2) hours of paid time off, at the beginning or end of their shift, to vote if they do not have sufficient time outside of their work hours to vote. “Sufficient time” is defined as four (4) consecutive hours either between the opening of the polls and the beginning of an employee’s shift or between the end of an employee’s shift and the closing of the polls.
- Employees must notify employers of the need for time off not more than 10 days and not less than two days before Election Day.
- New York employers are required to post a notice setting forth these rights at least 10 days prior to every election, in accordance with the New York State Election Law. New York employers should post the notice in a conspicuous place immediately, if they have not already done so. Such notice can be removed after the polls close on Election Day.
For more information on this issue or other employment matters, please contact:
© 2016 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.
The Department of Labor has released its highly anticipated final rule on overtime regulations under the Fair Labor Standards Act’s (“FLSA”) white collar exemptions. The new regulation will take effect December 1, 2016, giving employers approximately 200 days to prepare for compliance with the new regulations.
Key Provisions of the New Rule:
- The Minimum Salary Threshold is More than Doubled. Under the new rule, the minimum salary threshold for exempt status is increased from $455 a week to $913 a week ($47,476 per year).
- Increase to the Salary Threshold for the “Highly Compensated” Exemption. The minimum salary threshold for the “highly compensated” exemption is increased from $100,000 to $134,004 per year.
- Nondiscretionary Bonuses and Other Incentive Payments can Meet Up to % 10 of the Salary Threshold. Employers can count nondiscretionary bonuses and other incentive payments, including commissions, paid on at least a quarterly basis, for up to 10% of the salary threshold. If an employee does not earn enough of a nondiscretionary bonus or incentive payment in a given quarter to meet the threshold salary level, an employer may make a “catch-up” payment no later than the next pay period after the end of the quarter. Any such “catch-up” payment counts only toward the prior quarter’s salary.
The new rule also provides for automatic increases in the salary levels every three years (beginning January 1, 2020).
Importantly, the new rule does not make any changes to the “duties test” for executive, administrative, or professional employees that determines whether an employee who is earning more than the salary threshold is eligible for overtime.
What This Means To You
The new rule will have a significant impact, especially with respect to entry level managerial and professional positions. Employers should take the following steps to ensure they are in compliance with the new rule by December 1, 2016:
- Conduct an internal audit of exempt employees to determine whether employees who are currently classified as “exempt” will still qualify for the exemption under the new rule.
- Consider options for compliance with the new rule, including reclassification of formerly “exempt” employees as “non-exempt” or salary increases to bring exempt employees above the new threshold.
- Consult with legal, accounting and payroll professionals to ensure compliance with the new rule and to develop a plan for implementing changes and communicating with impacted employees.
- Review and update existing employment policies and procedures to make sure they accurately reflect changes to employee classification.
Special thanks to Daniella M. Muller, Senior Attorney in the Employment Practices Group, for her assistance preparing this alert.
For more information on this issue or other employment matters, please contact:
© 2016 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for informational purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.
Delaware Court of Chancery Clarifies Indemnification and Advancement Rights for Current and Former Directors and Officers
The Delaware Chancery Court ruled that transactions between a corporation and an entity affiliated with a controlling stockholder will be reviewed under the heightened entire fairness standard in the absence of certain procedural safeguards being implemented. Read more >>
Second Circuit’s Application of the Supreme Court’s Liability Standard for Statements of Opinion
The U.S. Court of Appeals for the Second Court in In re Sanofi Securities Litigation, AG Funds, L.P. v. Sanofi, applied the Supreme Court’s new standard for determining whether a statement of opinion is “materially misleading” and actionable under Federal securities laws.Read more >>
Delaware Court Finds 26% Equity Owner to Be “Controller” Due to Affiliations with Board Members
The Delaware Court of Chancery found in Calesa v. American Capital that it was reasonably conceivable that American Capital, Ltd. and its affiliates, a 26% stockholder in Halt, Inc. at the time of the transaction at issue, was a controller of Halt. Read more >>
For more information on the issues in this Alert, or corporate matters generally, please contact:
IRS Allows Mid-Year Changes to Section 401(K) Safe Harbor Plans
On January 29, 2016, the Internal Revenue Service issued Notice 2016-16 (the “Notice”) which provides guidance on mid-year changes to safe harbor plans under Section 401(k) of the Internal Revenue Code.
How Does This Guidance Affect Plan Sponsors?
1. Mid-year changes now permitted: Plan sponsors with safe harbor 401(k) plans now have the opportunity to make adjustments to their plans during the course of the year as circumstances warrant without having to wait until the next year.
2. A safe harbor plan may now be the appropriate choice: By eliminating the uncertainty about the ability to make mid-year changes, plan sponsors who were reluctant to adopt safe harbor plans because they wanted to retain flexibility to make mid-year changes to their plans should revisit whether a safe harbor plan design may now be appropriate.
Safe Harbor Plans and Notices
In order to avoid performing the costly and time-consuming nondiscrimination tests required for a 401(k) plan to remain qualified, many plan sponsors design their 401(k) plans to satisfy the safe harbor rules under the Code. Under these rules, the 401(k) plan could provide:
i. a non-elective contribution to non-highly compensated employees of at least 3% of compensation,
ii. a matching contribution equal to 100% of an employee’s contribution up to 3% of compensation, and
iii. 50% of an employee’s contribution in excess of 3% of compensation up to 5% of compensation, or
iv. a qualified automatic contribution arrangement which requires employees to opt out of making specified levels of contributions.
With limited exceptions, the safe harbor rules must be adopted before the beginning of a plan year and continue for an entire 12-month period. Employees must also be provided notice within a reasonable period before the beginning of the plan year about the rights and obligations of the safe harbor arrangement (a “Safe Harbor Notice”).
Under the Notice, routine changes in the Plan or the Safe Harbor Notice are permitted without violating the Code and the safe harbor rules. For example, under the Notice it would be possible to increase future safe harbor contributions or change the plan’s default investment fund mid-year. In making a mid-year change, within a reasonable period before the effective date of the change, employees must be provided with an updated Safe Harbor Notice. Whether the timing of the updated Safe Harbor Notice is reasonable is based on all of the relevant facts and circumstances. However, it is deemed satisfied if it is distributed at least 30 days but not more than 90 days before the effective date of the change. In addition, each employee must be given a reasonable opportunity to change the employee’s contribution election before the effective date of the change.
Prohibited Mid-Year Changes:
The Notice identifies the following mid-year changes as prohibited for a safe harbor plan, unless the mid-year change is required by applicable law:
i. a change to increase the vesting requirement attributable to an employee’s account balance for safe harbor contributions under a qualified automatic contribution arrangement,
ii. a reduction in the number or the narrowing of the group of employees eligible for safe harbor contributions,
iii. a change in the type of safe harbor plan, and
iv. a modification to the formula used to determine matching contributions if the change increases the amount of matching contributions or permits discretionary matching contributions.
For more information on the issues in this alert, or ERISA matters generally, please contact:
Copyright © 2016 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for informational purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.
EMPLOYMENT REMINDERS FOR 2016
The new year brings several important changes to New York City and State employment laws. In this alert, we will analyze New York City’s new requirement that most private employers will now have to offer pre-tax transit benefits, the Caregiver Discrimination Bill passed by New York City Council and the status of minimum wage in New York and New Jersey.
New York City’s Affordable Transit Act Went Into Effect January 1, 2016
Effective January 1, 2016, under New York City’s Affordable Transit Act (the “Act”), Intro 295-A, most private employers with 20 or more full-time employees in New York City are required to offer their full-time employees the opportunity to use pre-tax earnings to purchase certain transportation fringe benefits that are qualified under the Internal Revenue Service (other than qualified parking). Such transportation fringe benefits include: MTA subway and bus, Long Island Railroad, New Jersey Transit, Metro North, Amtrak, eligible van pooling services, eligible commuter bus services and Access-A-Ride.
The law defines “full-time employees” as those who work an average of 30 hours or more per week for the employer in New York City. The Act exempts certain employers from coverage, namely:
(1) government employers;
(2) employers that are not required by law to pay federal, state and city payroll taxes;
(3) employers that are party to a collective bargaining agreement, except where the number of full-time employees not covered by the collective bargaining agreement is 20 or more, in which case those full-time employees not covered by the collective bargaining agreement must be eligible for the benefit; and
(4) employers who demonstrate that offering qualified transportation benefits would cause financial hardship.
Once a covered employee becomes eligible for these benefits, the employee remains eligible throughout his or her employment, even if the employer subsequently falls below the 20-employee threshold.
Employers are required to provide their covered employees with a written offer of the opportunity to use pre-tax income to purchase these qualified transportation benefits by January 1, 2016, or four (4) weeks after an employee begins full-time employment, whichever is later. Employers also must maintain records demonstrating that they have made such offers and their employees’ responses for two (2) years.
Violations of the law may result in an assessment of civil penalties by the NYC Department of Consumer Affairs (DCA), the agency charged with enforcing the Act. Although the Act goes into effect on January 1, 2016, employers will have a six (6) month grace period — until July 1, 2016 — to establish a commuter benefits plan before being subjected to penalties. Moreover, the new law includes a 90-day cure period whereby an employer in violation will have 90 days to cure a first violation before a penalty is actually imposed.
An employer found to be in violation of the Act can be liable for a civil penalty ranging from $100 to $250 for the first violation. After the expiration of the 90-day cure period, every 30-day period that the employer fails to offer the benefit will constitute a subsequent violation and a civil penalty of $250 will be imposed for each subsequent violation, limited to 1 penalty per 30-day period.
What This Means To You
New York City employers that are subject to the Act should determine whether current employee benefit programs offer full-time employees the opportunity to use pre-tax earnings to purchase qualified transportation fringe benefits in accordance with federal law. If that opportunity is not offered, employers should amend or establish such a benefit plan or program to take effect immediately, ensuring that all employees who work an average of 30 hours or more per week in New York City are eligible for the benefits.
New York City Council Passes Bill Banning Discrimination Based On Caregiver Status
On December 16, 2015, the New York City Council voted in favor of Int. No. 108-A, legislation that amends the New York City Human Rights Law (NYCHRL) to include “caregiver status” as a protected class. The amended NYCHRL will now prohibit discrimination on the basis of an employee’s actual or perceived status as a caregiver. The legislation is awaiting Mayor Bill de Blasio’s signature.
Under the NYCHRL, it is an unlawful discriminatory act for an employer to refuse to hire, terminate or discriminate against an employee in compensation or in relation to terms, conditions or privileges of employment, based on an employee’s actual or perceived status as a member of a protected class. The NYCHRL defines several protected classes, including, but not limited to, “age,” “race,” “gender,” “sexual orientation,” “partnership status,” “national origin” and “disability.”
The newly passed bill adds “caregiver” as a protected class, thereby prohibiting employment discrimination based on an individual’s actual or perceived status as a caregiver. The amended NYCHRL defines “caregiver” as anyone who provides direct and ongoing care for a child under the age of 18 or for a care recipient. A “care recipient” is defined as an individual with a disability who:
(1) Is a covered relative or a person who resides in the caregiver’s household, and
(2) Relies on the caregiver for medical care or to meet the needs of daily living.
The amended NYCHRL further defines “covered relative” as a caregiver’s child, spouse, domestic partner, parent, sibling, grandchild, grandparent, child or parent of the caregiver’s spouse or domestic partner or any other individual in a familial relationship with the caregiver.
The legislation will take effect 120 days after enactment, although the City Commission on Human Rights is authorized to take any action necessary, prior to the effective date, to implement the amended law.
What This Means To You
New York City employers covered by the NYCHRL should review and update their policies and procedures. Covered employers should also update their training materials for employees, managers and supervisors.
New York Increases Minimum Wage—No Change To New Jersey’s Minimum Wage For 2016
Beginning December 31, 2015, the minimum hourly wage rate for employees in New York State increased from $8.75 per hour to $9.00 per hour.
Moreover, the minimum salary amounts that must be paid to New York employees who are exempt from New York’s overtime requirements as administrative or executive employees will increase from $656.25 per week to $675.00 per week on December 31, 2015.
Employers should be aware that the New York State minimum wage exceeds the federal minimum wage. Thus, although an employee’s hourly wages may comply with federal law, such wages may not comply with New York law.
Similarly, an employee paid a salary between the federal minimum of $455 per week and the New York minimum of $675.00 per week may qualify as “exempt” from overtime under federal law, yet may not qualify for the same exemption under New York law. In such circumstances, the employee is entitled to overtime and must be paid at a rate of at least one and one-half times the minimum hourly rate of $9.00 per hour for any hours worked in excess of 40 per week.
New Jersey’s minimum wage remains at $8.38 an hour in 2016. The wage has been tied to the consumer price index for all urban wage earners and clerical workers since January 2014. The New Jersey Department of Labor and Workforce Development, Division of Economic and Demographic Research (DOL) recently announced that there was no increase to the consumer price index in the past year and therefore the state’s minimum wage will remain unchanged for 2016.
What This Means To You
Employers should review the compensation paid to their employees in New York to ensure compliance with the new minimum wage and salary obligations and should take the following steps:
(1) Confirm the necessary payroll adjustments have been made and that they are in compliance with the new minimum wage laws
(2) Update their minimum wage posters at the workplace
(3) Ensure that their employees who are classified as “exempt” under the administrative or executive exemptions are being paid a salary of at least $675.00 per week in order to avoid violation of New York State’s overtime laws
Special thanks to Daniella M. Muller, an associate in the Employment Practice Group, for her assistance in preparing this alert.
For more information on this issue or other employment matters, please contact:
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Copyright © 2016 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for informational purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm. Reprinted with permission. For more Herrick publications, please visit Herrick.com.
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© 2017 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.