2016 Labor and Employment Law Update
2016 heralds changes, new developments, and resolutions to uncertainty in employment law at the city, state, and federal levels. The National Labor Relations Board, the Supreme Court, and the New York City Commission on Human Rights have put forth policy on topic areas running the gamut from employee social media use to religious accommodations to background and credit checks. State and city initiatives also implemented and expanded policies aimed at promoting equality in relation to sex and gender identity.
The National Labor Relations Board took up conflicts related to concerted activity, which it protects. Several court cases clarified the relevance of this protection in relation to company handbooks, recording policies, and class action waivers. It also raised its standards for joint employers.
The Supreme Court ruled on religious dress accommodations in the case EEOC v. Abercrombie & Fitch Stores, Inc., in which a Muslim woman challenged the company’s decision not to hire her because it assumed that her hijab would prevent her from adhering to its dress code.
At the local level, New York City implemented comprehensive “ban-the-box” legislation with the Fair Chance Act, as well as the Stop Credit Discrimination in Employment Act to eliminate the use of consumer credit history for employment purposes. The city’s Human Rights Commission expanded its guidance on what constitutes discrimination based on gender identity and expression, and clarified the penalties for this type of discrimination. An ordinance to make transit benefits available to employees also went into effect at the beginning of 2016.
New York State implemented its Women’s Equality Agenda, which encompasses stricter equal pay standards, pregnancy accommodations, and more expansive protections against familial status discrimination and sexual harassment.
Member Richard Block and labor and benefits associate George Patterson of law firm Mintz Levin visited TemPositions’ HR Roundtable Series on Thursday, February 25, 2016 to give a presentation and answer questions on these developments.
National Labor Relations Board
Block began by asking how may Roundtable attendees came from organizations with employees covered by the National Labor Relations Act (NLRA). About a quarter of attendees raised their hands, but Block ventured that everyone in the room likely had NLRA-covered employees.
“The National Labor Relations Act [NLRA] covers unionized and non-unionized employees, so it basically covers everybody,” Block said.
He noted that 2016 will be an interesting year for the National Labor Relations Board (NLRB) because of the upcoming presidential election. Because NLRB members are appointed by the president in staggered five-year terms, the body’s activity is shaped by the White House.
“If the Republicans win the White House, everything we talk about now will be reversed,” said Block. “Likewise, there are things we talk about now that didn’t exist 10 years ago.”
Under Barack Obama’s administration, the NLRB has focused on employees traditionally not subject to the NLRA.
Block asked attendees to define the term “concerted activity.” After some discussion, he clarified that the term encompasses any activity related to discussing or advancing the general common interest of employees. Employees may partake in concerted activity without suffering retaliation from employers. Concerted activity is defined by the NLRB, and is protected under the freedom of association.
“The NLRB currently is expanding its scrutiny of handbooks, email policies, and discipline for use of social media,” Block said.
Employees may not be fired for complaining on social media about their employers being unfair, cheap, etc. Policies prohibiting employees from sharing confidential information on social media are also largely invalid; such policies must be drafted with high levels of precision.
Almost half of attendees reported that their employers have policies that govern employees’ use of social media. Block urged them to reexamine these policies in light of recent NLRB activity.
He noted that labor protections specific to New York City are unlikely to be affected by NLRB actions. For example, if an employee posts on a social media platform that he has been discriminated against, and is then fired by his company for the post, the employee is not protected by the NLRA (unless he claims that there is a pattern of discrimination by the employer). However, the employee may sue the employer under city, state, and federal discrimination laws – regardless of whether discrimination actually occurred – for retaliation for making a discrimination claim.
Block discouraged attendees from devoting much time and effort to monitoring employees’ social media activities, as they are not permitted to act on many of the things they may discover. He also cautioned against doing much research into the social media and general online presence of potential hires due to the risk of violating New York City’s Fair Chance Act.
In the case Three D, LLC v. NLRB, the Second Circuit court ruled that workers who criticize their employers on social media are protected by the NLRA. This protection includes “liking” a post. In the case, a Connecticut sports bar had fired two employees after one had made a Facebook post criticizing the owner, and the other had “liked” it. The bar contended that the employees had violated the social media policy outlined in its handbook, but the court ruled that the employees had engaged in protected concerted activity.
Block advised attendees to consult with a labor lawyer before taking any disciplinary action regarding employee social media use.
Cellco Partnership d/b/a Verizon Wireless’s “solicitation and fundraising” policy prohibited employees from using email to distribute organizing materials to one another, even outside of work hours. In response to a challenge, a judge ruled that the policy had a “chilling effect” on NLRA-protected concerted activities.
“Employees can use your email system to organize,” said Block. He highlighted an upside to this for employers.
“As an employer, when you’re faced with a union drive, you need to know what the issues are so you can go to an NLRB election with full communication to employees about the issues that are there,” he said. “The fact that they can use your email, so that way you can at least learn what’s going on, to me that’s a useful thing.”
Confidentiality and Privacy
Macy’s Inc.’s confidentiality policy restricted “confidential” information about employees to “only those who need to see it,” and contained other broadly restrictive provisions involving use of the company logo, as well as a general disclaimer that its policy was consistent with the law.
In a challenge, a judge ruled that employees would reasonably interpret Macy’s policies to bar protected concerted activities. Employees cannot be disciplined for discussing matters of pay with one another, and the nature of the disclaimer was not specific enough to pass muster. Block urged companies that opt to include a disclaimer among its policies to be specific.
“If you’re going to have any social networking policies, make sure you have a disclaimer that the policy is not meant to impact activity protected by law, and give examples of what you’re talking about,” he advised. Confidentiality and privacy are two areas where specific examples are useful.
Block polled attendees to see if any had policies that prohibited recording of performance reviews by employees. One attendee said her company had such a policy in the past, but no longer does. Block said such policies are not viable.
“Any time you’re disciplining, any time you’re talking about performance management with employees, you could be recorded,” he said.
Though employers may ask employees if they are recording, or to stop recording, they are unable to legally prohibit employees from recording. However, employers may opt to halt a conversation or meeting that they do not wish to subject to possible recording.
Block highlighted a difference between New York State law and NLRA regulations regarding recording. While state law does not protect employees who record, recordings to which only one party consents are admissible in court proceedings. The NLRA does protects employees who record from discipline for doing so.
Overall, Block advised attendees to be extremely specific in drafting their policies, and to include specific examples of what is permitted and what is prohibited under said policies.
For NLRA purposes, any employer that potentially has influence over another can be considered a joint employer. For example, if McDonald’s corporation has any say over the wages or benefits of McDonald’s franchise employees, it is considered a joint employer. Staffing agencies are also considered joint employers. If a joint employer is violating the law, then the connected company can also be held liable.
“Make sure whatever outside agencies you use for permanent or temporary help are complying with these laws,” said Block.
An attendee asked if a staffing agency that complies with all employment laws and regulations could be held liable if a company for which it provided employees did not. Block answered that it would be unlikely, as the joint employer guidelines are intended to clarify under what circumstances staffing agencies are also employers (the companies that hire them are always employers).
Block recommended that attendees review any contracts with affiliates, and to clarify any indemnity provisions.
Arbitration Agreements and Class Action Waivers
Block also advocated using employee arbitration agreements as a means of preventing collective and class actions. Not only is arbitration faster and less expensive, it is more favorable to employers than courts. Though New York State’s employment-at-will provision makes it easy to get many employee lawsuits dismissed, lawsuits alleging discrimination can be more challenging for employers.
“Have arbitration agreements that prevent them [employees] from bringing discrimination cases in court,” Block advised. “Before a jury, you’re going to be behind even before you begin your opening arguments.”
When asked, just a few attendees reported their companies used arbitration agreements.
An attendee raised a question about implementing arbitration agreements for current employees. The counsel at her current company had told her that in order to do this, the company must offer the employees some kind of incentive, and she asked for Block’s take on this advice. Though he could not answer the question completely, Block advocated doing whatever was necessary to implement class action waivers as widely as possible. He mentioned a client facing a class action suit that includes employees from six years ago through the present. Had that client had even some of its employees sign class action waivers, the exposure would have been significantly less.
The NLRB has objected to arbitration agreements, and categorized class and collective action waivers as an attempt to prevent concerted activity, but has so far been overruled twice by the Fifth Circuit Court. Block predicted that disputes about such waivers would continue until the Supreme Court takes up the issue.
Religious Dress Accommodations
Patterson reviewed EEOC v. Abercrombie & Fitch, a case involving tension between company dress codes and religious dress. The retailer had rejected an otherwise-qualified job applicant because she was wearing a religious head covering, which conflicted with the company’s “look policy.” The look policy forbade employees from wearing hats or head coverings. The Supreme Court ruled that even if an employer is not completely certain that an employee’s attire is religious in nature, it must investigate whether it can accommodate the employee.
Fair Chance Act
Block reviewed New York City’s “ban-the-box” legislation, which forbids employers from inquiring about an applicant’s criminal history until after extending a conditional job offer. He emphasized that such an inquiry cannot be made in any form – not in writing, not on job applications, not during interviews, and not as a notification in a job ad. Before making a conditional offer, employers may not perform background checks or search other publicly available sources. This law applies to employers with four or more employees.
After a conditional offer is made, employers may inquire about a candidate’s convictions, but Block said that is often not worth doing so because it is easy to run afoul of the law if using a criminal background to reject a candidate. Because the New York City Commission on Human Rights is known for being strict, he advised following its guidelines concerning what an employer may ask “to the letter.”
The language reads: “Have you ever been convicted of a misdemeanor or felony? Answer ‘no’ if: a.) your conviction was sealed, expunged, or reversed on appeal; b.) was for a violation, infraction, or other petty offense such as disorderly conduct; c.) resulted in a youthful offender or juvenile delinquency finding; d.) if you withdrew your plea after completing a court program and were not convicted of a misdemeanor or felony.”
Block reminded attendees that they may not ask about arrests or non-convictions, nor use any such information in hiring decisions.
The law includes specific guidelines outlining valid reasons an employer may reject an applicant due to his/her criminal history. The employer must draw a direct relationship between the applicant’s criminal behavior and the prospective job, or show that employing the applicant would involve an unreasonable risk to the property or safety of others.
Factors to be considered in making these determinations include:
- the duties of the job, and if the applicant’s prior conviction affects his/her ability to carry out the job duties
- the amount of time elapsed since the events that lead to the conviction, and the applicant’s age at the time of said events
- the seriousness of the conviction history
- any information furnished concerning the applicant’s rehabilitation or good conduct
- the legitimate interest of the employer of protecting the property, safety, and welfare of other employees, clients, etc.
If an employer opts not to hire the applicant due to a criminal history after extending a conditional job offer, the employer must provide the rejected applicant with a written copy of the inquiry justifying the decision. After receiving a copy of the inquiry, the applicant has three business days to respond.
“For most occupations, you’re running the risk that if you don’t hire the person, you are going to face a serious violation under this law,” said Block.
He reminded attendees that violating the Fair Chance Act puts employers at risk for unlimited punitive damages, and unlimited aid and abetting regulations.
An attendee said that her employer is required by the Justice Department to do criminal background checks on potential hires, and wanted to know if it was okay to say in job postings that any conditional offer is based on a criminal background check. She said that the current procedure is to give applicants background check paperwork after they have been given an offer. Based on the text of the law, Block suspected that such a statement likely wouldn’t hold up to scrutiny, as it effectively communicates that background checks are required, which is unlawful. A major goal of the law is to encourage people with criminal backgrounds to apply for jobs, and such statements discourage convicted people from applying.
The Act is applicable to staffing agencies, with the provision that a conditional offer from an agency amounts to an offer to place the applicant in the firm’s labor pool, from which the applicant may be sent job assignments to the firm’s clients. If a staffing agency wishes to reject an applicant based on his/her criminal history, the agency must follow the process outlined in the Act (just like any other employer). Staffing agencies may be held liable if they aid and abet an employer’s discriminatory hiring practices.
“It’s the equivalent of an agency complying with a client’s request that they don’t hire African-Americans, or Jews, or Muslims, or whatever,” Block stressed. “This has the same protection as any other category of discrimination under the Civil Rights Act.”
Weighing the Risks
Block discussed a recent case he had in which an HR applicant was given a conditional offer. Upon learning that the applicant had two recent DUI convictions, the hiring manager rescinded the offer, as he believed the convictions showed poor judgment and was not comfortable hiring the applicant. The applicant protested, citing the Fair Chance Act, and Block advised the client to reinstate the job offer. However, the hiring manager decided not to take this advice.
Block noted that even if the law is clear, it is useful to be aware of the potential business implications it presents. As in his recent case, some employers may chose to risk a lawsuit rather than risk hiring an applicant who they fear would damage the company’s business, especially if they think the applicant is unlikely to sue. In this case, he advised the hiring manager to inform the board of the situation so if the applicant sued, the company would not be caught off-guard. He mentioned that if sued, an employer may opt to settle a case.
“It’s a business decision to do what most likely would be deemed unlawful in this case,” he said. “My job as a lawyer is to say what the law is, and assess different risks.”
Another attendee mentioned that his company deals with several clients that have their own processes that require anyone dealing with their products to go through a series of background checks and drug tests. He asked how to handle this situation. Block said the law supersedes any company’s policies, and recommended talking to the clients in question about it, as their policies are likely out of date.
One attendee had trouble fathoming that applicants with convictions for crimes like burglary and theft must be considered for positions that involve going into people’s homes, such as home health care workers and house cleaners. Block clarified that these may be examples of valid instances for rejecting an applicant based on his/her criminal history, but that there is no blanket rule: each decision is reviewed on a case-by-case basis, taking into account the details of the individual case, and the factors outlined above.
Another attendee who works with a domestic violence shelter said that because it is a violence-free environment, her organization cannot hire anyone with a violent history and must conduct background checks. Block asked whether this practice was required by law, or merely by the organization, The attendee said that it was required by law, to which Block responded that the employer was then exempt from the Fair Chance Act.
Block noted that exemptions from the Fair Chance Act are consistent with the local Civil Rights Restoration Act of 2005. He added that guidelines specify that all exceptions to the law’s anti-discrimination provisions will be construed narrowly. The burden of evidence for exemptions rests with employers. The Human Rights Commission will not classify entire employers or industries as exempt, but rather will investigate any exemptions in the context of individual positions.
In the case that an employer is sued for negligent retention or hiring, the employer will not be held liable because it did not do a criminal background check that it was not legally allowed to do.
Stop Credit Discrimination in Employment Act
This law prohibits employers with four or more employees from requesting or using consumer credit history for employment purposes. Research found that using credit reports in hiring disadvantaged candidates with low incomes, those with significant medical bills, those who are members of racial minority groups, and those who are survivors of domestic violence.
This law permits a few exceptions. One is if state or federal law or regulations of a self-regulatory organization require the use of consumer credit history for employment purposes. Employers may also comply with subpoenas, court orders, or law enforcement investigations that require credit information.
Credit history may also be considered for certain “sensitive” positions specified by the law. Such positions include law enforcement officers, department of investigation positions, positions that require employees to be personally bonded, positions that entail access to highly confidential trade secrets, positions that include signing authority over the funds of others in excess of $10,000, and positions with the ability to modify digital security systems.
Patterson stressed that the exception for “sensitive” positions may not be applied in a blanket-like fashion to anyone who works in the financial services industry.
Employers who violate this law are subject to the full range of penalties and damages specified by New York City human rights law, including back pay, punitive damages, and attorney fees.
An attendee asked if IT employees fell under these parameters. Patterson replied that there may be a few IT positions that could be considered sensitive, such as a position that controls a company’s entire information system, but most general IT positions would not be excepted from this law.
Another attendee asked about employees who have access to clients’ banking information. Patterson said that such positions would likely not be considered sensitive under this law. Block interjected that employers can always call the city Human Rights Commission for guidance.
Another attendee inquired whether a fiduciary over a 403(b) plan would be excepted from the law. Patterson said that if the fiduciary can sign for $10,000 or more worth of funds that are not in her own name, the position would qualify as sensitive.
Giving and Checking References
Questions arose about whether new laws like the Fair Chance Act and Stop Credit Discrimination in Employment Act could limit what could be disclosed about former employees in the context of reference checks. Block said that historically, employers are not subject to defamation claims for sharing negative but truthful information about former employees, but advised erring on the side of caution.
“You can always say, ‘I wouldn’t hire the person,” said Block. “You can’t be sued for saying that, and it’s enough for you to hear. Opinions are not defamatory.”
He gave an example from his own firm. After firing an attorney for regularly making inexplicable errors, he later found out the attorney had been using illegal drugs. Because he had fired the attorney for making mistakes, and not for the drug problem, there was no basis for any legal complaint under the ADA, or under any other provision.
One attendee asked if an employer may disclose during a reference check whether a former employee resigned, or was terminated. Block said that it depends: if there is a release or a settlement specifying that the terms of termination are kept confidential, or if the company handbook says the employer will only verify names and dates of employment, employers may not answer this question without breaching the contract. If there is no contract or handbook specification, employers are free to share. However, Block always advises keeping comments general.
“You have no legal obligation to get into the details,” he said.
New York City Transit Ordinance
This ordinance, which went into effect in January of 2016, requires employers with 20 or more full-time employees to offer their full-time employees the opportunity to use pre-tax earnings to purchase transportation benefits in accordance with federal tax law. Employees are entitled to take the maximum deduction permitted under federal law. Employers must maintain records for two years showing that employees were offered these benefits, and indicating whether they elected to use them.
As an alternative, employers may provide transit passes or other forms of transportation payment to their employees.
The transit ordinance considers any employee who has worked an average of 30 hours/week during the previous four weeks to be a full-time employee. When calculating the number of full-time employees, employers should take the average number of full-time employees for the most recent consecutive three-month period. This average should include all employees in any of an employer’s New York City locations.
Patterson mentioned that many employers already provide these benefits, and thus the ordinance will mainly prompt changes in record-keeping habits. Records of benefits and whether employees accepted them must be kept for two years.
When employees are provided by a staffing firm, the staffing firm is considered the employer, and is responsible for keeping track of all employees’ hours at various placements. The staffing firm determines whether its respective employees are eligible for the specified transit benefits by calculating each employee’s average hours during each four-week period.
Patterson reassured attendees that if their administrative departments aren’t equipped to handle the required calculations and record-keeping, outside payroll management companies can help.
“Many companies are already offering these benefits, but the main thing you want to take away is that it isn’t optional anymore, so you need to make sure you’re up to speed,” Patterson said.
One attendee mentioned that her company’s current policy is to grant transit benefits beginning 90 days after the date of hire, and wanted to know if it needed to update this policy in light of the ordinance. Patterson advised the attendee to revise the policy, as the ordinance entitles full-time employees to benefits after four weeks.
Another attendee asked if it was okay to grant transit benefits immediately to new employees. Patterson said yes.
After some chatter about the best way to keep records, one attendee pointed out that the city’s website has a form employers may download and use. She said that her company had employees fill out the form indicating whether or not they took the transit benefits offered, and keep all of the forms in a binder for easy reference in case of an audit.
Patterson praised this idea, saying that using the forms provided is a foolproof way to ensure compliance.
“It helps with compliance to show that you use the standard form that the city makes available, and it’s really not much trouble to do that,” he said.
New York State’s Women’s Equality Agenda
In early 2016, New York State passed a series of laws strengthening protections for women in the workplace, collectively called the Women’s Equality Agenda (WEA).
Bona Fide Equal Pay
Though equal pay for equal work has been on the books for some time, the WEA increases scrutiny and narrows the legally acceptable justifications for pay differences within organizations.
“The old standard basically said that you can have pay differences among employees, as long as they are based on factors other than sex,” explained Patterson.
Under the WEA, if factors in pay differences cause a disparate impact on the basis of sex, and there is an alternative employment practice available that would serve the same purpose, an employer must adopt the alternative practice. Otherwise, the reason for the pay differential – which may have been acceptable in the past – will be considered invalid under the law.
“If you have a male and a female in the same position and they are making different wages, you’re going to have to go back and revisit that,” said Patterson. “Under the new standard, you might not be in compliance anymore.”
The law also mandates equal pay among men and women working at the same establishment, which it defines as any geographic region no bigger than a county.
“If you have 10 different operations in Manhattan, you have to make sure men and women doing the same work are paid the same at all 10 of those,” said Patterson.
The law imposes stiff penalties for willful violations, including attorneys’ fees and liquidated damages up to 300% of total wages. These penalties, previously confined to New York City, now apply statewide.
The WEA also forbids familial status discrimination. In essence, employers may not discriminate against anyone who is pregnant, has a child/children, or is in the process of obtaining legal custody of a child/children. Though discrimination on the basis of familial status had been illegal in housing and credit for some time, the WEA has now made it illegal in employment.
Though pregnancy accommodations are mandated at the federal level by the Americans with Disabilities Act (ADA) and at the city level by the New York City Human Rights Commission, the WEA “fills in the gaps,” Patterson explained. It specifies accommodations to make it possible for pregnant people to continue doing their jobs, such as rest periods, break periods, and reassigning of physically strenuous duties.
Sexual Harassment: Size Doesn’t Matter
In the past, sexual harassment and discrimination laws applied to companies with four or more employees. The WEA makes these laws applicable to all employers, regardless of size.
An attendee asked if this meant that all organizations should be delivering harassment training. Though the law does not mandate it, Patterson and Block acknowledged that it is always a good idea.
“If you’re ever sued for harassment and you didn’t do any training, it looks terrible,” said Block. “You want to show that you pay attention to these things, that you’re sensitive to it.”
Patterson emphasized that the equal pay provision is the most significant part of the WEA, and expressed certainty that it would be tested in court. He advised attendees to scrutinize any pay discrepancies among men and women who hold the same positions within their organizations.
Gender Identity and Expression Discrimination
Though New York City has prohibited discrimination based on gender identity since 2002, a recent survey of transgender and gender-non-conforming residents revealed that as many as 75 percent have experienced harassment or mistreatment in the workplace. In light of this, the city Human Rights Commission has released detailed enforcement guidelines aimed at curbing this type of discrimination.
Patterson mentioned that discrimination based on gender identity and expression can often result from ignorance and uncertainty, and does not necessarily involve conscious intent. He advised attendees to read through the guidelines on the Commission’s website to ensure that they are not unintentionally discriminating.
“It does make a serious effort to clarify all of the gray areas under the law,” he said.
Failing to use person’s preferred name, title, or pronoun is an example of gender-based discrimination.
An attendee asked how to address and refer to an employee who identifies as a gender other than the one indicated on that employee’s legal forms. Patterson said to use the name, pronouns, and gender that the employee gives, regardless of the sex or gender recorded on legal documents. He mentioned that the city guidelines also include non-gender-specific pronouns – ze and hir – that can be used when a person’s gender and pronouns are unknown.
The attendee asked how to record an employee’s sex or gender for tasks like EEOC reporting in cases where the employee’s gender identify is different than the one on the employee’s legal documents. Patterson clarified that the Commission’s guidance applies to interactions related to the employee, and does not pertain to paperwork.
“If you are using the information you have in your database or in your files and reporting it to an agency, I don’t see any violation,” he said. Block predicted that the EEOC will eventually expand sex and gender categories beyond “male” and “female.”
Another attendee advised having a private conversation in an HR capacity with employees in such situations to find out how they would like to be identified on paperwork, as well as among fellow employees.
Patterson concurred, noting that it may be necessary to correct other employees who use the wrong name or pronouns. Failing to use or enforce the use of a person’s preferred name and pronouns can create a hostile work environment.
All employees must be permitted to use single-sex facilities consistent with their genders. For example, all employees who identify as female must be allowed to use the women’s restroom, regardless of the gender with which they were identified at birth. Under the law, an employee’s right to use gender-appropriate facilities takes precedence over any discomfort or objections raised by cisgender employees.
Block and Patterson suggested making all bathrooms unisex to avoid any potential for conflict.
Other things that constitute gender-based discrimination include imposing different uniforms or grooming standards based on sex or gender, providing employee benefits that discriminate based on gender, engaging in gender-based harassment, and engaging in retaliation.
Violations may result in civil penalties up to $125,000, and up to $250,000 in cases of “willful, wanton, or malicious conduct.” Other damages, including back and front pay, and compensatory and punitive damages, may also be incurred.
Andrea Burzynski is a freelance writer based in New York. Reach her at firstname.lastname@example.org.
The HR Roundtable is a breakfast forum for human resources professionals in New York City sponsored by The TemPositions Group of Companies. TemPositions, one of the largest staffing companies in the New York tri-state area with operations in California, has been helping businesses with their short- and long-term staffing needs since 1962.