Tag: Labor & Employment

On April 23, 2024, the Federal Trade Commission (FTC) announced it had approved its final rule that would effectively ban workplace non-compete agreements, with limited exceptions (the “Final Rule”). The effective date of the Final Rule is 120 days after publication in the Federal Register – not after the FTC’s public announcement.

Final Rule

The Final Rule concluded that non-compete agreements are an “unfair method of competition” and a violation of Section 5 of the FTC Act. Under the Final Rule, the FTC has issued a comprehensive ban on new non-compete agreements with all workers, including senior executives. Thus, under this rule, businesses are prohibited from entering into or enforcing new non-compete agreements upon the effective date.

What About Existing Non-Compete Agreements?

As for existing non-compete agreements, those will also become unenforceable on the effective date, except for existing non-compete agreements with senior executives in policy-making positions. The Final Rule defines “senior executive” as a worker 1) in a “policy making position”; and 2) earning an actual or annualized sum of $151,164 (through salary, bonuses, and/or commissions, but excluding fringe benefits, retirement contributions, and medical/life insurance premium payments).  A “policy making position” is a business’ president, CEO or equivalent, or any other person with “policy-making authority” for the business similar to a corporate officer with policy-making authority. In turn, those who have the authority to make policy decisions controlling “significant aspects of a business entity or common enterprise.”

Other Exceptions to the Final Rule

Exempt from the Final Rule are non-compete clauses entered into with a seller of a business entity, so long as the sale involves the disposition of the person’s ownership interest in the business entity, or disposition of all or substantially all of a business entity’s operating assets. The Final Rule clarifies that a “worker” with whom the rule bans non-compete agreements also does not include a franchisee in the context of a franchisee-franchisor relationship. However, the Final Rule applies to non-compete agreements with a person who works for a franchisee or franchisor.

Further, the ban does not apply to the enforceability of non-compete agreements that are the subject of ongoing litigation at the time of the Final Rule’s publication. Specifically, the ban does not apply “where a cause of action related to a non-compete clause accrued prior to the effective date.”

Other Types of Restrictive Covenants

The FTC states in the preamble that the Final Rule does not categorically prohibit other types of restrictive covenants, such as non-disclosure or non-solicitation agreements, which do not by their terms prohibit a worker, or penalize a worker, for seeking or accepting other work or starting a business after they leave their job.

What’s Next?

The Final Rule will become effective 120 days after publication in the Federal Register. Once the Final Rule is in effect, employers will be required to provide notice to workers other than senior executives who are bound by an existing non-compete agreement that they will not be enforcing any non-compete agreements against them. The Final Rule is certain to face legal challenges. The United States Chamber of Commerce has already announced it intends to initiate litigation as early as April 24, 2024.

Employers will be well served to review their existing non-compete, confidentiality, and non-solicitation agreements to determine whether they are currently enforceable or need to be amended to protect the employer from unfair competition by former employees.

On December 22, 2023, New York Governor Kathy Hochul vetoed S3100, a bill which would have prohibited virtually all contractual noncompete agreements restricting workers’ ability to leave their job for a role with a rival business. The bill, passed by both houses of the legislature in June, would have applied to all employers and most individuals, regardless of compensation levels.

The veto comes as a surprise to many as it was anticipated that Governor Hochul would sign the bill into law. In vetoing the bill, Governor Hochul signaled that she would be open to a more limited ban on noncompete agreements, noting that she has “long supported limits on non-compete agreements for middle-class and low-wage workers, protecting them from unfair practices that would limit their ability to earn a living.” It is expected that more limited non-compete legislation will be reintroduced by the New York state legislature in 2024.

Employers should keep in mind that in January 2023, the United States Federal Trade Commission issued a proposed rule which would ban all non-compete clauses in employment agreements throughout the country.  The agency has received more than 26,000 public comments on the proposed rule and no final rule has been issued.  News reports suggest a formal vote on the proposed rule was postponed until at least April 2024.  It is far from certain what any final rule would look like and any such final rule would be subject to legal challenge by employer groups.

This is a reminder that the New York State Minimum Wage Increase has gone into effect.  Governor Hochul signed Senate Bill S4006C into law on May 3, 2023, increasing New York’s minimum wage in annual increments beginning January 1, 2024.

Minimum Wage Increases

As of January 1, 2024, New York State’s minimum wage will increase to $16 per hour in New York City and the counties of Nassau, Suffolk and Westchester, and to $15 per hour everywhere else in the state. Both rates will increase by an additional $0.50 on both January 1, 2025 and January 1, 2026.

Unlike prior increases, the new rates do not differ based on employer size and lump together the rates for New York City, counties on Long Island and Westchester County. Beginning in January 2027, the minimum wage will increase annually according to the Consumer Price Index.

Exempt Salary Thresholds

To be classified as exempt from New York’s overtime requirements, executive and administrative employees must meet minimum salary requirements and satisfy certain duties tests. For these two exemptions, New York State sets the weekly minimum salary requirement at 75 times the hourly minimum wage.

As a result, with the increase of minimum wage, the minimum salary for exemption as an executive or administrative employee also increases from $1,125 per week to $1,200 per week ($62,400 annualized) in New York City, Nassau, Suffolk, and Westchester counties and from $1,064.25 per week to $1,124.20 per week ($58,458.40 annualized) elsewhere in the state.

Note, there is also a professional exemption under New York State law. For the professional exemption, employees must satisfy certain duties tests, but there is no minimum salary requirement under state law. Federal law currently establishes a minimum salary of $684 per week for the professional exemption.

Minimum Wage Increases in New Jersey and Connecticut

As of January 1, 2024, New Jersey’s minimum wage will also increase for most employees to $15.13 per hour. Under New Jersey State law, some employers are allotted more time to reach the $15.13 per hour minimum wage increase. For example, employees of seasonal employers and small businesses (fewer than six employees) will have until 2026 to pay their workers at least $15 per hour. The minimum hourly wage for these employees will increase to $13.73 per hour beginning January 1, 2024, an increase from $12.93 per hour.

As of January 1, 2024, Connecticut’s minimum wage also will increase to $15.69 per hour as a result of a new annual economic index adjustment. Thereafter, Connecticut’s minimum wage will be adjusted annually according to the U.S. Department of Labor’s calculation of the employment cost index.

What this Means for Employers

Employers operating in the Tri-State area employing minimum wage workers should be prepared to comply with the mandated minimum wage increases.

New York employers with exempt executive and administrative employees should review salaries to determine whether they continue to meet the 2024 thresholds for exemptions from overtime or whether these employees will need to reclassified as nonexempt employees entitled to overtime pay.

This is a reminder that the New York City Salary Range Transparency Law, originally scheduled to go into effect on May 15, 2022, will become effective on November 1, 2022.

By way of background, the new law amends the New York City Human Rights Law to require covered employers (those with 4 or more employees) who post a job, promotion, or transfer opportunity for a position that can or will be performed, at least in part, in New York City to disclose the minimum and maximum annual salary or hourly wage that the employer in good faith believes it would pay for the position.

What this Means for Employers

In preparation, it is recommended NYC employers review job descriptions for the jobs that will be advertised and include a good faith salary range with the position’s description.

Employers will need to include a salary range for any positions you anticipate advertising (or continuing to advertise) after November 1, for all covered job listings under the new law. Covered job listings are defined broadly to include any advertisement that includes a “written description of an available job, promotion, or transfer opportunity that is publicized to a pool of potential applicants” (which may include existing employees) and includes advertisements “on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs, and newspaper advertisements.”

While not a technical requirement, you also may wish to consider internally documenting the factors used to determine the salary range for a given position and/or provide information in the job posting itself about the factors that may impact what salary within the stated range may be offered to any particular candidate (e.g., years of experience, level of education obtained, etc.).

Please note that under the new law, salary includes only the base annual or hourly wage or rate of pay and does not include other forms of compensation or benefits offered in connection with the advertised position. Thus, an advertisement does not have to include health insurance, time off, severance pay, overtime pay, commissions, tips, bonuses, stock, or 401(k) plans.

New York State

On June 3, 2022, the New York State Legislature passed a similar bill that would require private-sector employers to disclose the range of compensation in all advertisements for jobs, including remote positions, that can or will be performed, at least in part, in New York State. Employers will also be required to maintain all necessary records, including the history of compensation ranges and job description for each job, to comply with the new law. The New York State law is expected to take effect in March 2023, 270 days after it was passed, as long as it is not vetoed by the Governor.

California

California also has passed a wage transparency law scheduled to go into effect on January 1, 2023. Employers with 15 or more employees will need to include salary ranges on job postings, among other requirements. It is anticipated that California will issue updated guidance in the coming months on complying with the new law.

Gibney will continue to monitor the salary transparency trend for guidance updates. For employment-related questions, please contact Robert J. Tracy.

On April 28, 2022, the New York City Council amended the New York City Salary Range Transparency Act. As a result of the amendment, the effective date will be moved from May 15, 2022 to November 1, 2022. The amendment is expected to be signed into law by Mayor Adams.

On January 15, 2022, New York City enacted a first-of-its-kind law requiring employers to include a maximum and minimum salary in all job postings for positions located in New York City. The requirement also applies to internal job postings as well as posted transfers within a company. The new law was set to go into effect on May 15, 2022. However, following the City Council’s passage of an amendment to the law, the effective date will now be November 1, 2022. The law will apply to all employers with more than four employees but excludes temporary hiring firms. This means that virtually all employers with employees in New York City will need to comply.

The amendment revises the salary transparency law in the following ways:

• Reinforces a limited exception to the requirements for positions that cannot or will not be performed, at least in part, in New York City. In other words, the requirement does not apply to locations outside of New York City including fully remote positions.
• Clarifies that the language of the provision, specifically that the “minimum and maximum salary” in all job postings is the minimum and maximum annual salary or hourly wage for the advertised position, clarifying that the law covers hourly workers as well as salaried workers.
• Creates a limited private right of action for an employee. The amendment states: “[E]mployee may bring such an action against their current employer for an alleged violation of this subdivision in relation to an advertisement by their employer for a job, promotion or transfer opportunity with such employer.”

Finally, under the amendment, monetary penalties will not be issued for an initial violation if the violation is cured (with proof that the violation was cured) within 30 days of service of the complaint.

What this Means for Employers

All New York City employers now have until November 1, 2022 to ensure compliance with the new pay transparency requirements. To prepare, employers are recommend to:

• Begin to assess existing policies for determining salaries and make adjustments where appropriate
• Develop a process to ensure that published information in connection with internal and external job postings includes required salary information; and
• Consider an internal audit of current salaries by position as well as exempt/non-exempt classifications.

It is anticipated that the New York City Commission on Human Rights will issued updated guidance in the coming months. Gibney will continue to monitor this for guidance updates.

Effective May 7, 2022, employers in New York State will need to provide written notice to new hires where the employer “monitors or otherwise intercepts [employee] telephone conversations or transmissions, electronic mail or transmissions, or internet” using “any electronic device or system.” The new state law applies to any private individual or entity with a place of business in the State of New York.

Any employer that electronically monitors telephones, emails, and/or internet usage must give prior written notice of that monitoring to all new employees and obtain a written acknowledgment in writing (which may be in electronic form). The notice must advise the employees that all telephone calls, emails, or internet access or usage may be subject to monitoring at any and all times and by any lawful means. With respect to existing employees, employers do not have to provide individual written notices or obtain written acknowledgments of the notices. However, New York employers must post such a notice in a “conspicuous place” readily available for viewing by employees subject to electronic monitoring.

The new law does not apply to processes designated to manage the volume or type of transmissions or performed solely for purposes of system maintenance or cybersecurity protection.

The New York State Office of the Attorney General has the authority to enforce the law. The law provides for the imposition of civil penalties, for violations of its requirements. Employers found to be in violation of the law are subject to civil penalties ranging from up to $500 for a first offense, $1,000 for a second offense, $3,000 for a third offense and for each subsequent offense. Significantly, there is no private right of action for affected individuals.

How Employers Can Prepare

To avoid civil penalties, New York employers should prepare for the law by taking the following steps:

1. Review their electronic monitoring practices and update their employee handbooks and employee-facing website portals to ensure that they are providing adequate notice of such monitoring under the new law.
2. Prepare an employee acknowledgment of electronic monitoring form to be included in onboarding documents for new employees.
3. Prepare a notice and post it in a conspicuous place readily available for viewing by employees. Employers may elect to post the notice on their intranet site, employee handbook, and/or physically post it in the workplace. Employers also may wish to place the notice on the login page of the employer’s computer network.

On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”). Significantly, the Act amends the Federal Arbitration Act (FAA) which allowed employers to enforce mandatory predispute resolution through arbitration. The Act invalidates all predispute arbitration agreements and class or claim waivers to the extent they are sought to be applied to any claim of sexual assault or sexual harassment, and provides that victims of sexual assault and/or harassment in the workplace, are given the option of bringing their claims in court.

How the Act Compares to New York Law

In 2018, New York State enacted Section 7515 of the New York Civil Practice Law and Rules (CPLR 7515) which invalidated predispute agreements to arbitrate sexual harassment claims “except where inconsistent with federal law.” In 2019, New York expanded the mandatory arbitration prohibition in CPLR 7515 to all claims of discrimination.

New York Courts have been split on whether CPLR 7515 was preempted by Federal law. With the passage of the Act, it is now clear that in New York, and across the nation, predispute agreements requiring mandatory arbitration of claims of sexual assault or sexual harassment are now prohibited.

New York’s CPLR 7515 is more restrictive than the Act since it prohibits predispute arbitration agreements for all claims of discrimination.  However, it remains to be seen whether New York Courts will interpret CPLR 7515 to invalidate mandatory arbitration provisions unrelated to sexual assault or sexual harassment claims, as New York’s broader arbitration prohibition may be ruled preempted by the FAA.

What Employers Need to Know:

1. The Act applies to all claims of sexual assault or sexual harassment that arise or accrue after March 3, 2022, regardless of the date of the agreement at issue.
2. The Act gives employees the option to invalidate arbitration agreements and class or collective action waivers with respect to sexual assault and sexual harassment claims. This means employees who have signed arbitration agreements now have the option to choose to arbitrate these claims or pursue them in court regardless of their contractual agreements with their employers.
3. The Act does not affect arbitration agreements with respect to claims unrelated to sexual assault or sexual harassment.

How Employers Can Prepare

Based upon the new law, employers should review the arbitration provisions in their agreements to ensure compliance with the Act.

On January 15, 2022, New York City enacted a first-of-its-kind law requiring employers to include a maximum and minimum salary in all job postings for positions located in New York City. The requirement also applies to internal job postings as well as transfers within a company. The new law will go into effect on May 15, 2022. The law will apply to all employers with more than four employees but excludes temporary hiring firms. This means that virtually all employers with employees in New York City will need to comply.

The law amends the New York City Human Rights Law, the anti-discrimination law governing New York City employers.  The statute specifically states “It shall be an unlawful discriminatory practice for an employment agency, employer, employee or agent thereof to advertise a job, promotion or transfer opportunity without stating the minimum and maximum salary for such position in such advertisement.”

While the law does not require employers to publicly advertise or internally post its open positions, should the employer choose to advertise or post, it must include the salary information.

Employers Can Expect More Guidance

• New York City is expected to issue guidance on compliance with the law.  It is expected that more information will be provided as to what constitutes “salary” and whether the advertisement must state whether the position is exempt or non-exempt from overtime pay.
• For employers considering the minimum and maximum salary for a particular role, the law provides only that “the range may extend from the lowest to the highest salary the employer in good faith believes at the time of the posting it would pay for the advertised job (internal and external listings), promotion or transfer opportunity.”  We can expect additional guidance on minimums and maximums as well.
• Specific penalties against employers have not been detailed as of yet. However, employers who fail to include the minimum and maximum salary offered for any position located within New York City may be subject to penalties including damages, attorneys’ fees, and fines.

How Employers Can Prepare Now to Ensure Compliance

All New York City employers should take steps to ensure compliance with these new pay transparency requirements by May 15, 2022. To prepare, employers are recommended to:

• Begin to assess existing policies for determining salaries and make adjustments where appropriate
• Develop a process by which employers will ensure that published information in connection with internal and external job postings includes required salary information; and
• Consider an internal audit of current salaries by position as well as exempt/non-exempt classifications.

Gibney will continue to monitor this for guidance updates. For questions, please contact Robert J. Tracy at rjtracy@gibney.com or email info@gibney.com.

On January 13^th, the Supreme Court in National Federation of Independent Business v. Department of Labor, invalidated the Occupational Safety and Health Administration’s (OSHA) COVID-19 vaccine-or-test Emergency Temporary Standard (ETS) for large private employers (employers with 100 or more employees). The January 13 decision throws out the ETS issued by OSHA in November to require large employers to develop, implement, and enforce a COVID-19 vaccination-or-testing policy.

The Decision

In a 6-3 decision, the Supreme Court held that the Occupational Safety and Health Administration overstepped its authority by seeking to impose the vaccine-or-test rule on all U.S. businesses with at least 100 employees. “OSHA has never before imposed such a mandate,” the Court noted. “Nor has Congress. Indeed, although Congress has enacted significant legislation addressing the COVID–19 pandemic, it has declined to enact any measure similar to what OSHA has promulgated here.”

The Court ruled that OSHA lacked the authority to impose a vaccine mandate on private employers because the law that created OSHA “empowers the Secretary (of Labor) to set workplace safety standards, not broad public health measures.” The Court refused to uphold the mandate which effectively ordered 84 million Americans to either obtain a COVID-19 vaccine or undergo weekly medical testing at their own expense. The Supreme Court held that upholding the OSHA ETS “would significantly expand” OSHA’s authority beyond the limits Congress set.

What this Means for Private Employers

• While the Supreme Court’s decision invalidated the ETS and narrowed OSHA’s authority, the decision does not limit the right of employers, states, or municipalities, if they so choose, to require employees to be vaccinated against COVID-19 (while giving consideration for proper religious and medical exemptions) or require the unvaccinated to be tested regularly.
• Employers will now be subject to state and local guidelines and restrictions with respect to COVID-19 protocols in the workplace. Employers with multiple locations may be faced with inconsistent, and potentially contradictory, standards governing worksites in different states and localities.
• Employers are advised to review their Covid policies in light of the now invalidated OSHA standards to ensure that they are compliant with state and local laws applicable to the locations where they operate.

What this Means for Health Care Employers

• On the same day that the Supreme Court struck down the OSHA ETS applicable to all large employers, it upheld the vaccine mandate applicable to health care employers who receive federal payments from either Medicare or Medicaid.
• In a 5-4 decision, the Court in Biden v. Missouri held that the vaccine mandate for health care workers was justified by the spending clause of the Constitution, which allows the federal government to impose conditions when it provides funding for programs like Medicaid and Medicare.
• Health care provider employers that receive any Medicare or Medicaid payments will need to comply with the federal vaccine mandate for health care workers.