New York Employers Mid-Year Review
In 2017, employers in New York encountered several important statutory changes affecting recruitment of applicants and retention of independent contractors. More legal change will come in 2018, warranting a mid-year review of current employment and hiring practices, as well as preparation for next year’s developments. Employers should take the time now to audit current practices and prepare for the imminent future.
On May 4, 2017, Local Law 67 was enacted to prohibit all employers in New York City from inquiring about an applicant’s salary history (including current or prior wages, benefits, and other compensation), and from relying on an applicant’s salary history when determining his or her compensation package during the hiring process, including contract negotiations. The law applies to both public and private employers and employment agencies, and to their employees and agents (collectively, “employers”). Employers may, however, engage in communications with an applicant about his or her expectations as to salary, benefits, and compensation, including any deferred compensation or unvested equity which the applicant may forfeit as a result of leaving his or her current employer. In addition, if the candidate voluntarily (and without any prompting by the prospective employer), discloses his or her salary history to the prospective employer, the employer may consider salary history in determining compensation for the applicant, and may verify the applicant’s salary history.
The law does not apply to: (a) actions taken by an employer, in accordance with any federal, state, or local law that specifically authorizes disclosure or verification of salary history for employment purposes or specifically requires knowledge of salary history to determine employee compensation; (b) applicants for internal transfer or promotion with their current employer; (c) an employer’s attempt to verify an applicant’s disclosure of non-salary related information or to conduct a background check, provided that if an employer acquires knowledge of a prospective employee’s salary history through such verification, it will not rely on any such disclosure in determining compensation; and (d) public employee positions for which salary, benefits, or compensation is determined by collective bargaining procedures.
The law takes effect on October 31, 2017 and is part of the New York City Human Rights Law (“NYCHRL”). As such, the New York City Commission of Human Rights has enforcement responsibilities and the same remedies are available as with other claims under the NYCHRL.
The law follows the passage of laws containing similar restrictions, recently enacted in Massachusetts, Puerto Rico, and Philadelphia. (For more information on the Philadelphia law, see our previous blog post.)
On May 15, 2017, the Freelance Isn’t Free Act (Local Law 140 of 2016) took effect. The law requires companies who retain the services of a freelancer (where the contract value is $800 or more standing alone or when combined with other contracts between the parties) to enter into written contracts, which must include, among other things, an itemization of services, the value of services, rate and method of payment, and payment dates. The law also includes an anti-retaliation provision, creates procedures for freelancers to file complaints, and provides for civil actions. A more detailed summary of the law’s requirements may be found in our prior blog post.
Paid Family Leave
Starting January 1, 2018, under the Paid Family Leave Law employees who have worked at least 26 weeks will receive up to eight weeks of paid family leave (“PFL”) for the following purposes: (i) provide care (physical or psychological) to a family member (employee’s child, spouse, domestic partner, parent (including step-parent or legal guardian), parent-in-law, sibling, grandchild, or grandparent); (ii) bond with a child during the first twelve months after birth or placement of the child for adoption or foster care with the employee; (iii) handle certain qualified exigencies arising from an employee’s spouse, domestic partner, child, or parent being on or called to active duty in the U.S. armed forces. The leave may be taken all at once or intermittently as needed in full day increments for a total of eight weeks. An employee taking PFL will continue to participate in the employer’s group health plan during the time covered by PFL.
Certain notice and documentation requirements exist for an employee requesting leave. During the year 2018, the paid benefit will be 55% of the employee’s average weekly wage capped at 50% of the statewide average weekly wage. In the years following 2018, the number of paid weeks and weekly paid benefit will increase.
An employer may require that PFL run concurrently with Family and Medical Leave Act (“FMLA”) Leave, New York City Sick Leave, and with the employee’s receipt of paid benefits under an employer’s group benefit plan or policy, such as long or short term disability or workers’ compensation benefits, or supplemental income replacement benefits.
During the time an employee receives PFL, the employee’s job is protected, which is similar to FMLA leave, although the requirement to qualify for PFL is significantly less.
The cost of PFL is funded through mandatory, regular payroll deductions by employers.
Effective December 31, 2016, the minimum wage increased in New York, ranging from $9.70/hour to $11.00/hour, depending on the location and size of the employer. Naturally, the overtime rates and tipped worker credits increased as well. Below are the rates for employers throughout the State through December 30, 2017.
The minimum wage will increase effective December 31, 2017, as reflected below:
- New York City employers with 10 or less employees: $12.00/hour
- New York City employers with 11 or more employees: $13.00/hour
- Nassau, Suffolk, and Westchester employers: $11.00/hour
- Rest of the State: $10.40/hour
Exempt Salary Threshold
With the change in minimum wage set for 2018, the salary threshold for exempt employees will change, because the salary threshold is set at 75 times the minimum wage. While employers in the past often focused on the possible change to the threshold under the Fair Labor Standards Act, which was scheduled to increase in 2017 following a Department of Labor (“DOL”) Rule but enjoined by a Texas Federal District Court and likely will be revisited by the DOL, New York employers may not have paid as much attention to the salary threshold increases at the State level under the New York Labor Law.
In 2017, the salary threshold for exempt employees (salaried professional, executive, and administrative) increased as shown below. The new salary thresholds increase effective December 31, 2017 and will continue to increase each year through the subsequent years (including in some areas of the State until 2021):
New York City Employers with 10 or less employees
|Starting 12/31/16||$787.50 per week ($40,950 annually)|
|Starting 12/31/17||$900.00 per week ($46,800 annually)|
|Starting 12/31/18||$1,012.50 per week ($52,650 annually)|
|Starting 12/31/19||$1,125.00 per week ($58,500 annually)|
New York City Employers with 11 or more employees
|Starting 12/31/16||$825.00 per week ($42,900 annually)|
|Starting 12/31/17||$975.00 per week ($50,700 annually)|
|Starting 12/31/18||$1,125.00 per week ($58,500 annually)|
Employers in Nassau, Suffolk, and Westchester Counties
|Starting 12/31/16||$750.00 per week ($39,000 annually)|
|Starting 12/31/17||$825.00 per week ($42,900 annually)|
|Starting 12/31/18||$900.00 per week ($46,800 annually)|
|Starting 12/31/19||$975.00 per week ($50,700 annually)|
|Starting 12/31/20||$1,050.00 per week ($54,600 annually)|
|Starting 12/31/21||$1,125.00 per week ($58,500 annually)|
Remainder of New York State
|Starting 12/31/16||$727.50 per week ($37,830 annually)|
|Starting 12/31/17||$780.00 per week ($40,560 annually)|
|Starting 12/31/18||$832.00 per week ($43,264 annually)|
|Starting 12/31/19||$885.00 per week ($46,020 annually)|
|Starting 12/31/20||$937.50 per week ($48,750 annually)|
If the Federal DOL Rule were to take effect and provide for a greater salary threshold, the federal level will supersede the State minimum threshold.
As employers prepare for the change to the federal minimum wage, the next few months provide New York employers an opportunity to consider the impact of the new threshold on employees’ salaries as noted above. They also should consider the continued increase to the exempt threshold over the following years. Now is an appropriate time for employers to audit their compensation programs for those in the category affected by the increased minimums.
Gibbons Employment & Labor Law Department attorneys regularly advise employers on written contracts, pay equity, and wage hour issues.