Author: BPS_NJA_Justin

New York LLC Transparency Act vs. Federal Corporate Transparency Act: A Guide for New York LLCs

The recently enacted New York LLC Transparency Act (NY LLCTA) was amended by Gov. Hochul at last month. It is based on the federal Corporate Transparency Act (CTA), and as such, bears significant similarities. However, the two acts are nonetheless distinct and have different scopes and timeframes. Here is a look at NY LLCTA, how it compares with CTA, and how businesses can remain compliant with both.

Understanding the New York LLC Transparency Act
The NY LLCTA, effective Jan 1, 2026, mandates the reporting of beneficial ownership information for limited liability companies (LLCs) formed or qualified to do business in New York State. This means LLCs must disclose details about individuals who own and control 25% or more of the company’s voting interests or profits.

Key Requirements of the New York LLC Transparency Act

• Reporting Entities: All LLCs formed in New York or registered to do business within the state are required to file a beneficial ownership report (BOR) with the New York Department of State (DOS).
• Beneficial Ownership Information: The BOR must include the name, date of birth, residential address, and a unique identifying number (issued by the IRS) for each beneficial owner.
• Exemptions: Certain types of LLCs are exempt from the NY LLCTA’s reporting requirements. These include publicly traded companies, certain investment funds, inactive businesses, and entities exempt from CTA.

Review the NY LLCTA here.

How Does the New York LLC Transparency Act Differ from the Corporate Transparency Act?
While the NY LLCTA shares similar goals with the federal CTA, there are some key distinctions:

• Scope: The NY LLCTA applies solely to New York LLCs, whereas the CTA covers a broader range of business entities, including corporations.
• Exemption Filings: Unlike the CTA, the NY LLCTA requires exempt LLCs to file a certification with the DOS claiming their exemption.
• Public Access: A significant difference lies in public access to the reported information. The NY LLCTA initially proposed a public database, but this has been put on hold. Conversely, the CTA mandates a secure, government-only database for BOR information.
• Filing Deadlines: As per the NY LLCTA, businesses formed or qualified to do business in New York State on or after Jan. 1, 2026 will have 30 days to comply, while those formed or qualified prior to that date will have until Jan. 1, 2027. Under the CTA, reporting companies formed prior to Jan. 1, 2024 have until Jan. 1, 2025 to comply, while companies formed Jan. 1, 2024 through Dec. 31, 2024 have 90 days to comply. Those formed on or after Jan. 1, 2025 have 30 days.
• Correction Timeframes: The NY LLCTA allows for corrected reports to be filed within 90 days of submission, while the CTA has a tighter 30-day window.
• Penalties: The NY LLCTA imposes a $250 civil penalty for non-compliant LLCs after two years of delinquency. Additional fines of $500 per day may be accrued for each day past due. The CTA carries potentially harsher civil and criminal penalties for non-compliance.

Complying with Both Acts: How BPS Can Help
Since both the New York LLC Transparency Act and the Corporate Transparency Act may apply to your LLC, it’s crucial to understand the requirements of each act and ensure compliance with both.

The veteran attorneys of our Corporate Law Practice Group can assist your LLC with navigating the nuances of these similar acts. Contact Robert Braumuller at (914) 287-6185 or rbraumuller@bpslaw.com to stay compliant.

How Healthcare Providers Can Prepare for DOJ’s Focus on Accessible Medical Equipment and Practices

The Department of Justice (DOJ) recently proposed significant changes to how the Americans with Disabilities Act (ADA) applies within the healthcare industry. The notice of proposed rulemaking (NPRM), made under Title II of the ADA, focuses on ensuring accessible medical diagnostic equipment and other accessibility practices for patients with disabilities. While the NPRM is focused on healthcare affiliated with state and local governments, providers should expect the rule, if passed, to apply to the broader healthcare industry soon. This article, therefore, explores the potential impact of the proposed rule on healthcare providers and offers steps to prepare for its possible implementation.

What Does the Proposed Rule Entail?

The NPRM centers on establishing enforceable standards for accessible medical diagnostic equipment (MDE) and other ADA compliance in healthcare. This includes examination tables, weight scales, x-ray machines, and other diagnostic equipment commonly used in healthcare settings. The core principle is to ensure patients with disabilities can independently access and utilize this equipment during examinations and procedures, to the greatest extent possible. Read the NPRM in its entirety, here.

How Will This Impact Healthcare Providers?

If passed, the rule will require healthcare providers to take a critical look at their MDE accessibility. Potential impacts could include:

• Facility Upgrades: Existing equipment might not meet the new accessibility standards. Providers may need to invest in acquiring MDE with features like adjustable heights, transfer assistance mechanisms, and compatibility with patient lifts.
• Staff Training: Operating new equipment effectively and safely requires proper training for staff. This includes assisting patients with disabilities in transferring to and from MDE, understanding specific equipment functionalities, and ensuring patient comfort during examinations.
• Review of Policies and Procedures: Facilities might need to revise internal protocols to accommodate patients with disabilities using MDE. This could involve scheduling additional time for appointments, ensuring clear communication regarding accessibility needs, and establishing protocols for using assistive equipment.

Preparing for the Potential Rule Change

Although the NPRM is still undergoing revisions, healthcare providers can proactively prepare:

• Stay Informed: Monitor updates from the DOJ regarding the rule’s progress. Bleakley Platt & Schmidt, LLP, can keep you informed and advise on specific compliance steps.
• Conduct an Accessibility Audit: Evaluate your current MDE for accessibility features. Identify areas where upgrades might be necessary to comply with the proposed standards.
• Research Accessible Equipment Options: Explore the availability of accessible MDE that aligns with your specific needs and budget. Consider factors like patient population, space constraints, and ease of use for both patients and staff.
• Develop a Training Plan: Start planning staff training programs to familiarize them with new equipment functionalities and proper techniques for assisting patients with disabilities.

The proposed rule on accessible medical diagnostic equipment and practices reflects a growing focus on ADA in healthcare. By proactively preparing, healthcare providers can ensure they deliver quality care that is accessible and equitable for all patients. Bleakley Platt & Schmidt’s Health Law Practice Group can guide providers through the compliance process and advise on implementing effective solutions. Contact Robert Braumuller at (914) 287- 6185 or rbraumuller@bpslaw.com to discuss your specific needs and ensure compliance.

Robert Braumuller to Take Part in Cybersecurity Panel at April WCA Presentation

On April 3, 2024, Robert Braumuller, a member of Bleakley Platt’s Information Technology & Cyber Security Practice Group, will be featured on a three-person All Access Healthcare panel, Cybersecurity: Impact on Healthcare, sponsored by the Westchester County Association.

The panel will discuss cybersecurity and proposed New York Hospital Cybersecurity Regulations in the context of increasing cyberattacks on health care providers by nation-state actors and other cybercriminals. On February 21 of this year, for example, Change Healthcare, a health care clearing house which normally processes fifteen billion healthcare transactions per year, was subject to a ransomware attack by BlackCat/ALPHV, a cyber-crime group believed to operate from Russia. The attack has frozen billions of dollars in payments to health care providers throughout New York and the United States. This session will discuss cybersecurity vulnerabilities and ways to defend against them.

This program will be held Wednesday, April 3 from 8:00 am – 10:00 am at 360 Hamilton Ave., White Plains, New York.

Registration is required.

A continental breakfast and networking will precede the panel.

John Diaconis to Present on Insurance Mediation at April NYSBA Meeting

Partner John Diaconis, a member of Bleakley Platt’s Insurance Law Practice Group, will be featured on a four-person panel presenting Mediating a Third-Party Insurance Claim Where the Insured and the Insurer Are at Odds at a joint meeting of The NY State Bar Association Dispute Resolution Section’s Mediation and Insurance Dispute Committees.

The panel will discuss situations in which:

• The insurer asserts that it does not cover all claims and wants the insured to monetarily participate in the settlement
• The insurer states that there are strong legal arguments to be made and wants the litigation to proceed, but the insured does not
• The insured wants to settle the claim late in the mediation day at the negotiated amount, but the insurer insists that the cost is too high and refuses
• The insurer wants to settle the claim, but the insured objects due to their own business reasons

This complimentary informational program will be held Monday, April 1 from 6:00 pm – 7:00 pm at the American Arbitration Association office at 150 East 42d Street, 17^th fl. New York, New York.

The discussion will be followed by networking and a cocktail reception.

The presentation will be available in person and remotely, via Zoom. Registration is necessary for either option.

Employer Obligations Under NYC’s Workers’ Bill of Rights Policy

As of July 1, 2024, a new regulation will require New York City employers to prominently display and provide a copy of a Workers’ Bill of Rights to both current and new employees. NYC’s Workers’ Bill of Rights is being developed by the Department of Consumer and Worker Protection, in collaboration with various governmental agencies, community groups, and labor organizations. This initiative aims to ensure that employees, prospective employees, and independent contractors in New York City are well-informed about their rights under relevant federal, state, and local laws.

The Workers’ Bill of Rights, available on New York City’s official website, details the rights of employees, covering topics like unionization and rights applicable irrespective of immigration status. Once effective, employers will be required to distribute a copy of the Workers’ Bill of Rights to all employees. New employees must receive this document on or before the first day of work.

Employers will also be required to display the Workers’ Bill of Rights prominently in an area that is easily accessible and visible to all employees. If online platforms or mobile applications are frequently used by an organization to communicate with its workforce, the Workers’ Bill of Rights must also be accessible via these means.

The Workers’ Bill of Rights must be presented in English and any language spoken as a primary language by at least 5% of a company’s employees, provided New York City makes the document available in that language. The term “employee” includes any person who is employed in NYC for more than 80 hours per calendar year, whether the person is employed on a full-time, part-time, or transitional job program basis.

Failure to comply with these regulations may result in a civil penalty of $500. However, for the first violation, employers will be given a notification and a 30-day grace period to rectify the non-compliance.

Employers are urged to familiarize themselves with the upcoming requirements. To ensure compliance and avoid penalties contact Joseph DeGiuseppe of Bleakley Platt & Schmidt’s Labor and Employment Practice Group at 914-287-6144 or jdegiuseppe@bpslaw.com.

A Look at New York’s Proposed Cybersecurity Regulation of Hospitals

New York has become the first state to propose comprehensive cybersecurity regulations aimed at enhancing patient safety and addressing cybersecurity concerns in all hospitals operating within the state. This initiative, introduced in November of last year, is part of New York’s ongoing commitment to issuing industry-specific cyber regulations, building on the precedent set for financial institutions in 2017.

The proposed regulations, if passed, seek to fortify the data privacy and cybersecurity protocols of hospitals, complementing the existing Security Rule of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). By doing so, the regulations aim to not only safeguard sensitive patient information but also mitigate disruptions to healthcare administration caused by cybersecurity incidents.

Key Requirements of New York’s Cybersecurity Regulations for Hospitals:

1. Comprehensive Cybersecurity Protocols: Hospitals will be required to establish robust cybersecurity protocols to ensure the integrity and confidentiality of patient data.
2. Cybersecurity Program and Risk Assessment: Hospitals must develop and maintain a cybersecurity program, conduct regular assessments of cybersecurity risks, and establish a response protocol in the event of a cybersecurity incident.
3. Chief Information Security Officer (CISO): Hospitals are mandated to appoint a CISO to oversee and lead cybersecurity efforts within the institution.
4. Multifactor Authentication: Access to hospital internal networks from an external network will require the use of multifactor authentication, adding an extra layer of security.
5. Security Guidelines for On-Premise Applications: Hospitals must adopt written procedures, guidelines, and standards to ensure the security of on-premise applications.
6. Incident Reporting: Hospitals are obligated to identify material cyber incidents promptly and report these events, which impact hospital operations, to the relevant stakeholders within two hours of the incident.

The proposed regulations are currently open for a 60-day public comment period, set to conclude on February 5, 2024. If the regulations are finalized and adopted in their current form, hospitals in New York will have a one-year grace period to achieve compliance, beginning on the enactment date. The regulations would apply to all general hospitals licensed pursuant to Article 28 of the Public Health Law, which is not limited to acute care hospitals, and would apply to diagnostic and treatment centers.

In anticipation of the regulations becoming law, New York hospitals are advised to proactively assess and update their cybersecurity infrastructure, controls, policies, and procedures. For assistance in navigating these requirements and ensuring compliance, hospitals can contact Robert Braumuller at (914) 287-6185 or rbraumuller@bpslaw.com.

DEA and HHS Again Extend Telehealth Controlled Substances Flexibilities

In a significant development for healthcare providers and patients alike, the rule permitting the telehealth prescription of controlled substances for new patient-provider relationships has been extended through the end of 2024. This marks the second extension to the rule implemented in 2020 by the U.S. Drug Enforcement Administration (DEA) and the Department of Health and Human Services (HHS) in response to the COVID-19 pandemic.

The DEA and HHS announced the second temporary extension on October 10, 2023. This move overrode the prior November 11, 2023 expiration and extends the application of the telehealth prescribing flexibility rule to December 31, 2024, irrespective of when the patient-provider relationship was established.

Before the onset of the COVID-19 pandemic, the Ryan Haight Online Consumer Protection Act of 2008 mandated an in-person evaluation of patients before healthcare providers could prescribe controlled substances. However, in response to the unique challenges posed by the pandemic, the DEA and HHS implemented temporary exceptions to this requirement, allowing healthcare providers to prescribe scheduled medications after conducting patient evaluations solely via telehealth.

The initial extension, issued on May 10, 2023, granted new patients the ability to receive prescriptions for scheduled medications through telehealth until November 11, 2023. For established patients, this privilege was extended until November 11, 2024. This second temporary extension expands telehealth prescribing flexibilities for all patient-provider relationships through the end of 2024.

The extension affords the DEA and HHS time to evaluate stakeholder comments received in response to two notices of proposed rulemakings (NPRMs) issued jointly in March 2023. These notices suggested allowing prescribers to provide a 30-day supply of medication to patients via telehealth. However, beyond this period, an in-person evaluation would be required to continue prescribing. Furthermore, certain medications would be exempted from telehealth prescribing, and an initial in-person visit would be mandated for prescribing Schedule II through V medications. Learn more about both the second temporary extension and the NPRMs, here.

The DEA and HHS emphasized their commitment to creating telehealth regulations that align with public health and safety, indicating that they are reviewing stakeholder comments to inform these regulatory measures. Additionally, the DEA has referenced plans to announce new standards by the fall of 2024, underscoring the evolving landscape of telehealth regulations and their critical role in modern health care delivery.

Bleakley Platt & Schmidt continues to track developments in telehealth policy and will post updates for our health care clients as information becomes available. To stay compliant with these changing rules, contact Robert Braumuller of the Firm’s Health Law Practice Group at (914) 287-6185 or rbraumuller@bpslaw.com.

New York’s Health Care Worker Vaccine Mandate Repealed

On October 4, New York’s COVID-19 healthcare worker vaccine mandate was formally repealed by the New York State Department of Health. The decision ends a more than two-year long COVID-19 policy and marks another tangible sign that New York has exited the public-health-crisis phase of the pandemic. Health care providers will no longer be required to track the vaccination statuses of their employees.

The emergency rule, adopted in August 2021 as 10 N.Y.C.R.R. § 2.61, directed hospitals, nursing homes, hospices, adult care facilities, and other identified health care entities to “continuously require” employees to be fully vaccinated. While it established a medical exemption, it did not account for religious beliefs, bringing forth challenges in court. The regulation caused conflict between labor and management over the implementation of its vague exemption standards. Its repeal will offer welcome clarity to employers and employees alike.

Even prior to the repeal, the Rule showed signs of weakening. A Department statement issued in May of this year declared that the state would not take any new actions to enforce the Rule. Less than six months later, 10 N.Y.C.R.R. § 2.61 is officially repealed.

Despite the political and social controversies surrounding vaccine mandates, from the state’s perspective, repealing the rule is a matter of practicality. The Department argues that, because COVID-19 does not yet have a fully established seasonality as does influenza, tracking employee vaccination statuses for both viruses would pose logistical challenges for providers. The continued evolution of the virus, variables surrounding future transmission rates, and anticipated changes to federal vaccine recommendations were also cited as evidence of the Rule’s impracticality.

The Department has stated that the repeal allows health care providers to make their own decisions regarding vaccine and mask mandates for employees.

As with all employment law matters, the attorneys of our Labor & Employment Law Practice Group are available to provide counsel. Contact Joseph DeGiuseppe, Jr. at (914) 287-6144 or jdegiuseppe@bpslaw.com.

New York State’s Captive Audience Law Explained

Within a day of its arrival on her desk, Governor Hochul enacted New York’s “Captive Audience Law” (S4982/A6604), amending Section 201-D of the NYS Labor Law. The main purpose of this law is to prevent employers from taking punitive actions against non-managerial employees who do not attend company-sponsored meetings intended to convey the employer’s stance on religious or political matters (so called “captive audience” meetings). This is significant because the new law broadly defines “political matters” to encompass organized labor, particularly decisions related to supporting or joining labor organizations. In effect, employers in New York State are now barred from requiring that employees attend meetings intended to discourage unionization.

The passage of this law marks a significant deviation from the rights of employers to engage in speech protected by Section 8(c) of the National Labor Relations Act. The NLRA regards mandatory, “captive audience” meetings as a form of protected employer speech under Section (c) – provided management does not use threats, promises of benefits, or punishment to discourage employee unionization. “Captive audience” speeches, however, are prohibited by the NLRB within 24 hours of a union representation election.

By contrast, the New York law makes it illegal for employers to refuse to hire, employ, or license non-managerial workers for choosing not to attend meetings, listen to speech, or view communications primarily intended to express the employer’s religious or political views, including unionization. Protected employees also may not be discharged or discriminated against regarding terms of employment for having declined to attend an employer’s “captive audience” meeting. Review the law in its entirety, here.

New York joins Connecticut, Maine, Minnesota, and Oregon in banning mandatory “captive audience” meetings. While this indicates a growing national trend, legal challenges are emerging around whether these bans conflict with Section 8(c) of the NLRA, highlighting the complex legal landscape surrounding this issue.

Bleakley Platt & Schmidt’s Labor & Employment Law Practice Group is prepared to counsel New York employers on compliance with this new law and will continue to monitor this legal trend on both the NYS and national level. To learn more, contact Joseph DeGiuseppe, Jr, at jdegiuseppe@bpslaw.com.

How Employers Can Comply with NLRB’s Stericycle Inc. Decision

Last month, the National Labor Relations Board (NLRB) made a significant announcement that will have far-reaching implications for workplace policies in both unionized and non-unionized settings. Stericycle Inc., as the decision is known, represents a departure from the 2017 Boeing Company decision, which employed a balancing test to evaluate employer workplace rules and handbook provisions. Under the new Stericycle standard, any overly broad employer rule or policy that has the potential to discourage employees from exercising their rights under the National Labor Relations Act (NLRA) may be considered unlawful.

The Stericycle decision is essentially a return to the NLRB’s stance on workplace rules established in the 2004 Lutheran Heritage decision, which targeted common employer rules and policies that promoted civility, courtesy, and productivity, and prohibited harassment, disruption, and insubordination in the workplace. The NLRB General Counsel (GC) will need to demonstrate that an employer rule or policy could inhibit employees from exercising their protected Section 7 rights, which encompass various activities related to their terms and conditions of employment.

Stericycle introduces an important change to Lutheran Heritage, which used a “reasonable employee” standard to evaluate the lawfulness of workplace rules. The NLRB will now assess employer rules from the viewpoint of an employee who is “economically dependent” on the employer and contemplates engaging in protected concerted activity. This perspective acknowledges the vulnerability of employees in relation to their employers and emphasizes the need for workplace rules to be narrowly tailored to serve legitimate business interests.

Demonstrating that a rule is unlawful will be the responsibility of the GC. A policy can be deemed an unfair labor practice if an employee could reasonably interpret the rule as coercive, even if it could also have a different interpretation, and even if the employer did not intend to restrict employee rights. However, employers can defend their rules under the Stericycle standard by proving that they advance legitimate and substantial business interests that cannot be achieved with a more narrowly tailored rule.

It should be noted that Stericycle retroactively applies to cases involving employer policies that are facially unlawful. This means that pending cases may require the rescission of rules deemed unlawful, with employers having the opportunity to replace them with more narrowly tailored alternatives.

Employers and managers who wish to review this decision in its entirety can do so, here.

Given this ruling, employers are urged to review and revise workplace policies and handbooks, with consideration given to how employees who are economically dependent on the company might perceive them. This applies to almost all private sector non-supervisory workers in the U.S., regardless of union affiliation, as both union and non-union workers are protected by Section 7 of the National Labor Relations Act. Employers are encouraged to craft specific, non-coercive rules that align with their legitimate business interests. Bleakley Platt & Schmidt’s Labor & Employment Law Practice Group has decades of experience helping companies stay compliant with changing NLRB regulations and decisions. To learn more, contact Joseph DeGiuseppe at jdegiuseppe@bpslaw.com.

Amended New York State Wage Transparency Law to Take Effect this Month

As Bleakley Platt & Schmidt has detailed in previous blogs, wage transparency has been a growing employment law trend in New York. Following similar laws in New York City and Westchester County, a state bill was predictably signed into law by Gov. Hochul in late 2022 and amended last March. The revised New York State wage transparency law is set to go into effect on September 17 and marks a significant shift in New York’s labor and employment law. Here’s what employers and managers should be aware of before then.

In a striking departure from NYC’s pay transparency law, the amended NYS law no longer contains language pertaining to any job that “can or will be performed in the State of New York,” such as remote positions performed in New York for out-of-state employers. Instead, the revised law applies only to jobs that can be physically performed, if only partially, within the State. A notable exception is jobs that are physically performed outside the State but which “report to a supervisor, office, or other work site in New York.”

Moreover, as a result of the amendment, employers are no longer required to keep records of job descriptions and pay ranges. Additionally, the amendment now defines “advertise” as it pertains to job postings as, “to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity.”

While wage transparency removes employers’ traditional advantage in salary negotiation, these amendments to the law may benefit managers by easing recording keeping requirements and providing a statutory definition for job advertisements. To review the amendments in their entirety, click here.

Bleakley Platt & Schmidt continues to monitor this legal trend and will post further updates as New York State’s wage transparency law takes effect next month. For counsel, contact Joseph DeGiuseppe, Jr. of our Labor & Employment Practice Group at 914-287-6161 or jdegiuseppe@bpslaw.com

2024 Budget Bill Makes New York Dispensary License Mandatory for Cannabis Retailers

As part of the state budget for the 2024 fiscal year, New York recently passed legislation aimed at cracking down on unlicensed sales of marijuana, which have thrived since the legalization of adult recreational cannabis two years ago. The primary goal of these measures is to regulate the cannabis industry and protect licensed dispensaries, which are currently outnumbered by nearly 2,000 unlicensed retailers in New York City alone. Supporters argue that these laws are necessary to bring order to the market and ensure consumer safety and tax compliance.

The legislation grants powers to the Office of Cannabis Management (OCM) and the Department of Taxation and Finance (DTF) to impose civil penalties on unlicensed cannabis businesses. For the most egregious offenders, fines of up to $20,000 per day may be assessed. The DTF will also be empowered to conduct regulatory inspections to ensure that proper taxes are being paid by businesses selling cannabis products and those involved in indirect sales, such as “sticker shops” or gifting schemes that give cannabis with the purchase of inexpensive merchandise.

The budget bill establishes that selling or giving away cannabis products without the necessary license, permit, or registration will be classified as a class A misdemeanor, punishable by up to one year in jail. While the Hochul administration claims that the focus will be on civil enforcement, some reformers fear the legislation could signal a potential return to criminalization, which has long been criticized as a failed strategy. Critics also worry that this could, in turn, disproportionately impact minority communities, which have historically faced greater enforcement and harsher penalties for drug offenses.

These provisions have sparked debates among state lawmakers, including members of the Black, Puerto Rican, Hispanic & Asian Caucus, who played a significant role in the passage of the previous Marihuana Regulation and Taxation Act (MRTA). The MRTA aimed to end incarceration for cannabis offenses and promote social equity by allowing individuals with past marijuana offenses to participate in the regulated cannabis market.

The key challenge moving forward will be finding a balance between curbing illegal sales and avoiding the re-criminalization of cannabis, while ensuring the success of the regulated cannabis economy in New York. This delicate balance will be critical to achieving the intended goals of the legislation and preventing further harm to marginalized communities disproportionately impacted by past drug enforcement policies. Review New York State’s 2024 fiscal year budget in its entirety, here.

The legalization of adult-use recreational cannabis has the potential to be a significant revenue driver for New York State and its municipalities. Bleakley Platt & Schmidt will continue to follow and provide updates on changes to State policy regarding this subject. Stay current on the latest legal news and insights by checking our blog page regularly.

New York Set to Enact Total Prohibition on Non-Compete Agreements

New York is set to become the latest state to enact a prohibition on non-compete employment agreements following the passage of bill A1278B/S3100A by the New York State legislature.

If signed into law by NY Governor Hochul, new Labor Law Section 191-d will go into effect thirty (30) days after it becomes law and will prohibit any non-compete agreement entered into or modified thereafter. The new law as currently drafted would not operate retroactively or void current non-compete agreements.

However, employers seeking to enforce current non-compete agreements may run into judicial roadblocks given the state’s newly codified public policy against the use of non-competes. Under current case law precedent, a non-compete is enforceable to the extent it (1) is necessary to protect the employer’s legitimate interests, (2) does not impose an undue hardship on the employee, (3) does not harm the public, and (4) is reasonable in time-period and geographic scope. (BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388-89 (1999); Reed, Roberts, 40 N.Y.2d at 307; Scott, Stackrow & Co., C.P.A.’s, P.C. v. Skavina, 780 N.Y.S.2d 675 (App. Div. 3d Dept. 2004).) It is highly unlikely that New York courts will uphold existing non-compete provisions after our elected state legislature has determined that non-compete covenants are illegal regardless of how compelling the business interests are and how narrowly tailored in duration and geographic scope the restriction is.

The legislation defines a “non-compete agreement” as any agreement, or clause contained in any agreement, between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer included as a party to the agreement.

The definition of “covered individual” does not distinguish between a traditional employment relationship and an independent contractor relationship. It covers any person who “whether or not employed under a contract of employment, performs work or services for another person on such terms and conditions that they are, in relation to that other person, in a position of economic dependence on, and under an obligation to perform duties for, that other person.”

Section 191-d imposes a total ban on non-compete agreements and provides a private right of action, granting employees and contractors the ability to sue employers who violate the section within two years of (i) the date the prohibited non-compete was signed; (ii) the date the employee or contractor learns of the prohibited non-compete agreement; (iii) the date employment or the contractual relationship is terminated; or (iv) the date the employer takes any step to enforce a non-compete agreement. The bill provides the court with the ability to void the non-compete and order other appropriate relief including awarding the employee/contractor lost compensation, damages, attorney’s fees and costs, and liquidated damages up to $10,000. Because the statute applies to contracts entered into or modified on or after the statute’s effective date, employers can become liable under the statute for old contracts with restrictive covenants that are inadvertently modified even if they do not seek to enforce them. This is a pitfall to avoid.

The term “Non-compete Agreement” is limited to agreements “after the conclusion of employment with the employer included as a party to the Agreement.” Accordingly, the new law would not prohibit the buyer of a business from imposing a non-compete restriction on the seller in a sale agreement between them since that agreement would be with a buyer entity, rather than with an employer entity.

Section 1(5) states that the law shall not be “construed or interpreted as affecting any other provision of [law] relating to the ability of an employer to enter into an agreement with a prospective or current covered individual that establishes a fixed term of service”.  While this statutory language is unclear, it seems likely that this provision is intended to permit an employer to enter into a contract for a fixed term even if the agreement includes provisions that require the employee or contractor to work exclusively for the employer during the term and to give his or her best efforts to promote the interests of the employer, which effectively precludes the employee or contractor from working during that time for another employer. The statute also permits agreements that prohibit the disclosure of trade secrets and confidential and proprietary client information and prohibit the solicitation of clients of the employer that the covered individual learned about during employment.

Bleakley Platt & Schmidt, LLP will continue to monitor the developments concerning this pending legislation. For more information and strategies to address the new legislation, please contact Robert Braumuller or Zaina S. Khoury, at RBraumuller@bpslaw.com or ZKhoury@bpslaw.com.

What Employers Should Know Ahead of the COVID-19 Outbreak Period’s July 10 Ending

Next month, the Outbreak Period of the COVID-19 National Emergency will expire, bringing with it an end to extensions of deadlines for special enrollment in employee health plans, continuing employee health benefits under COBRA, and filing claims. To ensure a smooth transition, employers should familiarize themselves with the coming changes and be prepared to answer employee questions.

As many will remember, the COVID-19 National Emergency ended a month earlier than originally projected (April 10 instead of May 11), with President Biden’s signing of House Joint Resolution 7 (H.J. Res. 7). Subsequent guidance from the Department of Labor clarified that the Outbreak Period’s original end date would remain July 10, as had been established in a prior DOL “Frequently Asked Questions” about COVID-19 emergency relief.

That previous guidance, issued March 29 of this year, stated:
DOL, the Treasury Department, and the IRS anticipate that the Outbreak Period will end July 10, 2023 (60 days after the anticipated end of the COVID-19 National Emergency). As of the last day of the Outbreak Period, the extensions under the emergency relief notices for timeframes that began during the COVID-19 National Emergency no longer apply.

DOL’s full FAQ is available for review, here.

While H.J. Res. 7 did not affect the July 10 deadline, the expiration of the Outbreak Period itself is significant for employers. It marks the end of:

• the special enrollment period giving employees one year (as opposed to the standard 30 days) to enroll in a health plan after a major life event
• certain COBRA-related relief allowing employees additional time to pay premiums or decide whether to use coverage
• deadline extensions for continuing health benefits and filing claims or appeals under COBRA

It should be remembered, however, that while July 10 marks the end of such extensions under the COVID-19 National Emergency, group health plans may still elect to provide longer timeframes for the above.

As with all employment matters, accurate and timely communication is paramount. Contact Bleakley Platt & Schmidt’s Labor & Employment practice group for guidance regarding this and other changes to employee benefits.

DEA Re-Examining Proposal to Limit the Prescription of Controlled Substances Via Telehealth

On May 3, 2023, the DEA released a statement that it had received a record 38,000 comments on its proposed rule that would no longer permit telehealth providers to prescribe controlled substances if the patient never had an in-person examination, subject to limited exceptions (see our March 21, 2023 article on this and related issues). “We take those comments seriously and are considering them carefully,” the DEA noted in its statement. “We recognize the importance of telemedicine in providing Americans with access to needed medications, and we have decided to extend the current flexibilities while we work to find a way forward to give Americans that access with appropriate safeguards.” Pending a final determination on the issue, the DEA and HHS have jointly issued a draft Temporary Rule extending the Covid-19 telemedicine flexibilities for prescription of controlled medications. This Temporary Rule will become effective when it is published in the Federal Register, which of this writing has not yet occurred. The full text of the DEA’s May 3 statement can be found here: Click.

Municipalities Must Re-Think Traditional Exclusionary Zoning to Allow Greater Flexibility for Mixed Use/Residential Development

Given the post-pandemic adjustments to our daily work and life patterns, high interest rates and decreased demand for office and retail space in Westchester County and throughout the Hudson Valley, the time is now for municipalities to embrace forward-thinking changes to outdated, onerous and restrictive zoning codes.  Rather than put every zoning use in its own separate, exclusionary rigid box of residential, commercial or office, municipalities should allow for more flexible zones with a combination of such uses based on the needs of the community.

The time for municipalities to embrace mixed-use zoning is now. Downstream consequences of the Fed’s tightening program are surfacing and signaling slower growth ahead.  This is particularly true for office and retail properties.  Office-using employment lagged the Hudson Valley’s overall growth rate, increasing just 0.1% year-over-year. See CBRE Figures – Westchester County – Q1 2023. The Wall Street Journal reports that lending for offices has plummeted to 35 percent of 2019 figures with retail not far behind. The consequences of this are that municipalities are potentially left with vacant and underperforming buildings which lead to other negative impacts in the community, loss of ratables, blight etc.  Conversely, the demand for residential, multi-family development is booming and there is simply not enough of it.

The COVID-19 pandemic did not cause this trend.  The pandemic accelerated trends that have been going on for years, namely the densification of assets through the redevelopment of properties, which are often retail centers or low-rise office sites.  See Multi-Housing News 9-14-20. Based on this market reality, the retail and office landscape has changed, causing developers to reimagine their existing offices and shopping centers by adding residential developments to those properties.  This pattern is the next logical step, as it adds market rate units to cater to the growing young millennial and empty-nester population, while at the same time bringing new life to underutilized commercial buildings and needed tax ratables to municipalities. In the area of retail centers, adding residential development to those properties provides those retail developers with an instant customer base, namely, residents seeking the live-work-play model of providing retail, dining, and entertainment all under one roof – all within walking distance.

Local municipal officials should seize this golden opportunity to reinvigorate their zoning codes to allow residential development in commercial/retail zone districts. Shifting consumer trends have led to vacancies in many commercial areas. To keep these areas viable and satisfy the need for housing options, municipalities should explore zone changes that would permit residential uses in pre-existing commercial zones. While municipalities may be hesitant to engage in this exercise due to factors stemming from lack of political will, fears of changing the character of the local neighborhoods and public opposition, such factors can be overcome with the right mix of expert input from professionals, open dialogue with stakeholders, community members and municipal officials, and a needs-based assessment of the type of mixed-used development appropriate for a particular site.  By the same token, this exercise to provide more flexible zoning should not be an onerous task marred by massive, costly and at times, lengthy timeframes, and logistical problems.

Adding residential use to commercial zones is an opportunity to transform local municipalities for the better. Municipalities should not fear such conversions, but rather embrace it and remove draconian zoning laws that no longer comport with modern world realities.  The days of traditional exclusionary zoning, and strict separation of uses are outdated and stifle the ability of municipalities to evolve. Bleakley Platt & Schmidt’s Land Use & Zoning Law Practice Group can help develop strategies for overdue zoning law updates. Contact Lino Sciarretta at (914) 287-6177 or lsciarretta@bpslaw.com. To learn more about our Land Use & Zoning Law Practice Group, click here.

Proposed HIPAA Privacy Rule Change to Strengthen Privacy Related to Reproductive Health

In the wake of the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, the Department of Health & Human Services Office for Civil Rights (“OCR”) has issued a Notice of Proposed Rulemaking to modify the Health Insurance Portability and Accountability Act’s (“HIPAA”) Privacy Rule to prohibit the use or disclosure of protected health information (“PHI”) to investigate or prosecute patients and providers involved in the provision of legal reproductive health care.

The Privacy Rule currently permits certain disclosures of PHI to law enforcement authorities and others. This provision will remain in effect while HHS solicits comments on its proposed rule change.  The proposal seeks to prohibit the disclosure of reproductive health care PHI to state law enforcement authorities for use in bringing criminal, civil, or administrative actions against patients for obtaining reproductive health care, including abortions, and against their health care providers for rendering the care.

Specifically, 45 C.F.R. §164.502 would be amended to prohibit the use or disclosure of PHI by a regulated entity for either of the following purposes:

• A criminal, civil, or administrative investigation into or proceeding against any person in connection with seeking, obtaining, providing, or facilitating reproductive health care, where such health care is lawful under the circumstances in which it is provided.
• The identification of any person for the purpose of initiating such investigations or proceedings.

The new rule would apply where the relevant criminal, civil, or administrative investigation or proceeding is in connection to: (1) reproductive health care sought, obtained, provided, or facilitated in a state where the health care is lawful and outside of the state where the investigation or proceeding is authorized; (2) reproductive healthcare that is protected, required, or authorized by federal law, regardless of the state in which such health care is provided; or (3) reproductive healthcare provided in the state in which the investigation or proceeding is authorized and that is permitted by the law of that state.

The proposal also would add a new section 45 C.F.R. §164.509, which would require a regulated entity, upon receipt of a request for PHI related to reproductive healthcare, to obtain a signed attestation that the use or disclosure of such PHI is not for a prohibited purpose. The attestation requirement would apply when the request is for PHI pursuant to health oversight activities, judicial and administrative proceedings, law enforcement purposes, and disclosures to coroners and medical examiners.

OCR Director Melanie Fontes Rainer commented on the proposal stating: “Today’s proposed rule is about safeguarding this trust in the patient-provider relationship, and ensuring that when you go to the doctor, your private medical records will not be disclosed and used against you for seeking lawful care.”

The proposed rule was published in the Federal Register on April 17, 2023, with public comments due by June 17, 2023.

For more information and regulatory guidance, please contact Robert Braumuller or Zaina S. Khoury, at RBraumuller@bpslaw.com or ZKhoury@bpslaw.com.

First Deadline of NYC’s Local Law 154 of 2021 Looms

With the passage of Local Law 154 of 2021 (the “All-Electric New Buildings Law”), New York City became the largest city in the world to require that newly constructed buildings operate solely on electricity.  This law means new buildings, with few exceptions, will be all-electric and emit less carbon, with the goal of improving local air quality.  The law is a significant milestone in the city’s push to decrease greenhouse gas emissions and sets ambitious targets for reducing the city’s carbon footprint. It is important for all developers, owners, and builders to be aware of the law’s regulations to ensure compliance and plan for similar transitions as this trend continues.

Local Law 154 is inaccurately referred to as an “NYC fossil fuel ban.” In actuality, the law imposes strict carbon dioxide limits on newly constructed buildings by prohibiting the use of any substance that emits over 25 kg of CO2 per million BTUs. This effectively bans the use of:

• propane
• diesel
• home heating fuel
• kerosene
• natural gas
• gasoline
• residual heating fuel in new buildings

The target of Local Law 154 is new construction. New buildings under seven stories must be fully electric by January 2024. Buildings over seven stories must comply by July 2027.

Major renovations that increase a building’s floor surface area by more than 110% are also subject to the law’s provisions. The Department of Buildings will enforce Local Law 154 through its existing construction document review process. Click here to read the law in its entirety.

However, the law also includes exemptions for certain types of buildings. These include:

• facilities requiring fossil fuel combustion for manufacturing
• laboratories
• commercial kitchens
• hospitals
• crematoriums
• buildings used by utilities to generate electricity or steam
• buildings used to treat sewage or food waste

While Local Law 154 does not address retrofitting current buildings, Local Law 97 is forthcoming.  Both laws aim to reduce building emissions by 40% by 2030 and 80% by 2050. Local Law 97 requires buildings over 25,000 square feet to meet lower emissions limits over the next decade.

The new emission thresholds starting in 2024 will affect only the top 20% of emitters. By 2030 the law will impact 75% of New York City’s buildings.

Local Law 154 represents a bold initiative in New York City’s efforts to reduce greenhouse gas emissions. Commercial real estate developers, building owners, and construction companies must become familiar with these new regulations to ensure compliance.

For counsel on this historic law and the larger trend it represents, contact Jonathan A. Murphy of Bleakley Platt & Schmidt’s Construction Law Practice Group at (914) 287-6165 or jamurphy@bpslaw.com.

To consult the Real Estate Practice Group on this matter, contact Peter N. Bassano at (914) 287-6102 or pbassano@bpslaw.com.

SCOTUS Ruling Clarifies Overtime for Daily-Rate Employees Under FLSA

On February 22, 2023, in Helix Energy Solutions Group, Inc. v. Hewitt, No. 21-984, the U.S. Supreme Court in a 6-3 decision held that a “highly compensated executive employee” who was paid at a daily rate and not paid on a “salary basis” at the then-required $455 weekly salary was not exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).

The employer, an offshore oil and gas company based in Houston, claimed that its former employee, a highly paid executive, earning more than $200,000 per year at a daily pay rate, was exempt from overtime pay because he received at least $455 each week, meeting the minimum standard for salaried workers at the time. The former employee claimed that he was entitled to overtime payments as he was not paid at FLSA’s then-required $455 weekly salary. According to the Curt’s record, the former employee from 2015 to 2017 lived on an offshore oil rig for 28 days at a time while being on-duty for 12 hours each day. He was paid  during this period from $963 to $1,341 per day, and earned $248,053 in 2015 and $218,863 in 2016.

In analyzing the FLSA regulations governing what constitutes being paid on “salary basis” and the “highly compensated employee” exemption, the Supreme Court, in an opinion authored by Justice Kagan, found that a daily rate, even one that exceeded the weekly salary minimum, did not satisfy the “salary basis” test required by the regulation because it constituted a guaranteed payment per day, not per week. According to Justice Kagan, however, employers can satisfy the “salary basis” test for “highly compensated” employees paid at a daily rate  paying the employee a defined weekly amount, along with a day rate for extra days, so long as there is a “reasonable relationship” between the weekly guarantee and the total amount actually paid.

Unfortunately for employers, the issue of what constitutes a “reasonable relationship” is not defined by FLSA regulation, other than the U.S. Department of Labor’s guidance in FLSA opinion letter 2018-15 on this issue. While this FLSA opinion letter acknowledges that the 1.5-to-1 ratio of guaranteed weekly salary to actual earnings may signify the existence of a reasonable relationship, the Department further stated in this letter that where actual or usual earnings are approximately 1.8 times the guaranteed weekly salary—or nearly double—the guaranteed weekly salary “materially exceed[s]” the permissible ratio of the regulation. Accordingly, employers should therefore seek the advice of counsel in classifying “highly compensated” employees as exempt even when they are paid at the current guaranteed FLSA salary of $684 per week to determine if a “reasonable relationship” exists between the employee’s actual and guaranteed weekly earnings within the meaning of the Department’s FLSA guidance.

National Labor Relations Board Decision Places Limits on Severance Agreements

On February 21, 2023, in McLaren Macomb, 372 NLRB No. 58, the National Labor Relations Board held that employers may not offer severance agreements to employees which require these employees “to broadly waive their rights under the National Labor Relations Act [Act].” The McLaren decision involved severance agreements offered to furloughed employees which prohibited them from making any disparaging statements against the employer and from disclosing the terms of the agreement itself.  McLaren now places limits on the use of confidentiality, non-disclosure, and non-disparagement clauses that employers may include in severance agreements. The decision reverses prior NLRB precedent in 2020 which found that similar severance agreements were not unlawful by themselves.

While the Act applies to most private sector employers and the U.S. Postal Services, including those with a non-union workforce, the McLaren decision does not apply to employees who are excluded from the act’s coverage, such as managers and supervisors. Moreover, the decision makes clear that the “free speech” of employees under Section 7 of the Act requires that  “employee critique of employer policy pursuant to the clear right under the act to publicize labor disputes is subject only to the requirement that employees’ communications not be so disloyal, reckless or maliciously untrue to lose the act’s protection.”

Based on the broad language of the McLaren decision, employers should review the language they use in severance and separation agreements and discuss with legal counsel whether that language should be modified, including those non-disparagement and confidentiality clauses found in pre-existing agreements.

Bleakley Platt & Schmidt Sponsors the 35th Annual Dinner for Westchester Catholic Schools

Bleakley Platt & Schmidt was honored to sponsor the 35th Annual Dinner for Westchester Catholic Schools last month at Manursing Island Club in Rye, New York. It was a fantastic fundraiser in support of the Inner-City Scholarship Fund.  

This year’s proceeds from the event will benefit scholarships, enrichment opportunities, and technology enhancements in the Central Westchester and Northern Westchester-Putnam Catholic school regions. 

BPS Partner Jim Glatthaar Presents Landlord-Tenant Update

On October 27, 2022, Bleakley Platt partner Jim Glatthaar co-taught a two-hour continuing legal education class for Judicial Title to update other practitioners on Landlord-Tenant law in New York. During the past 3 years, the practice of Landlord-Tenant law changed drastically, first with the Housing Stability and Tenant Protection Act of 2019, then with a series of pandemic induced changes, including Governor’s Executive Orders, NY Chief Administrative Judge’s Administrative Orders, the Tenant Safe Harbor Act of 2020, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020, extensions of eviction and foreclosure moratoria and Court decisions from the U.S. Supreme Court to Federal District Courts to City and Justice Courts where most Landlord-Tenant practice takes place. Mark Guterman of Lehrman, Lehrman & Guterman, LLP also co-taught the CLE class

The CLE class was conducted on Zoom with over 350 people, mostly attorneys, in attendance. Topics covered by Mr. Glatthaar included an analysis of Court decisions raising constitutional challenges to various forms of rent control, rent stabilization, and tenant protection laws; the effect of the end of eviction and foreclosure moratorium; local government attempts to interject themselves into Landlord-Tenant law; and a proposed law which would limit the rights of landlords to evict tenants unless the landlords allege and establish “good cause” for the evictions.

Considerations for NY Employers as Election Day Approaches

The November 8 midterm elections are quickly approaching. Now is the time for New York employers to take the necessary steps to ensure compliance with federal, state, and local law requirements that relate to voting rights and political activity. This is also the time to review your organization’s existing policies and practices. Below are some legal requirements New York businesses may want to consider in connection with voting leave for their employees.

Voting Leave

While no federal laws require private employers to give their employees leave in order to vote, as of March 2022 employees of federal agencies are entitled to receive up to four hours of administrative leave to vote in federal, state, local, tribal, and territorial elections. There has also been momentum for nationwide laws to provide voting leave for workers with proposed federal legislation, Bill H.R. 7489, referred in April and currently in the House committee.

Despite the lack of federal legislation covering private businesses, New York is one of 29 states in addition to the District of Columbia that have enacted laws to ensure that employees have the right to take a certain amount of time off from work to vote. Of the states that require voting leave for employees, a majority (all but seven), including New York, provide for paid leave.

Section 3-110 of the New York Election Law mandates that employees who are registered to vote in New York are eligible to take up to two hours of paid time off to vote. The right is triggered only when an employee is deemed not to have sufficient time to vote during the work day (defined as four consecutive hours either from the opening of the polls to the beginning of their work shift, or four consecutive hours between the end of a work shift and the closing of the polls). The two hours of paid leave can be taken at the beginning or end of an employee’s work schedule, as designated by the employer.  This paid leave is for any election in New York, including general elections, special elections called by the governor, primary elections, and town and village elections.

Advanced Notice of Leave

Most states with voting leave requirements mandate that employees request time off for voting leave in advance. New York is no different, requiring employees to notify employers of their intention to take paid voting leave at least two but no more than ten working days before Election Day. To avoid confusion, working days means any days that the employer is operating and open for business.

Employer Notice

Section 3-110 of the New York Election Law also mandates that employers conspicuously post a notice for employees in the workplace where it can be seen as employees come and go, setting forth the provisions of the law. Notices must be posted at least 10 working days before each election and remain posted until the polls close on Election Day. To view more about employee voting rights, please click here.

Employee Political Activity

Employers should also be aware that for employees who participate in political activity, such as fundraising for candidates, volunteering as poll workers, or running for office, Section 201-D of the New York Labor Law offers protection against discrimination. Employers are prohibited from discriminating against employees who engage in political activities outside of working hours, off the employer’s premises, and without the use of the employer’s equipment or other property, if these activities are legal.

Trends

On June 20, 2022, Governor Kathy Hochul signed the John R. Lewis Voting Rights Act of New York into law, which provides protection against discrimination in voting by ensuring equal access, in particular to members of racial, ethnic, and language-minority groups.  The law prohibits voter dilution; voter suppression; voter intimidation, deception, and obstruction, intentional or otherwise; and requires election-related language assistance beyond what is required by the federal Voting Rights Act.  Additionally, the law requires certain political subdivisions to receive pre-clearance for potential violations of the voting rights legislation. There is also now a requirement that covered jurisdictions (those with a history of civil or voting rights violations) “preclear” any changes to certain important election-related laws and policies before these jurisdictions can implement them, to ensure they will not violate the voting rights of a protected class.

With midterm elections quickly approaching, New York employers should evaluate current workplace policies and procedures with special attention to voting leave guidelines. Employers should also take the time to consult with legal experts to ensure compliance with local, state and, federal laws. Companies should also consider how these laws relate to remote work employees, as greater flexibly may be needed to meet the requirements of other states.

The attorneys in our Labor and Employment Practice Group are available for consultation regarding employee voting rights. Click here or contact us at (914) 287-6161 to learn more about how our expertise can help your organization stay compliant.

HR & Recruitment Efforts – Recent Development in Wage Transparency for Westchester County Employers

Wage transparency requirements for job postings are coming to Westchester County. Starting November 6, 2022, a new Westchester County law takes effect, requiring employers to provide a minimum or maximum salary for any job, promotion, or transfer opportunity in the posting or advertisement for the position. This law serves as an amendment to the local Westchester Human Rights law.

The law covers hard-copy or electronic postings pertaining to specific positions for which an employer recruits and accepts applications. It’s important to note that the wage transparency law does not apply to general “Help Wanted” announcements that do not specify a particular job and just generally indicate that an employer is accepting applications.

Westchester County’s wage transparency law also addresses potential confusion around remote work. The law specifically applies to job opportunities that require work to be performed, solely or partially, in Westchester County, whether from an office or remotely.

The Westchester law bears some similarity to a New York City law regarding wage transparency in job postings that will go into effect on November 1, 2022. Like the NYC law, it addresses employers with four or more employees, defines the geographic scope of applicability, and requires that minimum and maximum salaries be posted.

Employers found to be in violation of the wage transparency law are subject to any of the appropriate penalties listed in Section 700.11 (h) of the Laws of Westchester County. If found guilty of unlawful discriminatory practices, they may face penalties ranging from remedial action to damages and costly civil penalties.

New York State employers outside of Westchester should also be aware of Senate Bill S9427A, which has passed both houses of the NYS Legislature and is expected to be signed into law by Governor Kathy Hochul. This state-wide law would require employers, employment agencies, and agents to disclose the compensation or range of compensation when advertising any job performed in New York. Unlike previous laws, this law would punish employers who retaliate against applicants or employees who report a violation. Businesses that fail to comply with the statute face civil penalties up to $3,000, depending on their size, good faith, gravity of the violation, and history of prior violations. Additionally, the law would apply to any jobs that “can or will be performed,” at least in part, in New York State. This could mean that the new law will apply to listings in whatever state the employee resides, because the open position “can be” filled by a New York applicant who may work remotely. SB S9427A will take effect 270 days after it is signed into law.

Bleakley Platt & Schmidt strongly encourages employers to take the necessary steps towards compliance before the Westchester County law takes effect in November and continues to monitor developments throughout New York State in line with salary transparency initiatives.

Bleakley Platt & Schmidt Supports Rockland Meals on Wheels

Bleakley Platt & Schmidt is proud to be a part of this year’s Meals on Wheels Cornucopia, a delicious event for a worthy cause. The Hudson Valley’s best chefs gather yearly to prepare dinner for Meals on Wheels’ generous supporters whose contributions earn them a seat at one of twenty tables, each assigned to a different chef who prepares a unique meal for the attendees. Funds raised through the dinner allow the organization to continue feeding those in need.

The Firm also congratulates the 2022 Meals on Wheels Honorees:
Paul Paciello – Helmar Incorporated
George Hoehmann – Supervisor, Town of Clarkstown

To learn more about this special event, click here.
https://mowrockland.org/cornucopia2022/

New York City’s Law Imposing Restrictions on the Use of Artificial Intelligence – What Employers Need to Know

Beginning January 1, 2023, New York City employers and employment agencies utilizing artificial intelligence (AI), and automated employment decision tools for hiring purposes or in discretionary employment decisions will be required to comply with new obligations. New York City Council passed the bill in November 2021, and the bill became law on December 10, 2021, Local Law Int. No. 144.

The new law defines an automated employment decision tool as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for making employment decisions that impact natural persons.” This definition likely encompasses AI tools that assess employees with job match scores, degree or GPA requirements, and video interview software among other tools.

The law requires any NYC employer or hiring agency using automated employment decision tools to conduct a yearly bias audit of such tools and ensure that a summary of the results is publicly available on the employer or hiring agency’s website.  Companies or employment agencies that plan to utilize these tools in hiring starting in the New Year should have the tools submitted for an audit for bias and the results available to the public in 2022.

There are notification requirements for all employment candidates residing in NYC concerning the use of automated employment decision tools in the assessment of credentials for candidacy.  Notice must be provided no less than 10 business days before use so that it allows candidates to request an alternative process or accommodation.  Furthermore, upon written request from a job candidate, information about the type of data collected for the automated employment decision tool, the source of such data, and the employer or employment agency’s data retention policy must be provided within 30 days.

Guidance

The Council has not released any additional guidance in relation to compliance with the new law. It’s unclear what qualifies as a bias audit, other than the fact that the audit should include an evaluation by an impartial auditor of the automated tool’s disparate impact on persons in protected categories. With many employers utilizing AI decision tools provided by third-party vendors, due diligence will also be required with respect to the vendor’s compliance with the law.

Violations

While NYC’s new law does not expressly permit individual claims to be made by employees or candidates where violations occur, organizations found to be in violation are subject to a civil penalty of $500 for the first violation and any additional violations occurring the same day. Each subsequent violation incurs a fine of anywhere from $500 to $1,500. The law also charges separate violations for failing to comply with notice requirements, and for each subsequent day the automated employment decision tool is used without proper notice being given. NYC’s Office of the Corporation Counsel will be responsible for enforcing the law. Failure to correct these issues in a timely manner can lead to an expensive headache for employers.

Trends

New York City’s law is the first of its kind in the United States regarding AI hiring bias, but surely won’t be the last. AI regulation has quickly become a concern, with many states and cities considering how to ensure that these types of tools do not aid in bias or discrimination in employment decisions. In addition, the EEOC, in October 2021, addressed the subject of AI tools in employment decisions with respect to compliance with federal anti-discrimination laws.

Next Steps

New York City employers are encouraged to consult with experienced attorneys regarding compliance with the law. Companies may want to seek legal advice with respect to strategies and implementation of practices to protect against potential claims.

The employment law attorneys in our Labor and Employment Practice Group are always available for consultation regarding compliance with this new law. Bleakley Platt’s employment discrimination attorneys are also available for counseling in avoiding discrimination-related litigation. Contact us today at (914) 287-6161 or click here to learn more about how our expertise can help your organization stay compliant.

914 Inc. Names Zaina Khoury to “Ones to Watch” List of Best Lawyers Issue

Bleakley Platt & Schmidt is pleased to announce that 914 Inc. has named associate attorney Zaina Khoury to the “Ones to Watch” list for the category of Health Care Law in the publication’s Best Lawyers issue. Ms. Khoury is a member of the Firm’s Health Care Litigation, Health Law, and Corporate Law practice groups and possesses extensive experience in representing diverse medical industry clients on health care regulatory and transactional matters. Congratulations Zaina!

Legal Standing Is a Threshold that Must Be Determined by the Courts

In a recent Rockland County Business Journal piece, Bleakley Platt attorneys Lino Sciarretta and Daniel Fix look at a recent appellate court case concerning a Town of Greenburgh, NY zoning dispute and what it reveals about the role of the Courts in determining legal standing. Click here, to read their article in full.

Monkeypox and Employment Law: Legal Considerations for New York Employers

On August 4, 2022, President Biden declared a national public health emergency in response to the ongoing monkeypox outbreak. The announcement follows New York and other states having declared emergencies in the days prior. Already weary from the Covid-19 pandemic, New York employers now have to navigate the possibility of monkeypox spreading in their workplaces, as well as manage their already skittish employees who have faced workplace shut-downs and alternative working arrangements as a result of Covid-19. Even though at present monkeypox as an infectious disease seems to present less risk than Covid-19, employers still need to be prepared to address potential outbreaks in their workplaces.  Company managers need to consider both the health and legal impacts of this new virus in the months ahead.

Monkeypox and its Spread:

According to the U.S. Centers for Disease Control and Prevention (CDC), Monkeypox is a disease caused by infection from the same family of viruses as the variola virus, which causes smallpox, although health officials report that it carries milder symptoms and is rarely fatal.  The CDC advises that the virus can be spread through direct or intimate contact, such as with an infectious rash, scabs, or with body fluids. The virus is also spread through respiratory droplets during “prolonged, face-to-face contact, or during intimate physical contact, such as kissing, cuddling, or sex.”

Employers should regularly check for new Monkeypox information as it becomes available from the CDC and the World Health Organization. You can learn more about the virus by clicking here.

Workplace-Specific Guidance:

Although monkeypox is very different from Covid-19, there are similarities in its implications for employers. As with Covid-19, one of the first steps employers can take to reduce risk of transmission is to educate their employees on the monkeypox virus and precautions they can take to slow its spread.

Employers can also proactively adopt disinfection procedures similar to the procedures used against Covid-19. Routine cleaning and disinfecting of common surfaces and items touched by employees is recommended. In order maximize cleaning measures, the CDC recommends using “EPA-registered disinfectant in accordance with the manufacturer’s instructions.” CDC guidance also suggests that companies may want to encourage employees to consider vaccination against the virus. Frequent hand washing by employees is also recommended.  Up to date guidance can be found here:  https://www.cdc.gov

If an employee tests positive for monkeypox or starts exhibiting symptoms, the CDC recommends that the employee should immediately exit their place of employment, isolate, and contact a healthcare provider. If an employee tests positive or is presumed positive, the communicable period is from the time symptoms start until the bumps have healed and a new layer of skin has formed.  According to the CDC, a person should isolate until their rash has completely healed and all scabs have fallen off, forming a fresh layer of skin, which unfortunately will impact the workplace and productivity at companies already weary from the economic impact of the Covid-19 pandemic.

Awareness of potential legal claims:

Similar to COVID-19, stigmas surround the virus and those infected make monkeypox not only a public health crisis but a potential harassment and discrimination issue for employers. While precaution should be taken for employees exhibiting monkeypox symptoms or who have come in close contact with infected individuals, employers should be aware of anti-discrimination laws and remain compliant with Title VII well as state and local discrimination laws. As with COVID-19, discrimination against employees in protected categories who exhibit monkeypox symptoms or who have contracted the virus should be avoided.

While a company may inform other employees in the workplace about a positive case of monkeypox in the office, the employer cannot disclose the employee’s identity or other identifying information (i.e., only essential information should be shared).

Employers should also be mindful of the American with Disabilities Act (ADA) as well as state and local laws while addressing any potential cases of monkeypox in the workplace. These laws may require a company to provide reasonable workplace accommodations for an employee with monkeypox. Employers will likely have to engage in an interactive dialogue to determine whether an employee is entitled to a reasonable accommodation and what the accommodation may look like, such as additional leave or a remote work accommodation.

Whether an employee is entitled to paid or unpaid leave under state or local laws, or the Family and Medical Leave Act (FMLA), will also be a consideration under circumstances where an employee tests positive and is required to isolate or quarantine. Employers may need to revisit their policies regarding leave and consult with an attorney about requirements for leave in circumstances where an employee tests positive for monkeypox as the spread continues in the United States.

Update Employment Policies:

For these reasons, employers should take the necessary steps to remain compliant with relevant laws while providing a safe, hazard-free environment for their employees. We strongly recommend that employers seek the advice of legal counsel to create strategies in compliance with local, state and federal laws. Companies should also consider updating their employee handbook or policies to include a response to infectious/communicable diseases and include monkeypox in the policies as well as guidance on reducing transmission, and a response plan if there is a spread of the virus in the workplace.

The employment law attorneys in our Labor and Employment Practice Group are always available for consultation regarding implementing new workplace policies. Contact us today at (914) 287-6161 or click here to learn more about how our expertise can help guide you through this latest health crisis.

Remote Work: Laws NY Employers with Out-of-State Workers Must Consider

Remote work is here to stay. According to Forbes, 61% of employees preferred working in a fully remote setting. 97% of employees also preferred to maintain flexibility between remote and office work (Click here, to read the article). The modern employee can work from nearly anywhere for a company across the country or on the other side of the world. This has led some companies to experiment with hybrid work arrangements or forego the office completely. As remote work and related laws continue to be normalized, New York employers with out-of-state employees must remember that they may be subject to laws beyond the Empire State. Here are several variables they must consider.

Employment Laws

Employers may be  required to comply with the employment laws of the State or city from which a remote employee works if that employee is either not working in New York or is regularly assigned to work from a location outside of New York. Of course, employees who are temporarily assigned to work from a non-New York location (e.g., a contiguous State) as an accommodation to that employee for health or personal reasons (e.g., childcare) would most likely be subject to NY employment laws.   Otherwise, considerations should be taken for the family, medical, pregnancy, and sick laws of the State in which the remote employee is regularly assigned to work outside of NY. More specifically, New York’s wage and hour laws may come into effect when paying wages and overtime to non-exempt remote employees working in another State which offer employees less favorable minimum wage and overtime provisions.  The determination of which laws apply to remote employees is therefore factspecific and requires legal review and analysis.

 Tax Laws

If a remote worker is employed in a location other than the employer’s state, it creates a tax nexus for the company in terms of income tax withholdings. This can be an obstacle as companies become subject to taxation in another State, even if only one employee works there.  In general, employers should withhold applicable state and local income taxes based on where an employee primarily performs services – meaning their physical location. Some states have reciprocity agreements which permit withholding in a single state. However, New York does not have a reciprocity with either Connecticut or New Jersey.

Wages

Remote work has complicated wage and hour compliance for some employers. Organizations must monitor a state’s minimum wage and overtime requirements to adequately compensate a remote employee. Business expenses also must be properly compensated per each state’s laws. For example, California state law requires that employees be reimbursed for work-related expenses. It creates a gray area for employers attempting to determine whether an expense was a matter of convenience or essential to performing job duties.

Accommodations

Employers are still obligated to comply with anti-discrimination and anti-harassment laws regardless of an employee working remotely. These include protections such as tthe Americans with Disabilities Act, Title VII of the Civil Rights Act, and the Age Discrimination in Employment Act.

Monitoring

As remote work continues, employers have begun to increase monitoring practices, whether to monitor productivity or to maintain security. A recent New York law went into effect on May 7, 2022, requiring employers to notify employees of electronic monitoring practices, the legalities of which can vary by state. Texas considers electronic communication monitoring an invasion of privacy but allows supervision of phone systems for appropriate use after the employee is informed. The laws of some states don’t address employee monitoring but have recording laws that create speculation over what constitutes a violation of privacy.

Conclusion
Coordinating work policies with multiple state laws puts companies at risk of excessive fines and unnecessary litigation. Employers should make note of local, state, and federal labor laws to remain compliant with emerging remote work policies. It is strongly recommended that employers seek legal guidance while developing policies in compliance with all relevant laws.

The employment law attorneys of our Labor and Employment Practice Group are available for consultation, if you have any questions regarding establishing new policies. Contact us today at (914) 287-6144, or click here to learn more about how our expertise can help you stay on the right side of the law.

U.S. Supreme Court Eliminates the Requirement of Prejudice In Determining Whether Arbitration Rights Have Been Waived

For more than 50 years, federal courts have held that a litigant in a pending lawsuit must show prejudice in order defeat an opposing party’s invocation of its contractual right to arbitration. Recently, in Morgan v. Sundance, Inc., the U.S. Supreme Court rejected the requirement that prejudice be demonstrated by a party resisting arbitration, and in doing so fundamentally altered the test for when a right to arbitration has been waived. The case is an important warning to all litigants that they not sleep on their contractual right to arbitration, lest they risk losing it altogether.

The Facts of the Case

Petitioner Robyn Morgan, an hourly employee at a Taco Bell owned by respondent Sundance, signed an employment agreement containing an arbitration clause. She accused Sundance of manipulating payroll records to avoid paying overtime, commencing an action asserting wage theft under the Fair Labor Standards Act. Before filing a motion to compel arbitration, Sundance defended the action in federal court for eight months, filing a motion to dismiss that was denied and then engaging in unsuccessful mediation. Applying precedent, the lower court denied Sundance’s motion, finding that the company knew of its right to arbitration, but acted in a manner that was inconsistent with that right and prejudiced Morgan through its inconsistent actions. On appeal, the Eighth Circuit reversed, thus permitting arbitration to proceed, concluding that Morgan did not demonstrate prejudice.

The Supreme Court’s Decision

The Supreme Court noted that the Eighth Circuit relied upon a 1968 Second Circuit decision (Carcich v. Rederi A/B Nordie) that interpreted the Federal Arbitration Act (FAA) as “an overriding federal policy favoring arbitration” and held that “mere delay” without prejudice to an opposing party is insufficient to waive an arbitration clause. In the years since Carcich was decided, multiple other federal Circuit Courts have adopted the prejudice requirement and applied the Second Circuit’s reasoning.

In Morgan, the Supreme Court explicitly rejected the Second Circuit’s reasoning in Carcich and held that the FAA does not authorize courts to create procedural rules that favor arbitration. Referring to Section 6 of the FAA, which provides that any application to compel arbitration “shall be made and heard in the manner provided by law for the making and hearing of motions,” the Court concluded that the FAA prohibited the courts from formulating special rules intended to operate in “favor of (or against) arbitration.” The Court found that requiring a showing prejudice by the party opposing arbitration was such a rule and therefore was prohibited.

Having eliminated the prejudice requirement, the Supreme Court remanded the case to the Eighth Circuit with a direction to consider whether Sundance knowingly waived its right to arbitrate by acting in a manner that was inconsistent with that right.

Conclusion

The Supreme Court’s decision in Morgan instructs that federal courts may not give special treatment to arbitration provisions, with waiver of arbitration no longer being conditioned on a showing of prejudice to the party opposing it.  Accordingly, litigants who wish to invoke their contractual right to arbitration in the context of an existing lawsuit should do so promptly, or else risk waiving their rights through continued litigation in court.

Richard F. Markert is a Bleakley Platt partner and a member of the Firm’s Litigation Practice Group, specializing in commercial litigation and arbitrations. To read Mr. Markert’s attorney profile, please click here.