IMG_7083My colleagues, Clarisse Thomas, Keegan Drenosky and I have been busy keeping track of the developments in New York which may impact Connecticut employers with cross-border business.  Here are two of the most recent developments.

Freelance Isn’t Free

The New York City Council has enacted and the Mayor has signed a new law applicable to employers who hire contractors for work in New York City.

The “Freelance Isn’t Free Act”, which goes into effect on May 15, 2017, will formalize the relationship between the freelance worker and the hiring party, and require the parties to sign a written agreement.  Freelancers are considered to be those individuals or one person corporations who offer their services to the public.

Under the new law, if the arrangement with the freelancer involves payment that is $800 or more in a 120 day period, there must be a written contract.

A sample contract is being posted on the City’s Office of Labor Standards’ website.

The contract must have 1) the name and mailing address of both parties; 2) an itemization of the services being provided; 3) the value of the services; 4) the rate and method of compensation; and 5) the date payment is to be made.  If no date of payment is specified then payment must be made no later than 30 days from the completion of the services.  After the price is agreed upon, the hiring party is prohibited from requiring as a condition of timely payment that the freelancer accept anything less than the contracted amount.  Each party must retain a copy of the contract.

The City has also established a complaint procedure to resolve disputes, while giving the freelancer the right to bring a lawsuit for damages, costs and attorneys’ fees.  There are statutory damages of $250 if the freelancer only prevails on a claim that no written contract was executed.  However, the freelancer can recover additional damages in certain circumstances equal to the value of the contract, plus the value of the services, attorneys’ fees and costs.

In addition, civil penalties of up to $25,000 can be imposed on any hiring party who is found to have engaged in a “pattern or practice” of violating the law.

Because this law applies equally to both indivual employers and companies, care must be taken by anyone hiring a freelancer to ensure that a contract is in place if the fees at issue are $800 or more.

Ensuring Pay Equity

On January 9, 2017, Gov. Cuomo signed Executive Order No. 162, which is an Order for “Ensuring Pay Equity by State Contractors.”  This is an effort to ensure that there is no pay discrimination based on gender, race and ethnicity.

The Order requires state contractors (and their subcontractors) to specifically set forth the job title and salary of all the employees who are working directly on a State contract or, if they cannot be separately identified, then all the contractor’s employees.  This information is in addition to existing equal opportunity information already required to be submitted.

All State contracts, agreements and procurements executed on or after June 1, 2017 will contain this requirement.

 

In discrimination cases, when a plaintiff (which is a fancy legal term for employee) wins he or she is often entitled to have the defendant (typically the employer) pay his or her attorneys’ fees.  There acourtesy morgue file "dollar"re lots of cases out there that discuss formulas for such fees .

But the basic assumption that some employers will make is that these fees will not amount to a significant number.

A new case out of New York (the same federal Circuit as Connecticut) should change that perception. I would expect this case to become the new “gold standard” (pun partially intended) for fee requests both in New York and in Connecticut for employment law cases.

The New York Law Journal (subscription required) reports that in one case, the prominent plaintiffs’ firm of Outten & Golden received over $1 million in fees following a settlement of a discrimination claim.

What is particular noteworthy is that the Court ultimately granted an hourly fee request of lead partner Kathleen Peratis for $600 per hour (down from her requested rate of $675).  Since 2001, Peratis has headed the sexual harassment group at Outten & Golden, which the magistrate judge said “enjoys a reputation as one of the outstanding firms representing plaintiffs in employment cases.”

Why should employers in Connecticut be interested in this? Because this case is likely to be Exhibit A by any plaintiff’s attorney as to the “going rate” that experienced plaintiff’s attorneys are charging for their services.  The argument will likely be “Well, your honor, if a NY attorney can get $600/hour, my proposed Connecticut rate of $525 is surely reasonable” (never mind the fact that there are few employment law attorneys in Connecticut who charge that rate in “real” life.) 

But, you say, this is a New York firm, not Connecticut, so why should I worry?  However, you would be wrong to make that assumption.   Outten & Golden has a sizable office in Stamford, Connecticut and represents many employees across the state.  (Full disclosure: I have crossed paths with some of their attorneys many times and worked collaboratively with several on bar association projects.)   Thus, it is very much a Connecticut issue.

Are attorneys’ really worth that much? That’s hard for me to judge, but the rate does seem excessive for Connecticut — even the lower Fairfield County area.  Will courts in Connecticut use this case to raise awards in Connecticut? That remains to be seen.

For employers, the case has two important takeaways:

  • First, don’t underestimate claims for attorneys fees in employment cases. Settlement of cases early on can help prevent a situation where an attorneys’ fee interferes with a way to settle cases.  And for valuing cases at trial, don’t just consider “back pay” loses, but consider that the attorney could receive a sizable award in response to a fee request.
  • Second, re-familiarize yourself with the Second Circuit’s decision in Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, 522 F. 3d 182 (2d Cir. 2008). In Arbor Hill, the 2nd Circuit set forth new rules for district judges to follow when determining attorneys fees. The court there suggested that judges use their “considerable discretion, to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney’s fees in setting a reasonable hourly rate.”

For employers who are situated along the Connecticut-New York state line, keeping updated on the employment developments in both states is a challenging endeavor.  This is particularly true if the company’s sales force or business is dependent on servicing both areas.


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Connecticut employers with New York employees, should be aware of a number of recent amendments to New York Labor and Executive Laws.  These include:

(1) the requirement of a written agreement with commissioned salespersons;

(2) a change in the wage threshold for certain exempt employees;

(3) increased monetary fines for meal and rest period violations;

(4) leave for blood donors; and,

(5) narrowed criminal conviction inquiry.

My fellow EBG colleagues have prepared an excellent summary of these changes in an alert posted yesterday. 

For many employers, the new law on commissioned employees will be the most significant. The provision applies to all salespersons whose earnings are based, in whole or in part, on commissions from merchandise, real estate, insurance, securities, and other products or services.  As my colleagues have stated, the new law now states:

  • The employer and the commission salesperson must enter into a written document describing the terms of employment.
  • The document must be signed by both the employer and the employee.
  • The written document must describe how the wages, salary, commissions, draw-against commissions, if any, and all other monies earned and payable are calculated.
  • The frequency of reconciliation should also be included, if the agreement provides for a recoverable draw.
  • The document must also describe how commissions are paid upon termination of employment.
  • The document must also be kept on file by the employer for at least three years. 

It is easy to confuse the differences between the two states’ laws. For human resources professionals, its best to keep a running list of the applicable laws that may apply for certain issues.