Legislative Developments

One of the interesting strains to come out of the new round of publicity surrounding sexual harassment is a renewed focus on mandatory arbitration provisions.

And it comes from an unexpected source: former Fox News anchor Gretchen Carlson.

Indeed, Carlson recently gave an interview with former ESPN producer and self-titled “Commander-in-She” Valerie Gordon that may have slipped under radar in which she talks about such provisions.

She notes that mandatory or “forced” arbitration provisions enable sexual harassment to exist under the radar.

I’m doing some advocacy work on Capitol Hill, working on gathering bipartisan support to take the secrecy out of arbitration.  You know the forced arbitration in employment contracts makes these things secret.  We have to stop the silence around it.

In another recent interview, Carlson suggested that these arbitration provisions are often “in the fine print” and not focused on when people start a new job.  She’s talked about it during Senate press conferences this year as well.

I’ll be interested in reading more about Carlson’s perspective in her new book being released today.

Carlson’s message should be well taken by employers; if employers are using these arbitration provisions merely as a means to allow a system of harassment to continue, then shame on them.

But here’s the issue: As with most things employment law related, it’s far more nuanced.

There are times when arbitration makes sense for BOTH the employer and employee. Litigation is expensive — very expensive, some of my clients would say — and is filled with uncertainty and time-consuming drama.  I talked more about this in a 2014 post.

Arbitration can be less expensive and can allow both sides to be heard by a neutral third party much more quickly and effectively than a court system.

And yes, it avoids some publicity but again, that can benefit employees too.

By filing in arbitration, rather than court, an employee’s claims won’t be public and won’t seen by future employers as a potential lawsuit waiting to happen.

The U.S. Supreme Court is set to review this once more in a trio of consolidated cases, including whether employers can force employees to sign away rights to pursue a class actions.

And we shall see if the Connecticut General Assembly revisits the issue in the upcoming session in January 2018.  Until then, employers should continue to monitor developments in this area and figure out if mandatory arbitration provisions are right for your business.

 

Update August 16th: Late yesterday, I received further confirmation that the provisions regarding FMLA were withdrawn entirely from the proposed Democrat-led budget bill. Moreover, the General Assembly early this morning voted on a Republican version of the budget implementer, which now goes on to Governor Malloy (who has indicated he will veto the bill). That version did not contain language on the FMLA changes either. So for now, employers can stand down. However, employers should continue to track the changes both this year and next. FMLA changes may make a return at some point.   

Update at 2:06 p.m.: Since publishing this article, I’ve now heard from three people who work at or with the legislature that while they can’t find fault with my analysis of the proposed legislation as described below, the section on FMLA was intended to address a separate issue.   As a result, it appears that the section on CTFMLA changes discussed below may be withdrawn this afternoon.

What the motives were for this language are far beyond the scope of this blog; this blog has always tried to provide an apolitical analysis of the law and legislation.  For employers, just take note that the budget implementer bill language on FMLA is now likely to be withdrawn when the final bill is considered. 

Late this morning, the proposed bill implementing the state’s budget (a so-called “budget implementer”) was finally released. And like years past, the bill contains some nuggets that are seemingly unrelated to a budget.

As the proposal is a monstrous 925 pages (download here), I’m still reviewing it but employers in Connecticut need to be aware immediately about some proposed changes to the state’s FMLA provisions.  First, a caveat: This is still very much a work in progress so employers should keep a close eye and contact their legislators if interested.

  • First, the bill would expand the scope of relationships covered to include siblings and grandparents/grandkids.  Thus, if you needed to take time off to care for a grandparent, that would now be a covered leave.
  • Second, the bill would revise the definition of employer to now include the state, municipalities, public schools and private schools which means the CTFMLA would now apply to all of them.
  • But then things get even a bit more confusing. The bill changes the definition of “eligible employee” presumably to exclude state workers who are subject to collective bargaining. BUT the bill’s language is far more imprecise and would seemingly exclude ALL workers who are subject to collective bargaining (whether private or public).  Specifically, the definition of “eligible employee” would now mean an employee “who is exempt from collective bargaining…” It does not have the qualifier that perhaps the drafters intended, though, given the speed in which this has been prepared, readers take caution.
  • Next. and quite significantly, the bill would seemingly extend the leave parents get upon the birth of a child or for placement of a child for adoption of foster care.  Specifically, it indicates (line 8472!) that:

Leave under subparagraph (A) or (B) of subdivision (2) of subsection (a) of this section may be extended up to sixteen workweeks beyond the expiration of such leave due under subdivision (1) of subsection (a) of this section.

  • Thus, Connecticut employers would seemingly need to provide up to 32 weeks (16 + 16 more) of unpaid leave for new parents.
  • But the bill goes beyond that too — for leaves for birth, adoption placement, care of a family member or self or to serve as a organ or bone marrow donor, the bill expands the leave too.  Specifically, in line 8529:

An eligible employee may extend his or her personal leave provided under subparagraph (A), (B), (C), (D) or (E) of subdivision (2) of subsection (a) for up to twenty-four workweeks after the expiration of any accrued paid vacation leave, personal leave, or medical or sick leave with proper medical certification.

  • In addition, the bill goes on to add in line 8534, that for leaves for serious health conditions of self or family member, or for donor leaves:

The use of sick leave by an eligible employee for leave provided under subparagraph (C), (D) or (E) of subdivision (2) of subsection (a) of this section shall not be deemed an incident or occurrence under an absence control policy.

The changes are coming fast and furious and it is possible that this proposed bill won’t get passed in its current form.  It’s certainly far beyond the paid FMLA program that was originally under discussion by the legislature.  These changes would be effective in two weeks — October 1, 2017 — which doesn’t given employers almost any time to revise their policies or train their employees.

And I must confess that I’m still a bit surprised by the breadth of this and scratch my head as to whether this language was intended to mean what it appears to say.  I’d like to see a the office of legislative research recap this bill too.

In the meantime, I’m still reviewing the remainder of the bill for other changes relevant to private employers.  (It’s 925 pages and 26452 lines long so bear with me.)  Have you spotted anything else? Add it in the comments below.

My law partner, Gabe Jiran, talks today about whether it’s all that easy to change the terms of a collective bargaining agreement.  Is it just as easy as a vote? Or does it require something more? The answer has implications for all employers.  

With all of the talk about the financial difficulties faced by the government, I, and others in here, sometimes get the question of whether the State of Connecticut or other states might try to change the laws on collective bargaining or try to pass legislation to alter the terms of its existing collective bargaining agreements.

Other states have started down this road, but it is not that easy.

Recently, the Connecticut Attorney General was asked to opine on whether the General Assembly could statutorily change the contracts covering State employees to address the fiscal crisis.  A link to the opinion is here.

The short answer is that the State could do so, such as by passing a statute that wage increases be delayed or eliminated in State contracts.

However, the United States Constitution imposes a pretty heavy burden on the State to justify any such changes.

The relevant factors are:

  1. the severity of the fiscal crisis;
  2. the nature and duration of the contractual changes;
  3. the extent that the State has attempted to implement other alternatives in the past;
  4. the extent to which the State has studied and made findings about the feasibility of other alternatives;
  5. whether these alternatives would be a less dramatic option;
  6. the extent to which the fiscal crisis existed or was foreseeable when the State entered into the existing contract; and
  7. the State’s representations during negotiations for the existing contract.

Based on cases utilizing some or all of these factors, the State would face an uphill battle if it wanted to change an existing contract.

For example, a federal appeals court struck down the State of New York’s plan to delay wage increases for employees because New York had alternatives such as raising taxes or shifting money around in its budget.  In another New York case, the same court found that a $1 billion deficit was not a dire enough fiscal crisis to justify a delayed wage increase.

However, one case found that the City of Buffalo was able to impose a wage freeze when it was undeniable that Buffalo was in a fiscal emergency and that the wage freeze was a last resort after looking at other options.

In discussing the matters with others here, we expect that Connecticut and other states will continue to look for creative options to address their financial situations with employees.

However, it is doubtful that these options will involve changes to existing contracts without negotiation with the unions involved.  In addition, any State attempts to change contracts in the private sector would be almost certain to fail.

file101235857424For the last six years, you haven’t seen much on this blog about changes to federal employment laws because, well, there just weren’t any.  What we DID see, however, were changes to regulations and enforcement orders.

Nearly six months into the new Trump administration, we’re now starting to see significant shifts in the federal regulatory scheme too.

A lot of national employment law blogs have been starting to recap them so I’m not going to go too in depth here. Among the changes? A death-knell to the persuader rule, and, earlier this month, a pullback of guidance on joint employment and independent contractor rules.   And it looks like the overtime rule changes are still in limbo as well, with the DOL “rethinking” such rules in news articles this week.

You don’t need to have a law degree to understand that these changes will favor companies.

Last night too, the Trump administration named the final member of a new National Labor Relations Board who will, no doubt, start rolling back other labor law decisions that have favored employees and labor unions as well.

But what will the impact be in Connecticut?

It’s still a bit early to tell, but I think the impact may be muted in some ways. After all, we have a CONNECTICUT Department of Labor that still marches to its own drum.  For example, it has taken a pretty aggressive view on who is (or is not) an employee vs. an independent contractor.

Indeed, as I’ve discussed before, the Obama-era rule changes might have, in fact, helped level the playing field for some Connecticut employers who have felt that they have had to comply with stricter Connecticut rules which made them less competitive nationwide.  With the rollback of some of these rules at the federal level, Connecticut’s higher standards may come back into play more often.

That may be overstating it a bit, but Connecticut employers will have to play catchup to figure out the patchwork of federal and state regulations and the interplay between them.

Perhaps it is more fair to say that things are still shaking out this year for Connecticut employers.  The General Assembly session that just ended was more quiet than most.  But at a national level, employers shouldn’t be too quick to make too many changes because there seems to be many more aspects in flux than in years past.

The only thing I’ll predict for the next six months is that we have all the ingredients in place for a wild roller coaster ride with more changes than we’ve seen in some time.

So buckle up.   Things are just getting interesting.

capitoldas2Well, the Connecticut General Assembly ended earlier this week and, as predicted, it ended with a whimper and not a bang.  Many employment law proposals failed to receive votes, including those on minimum wage and Paid FMLA, leaving many employers (and the CBIA) breathing a bit of a sigh of relief.

I’ve previously recapped most of the bills here and here, so I’m only going to recap the session here in the interests of time.

  • The Governor is expected to sign a bill expanding the requirements for employers to provide reasonable accommodations to pregnant employees. Again, I’ve recapped the measure here but this is probably the most significant bill to come out of the session regarding employers.
  • There will be no minimum wage hike and the introduction of Paid FMLA failed to get enough votes this term.  There is little doubt that the split in the Senate along party lines slowed momentum down for what was going to be the Democrat party’s signature achievement this session.
  • Also not getting votes this session was a bill that would have prohibited many employers from running credit checks on prospective employees and a bill that would required employers to give advance notice to employees about their work shifts.
  • Another bill that would change whistleblower protections in Connecticut also failed to clear the House.

Some of the other technical changes, to workers compensation or unemployment compensation, offer up a mixed bag. I’ve covered them in a prior post.

A special session is still on the way and it’s possible that some measures will get plopped into an “implementer” bill for the budget like it did a few years ago.  But my gut tells me that the budget is unlike to be used this way given the significant financial issues in play.  Nonetheless, employers should continue to watch for any developments in this area until the special session is closed.

GA2Today is the last day of the Connecticut General Assembly regular session.  So it’s a good time to take a look at some of the bills pending or passed.  Strangely, things seem pretty quiet on the employment law front.  But after the dust settles, I’ll have another update. Here is where we stand as of early this morning (Wednesday).

  • Last night, the Senate approved of the measure (House Bill 6668) expanding protections in the workplace for workers who are pregnant.  It was previously passed by the House.   I’ve covered the bill in depth before but it now goes on to the Governor for his signature.  The bill, if signed, would become effective October 1, 2017.
  • The House also passed a measure last night (H.B. 6907) that exempts certain professional drivers from coverage under the state’s unemployment law.. The exemption applies to drivers under a contract with another party if the driver meets certain conditions. The measure moves to the Senate but given the backlog of bills today, final passage is definitely unclear.
  • The Senate last night passed a measure (H.B. 7132) that streamlines procedures for filing workers compensation claims.  Currently, the law generally requires private-sector employees seeking workers’ compensation benefits to submit a written notice of claim for compensation to either a workers’ compensation commissioner or their employer’s last known residence or place of business. This bill requires private-sector employees who mail the notice to their employer to do so by certified mail. It also allows employers, except the state and municipalities, to post a copy of where employees must send the notice (presumably a specific address). The posting must be in a workplace location where other labor law posters required by the labor department are prominently displayed.  Under the bill, employers who opt to post such an address must also forward it to the Workers’ Compensation Commission, which must post the address on its website. Employers are responsible for verifying that the information posted at the workplace location is consistent with the information posted on the commission’s website.By law, within 28 days after receiving an employee’s written notice of claim, an employer must either (1) file a notice contesting liability with the compensation commissioner or (2) begin paying workers’ compensation benefits to the injured employee (and retain the ability to contest the claim for up to a year). Employers who do neither of these within 28 days of receiving the notice are conclusively presumed to have accepted the claim’s compensability. Under the bill, if an employer posts an address where employees must send a notice of claim, the countdown to the 28-day deadline begins on the date that the employer receives the notice at the posted address.The bill now moves to the Governor for his review and approval.
  • The General Assembly is also continuing to review a possible Paid Family and Medical Leave insurance scheme.  This bill (S.B. 1) is definitely one to watch over the next day and over any special session as well.
  • Senate Bill 929 would expand whistleblower protections under 31-51m. It has passed the Senate and is awaiting a vote in the House.  Existing law prohibits employers from discharging, disciplining, or otherwise penalizing an employee for certain whistleblowing activities, including reporting suspected illegal conduct to a public body.  This bill additionally prohibits employers from taking such actions against an employee for objecting or refusing to participate in an activity that the employee reasonably believes is illegal. Specifically, it applies to such beliefs about violations or suspected violations of state or federal laws or regulations, municipal ordinances or regulations, or court orders. The bill also (1) extends the time an employee has to file such a lawsuit and (2) adds to the possible remedies available to employees, including punitive damages in certain circumstances.

That seems to be it so far. A lot can change though today and employers should continue to be mindful of the shifting landscape. Even bills that appear “mostly dead” sometimes come back to life at the end — and particularly in special session as well. So stay tuned.

pregnancy1On Tuesday, May 23rd, the Connecticut House of Representatives overwhelmingly passed a measure that would greatly expand the already broad anti-discrimination provision that exist under Connecticut law.  The bill, House Bill 6668, would make several substantive changes to the protections including defining what is a “reasonable accommodation” instead of leaving that determination open.

I’ve previously written extensively about the state laws covering pregnant employees before (here and here for example) so I encourage you to familiarize yourself with the current law so you can fully understand the contemplated change. But I’ll try to break it down here.

Existing law makes it a discriminatory practice to:

  • To terminate a woman’s employment because of her pregnancy;
  • to refuse to grant to that employee a reasonable leave of absence for disability resulting from her pregnancy;
  • to deny to that employee, who is disabled as a result of pregnancy, any compensation to which she is entitled as a result of the accumulation of disability or leave benefits accrued pursuant to plans maintained by the employer;
  • to fail or refuse to reinstate the employee to her original job or to an equivalent position with equivalent pay and accumulated seniority, retirement, fringe benefits and other service credits upon her signifying her intent to return unless, in the case of a private employer, the employer’s circumstances have so changed as to make it impossible or unreasonable to do so.

Those provisions would remain unchanged under the bill.

Existing law also makes it a discriminatory practice to:

  • fail or refuse to make a reasonable effort to transfer a pregnant employee to any suitable temporary position which may be available in any case in which an employee gives written notice of her pregnancy to her employer and the employer or pregnant employee reasonably believes that continued employment in the position held by the pregnant employee may cause injury to the employee or fetus;
  • fail or refuse to inform the pregnant employee that a transfer pursuant to subparagraph (E) of this subdivision may be appealed under the provisions of this chapter; or
  • fail or refuse to inform employees of the employer, by any reasonable means, that they must give written notice of their pregnancy in order to be eligible for transfer to a temporary position; 

The bill would delete those three rules and instead expand existing law to make it a discriminatory practice to:

  • limit, segregate or classify the employee in a way that would deprive her of employment opportunities due to her pregnancy;
  • discriminate against an employee or person seeking employment on the basis of her pregnancy in the terms or conditions of her employment;
  • fail or refuse to make a reasonable accommodation for an employee or person seeking employment due to her pregnancy, unless the employer can demonstrate that such accommodation would impose an undue hardship on such employer;
  • deny employment opportunities to an employee or person seeking employment if such denial is due to the employee’s request for a reasonable accommodation due to her pregnancy;
  • force an employee or person seeking employment affected by pregnancy to accept a reasonable accommodation if such employee or person seeking employment (i) does not have a known limitation related to her pregnancy, or (ii) does not require a reasonable accommodation to perform the essential duties related to her employment;
  • require an employee to take a leave of absence if a reasonable accommodation can be provided in lieu of such leave; and
  • retaliate against an employee in the terms, conditions or privileges of her employment based upon such employee’s request for a reasonable accommodation.

The changes don’t end there.  The bill creates definitions now for “reasonable accommodation” and “undue hardship”.

  • Under the bill, “Reasonable accommodation” means, “but shall not be limited to, being permitted to sit while working, more frequent or longer breaks, periodic rest, assistance with manual labor, job restructuring, light duty assignments, modified work schedules, temporary transfers to less strenuous or hazardous work, time off to recover from childbirth or break time and appropriate facilities for expressing breast milk.”
  • And under the bill, “Undue hardship” means an action requiring significant difficulty or expense when considered in light of factors such as (A) the nature and cost of the accommodation; (B) the overall financial resources of the employer; (C) the overall size of the business of the employer with respect to the number of employees, and the number, type and location of its facilities; and (D) the effect on expenses and resources or the impact otherwise of such accommodation upon the operation of the employer.

Contrast that with the ADA’s definition of those terms. If passed, the confusion for employers in interpreting these phrases are going to be plentiful.  The ADA, for example, does not define it so precisely in the law and leaves it to regulations to provide further guidance.  The undue hardship definition tracks closer but still differs:

The term “reasonable accommodation” may include (A) making existing facilities used by employees readily accessible to and usable by individuals with disabilities; and (B) job restructuring, part-­time or modified work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustment or modifications of examinations, training materials or policies, the provision of qualified readers or interpreters, and other similar accommodations for individuals with disabilities.

A) In general. – The term “undue hardship” means an action requiring significant difficulty or expense, when considered in light of the factors set forth in subparagraph (B).

(B) Factors to be considered. – In determining whether an accommodation would impose an undue hardship on a covered entity, factors to be considered include – (i) the nature and cost of the accommodation needed under this chapter; (ii) the overall financial resources of the facility or facilities involved in the provision of the reasonable accommodation; the number of persons employed at such facility; the effect on expenses and resources, or the impact otherwise of such accommodation upon the operation of the facility; (iii) the overall financial resources of the covered entity; the overall size of the business of a covered entity with respect to the number of its employees; the number, type, and location of its facilities; and (iv) the type of operation or operations of the covered entity, including the composition, structure, and functions of the workforce of such entity; the geographic separateness, administrative, or fiscal relationship of the facility or facilities in question to the covered entity

You will now have the same words mean different things.

Two other notes: First, the bill creates a broad definition of “pregnancy” by not just including the pregnancy and childbirth but also any “related condition, including, but not limited to, lactation”.   Contrast this with the federal Pregnancy Discrimination Act which defines pregnancy to just related medical conditions.

And second, the bill would create a new poster regarding pregnancy discrimination that employers would need to add to their facilities.

The CBIA initially expressed concern about this bill increasing the number of lawsuits and suggesting that “we should consider whether adequate enforcement of existing law is better than making businesses risk endlessly litigating what ‘could have been provided’ to employees in the past.”

For employers, this is a bill that warrants close attention; these have the potential to bring the most significant changes to this area of law in well over a decade.

GA2Yesterday, the Connecticut House of Representatives voted to pass legislation that would promote pay equity among men and women. However, the bill lacks a key provision that would have barred prospective employers from inquiring into an applicant’s salary history.

The CT Mirror and Hartford Business Journal do a good job reporting on the developments. The bill would:

  • “Ban employers from using a worker’s previously earned wages as a defense against a charge of pay inequity;
  • Protect employees from losing seniority based on time spent on maternity or other family or medical leave;
  • Strengthen the requirement that employers provide “comparable” pay for workers performing similar duties;
  • Clarify the state Commission on Human Rights and Opportunities’ ability to investigate complaints of discrimination when wages are involved.”

The Senate remains split along party lines, but the changes made to the bill make passage much more likely now.

The bill, House Bill 5591, can be downloaded here.

It’s unclear how much of an impact the bill will have. For example, the bill changes Conn. Gen. Stat. 31-75 that bars discrimination for work performed under “comparable” working conditions. Previously, the standard was “similar”.

But even the Office of Legislative Research was skeptical about this change noting “It is unclear whether this change has any legal effect.” After all, one definition of comparable is “(of a person or thing) able to be likened to another; similar”.

Moreover, many employers do not base pay on a “seniority system” but instead focus on merit instead. Thus, any changes to the statute on the “seniority system” will have minimal impact.

In any event, before employers act, it’s wise to wait to see what happens in the Senate. Any changes to the law would be effective October 1, 2017.  

 

 

If at first you succeed, try it again. 

Well, that may not be how the saying goes, but the first back-and-forth post between me and Nina Pirrotti, an employee-side attorney, was so well received that we’re back for another conversation. 

Today’s topic: What legislation are we both keeping our eyes out for at the Connecticut General Assembly?  

The Dialogue Begins

Dan Schwartz: So Nina, our first post was such a hit that I think we’re due for an encore.  Thanks for being up for this.

It has only bewn a few weeks, but it feels like we’re moving at warp speed on developments.  We could spend another post just on The Donald, sorry, Mr. President. Somehow I think we’re likely to talk about that again soon.

But let’s focus today on some of the legislative items we’re keeping an eye on, particularly in Connecticut. Each year, it seems like our General Assembly likes to roll out fresh employment law ideas.

Is there a particular bill that you’re keeping your eye on now from an employee-side perspective?

nina_t_pirrotti1-150x150Nina Pirrotti: I’m so glad you asked!   Yes, let me tell you about one bill that has been on my mind on the federal level (I am speaking about it at an ABA conference in sunny Puerto Vallarta really soon) and then I will give you a couple of highlights from our backyard.  

The federal bill that looms large for me right now (although concededly perhaps not as large as the prospect of sitting on the beach, tequila based beverage in hand) is the misleadingly named  Lawsuit Abuse Reduction Act (“LARA”) which would force judges to respond to Rule 11 motions in a particular manner. 

Rule 11 allows for the possibility of sanctions to be imposed on attorneys or parties who submit (or later advocate for) pleadings which have been filed for an improper purpose or which contain frivolous arguments or claims. 

While Rule 11 motions rear their ugly heads relatively rarely in litigation, a newly invigorated Republican majority in Congress has proposed LARA which would amend the sanctions provisions in Rule 11 to remove all judicial discretion – – regardless of the circumstances of the individual case- – in two critical respects. 

First it would require the court to sanction any attorney, law firm, or party who violates the rule.  Second it forces judges who find the rule has been violated to order the offending party to pay  the other party’s attorneys’ fees and costs.  Those in my world who oppose LARA say that there is no proof Rule 11 is not working in its current form, that the changes would burden the courts and that  its “once size fits all” mandatory sanctions would unfairly penalize employees in civil lawsuits.

Closer to home, two bills come to mind.  The first is a proposed modification of C.G.S.A. 31-51m, a statute which bars employers from retaliating against employees who report  employers’ unethical or legal wrongdoings to public bodies. 

The modification seeks to  protect employees who complain about such conduct internally or who refuse to participate in an activity they believe to be in violation of the law.   It also seeks to extend the timeline to bring an action under the law (employees now have only 90 days to file) and to provide for a greater array of damages if the employer violates the statute.

The second is a proposal to provide eligible employees with paid Family and Medical Leave Act leave.  The proposed legislation would require employees to contribute 1/2 of 1% of their wages to it (there would be no employer contribution) and employees cannot opt out it.   

We plaintiff employment lawyers would welcome both pieces of legislation as long overdue and reasonably tailored to protect Connecticut’s workforce.

What are your thoughts from the other side of the aisle, Dan?    Or is there other proposed legislation that has captured your attention?

Continue Reading The Dialogue: What Legislation We’re Keeping Our Eyes On

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.