We’re Not in Kansas Anymore: A New World for New York State Employers

When Dorothy awakes in Oz after being carried away from home by a tornado, she steps outside into a strange new world and, while holding her dog, says with childlike awe, “Toto, I have a feeling we’re not in Kansas anymore.” She has entered a place beyond her imagination that is as different from her Kansas farm home as night is from day. Bewildered, she explores her new surroundings in an attempt to understand where she is and how she got there, and embarks on her quest to find a way home, back to where she came from and the way things used to be. While she eventually finds her way home, but not before having to defeat the Wicked Witch of the West, she realizes that things will never be the same. As the result of recent changes in New York State employment law, employers, like Dorothy, have been carried away with breathtaking speed from the relative comfort of an employment law landscape they have known for decades to a new and unfamiliar place where the employer-employee relationship has been and continues to be transformed to something not seen before. However, unlike Dorothy, it is unlikely that New York State employers will ever get back home again and things will certainly never be the same.

Discrimination and Harassment

Perhaps the area most recently transformed for New York State employers is that of discrimination and harassment, particularly sexual harassment. On August 12, 2019, Governor Andrew Cuomo signed into law the most sweeping changes to the laws governing workplace discrimination and harassment in New York State in at least the past 50 years. Among these changes are the following:

  • Lowering the number of employees required for an employer to be covered by the New York State Human Rights Law (HRL) so that, effective February 8, 2020, all employers in New York State will be covered by the HRL regardless of size.
  • As of October 11, 2019, making it easier to prove harassment by effectively allowing an employee to prevail by simply showing that he or she was subjected to anything more than “petty slights and trivial inconveniences.”
  • Effective August 12, 2020, extending the time an individual has to file a charge for sexual harassment with the New York State Division of Human Rights from one year to three years.
  • As of October 11, 2019, prohibiting mandatory arbitration of any discrimination or harassment claim based on any characteristic protected by any law.
  • Allowing for the recovery of attorneys’ fees and punitive damages in all employment discrimination and harassment claims under the HRL filed on or after October 11, 2019.
  • As of October 11, 2019, prohibiting the use of nondisclosure agreements when settling or resolving any claim of discrimination or harassment, unless the individual voluntarily agrees to it. The validity of this change, though, is questionable, as a federal court has invalidated an earlier version of this change that applied only to claims involving sex discrimination or harassment.

These changes are in addition to the laws passed last year requiring all employers to adopt a sexual harassment policy and provide annual harassment training to all employees.

Equal Pay

Effective October 8, 2019, New York State law was significantly expanded to increase employer liability for pay discrimination. Before the change, § 194 of the New York State Labor Law only prohibited pay discrimination based on sex and required that an employee prove that he or she was paid less than an employee of the opposite sex performing a job requiring equal skill, effort and responsibility working under similar working conditions. This effectively required an employee to show that he or she was being paid less than an employee of the opposite sex who was performing the same job. As a result of a recent amendment to § 194, the Law now prohibits pay discrimination based not only on sex, but also on any other characteristic protected from discrimination under the HRL, including, among others, race, age, disability and religion. The amendment also lowered the comparator standard required to prove pay discrimination and now allows an employee to prevail simply by proving that he or she is performing substantially similar work – rather than equal work – as another employee who is paid more. The Law expressly permits pay differentials based on a seniority or merit system and productivity. And other bona fide factors can also be used for pay differentials under certain circumstances. These changes will make it immensely easier for employees to prevail on pay discrimination claims and make such claims more attractive to plaintiffs’ lawyers.

You Can’t Ask That Anymore

Employers have for years understood that they cannot consider an applicant’s protected status in deciding to make a job offer, and that certain questions should not be asked in the interview process to avoid even the appearance that a prohibited factor was considered. However, many, if not most, employers continue to ask applicants what they earned at their prior employers. This information is usually sought for two main reasons: (A) to maintain leverage in the wage negotiations process; and avoid offering more than an applicant is willing to accept; and (B) to learn what others in the market are paying. The days of asking about wage and salary history, however, are coming to an end. Effective January 6, 2020, it will be illegal for an employer in New York State to ask an applicant, or the applicant’s current or former employer, about the applicant’s wage or salary history. It will also be illegal to not hire an applicant who refuses to provide wage or salary information, and to rely on such information in making a hiring decision or in determining the individual’s wage or salary. Similar restrictions will also apply to current employees seeking a promotion. An applicant or current employee can, however, voluntarily provide wage and salary history. Despite these restrictions, employers will still be able to ask an applicant or current employee the wage or salary range he or she is seeking.

What’s Over the Rainbow? California, Here We Come!

The changes discussed above are certainly dramatic and will fundamentally change the employer-employee relationship in New York State , but the best may be yet to come. Many employers participate in the gig economy by using temporary help or workers classified as independent contractors. The societal backlash to the economic inequities many people attribute to the gig economy has led many states to pass legislation restricting workers who can be classified as independent contractors. For instance, California recently codified what’s known as the ABC test that classifies workers as employees unless they are (A) free from the control and direction of the employer in the performance of their work, (B) perform work that is outside the usual course of the employer’s business, and (C) customarily engaged in an independently established trade or occupation of the same nature as the work performed for the employer. This test makes it almost impossible to classify a worker as an independent contractor if the worker performs any services related to the employer’s usual business. Although New York State has not yet adopted the ABC test, there are signs that it may do so soon. The New York State Senate will hold a public hearing on the topic in Manhattan on October 16th, and Governor Cuomo has stated that California’s adoption of the ABC test got his “competitive juices flowing.” He also affirmed his goal of protecting workers by “redefining a worker as an employee, as opposed to an independent contractor.” If New York State adopts the ABC test, it will overnight reclassify thousands of independent contractors as employees and, as a result, impose significant additional economic burdens on employers.

It’s a new world for New York State employers. The employer-employee relationship has appreciably changed in the past year and appears likely to continue changing into the near future. Employers should take stock of the changes and make any necessary modifications to their policies and procedures to ensure they remain compliant with applicable law.

James R. Grasso is a partner with Phillips Lytle LLP and a member of the Labor & Employment Practice Team. He concentrates his practice in counseling and representing management in all areas of labor and employment law and litigation. He can be reached at jgrasso@phillipslytle.com or (716) 847-5422.