A number of recent developments in New York City law are likely to increase the litigation risks and costs of having employees who work in New York City. First, New York City is poised to become the most recent jurisdiction to pass a law requiring employers to provide sick time to employees. The new law will require almost all private New York City employers to provide sick time, in many cases paid New York City Earned Sick Time Act sick time, to their employees. Second, New York City recently passed a law banning discrimination against job applicants based on their unemployment status, which may result in increased nuisance litigation against employers. Finally, the Second Circuit Court of Appeals affirmed that the New York City anti-discrimination law is to be read more broadly than its New York State and federal counterparts, a holding that reinforces New York City's Human Rights Law as one of the most "pro-employee" laws in the country. As a result, the cost for New York City employers to defend against anti-discrimination claims is expected to rise.

New York City Earned Sick Time Act

On May 8, 2013, the New York City Council passed the Earned Sick Time Act (the "Sick Time Act"), which, once effective, will require most private New York City employers to provide their employees with paid sick time (or unpaid sick time in the case of smaller employers). While Mayor Bloomberg is expected to veto the Sick Time Act, the New York City Council has enough support to override that veto and it is expected that the Sick Time Act will become New York City law in the near future. The following is a summary of the key elements of the Sick Time Act:

How Much Sick Time Must be Provided? Employers will be required to provide a minimum of one hour of sick time for every thirty hours worked by their employees who work in New York City for at least eighty hours during a twelve-month period (which period is selected by the employer). Overtime-exempt employees are assumed to work forty hours per week for this purpose, unless they regularly work less than that amount, in which case their regular work week is used. There is a special rule for domestic workers, who will be entitled to two days of sick time per year. Sick time accrual and use may be capped by the employer at forty hours per twelve-month period.

Is Sick Time Paid or Unpaid ? Employers with fifteen or more employees, or with one or more domestic workers, must provide their employees with paid sick time. Other employers must provide their employees with unpaid sick time.

When Does Sick Time Begin to Accrue and When Can It Be Used ? Sick time begins to accrue upon commencement of employment (or, if later, upon the Sick Time Act becoming law). Employees can begin to use sick time on the 120th day after accrual begins. Domestic workers, however, do not become entitled to sick time until they have been employed for one year.

For What Purposes Can Sick Time Be Used? Sick time can be used for the following purposes:

  • the employee's need to diagnose, care for, or treat a health condition, or the employee's need to obtain preventive medical care;
  • to care for a family member who needs medical diagnosis, care, or treatment of a health condition or who needs preventive medical care;
  • the closure of the employee's place of business by order of a public official due to a public health emergency; or
  • the employee's need to care for a child whose school or childcare provider has been closed by order of a public official due a public health emergency.

Note that the Sick Time Act defines "family member" and "child" more broadly that most employee-leave laws (for example, the federal Family and Medical Leave Act), and includes same-sex spouses and domestic partners.

What Are the Notice Requirements Under the Law? Employers must provide each employee with a written notice of rights under the Sick Time Act at the commencement of employment. The New York City Department of Consumer Affairs (the "DCA") will create a model notice containing the required information that employers can use. This notice must be provided both in English and the employee's primary language (provided that the DCA has made a translation available in such language). There is a civil fine if the employer willfully violates this notice requirement.

What if We Already Offer Sick Time or Paid Time Off? Employers who already offer time off policies that meet or exceed the requirements of the Sick Time Act will not be required to provide employees with additional time off. Further, nothing in the Sick Time Act prohibits employers from offering more generous time off benefits (in fact, it is encouraged).

What Are the Penalties for Non-Compliance? Employers who violate the Sick Time Act may be subject to monetary damages and penalties and equitable relief (including reinstatement to employment if appropriate). The Sick Time Act is enforced by the DCA. While individuals may file complaints with the DCA, individuals do not have a private cause of action to enforce the Sick Time Act.

What Else Does the Sick Time Act Include? The Sick Time Act includes a number of other details, all of which are important, including:

  • An employer may require reasonable notice from the employee of the need to use sick time (not to exceed seven days for foreseeable leave and as soon as practicable for unforeseeable leave), and may set a reasonable minimum increment for the use of sick time, which minimum cannot be more than four hours.
  • Employees (other than domestic workers) must be allowed to carry forward unused sick time, but the employer and employee may agree not to do so if the employer pays out any accrued but unused paid sick time at the end of the applicable twelve-month period and allows the employee to accrue and use forty hours of paid sick time as of the first day of the next twelve-month period.
  • Employers are not required by the Sick Time Act to pay out any accrued sick time upon an employee's termination of employment. 
  • If an employee is absent for more than three consecutive work days, an employer may require a doctor's note stating that the use of sick time was authorized (though such note cannot be required to specify the nature of the health condition). 
  • If an employee uses sick time, the employer may not require the employee to find another employee to cover for his or her time off. 
  • In certain circumstances, the employer and employee may agree that the employee will work additional hours to make up for the time off in lieu of using up any sick time. 
  • In some circumstances, the provisions of a collective bargaining agreement may modify the application of the Sick Time Act to the employer's unionized employees. 
  • Employers must maintain written records documenting their compliance with the Sick Time Act for two years. 
  • Employers must treat health information obtained in connection with the Sick Time Act confidentially and may only disclose such information with the employee's consent or as required by law. 
  • The Sick Time Act contains a broad anti-retaliation provision that prohibits employers from retaliating or threatening retaliation against an employee for exercising or attempting to exercise rights under the Sick Time Act.

When Does the Sick Time Act Become Effective? The law has a unique and complex provision for determining when it will become effective. Its effective date is tied to New York City's economics. Assuming no significant economic downturn in New York City before December 16, 2013 (which most believe will likely be the case), the Sick Time Act will take effect as follows:

  • On April 1, 2014, all employers that employ twenty or more employees within New York City must comply with the paid sick time requirements, and all other employers must begin providing unpaid sick time; and
  • On October 1, 2015, all employers that employ fifteen to nineteen employees within New York City, or at least one domestic worker within New York City, must comply with the paid sick time requirements.

What Does this Mean for My Business? New York City employers should become familiar with the Sick Time Act. Covered employers should review their existing time off policies to see whether they meet the minimum requirements of the Sick Time Act and determine whether any changes will need to be made. In conducting this review, employers should pay particular attention to the details (e.g., for what reasons can time off be used? what are the accrual and carry forward rules?). Those without an appropriate sick time policy should begin to draft one (with input from counsel familiar with the requirements of the Sick Time Act). Once the form of employer notice is issued by the DCA, employers should plan to add that notice to the standard paperwork provided to new hires.

Prohibition on Discrimination Against the Unemployed

The New York City Council recently passed an amendment to the New York City Administrative Code (overriding Mayor Bloomberg's veto of the amendment in the process) barring discrimination against job applicants based on their unemployment status. This amendment is scheduled to take effect on June 11, 2013, and will make it unlawful for an employer, employment agency, or any agent thereof to (1) base an employment decision with regard to hiring, compensation, or the terms, conditions, or privileges of employment on an applicant's unemployment status, or (2) publish an advertisement for a job vacancy that states that being currently employed is a requirement or job qualification, or that unemployed applicants will not be considered for the job.

The amendment carves out certain actions that an employer is permitted to take with respect to unemployed job applicants, including considering the applicant's unemployment when there is a substantially job-related reason for doing so, inquiring into the circumstances surrounding the applicant's separation from prior employment, and setting compensation or terms and conditions of employment based on the applicant's actual amount of work experience. It remains to be seen how courts and the New York City Commission on Human Rights will interpret these carve-outs, and particularly what will constitute a "substantially job-related reason" for considering an applicant's unemployment.

As a result of this amendment, unemployed persons are now a protected class under New York City law, with protections similar to those provided to other protected traits (such as race, gender, and age), including the right to file a lawsuit against an employer for discrimination and the right to file a complaint with the New York City Commission on Human Rights. The amendment makes clear that protected individuals have the right to file a lawsuit alleging unemployment discrimination based upon a disparate impact theory of liability. Further, in addition to potential monetary liability for unlawful discrimination, employers who violate this amendment could be subject to civil penalties (and in extreme cases criminal liability).

What Does this Mean for My Business? New York City employers will now face greater risks as a result of this amendment. Even if employers comply fully with all of this amendment's requirements, many practitioners expect that employers will still be forced to incur legal fees to defend against meritless lawsuits filed by unemployed applicants who were not hired (or incur costs settling those allegations). An employer's best defense may be to take steps now to ensure that existing hiring practices and procedures will be compliant with this amendment, including educating employees involved in the hiring or interview process about this amendment (for example, making sure all interviewers understand what types of questions should be avoided during the interview) and reviewing job advertisements to ensure that they are in compliance with this amendment.

Second Circuit Confirms Broad Employee Protections Under the New York City Human Rights Law

The New York City Human Rights Law (the "NYCHRL") protects employees from discrimination based on protected traits (such as gender) and from retaliation for having engaged in protected activity (such as making a complaint of discrimination). For many years, courts construed the protections under the NYCHRL to be coextensive with, and no greater than, the protections offered by similar New York State and federal laws. However, in 2005, the New York City Council passed the Local Civil Rights Restoration Act of 2005 (the "Restoration Act"), which amended the NYCHRL to clarify that courts should construe the NYCHRL more broadly than similar New York State and federal laws (what this meant in practice was still to be seen).

Not much attention was paid to the Restoration Act until 2009, when a New York State appellate court (in Williams v. New York City Housing Authority) first defined the broad scope and implications of the Restoration Act (including holding that even a single comment could constitute actionable discrimination). Practitioners wondered how much traction the Williams decision would get, particularly in New York's federal courts, where cases often require judges to decide discrimination claims under federal, New York State, and New York City law at the same time. On April 26, 2013, we received our answer. In Mihalik v. Credit Agricole Cheuvreux North America, the Second Circuit Court of Appeals weighed in for the first time, essentially adopting the legal analysis of the Williams case and confirming the broad construction of the NYCHRL. While these cases no doubt benefit employees, they do make clear that the NYCHRL is not a workplace "civility code" and that "petty slights or trivial inconveniences" are not actionable.

What Does this Mean for My Business? The Restoration Act, and the noted court decisions, broken down to their most basic consequence, have made in much more difficult and costly for New York City employers to defend against allegations of discrimination and retaliation. Employers should no longer expect to regularly prevail on NYCHRL claims via summary judgment. It is now as important as ever that New York City employers (and all other employers for that matter) adopt appropriate anti-discrimination policies, train their supervisors and managers about compliance with such policies and anti-discrimination laws, educate employees about appropriate workplace behavior, and ensure that all workplace issues (for example, performance issues and violations of company rules) are properly and timely documented, as those written records may become the employer's best defense (or at least best approach to limit damages). Some employers may consider adopting a "zero tolerance" approach to certain violations of workplace policies and rules.

If your business has employees working in New York City or is considering hiring employees in New York City, we would be happy to answer any questions you may have regarding these developments and to help your business comply with the new requirements, including reviewing time off, hiring, and non-discrimination practices, implementing new policies or procedures, as necessary, and providing appropriate training to supervisors, managers, or the greater workforce.