New York recently enacted a number of laws and rules affecting New York employers, many of which took effect immediately. Some of these laws are significant, including changes to the confidentiality preference agreements required in connection with certain release agreements, an expansion of the statute of limitations under the New York State Human Rights Law, and increases to the 2024 overtime exemption salary thresholds.
It is important for employers to understand their obligations under these laws. The new laws are summarized below.
CHANGES TO NONDISCLOSURE PROVISIONS IN SETTLEMENT AGREEMENTS
On November 17, 2023, Governor Kathleen Hochul signed into law a bill that amends multiple requirements in Section 5-336 of the New York State General Obligations Law related to confidentiality preference agreements.
Previously, New York law required that where a release or settlement agreement (1) resolves claims with a factual foundation related to discrimination, harassment, or retaliation and (2) prohibits the employee from disclosing the underlying facts and circumstances relating to those claims, the employee needs to execute a separate agreement memorializing that it is their preference to include the confidentiality conditions in the agreement.
The new law’s most significant change is to remove the requirement from the General Obligations Law that an employee must wait 21 days before signing the preference agreement. Now, effective immediately under this new law, employees can take up to 21 days to sign, but are permitted to sign sooner if they choose to do so. Employees still have the right to revoke their signature on the preference agreement within seven days. This aligns the preference agreement signature process under the General Obligations Law with the signature process of people aged 40 or older signing a release agreement under the federal Age Discrimination in Employment Act.
Notably, the new law also
- expands the scope of the preference agreement requirement to apply to settlements and release of claims by independent contractors in addition to employees;
- prohibits the inclusion of a liquidated damages or forfeiture provision where a complainant has raised claims with a factual foundation relating to discrimination, harassment, or retaliation and the complainant will need to pay damages or forfeit consideration if they violate the nondisclosure or nondisparagement provisions in the agreement;
- prohibits including in the release agreement a requirement that the complainant who has raised claims with a factual foundation relating to discrimination, harassment, or retaliation complete an affirmative statement or disclaimer stating that they were not subject to such conduct; and
- requires that any agreement restricting an employee, potential employee, or independent contractor from disclosing factual information related to any claim of discrimination notify the individual that it does not prohibit them from speaking with law enforcement, the Equal Employment Opportunity Commission, the New York State Division of Human Rights, the New York Attorney General, a local commission on human rights or an attorney retained by the individual.
The law takes effect immediately and does not apply retroactively. It therefore applies to new settlement and release agreements with confidentiality provisions entered on or after November 17, 2023.
The legislature, in amending the confidentiality preference agreement provisions in the General Obligations Law did not simultaneously amend Section 5003-b of the New York Civil Practice Law and Rules, which includes a separate requirement that individuals wait 21 days before signing a confidentiality preference agreement. The CPLR only applies to cases pending in New York State court, not cases in federal court, courts in another jurisdiction, or in the pre-litigation or arbitration context.
Additionally, while the non-waivable 21-day consideration period arguably still applies to proceedings in New York State court, the new law is the legislature’s most recent involvement with the preference agreement process and best reflects their intent regarding how employers should comply with the timing and restrictions applicable to preference agreements.
EXEMPT EXECUTIVE AND ADMINISTRATIVE EMPLOYEE SALARY THRESHOLDS FOR 2024
The New York State Department of Labor (DOL) published proposed regulations setting the minimum wage, minimum salary, and other credits/allowances applicable to New York employees. The regulatory text establishes the same the statutory minimum wage increases previously signed into law by Governor Hochul earlier this year. The proposed regulations also establish new weekly minimum salaries for qualifying employees exempt from the New York Labor Law minimum wage and overtime requirements based on their executive or administrative positions.
The proposed regulations are subject to a comment period but, based on prior similar proposed regulations, likely will be finalized without significant changes. If that does occur, the new salary thresholds would take effect with the previously finalized minimum wage raises on January 1, 2024:
Minimum Wage (Statutory)
- New York City, Long Island (Nassau/Suffolk Counties) and Westchester County: $16/hour
- Remainder of New York State: $15/hour
Executive and Administrative Overtime Exemptions Minimum Salary (Proposed Regulation)
- New York City, Long Island (Nassau/Suffolk Counties) and Westchester County: $1,200/week or $62,400/year
- Remainder of New York State: $1,124.20/week or $58,458.40/year
MINIMUM SALARY FOR EMPLOYEES EXEMPT FROM NEW YORK STATE PAY FREQUENCY REQUIREMENTS
On September 15, 2023, Governor Hochul signed a bill into law that increases the minimum salary requirements for clerical and other exempt employees under Article 6 of the New York Labor Law, effective March 13, 2024. Article 6 does not address minimum wage and overtime exemptions and instead generally covers pay frequency and method of pay requirements.
Under this new law, the minimum salary for covered employees to be exempt from these requirements will increase from $900 per week ($46,800 per year) to $1,300 per week ($67,600 per year). The law specifically modifies the definition of “clerical” workers as well as individuals employed in a bona fide executive, administrative, or professional capacity in New York Labor Law Sections 190(7) (which creates a definition of clerical workers applicable to all of Article 6), 190(2) (which permits employers to automatically use direct deposit for exempt workers), and 198-c(3) (which creates criminal penalties for employers who fail to pay benefits or wage supplements to nonexempt employees).
One of the most frequently litigated provisions of Article 6 is New York Labor Law Section 191, which requires that “manual” workers be paid at least weekly. As clerical workers are exempt from the weekly pay requirement and deemed non-manual workers, this new law will increase the minimum salary rate for employers relying on the clerical worker exemption to Section 191 to $67,600 per year.
Importantly, because Article 6 does not govern minimum wage and overtime exemptions, there will be two separate exemptions in New York. The minimum salary for employees exempt from minimum wage and overtime requirements in 2024 will be either $62,400/year (downstate counties) or $58,458.40/year (remainder of New York State), while the minimum salary for employees exempt from the pay frequency and wage payment requirements under Article 6 will be $67,600 per year.
In other words, employees earning between the two salary bases will be exempt from minimum wage and overtime requirements, but not pay frequency and method of pay requirements (e.g., the weekly pay requirement to the extent the employees are otherwise “manual” workers).
EXTENDED STATUTE OF LIMITATIONS UNDER THE NEW YORK STATE HUMAN RIGHTS LAW
Governor Hochul signed into law on November 17, 2023 a bill amending the New York State Human Rights Law to extend the statute of limitations for filing claims of unlawful discrimination under state law to three years, which runs from the date of the alleged unlawful discriminatory practice.
The previous deadline for initiating discrimination claims under state law was one year, except for claims of sexual harassment, which could be filed within a three-year statute of limitations period. The new law expands the three-year limitations period to all New York State Human Rights Law discrimination claims.
This law takes effect on February 15, 2024.
FREELANCE WORKER PROTECTIONS
Governor Hochul signed legislation on November 22, 2023, creating protections for independent contractors that are very similar to the requirements of New York City’s Freelance Isn’t Free Act.
The law creates a new section of the New York Labor Law, 191-D, and sets forth wage and job protections for freelance workers in New York State. The law defines “freelance worker” as any person or an organization composed of only one person (in other words, an individual contractor’s corporation) hired as an independent contractor for at least $800. It excludes construction contractors.
The law requires companies who enter into covered agreements with freelance workers to reduce the terms of the agreement to writing, provide a written copy of the contract to the freelance worker, and include the following minimum information in the contract:
- The name and mailing address of both the hiring party and freelance worker
- An itemization of all services to be provided by the freelance worker, the value of these services, and the rate and method of compensation
- The date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined (if this provision is not included, then payment must be made no later than 30 days after the completion of the freelance worker’s services)
- The date by which the freelance worker must submit a list of all services rendered to meet any payment processing deadline of the hiring party
The hiring party is required to keep contracts for at least six years. The bill provides that the failure to produce a freelancer contract upon request by the NY DOL shall give rise to a presumption that the terms that the freelance worker has presented are the agreed upon terms. The law also requires the NY DOL to create template contracts, although companies would not be prohibited from creating or continuing to use their own.
Under the law, any freelance worker can file a confidential complaint with the NY DOL. The bill expressly provides that failure of a hiring party to keep adequate records can expose them to penalties and, in the absence of any records, “the hiring party…shall bear the burden of proving that the complaining employee was paid in accordance with this section.” The bill also gives freelance workers protection from intimidation, harassment, or discrimination for exercising their rights under the law.
Finally, the law provides a private right of action and six-year statute of limitations, except for claims regarding failure to provide a compliant written contract, which have a two-year statute of limitations and require a plaintiff to demonstrate they requested a written contract before the work began. Statutory damages for failing to provide a written contract are set at $250. Liquidated damages and attorney fees are available for a plaintiff who prevails on claims regarding failure to timely pay for services owed or retaliation.
The law takes effect on May 20, 2024, and applies only to contracts entered into on or after that date.
EMPLOYEE RIGHTS TO ABSTAIN FROM MEETINGS ON POLITICAL AND RELIGIOUS MATTERS
An amendment to the labor law prohibits employers from disciplining employees who opt not to participate in meetings sponsored by the employer concerning the employer’s views on political and religious matters. The law defines political matters as “matters relating to elections for political office, political parties, legislation, regulation and the decision to join or support any political party or political, civic, community, fraternal or labor organization” and religious matters as “matters relating to religious affiliation and practice and the decision to join or support any religious organization or association.”
Specifically, an employee cannot be disciplined for refusing to attend an employer-sponsored meeting, listen to employer speech, or view any other employer communication that has the primary purpose of expressing the employer's opinion concerning religious or political matters.
Employers are not prohibited from the following:
- Communicating to employees any information that the employer is required by law to communicate
- Communicating any information about job duties
- Having any higher education institutions meet with employees as part of coursework
- Having casual and optional conversations
- Having meetings to discuss the employers’ religious/political views where only the employer's managerial and supervisory employees are required to attend
Employers are required to post a sign in every workplace where notices to employees are normally posted to inform employees of their rights. The new law took effect immediately.
NOTICE OF ELIGIBILITY FOR UNEMPLOYMENT INSURANCE
On September 14, Governor Hochul signed a law that codifies an existing New York unemployment regulation requiring employers to provide notice to their employees that they are eligible for unemployment insurance whenever the employer makes a permanent or temporary separation of the employee, and broadens the requirement to apply to reductions in hours. Employers must now give notice of eligibility for unemployment insurance when they reduce hours to the point an employee works less than 30 hours a week and earns less than $504 per week.
Many employers choose to meet the current regulatory requirement by distributing a completed Form IA 12.3 whenever an employee separates. Distribution of this form upon a triggering reduction in hours would comply with the new requirements as well.
This law took effect on November 13, 2023.
PROHIBITION OF ACCESS TO EMPLOYEE SOCIAL MEDIA ACCOUNTS
Governor Hochul signed legislation on September 14 that will prohibit employers from requesting or requiring that an employee or applicant disclose any username, password, or other means for accessing a personal account through specified electronic communications devices as a condition of hiring, employment status, or for use in disciplinary actions.
The law defines “personal account” as an “account or profile on an electronic medium where users may create, share, and view user-generated content, including uploading or downloading videos or still photographs, blogs, video blogs, podcasts, instant messages, or internet website profiles or locations that is used by an employee or an applicant exclusively for personal purposes.” This definition essentially covers all personal social media accounts.
The law makes exception for the following:
- Accounts used for business purposes and where the employee was provided prior notice of the employer’s right to request access
- Accounts known by an employer to be used for business purposes
- Devices paid in whole or in part by the employer where the employer’s payment for such device was conditioned on the right to access the device, and where the employee was provided prior notice of and expressly agreed to the employer’s right to access the device
The exceptions do not allow an employer to access personal accounts on a device. The law also expressly allows employers to prohibit access to certain websites on an employer’s network or device and does not prohibit or restrict background checks required by FINRA or pursuant to other legal requirements. Finally, the new law expressly does not preclude employers from accessing or utilizing information about an employee or applicant that can be obtained without asking the employee for information or access.
The law takes effect on March 12, 2024.
INCREASE TO WORKERS’ COMPENSATION
This law increases the minimum benefits for workers’ compensation to $275 in 2024, $325 in 2025, and one-fifth of the state average weekly wage in 2026. The new law takes effect immediately.
EMPLOYEE RIGHTS TO CERTAIN INVENTIONS
Signed by Governor Hochul on September 15, this law creates a new provision of the New York Labor Law specifying that inventions and intellectual property developed entirely on an employee’s own time, without using an employer's property or trade secrets, belongs to the employee. The bill renders any invention assignment provision unenforceable if it requires employees to assign the rights to inventions developed using the employee’s own property and time.
However, the bill makes exceptions for inventions that relate either to the employer’s business, the “actual or demonstrably anticipated research of the employer,” or from work performed by the employee in the course of their work for the employer. The law is substantially similar to existing law governing invention assignment in California. The law took effect immediately upon Governor Hochul signing it on September 15, 2023.
CRIMINAL WAGE THEFT
Finally, Governor Hochul signed legislation on September 6 amending the penal law to streamline the way prosecutors can pursue wage theft charges on a criminal basis and bring new larceny charges for wage theft of an employee. A person who hires other individuals can now be criminally prosecuted for larceny where they hire a person to perform services and the person performs such services and the hiring individual does not pay wages, at the minimum wage rate and overtime, or promised wage, if greater than the minimum wage rate and overtime, to said person for work performed.
The law clarifies that in a criminal proceeding for wage theft, prosecutors can aggregate all non-payments or underpayments from one person to another into a single larceny count, even if the payment violation occurred in multiple counties. This will help streamline criminal wage theft litigation, which only occurs rarely, and allow prosecutors to bring potentially higher charges at once since they will reflect all of the underpayments at issue instead of just those localized in a single county.
The law took effect immediately upon Governor Hochul signing it on September 6, 2023.
These new laws continue the trend of expanding employee protections in New York State. Employers should take the following steps to meet their current obligations and prepare for the laws that will soon go into effect:
- Review and update template nondisclosure clauses and preference agreements
- Review exempt employees’ salaries in light of the announced increases to the minimum wage/overtime exemptions as well as pay frequency exemptions
- Create and post communications informing employees of their right to not participate in employer meetings on political and religious matters
- Review social media policies to ensure they do not require employees to provide access to personal accounts in violation of the law
- Review employee handbook provisions concerning employee intellectual property and inventions
- Ensure employees are being paid accurately and timely for their work