Employment relationship

State-specific laws

What state-specific laws govern the employment relationship?

Article 6 of the New York Labor Law governs payment of wages. Regulations promulgated by the New York State Department of Labor can be found under Title 12 of the New York Codes, Rules and Regulations.

The New York State Human Rights Law (N.Y. Exec. Law § 290 and following) is the state equivalent of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act (the federal anti-discrimination statutes), although the New York State Human Rights Law is broader and encompasses more protected classes. Employers should also be aware of the New York City Human Rights Law (N.Y.C. Admin. Code § 8-107 and following), which is the New York City anti-discrimination statute. The New York City Human Rights Law is more employee-friendly than its federal counterpart in both protections and damages, including its provisions for the recovery of uncapped compensatory damages.

Who do these cover, including categories of workers?

The New York Labor Law governs “any person employed for hire by an employer in any employment” (N.Y. Labor Law § 190). Likewise, the New York State Human Rights Law, which prohibits unlawful discriminatory practices, covers all employers, regardless of the number of employees in the state. Generally, employers with four or more workers are covered by the New York City Human Rights Law.

Misclassification

Are there state-specific rules regarding employee/contractor misclassification?

There are no specific state statutes governing employee or independent contractor classification. Courts and state agencies should look to common law definitions, under which:

 

the critical inquiry ... pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results. Factors relevant to assessing control include whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule. (Bynog v. Cipriani Group Inc, 1 N.Y.3d 193, 198 (2003) (citations omitted)). 

 

In defining independent contractor status, the New York State Department of Labor states that, in the performance of their duties, independent contractors are free from:

  • supervision;
  • direction; and
  • control.

 

Factors considered by the New York State Department of Labor in determining employee or independent contractor status include whether the worker:

  • has an established business;
  • advertises in electronic or print media;
  • buys an advertisement in Yellow Pages;
  • uses business cards, stationery, and billheads;
  • carries insurance;
  • keeps a place of business and invests in facilities, equipment, and supplies;
  • pays his or her own expenses;
  • assumes risk for profit or loss;
  • sets his or her own schedule;
  • sets or negotiates his or her own pay rate;
  • offers services to other businesses (competitive or non-competitive);
  • is free to refuse work offers; and
  • may choose to hire help.

 

New York City’s Freelance Isn’t Free Act, which became effective in March 2017, requires parties that engage independent contractors who provide at least $800 in services over a 120-day period to enter into a written contract for services, and further requires that full payment for services be tendered within 30 days of the completion of the independent contractor’s work. Moreover, it prohibits retaliation against a freelancer seeking to enforce any rights under this law. In June 2022, the New York State legislature passed the New York State Freelance Isn’t Free Act, which substantially mirrors its New York City predecessor and awaits the Governor’s signature to be signed into law.

Contracts

Must an employment contract be in writing?

Generally, employment contracts do not need to be in writing, provided that a contract for a fixed duration may be subject to New York’s Statute of Frauds (Sladden v. Rounick, 59 A.D.2d 882, 882 (1977) (an oral agreement for a two-year fixed term of employment was not enforceable)). However, a commissioned salesperson’s agreement must be in writing (N.Y. Labor Law § 191). Additionally, New York’s Wage Theft Prevention Act requires that employees be given written notice of their rate of pay upon hire, and in the event of any pay decrease, also be given such a notice and certain other information. Employers must maintain a written acknowledgement that employees received such information (N.Y. Labor Law § 195).

Are any terms implied into employment contracts?

There are implied covenants of good faith and fair dealing in employment contracts (ABN AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 228-29 (2011)). Employees are likewise subject to an implied duty of loyalty to their employer (e.g., W. Elec. Co. v. Brenner, 41 N.Y.2d 291, 294 (1977)). Additionally, if performance is continued under a contract after its expiration, the agreement may, in certain circumstances, be presumed to renew under the same terms. If the contract was for longer than one year, it will presumptively renew on a year-to-year basis (Borne Chem. Co. Inc. v. Dictrow, 85 A.D.2d 646, 648 (2d Dep’t 1981)).

Are mandatory arbitration agreements enforceable?

Generally, yes, New York courts routinely enforce written agreements requiring final and binding arbitration (e.g., DiBello v. Salkowitz, 4 A.D.3d 230, 232 (1st Dep’t 2004) (requiring disputes to be submitted to arbitration pursuant to a mandatory arbitration agreement)). However, in 2018, New York State passed a law prohibiting employers from requiring arbitration of sexual harassment claims, and in 2019, extended such law to prohibit mandatory arbitration of all claims of discrimination or harassment under the New York State Human Rights Law. Moreover, at the federal level, in March 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which prohibits employers from enforcing pre-dispute arbitration provisions and class or collective action waivers with respect to sexual assault and sexual harassment claims unless it is “at the election of the person alleging” the misconduct. This means that, though employers may still include such provisions, employees may choose to be released from any pre-dispute arbitration agreement or joint-action waiver relating to a sexual assault or sexual harassment dispute.

How can employers make changes to existing employment agreements?

Amendments to an employment agreement for a fixed term may be obtained through mutual agreement between the parties. Where the employment relationship is at will, “the employer may unilaterally alter the terms of employment, and the employee may end the employment if the new terms are unacceptable” (Minovici v. Belkin BV, 109 A.D.3d 520, 523 (2d Dep’t 2013)).