Is Your Contract Protecting You Against the Coronavirus?

In the last few days, I have been receiving a number of calls from clients whose businesses are being affected by the Coronavirus (COVID-19).  Whether you believe this is all unnecessary panic, or simply an exaggerated event, the economic impact now being felt by clients, their customers, their contractors, their suppliers--their businesses--is having significant economic consequences.  The main questions being posed are: who bears the costs of these economic impacts and are there possible defenses or ways to recover the costs if a party to a contract cannot perform its contractual obligations? 

The answers to these questions have largely centered around the force majeure provisions of various business contracts. The concept of “force majeure” is that a party’s performance of its contractual obligations may be excused where performance is prevented or frustrated due to an unusual event that is beyond the contracting parties’ control--sometimes referred to as an "Act of God."  This concept is seen in a variety of contracts: business contracts, insurance contracts, sales contracts and commercial leases, to name a few.

Often this clause is last thing the parties negotiate, or even pay attention to, because the chances of it becoming an important contract term are remote (depending on the type of business or industry).  And yet, here we are, with a kind of Act of God in the form of a pandemic virus.  And now that this has become a contractual issue for many businesses, it is time to evaluate and determine if a party can rely on it to not perform or to excuse performance of a contractual obligation. 

Like all contract provisions, the clause needs to be looked at carefully.  Hopefully, it was well-drafted. 

So, what to do if this clause is looking like it's your only way out of a difficult (and hopefully temporary) situation?

• Evaluate your contracts to determine the applicability of a force majeure clause to the current COVID-19 situation.
• Identify any actual or potential consequences arising from the situation both within your company and your supply chain.
• If you do identify consequences, assess and determine what it will take to respond and whether and to what extent there are actions that you can take to address or mitigate the situation.
• Be sure to track the consequences of the pandemic on your business and your efforts to address them.  (This may serve you well when you later need to rely on the clause as a defense to nonperformance).
• Determine if you have any notice or reporting requirements as these may be prerequisites or pre-conditions to your ability to assert defenses or seek relief.
• Review your insurance policies to assess any applicable coverage for losses resulting from the Coronavirus, including supply chain disruption and business interruption. 
• If you are encountering a consequence that you think may constitute a force majeure event, contact your attorney to make sure you act in a way that minimizes your potential liability.

The Bottom Line:  The COVID-19 situation will continue to change daily.  It is a good time to review your contracts for this little-paid-attention-to clause called force majeure.  It may save your business.  

Employers Beware: New York Has Passed Some Sweeping Changes to its Discrimination and Harassment Laws

On August 12, 2019, Governor Cuomo signed into law a bill that makes changes to New York's discrimination and harassment laws. These changes follow his signing of two other bills on July 10, 2019 that concern equal pay and salary history.  The changes go into effect beginning October 2019 and at various points over the next year.

Summed up, and in general terms, here are some of the changes:

Pay Equity: Equal wages must be provided for employees performing the same or "substantially similar" work under "similar working conditions."

Salary History: Employers are prohibited from soliciting information from an applicant or an employee regarding wage or salary history.

Burden of Proof for Harassment Claims: Employees no longer need to establish that harassing conduct was "severe or pervasive" to prove that harassment has occurred in the workplace; rather, they can now establish a lesser standard by showing that they were merely subjected to "inferior terms, conditions, or privileges of employment." This change is applicable to all claims of harassment - not just sexual harassment.  

Interestingly, and little discussed so far, is a change in the way discrimination is viewed.  Whether or not discrimination has occurred will be viewed through the eyes of the "reasonable victim" of discrimination as opposed to the "reasonable person," which is the current legal standard.  This means that if the victim of alleged discrimination feels that he or she has been discriminated against, this is sufficient, regardless of whether, objectively, a reasonable person may not see the conduct as discriminatory. 

Faragher-Ellerth Defense: Under existing law, once an employee establishes his or her initial burden of showing that he or she was harassed in the workplace, the employer often had a defense, known as the Faragher-Ellerth defense, if the employee did not complain about the harassment to the employer. However, under the new framework, the fact that an employee did not complain is no longer a defense for an employer.

Non-Employees in the Workplace: Similar to last year's change that protected non-employees in the workplace from sexual harassment, non-employees in the workplace are now protected from all forms of unlawful discrimination.

Non-Disclosure Agreements: Until now, it was not uncommon for employers to require their employees to resolve all workplace disputes in confidential binding arbitration, not court. It was also common for workplace discrimination and harassment claims to settle, and in a settlement agreement a provision was included prohibiting employees from disclosing the facts regarding the settlement. Now, similar to last year's change regarding the settlement of sexual harassment complaints and the limitation on the use of mandatory arbitration agreements, NDAs are prohibited for all forms of unlawful discrimination and harassment unless confidentiality is the employee's preference.

Damages and Attorneys' Fees: Punitive damages are now available in cases of unlawful employment discrimination, and attorneys' fees can be awarded to a prevailing employee. While the provision of attorneys' fees now aligns New York state law with federal law, the provision for uncapped punitive damages now provides for greater remedies than presently permitted under federal law.


The Bottom Line: The new laws are a continuation of certain changes to laws that took effect last year. Together these changes have resulted in a significant alteration of discrimination and harassment law in New York State.  The changes will arguably make it easier for employees to plead and prove sexual harassment and other harassment claims, and will also incentivize employees with the potential for increased damage awards. You can also expect that the revised legal standards, coupled with the expansion of actionable harassment claims beyond just sexual harassment, will result in an increase in litigation.

Moreover, previously, state law was interpreted consistently with federal law. However, that will likely no longer be the case. In those cases in which an employee brings claims under federal, state and city law, a court may now need to apply three different legal standards, which will further complicate the litigation of these types of cases.

Employers should ensure that their harassment and discrimination prevention training complies with the new legal standards, and that their procedures for preventing harassment and discrimination are consistent with current best practices. Employers should also review their form employment, confidentiality, arbitration, separation, settlement and other agreements in light of the new laws concerning arbitration and non-disclosure provisions.

New York City Releases New Guidance on Discrimination Based on Hair

In February 2019, the New York City Commission on Human Rights released a legal enforcement guidance about race discrimination on the basis of hair.

According to the Commission, the New York City Human Rights Law (NYCHRL) “protects the rights of New Yorkers to maintain natural hair or hairstyles that are closely associated with their racial, ethnic, or cultural identities. For Black people, this includes the right to maintain natural hair, treated or untreated hairstyles such as locs, cornrows, twists, braids, Bantu knots, fades, Afros, and/or the right to keep hair in an uncut or untrimmed state.” The phrase “Black people” includes those who identify as:

• African;

• African American;

• Afro-Caribbean;

• Afro-Latin-x/a/o; or

• Otherwise having African or Black ancestry.

According to the guidance, hair-based discrimination implicates many areas of the NYCHRL, including prohibitions against race, religion, disability, age, or gender-based discrimination. The Commission’s guidance seeks to highlight the protections available under the NYCHRL for people who maintain particular hairstyles as part of a racial or ethnic identity, or as part of a cultural practice, regardless of the changing nature of these characteristics.

Covered entities with policies prohibiting hairstyles associated with a particular racial, ethnic, or cultural group would, with few exceptions, violate the NYCHRL’s protections against race and related forms of discrimination. Additionally, although the guidance focuses on Black communities, these protections broadly extend to other impacted groups including, but not limited to, those who identify as Latin-x/a/o, Indo-Caribbean, or Native American, and also face barriers in maintaining “natural hair” or specific cultural hairstyles.

Employer Record Keeping: What to Keep

I am often asked by clients: "What personnel and employment documents should we keep on file and for how long?" So, here is my basic response:

Rather than deciding what to keep and what to throw out, create a document-retention policy. This means you only retain the documents that are required to be retained by law, because of business necessity, or because it might just be useful--what I call the "you never know" category. The last two categories are specific to each business; the first, however, should follow the law and here is what the law requires:

• For at least 2 years, keep basic employment and earning records like timecards, wage-rate tables, shipping and billing records, and records of additions to or deductions from wages.
• For at least 3 years, keep payroll records, certificates, agreements, notices, collective bargaining agreements, employment contracts, and sales and purchase records.
• Basic payroll data.
• Dates FMLA leave is taken, including hours of leave for times of less than a full day.
• Copies of written notices given to employees as required by the FMLA.
• Documents describing benefits, policies and practices regarding paid and unpaid leave.
• Premium payment records for employee benefits.
• Records of disputes over the designation of leave as FMLA.
• Records relating to medical certifications, recertifications or medical histories created for FMLA purposes, kept in separate files from the usual personnel files.

I-9 Forms
Under the Immigration Reform and Control Act, you must keep copies of an employee's I-9 (Employee Eligibility Verification Form) for 3 years after the date of hire. If the employee works longer than three years, hold on to the form for at least another year after he or she leaves.

FLSA
Under the Fair Labor Standards Act you must:

Equal Pay Act
In addition to the payroll records that the FLSA requires, you must also keep, for at least 2 years, any records that show why you may pay different wages to employees of different sexes, such as wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements.

Discrimination
The Equal Employment Opportunity Commission highly recommends that employers keep all employment records for at least 1 year from the employee's date of termination. The federal Age Discrimination in Employment Act requires that you retain payroll records for 3 years. In addition, an employer must keep files of benefit plans and seniority and merit systems while they are in effect and for at least 1 year after they end.

FMLA
If your company is covered by the Family and Medical Leave Act (FMLA), it must retain the following records for 3 years:

OSHA
Under the Occupational Safety and Health Act, employers must keep records of job-related injuries and illnesses for 5 years. But some records, like those covering toxic substance exposure, must be kept for 30 years.

ERISA
For benefit plans under the Employee Retirement Income Security Act, an employer must retain summary descriptions and annual reports for 6 years.

New Developments in Employment Law this Spring....

The New York City Freelance Isn't Free Act, which was signed into law in November 2016,  takes effect on May 15, 2017. Under the Act, the following protections for freelance workers or independent contractors are established and enhanced--specifically, the right to:

(a)  a written contract;
(b)  timely and full payment; and
(c)  protection from retaliation

The Act establishes penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees.


Also, on May 4, 2017, Mayor Bill de Blasio signed a bill prohibiting New York City employers from inquiring about a prospective employee’s salary history during all stages of the employment process. If an employer is already aware of a prospective employee’s salary history, then it is prohibited from relying on that information in the determination of salary.

This law will become effective October 31, 2017.

NY Amends Salary Threshold to Maintain Overtime Exemptions for White Collar Employees

The New York Department of Labor has adopted proposed changes to increase the salary threshold for “white collar” executive and administrative employees to qualify as exempt. Accordingly, employers are required to pay the following minimum salaries as of their respective dates to maintain the executive and administrative overtime exemption under New York law:

Large employers (those with 11 or more employees) in New York City:

$825 per week effective December 31, 2016.
$975 per week effective December 31, 2017.
$1,125 per week effective December 31, 2018.

Small employers (those with 10 or fewer employees) in New York City:

$787.50 per week effective December 31, 2016.
$900 per week effective December 31, 2017.
$1,012.50 per week effective December 31, 2018.
$1,125 per week effective December 31, 2019.

Employers in Long Island and Westchester:

$750 per week effective December 31, 2016.
$825 per week effective December 31, 2017.
$900 per week effective December 31, 2018.
$975 per week effective December 31, 2019.
$1,050 per week effective December 31, 2020.
$1,125 per week effective December 31, 2021.

Employers in the remainder of New York State (outside of New York City, Long Island, and Westchester):

$727.50 per week effective December 31, 2016.
$780 per week effective December 31, 2017.
$832 per week effective December 31, 2018.
$885 per week effective December 31, 2019.
$937.50 per week effective December 31, 2020.

NYC Says There Are No Longer Just Males and Females

In May of this year, the New York  City Commission on Human Rights announced a list of 31 new genders that are protected by New York City's anti-discrimination laws.  The list includes the terms "androgynous," "gender bender," "gender gifted," "third sex," "genderqueer," "gender fluid" and "pangender."  And the list is by no means intended to be "exhaustive."  I suppose they couldn't think of any other gender types at the moment.

This all comes within the scope of New York City Human Rights Law passed in 2005 known as the 2005 Civil Rights Restoration Act.  Apparently, the law needed updating, or at least further clarification, because such gender terms and different gender concepts were not within the contemplation of the legislators back in 2005, and so now the City wants to make clear who is protected.

The NYC Human Rights Law also requires employers and covered entities to use an individual’s preferred name, pronoun and title (for example, Ms./Mrs.), regardless of the individual’s sex assigned at birth, anatomy, gender, medical history, appearance, or the sex indicated on the individual’s identification.

Be careful employers:  the penalties for violating the law are harsh:  $125,000 for each violation or $250,000 if the discriminatory conduct is considered willful.

The times, they are a changin'....

Time Off for Bad Weather

With the recent wintry weather that New York has experienced this year, many businesses closed their stores, locations or offices either because of bad weather or in anticipation of bad weather.  The Mayor's and the Governor's decisions to close the transportation system in anticipation of a blizzard that never materialized also did not help matters!

The situation has prompted a number of questions concerning how employees' pay should be treated when a business closes because of weather conditions.

Here are the rules of thumb:

(1) For employees who are exempt from minimum wage and overtime laws, they do not have to be compensated if they do not show up for work because of bad weather if the business remains open; if an employer closes the business due to bad weather, the employee's full salary must be paid for the pay period even if he or she may not have worked the full period.  However, in the case where the business is open, but the employee does not appear for work, if the company has a paid time off policy, then the employee can ask to be paid for the day if he or she has accrued time.

(2) In the case of non-exempt employees, that is, employees that are subject to minimum wage and overtime laws, if the company closes, they are not entitled to be paid, but the company can allow the employee to apply any accrued paid time off if the company has such a policy.

An interesting situation arises with employees that can telecommute.  If an exempt employee works remotely from home on a bad weather day, no deduction can be made if the employee is "absent" from work.  However, because of the difficulty of monitoring whether an employee is actually working at home, non-exempt employees should always be prohibited from working from home.

Paying employees for work when they are not actually in the office or the place of employment is a difficult issue for many business owners.  The rules are complicated enough, so as businesses become more affected by global weather changes, it is a good idea to have a set of rules and policies in place for exempt and non-exempt workers, and to make them known to employees so they are not surprised by any deductions from wages.

Who Your Employees Associate With May Be Grounds for a Discrimination Suit

Can being married to a Jewish spouse subject your business to a discrimination suit based on religion? Yes, says the state appellate court in the Second Department of New York.

In a recent decision by that court in Jeffrey Chiara v. Town of New Castle, decided on January 14,2015, an appellate panel of judges opined that the plaintiff husband, who was not Jewish, but married a Jewish woman, was found to be discriminated against by virtue of his marriage to his wife.  Coworkers of Mr. Chiara apparently made derogatory comments about the Jewish religion. When he informed his coworkers that his wife was Jewish, the derogatory anti-Semitic remarks and comments continued--for several years.

In 2006, the Town of New Castle brought disciplinary charges against Mr. Chiara for misconduct and insubordination, and his employment was eventually terminated.  He thereafter filed a lawsuit alleging discrimination and hostile work environment based on religion--his wife's!

After losing his case at the trial court level, he argued to the appellate court that he was a member of a "protected class" by virtue of his marriage to a Jewish woman.  His employer argued that no law in New York supports a claim of discrimination based on the religion of a spouse.

The Appellate Division, Second Department, disagreed and held that just as Title VII of the federal law, the New York State Human Rights Law protects employees based on their association with other individuals, including their spouses.

As the first decision of its kind in New York, employers should be very mindful that New York law has now been interpreted broadly enough (at least by this one court) to extend protections to employees even if they are not covered by Title VII of the federal law.  It should also serve as a warning to employers that employees may be deemed to be discriminated against based on who they associate with,even if they are not within a protected class.

"Leering" Does Not Create a Hostile Work Environment

The Second Circuit Court of Appeals recently ruled in Lewis v. City of Norwalk (2d Cir. 2014) that a supervisor's occasional "leering" and "licking of his lips" at a subordinate employee was insufficiently severe and too sporadic to create a hostile work environment.

The subordinate complained that beginning in 2006, his supervisor, who was openly gay, "leered" at him and "made gestures with his tongue."  Although it began in 2006 and went on for years thereafter, it became merely sporadic over time.

Eventually, the employee was up for a performance review and his review reflected unacceptable work performance.  He was offered to resign with a severance package, or the employer would fire him.  He refused to resign--so he was fired.  The employee then commenced suit for sexual harassment against his supervisor and former employer.  His claims, however, were dismissed by the federal district court and, on appeal to the Second Circuit, he lost again, the Court holding that the supervisor's conduct was insufficiently severe and too sporadic to constitute sexual harassment.

This case is a reminder that in New York what constitutes conduct that is sufficiently "severe" in the context of a claim of sexual harassment must reach a very high threshold.

The Stakes are High for Misclassifying Employees in 2014

Misclassifying a worker as an independent contractor instead of an employee is creating potentially greater problems for business in 2014.   And it may well prove to be a banner year for the IRS, the U.S. Department of Labor and the  EEOC, which have all articulated their aggressive pursuit of misclassification claims against employers this year. I have warned about the danger of misclassifying workers as independent contractors in the past, and the penalties imposed for doing so.  This year, with an increase in the minimum wage in NY to $8.00 per hour, the implementation of the Affordable Care Act  (ObamaCare) and certain amendments to the Americans with Disabilities Act (ADA), the stakes are even higher. In addition, the U.S. Senate is introducing a bill in Congress (the Payroll Fraud and Prevention Act) to impose more requirements and penalties for misclassification.    Under the new law, among other things, an employer will be required to give written notice to each worker that he/she is considered a non-employee.  If wrongly classified, and the result is a wage underpayment, then the additional amounts already imposed under the Fair Labor Standards Act as a liquidated penalty for violation will be doubled.  The law will also allow the Department of Labor to target certain industries with "frequent incidence of misclassifying employees...."  For example, the construction industry and the restaurant industry. What makes it difficult for businesses to comply with the classification rules is that each government agency has a different definition and a different test for making the determination.  Therefore, employers need to make sure they fit all of the definitions.

"Indefinite Leave" Declared a Reasonable Accomodation!

New York's highest court has ruled this month in Romanello v. Intesa San Paolo, S.p.a. that under the New York City Human Rights Law, an indefinite leave of absence for a disability is not in and of itself an unreasonable accommodation. Instead, says the court, it is up to the employer to prove that such an accommodation would be an undue hardship.

This new ruling stands in stark contrast to the New York State and federal disability discrimination statutes. The courts interpreting those statutes have consistently held that an indefinite leave of absence as the result of a disability is not a reasonable accommodation.

The Court's ruling is significant to employers who must now meet an additional pleading requirement, that is, that the indefinite leave will result in an undue hardship, to satisfy their burden under the New York City law.

Supreme Court Defines the Term "Supervisor" Under Title VII

Last October 2012, I wrote about the case of Vance v. Ball State University, a Seventh Circuit federal appeals court case that addressed the question of who a "supervisor" is for purposes of employer harassment claims alleged under Title VII.

The question is important because under federal law, when the alleged harasser is a co-worker, the employer will only be liable for the harasser's actions if the employee proves that the employer was negligent.  But when the employee is a supervisor who creates a hostile work environment, the employer is liable unless it can prove a defense, for instance, that it had an anti-harassment policy and that the employee who was the victim of the harassment failed to take advantage of such a policy.

The Seventh Circuit in Vance adopted a narrow definition of the term and ruled that a supervisor is  someone who has the authority to make tangible decisions about an employee's work conditions, including hiring, firing, demoting, promoting, transferring and disciplining.  To contrast this definition, the Second Circuit federal court in New York, defines a supervisor less restrictively as anyone who simply has authority to direct the employee's daily work activities.

Vance was appealed to the United States Supreme Court and the Supreme Court's decision was handed down this past June 24, 2013.  In a 5-4 majority opinion the Supreme Court has sided with the Seventh Circuit and ruled that a "supervisor" is someone with the authority to effect significant change in an employee's employment status or has the ability to cause a significant change in benefits.  If such a person is responsible for the harassment, then the employer may be liable, but the harasser's mere ability to direct or supervise another employee's work is not enough to hold the employer vicariously liable.

The Supreme Court's decision, at the same time, explicitly rejects the EEOC's broad definition of the term supervisor.

No doubt the decision will have a significant impact on employee harassment lawsuits going forward; giving employers a decided advantage in this area.

An Employer's Job Description of "Essential Job Functions" Carries Great Weight

What constitutes an "essential job function" under the Americans with Disabilities Act?  It is a question that the courts grapple with everyday because it is a critical element of any disability discrimination claim.  Well, the federal court for the Eighth Circuit Court of Appeals has recently answered the question and has decided that an employer's judgment carries great weight in making the determination. The court held that the job description by the employer, not the employee's specific experience on the job, is what counts most.

 In Knutson v. Schwan's Home Service Inc. (April 2013) an employee was terminated after two years on the job on the ground that the employer claimed that the employee was no longer able to meet the physical standards described in his job description. The employee sued under the ADA alleging discrimination. He claimed that he rarely drove a commercial vehicle as part of his normal job duties, and so, when he suffered a serious eye injury and could not obtain Department of Transportation certification to drive a commercial vehicle (a requirement in his job description), he could nevertheless perform "the essential job functions" of his work. His termination, he claimed, therefore violated the ADA.  The employer, however, proved that the employee's ability to drive a commercial vehicle was essential to the job no matter how infrequently this ability was used, and that it was listed in the job description as a qualification for the position.

 The Eighth Circuit agreed with the employer and held that the job description is what counts when determining whether an employee can perform the essential functions of the job.

Whether or not state or federal courts in New York presently agree with the Eighth Circuit, the decision underscores the importance of clear, complete and up-to-date job descriptions, and documented business-related reasons for decisions affecting employees.  Being able to document a consistent application of job requirements and the necessity of those requirements will bring employer's one step closer to successfully defending against a disability discrimination claim under the ADA.

Supreme Court to Decide Who's the Boss in Sexual Harassment Cases

Increasingly, individual employees are being named in employment lawsuits because of their perceived involvement in adverse employment decisions made by their employer.  The reason is:  if the employee is involved in an alleged incident of sexual harassment, for example, and he or she is a "supervisor," the employer may be held liable for the acts of that employee.

However, federal employment law, at least in the context of sexual harassment claims, makes a distinction between supervisors and non-supervisors or co-workers.  Under federal law, when the alleged harasser is a co-worker, the employer will only be liable for the harasser's actions if the employee proves that the employer was negligent.  But when the employee is a supervisor who creates a hostile work environment, the employer is liable unless it can prove a defense, for instance, that it had anti-harassment policy and that the employee who was the victim of the harassment failed to take advantage of such a policy.

This term, the U.S. Supreme Court is expected to decide, in the case of Vance v. Ball State, 2008 U.S. Dist. LEXIS 69288 (S.D. Ind. 2008) aff'd 646 F.3d 461 (7th Cir. 2011), the issue of the scope of supervisor liability, and resolve the question of who qualifies as a supervisor.  Here in the Second Circuit, the court of appeals has defined the term supervisor broadly to include any individual with the power to direct and oversee the work of the alleged victim. This is also the definition adopted by the EEOC.  More specifically, the Second Circuit has held that for the purpose of supervisor liability, a supervisor is one who possesses "authority to direct the employee's daily work activities" even if he lacks the authority to take tangible employment actions against the victim.  Mack v. Otis Elevator, 326 F.3d 116, 127 (2d Cir. 2003).  Other federal courts have applied more narrow definitions of the term.

The Supreme Court will likely adopt either a broad or a narrow definition, but until then employers in New York are well advised to follow the broader definition of "supervisor" and understand that they will be liable to an alleged victim of harassment for the acts of an employee who is responsible for directing and supervising work, not just one who has the authority to make employment decisions.

Stay posted for the Supreme Court's decision.

Defending Against Age Discrimination Claims Has Just Become a Little More Difficult

Recently, the EEOC issued a final rule making it more difficult for employers to establish the "reasonable factor other than age" defense for disparate impact age discrimination claims by employees.

Under the Age Discrimination in Employment Act an employee may bring an action against his or her employer for either disparate treatment or disparate impact.  A disparate impact claim alleges that the employer has a policy or procedure that may appear neutral, but in fact adversely affects employees who are older than 40 years of age.

One defense that employers have typically raised in the face of a disparate impact claim is that the policy or procedure was "reasonable and based upon factors other than age."  But now that defense has been heightened.

The new EEOC rule, which took effect on April 30, 2012, requires an employer to establish not only that the policy or procedure was based on reasonable factors other than age, but that it was reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known or should have been known to the employer at the time.

What this means to employers is that a much more thorough analysis of the business' circumstances and its needs must be conducted before changing or implementing any new policy or procedure that could impact the older employees even if there is a reasonable basis for the change.

New York Appellate Court Sets Standard for the Preservation of Electronically-Stored Information in Anticipation of Litigation

The preservation of electronically-stored data and documents, including email communications, when parties anticipate litigation, has been the subject of much debate and many court decisions in the past few years.

The obvious concerns are that parties that anticipate litigation may (a) intentionally destroy such data if it is believed to contain harmful evidence against the business, or (b) accidentally destroy the data, or (c) simply destroy the data as a routine part of their practice to purge certain documents and communications.

Until recently, the New York state courts had not articulated a set standard for when a party must implement an appropriate “hold” in order to avoid the destruction of electronic data and documents, including emails. The Federal courts had done so in 2003 with the notable decision in Zubulake v. UBS Warburg, LLC.

Now, at least one appellate court in New York, the Appellate Division, First Department, has adopted the same standard formulated by the Zubulake court.  The court in Voom HD Holdings, LLC v. EchoStar Satellite, LLC, 2012 WL 265833 (1st Dept. 2012) so held this past January 2012. 

According the Appellate Division, First Department, now, whenever a party reasonably anticipates litigation, the party must take steps to implement a hold policy on the destruction of the data even if litigation has not commenced, no notice of any claim has been served, or the parties are attempting to negotiate a resolution of the dispute.

Third Party Retaliation Claims Get a Little Help From the Supreme Court

Eric and his fiance, Miriam, work for the same employer.  Everyone in the workplace knows of their relationship. One day, Miriam files a charge with the EEOC alleging that she has been discriminated against on the basis of her gender.  After the employer is notified of the charge, Eric is fired.  Does Eric have a claim of retaliation against his employer even though he was not the one who complained about the discrimination?  Well, until recently Eric would not have had a claim of retaliation if he was not engaged in a protected activity at the time of the retaliatory action. However, this year the United States Supreme Court decided that he did.

Prior to the Supreme Court's decision in Thompson v. North American Stainless LP earlier this year, "third-party retaliation" claims were analyzed by reviewing the language of the anti-retaliation provision at issue. And, generally speaking, denial of the claim was based on a conclusion that the person retaliated against must be the same person who had engaged in a protected activity (like Miriam, who had complained about gender discrimination).

Lo and behold the Supreme Court now says that a person aggrieved under Title VII is one who is "within the zone of interests" protected under Title VII, and it concludes that Eric was within the "zone of interest," was aggrieved by the employer's actions, and had standing to sue.

Of course, this holding raises the obvious question: how big is this "zone of interest"? Do we include husbands and wives? Siblings? Cousins?  What about non-familial relationships?  What about a family member who is not employed by the same employer, but whose employer is somehow induced to fire him or her? 

While no New York court has specifically ruled on the question of third-party retaliation claims, recent New York federal court cases decided in the past few weeks seem to have applied the broad intention of the ruling in Thompson.  The Second Circuit, for example, in Tepperwien v. Entergy Nuclear Operations, Inc., (observing the Thompson court's dicta) stated that  “[g]iven the broad statutory text and the variety of workplace contexts in which retaliation may occur, Title VII's antiretaliation provision is simply not reducible to a comprehensive set of clear rules.”

EEOC Expands Definition of Disability

The Equal Employment Opportunity Commission has issued final rules, effective May 24, 2011, interpreting the Americans with Disabilities Act Amendments Act of 2008. The new rules broaden coverage under the Act and change the focus from whether an employee has a disability to whether the employer has satisfied its obligation to accommodate a disability.

Until now, it was generally accepted that the determination of whether a particular condition constituted a legal disability was dependent upon an “individualized assessment.” Under the new regulations, however, the EEOC lists a number of conditions that will “virtually always” constitute a disability, including, for example, cancer, diabetes, HIV infection, bipolar disorder and schizophrenia. The rules also specify that a disability of any duration may be a covered disability, which would include episodic conditions and conditions that are in remission.

Greater protection is also afforded employees who are “regarded as” disabled. These employees are protected if the employer has a perception that the employee has an impairment—regardless of whether the impairment is perceived as an actual disability.


The Amendments Act of 2008 and the new EEOC rules are an attempt to reverse a series of relatively recent Supreme Court decisions that placed greater restrictions on the rights of individuals with disabilities. There is no question that now employers should interpret the concept of “disability” broadly, and that the focus of the employer should be less on whether or not the employee is disabled and more on whether it has policies and procedures in place to reasonably accommodate the disability.

Change in Employer Wage Notification Requirements

Effective April 9, 2011 the New York Wage Theft Protection Act of 2010 has substantially modified the existing wage notification requirements under New York Labor Law Section 195.

Under prior law, an employer had to simply notify an employee at the time of hiring of the rate of pay and pay date, and obtain a written acknowledgment from the employee. Employers were also required to provide written notification of any changes at least seven days in advance and provide an employee with every wage payment: a statement listing gross wages, deductions net wages. Payroll records were to be maintained for not less than three years.

Now, however, all employers in New York State, regardless of size, must provide written notice to each employee upon hire and annually thereafter, by no later than February 1 ,of the following:

• The rate of pay, both straight time and, if applicable, the overtime rate
• The basis of pay (e.g., hourly, salary, shift, day, week, month)
• Any allowances claimed as part of minimum wage (e.g., tip allowance, meal allowance, lodging allowance )
• The employer's regular pay date
• The name of the employer, including any d/b/a's
• The physical address of the employer and, if different, the mailing address
• The employer's telephone number
• Any "other information" deemed "material and necessary" by the NYS Commissioner of Labor

Further,

• The notice must be written in English and in the employee's primary language as defined in the statute.
• The notice must be provided in duplicate so that the employee may retain a copy.
• The employer must obtain a signed and dated acknowledgement from the employee of receipt of the notice and that it was in the employee's primary language. The acknowledgements must be obtained each and every time an employee is provided with a notice (for example, raises, annual February notices, etc.). The acknowledgements must be retained by the employer for six (6) years.

The penalties for non-compliance and non-payment of wages have also drastically changed. Employers that fail to pay wages as required are subject to a civil fine of $500 for each such failure. Employers failing to pay wages as required are guilty of a misdemeanor and can be fined from $500 to $20,000, or imprisoned for up to one year plus one day OR BOTH. An employee who is not provided the required notifications within ten business days of his first day of employment may recover in a civil action damages of $50 for each workweek that the violations occurred or continue to occur, to a maximum of $2,500, plus costs and reasonable attorneys' fees.

Moreover, in any action brought against the employer, if the employee prevails, the court will allow the employee ordinary costs, expenses (not to exceed $50), plus reasonable attorneys' fees. An additional amount, equal to 100% of the wages due, will also be awarded as liquidated damages.

Employers are well-advised to comply with the new law or risk very substantial penalties.