The governor’s veto represents a win for New York employers, who may continue to use and enforce noncompete provisions to protect their business interests and retain their talent. 

In 2023, New York State and New York City enacted a slew of labor and employment laws levying additional requirements on employers. Employers should familiarize themselves with these new laws as well as others that went into effect in 2023 and update their relevant policies accordingly. New York employers’ new obligations in 2024 span a wide range of topics including unemployment, electronic communications, wage payments, wage theft, intellectual property, salary transparency, safe and sick time, minimum wage, settlement agreements, payment agreements for freelance workers, expansion to a statute of limitation and protected characteristics, captive audience meetings and mass layoffs.

New York State

Noncompete Agreements

On December 22, 2023, Governor Kathy Hochul vetoed a bill that, if signed, would have banned noncompete provisions in New York. While New York’s bill was broad sweeping, other states have recently enacted bans on noncompete provisions for workers earning lower wages or required certain notices to effectuate noncompetes. The governor’s veto represents a win for New York employers, who may continue to use and enforce noncompete provisions to protect their business interests and retain their talent. Duane Morris will continue to monitor developments in this area, as the bill’s sponsors will likely continue their efforts to limit noncompete provisions. Read more in our separate Alert on this topic.

Unemployment

On September 14, 2023, Governor Hochul signed a law amending Section 590 of the New York Labor Law, which became effective on November 13, 2023, requiring employers to provide written notice of the right to file for unemployment benefits to terminated employees, employees who have been temporarily separated, employees whose working hours have been reduced, and employees who have an interruption of continued employment that results in partial unemployment. Employers are required to provide the written notice to such employees at the time of the qualifying event. The written notice of rights may be provided either as a form provided by the New York State Department of Labor (NYSDOL) or a form approved by the NYSDOL. The form must include the employer’s name and registration number and the address of the employer to which a request for remuneration and employment information must be directed.

Governor Hochul also signed a law on September 14, 2023, requiring that the NYSDOL commissioner establish a procedure to notify applicants for unemployment about the supplemental nutrition assistance program (SNAP) and the special supplemental nutrition program for women, infants and children (WIC). The law, which becomes effective on January 12, 2024, does not detail whether employers will be responsible for providing this notification to applicants for unemployment.

Electronic Communications

On September 14, 2023, Governor Hochul approved a law prohibiting employers who engage in business in New York State from requesting or requiring their employees or applicants for employment to disclose information that could be used to access a “personal account” on an electronic device. “Personal accounts” include social media profiles and forums in which one could communicate with others and upload photographs, blogs and podcasts. Electronic devices include computers and phones. The law also prohibits an employer from requesting or requiring that an employee or job applicant access their account in the presence of the employer. An employer may not penalize or threaten to penalize an employee who refuses to disclose such electronic information or refuse to hire an applicant who refuses to disclose such electronic information.

This law does not prohibit employers from:

• Requiring an employee to disclose their login information for nonpersonal accounts used to access the employer’s internal computer;
• Requesting or requiring an employee to provide access to accounts provided by the employer if the accounts are used for business and the employee was previously notified that the employer has a right to require access to such information;
• Requiring an employee to disclose their login information for accounts if such accounts are used for business purposes;
• Accessing nonpersonal accounts on an electronic device the employer paid for, at least partially, where the employer notified the employee that payment for the device was conditioned on the employer’s right to access the device and the employee agreed to the same;
• Complying with a court order to obtain information from an employee’s accounts;
• Restricting or prohibiting an employee’s access to websites while using an employer’s network or an electronic device paid for, at least in part, by the employer, where the employee was previously notified and agreed to the fact that payment for the device was conditioned on the employer’s right to restrict such access; or
• Complying with a duty to screen employees or job applicants or monitor or retain employee communications established by federal law or by a self-regulatory organization.

An employer complying with certain federal, state or local law requirements by monitoring or retaining employee communications may continue to do so, and may even assert as an affirmative defense that it acted to comply with such a law if an individual brings an action against an employer under this new law.

New York employers should review their communications policies as well as their personal and company electronic device policies to ensure compliance with the new law by March 12, 2024.

Wage Payment Protections Exemption

On September 15, 2023, Governor Hochul signed a law, effective March 13, 2024, that revises the definition of “clerical and other workers” in Article 6 of the New York Labor Law, which discusses protections afforded in payment of wages to certain employees. The law states that employees in the “clerical and other workers” category must be paid at least semimonthly and provide advance, written consent before being paid wages via direct deposit. It also holds the employer guilty of a misdemeanor in the event that the employer fails to provide benefits or wage supplements within 30 days of being due. Benefits and wage supplements include reimbursement for expenses, health, welfare and retirement benefits, and vacation, separation or holiday.

Currently, the law excludes from its definition of “clerical and other workers” individuals employed in a bona fide executive, administrative or professional capacity who earn more than $900 per week. The amendment increases the minimum salary requirement to be excluded from protections afforded to “clerical and other workers” to $1,300 per week, thereby expanding the category of individuals entitled to the statute’s protections.

While this law dictates the minimum salary needed to be exempt from the semimonthly pay frequency requirement and other wage payment protections, it does not address overtime exemptions or minimum wage.

New York employers should review their payment and benefit policies to account for the expansion of the law well in advance of March 13, 2024.

Employee Inventions

Governor Hochul signed a law with immediate effect on September 15, 2023, rendering unenforceable all provisions in employment agreements requiring employees to assign to their employers inventions made on their own time and that do not use their employer’s equipment, facilities or trade secret information. This law does not apply to inventions that relate to the employer’s business or “actual or demonstrably anticipated research or development of the employer.” The law also does not apply to inventions that result from work performed for the employer.

New York employers should review invention assignment provisions to any existing employment agreements to determine whether their current scope is permissible under the newly enacted law.

Pay Transparency

New York’s pay transparency law took effect on September 17, 2023. This law requires employers with four or more employees to disclose compensation ranges for job opportunities, promotions and transfers. The ranges must consist of the minimum and maximum annual salary or hourly compensation. Employers must also state if a position is commission-based. The law applies to roles that will be performed, at least in part, in New York State, as well as those that will not be performed in New York but report “to a supervisor, office, or other work site in New York.” The law also applies to job postings for remote work that report into a New York office or supervisor. If an employee’s physical presence in New York is only for occasional work-related purposes, such as a meeting, conference or communicating with employees based in New York, that would not be enough activity to be considered a job performed in New York under the law. Employers are prohibited from retaliating against employees who discuss their compensation with co-workers.

New York employers should ensure that their job postings for New York-based and non-New York-based roles reporting into New York covered by the law include good-faith compensation ranges.

Minimum Wage and Wage Orders

Effective January 1, 2024, the executive and administrative overtime exemption threshold minimum salary is:

• $1,200 a week ($62,400 a year) in New York City, Long Island and Westchester County; and
• $1,124.20 a week ($58,458.40 a year) in the remainder of the state.

The minimum wage for all employees except janitors in residential buildings is:

• $16.00 in New York City, Long Island and Westchester County; and
• $15.00 in the remainder of the state.

Those subject to the Minimum Wage Order for the Building Service Industry must now pay their janitors in residential buildings:

• $10.65 per unit per week for work performed in New York City, Long Island and Westchester County; and
• $10.00 per unit per week for work performed in the remainder of state unless they are paid the below amounts per week.

The above unit rates are not applicable to janitors who are paid at least:

• $680.55 per week in New York City, Long Island and Westchester County; and
• $637.50 per week in the remainder of the state.

Settlement Agreements

On November 17, 2023, Governor Hochul signed into law a bill, which became effective immediately, amending Section 5-336 of the New York State General Obligations Law pertaining to settlement agreements. Before the amendment, the law:

1. Required that along with a release or settlement agreement involving discrimination, harassment or retaliation claims where the complainant was prohibited from disclosing the underlying facts and circumstances of those claims, the complainant must execute a separate agreement stating that confidentiality of those terms is their preference;
2. Required an individual to wait 21 days before agreeing to the confidentiality language and this consideration period was not waivable;
3. Provided for a seven-day revocation period after the individual signed the agreement; and
4. Required that agreements restricting the disclosure of factual information related to any future claims of discrimination notify the complainants that they are not prohibited from speaking with law enforcement, the Equal Employment Opportunity Commission, the New York State Division of Human Rights, a local commission on human rights or complainants’ attorney.

While the amendment maintained points one, three and four above, it modified the second above requirement by allowing complainants executing such agreements to waive the 21-day waiting period before executing the agreement agreeing to the confidentiality language, making this provision in line with a similar consideration period found in the Older Workers Benefit Protection Act.

The amendment also provides the following:

• Prohibits settlement agreements involving harassment, discrimination and retaliation claims from requiring the complainant to pay liquidated damages to the accused or forfeiting the consideration received under the agreement if the complainant violates an included nondisclosure or nondisparagement provision;
• Expands protections of these settlement rules beyond employees and potential employees to independent contractors;
• Deems releases unenforceable if they contain or require “any affirmative statement, assertion or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, including discriminatory harassment, or retaliation”; and
• Requires that agreements restricting the disclosure of factual information related to any future claims of discrimination notify the complainants that they are not prohibited from speaking with the New York attorney general.

The amendments do not, however, affect Section 5003-B of the New York Civil Practice Laws and Rules, which still requires plaintiffs who have filed a complaint in New York State court to wait the full 21-day consideration period before signing a settlement agreement in a case involving discrimination claims.

Employers should review and revise their template confidentiality agreements that accompany settlement agreements involving harassment, discrimination and retaliation as soon as possible.

Payment of Wages for Freelance Workers

New York State adopted its own Freelance Isn’t Free Act, mirroring New York City’s law that bears the same name, effective May 19, 2024. The law applies to freelance workers who are independent contractors retained to provide services of at least $800 during the immediately preceding 120 days.

Under the law, a hiring party must (i) enter into a written contract with a freelance worker any time the hiring party retains the freelance worker’s services; (ii) provide the freelance worker with a copy of the written contract; and (iii) retain the contract for at least six years. The law describes certain items that must be included in such a contract, such as both parties’ names and mailing addresses, an itemization of the services and their value, the rate and method of compensation, the payment date and “the date by which a freelance worker must submit a list of services rendered under” the contract. Further, the law requires that compensation be paid to freelance workers by the date that compensation is due under the terms of the executed contract between a hiring party and a freelancer. If the contract does not specify a date by which payment is to be made to the freelance worker or the manner in which the payment date will be determined, the hiring party must pay the freelance worker by the 30th day after the worker’s services have been completed. Freelancers who are successful in a civil action against the hiring party are “entitled to an award of double damages, injunctive relief” and “statutory damages equal to the value of the underlying contract for each violation.” Moreover, if a judge finds that “the hiring party has engaged in a pattern or practice of violations” of this law, they may impose a civil penalty on the hiring party of up to $25,000, to be paid into the general fund.

New York State Human Rights Law Extended Statute of Limitations

Effective February 15, 2024, the statute of limitations to file a charge with the New York State Division of Human Rights (NYSDHR) that includes claims of unlawful discriminatory practices and retaliation under the New York State Human Rights Law (NYSHRL) will be three years. Previously, all claims of alleged discrimination under the NYSHRL had a one-year statute of limitations for filing with the NYSDHR, except for claims of sexual harassment, which already had a three-year statute of limitations. The extended statute of limitations will apply prospectively to all unlawful discriminatory practice claims arising on or after February 15, 2024.

Extending the statute of limitations for NYSHRL claims brought before the NYSDHR conforms it to the statute of limitations for NYSHRL claims in New York State court. A New York State court civil action under the NYSHRL, as well as the New York City Human Rights Law, must be brought within three years after the alleged discriminatory practice. 

New York Worker Adjustment and Retraining Notification Act Regulation Amendments

Amendments to the New York Worker Adjustment and Retraining Notification (WARN) Act regulations took effect on June 21, 2023, and impose additional obligations on employers conducting mass layoffs. Among other changes, the amended NY WARN Act regulations:

• Consider remote workers as employed by the site at which they are based (the amendment does not provide guidance as to how to determine the employment site at which such individuals are “based”);
• Revise the content of WARN notice and add recipients to whom the notice must be distributed;
• State that if the business is sold, the selling employer must provide the WARN notice to affected individuals;
• State that the faltering business exception (as opposed to the unforeseeable business circumstance exception) does not apply to mass layoffs―only plant closings, which differs from the federal WARN Act;
• State that pandemics satisfy the unforeseeable business circumstances exception; and
• Require employers who are seeking an exception to the 90-day notice period requirement (which must be established in a determination by the NYSDOL commissioner) to submit detailed information to the NYSDOL within 10 business days of the required notice being provided to the commissioner.

Prohibition on Captive Audience Meetings

On September 6, 2023, Governor Hochul signed a bill banning mandatory captive audience meetings, amending Section 201-d of the New York Labor Law. The law, which took effect immediately, prohibits employers from requiring employees to attend meetings or listen to communications that have the primary purpose of sharing the employers’ thoughts concerning religious or political matters. “Political matters” include matters related to union elections and joining and supporting unions. The law does not apply to supervisory or managerial employees. For more information on this law and its implications for New York businesses, please refer to our previous Alert.

Criminal Wage Theft

On September 6, 2023, Governor Hochul signed a bill, which took effect immediately, amending the penal law on wage theft prevention. Previously, prosecutors could not pursue wage theft charges on a criminal basis; now wage theft is considered property theft chargeable as larceny. The law allows an employer to be criminally prosecuted for larceny if they hire another to perform services, the individual performs the services and the employer does not pay the individual’s wage. The hiring individual’s wage is defined as the promised wage (if it is greater than the minimum wage and overtime) or the state minimum wage and overtime. The law also allows prosecutors to aggregate all nonpayments or underpayments involving multiple employees from a workforce across counties into one count of larceny. Aggregation will likely allow prosecutors to seek stronger penalties against employers who do not timely provide all due wages to their workers.

This law comes on the heels of Manhattan District Attorney Alvin L. Bragg Jr.’s February 2023 creation of the Worker Protection Unit to investigate and prosecute wage theft. As always, New York employers should ensure their policies and practices provide for timely, full payment of due wages.

New York City

Safe and Sick Time Law

Changes to the New York City Earned Safe and Sick Time Act (ESSTA) took effect on October 15, 2023. The following are some of the most significant updates to the law, which relate to employer and employee coverage and notice, reimbursement to employees of certain costs, confidentiality, record retention as well as enforcement and penalties.

Coverage Thresholds

The amount of sick and safe time employers are required to provide employees every calendar year is determined as follows:

• Employers with 100 or more employees must provide up to 56 hours of paid safe and sick time;
• Employers with five to 99 employees must provide up to 40 hours of paid safe and sick time;
• Employers with four or fewer employees and a net income of $1 million or more must provide up to 40 hours of paid safe and sick time; and
• Employers with four or fewer employees and a net income of less than $1 million must provide up to 40 hours of unpaid safe and sick time.

When an employer’s employee headcount rises to the next coverage threshold, it must immediately change its safe and sick time benefits provided to the employees to the new threshold. When an employer’s employee headcount falls to a lower coverage threshold, the employer may not reduce the employee safe and sick time entitlements to the new threshold until the following calendar year.

Employee Headcount

Employee headcount is determined based on the greatest number of employees nationwide employed at any given time in the calendar year (even though those outside of New York City are generally not entitled to the benefits) and includes full-time, part-time, employees jointly employed and employees on leave, suspension and other temporary absence.

Employees who are telecommuting “while physically located outside of New York City” are not covered by the ESSTA, even if the employer is located in New York City. Employees who are based outside of New York City and expected to regularly perform work in New York City are covered by the ESSTA, but only hours worked by such an employee in New York City will count toward the accrual of safe and sick leave under the law.

Policies and Documentation

Employers requiring reasonable notice as soon as practicable of the need to use safe and sick time where the need is not foreseeable must indicate this requirement and the method of notice in their written policy. Per the amendments, a leave request may now be submitted to an email address designated by the employer, or through a scheduling software system to which the employee has access and on which the employee has received training and written instruction on its use. Such procedures for employees to give notice of the need to use safe and sick time when the need is foreseeable may not require more than seven days’ notice prior to the date such safe or sick time is to begin.

An employer that requires employees to provide documentation to use safe or sick time must reimburse employees for fees charged by licensed healthcare providers and reasonable costs or expenses incurred to obtain documentation for the use of safe or sick time.

Employers must inform employees through a pay statement or other form of written documentation provided to the employee each pay period of the amount of safe and sick time accrued and used during the relevant pay period and total balance.

Employers using electronic systems to issue pay documentation related to safe and sick time must:

1. Electronically notify employees each pay period to the fact that the required information is available;
2. Make the required content electronically accessible in the system to employees outside of the workplace; and
3. Maintain accrual, use and balance information in the electronic system for all past pay periods.

Confidentiality

The ESSTA also now requires that an employer’s safe and sick time policy state:

The employer will not ask the employee to provide details about the medical condition that led the employee to use sick time or the personal situation that led the employee to use safe time, and that any information the employer receives about the employee’s use of safe/sick time will be kept confidential and not disclosed to anyone without the employee’s written permission or as required by law.

Record Retention and Penalties

Employers must maintain records for each employee and each pay period that show the amount of safe and sick time accrued and used during that period, as well as the balance. Critically, failing to maintain or distribute a written safe and sick time policy and failure to maintain adequate records are considered reasonable inferences that the employer does not provide or refuses to allow the use of accrued sick and safe time. Affected employees may be granted relief, including being credited to their safe and sick time balance the number of hours the employee should have accrued, “provided that such balance does not exceed two times the maximum number of hours available for use in a calendar year.” Furthermore, employers may be charged a penalty of $500 per employee per calendar year that the employer engaged in the policy or practice.

Employers should revise their sick and safe time policy to comply with the latest changes to the law, including altering documentation requirements for sick and safe time usage and referring back to their safe and sick time policies as they cross over from one employee headcount coverage threshold to another.

Prohibition on Discrimination on the Basis of Height or Weight

New York City Mayor Eric Adams signed an amendment that became effective on November 22, 2023, prohibiting discrimination in employment (as well as the areas of housing and public accommodations) on the basis of an individual’s height or weight. Employers are exempt if they are required by federal, state or local law or regulations to consider height or weight in employment decisions. Employers are also exempt where the New York City Commission on Human Rights adopts a regulation (i) identifying jobs for which height and weight could prevent an individual from performing essential requirements of a job and no alternative is available, or (ii) identifying jobs for which consideration of height or weight is reasonably necessary for the normal operation of the business. For decisions not covered by these exemptions, employers would have an affirmative defense if their actions based on an individual’s height or weight were reasonably necessary for normal business operations, or an individual’s height or weight prevents them from performing the essential functions of a particular job with or without an accommodation.

For detailed information on this law and practical compliance steps NYC employers should consider, please refer to our previous Alert.

What This Means for Employers

The beginning of the new year is a good time to review policies and practices to make sure they are up-to-date with New York’s ever-evolving legislation, including the laws referenced in this Alert. Expect to hear from us again soon, as we are tracking other bills that are expected to become law in the near term. Happy New Year!

For More Information

If you have any questions about this Alert, please contact Eve I. Klein, Katelynn Gray, Maria Cáceres-Boneau, Gregory Slotnick, Liran Messinger, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.