Insights

New York Department of Labor Issues Guidance Regarding Paid Prenatal Leave, Taking Effect January 1.

On September 30, 2024, Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York dismissed a putative class action in Mejia v. High Brew Coffee Inc., 1:22-cv-03667-LTS (S.D.N.Y. Sep. 30, 2024), holding that an online-only business’s website is not a place of public accommodation under Title III of the Americans with Disabilities Act (“ADA”). Chief Judge Swain’s opinion is the first of its kind for the Southern District and is the latest installment in an ongoing judicial debate about the reach of the ADA’s regulatory reach.  

The Federal Trade Commission (“FTC”) is now batting .500 in its effort to defend its rule banning most employee non-compete agreements.  On July 23, 2024, Judge Kelley Hodge of the U.S. District Court for the Eastern District of Pennsylvania denied the request for a preliminary injunction to block that rule from going into effect pending a full trial.  This decision is at odds with the decision issued earlier this month by Judge Ada Brown of the U.S. District Court for the Northern District of Texas, which found that the FTC had exceeded its statutory authority and issued a limited preliminary injunction that prevented the rule from becoming effective as to the plaintiffs in that case. 

On July 3, 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas temporarily blocked the Federal Trade Commission (“FTC”) from enforcing its recent rule banning virtually all employee non-compete agreements in the United States.  In its 33-page opinion, the court ruled that the plaintiffs are likely to succeed on the merits of their claims that the FTC lacks statutory authority to issue its non-compete ban via rulemaking and that the FTC’s decision to ban non-competes broadly was arbitrary and capricious. However, in a surprise twist, the court declined to grant nationwide preliminary relief, opting instead to limit its injunction to the specific plaintiffs in the action.  The court indicated that it intends to issue a final ruling by August 30, 2024—days before the non-compete ban is scheduled to take effect on September 4.

Beginning January 1, 2025, New York employers will be required to provide employees with 20 hours of paid “prenatal personal leave” during any 52-week calendar period to attend prenatal medical appointments during or related to pregnancy. New York is the first state in the country to mandate paid leave specifically for pregnant employees.  “Prenatal personal leave” is included in an amendment to New York’s budget, recently signed into law as Sections 196-b.2 and 4-a of the New York Labor Law by the governor and cleared by the state legislature.

On March 1, 2024, the New York City Department of Consumer and Worker Protection (“DCWP”) published a Workers’ Bill of Rights, which was developed in collaboration with the Mayor’s Office of Immigrant Affairs, the New York City Commission on Human Rights, and community and labor organizations in accordance with Local Law 161.  By July 1, 2024, all New York City employers are required to post prominently in the workplace the “Know Your Rights At Work” poster, which contains a scannable QR code linked to the DCWP website containing the Workers’ Bill of Rights.  Employers are also required to distribute a copy to each employee, and to provide every new hire with a copy on or before their first day of work.  Employers must also post it on their intranet or mobile app if they offer one for employees to use. 

Crowell & Moring previously reported that new paid leave laws would be in effect at the start of 2024 in Chicago and Illinois. (For more information, see Crowell & Moring’s December 1, 2023 Alert, “New Year Will Bring Changes to Paid Leave in Illinois and Chicago”). The Chicago City Council has now amended its Paid Leave and Paid Sick and Safe Leave Substitute Ordinance (“Amended Chicago Ordinance”), making a number of changes, including delaying the effective date to July 1, 2024. Cook County also followed suit, acting to bring its laws in line with the new Illinois and Chicago paid leave requirements, with the passage of the Cook County Paid Leave Ordinance (“Cook County Ordinance”) at the end of last year.  

On January 10, 2024, the U.S. Department of Labor (“DOL”) published its final rule on Employee or Independent Contractor Classification under the Fair Labor Standards Act (“FLSA”). Crowell & Moring previously reported on the proposed rule announced on October 11, 2022. The final rule rescinds the “core factors” independent contractor rule adopted by the Trump administration in 2021 and returns to a “totality of the circumstances” analysis for determining whether a worker is properly classified as an employee or independent contractor. According to the DOL, the new final rule institutes an analysis that better aligns with judicial precedent and the FLSA’s text and purpose. The final rule goes into effect on March 11, 2024.

Governor Hochul vetoed a bill passed by the New York State legislature that would have effectively banned all non-compete agreements.  In her December 26, 2023 veto message, Governor Hochul cited New York’s “highly competitive economic climate” and the “legitimate interests” of companies to “retain highly compensated talent,” while stating that she has “long supported limits on non-compete agreements for middle-class and low-wage workers.” The Governor observed as well that she had “proposed banning non-compete agreements for anyone making below the median wage in New York” in her first Executive Budget. Governor Hochul stated that she remains open to “future legislation that achieves the right balance.”

New York State has enacted several new laws with significant implications for employers.  These include (1) restricting employers’ ability to request the social media credentials of applicants and employees, (2) requiring employers to provide notice of unemployment insurance eligibility upon an employee’s separation from employment, (3) limiting an employer’s ability to require employees to assign invention rights, (4) criminalizing wage theft as a form of larceny and (5) limitations on so-called employer captive audience speeches.  Each of these laws is summarized below. 

On September 13, 2023, the New York State Department of Labor released proposed regulations aimed at clarifying employer obligations under New York State’s pay transparency law (“Law”).  The Law, effective September 17, 2023, requires employers in New York State to disclose compensation or compensation ranges and existing job descriptions for all advertised jobs, promotions, and transfer opportunities. Crowell & Moring LLP previously reported on the Law, issued on December 21, 2022, and on its subsequent amendments, signed into law on March 3, 2023.

On September 8, 2023, the Department of Labor (“DOL”) published a Notice of Proposed Rule Making (“NPRM”) proposing a number of changes that would, if enacted, substantially increase the number of workers who would be eligible for overtime pay under the federal Fair Labor Standards Act (“FLSA”).  Most critically, the NPRM would raise the annual salary threshold for the FLSA’s administrative, executive and professional exemptions -- the so-called “white collar” exemptions -- from $684 per week ($35,568/year) to $1,059 per week ($55,068/year).

On August 30, the U.S. Department of the Treasury (“Treasury”) published in the Federal Register proposed regulations addressing the prevailing wage and apprenticeship (“PWA”) requirements under Sections 45(b)(7) and (8) of the Inflation Reduction Act (“IRA”).  These proposed regulations incorporate and supplement the limited guidance issued previously, which includes Notice 2022-61, published by the Treasury in November 2022, as well as the Frequently Asked Questions (“FAQ”) on the Department of Labor’s IRA website.  The proposed regulations shed light on various issues of significance to taxpayers seeking the enhanced tax credits provided by the IRA, as well as other stakeholders. 

On August 23, 2023, the U.S. Department of Labor (“DOL”) issued a final rule updating regulations governing federally funded construction projects subject to the Davis-Bacon Act and Related Acts (“DBA”). The final rule is the first significant regulatory update to the DBA since 1982.  Among other things, the final rule changes how DOL will calculate the applicable prevailing wage for any given classification of workers on a DBA-covered contract when the default “majority” prevailing wage calculation is not possible; in particular it supplants the current “weighted average” calculation approach with the “30-percent rule.” The revised rule will go into effect on October 23, 2023 – 60 days after it was published in the Federal Register.

On June 20, 2023, the New York State Assembly passed a sweeping bill that, if signed into law by Governor Hochul, will effectively ban future non-compete agreements.  If enacted, New York would join California, North Dakota, Oklahoma, and Minnesota in implementing a complete prohibition on non-compete agreements.  As of this writing, the bill has not yet been delivered to the Governor.

On June 21, 2023, the New York State Department of Labor (“NYSDOL”) issued updated regulations to the New York State Worker Adjustment and Retraining Notification Act (“NYS WARN Act”), which requires employers with 50 or more employees to provide 90 days’ notice of mass layoffs, plant closings and other specified employment losses.  According to the NSYDOL website, these new regulations are intended to “address the post-pandemic employment climate” and “simplif[y] language to ensure businesses better understand their obligations.”  The changes include, among other things:

In Clark v. A&L Homecare and Training Center, LLC, Nos. 22-3101/3102, a split three-judge panel for the U.S. Court of Appeals for the Sixth Circuit held that notice to potential plaintiffs should only be issued if lead plaintiffs show a “strong likelihood” that such absent employees are “‘similarly situated’ to the plaintiffs themselves.” In so holding, the Sixth Circuit joined the Fifth Circuit in rejecting the long-standing “lenient” two-step collective action certification process.  The Sixth Circuit declined, however, to apply the Fifth Circuit’s approach and adopted a “strong likelihood” standard.  The Clark decision, issued on May 19, 2023, will significantly impact FLSA collective action litigation in favor of employers in federal district courts in Ohio, Michigan, Kentucky, and Tennessee.  The widening Circuit split ripens this issue for review by the Supreme Court of the United States.

On May 26, 2023, New York City Mayor Eric Adams signed a bill into law expanding the New York City Human Rights Law (Human Rights Law) to prohibit discrimination on the basis of height and weight. The law goes into effect on November 22, 2023, and will prohibit discrimination on the basis of height and weight in employment, public accommodations, and housing. The law will apply to the following covered entities—New York City employers, employment agencies, and labor organizations, and it prohibits them from denying employment opportunities, refusing to hire, or otherwise discriminating against individuals because of height or weight.

On Friday, April 28, 2023, the Fifth Circuit in Rest. Law Center v. United States Department of Labor, No. 22-50145, 2023 WL 3139900 (5th Cir. Apr. 28, 2023), reversed a decision from the Northern District of Texas (the “District Court”) that refused to enjoin the Department of Labor’s tip credit regulations amendment in effect since December 28, 2021. The amendment requires employers to pay tipped employees the full minimum wage for nontipped work directly supporting tipped work if it: 1) amounts to more than 20% of the employee’s total weekly time paid at the tipped minimum wage rate, or 2) exceeds 30 continuous minutes. The Fifth Circuit concluded in a 2-1 panel decision that the plaintiffs demonstrated that the ongoing management costs imposed on employers by the new “continuous 30-minute rule” in the form of additional timekeeping requirements results in irreparable harm.