On May 1, 2013, the New York City Council released the final version of the New York City Earned Sick Time Act (the Act), which will require all New York City employers to provide their employees with sick leave and will require most New York City employers to provide paid sick leave. The City Council will vote on whether to approve the Act on May 8, 2013, and it is a near certainty that the Act will be passed and enacted into law, despite an expected Mayoral veto. The final version of the Act provides additional clarification for employers on a number of issues, but it still leaves some key questions unanswered.
Covered Employers and Employees and Leave Accrual
Under the Act, effective April 1, 2014, all New York City employers must provide at least 40 hours of sick leave (i.e., five sick days) to most of their employees. For employers with 20 or more employees, the five sick days must be paid; for employers with less than 20 employees, the sick leave can be unpaid. On October 15, 2015, the requirement to provide paid sick days to employees expands to employers with 15 or more employees. In determining whether an employer has more than 15 or 20 employees, the Act requires a “chain business” to be treated as one large entity. A “chain business” is “any employer that is part of a group of establishments that share a common owner or principal who owns at least 30 percent of each establishment where such establishments (i) engage in the same business or (ii) operate pursuant to a franchise agreement[.]” For example, if a restaurateur owns two establishments under separate corporations each with 12 employees, the Act treats the two corporate entities as one employer with 24 employees.
For those employers that are required to provide paid sick leave, the pay is based on the employee’s wage rate in effect at the time that he or she takes sick leave. For those employees who receive most of their compensation in the form of “gratuities,” it appears that the Act only requires the employer to pay the employee his or her base wages.
At the commencement of employment or on the date that the law becomes effective, whichever is later, employees accrue sick leave at the rate of one hour of leave for every 30 hours of work. However, employees can only accrue up to 40 hours of leave per calendar year, which is any regular and consecutive 12-month period as determined by the employer. For those employees who are exempt from overtime, the Act assumes that such individuals work 40 hours per week.
Although, employees begin to accrue sick leave at the commencement of employment, they are not entitled to take such leave until they have been employed by the employer for 120 days. Therefore, even if an employee has accrued sick leave time, he or she may not take the leave until the employee has been employed for approximately four months. In addition, the Act states that upon the cessation of the employment relationship, the employer is not required to pay the departing employees for their accrued but unused sick leave.
Further, at the end of each calendar year, the employer has a choice. The employer can either pay out all accrued but unused sick leave to the employees or the employer can permit employees to carry over accrued sick leave from year to year up to a maximum of 40 sick leave hours. Indeed, under the Act, employers are not required to provide more than 40 hours of sick leave to an employee during any calendar year.
Use of Sick Leave
Employees may use accrued sick leave to care for themselves or a close family member. If the leave is foreseeable, the employer can require the employee to provide up to seven days advanced notice of the employee’s intention to take accrued sick leave. If the leave is unforeseeable – as will likely occur in the vast majority of cases – the employer can require the employee to provide as much notice as is “practicable.” However, the term “practicable” is not defined in the Act.
If an employee notifies the employer that he or she intends on taking sick leave under the Act, the employer cannot require the employee to find a replacement to cover the employee’s shift as is common in the hospitality industry. Indeed, if an employer conditions the employee’s use of sick leave on finding a replacement such a condition is a clear violation of the Act and would entitle the affected employee to damages. However, in certain circumstances, the employer and the employee can voluntarily agree to work additional time to make up for the time taken under the Act; such an agreement must be truly voluntary as the employer cannot compel or otherwise pressure the employee to work the extra time. In addition, if an employee uses sick leave under the Act, the employer cannot require the employee to work additional time to make up for the taken leave time nor can the employer retaliate against the employee by disciplining, discharging, demoting, suspending, cutting hours, or otherwise taking an adverse employment action against the individual.
When an employee has been on sick leave for three or more consecutive work days, the employer can require the employee to provide a note from a health care provider that confirms that the leave was authorized under the Act. Because the Act states that the employer can request the note only after the employee has been out for three or more consecutive days, it is unlikely that the employer can request such a note when the employee has been out for less than three consecutive work days. However, if an employee uses sick leave for less than three consecutive days, the employer can request the employee to submit written confirmation that the employee used sick leave pursuant to the Act as long as the employer does not require that the confirmation come from a doctor or other health care provider.
Notice of Rights
The Act also requires employers at the commencement of employment to provide employees with written notice of the employee’s rights to sick leave, including the accrual and use of sick leave, the applicable calendar year as determined by the employer, the right to be free from retaliation, and the right to file a complaint with the New York City Department of Consumer Affairs. This notice must be provided in English and the employee’s primary language. The Act also states that the “notice may also be conspicuously posted at an employer’s place of business in an area accessible to employees.” It is unclear whether the employer can post the notice in lieu of providing written notice to each employee at the commencement of employment. However, as these statutes are generally construed in favor of the employee, it is likely that the employer must provide written notice to each individual and in addition, at the employer’s option, the employer can also post the notice.
Other Employer Leave Policies
If an employer provides at least 40 hours of other paid leave to its employees, such as paid time off, paid vacations, or paid personal days, and employees can use such paid leave to care for themselves or a close family member then the employer is not required to provide additional paid sick leave under the Act.
The Act will be enforced by the Department of Consumer Affairs. Individuals have 270 days (i.e., nine months) from the date that they knew or should have known of the alleged violation to file a complaint.
If an employer violates the law, the penalties differ depending upon the type of violation. If an employer fails to provide paid sick leave to an employee (where such paid leave is required), the employee will be entitled to three times the wages that should have been paid or $250, whichever is greater. If an employee requests sick time and that request is unlawfully denied by the employer or the employer requires the employee to find a replacement to cover the employee’s shift, the employee can recover $500. If an employer retaliates against the employee for exercising his or her rights under the Act, the employee is entitled to back pay and benefits, appropriate equitable relief (e.g., removal of warning, reinstatement) and $500, which is increased to $2,500 when the employee was unlawfully discharged. Further, the Department of Consumer Affairs can also recover civil penalties ranging from $500 to $1,000 for each violation of the Act.
The Act will certainly increase costs for all New York City employers. These costs are not just financial. Indeed, there will be additional administrative burdens for New York City employers, such as covering employee shifts on short notice and tracking employee usage of sick days. The Act will also subject unwary employers to fines and penalties if they fail to properly comply. Accordingly, employers must be diligent in ensuring that they continue to comply with applicable law.
For more information about this Alert, please contact Carolyn D. Richmond
The New York City Hospitality Alliance continues to fight against burdensome and unnecessary workplace legislation in Albany, most recently circulating an Alliance Opposition Memo on a bill that would establish a new civil cause of action for employees who claim that they are subject to an abusive work environment (S3863/A4965).
While the Alliance and its members obviously take workplace issues seriously, this bill will do little to help employees and will succeed only in harming employers and increasing burdens on businesses at a time when New York’s economy continues to struggle. The Alliance joins other business groups, such as the NYS Business Council, in expressing serious, substantive concerns with this proposal:
-The bill fails to definitively define exactly what constitutes an “abusive work environment” – an ambiguous, uncertain, and flexible concept which will inevitably lead to increased and costly litigation.
The retaliation provision interferes with an employer’s ability to effectively manage performance in the workplace.
-The bill permits a plaintiff to claim physical or psychological harm in the workplace based on common human behavior such as incivility or sarcastic remarks or any words or actions judged in the “eye of the beholder” as offensive compounds the serious risk to employers.
-And finally, it undermines the diligent efforts made by many employers to provide a positive work environment through formal dispute resolution processes, anti-harassment trainings, written codes of conduct, and open door policies.
The Alliance will continue to work with employers throughout our industry to ensure that existing (and sufficient) federal and state statutory protections are adhered to and that all employees are provided with a workplace free of abusive treatment. At the same time, we will continue to express our views in Albany about the real costs of redundant and damaging legislative proposals such as S3863/A4965.
If you have any questions about NYC Hospitality Alliance’s position, contact The Alliance’s Executive Director, Andrew Rigie – 212-582-2506 firstname.lastname@example.org
In the New York City metropolitan area, there are close to thirty thousand eating and drinking establishments – if you work in one of them, you may want to take a closer look at your paystubs. Recently, three extensively tenured servers and bartenders at The Park restaurant – a Chelsea favorite – filed a class action lawsuit against owners for incorrectly calculating their wages.
In particular, the defendants are accused of making illegal deductions when customers failed to pay bills, not properly compensating for overtime, and misappropriating tips. This lawsuit alleges violations of restaurant worker rights under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL)
Not only was the restaurant company sued, but also Sean MacPherson and Eric Goode – the principal owners. Reports indicate that the two are heavily involved in day-to-day functions of the establishment. The two defendants operate several properties on both coasts.
In case you were wondering, it’s illegal to sue someone for something they didn’t do – especially directly after they’ve sued you for something you did do. Take, for example, the latest antics of a New York restaurant owner and his former bookkeeper.
Gilbert Carandang, a bookkeeper for a New York-based restaurant group, was fired by one of the co-owners, Robert Shapiro, in 2011. Knowing that Carandang had steady grounds to sue over wages and overtime compensation, Shapiro pre-emptively threatened to tell the authorities that Carandang was stealing from the restaurant.
Carandang persisted and went ahead with legal action. Shapiro didn’t disappoint and fulfilled his promise to retaliate. Carandang was arrested, placed in jail for 6 days, and had his home searched by police. Federal Court Judge Steven Crotty was quoted as finding Shapiro’s tactics “extreme,” “outrageous,” and “beyond the pale.”
Shapiro is now potentially liable for intentional or negligent infliction of emotional distress.
There seems to be no end to increased government regulations and higher taxes. New York State’s new budget includes two provisions which will have a huge impact on restaurants. The increase to the minimum wage has gotten a lot of attention and impacts the restaurant industry more than any other because most tipped employees are considered minimum wage earners.
Restaurant industry lobbying groups are claiming victory because there is no provision for increasing the minimum wage for tipped employees as long as their tips when added to their wage equal or exceed the minimum wage. However, the bill does allow for a wage board to convene and recommend an increase to the labor commissioner. If history is any indication, the board will recommend and the commissioner will approve an increase.
If it eventually goes up to $6.20 when the minimum wage goes to $9.00, which would assume the current ratio remains the same, that would be a $1.20 per hour increase. If a restaurant has 50 tipped employees making minimum wage and working 25 hours per week the additional annual wages would be $78,000 plus approximately $7,800 in additional employer payroll taxes.
For a while, the government has been extending unemployment benefits and it appears it is now time to pay the piper. Let me give a little background. State unemployment insurance is an experience rated “tax” with a per employee cap or wage base. The more people who collect against an employer’s account the higher their tax rate. In New York, for example, rates currently range from 1.5% to 9.9% on the first $8,500 of compensation.
Buried in the bottom of the latest budget bill were increases to the annual wage base to be rolled out over the next decade or so. The wage base will maximize in 2026 at $13,000, an annual increase of $4,500. For every 1% of unemployment insurance that’s $45 per employee. It may not sound like much, but if you have 100 employees and your UI rate is 4.5%, the annual increase to your UI cost could reach $20,250.
On May 7th 2013, The Alliance‘s Executive Director, Andrew Rigie and Legislative Counsel, Rob Bookman testified at a City Council hearing in support of several bills that we have been advocating for, which if passed would make it easier for restaurants to apply for, renew and operate sidewalk cafes in NYC.
If this pending legislation passes, these important bills will:
-Change the law to allow Sidewalk Cafes to open on Sundays, beginning at 10:00 a.m instead of noon. This will be great for business.
-Speed up the approval process for new applications that have little or no opposition.
-Close a loophole that has allowed the Department of Consumer Affairs to treat cafe licensees, with timely pending renewals on file, as if they are operating as unlicensed cafes.
Click here to read The Alliance’s testimony
It’s not too late! The Alliance still encourages members to contact their City Council members and ask them to support the following bills:
Int. No. 875 – In relation to permitting sidewalk cafes to operate on Sundays beginning at 10:00 a.m
Proposed Int. No. 876-A – In relation to operation of a sidewalk cafe.
Int. No. – In relation to the review and approval of petitions for revocable consents to operate sidewalk cafes.
Thank you for your support and The Alliance will keep you up-to-date on the status of this pending legislation.
A number of Florida restaurants have come under scrutiny for violations of the Fair Labor Standards Act (FLSA). After the U.S. Labor Department’s Wage and Hour Division instituted an enforcement initiative focusing on full-service Florida restaurants, a number of establishments were found to be in violation of minimum wage, overtime and child labor provisions. The Department of Labor (DOL) has recently announced this to the press.
In 2012, there were more than 80 investigations of Florida establishments. Over 800 employees were found to have claims to mistreatment, resulting in nearly half a million dollars worth of reimbursement in minimum wage and overtime back wages. These investigations also resulted in the assessment of liquidated damages and civil money penalties.
The DOL’s Tampa office has been sending agents on unannounced visits throughout the state, ensuring that applicable labor standards are being met. The FLSA was found to have been violated rampantly in the Hillsborough Country area. Many employees were found to have been working exclusively for tips – a major violation – with no regard for minimum wage standards. Further violations included illegal deductions from worker’s checks, incorrect register counts – which can lead to dishonest wage reports, incorrectly calculated overtime, and minors being allowed to operate hazardous equipment.
The enforcement initiative remains in a full court press. The goal, of course, is to identify common problems and institute proper enforcement – and penalties. The DOL is doing it’s best to identify every problem, and take the steps to ensure that back wages are paid, and punishment is exacted on non-monetary violations.
Most importantly, the DOL is reaching out to community groups and speaking directly with workers to get their take on exactly what has been going on at these establishments. First hand accounts have become a major factor in assisting DOL agents in completing successful evaluations of the various restaurants in question.
The Alliance is bringing you a friendly reminder that the May 7th deadline for incorporating the newly revised I-9 form is approaching! Be aware that employers who are not using the revised I-9 for employees hired after this date may incur a penalty.
The Alliance recently hosted a seminar ‘The New I-9 & How it Affects You’ with speaker Alka Bahal of Fox Rothschild LLP. The seminar reviewed and explained the new revisions, how to execute the new I-9, how to successfully comply and much more. If you were unable to join us, you can access the seminar information here. We hope you are able to join us for future events!
The Alliance will keep you updated on this issue as we continue to provide our members with the education, information and access to expert consultants they need to keep in compliance and avoid fines. Join The Alliance today!