NYC Passes Local Law Prohibiting Inquires About Prospective Employees Previous Salary

On May 4, 2017, the Mayor signed into law a Bill into law which prohibits inquires about a prospective employees previous salary. A copy of that Local Law, which is only applicable to NYC employers, is available here. The statute provides, in part, as follows:

Section 1. Section 8-107 of the administrative code of the city of New York is amended by adding a new subdivision 25 to read as follows:

25. Employment; inquiries regarding salary history. (a) For purposes of this subdivision, “to inquire” means to communicate any question or statement to an applicant, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing or otherwise, for the purpose of obtaining an applicant’s salary history, or to conduct a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history, but does not include informing the applicant in writing or otherwise about the position’s  proposed or anticipated salary or salary range.  For purposes of this subdivision, “salary history” includes the applicant’s current or prior wage, benefits or other compensation. “Salary history” does not include any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.

(b) Except as otherwise provided in this subdivision, it is an unlawful discriminatory practice for an employer, employment agency, or employee or agent thereof:

1. To inquire about the salary history of an applicant for employment; or

2. To rely on the salary history of an applicant in determining the salary, benefits or other compensation for such applicant during the hiring process, including the negotiation of a contract.

(c) Notwithstanding paragraph (b) of this subdivision, an employer, employment agency, or employee or agent thereof may, without inquiring about salary history, engage in discussion with the applicant about their expectations with respect to salary, benefits and other compensation, including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.

(d) Notwithstanding subparagraph 2 of paragraph (b) of this subdivision, where an applicant voluntarily and without prompting discloses salary history to an employer, employment agency, or employee or agent thereof, such employer, employment agency, or employee or agent thereof may consider salary history in determining salary, benefits and other compensation for such applicant, and may verify such applicant’s salary history. 

Stray Comments Not Enough To Establish Sexual Harassment

Johnstone v. Monticello, ____F. Appx.____(2d Cir. April 28, 2017), is an interesting sexual harassment case. Though the facts are a bit unusual, it demonstrates the difficulty in establishing a case of sexual harassment.

The plaintiff, a police officer, arrested the Mayor for driving under the influence. The Mayor allegedly referred to the police officer as a “racist,” a “cracker,” a “white mother fucker,” a “member of the KKK,” and a “Nazi,” and called an African American officer a “sellout,” an “Uncle Tom,” and a “token.” What is unusual is that these alleged remarks occurred while the arrest was being processed and hence, this is not your typical employment case. Nevertheless, the court applied the stray remarks doctrine and dismissed the case, reasoning:

Johnstone fails to plead facts sufficient to establish a hostile work environment claim. Since one consideration is the frequency of the alleged abuse, his reliance on a single incident over the course of a nearly 30-year career weighs heavily against  him, although that alone is not dispositive. More significant is that an abusive tirade by a person arrested for driving under the influence is not sufficient “to alter the conditions,” id. at 373, of Johnstone’s employment. The Supreme Court has cautioned that the Title VII analysis  requires careful consideration of the social context  in which particular behavior occurs and is experienced  by its target. A professional football player’s working environment is not severely or pervasively  abusive, for example, if the coach smacks him on the buttocks as he heads onto the field--even if the same  behavior would reasonably be experienced as abusive  by the coach’s secretary (male or female) back at the office.  Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 81 11 (1998). Jenkins’s alleged comments were severe, but they were not made in the context of an employer addressing an employee in the workplace; they were made by an apparently intoxicated  citizen who was belligerent because he was being taken into  custody and processed for violating the law. Being subjected  to an intoxicated and verbally abusive perpetrator does not alter the conditions of a police officer’s employment or create an actionably hostile work environment, even if the person arrested happens to be the mayor.

Overtime Must Be Paid For Work Beyond 40 Hours Per Week

Edelmann v. Keuka College, ____F. Supp. ____(W.D.N.Y. April 10, 2017)(registration required), is a typical FLSA case. The plaintiff, a senior technical support technician claims that was entitled to overtime even though he was paid on the basis of a salary because he was not an exempt worker under the FLSA.

The court refused to dismiss the case and rejected the employer's claim that the plaintiff did not allege a violation of the FLSA, reasoning:

Here, Plaintiff alleges that he typically worked 50 hours per week as a salaried employee. ECF No. 1 at ¶31. Plaintiff alleges that, though he had a fixed schedule, he often performed work outside of his predetermined hours. Id. at ¶¶22-27. Specifically, Plaintiff alleges that he was expected to be "on call" from 7 p.m. to 10 p.m. for weeks at a time, id. ¶22, and that he frequently received calls after 10 p.m. Id. at ¶3. Additionally, Plaintiff alleges that he worked college events — like commencements, open houses, and orientations — outside of his normal working hours. Id. at ¶25. Further, Plaintiff alleges that he was required to work Defendant's yearly board meeting, which required him to be available to provide technical support at all times, including overnight. Id. at ¶26.
Those allegations give rise to a plausible inference that Plaintiff worked more than 40 hours in any given workweek. Like the plaintiffs in Nakahata, Plaintiff has not attached time values to each of the instances of extracurricular work that he alleges. See Nakahata, 723 F.3d at 200-201; ECF No. 1 at ¶¶22-27. But unlike the plaintiffs in Nakahata, who might not have had a standard 40-hour schedule in any given week, Plaintiff was a salaried employee who worked fulltime. Compare Nakahata, 723 F.3d at 199 (noting that the plaintiffs alleged "Plaintiffs and Class members regularly worked hours both under and in excess of forty per week") with ECF No. 1 at ¶30 ("Throughout his tenure with [Defendant], [Plaintiff] worked significantly more than 40 hours each and every week."). Plaintiff's allegations are more plausible than the allegations at issue in Lundy for the same reason. Any work performed in addition to his standard, fulltime schedule necessarily adds up to an amount great than 40 hours. Because Plaintiff has alleged that, in addition to his fulltime schedule, he frequently worked evenings and weekends, his allegations give rise to a plausible inference that he worked more than 40 hours per week. See ECF No. 1 at ¶¶22-27.

Court of Appeals Defines Employer For Purposes of State Anti-Discrimination Law

Griffin v. Sirva, Inc., ____N.Y3d____(May 4, 2017), is an important decision to be aware of.
In this case, the Court addressed several certified questions from the 2d Circuit, including who is an employer under the Executive Law. The Court adopted the common law right to control test which it described as follows:

Decades before Gulino, our lower courts applied New York common law to make that determination. In State Div. of Human Rights v GTE Corp., the Appellate Division identified four relevant factors: "'(1) the selection and engagement of the servant; (2) the payment of salary or wages; (3) the power of dismissal; and (4) the power of control of the servant's conduct'" (109 AD2d 1082, 1083 [4th Dept 1985], quoting 36 NY Jur, Master and Servant, § 2). As with the Reid test (endorsed in Darden and Gulino), "'[t]he really essential element of the relationship is the right of control, that is, the right of one person, the master, to order and control another, the servant, in the performance of work by the latter'" (id.).
In light of the foregoing, we answer the second certified question, as reformulated, as follows: common-law principles, as discussed in GTE, determine who may be liable as an employer under section 296 (15) of the Human Rights Law, with greatest emphasis placed on the alleged employer's power "to order and control" the employee in his or her performance of work

Public Employee Does Not Have To File Grievance Over Statutory VIolation

A fundamental part of labor and employment law is that an employee must exhaust his administrative remedies before proceeding in court. Typically, in the public sector the administrative remedy may be a grievance under the collective bargaining agreement.

Matter of PBA v. New York, ____A.D.3d___(3d Dep't. May 4, 2017), is an important case because it stands for the proposition that if the violation is one of law, a grievance does not have to be filed. As the court explained:

We find that the exhaustion of remedies principle is inapplicable and that the matter is ripe for judicial review. "[A] determination made by an administrative agency must first be challenged through every available administrative remedy before it can be raised in a [*2]court of law" (Matter of Hudson Riv. Val., LLC v Empire Zone Designation Bd., 115 AD3d 1035, 1037 [2014] [citations omitted]). However, this rule does not apply where "an administrative challenge would be futile or where the issue to be determined is purely a question of law" (id. at 1038; see Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]).

Commissioner of Education Appeals Must Be Commenced Within 30 Days

Appeal of SUSAN SUDANO, No. 17, 078 (April 20, 2017), is an important decision to be aware of. A tenured teacher sought to challenge her excessing. The Commissioner did not reach the merits of the case because of several procedural problems. With respect to Commissioner appeals, the Commissioner described the applicable statute of limitations as follows:

 An appeal to the Commissioner must be commenced within 30 days from the making of the decision or the performance of the act complained of, unless any delay is excused by the Commissioner for good cause shown (8 NYCRR §275.16; Appeal of Lippolt, 48 Ed Dept Rep 457, Decision No. 15,914; Appeal of Williams, 48 id. 343, Decision No. 15,879).  The Commissioner has previously held that an appeal is timely when commenced within 30 days of receiving the determination (Appeal of C.S., 48 Ed Dept Rep 497, Decision No. 15,929; Appeal of M.H. and E.H., 47 id. 274, Decision No. 15,694).  However, where the alleged wrong is that another teacher has been appointed to a position in violation of the petitioner’s preferred eligibility rights, the petitioner does not become aggrieved until the date that another person commences service in the position at issue (Appeal of Gimbrone, 56 Ed Dept Rep, Decision No. 17,036; Appeal of Gordon, 53 id., Decision No. 16,582; Appeal of Dickinson, 50 id., Decision No. 16,082; Appeal of Petkovsek, 48 id. 513, Decision No. 15,933).  The record indicates that petitioner commenced the appeal by serving respondents board and Colabufa within 30 days of the beginning of the school year, the first date on which petitioner became aggrieved.  To the extent petitioner contends that respondent violated Education Law §3013(3) by failing to recall her from the preferred eligibility list to vacant positions that were filled by other teachers, I find that the appeal is timely.  To the extent petitioner contends that she was not the least senior teacher in the remedial reading tenure area and should not have been excessed, I agree with respondent that such claim had to be brought within 30 days of the effective date of the abolition and is untimely. . . 

Education Law 3020-a Decision Finding of Misconduct Bars Unemployment Insurance

Under New York law, if an employee is terminated for misconduct, they generally are not entitled to unemployment insurance. The issue of what constitutes disqualifying misconduct is often litigated.

Matter of Telemaque v. Commissioner of Labor, ____A.D. 3d___(3d Dep't, 2017), addressed the issue of whether a finding of misconduct by a Education Law Section 3020-a hearing officer is conclusive for purposes of Unemployment Insurance and the court held that it is, reasoning:

 Claimant primarily challenges the Hearing Officer's factual and credibility determinations, and argues that evidentiary errors were made at the disciplinary hearing. It does not appear that claimant appealed that disciplinary determination and her challenges to the merits of that determination may not be raised in this unemployment insurance proceeding. Moreover, the record reflects that claimant was represented by an attorney at the hearing who had the opportunity to present evidence and witnesses and to cross-examine the employer's witnesses, and that claimant testified at length with regard to the charges. As claimant had a full and fair opportunity to litigate the charges of misconduct at that hearing, the Board properly gave collateral estoppel effect to the Hearing Officer's factual determinations. . . 

House Passes Bill Authorizing Private Sector Employers To Pay Comp Time Instead of OT

On May 2, 2017, the U.S. House of Representatives passed HR 1180. A CNN news story about that Bill is available here. If the Senate passes the Bill in its current form, President Trump indicated that he will sign it into law.

The Bill amends the 1938 Fair Labor Standards Act with respect to private sector employers only. The Bill authorizes, but does not mandate, private sector employers to provide compensatory time off at time and half for overtime. An employer can only provide compensatory time off under the conditions as stated in Bill as follows:

An employer may provide compensatory time to employees under paragraph (1) only if such time is provided in accordance with—
(A) applicable provisions of a collective bargaining agreement between the employer and the labor organization that has been certified or recognized as the representative of the employees under applicable law; or

(B) in the case of an employee who is not represented by a labor organization that has been certified or recognized as the representative of such employee under applicable law, an agreement arrived at between the employer and employee before the performance of the work and affirmed by a written or otherwise verifiable record maintained in accordance with section 11(c)—
(i) in which the employer has offered and the employee has chosen to receive compensatory time in lieu of monetary overtime compensation; and
(ii) entered into knowingly and voluntarily by such employee and not as a condition of employment. . . .

If enacted into law, I suspect that the highlighted provision above will generate a significant amount of litigation in situations where some employers may mandate that employees agree to compensatory time off in lieu of overtime in order to maintain their jobs.

Court Strictly Construes At-Will Private Sector Employee's Fraud Claim

Connaughton v. Chipotle, ____N.Y.3d ____, (May 2, 2017), is an example of how difficult it is for a private sector employee, employed at will,  to challenge his termination in New York.

As readers to this blog are probably aware, New York is an employment at will state which means that a private sector employer can terminate an employee for any reason so long as it is not an unlawful reason, i.e., employment discrimination.

The plaintiff here, probably aware of this doctrine, sought to challenge his termination on the basis of fraud. Plaintiff claimed that he was fraudulently induced to be employed to work on a certain restaurant concept even though his employer knew he could not work on that concept because of a prior non-compete agreement.

The court strictly construed the elements of a cause of action for fraud and dismissed plaintiff's claim because he could not prove damages, reasoning:

To allege a cause of action based on fraud, plaintiff must assert "a representation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission and injury" (Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996] [internal citation omitted]). Critically, "[a] false representation does not, without more, give rise to a right of action, either at law or in equity, in favor of the person to whom it is addressed. To give rise, under any circumstances, to a cause of action, either in law or equity, reliance on the false representation must result in injury . . . . If the fraud causes no loss, then the plaintiff has suffered no damages" (Sager v Friedman, 270 NY 472, 480-481 [1936]).

In New York, as in multiple other states, "'[t]he true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong' or what is known as the 'out-of-pocket' rule" (Lama Holding, 88 NY2d at 421, quoting Reno v Bull, 226 NY 546, 553 [1919]). Under that rule, "[d]amages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained . . . . [T]here can be no recovery of profits which would have been realized in the absence of fraud" (id. at 421, citing Foster v Di Paolo, 236 NY 132 [1923], AFA Protective Sys. v American Tel. & Tel. Co., 57 NY2d 912 [1982], and Cayuga Harvester, Inc. v Allis-Chalmers Corp., 95 AD2d 5 [4th Dept 1983]). Moreover, this Court has "consistent[ly] refus[ed] to allow damages for fraud based on the loss of a contractual bargain, the extent, and indeed . . . the very existence of which is completely undeterminable and speculative" (Dress Shirt Sales v Hotel Martinique Assocs., 12 NY2d 339, 344 [1963]). (emphasis added).

This case is very unusual because the defendant employer contracted with the plaintiff to develop a certain restaurant concept which included hiring plaintiff as an employee.

Employee Entitled To Disclosure of Medical Records For Whistleblower Case

McMahon v. New York Organ Donor Network, Inc., ____Misc. 3d____(N.Y. Co., April 6, 2017), is both an interesting and unusual case.

The plaintiff, a transplant coordinator, asserted that he was fired for being a whistleblower in violation of New York Labor Law Section 740 (applicable to private sector employers). He alleged that he disclosed the fact that organs were procured without legally required medical testing and in some cases, were taken from the patient while they were still showing signs of life.

This case is about disclosure of medical records which the plaintiff needed in order to prove his case.

The court ordered the disclosure and rejected the argument that these medical records were protected under HIPPA, reasoning:

HIPAA provides that "[e]xcept as otherwise permitted or required by this subchapter, a covered entity may not use or disclose protected health information without an authorization that is valid under this section" (45 CFR § 164.508[a][1]). Health plans, health care clearinghouses and certain health care providers are identified as 'covered entities' under HIPAA (45 CFR § 160.103). "A covered entity may use or disclose protected health information to organ procurement organizations" (45 CFR §164.512[h]). A covered entity may also disclose health information protected under HIPAA in a judicial proceeding (45 CFR §164.512[e])HIPAA provides that "[e]xcept as otherwise permitted or required by this subchapter, a covered entity may not use or disclose protected health information without an authorization that is valid under this section" (45 CFR § 164.508[a][1]). Health plans, health care clearinghouses and certain health care providers are identified as 'covered entities' under HIPAA (45 CFR § 160.103). "A covered entity may use or disclose protected health information to organ procurement organizations" (45 CFR §164.512[h]). A covered entity may also disclose health information protected under HIPAA in a judicial proceeding (45 CFR §164.512[e]).

The instant motion appears to raise an issue of first impression — whether an OPO that is not covered by HIPAA must produce medical records it obtained from a covered entity because this information is required in order to run its organization. The reason that defendant receives medical records is that it needs the information to process organ donations. Defendant must know certain information about a donor's medical history in order to ensure that a donation is successful.

However, defendant is not a covered entity and, therefore, must turn over the requested information. Defendant failed to identify a federal regulation or case law that would prevent this Court from requiring disclosure. Defendant cites Liew v New York Univ. Med. Ctr. (55 AD3d 566, 865 NYS2d 278 [2d Dept 2008]) in support of its argument that it need not produce the requested medical records. That case, however, is inapposite because in Liew, the defendant, a hospital, sought to compel third-party defendant St. Luke's Hospital to produce medical records of a nonparty organ donor. The Supreme Court's opinion in Liew, which the Second Department affirmed without modification, noted that the "HIPAA Privacy Rule protects the confidentiality of these records" (Liew v New York Univ. Med. Ctr., 2007 WL 6122885 [Sup Ct, Queens County, May 29, 2007]). This suggests that, although not mentioned in the Appellate Division's decision, St. Luke's Hospital was a covered entity HIPAA. Because defendant is not a covered entity, this case is not binding based on the facts of this case.