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NY Governor Proposes Budget Addressing Labor and Employment Issues

February 11, 2019

New York Governor Andrew Cuomo last month unveiled his proposed 2020 New York State Budget, which, similar to last year’s proposed budget that unveiled the state’s new sexual harassment laws, includes several provisions of interest to New York employers. Key provisions include proposals to: (1) implement a statewide salary history ban and equal pay protections applicable to all protected classes; (2) broaden the definition of harassment and lower the standard for an individual to prove that harassment occurred under New York State law to match New York City law; and (3) increase criminal liability for willful nonpayment of wages.

1. Salary History Ban and Revised Equal Pay Protections

First, the proposed budget would amend the New York State Human Rights Law (NYSHRL) to prohibit the use of salary history in employment decisions, mirroring an existing ban in force in New York City. The budget would also make it an unlawful discriminatory practice for an employer to rely on or inquire about the salary history of a job applicant as a factor in determining (a) whether to hire the applicant, or (b) what salary to offer the applicant. The proposed law does allow for an employer to rely on salary history if an applicant voluntarily discloses prior pay information without prompting. Notably, the proposed budget would allow employers to engage with applicants about “their expectations with respect to salary, benefits, and other compensation.”

Second, this proposal would modify the equal pay provisions of the New York Labor Law (NYLL) to apply to all protected classes under the NYSHRL – including age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, marital status, disability, domestic violence victim status, criminal or arrest record, or predisposing genetic characteristics. The NYLL provisions currently only apply to the protected class of sex. While individuals in other protected categories who believe they are unfairly underpaid may have been able to seek redress under the NYSHRL previously, this revision is potentially significant as it would allow them to bring a claim for equal pay directly under the NYLL, which includes a longer six-year statute of limitations, in addition to applicable discrimination statutes. The proposal also would modify the equal pay provisions to require equal pay for “substantially similar work,” whereas the NYLL provisions currently only apply to “equal work.”

These provisions would take effect 180 days after being signed into law.

2. Broadened Harassment Definition, Further Limits on Nondisclosure Agreements, and Required Posted Notice

The proposed budget also would significantly broaden the definition of harassment under the NYSHRL (which was just amended to explicitly prohibit discrimination based on gender identity or expression), strengthening protections for employees under state law to more closely mirror the New York City Human Rights Law (NYCHRL). The proposed law has three components: (1) a significantly expanded definition of harassment under the NYSHRL; (2) a new requirement for nondisclosure agreements under the New York General Obligations Law; and (3) a new posted notice requirement under the NYLL. If enacted, these provisions would take effect January 1, 2020.

   a. NYSHRL Definition of Harassment

The proposed law amends the NYSHRL to specifically state that harassment is unlawful under the NYSHRL. It further defines harassment as an unlawful discriminatory practice when the type of actions that have been found by the courts to create a hostile environment or a tangible job detriment result in a person or persons being treated not as well as others because of a protected characteristic. Markedly, the proposed law explicitly removes the familiar “severe or pervasive” standard applicable under Title VII from the NYSHRL. Instead, the law would require that an employee only show that the alleged harassment “does not include what a reasonable person with the same protected characteristic would consider petty slights or trivial inconveniences.”

This proposal effectively replicates the standard used by courts in addressing NYCHRL claims as the US Court of Appeals for the Second Circuit has held that harassment under the NYCHRL does not include petty slights or trivial inconsistencies. Thus, should the law pass, employers should expect courts to treat NYSHRL claims broadly and akin to NYCHRL claims.

   b. New Nondisclosure Agreement Requirements

The proposed law adds to the requirements for nondisclosure agreements to be enforceable under the New York General Obligations Law, which initially came into force in 2018. The proposal states that nondisclosure agreements entered into between employers and employees or potential employees as of January 1, 2020, that prevent the disclosure of factual information related to “any future claim of sexual harassment, assault, or discrimination” are void and unenforceable unless the agreement includes language allowing the parties to “file a complaint about such factual information with a state or local agency, and testify or otherwise participate in a government investigation.”

   c. New Posted Notice Requirement

Further, the proposed law directs the New York State Department of Labor and New York State Division of Human Rights to produce and distribute a workplace sexual harassment prevention poster. Employers will be required to display this poster or an equivalent in a conspicuous workplace location by January 1, 2020. A poster has not yet been issued, but such a poster will be separate and in addition to the one required to be displayed by New York City employers as of September 6, 2018, pursuant to the Stop Sexual Harassment in NYC Act.

3. Increased Criminal Liability for Willful Nonpayment of Wages

Finally, the proposed budget would also amend the NYLL to provide for stronger criminal penalties in the event of willful nonpayment of wages. The law would provide for criminal liability as follows:

  • Single employee owed less than $1,000 or group less than $25,000: Class A misdemeanor;
  • Single employee owed more than $1,000 or group more than $25,000: Class E felony;
  • Single employee owed more than $3,000 or group more than $100,000: Class D felony;
  • Single employee owed more than $50,000 or group more than $500,000: Class C felony; and
  • Subsequent offense within six years of date of conviction of prior offense: Class E felony.

In practice, criminal liability is infrequently alleged and even more rarely imposed for most wage violations. Employers should be aware, however, that where an employee can demonstrate that the employer or its agents committed theft from an employee’s wages, the penalties can be significant.

Conclusion

The proposed budget still needs legislative approval before it can be finalized. However, as it significantly expands equal pay and harassment protections, employers should continue to monitor the budget’s progress. If the current budget is enacted, employers should review their harassment policies to ensure that they are compliant with the expanded state law, ensure that any hiring materials do not include salary history inquiries, and train managers and employees as appropriate.

Contacts

If you would like assistance in reviewing current accommodation policies, have any questions, or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

New York
Leni D. Battaglia
Melissa C. Rodriguez
Kenneth J. Turnbull