In what has become a trend over the last few years, Governor Cuomo included multiple labor and employment law proposals in the budget that, if approved, would create significant new responsibilities for New York employers, including paid sick leave requirements and contractor disclosure requirements, in addition to the creation of a gig economy task force.
New York Governor Andrew Cuomo unveiled his proposed 2021 New York State budget on January 21. As we previously reported, Governor Cuomo’s 2020 budget proposal included a state salary history ban, expanded equal pay protections, and antidiscrimination law reforms, each of which was passed into law by the New York legislature. Two years ago, Governor Cuomo included initial versions of the since-passed broad sexual harassment protection policy and training laws. This year, there are three key provisions of interest to employers: (1) a statewide mandatory paid sick leave requirement, (2) increased disclosure requirements for state contractors regarding sexual harassment complaints, and (3) the creation of a task force to propose legislation addressing the “gig economy” and an alternate grant of regulatory authority to the New York State Department of Labor.
If approved by the New York legislature, the budget would mandate that employers provide employees with paid sick leave as follows:
Similar to the New York City Earned Sick and Safe Time Act, the proposed state requirement would also create an accrual rate of one hour of sick time earned for every 30 hours worked. However, if enacted, the state law would require employers with 100 or more employees to provide at least seven days (56 hours) of paid sick time per year whereas the New York City law only requires covered employers to provide at least five days (40 hours) of paid sick time.The proposed law does not contain any other details regarding sick leave, including permitted uses for leave, definitions of covered family members, notice or recordkeeping requirements, payment requirements, employee eligibility, or any carryover or payout requirements, all of which are commonly included in paid sick leave laws. Instead, the budget delegates authority to the commissioner of the New York State Department of Labor to adopt regulations and issue guidance to establish standards for implementation.
If passed in its current form, the proposed law would take effect one year after enactment.
The budget includes a proposal that would dramatically increase sexual harassment disclosure requirements for organizations that contract with New York State. Two years ago, New York State instituted a requirement that all organizations contracting with the state must, in submitting competitive bids, affirm that they meet the state’s sexual harassment policy and training requirements.
If the proposed legislation is enacted however, the budget would also require that beginning on July 1, 2020, all organizations bidding for a state contract include a report disclosing the following:
The budget defines “settlements” for purposes of this provision as any written commitment or written agreement, including any agreed judgment, stipulation, decree, agreement to settle, assurance of discontinuance, or other form of agreement between an employee and a bidder.
Notably, the budget also proposes a requirement that the information shared in these bidder reports would also be shared with the New York State Division of Human Rights and the Office of the New York State Comptroller, which would generate an annual report summarizing this data. This annual report would be submitted to multiple senior New York officials.
Finally, the budget would create a “digital marketplace worker classification task force.” If the budget proposal is approved, the task force would “provide the governor and the legislature with a legislative recommendation addressing the conditions of employment and classification of workers in the modern economy of on-demand workers connected to customers via the internet.” The task force would be directed to submit its report, which would include a recommended standard for classification, on or before May 1, 2020.
The legislation would also authorize the New York State Department of Labor to promulgate regulations after May 1, 2020 (if the task force cannot come to an agreement) to determine the appropriate classification of individuals providing services for a “digital marketplace company,” defined as follows:
[A]n organization . . . that operates a website or smartphone application, or both, that customers use to purchase, schedule and/or otherwise arrange services including, but not limited to repair, maintenance, construction, painting, assembly, cleaning, laundry, housekeeping, delivery, transportation, cooking, tutoring, massage, acupuncture, babysitting, home care, healthcare, first aid, companionship, or instruction, and where such company utilizes one or more individuals to provide such services.
Such organization: (i) establishes the gross amounts earned by the individual providing such services; (ii) establishes the amounts charged to the consumer; (iii) collects payment from the consumer; (iv) pays the individual; or any combination of the foregoing actions; and the individual may provide such services in the name of the individual, or in the name of a business, or as a separate business entity, and without regard the consumer of such personal services may be an individual, business, other entity, or any combination thereof.
The legislation would further direct the New York State Department of Labor to “consider” whether the “ABC” test should be the appropriate standard for whether such workers should be classified as employees or independent contractors. Finally, the legislation would allow the New York State Department of Labor to “exempt any company from application” of the regulations.
The New York State budget is subject to legislative approval before it is finalized and its provisions are enacted into law. However, as the governor has successfully used the budget as a vehicle to enact significant employment legislation over the last two years, employers should be aware of this year’s budget proposals. We will continue to monitor the budget’s progress. If the budget is enacted, employers may need to revise their handbooks/leave policies to ensure that they are compliant with the expanded state law and generate significant new reporting data. Further, employers that are state contractors should be aware of the new reporting requirements, which may affect business decisions regarding how to respond to potential allegations of sexual harassment in the workplace.
If you 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 Battaglia
Kimberley Lunetta
Melissa Rodriguez
Douglas Schwarz
Kenneth Turnbull