The New York City Council (the “NYCC”) has proposed to establish a “Savings Access New York Retirement Program” (the “NYC Retirement Program”) that would require New York City private-sector employers with at least 10 employees to offer a new savings program to employees who are not eligible to participate in an employer-provided savings plan (such as a 401(k) or 403(b) plan). Currently the NYCC proposal is in committee, and no further action has been taken to date.

Although passage of the NYC Retirement Program is far from certain, this proposal is consistent with other state and local government legislative efforts to increase the retirement savings of employees. To assist employers with long-range benefits planning, this blog provides a high-level summary of the NYCC proposal and the potential questions and issues that employers may face if required to implement the NYC Retirement Program.

Summary of the NYC Retirement Program

  • An employer, whether for-profit or otherwise, with a physical presence in NYC will be a “covered employer” subject to the NYC Retirement Program if the employer (i) currently employs no fewer than 10 employees and has employed no fewer than 10 employees for the prior calendar year, (ii) has been in continuous operation for at least two years, and (iii) has not offered, in the previous two years, a retirement plan to its “eligible employees” (as defined below).
  • An employee will be eligible for the NYC Retirement Program if such employee (i) is at least 18 years old, (ii) is employed part-time or full-time for compensation in New York City by a covered employer, and (iii) has not been offered a retirement plan by the covered employer during the preceding two years. Under the NYC Retirement Program, a “retirement plan” includes a qualified retirement plan under Section 401(a) and Section 403(a) and (b) of the Internal Revenue Code of 1986, as amended, however, many such retirement plans exclude certain classifications of employees, such as part-time or temporary employees that would be covered by the NYC Retirement Program.
  • The NYC Retirement Program provides for an automatic 3% contribution via payroll deduction by eligible employees to a Roth or traditional IRA. The employee will be permitted to opt-out of the program or to contribute an amount other than 3%.
  • Covered employers will have the following obligations:
    • Enrolling eligible employees;
    • Remitting payroll deductions for deposit in the NYC Retirement Program;
    • Providing information to eligible employees about the NYC Retirement Program; and
    • Maintaining records documenting compliance with the NYC Retirement Program.
  • Covered employers that fail to comply with the NYC Retirement Program may be subject to civil monetary penalties, the amount of which will be based on the number of eligible employees affected and the duration of the compliance failure.
  • Administrative fees for the NYC Retirement Program will be allocated pro rata to the accounts of eligible employees.
  • The NYC Retirement Program is intended to be exempt from the Employee Retirement Income Security Act of 1974, as amended, although the current proposal does not indicate the exemption that will be used.

Takeaways for Employers

Given the potential reach of the NYCC proposal and the ambiguities it raises, employers with a presence in New York City should monitor the status of the NYCC proposal. Even large employers who currently offer broad-based retirement plans may not be exempt from the NYC Retirement Program if retirement benefits are not offered to all eligible employees covered by the NYC Retirement Program.

So far, the year 2018 has brought an increasing number of labor and employment rules and regulations. To help you stay up to date, we are pleased to invite you to join our Employment, Labor & Workforce Management Webinar Series. Each month, we will focus on a specific industry, topic, or practice area.

Our July webinar will be hosted by Epstein Becker Green’s Health Employment and Labor (HEAL) strategic service team and Trade Secrets and Employee Mobility service team. This webinar will provide an overview of the legal landscape of non-compete agreements in the health care industry, including state law requirements and restrictions, public policy considerations, recent developments, and expected trends. The webinar will also address key considerations when drafting and enforcing non-competes, engaging in the due diligence process, and integrating providers following a health care transaction.

Tuesday, July 24, 2018
12:00 p.m. – 1:00 p.m. ET

Register for this complimentary webinar today!

Health care registry companies provide families and their loved ones with peace of mind by providing matchmaking and referral services for qualified, pre-screened and vetted home caregivers. They often also provide administrative services. As part of the “gig economy,” health care registries often tread a fine line in classifying caregivers as independent contractors rather than employees. A new Field Assistance Bulletin (“Bulletin”), “Determining Whether Nurse or Caregiver Registries are Employers of the Caregiver,” issued on July 13, 2018, by the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) to its field enforcement staff, provides a road map on how homecare, nurse, and caregiver registries relying on an independent contractor business model can ensure the caregivers remain independent contractors not covered by the Fair Labor Standards Act (“FLSA”).

Relevant Factors to Maintain an Independent Contractor Business Model

The Bulletin restates the traditional “economic reality” test for determining independent contract staff, under which the WHD considers the totality of the circumstances when evaluating whether an employment relationship exists between a registry and a caregiver. No one factor is necessarily dispositive. It also notes that it historically has maintained that a registry that performs only referral and payroll services is not an employer of the caregivers whom it refers, but a registry that also directs and controls the work and sets the rate of pay may become an employer of the caregiver. The Bulletin then discusses specific business practices that could affect the determination of whether an employment relationship exists. The relevant factors flagged by the WHD and best practices are listed below:

  • Background Checks: Registries can collect objective information such as a caregiver’s criminal history, credit report, licenses, credentials, or background checks pursuant to state or local laws without being designated as employers. However, screening that evaluates subjective criteria, such as interviewing a caregiver or obtaining a caregiver reference to determine likeability or suitability for a particular client, may imply that the registry is an employer.
  • Hiring and Firing: Making the client the ultimate decision maker in hiring and firing the caregiver will help ensure no employment relationship exists between the registry and the caregiver. Thus, a registry that informs its client that a potential caregiver meets the client’s threshold parameters and preferences but leaves the client to decide whether to accept or decline services is not an employer of the caregiver. Conversely, exercising control over hiring and firing decisions, even by terminating the caregiver’s services at the request of a client, may have the opposite effect.
  • Scheduling and Assigning Work: Leaving it to the client and caregiver to independently determine work schedules and assignments avoids triggering an employment relationship. In addition, communicating contact information to selected caregivers (screened by objective criteria such as whether the caregiver can work in a home with pets or smokers) about potential clients also does not indicate an employer-employee relationship. On the other hand, exercising control over the work schedules and assignments, or offering work assignments based on the registry’s own discretion and judgment based on subjective factors such as likeability, may suggest an employment relationship.
  • Controlling the Caregiver’s Work: Controlling, monitoring, supervising or providing instruction on how to provide services, supervising or evaluating work performance, or even just monitoring the caregiver’s methods or work habits may cause a registry to be considered an employer of the caregiver. In addition, exercising control over the caregiver by such actions as limiting the number of clients or hours of work referred to a caregiver or prohibiting the caregiver from seeking work outside the registry may also have the same effect.
  • Setting the Pay Rate: Requiring the client and caregiver to negotiate or determine rates of pay (or if Medicaid sets the rate) avoids creating an employment relationship between the registry and caregiver. A registry may, however, provide advice on typical pay rates in the area to serve as a benchmark for negotiations, or relay offers and counteroffers. On the other hand, the registry acts more like an employer by effectively setting the rate of pay, or dictating what a caregiver should charge for specific services.
  • Continuous Payments for Caregiver Services: Registries seeking to maintain an independent contractor business model should consider charging one-time upfront fees for matching caregivers and clients, or charging fees solely for administrative and ministerial functions such as payroll processing or tax documentation. Conversely, a fee system based on the number of hours a caregiver works indicates the registry’s fees are based on an ongoing relationship and may create employer status.
  • Paying Wages: A registry that provides payroll-related functions for its clients can avoid designation as an employer by transmitting only client-funded payments to the caregiver in the form of pay or benefits (by, for example, issuing checks or electronic deposits) chosen by the caregiver. The registry should avoid issuing direct payments by use of its own funds, even if it expects to be reimbursed by the client. Failing to heed this advice may trigger an employee-employer relationship.
  • Tracking Caregiver Hours: A registry’s reliance on the caregiver and/or client for confirmation of hours by independent submissions of time records will not indicate the registry is the caregiver’s employer. The same is true if the registry requires the client or caregiver to submit correct time records through time sheets or an electronic time verification system provided by the registry. Conversely, verifying, creating, or confirming records of the caregiver’s hours worked may indicate supervision and control, and consequently an employer-employee relationship.
  • Purchasing Equipment and Supplies: Investing in office space, payroll software timekeeping systems and other products to operate the business will not be regarded as forming an employment relationship between caregivers and a registry. Registries can also provide caregivers with an option to purchase discounted equipment or supplies from either the registry or a third party. However, registries should avoid investing in a caregiver’s training or pay for a caregiver’s licenses, insurance or medical supplies, as such actions indicate the registry is acting as an employer, instead of simply a referral service.
  • Receiving Employer Identification Number (EIN) or 1099: Whether registries require an EIN (or a caregiver acquires one), or state law requires insurance or a bond, is irrelevant to a determination of employee status. Calling a caregiver an “independent contractor” or issuing an IRS 1099 form does not preclude the caregiver from being an employee for FLSA purposes.

The Bulletin makes it clear that other factors also may be considered and that all factors will be evaluated in any given case. Nonetheless, a registry that avoids all or most of the factors discussed above that can cause the loss of independent contractor status should have a significant degree of confidence that the WHD will not claim otherwise. At the same time, in addition to complying with the FLSA requirements, employers should also ensure they are complying with other tests, such as those imposed by state agencies that require unemployment insurance contributions, as well as the Federal Internal Revenue Service requirements for independent contractor status.

* Eduardo J. Quiroga, a Summer Associate (not admitted to the practice of law) in Epstein Becker Green’s New York office, contributed to the preparation of this Advisory.

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See also the related article posted on our Wage and Hour Blog.

Effective July 26, 2018, Oklahomans will be able to legally use medicinal marijuana under state law. The change follows a June 26, 2018 ballot measure, State Question 788, approved by 56% of voters. Oklahoma’s new law, cheekily coded 63 Okla. Stat. § 420 et seq., expands the prior permissible use of cannabidiol (CBD) oil for limited purposes, now allowing licensed medicinal marijuana consumption. The ballot measure initially appeared in 2016, but was delayed for several years by a series of legal challenges concerning changes to its title, ultimately resolved by the Oklahoma Supreme Court in March 2017.

Consistent with the secondary wave of state laws legalizing medicinal marijuana, Oklahoma’s law contains an anti-discrimination provision providing that employers “may not discriminate against a person in hiring, termination, or imposing any term or condition of employment or otherwise penalize a person based on their status as a medical marijuana license holder,” unless failing to do so would cause the employer to “imminently lose a monetary or licensing related benefit under federal law or regulation.” 63 Okla. Stat. § 425(B)(1)-(2). Further, employers may not take action against a license-holder solely based upon the results of a positive drug test for marijuana or its components. 63 Okla. Stat. § 425(B)(2). Employers should note that these protections do not extend to use or possession of marijuana in the license-holder’s place of employment, or during the hours of employment. Id.

Oklahoma’s law differs from other states’, however, in that it does not predicate approved marijuana use on specific qualifying medical conditions. Instead, medical license applicants need only obtain the signature of an Oklahoma Board certified physician, who recommends the license “according to the accepted standards a reasonable and prudent physician would follow when recommending or approving any medication.” 63 Okla. Stat. § 420(M). Moreover, the law incorporates protections for the recommending physician, who “may [not] be unduly stigmatized or harassed for signing [the] medical marijuana license application.” Id.

Looking forward, interested parties should expect to see regulations introduced to further refine terms of use. Governor Mary Fallin previously criticized the law as too “loose[ly written],” such that it “opens the door for basically recreational marijuana[,]” and threatened to call a special session of the legislature to develop regulations if the ballot measure succeeded. Rather than call a special session, however, Governor Fallin signed emergency legislation on July 11 adopting rules created by the State Board of Health, including a ban on the sale of smokable marijuana. In response, activists are pushing to legalize recreational marijuana use as an “insurance policy” against these and other potential restrictive regulations. At least two parties have filed lawsuits challenging the validity of the recent Department of Health rules. Additionally, Oklahoma voters will weigh in on Questions 796 and 797 this November—provided those questions receive the requisite 124,000 signatures by August 8, 2018—deciding whether to classify marijuana as an “herbal drug” and whether to permit adults 21 years or older to recreationally use marijuana, respectively.

Beginning July 1, 2018, recreational marijuana can be legally sold, taxed, and consumed in Massachusetts—one of nine states, in addition to Washington, D.C., that now permits recreational marijuana use. Massachusetts already is one of 29 states that allow marijuana use for medicinal purposes (and 17 others permit certain low-THC cannabis products for medical reasons).

Background

Legalization of recreational marijuana started in 2016 with a ballot initiative by Massachusetts voters. The Regulation and Taxation of Marijuana Act (“Marijuana Act”), which took effect on December 15, 2016, provides that “[t]his chapter shall not require an employer to permit or accommodate conduct otherwise allowed by this chapter in the workplace and shall not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.” Thus, while the Marijuana Act expressly permits employers to prohibit employees from using or being under the influence of marijuana in the workplace, it does not address whether an employer can regulate employees’ lawful use of marijuana off duty.

How Might a Court Rule if an Employer Banned Off-Duty Recreational Marijuana Use?

Employers may terminate an employee for off-duty and/or off-site recreational marijuana use because Massachusetts, unlike a number of other states, has no statutory protection for employees’ lawful off-duty conduct, such as smoking.

There are, however, other claims an aggrieved applicant or employee might bring absent the off-duty conduct statute protections. In one case, an employee who was terminated by his employer for violation of the company’s non-smoking policy when he tested positive for nicotine brought a case claiming a right to privacy. See Rodrigues v. EG Sys., 639 F. Supp. 2d 131, 133 (D. Mass. 2009).   A federal court dismissed the plaintiff’s claims that the employer violated his right to privacy because the plaintiff made no attempt to keep his smoking private: he testified to smoking outdoors and purchasing cigarettes with coworkers. Id.

In Barbuto v. Advantage Sales and Marketing, LLC, a 2017 decision by the Massachusetts Supreme Judicial Court, a new hire disclosed a prescription for medical marijuana she used for Crohn’s Disease. 78 N.E. 3d 37, 42 (Mass. 2017). HR personnel informed her that her prescribed, off-duty use would be acceptable; however, when she tested positive after working for one day, the company terminated her employment.

The Barbuto court permitted the employee’s reasonable accommodations claim. Specifically, the court held that although marijuana use is still illegal at the federal level, the public policy of Massachusetts prioritizes accommodating workers with disabilities.

Although the use of medical marijuana could be considered a public policy concern under certain circumstances, given that an employee may be discharged for the off-duty conduct of smoking cigarettes, it is unlikely that Massachusetts courts would protect employees who test positive for recreational marijuana use. Unlike medical marijuana use, recreational marijuana use likely does not implicate public policy considerations because the use of medical marijuana has health benefits related to treating illness and disease, whereas the use of recreational marijuana does not.

With respect to privacy arguments akin to those asserted in Rodrigues, courts might distinguish marijuana from cigarettes for a variety of reasons. In Massachusetts, marijuana consumption in public and in vehicles is prohibited, whereas cigarette smokers have greater freedom to smoke outdoors and in vehicles. Additionally, marijuana, unlike cigarettes, is still illegal under federal law.

How Can Massachusetts Employers Manage Employees While Avoiding Legal Risks of Employees Using Recreational Marijuana?

Although neither the law nor the applicable regulations address employee-employer rights in the context of recreational marijuana, and it is too soon for the courts to have weighed in, employers likely have the right to terminate an employee for recreational marijuana consumption, even where that consumption occurs off duty and/or off-site. To minimize any risk that an employee may bring a viable legal claim resulting from the termination of employment or rescission of a conditional offer of employment due to a positive drug test, employers should consider the following:

  1. Employers that continue to enforce zero tolerance policies and either decline to hire or terminate individuals for marijuana use should articulate to employees that the test will screen for marijuana, and clearly define “illegal” drugs as those banned under federal, state, or local law to avoid conflicts regarding its legal status in Massachusetts.
  2. As recreational use becomes more prevalent in Massachusetts, in light of the Marijuana Act, talent pool considerations may favor loosening drug-testing policies, at least for certain positions.
  3. Though Massachusetts law currently permits pre-employment drug screening for any reason (as long as it is non-discriminatory), employers may choose to eliminate standardized testing policies and instead opt to test only upon “reasonable suspicion” that the employee is under the influence at work.
  4. Multistate employers should update employee handbooks with particular emphasis on any changes made to their drug-testing policies and decide whether they plan to standardize testing across the company or enact carve-outs for recreational marijuana states.
  5. Notwithstanding the above, because health care employers in particular face safety issues and high risks associated with patient care, those considerations may weigh in favor of enforcement of zero tolerance and standardized testing policies – particularly with respect to recreational marijuana – in patient-care and other safety-sensitive positions.
  6. Employers in highly regulated industries, such as health care and transportation, should be aware of additional regulations that govern drug testing in their industries.
  7. Drug-testing policies should make clear that on-the-job marijuana consumption or being under the influence of marijuana remains against company policy. Further, employers wishing to prohibit off-duty or off-site recreational consumption should expressly state that such conduct may result in discipline or termination of employment.

This post was written with assistance from John W. Milani, a 2018 Summer Associate at Epstein Becker Green.

State attorneys general from Louisiana, Missouri, Oklahoma, Texas, Michigan, Nebraska, and South Dakota have joined Arkansas (collectively the “States”) in an amicus brief to the Eighth Circuit, urging the court not to join the Seventh Circuit and Second Circuit in interpreting Title VII of the Civil Rights Act of 1964 (“Title VII”) to prohibit sexual orientation discrimination.

The States submitted this brief in a case brought by Mark Horton against Midwest Geriatric Management LLC (“Midwest Geriatric”) in which the plaintiff alleges sexual orientation and religious discrimination in violation of Title VII. More specifically, Horton alleges that Midwest Geriatric revoked his job offer after the company learned he was gay. In their brief, the States assert that Horton wrongly petitioned the court to ignore precedent and reverse its prior position that sexual orientation discrimination is not covered by Title VII.

The States argue that until last year, when the Seventh and Second Circuits expanded the scope of Title VII to encompass sexual orientation discrimination, federal courts had unanimously found that sexual orientation was not a protected category under Title VII, and the Eighth Circuit should follow this long-standing view. The States add that, despite numerous opportunities to revise Title VII to include sexual orientation, Congress has chosen not to do so. Finally, the States contend that Horton’s arguments simply are not persuasive.

In addition to the States’ brief, the Eighth Circuit has also received amicus briefs supporting Horton’s argument from 18 other states and Washington D.C., in addition to the U.S. Equal Employment Opportunity Commission and various businesses.

The Eighth Circuit’s decision remains pending, and we will be watching for it. In the meantime, employers operating within the Eighth Circuit—comprising Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota—are encouraged to evaluate their non-discrimination policies with this potential change to the federal law in mind, to the extent they have not already done so to comply with state or local laws.

Featured on Employment Law This Week: NJ Senate Advances Ban on Sex Harassment Confidentiality Agreements.

The New Jersey Senate wants no more secrecy around harassment claims. On a 34-to-1 vote, the chamber approved legislation banning confidentiality agreements involving sexual harassment claims. The bill is still pending in the House, where a vote is expected in the next few weeks. The legislation would also allow victims to keep their identities confidential and would establish jurisdiction in Superior Court, arguably bypassing arbitration agreements.

Watch the segment below.

Our colleague at Epstein Becker Green has a post on the Hospitality Labor and Employment Law blog that will be of interest to our readers in the health care industry: “The Generally Prevailing Website Accessibility Guidelines Have Been Refreshed – It’s Time to Officially Welcome WCAG 2.1.”

Following is an excerpt:

After nearly ten years, on Tuesday, June 5, 2018, the World Wide Web Consortium (the “W3C”), the private organization focused on enhancing online user experiences, published the long awaited update to its Web Content Accessibility Guidelines 2.0 (“WCAG 2.0”), known as the WCAG 2.1. Those who have been following along with website accessibility’s ever-evolving legal landscape are well aware that, despite not having been formally adopted by regulators for the vast majority of the private sector, compliance with WCAG 2.0 at Levels A and AA has become the de facto baseline for government regulators, courts, advocacy groups, and private plaintiffs when discussing what it means to have an accessible website. …

Read the full post here.

Our colleague at Epstein Becker Green has a post on the Health Law Advisor blog that will be of interest to our readers in the health care industry: “NIST Seeks Comments on Cybersecurity Standards For Patient Imaging Devices.”

Following is an excerpt:

The National Institute of Standards and Technology (“NIST) has announced that it will be seeking industry input on developing “use cases” for its framework of cybersecurity standards related to patient imaging devices. NIST, a component of the Department of Commerce, is the agency assigned to the development and promulgation of policies, guidelines and regulations dealing with cybersecurity standards and best practices. NIST claims that its cybersecurity program promotes innovation and competitiveness by advancing measurement science, standards, and related technology in ways that enhance economic security and quality of life. Its standards and best practices address interoperability, usability and privacy continues to be critical for the nation. NIST’s latest announcement is directed at eventually providing security guidance for the healthcare sector’s most common uses of data, inasmuch as that industry has increasingly come under attack. …

Read the full post here.

On April 17, the Joint Commission—a nonprofit organization that provides accreditations to health care organizations—issued a list of seven steps hospitals should take to improve safety and reduce the risk of workplace violence perpetrated by employees, patients, and visitors. While the seven steps are advisory rather than mandatory, health care organizations risk jeopardizing their accreditation status if they fail to take appropriate action in response to episodes of workplace violence.

The Joint Commission’s alert seeks to address what it characterizes as the prevalence of workplace violence in the health care industry, citing a 2015 report from the federal Occupational Safety and Health Administration (OSHA) suggesting that approximately 75% of workplace assaults reported annually occur in health care and social service. The Joint Commission suggests that health care workplaces are particularly susceptible to workplace violence because of the daily care of patients dealing with mental health issues.

In the last few years, OSHA has taken action to address workplace violence in health care settings, including by overhauling its Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers, and by issuing citations to health care employers with allegedly inadequate workplace violence programs. Yet OSHA has not proposed an explicit regulation applicable to workplace violence in health care and instead has relied upon the General Duty Clause when issuing citations. And as our colleagues have reported, as of April 1, 2018, California is the only state that expressly requires all health care facilities to maintain a comprehensive plan to prevent workplace violence. The Joint Commission’s recent alert now adds additional incentives for health care organizations to implement and update workplace violence prevention programs.

So what can health care organizations do to protect the workers who put themselves in harm’s way each day? According to the Joint Commission, organizations should clearly define the term “workplace violence.” Staff members should recognize that workplace violence comprises a broad range of behaviors, from verbal assaults to physical violence with or without use of weapons. Staff should be able to easily report episodes of workplace violence, and organizations should track and follow up on any reported incidents, providing support and psychological counseling to victims, witnesses, and others affected.

Once organizations begin tracking incidents, they should review and analyze the data to identify common contributing factors and use those to develop intervention strategies. These strategies may include changes to the physical environment, such as altering exit routes, improving alarm systems, adding restricted access doors, and implementing more regular security patrols, or altering work practices or administrative procedures, reducing stressors like crowding and wait times, identified as risk factors for workplace violence. Organizations should train employees on how to use de-escalation tactics, and run practice drills such as active shooter response simulations. Finally, organizations should regularly review and assess the effectiveness of their responsive strategies to recognize areas of success and ensure continuous improvement.

While these measures are unlikely to completely eliminate workplace violence in health care settings, they represent a step in the right direction toward managing the risks, thus enabling our health care workforce to focus on the business of healing. Health care employers are well-advised to consult with counsel to develop and implement effective workplace violence prevention programs to improve employee safety and morale, reduce the likelihood of receiving an OSHA citation or jeopardizing accreditation, and – in the case of California employers – comply with the law.