Last month, the New York State Court of Appeals invalidated a state Department of Health (DOH) regulation that restricted certain health care providers contracting with the state from paying executives more than $199,000 annually, regardless of whether the funds came from the state or not. However, the Court upheld two other DOH regulations; one that limits providers from using public tax-payer money directly to pay executives in excess of $199,000 annually, and another that limits the amount of public funds used for administrative costs.

In January 2012, Governor Andrew Cuomo issued Executive Order 38 in response to media reports calling out high executive compensation rates among nonprofit health care organizations receiving funds from Medicaid. Executive Order 38 directed the DOH to regulate the use of state funds for executive compensation and administrative costs. Consistent with this executive order, the DOH implemented three regulations that imposed: (1) a “hard cap” prohibiting covered providers from using public funds directly to pay executives more than $199,000 (2) another “hard cap” limiting the percentage of public funds used for administrative costs to fifteen percent annually by 2015; and (3) a “soft cap” subjecting covered providers to penalties should they pay executives, with certain exceptions, more than $199,000, regardless of whether the money used to pay them came from public or private sources.

Shortly after the regulations were announced, a group of nursing homes, assisted-living programs, home-care agencies, and trade associations brought lawsuits challenging the DOH’s authority to issue the regulations. These lawsuits, arguing that the DOH exceeded its regulatory authority in promulgating the regulations, eventually made their way all the way up to the courts to the Court of Appeals.

The Court’s majority opinion in LeadingAge New York, Inc. v. Shah, authored by Chief Judge DiFiore, held that the hard cap regulations fell within the DOH’s regulatory authority and were valid agency actions. With regard to the soft cap, however, the majority concluded that the DOH did in fact exceed its authority, usurped the Legislature’s role, and violated the separation of powers doctrine. Accordingly, the soft cap regulation subjecting covered providers to penalties if they paid executives above the $199,000 threshold, regardless of the source of funds, was struck down by the Court.

In accordance with this decision, covered health care providers who contract with the state will no longer need to comply with the “soft cap” regulation or fear penalties for failure to do so. However, health care providers covered by the “hard cap” regulations will still need to comply with the limitations set under those regulations, absent an applicable exception.

Our colleagues , at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the health care industry: “Proposed Federal Bill Would Pre-Empt State and Local Paid Sick Leave Laws.”

Following is an excerpt:

On November 2, 2017, three Republican Representatives, Mimi Walters (R-CA), Elise Stefanik (R-NY), and Cathy McMorris Rodgers (R-WA), introduced a federal paid leave bill that would give employers the option of providing their employees a minimum number of paid leave hours per year and instituting a flexible workplace arrangement. The bill would amend the Employee Retirement Income Security Act (“ERISA”) and use the statute’s existing pre-emption mechanism to offer employers a safe harbor from the hodgepodge of state and local paid sick leave laws. Currently eight states and more than 30 local jurisdictions have passed paid sick leave laws.

The minimum amount of paid leave employers would be required to provide depends on the employer’s size and employee’s tenure. The bill does not address whether an employer’s size is determined by its entire workforce or the number of employees in a given location. …

Read the full post here.

As we have previously reported, there has been an uptick of new employment decisions finding in favor of registered medical marijuana users.  In keeping with these decisions, an administrative law judge (“ALJ”) at New York City’s Office of Administrative Trials & Hearings (“OATH”) also issued a report and recommendation, subsequently adopted by the relevant City commissioner, to dismiss a petition against a taxi driver that would have stripped him of his driver license because of his lawful medical marijuana use.

In Taxi & Limousine Comm’n v. W.R., OATH Index. No. 2503/17 (July 14, 2017), adopted, Comm’r Dec. (July 25, 2017), the Taxi & Limousine Commission (“TLC”) filed a petition seeking the revocation of the respondent taxi driver’s TLC Driver License because the driver tested positive for marijuana.  OATH disagreed and recommended that the petition be dismissed, finding that revocation solely because of the driver’s status as a certified medical marijuana patient would violate New York City and State laws.  The TLC adopted the OATH decision.

The rationale was simply stated. Under the New York Compassionate Care Act, certified patients may not be subject to penalty or denied any right or privilege solely for the certified use of medical marijuana.  Because the patient certification is analogous to a prescription, the certified use of marijuana could not constitute an illegal drug use that would serve as the basis to revoke a license.  Further, certified patients are deemed to have a disability under the New York State Human Rights Law.  Because the New York State Human Rights Law prohibits discrimination on the basis of disability, as does the New York City Human Rights Law, the driver had additional protections against revocation of his license.

Key Takeaways

This case serves as another illustration of the intersection of medical marijuana use and disability, and the potential pitfalls for those companies that maintain zero-tolerance drug policies.

New York City employers should be particularly cautious in the use of drug tests and the enforcement of their drug policies. While this decision involves a licensee rather than an employee, the reasoning employed by the ALJ could be equally applied to the employment context.  Additionally, OATH—as an independent administrative tribunal within the City—hears cases brought by any City agency, board, or commission, including the New York City Commission on Human Rights (“CCHR”).  In a case brought by the CCHR, OATH issues a report and recommendation to the City Human Rights Commissioner.  While the Commissioner has discretion to adopt, modify, or reject the report and recommendation, if such rationale were applied in an employment case, there is little doubt that this rationale would be followed by the Commissioner in employment discrimination cases.

When: Thursday, September 14, 2017 8:00 a.m. – 4:30 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Immigration
  • Global Executive Compensation
  • Artificial Intelligence
  • Internal Cyber Threats
  • Pay Equity
  • People Analytics in Hiring
  • Gig Economy
  • Wage and Hour
  • Paid and Unpaid Leave
  • Trade Secret Misappropriation
  • Ethics

We will start the day with two morning Plenary Sessions. The first session is kicked off with Philip A. Miscimarra, Chairman of the National Labor Relations Board (NLRB).

We are thrilled to welcome back speakers from the U.S. Chamber of Commerce. Marc Freedman and Katie Mahoney will speak on the latest policy developments in Washington, D.C., that impact employers nationwide during the second plenary session.

Morning and afternoon breakout workshop sessions are being led by attorneys at Epstein Becker Green – including some contributors to this blog! Commissioner of the Equal Employment Opportunity Commission, Chai R. Feldblum, will be making remarks in the afternoon before attendees break into their afternoon workshops. We are also looking forward to hearing from our keynote speaker, Bret Baier, Chief Political Anchor of FOX News Channel and Anchor of Special Report with Bret Baier.

View the full briefing agenda and workshop descriptions here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

Our colleagues Patrick G. Brady and Julie Saker Schlegel, at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the health care industry: “Beyond Joint Employment: Do Companies Aid and Abet Discrimination by Conducting Background Checks on Independent Contractors?

Following is an excerpt:

Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

Read the full post here.

On February 1, the New York State Department of Labor (“NYSDOL”) adopted regulations (“Regulations”) clarifying the pay transparency provisions of Section 194(4) of the New York Labor Law. The pay transparency section was added to Section 194 as part of a broader amendment to New York State’s equal pay law in January 2016. This pay transparency section provides that employers may not prohibit employees from “inquiring about, discussing, or disclosing” the wages of that employee or another employee, and explains what any company policy on the topic can and cannot say.

In the Regulations, the NYSDOL clarified that any employer-instituted restrictions on such discussions must (a) be justified without regard to content, (b) be narrowly tailored to serve a significant interest, and (c) leave open ample alternative channels for discussion of the topic. Additionally, the NYSDOL clarified that an employer may prohibit employees from talking about what other employees’ wages are without express permission from that employee, and that such permission can be withdrawn at any time. Further, such permission need not be granted in writing.

Finally, the regulations clarify that, to the extent an employer wishes to implement a policy limiting employees from discussing wage information, such a policy cannot unreasonably or effectively preclude or prevent inquiry, discussion, or disclosure of wages at the worksite and/or during work hours, either directly or in practice. Indeed, such a policy would also likely be deemed to violate the National Labor Relations Act, which prohibits employers from restricting non-managerial and non-supervisory employees’ collective discussions regarding pay and benefits. The policy can, however:

  • Provide for additional restrictions on the ability of certain employees (i.e., those who regularly have access to such information in connection with their jobs, such as Human Resources and Payroll employees) to share such information; and
  • Establish reasonable workplace and workday limitations on the time, place and manner for such inquiries, as long as those limitations are consistent with standards promulgated with the Commissioner of Labor and other state and federal laws.

Finally, if an employer wishes to avail itself of the ability to use as an affirmative defense against a claim that it violated Section 194 or that the employee who shared or discussed his or her wages violated the company’s policy against same, the employer must demonstrate that employees were given the policy in accordance with the terms of Section 194.

Therefore, companies with policies and/or practices restricting employees’ rights to discuss their wage information that do not reflect the restrictions described above should be reviewed and revised.

Our colleagues Judah L. Rosenblatt, Jeffrey H. Ruzal, and Susan Gross Sholinsky, at Epstein Becker Green, have a post on the Hospitality Labor and Employment Law Blog that will be of interest to many of our readers in the health care industry: “Where Federal Expectations Are Low Governor Cuomo Introduces Employee Protective Mandates in New York.”

Following is an excerpt:

Earlier this week New York Governor Andrew D. Cuomo (D) signed two executive orders and announced a series of legislative proposals specifically aimed at eliminating the wage gap in gender, among other workers and strengthening equal pay protection in New York State. The Governor’s actions are seen by many as an alternative to employer-focused federal policies anticipated once President-elect Donald J. Trump (R) takes office. …

According to the Governor’s Press Release, the Governor will seek to amend State law to hold the top 10 members of out-of-state limited liability companies (“LLC”) personally financially liable for unsatisfied judgments for unpaid wages. This law already exists with respect to in-state and out-of-state corporations, as well as in-state LLCs. The Governor is also seeking to empower the Labor Commissioner to pursue judgments against the top 10 owners of any corporations or domestic or foreign LLCs for wage liabilities on behalf of workers with unpaid wage claims. …

Read the full post here.

With flu season quickly approaching, health care employers may be considering mandatory influenza vaccinations for their workforce. Mandatory vaccination policies may dramatically increase patient safety, but they may also cause friction within the workforce when employees object on religious grounds to being vaccinated.

While no federal and few state statutes address the legality of enforcing mandatory vaccination policies, the EEOC and private litigants recently have moved this issue forward in the courts. Under Title VII of the Civil Rights Act of 1964 (“Title VII”), employees with sincerely held religious beliefs are entitled to a reasonable accommodation of those beliefs, provided that such accommodation does not create an undue hardship for their employer. This year, the EEOC has filed at least three separate lawsuits against hospitals in Pennsylvania, Massachusetts, and North Carolina alleging failure to accommodate religious beliefs in relation to such hospitals’ respective mandatory influenza vaccination policies.[1]

These lawsuits follow shortly on the heels of a decision in the District Court of Massachusetts, granting summary judgment in favor of a hospital employer that terminated an employee who refused a mandatory flu vaccination because of her religious beliefs. In Robinson v. Children’s Hospital Boston, Civ. No. 14-10263 (D. Mass. Apr. 5, 2016), the defendant hospital implemented a policy requiring all persons who worked in or accessed patient care areas to be vaccinated against the flu to ensure the safest possible environment and highest possible care for its patients.

The plaintiff, one of the first hospital employees to interact with patients as they entered the emergency room, refused the flu vaccination for religious reasons and was permitted by the hospital to explore whether there was another internal position outside of patient care that would exempt her from the flu vaccine. The court concluded that the hospital’s efforts to locate another position for the plaintiff—including allowing her to use earned time off to search for employment elsewhere—and to label her termination a voluntary resignation to preserve her ability to re-apply for other hospital positions in the future, constituted a reasonable accommodation under Title VII.

The court also concluded that granting the plaintiff’s request not to be vaccinated would have caused the hospital an undue hardship because it would have increased the risk of transmitting influenza to the hospital’s already vulnerable patient population. The admissible evidence led the court to find that (i) health care employees are at a high risk for influenza exposure, which can be fatal to vulnerable patients; (ii) numerous medical organizations support mandatory influenza vaccination for health care workers; and (iii) the medical evidence in the record demonstrated that a vaccination is the single most effective way to prevent the transmission of the flu.

While the hospital’s policy in Robinson only covered patient-facing employees, health care employers with flu vaccination policies impacting all employees should be aware that they will be subject to heightened scrutiny by regulators such as the EEOC. For instance, in EEOC v. Baystate Medical Inc., Civ. No. 3:16-cv-30086 (D. Mass. June 2, 2016), Baystate’s policy required employees who refused the flu vaccination to wear a surgical mask at all times while working at the hospital’s facilities. The employee in question worked in human resources, had no patient contact, and argued that it was not reasonable for her to wear the mask because people complained that they could not understand what she was saying. Following several occasions in which the employee pulled the mask down away from her mouth so that people could understand her, the plaintiff was discharged for violating Baystate’s policy. While the facts have yet to be developed, these allegations were sufficient to prompt the EEOC to file suit.

Other courts addressing religious discrimination claims in this context also have indicated the importance of the employee’s interaction with patients in determining whether and to what extent a mandatory vaccination policy may be enforced. In Chenzira v. Cincinnati Children’s Hosp. Med. Ctr., Civ. No. 1:11-cv-00917 (S.D. Ohio Dec. 27, 2012), the plaintiff-employee alleged that her adherence to veganism prohibited her from receiving a flu shot. On a motion to dismiss, the court allowed a religious discrimination claim to proceed, finding that the plaintiff could subscribe to veganism with a sincerity equating to that of sincerely held religious views. Notably, the court made a point of stating that the decision did not address the safety of patients at the hospital, which was the hospital’s presumed justification for terminating the plaintiff. The court signaled that it would consider this justification in light of what, if any, contact the plaintiff had with patients, and/or what sort of risk her refusal to receive a vaccination could pose in the context of her employment. (The case later settled.)

Employers looking for additional guidance as to whether and to what extent they must accommodate an employee’s refusal be vaccinated against seasonal influenza also should look to any state or local laws that may impact their ability to mandate flu vaccinations. For instance, a New York statute requires people to be vaccinated if they are affiliated with or employed by a health care facility and who engage in activities that could potentially expose patients to influenza.[2] Those who decline the flu shot during flu season must wear a surgical mask while in areas where patients are normally present. The statute also requires health care facilities to supply such masks to personnel free of charge.

Takeaways

Particularly given the implications to patient safety, health care employers are well within their rights to implement a mandatory flu vaccination policy. Nonetheless, employers should be prepared to address requests for reasonable accommodation made by employees who decline a vaccination because of sincerely held religious beliefs. In those circumstances, employers should engage in the interactive process, with the following considerations in mind:

  • Consider the nature of the employee’s position, as you may have more difficulty in enforcing the policy against employees who do not routinely interact with patients. Courts are more likely to require an alternative accommodation for employees in non-patient-facing roles.
  • Determine whether the employee can be accommodated by wearing a surgical mask or by temporarily or permanently transferring that employee to another position that does not implicate patient safety.
  • Ensure that any refusal to be vaccinated originates from a sincerely held religious belief, but be aware that challenges to a sincerely held belief have been heavily scrutinized by the courts.

A version of this article originally appeared in the Take 5 newsletter Five Key Issues Impacting Health Care Employers.”

[1] EEOC v. St. Vincent Health Ctr., No. 16-224 (W.D. Pa. Sept. 22, 2016); EEOC v. Baystate Med. Ctr., Inc., No. 3:16-cv-30086 (D. Mass. June 6, 2016); EEOC v. Mission Hosp., Inc., No. 1:16-CV-00118 (W.D.N.C. Apr. 28, 2016).

[2] New York State Sanitary Code, 10 N.Y.C.R.R. § 2.59.

On November 4, 2016, the Western District of Pennsylvania held that the “because of sex” provision in Title VII of the Civil Rights Act prohibits discrimination on the basis of sexual orientation. In doing so, the court broke from the recent trend of federal courts that have felt compelled by prior precedent to dismiss sexual orientation discrimination claims.

In EEOC v. Scott Medical Health Center, P.C., the plaintiff (a gay male) alleged that he was subjected to repeated and unwelcome offensive comments regarding his sexual orientation and his relationship with a male partner, creating a hostile and offensive work environment that resulted in the plaintiff’s constructive discharge.  Relying on the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which held that discrimination on the basis of sex stereotyping is prohibited, the court concluded that “discrimination on the basis of sexual orientation is, at its very core, sex stereotyping plain and simple; there is no line separating the two.”

This conclusion contradicts recent decisions in the Seventh Circuit and Southern District of New York, both of which have held that gender discrimination can be “disentangled” from sexual orientation discrimination, and have dismissed claims premised solely on sexual orientation discrimination allegations.  The Western District of Pennsylvania’s departure from prior precedent could signal the beginning of a split in authority that could eventually end up with this issue being considered by the Supreme Court.

This area of law is ripe for further litigation. In the short term, employers should continue to monitor the changing legal landscape and be mindful that other courts could also conclude the discrimination based on sexual orientation is prohibited under Title VII, as well as anti-discrimination provisions in other laws and regulations, such as Executive Order 13672 expressly barring federal contractors from discriminating on the basis of sexual orientation or gender identity.  Regardless of the federal court pronouncements, employers should be aware that various federal agencies are taking the same expansive view of the definition of discrimination on the basis of “sex.”  In the Final Rule implementing Section 1557 of the Affordable Care Act, for example, the Department of Health and Human Services expressly defines discrimination on the basis of sex to include sex stereotyping (and gender identity). Numerous states also expressly prohibit sexual orientation discrimination under their employment law.  Thus, employers seeking to comply with applicable state law and seeking to avoid scrutiny from the EEOC and other federal agencies should train their workforce to eliminate discriminatory or harassing behavior premised on sexual orientation, and review their policies to ensure that such discrimination is prohibited.

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.