Daniel L. Morgan
One of the spending bills signed by President Trump to avert a government shutdown late last year had attached to it the Setting Every Community Up for Retirement Enhancement Act of 2019, or as it’s known by its acronym, the SECURE Act.
The SECURE Act, which passed the House on May 23, 2019, but languished in the Senate, has important implications for retirement savings.
In a series of four posts, I will provide an overview of a few of the more noteworthy features of the legislation. In this first post, I examine the creation of a new rule requiring 401(k) plans to cover long-term part-time workers. A subsequent post will discuss other changes impacting 401(k) plans, including liberalizations of the safe harbors that allow a 401(k) plan to bypass contribution nondiscrimination testing, and a provision that seeks to encourage the inclusion of annuity payments as a form of 401(k) plan distribution. Another will describe an extension of the time limit on adopting a new retirement plan, to make it effective for a tax year, and the fourth post will discuss the changes made by the Act to the required minimum distribution rules applicable to retirement plans and IRAs. Continue reading “Some Highlights from the Recently Enacted SECURE Act”
Stephen E. Tisman
In July, we reported that the New York State Legislature had passed a bill that could substantially alter the legal landscape of wage disputes by allowing employees with wage claims to file liens against their employers’ assets in the amount of the claim. The lien could be filed without any court order or determination of probable liability. The bill further permitted attachments of the employer’s property and would have expanded the personal liability of the 10 largest shareholders of non-public companies by making them liable not only for wages, but also for interest, penalties, liquidated damages, attorneys’ fees, and costs.
On January 1, 2020, anxious employers got a reprieve—albeit a temporary one—when Governor Cuomo vetoed the legislation. Continue reading “No New York Employee Wage Liens—Yet!”
Alix L. Udelson
New Jersey and New York are the latest states to prohibit employers from asking job applicants about their pay history and considering pay information in making employment decisions.
In New Jersey, effective January 1, 2020, private employers cannot screen applicants based on their pay history. Employers also cannot require an applicant’s salary history satisfy a certain minimum or maximum criteria. Employers may not consider an applicant’s refusal to provide compensation information in making an employment decision.
There are several noteworthy exceptions and limitations to this law. Continue reading “Salary History Ban Spreads—New Jersey and New York Jump on Board!”
Caroline Powell Donelan
UPDATE: On December 29, 2019, the U.S. District Court for the Eastern District of California issued an order temporarily enjoining the enforcement of AB 51 (California’s anti-arbitration law discussed here and here) pending resolution of plaintiffs’ motion for a preliminary injunction, highlighting the “likelihood of irreparable injury” to California employers, and noting plaintiffs had “raised serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”
The court will hear plaintiffs’ motion for a preliminary injunction on January 10, 2020.
Stephen E. Tisman
On November 9, Governor Cuomo signed into law an amendment to the New York Labor Law making it illegal to discriminate against employees based upon the reproductive health decisions of employees or their dependents. The law went into effect immediately upon signing.
Specifically, the new law (N.Y. Labor Law § 203-e):
- Prohibits an employer from accessing an employee’s personal information regarding reproductive health decision-making without the “employee’s prior informed affirmative written consent.”
- Prohibits an employer from taking “retaliatory personnel action” against an employee with respect to compensation and terms of employment, because of the employee’s (or dependent’s) decision-making, including decisions regarding use of a drug, device, or medical service.
- Prohibits requiring an employee to waive the right to make particular reproductive healthcare decisions.
- Requires employee handbooks to include notice of employee rights and remedies under the new law.
- Prohibits retaliation against an employee for protesting the violation of rights under the new law, filing an action under or related to the new law, or providing information to a public body.
The new law creates a legal right of action that an employee can pursue in any court of competent jurisdiction for damages, injunctive relief, reinstatement, attorneys’ fees, and liquidated damages equal to the damages awarded, with liquidated damages subject to a defense if the employer proves “a good faith basis to believe that its actions… were in compliance with the law.”
All New York employers must immediately revise employee handbooks to give notice of the law and available enforcement remedies.
The Legislative Supporting Memorandum makes explicit the legislature’s intention to protect employees against employer efforts to deny them the benefit of the provision in the federal Affordable Care Act which requires that health insurance plans cover FDA-approved birth control methods, without out-of-pocket costs. The law will undoubtedly be challenged by an employer claiming that providing such coverage violates the employer’s religious beliefs (think Masterpiece Cakeshop v. Colorado Civil Rights Commission). The ultimate fate of this statute will be resolved under federal First Amendment law.
As the new year approaches, California employer associations have taken action to prevent Assembly Bill (“AB”) 51 from taking effect. As referenced in this BR Workplace Post, AB 51, signed by Governor Gavin Newsom on October 10, 2019, prohibits mandatory arbitration in cases under the Fair Employment and Housing Act (“FEHA”) and California Labor Code, and also prohibits employers from retaliating against individuals who do not consent to arbitration agreements. AB 51 is in part motivated by the #MeToo movement, and part reflective of California’s ongoing battle against the U.S. Supreme Court’s unwavering support of arbitration. It is designed to ensure employees maintain the right to bring FEHA and wage-and-hour actions in court, rather than forced arbitration as a condition of employment.
As employers across the state stare down the barrel of AB 51, the California Chamber of Commerce filed a Complaint for Declaratory and Injunctive Relief in federal court in California last week seeking to prevent AB 51 from going into effect on the grounds that it is invalid and preempted by the Federal Arbitration Act (“FAA”). The FAA has a long-established policy favoring arbitration as a means for efficient and individualized alternative dispute resolution. The U.S. Supreme Court has also steadfastly refused to allow employees to circumvent the FAA and file actions in court.
The hearing on the motion for preliminary injunction is set for January 10, 2020, nine days after AB 51’s effective date. Only time will tell how the court will rule. In the meantime, employers should contact legal counsel to determine the best, tailored course of action given their specific operations, workforce, and overall risk tolerance.
Jason E. Reisman
Just yesterday, the Pennsylvania Supreme Court issued a decision in a case involving the “fluctuating work week” (“FWW”) method of paying overtime that has been percolating in the Commonwealth courts for almost six years. The Pennsylvania high court held that, although the U.S. Supreme Court has confirmed the validity of the FWW method under the Fair Labor Standards Act (“FLSA”), Pennsylvania has not incorporated it into state law; and its use in Pennsylvania is therefore not permitted.
The case is Chevalier v. General Nutrition Centers Inc. In it, the Pennsylvania Supreme Court upheld a $1.7 million judgment against General Nutrition Centers (“GNC”) in favor of a class of former store managers who had alleged they were shorted on overtime pay. GNC had used the FLSA’s FWW method, which allows employers to pay employees whose hours fluctuate from week to week a salary that is intended to compensate them for all of the hours worked each week. If the employees work more than 40 hours in a week, then the designated salary is divided by the total number of hours worked that week to calculate the “regular rate,” which is then divided in half and multiplied by the number of overtime hours to compensate the employees for the additional overtime pay due.
Okay, enough math for this blog—basically, the FWW method allows employers to pay overtime at a “half-time” rate because the underlying salary pays for all straight time due for the hours worked. (Note for math geeks: the FWW method causes employees to see a lower effective hourly rate and overtime rate as they work more hours.) This “half-time” method of paying overtime pay conflicts with the Pennsylvania Minimum Wage Act’s requirement that overtime compensation be 1.5 times the regular rate of pay—at least that’s what the state supreme court found.
So, as a side note for Pennsylvania employers, there’s no need to concern yourselves with the brand-new proposed rule on the FWW method issued earlier this month by the U.S. Department of Labor.
Our “simple” advice moving forward: Don’t use the FWW method for employees in Pennsylvania.