NLRB Moves Closer to Banning Use of Noncompetes and Other Restrictive Covenant Agreements

On May 30, 2023, the National Labor Relations Board (“NLRB”) General Counsel, Jennifer Abruzzo, issued a memo titled “Non-Compete Agreements that Violate the National Labor Relations Act.” The memo details how the NLRB views non-compete agreements between employers and employees and suggests that, generally, non-compete agreements violate employees’ rights under the NLRA. Importantly, a memo is not a decision, meaning there is no decision holding that a non-compete violates the NLRA.

By way of background, Section 7 of the NLRA protects employees’ rights, and it is an unfair labor practice “to interfere with, restrain, or coerce employees in the exercise” of rights guaranteed under Section 7. The NLRA applies to employees that are represented by a union, and those that are not represented by a union.

According to the memo, non-compete agreements violate the NLRA unless they are “narrowly tailored to address special circumstances justifying the infringement on employee rights.” The memo describes the following types of protected activities that non-compete agreements allegedly suppress:

  1. Concertedly threatening to resign for better conditions: Non-compete agreements can discourage employees from collectively threatening to quit as a negotiation tool for better working conditions due to fear of limited employment opportunities and potential legal consequences.
  2. Carrying out concerted resignations for better conditions: The agreements can discourage group resignations intended to improve working conditions, as employees might fear being unable to secure new employment due to the non-compete restriction.
  3. Seeking or accepting employment with a competitor: Non-compete agreements can deter employees from pursuing employment with local competitors to improve their working conditions, as this could potentially breach the agreement.
  4. Soliciting co-workers to work for a local competitor: Employees may fear inviting co-workers to join a local competitor due to the potential legal ramifications associated with breaches of non-compete agreements.
  5. Seeking employment to engage in protected activities: Non-compete agreements can discourage employees from seeking new jobs to engage in protected activities, like union organizing, at the new workplace, as the agreements limit their mobility and potential employment opportunities.

The potential implications of this memo could be vast. It suggests that employers should exercise caution when requiring non-compete agreements and that such agreements should be narrowly tailored to specific, valid business interests. It specifies that “a desire to avoid competition from a former employee is not a legitimate business interest that could support a special circumstances defense.” The memo could also potentially open the door for legal challenges against overbroad non-compete agreements.

Employers should review their template noncompetition agreements to ensure that they do not run afoul of the NLRB’s memo and, where appropriate, update and re-issue amended agreements to current employees.

Further Update on NY Healthcare Budget

Since our alert on the status of the healthcare (and home care) budget was issued, we have received more information about the wage (not benefit) changes to home care worker compensation. We’ve also received a significant influx of questions about the minimum wage, benefit, timeline, programmatic, and other implications of what is – to our best understanding – a very rough draft of the final budget language regarding the home care worker minimum wage and wage parity provisions. Although the ink has not even been run on this language (let alone dried), here’s a high-level overview of our current understanding of the numbers and the timeline for home care worker wages.

Although the ink has not even been run on this language (let alone dried), here’s a high-level overview of our current understanding of the numbers and the timeline for home care worker wages.

Effective Immediately, New York Will Cease Enforcement Of Covid-19 Vaccine Mandate For Healthcare Workers

The New York State Department of Health has now issued a Dear Administrator Letter (“DAL”), confirming that it has started to roll back the regulation that had required healthcare workers to be vaccinated against COVID as a condition of working in licensed home care services agencies, as well as other entities licensed under the Public Health Law.
Effective immediately, the Department will cease citing providers for failure to comply with the vaccination requirements. A formal repeal of the regulatory requirements will follow later, through the procedures of the Public Health and Health Planning Council (“PHHPC”).  The DAL warns that the Department may continue seeking sanctions against providers based on previously cited violations of the COVID vaccination mandate that allegedly occurred. 
Lastly, the DAL notes that the federal government has also started the process to end the vaccination mandate for healthcare facilities certified by CMS.  

NLRB Decision Restores Protection for “Worker Outbursts”

In a decision that will impact employers’ ability to enforce civility and professional conduct rules in the workplace, the National Labor Relations Board (“NLRB” or the “Board”) released a decision in Lion Elastomers LLC II, 372 NLRB No. 88 (2023), that has profound implications for both employers and employees. The underlying facts involved an employee who was disciplined and dismissed after a heated exchange with managers allegedly concerning working conditions. In its decision, the NLRB determined that the employee’s conduct was protected conduct and the Company was barred by the National Labor

Relations Act from taking adverse employment action against the employee on that basis. The result of the decision is that employees engaged in workplace activism and union-related activity will have significantly greater legal protection, even when such activism involves profane, harassing, or vulgar conduct. Employers contemplating disciplinary action will need to be mindful of yet another basis of “protected activity” in their analysis.

NYC Passes Law Prohibiting Employment Discrimination on the Basis of Height or Weight

On May 11, 2023, the New York City Council adopted a bill to amend the New York City Human Rights Law to include prohibitions on discrimination based on height and weight. This bill adds “height and weight” to the list of categories protected by Title 9 of the New York City Administrative Code, specifically to prohibit discrimination in connection with employment, housing, and access to public accommodations because of a person’s actual or perceived height or weight. Today, May 26, 2023, New York City Mayor Eric Adams signed the bill into law, announcing that “[n]o one should ever be discriminated against based on their height and weight.” The Bill will be effective 180 days from now, or November 22, 2023.

Of importance to employers, the law provides for exemptions (i.e., there is no prohibition on discrimination based on height or weight) where:

  1. Preferential treatment on the basis of height or weight is required by federal, state, or local law or regulation;
  2. An individual’s height or weight could prevent them from performing the essential functions of the job with or without an accommodation; or
  3. A certain height or weight is reasonably necessary for the normal operation of the business.

The Bill charges the New York City Commission on Human Rights with identifying particular jobs or job categories that fit into the above exceptions. Employers should update their employee handbooks (yet again) to account for these new protected characteristics and review any job descriptions that may be affected by these legal changes.

Update on NY Healthcare Budget: Implications on Home Care

Sections of the health care budget seem to be slowly being released as the Legislature and the Governor work feverishly to finalize the New York State budget this week. By all accounts in Albany, the New York State budget will be finalized by the end of this week.

We have received what appears to be a close-to-final summary of the Minimum Wage Act and Wage Parity Law amendments that would take effect upon the adoption of the final budget. As relevant to our readers, this document indicates that the Budget would amend the law to provide the following:

  1. The home care worker wage parity hourly amounts of $3.22 and $4.09 would be reduced by $1.55 effective as of January 1, 2024. This would result in a New York City wage parity rate of $2.54 (instead of $4.09) and the Long Island/Westchester rate of $1.67 (instead of $3.22). If this is indeed the final budget language, we expect that this will not only reduce the wages of those workers who receive their wage parity as a wage (instead of a benefit), but that the plans will also reduce their reimbursements. It remains to be seen whether any such reduction will be by $1.55 or $1.55+overhead. Providers are advised to very carefully implement any wage reductions; the New York Labor Law governs (with strict penalties for noncompliance) the process of reducing wages or changing benefits.
  2. The $1.00 minimum wage increase that is scheduled for October 1, 2023 would be postponed to January 1, 2024. The new law would also cap the minimum wage of home care workers at the general minimum wage + $3.00.
  3. The law would be amended to allow the Department of Health greater authority to collect information from payers and providers about the wages and benefits being paid to home care workers. The owners of agencies would need to certify that the payroll records they are providing to the Department are “true,” under penalty of perjury. Failure to make such payroll records available may result in immediate suspension of the agency from Medicaid (including MLTC Medicaid), and the Department of Health will be empowered to direct MLTCs to suspend any payments to the provider.
  4. The law would be amended to allow the Department of Health greater oversight over managed care organizations, including the contracted rates of payments between such plans and the providers. The stated intent of this amendment is to provide for greater transparency and better enforcement of wage violations. This amendment could also open the door to providers making more kickback-type complaints against plans related to rate-setting between plans and providers.
  5. The Verification Organization program would be void and replaced by EVV.

We do not yet have access to the other parts of the Budget that are being discussed, such as the potential repeal or amendment of the CDPAP RFO. We will provide an update as more information becomes available.

New York Budget Has Been Finalized

Minimum Wage and Wage Parity

The final health and employment bills in the New York State Budget were signed last night. We reported several days ago on the wage parity and minimum wage changes from this year’s Budget as they apply to home care workers. As reported, the following are the newly scheduled minimum and wage parity rates taking effect:

  • January 1, 2024: The home care worker minimum wage for New York City, Westchester, and Long Island will increase to $18.55/hour with the wage parity benefit portion of $3.22 or $4.09 being reduced by $1.55. The minimum wage for the rest of New York State will increase to $17.55.
  • January 1, 2025: The home care worker minimum wage for New York City, Westchester, and Long Island will increase to $19.10/hour. The minimum wage for the rest of New York State will increase to $18.10.
  • January 1, 2026: The home care worker minimum wage for New York City, Westchester, and Long Island will increase to $19.65/hour. The minimum wage for the rest of New York State will increase to $18.65.

We have heard, but are still confirming, that SEIU1199 has lobbied for and, reportedly, secured additional QIVAPP funding to help offset the wage parity benefit subsidy reductions that are slated to take effect as a result of this Budget. As our readers know, the millions of dollars in QIVAPP will only go to home care providers whose workers are represented by SEIU1199 and a handful of other agencies whose workers are not represented by SEIU1199.

The Budget Contains a Significantly Reduced MLTC Oversight Standard than Proposed by Governor

As we had previously reported, the Budget was proposed to have a MLTC RFO-type system and approval process for managed care organizations. Based on the final Budget language that was passed, effective January 1, 2024, every MLTC that is currently authorized to operate will need to have a Medicare Dual Eligible Special Needs Plan in operation with a CMS Quality Star Rating of 3 stars or higher (with plans that do not have the rating being exempted). The MLTC will be required to “sufficiently demonstrate” “success” in the following performance metrics:

  • To “ensure network adequacy,” a “commitment to contracting with ‘adequate’ number of [LHCSAs and FIs] needed to provide necessary personal care services to the greatest practicable number of enrollees …”
  • Readiness to timely implement and adhere to the maximum wait time criteria for key categories of service
  • Commitment to quality improvement
  • Accessibility and geographic distribution of network providers, taking into account the needs of persons with disabilities and the differences between rural, suburban, and urban settings
  • Demonstrated cultural and language competencies specific to the population of participants
  • Ability to serve enrollees across the continuum of care, as demonstrated by the type and number of products the MLTC operates or has applied to operate
  • Value-based care readiness and experience

Many of the terms quoted above are not defined, so it is not clear what and how much the Department of Health will operationalize these Budget provisions to oversee and manage plans. The Commissioner could define what an “adequate” number of LHCSA and FI contracts could be, but it is more likely that the Department will just leave these decisions to be made by plans on a case-by-case basis. 

Budget Cracks Down on Staffing Agencies that Serve Healthcare Providers

The Budget creates registration and significant transparency and reporting requirements for “temporary health care services agencies” and “health care technology platforms,” which the Budget defines to mean “a person, firm, corporation, partnership, association or other entity in the business of providing or procuring temporary employment of health care personnel for health care entities.” Notably, mobile app companies and nurses’ registries are included in this definition. Excluded from the definition, and the law’s coverage, are LHCSAs and solo 1099 healthcare staff that are directly engaged by the covered healthcare provider. The law applies to “health care personnel,” which is defined to include CNAs, nurses, and other licensed or unlicensed direct care staff “provided by the temporary care services agency to provide temporary services.” For purposes of the law, a “health care entity” means an agency, corporation, facility, or individual providing medical or health care services.

Registration Requirements

Effective upon the issuance of regulations by the Department of Health (“DOH”), the Commissioner will require any operator of a temporary health care services agency (“staffing agency” or “agency”) to register that staffing agency with the DOH. The Commissioner will publish guidelines establishing the forms and procedures for the registration, but the forms will require the following information:

  • the name and address of any controlling person of that staffing agency
  • the name and address of healthcare entities where the controlling person or their family members have an ownership relationship or direct the management or policies of such healthcare entities. In other words, the DOH intends to go to the “nucleus” of the ownership structure
  • a demonstration that the applicant is of good moral character and able to comply with all applicable state laws and regulations relating to the activities in which it intends to engage. There is no indication of what factors the DOH we’ll consider in this analysis.
  • Registration and related annual renewal fees of $1000

As a condition of the registration, a staffing agency will be required to:

  • Document that each healthcare personnel provided to or contracted with healthcare entities meets the minimum licensing, training, and continuing education standards for the position in which the healthcare personnel will work
  • Shall comply with all “pertinent” requirements and qualifications for personnel employed in healthcare entities
  • Shall not restrict in any manner the employment opportunities of its healthcare personnel (which means that the staffing agency cannot have restrictive covenants, such as non-competes, in place with the staff)
  • Shall not require the payment of liquidated damages, employment fees, or other compensation should the temporary staff be hired permanently by the facility where they were placed to work
  • Shall retain all records for six years and make them available to the DOH upon request
  • Shall comply with any requests made by the DOH to examine the books and records of the agency, subpoena witnesses, and documents, and make such other investigation as is necessary in the event that the DOH has reason to believe that the books are records do not accurately reflect the financial condition or financial transactions of the agency.

The registration issued by the DOH to any Staffing Agency will be effective for one year.

Transfer of Ownership

When ownership interests of 10% or more, or management of a staffing agency, is sold or transferred, the registration of the staffing agency may be transferred to the new owner or operator for 30 days, or until the new owner or operator applies and is granted or denied a new registration by the DOH, whichever is sooner.

Public Notices and Reporting

The Commissioner of Health will make available a list of all staffing agencies that are registered with the DOH on its website.

The DOH will also publish a quarterly report, containing aggregated and “de-identified” data collected pursuant to this law.

The staffing agency must submit to the DOH copies of all contracts with healthcare facilities to which it assigns or refers healthcare personnel and copies of “all invoices to healthcare entities’ personnel. “The executed contracts must be sent to the DOH within 5 business days of their effective date and are not subject to disclosure under the Freedom of Information Law (“FOIL”).

Minimum Standards for Operations

The new law sets the minimum standards for the operation of the staffing agencies, as follows:

  • The staffing agency must appoint an administrator qualified by training, experience, or education to operate the staffing agency. Again, there is no indication of the level of experience, training, or education sufficient to meet this standard.
  • Every staffing agency location must have its own administrator.
  • The staffing agency must maintain a written agreement or contract with each healthcare facility with which it contracts, and the law establishes the minimum requirements for those contracts.

Compensation for Services

Staffing agencies will be required to report quarterly to the DOH a full list of charges and compensation, including a schedule of all hourly billing rates per category of healthcare personnel, a full description of any administrative charges, and a schedule of rates of all compensation per category of healthcare personnel, including but not limited to the following information:

  • Hourly regular pay rate, shift differential, weekend differential, hazard pay, charge nurse ad-on, overtime, holiday pay, travel or mileage pay, and any health or other fringe benefits provided,
  • The percentage of healthcare entity dollars that the agency spent on temporary staffing wages and benefits compared to the agency’s profits and other administrative costs,
  • A list of the States and zip codes of the healthcare personnel’s primary residences
  • The names of all healthcare entities that the staffing agencies contract with in New York State
  • The number of healthcare personnel of the staffing agency working at each entity, and
  • Any other information that may be required by the Commissioner of Health

Enforcement and Penalties

The New York Attorney General may, upon the request of the DOH, bring an action for an injunction against any individual or entity violating this law. “In addition to other remedies available by law,” violations of this law will be subject to penalties and fines, with each violation committed by any healthcare personnel of a staffing agency being considered a separate violation.

Home Care Employers Take Note “Sweat Bill” Moves Closer to Becoming Law

The SWEAT Bill (full text available here) is yet another well-intentioned but completely unnecessary anti-business piece of legislation that has been resurrected and gained traction with the New York Legislature in the last few days. As the legislative session is wrapping up this week, employee advocacy groups are working diligently in the last few days to ensure that this bill becomes a law. Employers that are in industries that are susceptible to wage claims, such as employers in the home care industry, should contact their local elected officials immediately to object to this bill becoming law.

As we had reported previously when this law was originally introduced several years ago (and, thankfully, had stalled in the Legislature since that time), the SWEAT Bill would allow alleged “victims” of wage theft to obtain a temporary lien against their employer’s (or alleged employer’s) assets upon the filing of a “wage claim.” (The term “wage claim” is not defined in the law and, thus it is unclear if a lawsuit has to be filed in order for the law’s provisions to be triggered, or whether a complaint to the Department of Labor would suffice).  In other words, a current or former employee could file a claim against their employer (or former employer) and immediately place a lien on that employer’s personal and real property. The problematic part of this bill is that it allows an employee to secure the lien without having prove any wrongdoing or error by the employer. The lien, once filed, would be in the amount of the alleged claim (which could be a class claim), plus liquidated damages. In effect, the employee lien could prevent an employer (or alleged employer in cases of fiscal intermediaries) from conveying, selling or transferring real or personal property while the employee lien is in place. The lien could impede a business’s attempts to sell the business or secure financing.

If the SWEAT bill is passed, employees and their attorneys will have significant new leverage to elicit, through threatened litigation or claims, favorable wage and hour payouts from employers. Employers, facing the prospect of expensive litigation and a lien, would be pressured into settling even the most meritless of claims. 

The SWEAT Bill was previously vetoed by Governor Cuomo. Perhaps the same fate will follow the bill with Governor Hochul, but no employer should sit idly by given the potential ramifications of this law. We encourage all our readers to contact their lobbyists, associations or attorney and the legislative officials directly to object to this bill becoming a law.

NY DOL Proposes Updates to Model Sexual Harassment Prevention Policy

The New York State Department of Labor (“DOL”) has published an updated model Sexual Harassment Prevention Policy. The proposed policy is subject to public comment until February 11, 2023, after which the DOL will adopt a final version of the policy.

By way of background, effective October 9, 2018, covered New York employers were required to adopt sexual harassment prevention policies that meet or exceed the minimum standards set forth in §201-g of the New York Labor Law, or adopt and disseminate the model policy published by the DOL. The Labor Law requires the DOL to review and revise its model policy every four years to account for changes in the law and workplace.

The following are the key proposed changes in the 2023 model policy:

  • Defines different gender identities (cisgender, transgender, and non-binary).
  • Clarifies that harassment may be committed remotely.
  • Reaffirms that gender-based harassment and discrimination are not limited to sexual contact or suggestive conduct, and includes gender stereotyping and treating employees differently because of their gender identity.
  • Provides many additional examples of sexual harassment, discrimination, and retaliation across a broader spectrum of industries.
  • Includes bystander intervention methods to encourage employees to intervene if they witness harassment in the workplace.
  • Explains that harassment does not need to be severe or pervasive (the federal standard) to be unlawful.
  • Clarifies that intent is not a defense to harassment and discrimination.
  • Clarifies that whether conduct or behavior is unlawful is based on an objective standard – viewed from the standpoint of a reasonable victim.
  • Clarifies that harassment exists where the conduct or behavior rises above “petty slights and trivial inconveniences.”
  • Adds information regarding the New York State Division of Human Rights’ (NYSDHR) sexual harassment hotline.
  • Clarifies that retaliation may include the public disclosure of personnel files in retribution for engaging in protected activities.
  • Revises the “Investigation” section to provide that employers (and/or their investigators) must exercise “sensitivity” in handling complaints, and replaces a 30-day investigation timeframe with an obligation to complete the investigation “as soon as possible.”
  • Updates the time to report a claim to the NYSDHR from one to three years.
  • Clarifies that discrimination based on any of the protected classes is prohibited.
  • Explains that complaints to the NYSDHR can be completed online.
  • Re-emphasizes supervisors’ and managers’ obligation to report harassment and discrimination.
  • Provides an expanded explanation that the policy applies to both employees and non-employees (independent contractors, vendors, gig workers, consultants and other service providers).

Our firm is monitoring this development and will advise employers and clients of the new policy requirements once adopted by the DOL. As was the case with the first model sexual harassment policy, employers will have the option of either adopting the model policy or drafting an individual policy that meets or exceeds the minimum standards contained in the DOL’s final version model policy.

For any questions regarding this topic, please contact Poricanin Law.

NY Now Requires Electronic Distribution of Mandatory Workplace Posters

Effective December 16, 2022, Labor Law Section 201 was amended to require New York employers to provide employee rights notices electronically.  Traditionally, employers satisfied their workplace notice posting requirements by physically posting government-issued posters in the workplace, often on bulletin boards or pre-printed posters. However, with this amendment of the Labor Law, employers are now required to provide these notices either by email or through the employer’s website, in addition to continuing to post the notices in any physical work location.  Employers are also required to notify employees that the employee workplace notices are available electronically.

This change to Section 201 of the Labor Law was sloppy, creating a number of practical challenges for already over-regulated New York employers.  For example, for employers who do not maintain a website or who do not communicate with employees through email, does the law require them to now create an electronic communication system with those employees?  The law specifically states that digital copies of the notices must be provided on a website or email, seemingly prohibiting the distribution of these notices via text messages.   

Separately, the law amended a New York Labor Law section discussing notices required by the New York Commissioner of Labor, thereby suggesting that only those notices required by the State’s Commissioner of Labor would have to be electronically distributed.  However, the new language in the law states that “all other documents required to be physically posted at a worksite pursuant to a state or federal law or regulation” must also be made electronically available.  This seems to suggest that non-employment type posters and/or those issued by the federal government would also be subject to this new electronic-distribution requirement. 

Lastly, while the law is effective immediately, it is not clear whether employers are required to implement this law for their current staff, or only apply the new requirements to new hires.  If it is the former, the new law creates a time-sensitive urgency for employers to act.

We will be reaching out to the Department of Labor to clarify these requirements.  In the meantime, employers should start considering how to comply with the new law, which is in effect.  For some employers, the law’s requirement of distributing workplace notices electronically will be simple to administer.  However, for other employers, such as those in the home care industry, the requirement may prove difficult to effectuate.  Failure to satisfy the electronic notice posting requirement could result in monetary fines.  In addition, non-compliance could be used as evidence against an employer in connection with allegations of other workplace violations.