N.Y. Employers Face New Laws on Smoking, Discrimination, Organizing, Layoffs


May 12, 2003

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Thelen Reid Brown Raysman & Steiner LLP

INTRODUCTION

In a flurry of legislative activity not seen for many years, New York State and New York City recently enacted or amended a number of labor and employment statutes. This new legislation is far-reaching and changes the legal landscape for New York employers in many significant ways. Following is a summary of developments and highlights of steps that New York employers should take to comply with the new laws.

NEW YORK STATE LEGISLATION

The New York Legislature amended the Human Rights Law, Executive Law §§290 et seq., in late 2002 in two significant ways. First, the amendments added a new prohibition against discrimination in employment, housing, public accommodations, education and credit on the basis of sexual orientation. Second, the Human Rights Law's prohibition against discrimination on the basis of religion was amended substantially to require employers to "reasonably accommodate" an employee's "sincerely held religious observance or practice... without undue hardship on the conduct of the employer's business."

The Sexual Orientation Non-Discrimination Act, which became effective on January 16, 2003, amended the Human Rights Law and the New York Education Law to prohibit discrimination on the basis of "sexual orientation." "Sexual orientation" is defined as "heterosexuality, homosexuality, bisexuality, or asexuality, whether actual or perceived." However, an amendment to prohibit discrimination against transgendered individuals (persons undergoing a sex change and cross-dressers) was rejected by the Legislature. The amendments do not change provisions of the Human Rights Law that allow religious institutions and organizations, based on religious principles, to limit employment or to make employment selections that are designed to promote the religious principles for which the organizations were established.

Employers already subject to the New York City Human Rights Law, Administrative Code §§8-101 et seq., will not be significantly affected by these amendments because the city law long has prohibited discrimination on the basis of sexual orientation. However, unlike the definition of "sexual orientation" in the state law, the city law does not include "asexuality." What, if any, impact this slight variation will have on New York City employers is not clear.

Employers not already subject to the City Human Rights Law should make sure to update their policies prohibiting employment discrimination to include discrimination on the basis of sexual orientation. Employers also should make sure their anti-harassment training programs, policies and complaint procedures specifically address the prohibition of discrimination on the basis of sexual orientation.

The State Human Rights Law prohibiting discrimination on the basis of religion was amended effective November 16, 2002, to detail employers' obligation to "reasonably accommodate" employees' or prospective employees' "sincerely held religious observance or practice without undue hardship on the conduct of the employer's business." Executive Law §296 (10) (a). The amendments were intended to broaden protection for employees and applicants whose religious beliefs require them to observe certain sabbath, holy day or prayer requirements or mandate particular forms of dress, hairstyle or beards.

The amendments also were designed to give employers guidance by defining what constitutes an "undue hardship" relieving them of their duty to make religious accommodations. Although case law under the Human Rights Law had recognized the "undue hardship" defense, its parameters were not always clearly defined.

The amendments prohibit employers, employees and agents of employers from "impos[ing] upon a person as a condition of obtaining or retaining employment, including opportunities for promotion, advancement or transfers, any terms or conditions that would require such person to violate or forego a sincerely held practice of his or her religion" without first engaging in a "bonafide effort" to reasonably accommodate such a sincerely held religious practice.

Sincerely held religious practices "include... but [are] not limited to the observance of any particular day or days or any portion thereof as a sabbath or other holy day in accordance with the requirements of his or her religion." Executive Law §296 (10) (a). Except when it would cause the employer undue hardship, "no person shall be required to remain at his or her place of employment during any day or days or portion thereof that, as a requirement of his or her religion, he or she observes as his or her sabbath or other holy day…." Executive Law §296 (10) (b).

Required accommodations also include giving the employee a reasonable amount of time before and after observance of a sabbath or other holy day to travel between work and home. When practicable in the employer's "reasonable judgment," an employee's absence from work may "be made up by an equivalent amount of time and work at some other mutually convenient time, or shall be charged against any leave with pay ordinarily granted, other than sick leave…." Executive Law §296 (10) (b). Employees may not be denied permission to utilize leave solely because the leave will be used to allow an absence from work to accommodate the employee's sincerely held religious belief or practice.

The statute also provides a detailed definition of what constitutes "undue hardship" for an employer. An "undue hardship" would require the employer to violate a bonafide seniority system. Employers are not required to provide an accommodation if it "will result in the inability of an employee to perform the essential functions of the position in which he or she is employed." Executive Law §296 (10) (d).

Labor Law §211-a was amended effective December 29, 2002, to prohibit the use of state funds and facilities to "encourage" or "discourage" union organizing efforts. This amendment significantly broadens the prohibitions in Labor Law §211-a as enacted in 1996, which prohibited employers' use of state funds to train "administrative personnel" (such as managers and supervisors) in methods to thwart unionizing efforts. Influential unions such as Service Employees International Union Local 1199, the largest union of health-care workers in New York, strongly lobbied for the amendment.

Labor Law §211-a now bars employers from using "funds appropriated by the State" to hire attorneys, consultants or other contractors to encourage or discourage union organizing efforts; to train supervisors, managers or other administrative employees concerning methods to encourage or discourage union organizing efforts; or to hire or pay employees whose principal job duties are to encourage or discourage union organizing efforts. Employers also may not use state-appropriated funds to encourage or discourage employees from participating in a union organizing campaign.

The law also requires employers to keep detailed accounting and financial records concerning their use of state-appropriated funds for at least three years after activities related to union organizing. Such records must be sufficient to show that state funds were not used to pay for any activities prohibited by the labor neutrality law. The New York Commissioner of Labor is authorized to promulgate regulations to prescribe the form and content of such records. Regulations have not been issued yet.

Penalties that may be assessed for violation of labor neutrality law are substantial: A court may impose a civil penalty of up to $1,000; a court may order the employer to return the funds to the state; for a "knowing violation" or if the employer had another violation in the preceding two years, the court may impose a penalty of $1,000 or three times the amount of money the employer unlawfully expended, whichever is greater; and the New York State Attorney General may seek a restraining order to prohibit the unlawful conduct.

While it might seem that the labor neutrality law would apply to only a few employers, it actually will affect hospitals, universities, charitable organizations and other not-for-profit organizations that rely heavily on Medicare/Medicaid payments or other state funding.

Assessing the reach of the amendments is complicated by the fact that the statute does not define key terms. It is unclear what activities will be viewed as efforts to "encourage" or "discourage" union organizing efforts. Many common employer activities -- such as compensation studies, supervisory training, grievance procedures -- conceivably could be viewed as efforts to "discourage" union organizing because many employers engage in these activities as part of their lawful efforts to maintain a union-free environment. Presumably, the new law was not intended to prohibit these lawful activities, but the lack of specificity in the statute's definitions is troubling.

The labor neutrality law may be subjected to legal challenge, and it is not clear whether the law will survive. New York's statute is quite similar to a law enacted in California in 2001, which the U.S. District Court for the Central District of California recently overturned on grounds that it is pre-empted by the National Labor Relations Act. Chamber of Commerce of U.S. v. Lockyer, 225 F. Supp.2d 1199 (C.D. Cal. 2002).

Because of the New York law's potential conflict with the concept of free debate under the NLRA, the National Labor Relations Board has taken a keen interest. On October 30, 2002, NLRB Assistant General Counsel for Special Litigation Margery E. Lieber wrote New York State Labor Commissioner Linda Angello to express the NLRB's "serious concerns" over the impact that the new law will have on employers' free-speech rights in union organizing drives. Despite the Lockyer decision and the NLRB letter, employers must comply with the statute until it is overturned.

Labor Law §215-c was amended effective September 17, 2002, to prohibit discrimination against employees for displaying the American flag. The law applies to public and private employers and prohibits employers from discharging or discriminating against employees for displaying the American flag on their work stations or on their persons if the display "physically does not substantially or materially interfere with the employee's job duties."

Employees may bring a civil action to enforce the law or may file a complaint with the New York Department of Labor. The Commissioner of Labor may assess a civil penalty of $200 to $2,000 against an employer found to have violated the law. A court may restrain violations of the statute and award appropriate relief, including reinstating discharged employees to their jobs with restoration of seniority, back pay, damages and attorney fees.

The New York Legislature enacted far-reaching amendments to the Public Health and Education laws that prohibit smoking in all indoor workplaces, including almost all bars and restaurants. The law also prohibits smoking in other venues, including on public transportation, in public transportation facilities, in other places of public accommodation, in businesses and in educational facilities. The law will become effective on July 24, 2003.

There are unanswered questions about the effect of the state legislation on local anti-smoking laws.

The law applies to employers of one or more persons and prohibits smoking in all "places of employment." "Place of employment" is defined as any indoor area under the control of an employer in which employees perform services. A "place of employment" also includes company vehicles.

Smoking will be forbidden in virtually all restaurants and bars. Smoking will be allowed only in cigar bars and outdoor dining areas of food service establishments with no roof or other ceiling enclosure.

Civil penalties up to $2,000 may be imposed for each violation of the law. The law has many other provisions, so New York State employers should consult counsel for advice about complying with all provisions pertinent to their operations.

NEW YORK CITY LEGISLATION

New York City Mayor Michael R. Bloomberg on December 30, 2002, signed the Smoke Free Air Act of 2002 that prohibits smoking virtually everywhere in New York City except for private residences, private automobiles, hotel and motel rooms, retail tobacco stores and a few other venues.

Some of the most significant changes include the complete prohibition of smoking in places of employment and in the vast majority of places of public accommodation and the elimination of smoking in all restaurants (regardless of seating capacity) and virtually all bars. The Act places New York City in the forefront of jurisdictions limiting exposure to second-hand smoke.

As originally enacted in 1995, the Act contained a number of exceptions permitting smoking, including in enclosed private offices, smoking rooms, bars, restaurant bars, lobbies in hotels and motels, and restaurants with a seating capacity of 35 or less.

The vast majority of those exceptions have been eliminated. Most provisions of the new law became effective on March 30, 2003, although a few provisions have different effective dates.

The amendments eliminate exceptions that had allowed smoking, under certain conditions, in private, enclosed offices usually occupied by no more than three persons. Now, smoking will be banned in all private, enclosed offices. Similarly, the exception that had permitted employers to provide one "smoking room" per floor in the workplace was eliminated. Smoking now is prohibited in all company vehicles occupied by more than one person. Smoking is prohibited in all vehicles owned by New York City.

Key provisions of the 1995 Act remain in force. Employers must have a written smoking policy, including a procedure for resolving disputes, and still may not retaliate against employees for exercising or attempting to exercise their right to work in a smoke-free environment.

The new law increases civil penalties for violations to $1,000 to $2,000 (for a third and subsequent violations).

The definition of "gender" under the Human Rights Law was expanded in 2002. Now prohibited is discrimination on the basis of "actual or perceived sex and… a person's gender identity, self-image, appearance, behavior or expression, whether or not that gender identity, self-image, appearance, behavior or expression is different from that traditionally associated with the legal sex assigned to that person at birth." Administrative Code §8-102 (23).

This definition of "gender" was intended to extend the Human Rights Law's protections to transgendered people. However, issues may arise from the amendment's very broad definition of "gender." For instance, to the extent "gender" now includes "appearance," an employer's dress code or grooming policies might be subject to challenge. But, workplace dress code and grooming policies generally have been found lawful under Title VII of the Civil Rights Act of 1964, 42 USC §§2000e et seq.

The Displaced Building Service Workers Protection Act, codified as Administrative Code §22-505, grants new job security protections effective November 27, 2002. It provides temporary protection from job loss to building service workers when the building where they work is sold or its control is transferred to another entity. The act provides protection to workers who are employed by a building contractor when the building owner or manager replaces the contractor. The statute also contains an opt-out provision for successor employers that already are party to or that agree to become bound by a collective bargaining agreement with provisions addressing the layoff or discharge of building service workers.

Employers subject to the Act include "any person who owns or manages real property" within New York City, including building managing agents, building service contractors, housing cooperatives and condominium associations. Administrative Code §22-505 (a) (6). The Act does not apply to owners or operators of residential buildings with fewer than 50 units or to commercial buildings of less than 100,000 square feet. The law also exempts from coverage employers who have hired their employees pursuant to a New York State preference for disabled workers and certain buildings occupied by governmental entities.

"Building service employees" include employees who have been regularly assigned to a building for at least 90 days (on a full-time or part-time basis) immediately preceding the employment transition at issue. Administrative Code §22-505 (a) (4). Employees not covered by the Act include those who work less than eight hours a week or who earn more than $25 an hour and managerial, supervisory and confidential employees (excluding building superintendents and resident managers).

The Act requires a "successor" building owner, manager or contractor to offer employment to employees for 90 days. During this 90-day "transition period," the successor can terminate employees of the predecessor employer's only for "cause." After 90 days, the successor must perform written performance evaluations for each employee retained and must offer continued employment to all employees who receive a satisfactory rating.

To assist the successor employer in fulfilling its obligations under the ordinance, the predecessor employer must give the successor certain employee information, post information for employees and notify any unions with contracts.

The Act does not prohibit a successor employer from laying off employees during the 90-day transition period if the successor concludes that fewer employees are needed. Administration Code §22-505 (b) (6). But, employees must be selected for layoff by seniority within their job classification and must be given first refusal of any jobs that become available within their job classification.

The Act does not prohibit successor employers from setting working conditions, hours, wages or benefits that differ from the predecessor's. Other applicable labor laws may prevent the successor from doing so. Employees discharged in violation of the Act may sue for back pay, the costs of benefits, attorney fees, costs and injunctive relief. Administrative Code §22-505 (c).

There are three ways a successor employer can become completely exempt from the ordinance's requirements. First, a successor employer is exempt if it agrees to assume or be bound by the predecessor's collective bargaining agreement if the collective bargaining agreement "provides terms and conditions for the discharge or laying off of employees." Administrative Code § 22-505 (d). Second, a successor employer may become exempt if it agrees to enter into such a union contract. Id. Third, a successor employer may become exempt by agreeing to cover the predecessor's employees under an existing collective bargaining agreement that provides terms and conditions for laying off or discharging employees. Id. The predecessor employer may become exempt from its obligations under the Act if the predecessor obtains a written commitment from the successor that building service employees will be covered by a collective bargaining agreement providing terms and conditions for the discharge or layoff of employees.

It seems apparent the Act was intended to stop a building from "going non-union" after a change in ownership or replacement of a service contractor. By requiring the successor to retain the predecessor's employees for 90 days, the law heightens the likelihood that the union representing the predecessor's workers will be able to continue representing them under the "successorship doctrine" arising under federal labor laws. Service Employees International Union Local 32B-32J, which represents approximately 70,000 building service employees in New York City and is the largest private sector union in the city, helped draft the proposed ordinance. SEIU was behind adoption of similar laws in the District of Columbia, Philadelphia, Los Angeles and the State of California. The District of Columbia law withstood a legal challenge. Washington Service Contractors Coalition v. District of Columbia, 45 F.3d 811 (D.C. Cir. 1995).

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©2003 Thelen Reid Brown Raysman & Steiner LLP