Appellate Court Nixes Employee Arbitration Agreements – What Does This Mean for Home Care Employers?

Notice: By decision dated July 19, 2017 (the “Decision”), the Appellate Division, First Department (the “First Department”) (which has jurisdiction over Manhattan and Bronx) held that arbitration agreements obligating employees to waive their rights to bring collective disputes, such as class actions regarding wage disputes, were unlawful and unenforceable because they “run afoul of the National Labor Relations Act” (the “NLRA”). Though freely acknowledging that the United States Supreme Court will resolve a similar issue in its October 2017 Term, the Decision currently binds the trial courts in Manhattan and the Bronx and has precedential effect for other trial courts throughout New York. The Decision can be appealed to New York’s highest court, the New York Court of Appeals.

How Did this Issue Come Up?

In Gold v. New York Life Insurance, former insurance agents engaged as independent contractors by New York Life Insurance Company (“NY Life”) asserted violation of New York Labor Law and sought recovery of underpayment of wages. Each agent’s contract contained a provision requiring arbitration of claims or disputes with NY Life. By these agreements, the insurance agents also waived any right to bring their claims on a class, collective or representative basis. On appeal from summary judgment in favor of NY Life, the First Department interjected itself into the national debate concerning enforceability of class and collective action waivers in the context of wage and hour litigation by refusing to enforce NY Life’s arbitration agreements.  The court held that these agreements were unenforceable because their class and collective action waivers violate the NLRA. The Decision is significant in that the First Department rejected the current and longstanding position held by the Second Circuit of the U.S. Court of Appeals (the “Second Circuit”) (which court’s jurisdiction includes Manhattan and Bronx) that upholds class and collective action waivers, and sided with the United States Court of Appeals for the Seventh Circuit in deeming such agreements to have an effect of unlawfully abrogating employees’ right under Section 7 of the NLRA.

What Does the Decision Mean for Home Care Employers?

Until the United States Supreme Court rules otherwise in its upcoming term, the Decision is troubling for New York employers who have relied on the United States Supreme Court’s and Second Circuit’s decisions upholding employee waivers to commence and/or participate in collective, class or representative actions. Following so soon after the First Department’s decision in Tokhtaman v. Human Care LLC, ruling that 24- hour workers are entitled to 24 hours of pay, the risk of class action 24-hour cases has increased as has the risk that Wage Parity Act claims will be added.

Plaintiffs’ attorneys seeking to assert wage claims that arose in Manhattan and Bronx will likely elect to avoid the U.S. District Court for the Southern District of New York and not pursue claims under the Fair Labor Standards Act, and assert only wage claims under New York Labor Law in state court.

Since arbitration agreements with class action waivers may no longer offer employers protection from class actions in state trial courts, we encourage home care agencies to review and evaluate their current wage and hour practices, implement regular self-audits, especially of their 24-hour cases, and undertake immediate corrective action in the event non-compliance is identified.

 FordHarrison LLP advises and counsels home care agencies and Fiscal Intermediaries under the New York State CDPAP on all issues relating to labor, employment and benefits. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your workplace, please contact the authors, Stephen Zweig at szweig@fordharrison.com, and Philip Davidoff at pdavidoff@fordharrison.com,  or contact any of the firm’s attorneys in its New York City office at (212) 453-5900.

FLSA Conditional Certification Denied in NYS for 5,000 Home Care Workers

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Individuals, Families, and Households and those who Jointly Employ Home Care Workers with them are all Liable for Unpaid Overtime

Executive Summary: Claims by home care workers for unpaid overtime have risen steadily since the U.S. Department of Labor, in 2015, eliminated the federal overtime exemptions that allowed agency employers essentially to pay no overtime wage premiums. This has greatly affected agency employers In New York, who are increasingly seeing class action suits being filed against them. It has also affected individuals, families and households in New York who hire home care workers directly, especially when the home care worker is an agency-employer worker who is continued for extra hours in a workweek. Since 2010, the New York Domestic Workers Bill of Rights has required “direct-hire” employers of home care workers to pay overtime at time and one half the worker’s regular rate. When an agency worker is continued for extra hours by an individual, family or household, both can be held liable for unpaid overtime on all hours worked over 40 in a workweek, regardless of who scheduled the hours. Beyond the agency and individual, family, or household, others who have the power, whether or not exercised, to hire, employ, or pay the worker, such as a child or relative who takes care of a client’s affairs or an attorney acting under a power of attorney or as a legal guardian, conservator, or trustee, are also at risk of being held liable. Continue reading

Home Care Professionals Series: Part 1 – NYS Domestic Worker’s Bill of Rights

Executive Summary. As most home care agencies know, the United States Department of Labor (“USDOL”) eliminated the companionship exemption for home care agency workers on October 13, 2015 in its Final Rule on the Application of the FLSA to Domestic Service Workers (“Final Rule”). What they may not have considered, however, is that following the Final Rule, the NYS Domestic Workers Bill of Rights, which originally only applied to home care workers directly employed by individual households, now also applies to agency employed home care workers. For NYC agencies, in particular, coming into compliance with Domestic Workers Bill of Rights requires changes to the benefits they provide to their home care workers.

Paid Leave Requirements

Until October 13, 2015, when the USDOL’s Final Rule went into effect, NYC home care agencies’ paid leave policies were only required to comply with the paid sick day requirements under Earned Sick Time Act (ESTA) (effective April 1, 2014, except for unionized agencies, which were exempted until their collective bargaining agreements expired). Now, NYC home care agencies have to comply with both ESTA and the NYS Domestic Workers Bill of Rights (“DWBR”).

DWBR requires that home care workers of eligible home care agencies be given 3 paid “days of rest” if they have been employed with the agency for at least one year and averaged 30 or more hours of work per week. Part-time workers receive fewer days, depending on their average hours worked.

ESTA separately requires that home care workers of eligible home care agencies be provided up to 40 hours of paid sick leave annually. Fortunately, ESTA has special provisions for workers covered by DWBR that effectively allow agencies to credit the paid time given under DWBR toward ESTA’s 40 hour requirement: under ESTA, home care agencies are only required to provide 2 days of sick leave to full-time home care workers (and, consistent with DWBR provisions, less time for part-time workers).

In sum, a NYC home care agency must offer its home care workers at least 5 days of paid time off (3 days of rest under DWBR and 2 sick days under ESTA) if they (i) are employed for at least one year; (ii) worked 30 or more hours per week, on average, during the previous year; and (iii) work more than 80 hours per calendar year in NYC.

Accrual and Use Requirements of Paid Leave

DWBR, unfortunately, is silent on accrual and use limitations home care agencies may impose. The New York State Department of Labor (“NYSDOL”) has issued FAQs advising agencies that paid days of rest are due to the worker at the beginning of the calendar year. For home care workers who have not yet been employed for a full year by the first day of the calendar year, the agency must transition the employee’s benefits by providing a pro rata share of days of rest on the one-year anniversary of employment and then providing the full allotment on the first day of the next calendar year. According to these FAQs, agencies cannot require that workers use days of rest in periods of less than one day, and any unused earned days of rest must be paid at the end of each year and at separation of employment. The NYSDOL FAQs also indicate that a “day” is to be paid at the worker’s regular rate of pay for the average number of hours in his or her normal workday.

ESTA, apparently trying to harmonize its requirements with those of DWBR, requires that additional sick time under ESTA be “calculated” in the same manner as days of rest under DWBR, but does not answer whether many of its other nuanced requirements will give way to the provisions under DWBR.

Weekly Day of Rest

DWBR also entitles home care workers to a 24-hour (consecutive) period “of rest” each week, which it recommends be coordinated with the worker’s traditional day for religious observance. If the home care worker waives this entitlement and accepts work on that day, he or she must be paid at the worker’s overtime rate for all hours worked on this day, whether or not the worker’s total hours for the week exceed 40.

 What questions does the new application of DWBR raise for NYC home care agencies?

  1. How many hours constitutes a “day” if your home care workers work shifts of varying lengths, including 24-hour shifts?
  2. Do home care agencies have to allow their workers to take sick time in 4-hour increments, when that is not required by DWBR?
  3. May a home care agency implement different notice or scheduling requirements for the use of days of rest under DWBR and sick days under ESTA?
  4. If a home care agency’s collective bargaining agreement has not yet expired, and therefore ESTA does not apply, how should the agency plan to implement current DWBR and future ESTA requirements?
  5. If a home care agency had not yet provided any paid days of rest or sick days to its home care workers for 2015, how much time is the agency required to provide retroactively to its workers for 2015?
  6. May a home care agency choose to rollover workers’ sick days rather than pay out at the end of the year, as allowed under ESTA, but not allowed for days of rest under the DWBR?
  7. If a home care agency is providing extra paid time off in addition to DWBR time, what are “best practices” and how should they be written in a paid time off provision in an employee handbook?

The Bottom Line

ESTA and DWBR combine to create a statutory minimum for paid time off available to home care workers. However, the interplay between the two laws is not yet well-defined and agencies should be careful to implement a paid time off policy that complies with the different requirements of both laws.

FordHarrison advises and counsels home care agencies on all labor, employment and benefit issues. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your home care agency, please contact the authors, Stephen Zweig, Roshni Chaudhari, or Andrea Orr (paralegal), members of the firm’s Home Care Industry Group in its New York City office at szweig@fordharrison.com, rchaudhari@fordharrison.com, aorr@fordharrison.com, or (212) 453-5900, or the FordHarrison attorney with whom you usually work. 

DOL’s Final Rule Upheld by D.C. Court of Appeals

BREAKING NEWS: The D.C. Court of Appeals ruled today that the US Department of Labor’s (“DOL”) Final Rule on the Application of the Fair Labor Standards Act to Domestic Service (the “Final Rule”) is valid, because it is “grounded in a reasonable interpretation of the statute (FLSA) and is neither arbitrary nor capricious.” Under the Final Rule, home care agency workers are no longer covered by the FLSA’s companionship services exemption or its live-in domestic worker exemption. This decision is of serious concern to the home care industry. Whether the decision will be appealed to the U.S. Supreme Court remains to be seen.

What Questions Do Home Care Agencies Need To Have Answered?

  1. When will the change in the law be considered effective? The Final Rule was initially to be effective January 1, 2015, before it was invalidated by the district court. The D.C. Court of Appeals has reversed the district court, and remanded for entry of summary judgment in favor of the DOL. How will the District Court’s earlier decisions, or a delay in issuing its decision on remand, delay the effective date? What position will the DOL take on the effective date?
  2. When will the DOL begin to enforce the Final Rule? When the Final Rule was originally issued, the DOL said it would delay enforcement for six months from the effective date or until June 30, 2015, and for the remainder of 2015, would exercise prosecutorial discretion in determining whether to bring enforcement actions. Will the DOL still provide for a meaningful transition period?
  3. How does validation of the Final Rule affect private attorney lawsuits and class actions? Agencies are now obligated to pay time and one half the worker’s regular rate of pay for hours worked over 40 in a workweek. If a worker receives a base rate and a higher rate for certain hours (e.g. weekend), calculation of a worker’s overtime rate will be more difficult because it requires a weighted blending of the two rates to provide the regular rate of pay for that week. Employers who do not comply may be targeted by plaintiff’s lawyers.
  4. How does validation of the Final Rule affect enforcement actions by the NYS Department of Labor? The Final Rule effectively eliminates the differing treatment of workers under New York law based on whether they are employed by agencies or directly by households. Formerly, under the NYS Domestic Workers Bill of Rights, for- profit agency home care workers who qualified as “companions” under federal law only had to be paid overtime at one and one half the NYS minimum rate of pay. Now all agencies, for-profit and not-for-profit, must pay home care workers overtime at one and one-half times the individual worker’s regular rate of pay.
  5. What effect does the Final Rule have on the “hours worked” rules applicable to the home care industry? Is there a difference in the treatment of “live-in” workers versus “sleep-in” workers? What type of written agreements with 24 hour case workers must be entered into? Is it a “duty-free” hour if the worker is required to remain on-call on the premises? How must sleep time and travel time be handled?

If you have any questions regarding this Alert or would like our advice of your home care agency’s particular facts and circumstances, please contact the author, Stephen Zweig, Partner in FordHarrison’s New York City office, who has counseled and defended home care agencies for over 35 years, at szweig@fordharrison.com or (212) 453-5900, or the FordHarrison attorney with whom you usually work.

Brooklyn Judge Finds 13 Hours Pay for 24 Hour Case Lawful, Creating Split Among Kings County Justices

Executive Summary:

On May 4, 2015, Kings County Supreme Court Justice David I. Schmidt issued a decision in Adriana Moreno, et al. v. Future Care Health Services, Inc., et al., Index No. 500569/13, which concerned live-in home health aides (“live-ins”) who asserted they were not properly compensated for 24-hour shifts. Justice Schmidt decided that the plaintiffs did not meet the requirements as set forth under New York law for class certification to apply to all similar workers, and further deferred to the New York State Department of Labor’s (“NYDOL”) 2010 Opinion Letter (“2010 Opinion”), disagreeing with the live-ins, and upholding the homecare agency’s payment of the minimum 13 hours for 24-hour shifts.

Background:

The NYDOL 2010 Opinion considered the issue of live-in compensation for third-party agency employers, stating such employers were permitted to pay live-ins for 13 hours for a 24-hour shift, provided the live-in: (a) slept 8 hours (with at least 5 of such hours uninterrupted); and (b) received 3 uninterrupted hours for meals. The 2010 Opinion can be viewed here: http://labor.ny.gov/legal/counsel/pdf/Other/RO-09-0169%20-%20Live-In%20Companions.pdf.

The affordability of employing live-ins has been a hot topic in the homecare industry, which ultimately turns on how a live-in’s “hours worked” are defined. For more information on how an agency can defend itself against a private lawsuit targeting live-ins, view our firm’s December 12, 2014 LegalAlert: “Can Your Home Care Agency Afford to Employ Sleep-Ins?” here: http://www.fordharrison.com/can-your-agency-afford-to-employ-sleep-ins-1.

Decision:

Justice Schmidt relied on the framework outlined in the 2010 Opinion and found no “evidentiary detail” that demonstrated the live-ins in Moreno did not receive the necessary uninterrupted sleep or meal breaks to warrant more than the 13 hours’ pay they received. Moreover, Justice Schmidt noted the live-ins failed to show an “across the board policy” by their Employer which violated their right to compensation for all “hours worked.”

Justice Schmidt’s Moreno decision is welcome news for homecare agencies operating in Kings County and New York generally, as it signals a deviation from the harsh holding of fellow Kings County Supreme Court Justice Carolyn Demarest in Andreyeyeva v. New York Health Care, Inc., 45 Misc. 3d 820 (Sup. Ct., Kings County, Sept. 16, 2014). Just nine months ago, Justice Demarest’s Andreyeyeva decision sent shockwaves through the homecare industry, declaring that 24-hour shift workers should receive compensation for every single hour of their 24-hour shift, regardless of sleep or meal time. Judge Demarest’s decision is currently on appeal.

In December of 2014, Justice Schmidt had declined to grant a motion to dismiss in Melamed v. Americare Certified Special Serv., Inc., 2014 N.Y. Slip. Op. 33296 (Sup. Ct., Kings County, Dec. 11, 2014) and cited Andreyeyeva in support of his decision. In that case, Justice Schmidt declined to decide the issue of how many hours of pay was required on a 24-hour shift, stating that “any argument over whether or not the plaintiffs should be paid for every hour on site is irrelevant at this point since a grant of dismissal, in defendants’ favor, is not hinged upon such issue.” Id.

Conclusion

The disagreement between Supreme Court Justices in Kings County evidences how complicated the issue of compensable time is with regards to 24-hour shift workers. Although New York Labor Law (“NYLL”) requires that employees receive pay for “each hour worked,” reasonable minds (i.e. two Supreme Court Justices) now “split” and differ on what “hours worked” means in this context. If you have any questions regarding this Alert, please contact Danielle Moss at dmoss@fordharrison.com or Stephen Zweig at szweig@fordharrison.com of FordHarrison’s New York City office.