New York Expands Data Security and Breach Requirements for Employers Under the SHIELD Act

On July 25, 2019, the Stop Hacks and Improve Electronic Data Security Act (the “SHIELD Act”) was signed into law by New York Governor Andrew Cuomo.  The SHIELD Act aims to ensure that New York residents are afforded greater protections against cybersecurity breaches from companies with which they do business.  The SHIELD Act takes effect on March 21, 2020 and imposes key changes to New York’s cybersecurity and data breach notification laws.

Scope of the SHIELD Act

The SHIELD Act provides strong safeguards to protect against identity theft and data breaches for all New York Residents.  Not only will all New York businesses be required to comply with the SHIELD Act, but the SHIELD Act has far-reaching effects because it applies to out of state businesses that maintain the private information of New York residents.  Any business or employer holding a New York resident’s private information must understand the new changes to New York’s data security laws, they must be aware of what personal and private information is protected under the SHIELD Act, and they must know what steps employers need to take to be deemed in compliance with the SHIELD Act’s safeguards.

Expanded Definition of “Private Information” and “Breach”

The SHIELD Act expands the definition of “private information” and sets forth specific personal information that, if breached, could trigger a notification requirement.  “Private information” that is to be protected by the data breach law includes the following: Social Security number; credit, debit or account card number, in combination with any required access or security code, password, other security questions and answers; driver’s license number or non-driver identification card number; username or e-mail address with a password that permits access to an online account; and biometric information, meaning any data that is used to authenticate an individual’s identity by electronic measurements of the individual’s unique physical characteristics, including a fingerprint, retina or iris image, or a voiceprint.

The SHIELD Act also amends the definition of a “breach of the security of the system” by providing that a “breach” includes incidents where private information was accessed, regardless of whether that private information was acquired.  Under New York’s current data breach laws, a breach occurs only when there was acquisition of the private information and excludes incidents involving mere access.  Employers should note that the SHEILD Act does include the “good faith employee” exception to the definition of “breach.”  When an employee, in good faith, accesses or acquires private information in conjunction with the purposes of the business and the private information is not subject to an unauthorized disclosure, the access or acquisition of the private information will not be considered a “breach.”

Requirements for Employers Under the SHIELD Act

While the SHIELD Act does not impose a specific list of safeguards that businesses and employers must comply with, the SHIELD Act does provide that a business that licenses or owns computerized data that includes a New York resident’s private information will be in compliance with the law if it develops, implements, and maintains reasonable safeguards to protect the security, confidentiality and integrity of maintaining and disposing of private information.  The following include some of the key reasonable safeguards that employers should implement to adhere to the law:

  • Designate one or more employees to coordinate the security program;
  • Identify reasonably foreseeable internal and external risks;
  • Assess the sufficiency of safeguards in place to control the identified risks;
  • Provide training and oversight for employees involved in the security program practices and procedures; and
  • Provide training to employees involved in the security program on the disposal of private information, after it is no longer needed for business purposes, by erasing electronic media, so that the private information cannot be reconstructed or read.

The SHIELD Act’s list of reasonable safeguards highlights the important role that a company’s human resources professionals and senior management must fulfill to comply with the new law.  A company’s human resources professionals and senior management should provide the required training of employees to implement the security program.  Further, they will be able to provide critical assistance to investigations of a data breach to determine whether the disclosure of an employee’s private information was inadvertent and, if so, whether it is likely that the private information will be misused.

Employers should note that two types of businesses may satisfy the reasonable safeguards requirement without having to implement a data security program as described above.  First, a business will be deemed compliant with the SHIELD Act if the business is in compliance with other laws requiring information security, such as the health Insurance Portability and Accountability Act Security Rule (“HIPPA”), the Gramm-Leach-Bliley Act (“GLBA”), or the New York State Department of Financial Services’ Cybersecurity Requirements for Financial Services Companies.  Second, a small business, meaning a business employing fewer than 50 employees and earning less than $3 million in gross annual revenue or earning less than $5 million in year-end total assets, is only required to ensure that their data security safeguards are appropriate when taking into consideration the size and complexity of the small business, the nature of the scope of the small business’s activities, and the sensitivity of the personal information collected from or about the small business employees.

The SHIELD Act also amends New York’s current existing data breach notification requirements, will take effect on October 23, 2019.  Since a “breach” will now consist of an unauthorized access to private information, regardless of whether any private information is acquired, an inadvertent disclosure of private information that is not likely to result in the misuse of information only requires the employer: (1) document its determination that the inadvertent disclosure is not likely to result in misuse; and (2) retain that documentation for a period of 5 years.  If the inadvertent disclosure involved private information of more than 50 New York residents, the employer must submit its documentation to the New York State Attorney General within 10 days of the employer’s determination.

Employers should also be aware that if their business is required to provide notice of a data breach under another regulatory scheme such as HIPPA or the GBLA, the SHIELD Act only requires that the New York State Attorney General, the New York Department of State, and the New York State Office of Information Technology Services be notified as to the timing, content and distribution of the notices of the breach and the approximate number of affected persons, and must provide a copy of the template of the notice sent to the affected persons.

Violations of the SHIELD Act

Although New York residents are not provided with a private right of action or the right to litigate a violation by a class action, the SHIELD Act does permit the Attorney General to bring an action against a business for violations of the law and may recover civil penalties.  Courts may award damages for actual costs or losses incurred by a person entitled to notice for data breach notification violations that are not reckless or knowing.  Courts may impose the greater of $5,000 or up to $20 per instances, with a cap of $250,000 for knowing and reckless violations.  Employers must also note they may incur penalties of up to $5,000 per violation for failure to comply with the reasonable safeguard requirements.

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How to End Workplace Bullying

In the wake of the growing #MeToo movement, many employers recently focused their efforts to implement anti-sexual harassment policies and procedures.  However, many employers fail to realize that their attention must also be placed on the related behavior to sexual harassment: workplace bullying.  Most forms of civil rights violations and discrimination, including sexual harassment, include bullying.  Like the effects that sexual harassment have on a company’s work environment, workplace bullying will likely lead to a decrease in employee morale, productivity, and efficiency, and an increase in employee attrition.  Hence, employers should develop policies and programs to eliminate workplace bullying.

Defining Workplace Bullying

In order to create a framework to prevent workplace bullying, employers must learn and understand what workplace bullying entails.  Although there are various forms of bullying, many forms of bullying may involve behaviors such as the following:

  • Making derogatory or intimidating comments towards an individual, their work, or their ability to perform their work;
  • Attempts to negatively impact an individual’s work, or prevent an individual from performing work;
  • Attempts to incite others to engage in the bullying of an individual; and
  • Spreading gossip or rumors designed to negatively impact an individual, or cause others to question that individual’s professionalism, capability, and skills.

Usually workplace bullying is verbal in nature rather than physical; the above list is far from comprehensive to describe what could be considered as workplace bullying.

Workplace bullying may be difficult to spot because the bully may take discreet actions to bully their target.  Examples of workplace bullying include the following:

  • During a meeting, an employee is continually interrupted or mocked by another individual who speaks over or belittles them, or the individual makes exaggerated facial expressions such as rolling their eyes to discourage the employee from participating in the meeting.
  • An individual aggressively berates another employee at a staff meeting or in a group e-mail.
  • An individual makes negative comments or disparaging jokes about another employee either whether the employee is present or not, and/or encourages other co-workers to do the same.
  • An individual who has the responsibility to delegate tasks to an employee deliberately chooses not to notify the employee of the task and deadline until such a time as the employee will be incapable of completing the work, likely causing the senior management or the boss to question the employee’s work ethic.
  • An employee is intentionally excluded from department or team meetings or events, to make the employee appear unimportant or disengaged.
  • An individual physically intimidates an employee by invading the employee’s personal space or disrespecting their privacy.

Employers should also understand that workplace bullying is likely to be repetitive and may escalate over time.  Victims of workplace bullying are made to feel powerless or too embarrassed to defend themselves or seek redress to end the bullying.  This is why employers must also implement an anti-bullying policy in the workplace.

Drafting an Anti-Bullying Policy

The only way an employer can protect its employees from workplace bullying is to adopt a robust anti-bullying policy that clearly sets forth that any form of bullying will not be tolerated and identifies and provides examples of unacceptable bullying behaviors.  The policy should also set forth procedures for how employees at any level may report incidents of bullying, even if the employee may want to report it anonymously.  An anti-bullying policy should include a framework where an employee may be able to bypass having to report the bullying in a specific sequence or up through a specific chain of command, if the bully in question is the victim’s direct supervisor or manager.  Further, employers should encourage an open-door policy for employees to report workplace bullying in a safe, supportive environment without penalty or judgment.

An effective anti-bullying policy will set forth the procedures for how an allegation of workplace bullying will be dealt with, including who will be responsible for investigating the complaint and what steps will be taken to investigate the complaint to promptly address the complaint.  The policy should also explain that if an investigation corroborates the allegation of bullying, immediate corrective actions will be taken to redress the bullying.  Additionally, the policy should explain the consequences and disciplinary steps that will be taken against the aggressor based on the severity, duration and scope of the bullying.

Providing Anti-Bullying Training

Implementing a policy is not enough to protect your employees.  All employees should be trained and educated on the nature of workplace bullying and how to recognize it – whether as a victim, witness, or bully, and how to report it.  Further, all managers and supervisors must be trained not only to recognize the signs of workplace bullying and how to respond to bullying complaints, but also be trained on effective management skills and techniques, since managers and supervisors may tend to display bullying behaviors as a result of their position.  The key to protecting employees from workplace bullying is to avoid a disrespectful and negative work environment and to establish and continually support a corporate culture that impedes the inclination to bully before the behavior can start.  Training all senior management, including all managers and supervisors, on anti-bullying in the workplace will begin to set a positive corporate culture that will trickle from the top of the company down to all employees.

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New York State Prohibits Discrimination Based on Hairstyle

On July 12, 2019, Governor Andrew Cuomo signed into law a bill amending New York State’s Human Rights Law by prohibiting racial discrimination based on “traits historically associated with race,” such as natural hair texture and hairstyles including, but not limited to, as braids, locks and twists.  The purpose behind this amendment is to remove an individual’s hairstyle from being used as a proxy for racial discrimination.  New York is now the second state, after California, to ban discrimination based on hairstyle.  This legislation piggybacks off of the New York City Commission on Human Rights’ ban on any workplace appearance or grooming policy that restricts, bans or limits natural hairstyles or hair textures associated with race. (Link to our article on NYC Deems Race Discrimination on the Basis of Hair is Illegal)

What does this mean for employers?  First, employers should note that they were already prohibited from engaging in any type of race-based discrimination.  This new amendment, which took immediate effect when signed into law, only codifies the connection between race and certain hairstyles that were common targets for discrimination.

Second, this new law does not prohibit employers from having a grooming or appearance policy in place.  However, in accordance with the new amendment, employers are not permitted to directly target hairstyles or natural hair textures that are traditionally associated with particular races through an appearance or grooming policy.  This means that employers must review their grooming and appearance policies to ensure that hairstyles commonly associated with a person’s racial identity, such as cornrows, locks, twists, Afros, fades, braids, or other hairstyles that are disorderly or inherently messy, are not prohibited.  In addition, any appearance or grooming policy must be uniformly applied among all employees and must have a valid, nondiscriminatory basis.

PMP is here to help with all employee handbooks and any appearance and grooming policies to make sure they do not conflict with this new law.

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How to Protect Against Employee Moonlighting

Do you suspect your employees are working a second job – and that it’s starting to affect the quality of their work at your company?  If you haven’t already run into this problem, it is likely your business will in the future.  When the cost of living is already so high and keeps increasing, even well-paying jobs may not be sufficient to cover all of an employee’s expenses.  As a result, employees are hard pressed to find solutions to provide the cash flow they need.  Struggling employees will often seek a second paying job to earn extra income to meet their needs.

Most of the time an employer is not informed that an employee is working a second job and the employer is surprised to learn that their employee is now juggling two jobs.  However, it most likely is not a surprise to the employer that something about the employee has changed, especially when the employee demonstrates a decrease in the productivity and quality of their work, the employee’s absences from work increase, and the employee begins to arrive late to work.

Can employers simply ban employees from taking a second job?  Unfortunately for employers, the answer is most likely no.  Most states have enacted laws affording individuals the right to work, which outweighs most adverse affects to employers.  Aside from adopting prohibitions barring employees from working for a competitor, starting a new business to compete with your business, or disclosing your company’s proprietary information or trade secrets, few employers want to implement policies that interfere with their employee’s off-duty activities due to potential violations of the National Labor Relations Act (NLRA) and state laws.

However, employers are not left without any means to protect their businesses against the detrimental effects of moonlighting.  Employers should create a legally complaint moonlighting policy that focuses on the issue of noninterference with your company instead of regulating employees’ off-duty conduct.  Specifically, the policy should focus on the employee’s job performance and the required work hours for the employee’s job.  The policy should set forth the expectation that the employee must first meet the demands of the current job, which could include covering others’ shifts or working overtime.  Further, an employee’s schedule and work assignments will not be altered to accommodate the employee’s duties for their second job.  The policy should also include a statement that permits employees to work a second job so long as the outside work does not negatively impact or interfere with the employee’s job performance.  The policy should also state the consequences an employee may face if their job performance suffers as a result of their responsibilities relating to a second job.

A moonlighting policy may also include provisions that prohibit employees from working a second job that creates a conflict of interest for your company.  Those provisions should include examples of what constitutes a conflict of interest.  For example, working for a direct competitor or soliciting customers from the primary employer to work for a competitor would qualify as a conflict of interest.

Employers may also want a provision requiring employees to provide notice prior to accepting a second job.  This notice requirement may alert employers to their employees’ financial difficulties that the employer may be able to help with, such as giving an employee additional work or approving overtime for the employee.  This may provide an incentive for the employee not to accept the second job and be able to contribute more towards your business’ success.  However, employers should note that employees should not be required to obtain approval prior to accepting a second job offer, since that can be viewed as the employer discouraging protected activity under the NLRA. Hence, the policy should also include a statement that this policy is not intended to discourage and will not apply to employees participating in any protected activity under the NLRA.

Contact PMP for help with drafting or revising your company’s moonlighting policy.

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Working On the Phone and Off the Clock: Everything Employers Need to Know

Does responding to a work email while shopping at the grocery store still count as work?  Almost always the answer is “yes.”  And those minutes will add up and cost employers thousands of dollars in legal fees for failing to pay non-exempt employees for that off-the-clock time.

Although technology has made it easier than ever for employees to work remotely, out of the office, and after hours, the ability for a non-exempt employee to work off-the-clock poses a very real threat to employers that can result in serious penalties.  While exempt employees do not have to keep track of their hours worked, non-exempt employees are required to report all hours worked and be paid overtime for all hours worked in excess of 40 hours in a workweek.  Although courts have held that an “insignificant period of time” spent working off the clock is to be considered de minimis and does not require employers to compensate non-exempt employees for that time spent working, the Fair Labor Standards Act (FLSA) regulations state that a non-exempt employee working as little as 10 minutes per day is not to be considered de minimis.  A non-exempt employee answering more than a couple of emails or taking a call longer than 10 minutes after hours may require those employees to be compensated.

Not only do employers risk FLSA lawsuits for failing to pay non-exempt employees for working off-the-clock, or to pay an overtime premium, employers may face Department of Labor (DOL) audits and investigations, or state agency audits and investigations, that may lead to hefty fines and large legal bills.  Even worse, employees can recover “liquidated damages,” which is equal to the amount the employee is owed in unpaid wages, and the employee can also recover their attorney’s fees.  Employees may also sue for unpaid wages on behalf of themselves and other employees similarly situated, which could lead to a possible class action under state laws or a collective action under the FLSA.

An employer’s liability in a lawsuit filed under the FLSA increases when employees are encouraged to respond to urgent email requests or frantic calls or text messages from managers.  If an employer is made aware of a non-exempt employee answering texts or emails after-hours, those employees should be compensated for their time.  However, employers should also note that ignorance is not an alibi and will not prevent a non-exempt employee from filing an action under the FLSA.

Fortunately, we have put together three tips to help employers protect against wage and hour claims.

  • Create and enforce a written policy regarding non-exempt employees working off-the-clock. This policy should explain when non-exempt employees are allowed to work overtime and must clearly set forth the procedure required for non-exempt employees to be authorized to work overtime.  The policy should also include provisions stating that an employee’s failure to adhere to the rules will result in a disciplinary action, ranging from suspensions up to termination.  However, employees must still be compensated for hours worked off-the-clock if the employer knew or had reason to know of the work.
  • Implement methods for non-exempt employees to track all work performed off-the-clock. Although the method of tracking time will depend on the industry and the technology available, it is important for employees to report the time they spend working after hours because an employer may not arbitrarily fail to count any portion, however small, of working time that employees are entitled to be paid.
  • Train supervisors and managers to avoid active or passive encouragement of non-exempt employees to work after hours. Educate managers and supervisors on the penalties for failure to pay for time worked and the amount of backpay and other damages employees may be entitled to should they bring an action against the employer.  Supervisors must also be instructed to enforce the policies regarding working after hours, and must not ignore when a non-exempt employee is working off-the-clock.  They must record the time the employee worked so they may be compensated for that time.  Willful violations of wage and hour laws will likely lead to steeper penalties.

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The Value of the Stay Interview

Employers strive to minimize employee turnover and want to retain top-performing employees and prevent those employees from quitting.  How can employers reduce employee turnover?  What makes high-performing employees want to leave a company?  How will an employer know if an employee is considering quitting their job?

The easiest way for employers to answer these questions is to simply ask employees directly in the form of a stay interview.  Employers should not assume they know what motivates their employees or why their employees are leaving and seeking alternative employment.  Normally, it’s too late to address employees’ concerns when the employer is only made aware at the exit interview of the employee’s reasons for quitting their job.  This is why the stay interview is in many ways a more valuable and powerful tool over an exit interview.  A stay interview can alert employers to problems that can be solved before their top-quality employees choose to leave their jobs.  Conducting stay interviews will allow employers to gain helpful insight as to the degree of employee engagement and satisfaction that exists within the company.  The stay interview is a fact-finding mission that enables employers to proactively take steps to improve their businesses and eliminate employees’ frustrations.  Unlike employee satisfaction surveys, a stay interview provides employers with the ability to ask clarifying and follow-up questions to truly understand employees’ current motivations or concerns.  Stay interviews will also help employers to build trust amongst their employees and demonstrate that the employer cares about their employees’ values and needs in the workplace.

Before conducting any stay interviews, employers should evaluate their company culture.  If the organization lacks a culture of trust and openness, employees may not be as truthful and may view these interviews warily.  Not only would these interviews be a waste of both the employer’s and employees’ time, employees’ answers will likely lead to ineffective changes that may result in top-performing employees leaving their jobs.  If the work environment lacks trust, employers should consider conducting team building and trust building exercises.  This will let employees know management cares about improving the culture of the company.  Once employers have built a foundation of trust and open communication in the workplace and have shown employees that management has successfully made improvements to the culture and workplace, they will then be able to conduct effective stay interviews.

How can employers use the stay interview to their advantage?  Begin with training managers on how to conduct the interviews and go over what questions should be asked.  Explain to the interviewers that these stay interviews are ways for them to effectively build trust with employees.  Teach the interviewers how to actively listen and engage employees in open-ended conversation.  Employers should note that it is worth spending the time to train managers and supervisors on how to conduct the interview if the training will result in a productive interview that informs employers on how they can improve their businesses.  It is important for managers or supervisors to conduct the interviews rather than Human Resources staff since a manager is most likely in the best position to make an impact on the employee’s daily working conditions.

Who should be interviewed?  It is important to evaluate which employees should be interviewed.  Employers should start by interviewing their top-performing employees to determine whether there are any issues or concerns that would cause those employees to look for new jobs.  This will allow employers to solve problems and address issues that come up in the stay interviews to decrease the chance that the employees making the greatest contributions to the company’s success will quit.  Employers should also consider interviewing recent hires.  Often, new or recent hires are more likely to turnover because they have less invested in the company.  It may be a good idea to interview recent hires who have had some time to acclimate to their new job and have been employed for at least six months.  This will allow employers to find out what can be done to improve newer employees’ workdays in order to increase employee retention and prevent employers from investing their resources, time and effort into training employees that will leave after one or two years.

What questions should be asked?  Start the interview by asking easy-to-answer, positive questions.  For example, begin the interview by asking about what the employee looks forward to every day at work.  Once the manager has “broken the ice,” they can start to ask tougher questions.  Some questions to help improve the employee’s workday include the following:

  • How can management/managers/supervisors support the employee better?
  • What kind of recognition or feedback would the employee like about their performance that they aren’t currently receiving?
  • What opportunities for self-improvement would the employee like to have that extends beyond the employee’s role?
  • What skills or interests does the employee have that management has not utilized to the fullest extent?
  • What has the employee felt good about accomplishing while working for the company?
  • Are there areas of frustration throughout the employee’s workday that could be improved?
  • What kinds of flexibility would be helpful to the employee in balancing their home and work life?
  • If the employee could change one thing about their job, department, or the company, what would it be?

Avoid asking closed-ended and yes-or-no questions, such as “are you happy working here?” or “are you earning enough money here?”  Employees always want to make more money and the simple yes or no answer to whether an employee is happy working for your company is useless to employers that want to decrease employee turnover rates.  Ask questions that provide meaningful insight as to the employees’ motivations and areas of the workplace that require improvement.  It is also important for the interviewer to make sure they are not treating the stay interview like a performance review.  Keep performance review discussions completely separate from stay interviews.

What should be done with the information collected after the stay interviews?  Employers should hold a debriefing session to provide the interviewers with the opportunity to discuss employees’ answers, looking for patterns throughout the company, and talk about ways to address common issues.  This will allow employers to determine the changes to be made on a company-wide basis and throughout individual departments.  Employers must not make light of how employees perceive the company or their specific departments.  Although you may disagree with employees’ views, the employees’ perceptions certainly impact their job performance.  Further, becoming defensive or trying to make excuses for issues brought to light during the stay interviews will only thwart your efforts to understand your employees’ motivations and levels of satisfaction.

Finally, employers must put in place methods to actually follow up on the information obtained from the stay interviews.  The only thing worse than expending the time and effort to conduct the interviews, is to completely ignore the employees’ answers.  When implementing changes as a result of the information gained in these interviews, be sure to communicate to employees that these changes were put in place to acknowledge their concerns and address the issues.  Employers should also set times to follow up with the employees interviewed to determine if the changes made increased employee motivation and minimized employee frustrations.

By conducting stay interviews, acting upon the information obtained in the interviews, and following up with employees to find out if the solutions implemented actually improved the workplace, employers are likely to increase their rates of retention of top-performing employees.

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What Business Owners Must Do to Ensure Your Non-Compete is Enforceable in New York

As a business owner, it is likely you have spent a number of years creating, developing, and fostering a formula to make your business highly competitive.  After expending such efforts to give your business its competitive edge, you want to protect your company’s from the threat of a former employee using stolen business methods to start their own business or to bring your company’s proprietary information to one of your competitors.  Many employers will have employees sign a non-compete agreement before they can start working in order to protect the company’s trade secrets and proprietary information.  However, there are many common mistakes made when drafting non-compete agreements that will render the contract unenforceable.

If a former employee brings a legal action seeking to void a non-compete agreement or if an employer seeks to enforce the agreement after learning the former employee violated it, a court will evaluate the non-compete agreement by taking into consideration the following factors:

  • Is there a legitimate interest the employer is trying to protect with the non-compete agreement?
  • Does the non-compete agreement include a geographic restriction? What is the scope of the geographic restriction?
  • Does the non-compete agreement include a temporal restriction stating how long the agreement will last?
  • Does the non-compete agreement preclude the employee from performing a different type or scope of work from what they were hired to do by the employer?
  • Does the employer provide any consideration, such as additional benefits or compensation, in return for having the employee sign the non-compete agreement?
  • Was the employee terminated without cause or did the employee voluntarily resign?

Business owners must understand that New York maintains a strong public policy that individuals have the right to pursue livelihood and work.  A non-compete agreement will not be enforced if the only purpose is to simply restrict competition.  A company’s non-compete agreement must further the employer’s legitimate goal, such as protecting customer lists or other specified confidential knowledge the employee gained only while working for the business that would inevitably be used to benefit a competitor.

Under New York law, a non-compete agreement will only be enforced if: (1) the scope of the agreement is no greater than is required to protect the employer’s legitimate interest; (2) the agreement does not impose an undue hardship on the employee; and (3) the agreement is not injurious to the public.  Courts will weigh the factors stated above when determining whether a non-compete agreement is enforceable.

There are a variety of reasons why a court would render a non-compete agreement unenforceable.  One common reason non-compete agreements are found unenforceable arises when the agreement causes undue hardship to the employee because it lacks a reasonable geographic and temporal scope in relation to the information the employer is trying to protect.  A non-compete agreement will likely be enforced to the extent it is necessary to prevent an employee’s disclosure or solicitation of trade secrets, to prevent an employee’s use of the employer’s confidential customer information, or where the services performed by the employee were deemed unique or special to the employer.

For example, it is unlikely a non-compete agreement would be enforceable where it includes a broad geographic restriction spanning an entire state, if the duration of the restriction is to last more than one or two months.  This restriction would cause the employee an undue hardship because it would essentially cause the employee to move to another state in order to find a job.  It is also unlikely a court would hold an agreement to be enforceable where the geographic restriction prevents the employee from working in a region where the employer does not conduct business.  If the employer does not do business in the region where the employee is restricted from working, the agreement does not seek to protect the employer’s interest.

Reasonable restrictions may be enforceable when the employer is clearly trying to restrict the employee from using trade secrets, proprietary information, or specialized information to which the employee was only exposed to because of their employment, and that is not generally known in the industry.  In addition, the geographic and time restraints must be reasonable in relation to the information sought to be protected.  Reasonable geographic and time restrictions will depend on the industry of the company and existing state precedent.  In New York, reasonable time restrictions have been found to range from six months to two years.  A reasonable geographical restraint will generally be enforced on a case-by-case basis, and requires the court to consider the length of the temporal restriction and the activities the employee is restricted from performing.

It is also important whether the employee voluntarily resigned or was terminated without cause.  When an employee’s employment is terminated without cause due to downsizing or operational restructuring, the employee should not be restrained from seeking new employment, as that squarely violates New York’s public policy.  An essential trait of a non-compete agreement is that the employee has the choice to leave their job when the employer is still willing to continue to employ the employee.

Not all non-compete agreements will be deemed unenforceable when the court finds a defect relating to a geographic or time restriction.  In many instances, courts may “blue pencil” the agreement to limit the geographical area, decrease the duration of the agreement, and reduce the scope of the employee’s restricted activity in order to make the agreement enforceable.  However, courts are not required to blue pencil an overly-broad agreement.  Hence, the agreement may include a “blue pencil clause.”  This clause would state the parties intend that the agreement will be enforced to the maximum extent permitted by law, and that should a reviewing court find the agreement is overbroad, the court may blue pencil the clause to make the agreement enforceable.

One exception to the requirement that a non-compete agreement must be reasonable is when the employee chooses not to compete and in return, receives certain contractual benefits, including deferred compensation and benefits.  However, when the employee is terminated without cause, the employer has already made the decision for the employee and any non-compete agreement the employer tries to enforce will likely be found to be unreasonable.

Employers should thoroughly review their non-compete agreements to ensure that they are reasonable in duration, geographic scope, and aim to reasonably protect the employer’s legitimate interest.

PMP is available to review or create your non-compete agreements.

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‘Trans-form’ Your Workplace to be More Inclusive of Transgender and Non-Conforming Employees

Although employers don’t intentionally create a hostile work environment for transgender and non-conforming (TGNC) employees, often the outcome is a hostile work environment due to a lack of understanding and education.  Many TGNC employees experience unnecessary barriers that make working harder than it needs to be on a daily basis.  When it comes to any marginalized group such as TGNC employees, true inclusion does not arise from creating a more diverse workplace; it’s about ensuring the organization treats all employees equitably when it comes to employees everyday work experiences.  Here are 9 simple ways to make your workplace more inclusive of TGNC employees.

  1. Don’t make TGNC employees educate you. Whether you’re a manager, supervisor or co-worker, you must understand that it is not the responsibility of a visibly TGNC employee to answer your questions about all things TGNC despite the fact that you have good intentions behind your curiosity. It is important to respect all employees’ privacy.  If your organization is looking to become more TGNC-inclusive, consider hiring a TGNC person as a diversity consultant.  Other ways to educate yourself and your employees is to build TGNC examples into sexual harassment or respectful workplace training.  Including TGNC examples in how your company trains its employees by clearly communicating how you expect your employees to behave that will pave the way to make the workplace more inclusive.
  2. Try to become gender neutral in all aspects of the workplace. Moving towards gender neutrality will create a workplace where people of all genders can authentically express their gender identities. Using more inclusive language in employee handbooks and notices, such as “people of all genders” or simply “employees” as opposed to binary language, such as “men and women,” is another way to impose gender neutrality in the workplace.  Additionally, employers should revise dress codes to avoid gender stereotypes.  If your company’s uniforms must have a “male” or “female” version, let employees dress according to the gender they identify with, or provide a gender-neutral option that all employees are permitted to wear.
  3. Acknowledge and use the employee’s preferred name, gender, and pronoun. To the greatest extent possible, company directories, email addresses, and business cards should include the employee’s preferred name and gender. When addressing a TGNC employee, employers, supervisors and co-workers should also use the employee’s preferred pronoun and avoid misgendering.  Misgendering occurs when you call a TGNC person by their old name after they changed their name, or using pronouns that don’t match the TGNC person’s chosen gender identity.  Employers may want to offer the option of including the employee’s preferred gender pronoun in their email signature to let others know of their preferred gender pronoun.  Employers should also establish ways to deal with a discrepancy on any legal documents and do the best they can to use the employee’s preferred name, gender, and pronoun.  It might be easier to think about the information your company really needs for documentation purposes, and to refer to an employee’s legal name only when necessary.
  4. Respect everyone’s confidentiality and privacy. All supervisors, managers, colleagues and co-workers should understand that it is obviously inappropriate to ask a TGNC employee about their transitioning or surgical status. Although it may be an intriguing topic to discuss, employees must understand TGNC people are in no way obligated or expected to disclose their personal information to you.  Should a TGNC employee choose to share their personal information with a supervisor, the supervisor should have the conversation in a private place where the TGNC employee may speak freely.  Supervisors and managers should make sure they do not disclose their personal feelings on the topic, and to take care not to share any private details, including medical decisions, that the TGNC employee did not authorize to be heard.
  5. Model an inclusive and safe work environment. Creating a safe and more inclusive workplace simply requires employers, supervisors, and managers to think about how they talk about marginalized or minority groups. One way to do this is to always assume there is a TGNC person in the room and to make sure all conversations involving TGNC people or any other minority is respectful and appropriate for the workplace.  The way a supervisor or manager speaks about a certain group of people sets an example for employees to follow.
  6. Plan for transitions before they happen. Implementing policies and procedures to help employees who transition on the job can relieve a lot of anxiety and reduce the amount of speed bumps for the employee. Developing clear guidelines for supervisors and managers to support an employee going through a transition is necessary.  Supervisors should be instructed to start by listening and let the employee guide the conversation.  Managers and supervisors should express their willingness to help develop and brainstorm ways in which you can support them throughout this process.  It might mean that you communicate the necessary information to others on behalf of the employee with their permission, or you help the employee come out to a small number of coworkers as necessary.  Supervisors can let the employee know that there are set procedures for how employment records are changed and how their transition is communicated to staff that are required to be notified.
  7. Allow employees to use their preferred-gender restroom. To ensure an inclusive workplace, allow TGNC employees to use gender-segregated restrooms that correspond to their gender identity. Other options may include permitting employees to use gender-neutral single-occupancy restrooms.  Any unnecessary bathroom restriction can result in an employee avoiding using the restroom at work, which is dangerous and unhealthy.  Any way to help alleviate anxiety for TGNC employees will significantly improve conditions in the workplace.
  8. Include TGNC employees in decision-making involving TGNC staff. It is shocking how many employers will create TGNC policies without consulting their TGNC employees. It should come as no surprise that a policy will likely be ineffective when that policy is developed by those it does not affect or apply to.  It may be a good idea for employers to enlist outside expertise from TGNC groups for guidance and direction when drafting policies or making decisions involving TGNC employees.
  9. Adopt, display and follow through with a formal non-discrimination policy. To assure employees and customers know that your company seeks to create an inclusive work environment, develop a formal non-discrimination policy and display it proudly in the workplace and on your company website. Such policies let all marginalized groups, including TGNC individuals know that they are welcome to apply for employment without fear of discrimination and that employees may show up to work every day without fear of harassment or discrimination.  Displaying the policy can serve as a reminder of how all employees are expected to treat one another and that there are severe repercussions for violating the policy.  To ensure everyone adheres to this non-discrimination policy, employers must consistently enforce this policy.  Although an employee’s concern may seem insignificant or appear to indicate that a minor mistake was made, one incident may be indicative of a larger problem.  Take and investigate all concerns and complaints seriously in order to maintain a safe and inclusive environment for all employees.

Take and investigate all concerns and complaints seriously in order to maintain a safe and inclusive environment for all employees.

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New York’s Suffolk County Imposes Salary History Ban Takes Effect June 30, 2019

On November 20, 2018, the Suffolk County Legislature passed the Restrict Information Regarding Salary and Earnings Act (“RISE” Act) by a vote of 17-0.  As stated in the RISE Act’s legislative intent section, the New York State Department of Labor (NYSDOL) issued a report in April 2018 which found that women in Suffolk County earn 78.1% of what their male counterparts earn, compared to the State-wide percentage of 86.8%.  Since employers often use salary history to determine a prospective employee’s wages or salary, an applicant’s prior salary can thus perpetuate the inequitable pay scale that women face with each successive job.

The RISE Act aims to close the pay gap between men and women by restricting employer’s access to a potential employee’s salary history.

Effective June 30, 2019, employers with four (4) or more employees in Suffolk County may not:

  • Inquire, in any form of application or otherwise, about a job applicant’s wage or salary history, including but not limited to, compensation and benefits.
  • Rely on the salary history of an applicant for employment in determining the wage or salary amount for such applicant at any state in the employment process including the offer or contract.

Suffolk County employers should note that the RISE Act expressly excludes any actions taken that are (1) pursuant to any federal, state or local law which requires the verification or disclosure of an applicant’s salary for employment purposes, or (2) pursuant to a collective bargaining agreement.

Violations under the RISE Act may result in an award of compensatory damages to the individual, payment to the County general fund, and civil fines and penalties in an amount not to exceed $50,000 ($100,000 if the violation is found to be willful, wanton or malicious).

What must employers do to ensure their pre-employment practice comply with this new legislation?  It is a good idea to instruct hiring managers not to engage in any discussion involving an applicant’s compensation history during the interviewing process.  Additionally, employers should review all job application forms to determine that their hiring practices do not require applicants to submit any information regarding their salary history.  Employers should also verify that their procedures to check references of job applicants do not result in obtaining an applicant’s salary history.

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Protect Your Company By Playing It Safe When Hiring Interns

As we enter into the start of summer, college students now begin their summer internship programs. It is time for employers and businesses to review their internship program policies. College students rely on summer internships to gain valuable professional experience and in exchange, companies provide unpaid internships as an opportunity to let students learn from behind the scene and get a foothold into a new industry. But is an unpaid internship legal?

Employers must ensure when creating an internship program without providing compensation that they comply with local, state and federal laws governing whether participants of their unpaid internship programs are interns or employees. Here’s how you may determine if your business’ unpaid internship program is legal.

As of January 2018, the U.S. Department of Labor (DOL) announced its switch from the old six factor test to the new primary beneficiary test to determine if an intern for a private sector for profit business is considered an employee under the FLSA. The primary beneficiary test includes seven flexible elements that will be applied to each case individually. The seven elements of the primary beneficiary test include:

1. Whether the intern and employer clearly understand there is no expectation of compensation. If there is any promise of compensation, whether expressed or implied, it suggests that the intern is an employee.
2. The degree to which the internship program provides training as would be comparable to that which would be provided in an educational environment, including hands-on and clinical training provided by educational institutions.
3. If the internship is connected to the intern’s formal education institution by receiving academic credits or the integration of coursework.
4. If the employer accommodates the intern’s academic commitment by following the academic calendar.
5. Whether the length of the internship program is limited to a period in which the program provides the intern with beneficial learning.
6. The extent to which the work the intern performs complements rather than displaces the work paid employees perform, while affording significant educational benefits to the intern.
7. If both the employer and intern understand that the internship program will be conducted without leading to a job offer once duration of the internship has expired.

How are these elements applied? Under what circumstances under the FLSA will the internship not be compliant, if it doesn’t meet all factors? If it does meet some, but not all? Employers should note that no single factor of this test is determinative, but the core issue to decide whether an intern would be deemed an employee under the FLSA is whether the internship program is primarily benefitting the student or the employer.

New York has also enacted separate criteria in addition to the federal standards to determine whether an intern working for a for-profit business is subject to the New York State Minimum Wage Act and Wage Orders. Generally, an intern will only be considered exempt from the requirements of Minimum Wage Act and Orders if the intern is not in an employment relationship. Under New York labor standards an employment relationship does not exist if all of the following criteria are met:

1. Although the training includes actual operation at the employer’s facilities, the training the intern receives must be similar to training provided in an educational program (e.g., the program builds on a classroom or academic experience, not the employer’s operations; the intern is not performing routine work of the business on a regular basis and the business does not depend upon the work of the intern).
2. The training must be for the benefit of the intern and any benefit to the employer must be merely incidental.
3. The work the intern performs does not displace regular employees and the intern works under close supervision (e.g., intern’s job shadows an employee to learn certain functions, under the constant supervision of regular employees). It should be noted that interns will be viewed as employees if the business would need to hire more staff or require existing employees to work more hours to do the interns’ work.
4. The activities of interns do not provide an immediate advantage to the employer and on occasion, the employer’s operations may actually be impeded.
5. The intern is not necessarily entitled to a job once the internship has ended and the intern is free to accept a job elsewhere in the same field.
6. Interns must be notified in writing, prior to the start date of the internship, that they will not receive any compensation and are not considered employees for minimum wage purposes.
7. All clinical training is performed at the direction and under the supervision of people who are experienced and knowledgeable of the activity.
8. Interns cannot receive employee benefits including, but not limited to, health and dental insurance, retirement or pension credit, and free or discounted goods and/or services from the employer.
9. The training is general and will prepare interns to work in any similar business. The program may not be specifically designed for a job with the employer that offers the program.
10. The employer’s screening process for accepting interns into its program is not the same as for employment and does not appear to be for that purpose. The screening may only use criteria relevant for admission to an independent education program.
11. Any postings, solicitations, or advertisements for the internship must clearly discuss training or education, instead of employment, although an employer may indicate a qualified graduate may be considered for employment.

Essentially, if employers still want to proceed with an unpaid internship program, they must make sure the program includes a strong educational component. Employers must understand that merely being associated with a university or other institution of education does not make an unpaid internship legally sound.

Here are some key tips employers must consider if they choose to offer an unpaid internship program:

1. Create a formal internship program that includes scheduled start and end dates.
2. Institute a method to maintain a record of the hours worked.
3. Be certain the internship program is not merely a substitute for paid, regular employees or as a trial period.
4. Include in all posting, advertisements or solicitations that applicants eligible for college credit are preferred.
5. Provide an offer letter in writing to the intern stating the internship is unpaid and that a job is not guaranteed.

Be sure to review and update your company’s policies regarding unpaid internship programs to be certain they comply with federal and state standards.

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