By Catherine I. R. Pontoriero, Esq.
Once again this year, legislators in New York and New Jersey have implemented many new and expanded protections for employees and obligations for employers. Laws and regulations impacting the employer-employee relationship in 2024 have been enacted in several key areas, including: wages, non-compete agreements, hiring, use of social media and artificial intelligence, termination, classification of employee and employer status, and new and expanded obligations regarding workers with certain protected characteristics. To ensure that your company is in compliance with these important changes for the new year, we suggest following this “to-do” list as we end 2023 and ring in 2024:
1. Ensure wages meet new thresholds.
The minimum wage will increase in New Jersey and New York effective January 1, 2024.
- New Jersey’s minimum wage will increase from $14.13 to $15.13 per hour for most non-exempt employees. In addition, the minimum wage will increase from $12.93 to $13.73 per hour for seasonal and small employers with fewer than six employees, from $12.01 to $12.81 per hour for agricultural employees, and from $17.13 to $18.13 per hour for long-term facility staff. Tipped employees will receive a higher tip credit in the new year – from $5.26 per hour with a $8.87 tip credit to $5.26 per hour with a $9.87 tip credit.
- In New York, the minimum wage will increase from $15 to $16 per hour in New York City and Nassau, Suffolk, and Westchester counties and from $14.20 to $15 per hour in the rest of the state.
And these increases are slated to continue in future years. As part of the FY 2024 Budget agreement, New York’s Governor Hochul stated that the minimum wage would increase by an additional $0.50 per hour in 2025 and 2026, and that, effective January 1, 2027, New York will increase the minimum wage at a rate determined by the Consumer Price Index. New Jersey already re-evaluated its minimum wage annually based on the Consumer Price Index.
Governor Hochul also recently amended the New York Labor Law (“NYLL”) to increase the $900 per week threshold for exemption from wage payment protections, such as pay frequency rules requiring employers to pay wages at least semi-monthly on regular paydays and cash payment requirements prohibiting employers from depositing wages in the bank without employees’ advance written consent. As of March 13, 2024, employees who earn less than $1,300 per week will be entitled to NYLL wage payment protections. For more information, see our prior eAlert HERE.
Employers also should be aware of the federal government’s proposed rule raising the minimum salaries workers must receive to qualify for exemption from wage and overtime rules under the Fair Labor Standards Act (“FLSA”). The proposed rule – discussed more fully HERE – would increase the standard salary level to $1,059 per week ($55,068 annually), extend this standard salary level to workers in certain U.S. territories, increase special salary levels, and increase total annual compensation for Highly Compensated Employees to $143,988. The proposed rule automatically would update the earnings thresholds every three years based on data available at that time. Although the rule was expected to become final at the end of the comment period in November, the DOL received over 33,000 comments, delaying the expected issuance of the final rule to April 2024.
Employers should evaluate their payment policies and structures to ensure employees are being paid in accordance with minimum wage requirements and be ready to comply with the new thresholds for federal overtime exemptions and exemption from New York wage payment protections, as applicable.
2. Verify that your company is properly paying employees to avoid significant new penalties.
As we reported earlier this year HERE, failure to pay the appropriate minimum wage or overtime is now included in the crime of larceny under the New York Penal Code. While New Jersey does not define wage theft as larceny, employees may be able to recover liquidated damages of 200% in addition to the original wages owed under New Jersey’s Wage Theft Act. These developments underscore the importance of reviewing your pay practices (and checking them twice).
3. Evaluate your non-compete restrictions in light of federal and state laws that disfavor such provisions.
Employers intending to enter or enforce non-compete provisions should be mindful of the national trend toward limiting those provisions. As we have previously reported (HERE and HERE), the federal government along with a growing number of states, including New York, have either restricted or proposed legislation restricting non-compete agreements.
- The federal government disfavors noncompetes and is actively seeking to prohibit them. In January 2023, the Federal Trade Commission (“FTC”) issued a Notice of Proposed Rulemaking, which prohibits employers from entering non-compete agreements and acts retroactively to rescind existing agreements. There is one limited exception for non-compete agreements related to the sale of a business entity or its assets. Fortunately for employers, the Notice does not include a private right of action. The FTC is expected to vote on the rule’s final version in April 2024. In February 2023, a bipartisan coalition reintroduced the Workforce Mobility Act, which prohibits non-compete agreements with two exceptions: (1) the sale of goodwill or an ownership interest; and (2) a partnership dissolution or disassociation. Unlike the FTC, the Act includes a private right of action. The legislation is still in committee. On May 30, 2023, the General Counsel of the National Labor Relations Board (“NLRB”) stated that the proffer, maintenance, and enforcement of non-compete provisions violates the National Labor Relations Act (“NLRA”) because non-compete agreements interfere with employees’ rights to organize, bargain collectively, and seek other employment opportunities. There are three limited exceptions: (1) agreements restricting only managerial or ownership interests in a competing business; (2) agreements restricting independent-contractor relationships; and (3) agreements that are narrowly tailored to address special circumstances justifying infringement on employees’ rights.
- In June 2023, the New York State legislature passed S3100A and A1278B, which invalidate non-compete agreements signed or modified after the bill’s effective date. In November 2023, Governor Hochul publicly stated that she supports limiting the use of non-compete agreements for low and middle-income workers earning up to $250,000, thereby giving them job flexibility and mobility. On December 12, 2023, lawmakers delivered the bill to the Governor for approval without amendments. This action triggered a 10-day period for the Governor to either veto the bill or sign it and negotiate chapter amendments. See our eAlert HERE for more information on the law. We will continue to monitor this law for any updates.
These federal and state challenges to non-compete agreements clearly demonstrate that employers should exercise caution when entering into or attempting to enforce non-compete agreements and may want to take inventory of existing non-competes. NFC would be happy to assist your business in navigating the non-compete legislation in your jurisdiction to ensure you are in compliance.
4. Establish a process to comply with pay transparency and other laws impacting recruiting.
Employers looking to hire in 2024 should be mindful of the national trend toward pay transparency in job postings as well as New York-specific legislation on pay transparency, social media, and artificial intelligence (“AI”).
- Regarding pay transparency, to date, eight states have enacted pay transparency legislation (California, Colorado, Connecticut, Maryland, Nevada, New York, Rhode Island, and Washington), with Hawaii and Illinois joining the fray on January 1, 2024, and January 1, 2025, respectively. Both the Massachusetts House of Representatives and Senate recently passed similar bills on pay transparency. In addition, several cities and counties, including New York City, require pay transparency. New York State’s amended pay transparency statute went into effect on September 17, 2023. The statute – discussed more fully HERE and HERE – provides that employers with four or more employees must disclose: (1) compensation or range of compensation; and (2) a job description, if one exists, with any advertisement for a job, promotion, or transfer opportunity. Importantly, the amendment applies these requirements to individuals working outside of New York because the statute applies to advertisements for jobs, promotions, or transfer opportunities that will physically be performed, at least in part in New York, or physically performed outside of New York but report to a supervisor, office, or worksite in New York. In light of this amendment and the national trend toward pay transparency, employers should have a plan in place to comply with these laws, including updating job descriptions and ensuring ranges of compensation are accurate.
- Employers should review their social media policies and procedures as well as the application process to ensure compliance with recent legislation. For example, as of March 12, 2024, New York employers will be prohibited from requesting or requiring an applicant or employee to disclose the user name, password, or other access information for personal accounts, such as social media accounts, as a condition of hiring or employment or for use in disciplinary action. It is also recommended that employers review electronic communications policies to ensure they give employees proper notice of the employer’s right to access certain employee accounts and devices. For more information, see our prior eAlert HERE.
For employers in New York City, Local Law 144 concerning AI and its use in hiring and employment decisions went into effect on July 5, 2023. AI, such as resume screening software, automatic scoring of applicant ability tests, and performance evaluation metrics, is permissible in New York City only if the employer conducts an impartial bias audit via an independent auditor to assess the tool’s disparate impact on protected characteristics within one year prior to use and meets certain publication and notice requirements. See our eAlert HERE for more information on this new law. Similar bills have been introduced in New York State (S07623) and in New Jersey (A4909/S1926).
5. Implement new Form I-9 documents and procedures.
During the pandemic, the Department of Homeland Security and U.S. Immigration & Customs Enforcement suspended the requirement that identity and employment eligibility documents on Form I-9 must be physically examined. As of August 1, 2023, employers may either physically examine Form I-9 documents or, alternatively, conduct remote verification electronically with a live video call interaction. However, only employers enrolled and in compliance with the E-Verify program may use this alternative method. Employers must complete remote verification within three business days of an employee’s start date. For more details on the remote verification process, see our eAlert HERE. Additionally, as of November 1, 2023, employers are required to use the new simplified Form I-9 (available HERE), which includes a checkbox for employers to indicate that they examined the documents using the alternative method.
6. Consider new WARN Act protections in planning large layoffs or shutdowns.
In the coming year, it will be important for New Jersey and New York employers to be aware of their obligations relating to large layoffs because both states increased their WARN protections in 2023.
- Significant revisions to New Jersey’s mini-WARN Act became effective on April 10, 2023. See our eAlert discussing the amendments HERE. In sum, New Jersey’s mini-WARN Act is triggered if an employer with 100 or more employees, regardless of full- or part-time, terminates 50 full- or part-time employees in New Jersey during a 30 day period. Under the new amendments, the employer must (1) notify employees 90 days in advance; and (2) provide affected employees with mandatory severance of one week of pay per year of service, plus four additional weeks if timely notice is not given.
- As we reported HERE, New York State’s new WARN Act regulations became effective in June 2023. New York’s law applies to employers with only 50 or more employees; those employers must provide 90 days written notice of a triggering event, such as a mass layoff or closure. New York now requires that electronic notice be provided to affected employees, employee representatives, local government elected officials, school districts, and emergency services where the affected employment site is located. Unlike New Jersey which only recognizes a natural disaster exception, New York provides exceptions to the 90-day notice requirement for faltering companies (i.e., plant closings) and public health emergencies.
All employers contemplating a reduction in force, sale of the business, plant shutdown, or other major workforce change in 2024, should seek legal counsel in advance for guidance on navigating these tricky notification obligations.
7. Review template severance and settlement agreements.
Template agreements should be reviewed in light of McLaren v. Macomb and amendments to New York’s General Obligations Law.
- In February 2023, the NLRB found that overbroad confidentiality and non-disparagement clauses in severance agreements violated the NLRA because they interfered with, restrained, or coerced employees’ exercise of their Section 7 rights. More specifically, the NLRB found that the clauses at issue were unlawful because they prohibited the employee from discussing the terms of the agreement with former coworkers or the union and failed to narrowly define disparagement as maliciously untrue statements that are unrelated to labor practices, wages, hours, or working conditions. See our February eAlert HERE for more details on the NLRB’s decision in McLaren v. Macomb.
- In March, the NLRB’s General Counsel issued a guidance memorandum, discussed in more detail HERE, which broadly applied the reasoning in McLaren to any overbroad statements in agreements with current and former employees and to communications with employees.
Although McLaren is currently under appeal in the Sixth Circuit, employers should review their template agreements to ensure they do not contain any overbroad provisions that would affect employees’ rights to engage with one another and consider whether to narrow or remove any confidentiality or non-disparagement provisions.
- Additionally, as we reported HERE, new amendments to Section 5-336 of the New York General Obligations Law became effective on November 17, 2023. Now, employers are prohibited from requiring confidentiality of the underlying facts in both settlement agreements and separation agreements involving harassment and retaliation claims as well as discrimination. And, a release is unenforceable if the agreement includes a requirement: (a) that the individual pay liquidated damages if they violate a non-disclosure or non-disparagement clause; (b) that the individual forfeits all or part of the consideration for violating a nondisclosure or non-disparagement clause; or (c) of an affirmative statement, assertion, or disclaimer that the individual was not subject to discrimination, harassment, or retaliation. Individuals can waive the 21-day consideration period as long as they were given 21 days to consider the non-disclosure clause. Employers should work with counsel to review their template agreements to ensure they are in compliance with this law.
8. Understand new obligations regarding unemployment.
In the last year, employers’ unemployment obligations have changed in New Jersey and New York.
- In July 2023, new amendments to New Jersey’s Unemployment Compensation Law took effect. These amendments – discussed more fully HERE and HERE – require New Jersey employers upon separating employees to: (1) complete Form BC-10 and electronically submit it to the Division of Unemployment and Temporary Disability Insurance (“Division”) as well as send it to the employee; and (2) submit a new form, which has not yet been issued, containing benefit determination information to the Division. Employers must submit both items to the Division regardless of whether the separated employee chooses to apply for unemployment benefits. Guidance on new forms and what exactly must be submitted (and how to properly submit) is still forthcoming. The amendments also impose new deadlines and increase the penalties for failing to comply with the law.
Because the infrastructure associated with this new law is still in the development phase, we suggest that employers register for NJDOL’s Employer Access online service now and be aware that at some point in 2024, they will have to comply with the obligations set forth in the amendments. While the BC-10 form is available on the website, employers do not have to send a completed form to the Division at this time; rather, employers must only provide the Division with the date the employee’s unemployment will begin.
- As previously reported HERE, New York expanded employers’ obligations regarding when employees must receive notice of their eligibility for unemployment benefits effective November 13, 2023, to require written notice of employees’ right to file for unemployment benefits within five days of termination of employment, reduction of scheduled working hours, temporary separation, or any interruption of continued employment that results in total or partial unemployment.
9. Evaluate potential joint employer relationships.
The NLRB’s new joint employer rule will go into effect on February 26, 2024, and applies to cases filed after that date. It provides that two entities are joint employers if: (1) each entity has an employment relationship with the employees; and (2) they share or codetermine one or more of the employee’s essential terms and conditions of employment, which are: (a) wages, benefits, and other compensation; (b) hours of work and scheduling; (c) assignment of duties to be performed; (d) the supervision of the performance of duties; (e) work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; (f) tenure of employment (hiring, discharge, etc.); and (g) working conditions related to safety and health of employees. Once an entity is considered a joint employer because it controls one or more essential terms or conditions of employment, it must bargain with unions over those terms or conditions of employment and all other mandatory subjects of bargaining over which it exercises control. This law will likely impact franchisors and end-users of staffing firms; therefore, those employers especially should consult with counsel and learn what impact joint employer status may have on their business and their relationship with their workforce.
10. Update employee handbooks and other workplace policies.
Ringing in the New Year is always a good time to check in on employee handbooks and other policies in light of recent legislation.
- First, there are new federal and state protections for pregnant and nursing mothers. On the federal front, the Pregnant Workers Fairness Act (“PWFA”) became effective on June 27, 2023. This legislation requires employers with 15 or more employees to provide reasonable accommodations to qualified applicants or employees who communicated that they have a physical or mental condition related to pregnancy or childbirth unless such accommodation would impose an undue hardship on the business. Under the PWFA, employers must engage in the same good faith interactive process as under the Americans with Disabilities Act. See our eAlert HERE for more information on the PWFA. Employers are still awaiting finalized regulations on the PWFA, which are expected by year-end. For New York employers, amendments to the Nursing Mothers in the Workplace Act went into effect on June 7, 2023. The statute – discussed more fully HERE and HERE – requires all New York employers to provide reasonable unpaid break time to express breast milk for up to three years following the birth of a child. The amendments set forth lactation room requirements and mandate that all employers have a lactation accommodation policy.
- Second, as of November 2023, height and weight are now protected characteristics under the New York City Human Rights Law. See our eAlert HERE. The law prohibits discrimination based on actual or perceived height or weight in employment, public accommodations, and housing. Employers may take height and weight into account, however, when it is required by law, when a person’s height or weight could prevent performing the essential requirements of a job, or where consideration of height or weight is necessary for executing an employer’s normal operations. Stay tuned as New York State and New Jersey similarly have pending legislation prohibiting height and weight discrimination.
- Third, for New York State employers, Governor Hochul recently signed several laws that create new policy considerations for 2024. As we reported HERE, in April 2023, New York State issued an updated Model Sexual Harassment Policy and training materials. The model policy emphasizes that in order for an employee to have suffered sexual harassment in the workplace, the conduct at issue does not need to be severe and pervasive; rather, it merely has to rise above the level of “petty slights” or “trivial inconveniences.” The model policy includes a new section on bystander intervention and examples of sexual harassment on virtual meeting platforms. The updates to the Model Training materials mirror the Model Sexual Harassment Policy. New York employers should review their current policies and training materials to ensure they comply with the updated models.
- In August 2023, New York State amended the New York State Human Rights Law relating to discrimination against interns to include gender identity or expression as a protected characteristic. (See our prior eAlert HERE.) Employers who hire interns should be aware of this protection when hiring and in setting terms and conditions of employment.
- Last, in November 2023, Governor Hochul signed an important piece of legislation – the Freelance Isn’t Free Act, which requires employers to provide written contracts and wage protections to freelance workers, who are hired as independent contractors to provide services equal to or greater than $800 (either in a single contract or for work within the preceding 120 days). This law will go into effect on May 20, 2024, and apply to contracts entered on or after that date. See our prior eAlert HERE for more information on this new law. New York employers who hire freelance workers should consult with counsel to ensure they are prepared to comply with this law.
Employers in all jurisdictions should confirm their policies and handbooks are up to date for 2024. Feel free to reach out to NFC if you would like our assistance updating your handbook in the new year.
11. Update physical and electronic postings and send required notices.
Employers should ensure that they have the most current federal, state and local postings available and are providing such postings to employees in all required manners. For example, in New York, employers now must inform employees of their rights under the law prohibiting mandatory captive audience meetings by posting a sign in each workplace in a location where notices are normally posted. See our prior eAlert HERE for more information on this legislation. With the ever-increasing number of remote workers, employers should not forget about sending information that typically would be posted in the office.
12. And, last but certainly not least, don’t forget to ring in the New Year by scheduling trainings!
This is a reminder to schedule trainings, especially for supervisors and managers, on any updated company policies. In addition, employers should ascertain whether they are subject to mandatory anti-discrimination and harassment training (see our guidance on jurisdictions requiring training HERE) and ensure those annual trainings are met. Even where training is not mandatory, it is recommended as an important tool to address, avoid, manage, and mitigate risk in your workplace. NFC has a wide offering of available and timely trainings that we can bring to your organization.
Happy New Year 2024 from your NFC Team!