On April 22, 2020, the New York City Council referred three bills to committee: two of which would greatly affect the employment practices of "essential businesses" (as defined in guidance implementing Governor Cuomo's "New York on PAUSE" Executive Order), and a third which would affect virtually all employers. 

  • First, Int. No. 1923 would impose a "just cause" standard on essential businesses with respect to employee terminations, reductions in hours and indefinite suspensions.
  • Second, Int. No. 1918 would require larger essential businesses to pay their hourly workers premium payments of $30, $60, or $75, depending on the length of the employee’s shift.
  • Third, Int. No. 1926 would expand the scope of workers who are eligible for benefits under New York City's Earned Safe and Sick Time Act (ESSTA). 

This advisory provides a high-level summary of the aspects of these bills, which are subject to change as they work their way through the legislative process. Employers who would be affected by these bills if they become law may wish to reach out to trade associations, fellow members of the regulated community, and other interested stakeholders to explore next steps during the pendency of these bills. 

Just Cause Discharge From Employment - Int. No. 1923

As currently drafted, this bill would prohibit an employer operating an essential business from discharging without just cause an essential employee who has completed 30 days of service.

Significantly, the term "discharge" includes termination, constructive discharge, indefinite suspension and reduction of hours of at least 15 percent of the employee’s work schedule. Thus, essential businesses that have implemented furlough arrangements would likely be subject to this law and its requirement of just cause.

  • Just cause is defined as "sufficient cause for discharging an essential employee, such as the employee's failure to satisfactorily perform job duties or employee misconduct that is demonstrably and materially harmful to the essential employer’s business interests." 

Notably, the bill is silent as to whether an employer’s economic circumstances would constitute just cause for discharge. Additionally, an essential business will not be able to demonstrate just cause unless it has used a progressive discipline procedure (and relies solely on discipline issued in the previous year) or the misconduct is severe enough to merit immediate discharge.

The bill provides for an administrative framework for prosecuting and defending claims, and confers upon employees a private right of action (including the right to bring class actions) which imposes upon the employer the burden of proving that the discharge was for just cause.

Premium Pay - Int. No. 1918

As currently drafted, this bill would require “large essential employers” to pay their hourly workers shift premiums. In the bill’s current form, the premiums are: 

  • $30 for any shift of less than four hours;
  • $60 for any shift of between four and eight hours; and
  • $75 for any shift of greater than eight hours. 

A "large essential employer" is defined as one that employs 100 or more persons (including persons on a full-time, part-time or temporary basis). Furthermore, for an employer in a chain business (which means any business that is part of a group of establishments that share a common owner or principal who owns at least 30 percent of each establishment where such establishments (i) engage in the same business or (ii) operate pursuant to franchise agreements with the same franchisor as defined in the General Business Law), all employees in that group of establishments are counted.

Finally, the bill provides for posting of a notice within five days of its effective date, as well as for a private right of action.

Earned Safe and Sick Time Act (ESSTA) - Int. No. 1926

This bill would apply to all employers who are subject to the ESSTA. Significantly, this bill would greatly expand the scope of the definition of the term "employee" under the ESSTA.

Generally, the bill would provide ESSTA coverage for any person providing labor or services for remuneration in New York City for more than 80 hours in a calendar year "unless the hiring entity demonstrates that all of the following conditions are satisfied:

  1. The person is free from the control and direction of the hiring entity in connection with the performance of the labor or services, both under the contract for the performance of the work and in fact;
  2. The person performs labor or services that are outside the usual course of the hiring entity's business; and
  3. The person is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the labor or services performed."

This test is substantially similar to the "ABC" test currently applied in states such as California, Massachusetts, and New York to determine employee/contractor classification with regard to the application of wage payment laws. It is notable, however, that this definition would apply solely for purposes of ESSTA.

Furthermore, expansion of ESSTA benefits would not apply to:

  1. A person who performs work as a participant in a work experience program pursuant to section 336-c of the Social Services Law.
  2. A person who is employed by various government authorities.
  3. A person engaged in a work study program under section 2753 of title 42 of the United States code.
  4. A person compensated by or through a qualified scholarship as defined in section 117 of title 26 of the United States Code.
  5. An independent contractor who does not qualify as an employee under [the test described above].
  6. An hourly professional employee. 

Next Steps

Employers are encouraged to consult counsel as they confront the unique challenges of managing a workforce during COVID-19 and as they consider policy changes necessary to comply with new legislation on the federal, state, and local levels.

The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.

DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.