What is a whistleblower policy?

A whistleblower policy is an organizational policy that encourages workers to report suspected illegal or improper activity within the organization while protecting workers from retaliation for making such reports.

Is our nonprofit required to have a whistleblower policy?

New York nonprofits that have at least twenty employees and annual revenues of $1 million or more are required to have a whistleblower policy under Section 715-b of the New York Not-for-Profit Corporation Law.

Keep in mind that whistleblowers have significant protections under other federal, state, and local laws, even if those laws do not explicitly require adoption of a whistleblower policy. For example, Section 1107 of the American Competitiveness and Corporate Accountability Act of 2002 (more commonly known as the Sarbanes-Oxley Act) makes it a crime to intentionally retaliate against any individual, “including interference with the[ir] lawful employment or livelihood,”  for providing law enforcement with truthful information relating to the commission or possible commission of any federal offense. Many states and municipalities have other laws that protect whistleblowers from retaliation.

A whistleblower policy helps to educate management and workers about these legal protections. It is a helpful tool in promoting a culture of lawfulness and integrity. By explicitly stating management’s commitment to protect whistleblowers from retaliation and laying out a process for reporting illegal or improper activity, a whistleblower policy encourages workers to communicate their concerns to the employer in good faith without fear of reprisal. Adopting a whistleblower policy is a recommended best practice for nonprofit employers.

What are the key changes to New York’s whistleblower protections?

Effective January 26, 2022, New York amended Section 740 of the New York Labor Law, which protects workers who engage in whistleblowing activity from retaliation by their employers.¹ The amendments expanded the classes of protected workers, the types of protected whistleblower actions, the types of employment-related actions that are considered illegal retaliation, the time frame for individuals to file a retaliation claim, and the potential penalties for employers who do retaliate against whistleblowers. Below is a summary of some of the key changes.

1. Protected Individuals. The prior law appeared to protect current employees only. The amended law protects current employees, former employees, and independent contractors from retaliation for whistleblowing activity.

2. Protected Actions. Under the prior law, whistleblower protections only applied to disclosures or threats of disclosure that involved an actual violation of a law, rule, or regulation and presented a substantial danger to the public health or safety or constituted health care fraud. There were many types of illegal activities that did not fit within this standard, leaving employees who reported such activities at risk of retaliation. The prior law also stipulated that whistleblower protections did not apply if an employee disclosed an illegal activity, policy, or practice to a public body without first notifying the employer and giving the employer a reasonable opportunity to correct the problem.

The amended law changes these standards. An employer may not retaliate against a protected individual for doing any of the following:

• Disclosing or threatening to disclose to a supervisor or public body an activity, policy, or practice of the employer that the individual “reasonably believes” violates a law, rule, or regulation or poses a substantial and specific danger to the public health or safety;
• Providing information to, or testifying before, any public body conducting an investigation into any such activity, policy, or practice by the employer; or
• Objecting to, or refusing to participate in any such activity, policy, or practice.
• Protected individuals also need only make a “good faith effort” to report the activity, policy, or practice to the employer prior to notifying a public body. No employer notification is required at all when:
  • There is an imminent and serious danger to the public health or safety;
  • The whistleblower reasonably believes that reporting to the supervisor would result in a destruction of evidence or other concealment of the activity, policy, or practice;
  • The activity, policy, or practice could reasonably be expected to lead to endangering the welfare of a minor;
  • The whistleblower reasonably believes that reporting to the supervisor would result in physical harm to the whistleblower or any other person; or
  • The whistleblower reasonably believes that the supervisor is already aware of the activity, policy, or practice and will not correct it. 

3. Prohibited Retaliation. The amended law expands the definition of unlawful retaliation to mean any adverse action taken by an employer or the employer’s agent “to discharge, threaten, penalize, or in any other manner discriminate against” a protected individual who engages in protected whistleblowing activity. This includes:

• Actual or threatened adverse employment actions against a protected individual in the terms and conditions of employment, including but not limited to discharge, suspension, or demotion;
• Actions or threats to take actions that would adversely impact a former employee’s current or future employment; or
• Contacting or threatening to contact United States immigration authorities or otherwise reporting or threatening to report a protected individual’s suspected citizenship or immigration status or the suspected citizenship or immigration status of a protected individual’s family or household member. 

4. Increased Filing Time, Right to Jury Trial, and Penalties for Retaliation Claims. The statute of limitations for filing a retaliation claim under Section 740 is increased from one year to two years. Parties are entitled to a jury trial. A successful retaliation claim against an employer may result in any of the following penalties:

• An injunction against the employer;
• Reinstatement of the whistleblower to their same position or an equivalent position, or front pay in lieu of reinstatement;
• Reinstatement of full fringe benefits and seniority rights;
• Compensation for lost wages, benefits, and other remuneration;
• Payment by the employer of reasonable costs, disbursements, and attorneys’ fees;
• A civil penalty for the employer of up to $10,000; and/or
• Payment of punitive damages by the employer, if the violation was willful, malicious, or wanton. 

5. Employer Notice Requirement. Employers are required to inform protected individuals of their protections, rights, and obligations under the law by posting a notice “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants for employment.” The New York State Department of Labor has issued a model notice that employers can post. Employers must also provide an electronic copy of the whistleblower notice to protected individuals via email and/or posting on their website.

1 In 2022, New York also amended Section 741 of the Labor Law, which applies to whistleblower complaints against health care employers.

The post Updated Whistleblower Protections in New York – Is Your Nonprofit Compliant? first appeared on Perlman Sandbox.

Total compensation must be reasonable under federal law such that the organization complies with the private inurement doctrine. 
A 501(c)(3) organization must be organized and operated so that no part of its net earnings inures to the benefit of any private shareholder or individual.  It has long been held by the federal courts that “the payment of reasonable salaries by an allegedly tax-exempt organization does not result in the inurement of net earnings to the benefit of private individuals.”[1]

Assessing the reasonableness of compensation is largely a market driven analysis. 
An executive’s compensation is properly compared to individuals in similar positions at organizations of a similar size, in the same or a comparable geographical area, performing similar services.  The experience, expertise, and accomplishments of the individual are also taken into consideration.  It is appropriate to hire a qualified independent consultant to conduct a market analysis to ensure that compensation is reasonable.

The total compensation of an executive, and not merely the base salary or cash compensation, must be considered in determining whether compensation is reasonable. 
All compensation and benefits, including bonuses, deferred compensation, pension payments, and other perks not provided for legitimate business purposes are to be considered in calculating the total compensation at issue.

In the event that an executive is paid severance upon termination, any severance payments must be reasonable to assure compliance with applicable laws. 
The payment of excessive severance can itself be deemed excess compensation in violation of state and federal laws. An exception, for example, might be in connection with the reasonable settlement of a claim against the organization for improper termination.

Entering into a formal written contract with a senior executive can be advantageous for both the organization and the executive to ensure compliance with the laws governing executive compensation. 
Such a contract should set forth the duties and responsibilities of the executive, and thereby set standards for evaluating the executive.  It should also establish appropriate severance in the event of termination without cause.

Board members of charitable organizations in the various states have a fiduciary duty to preserve the organizations’ charitable assets, to supervise and oversee the administration of the organization’s’ assets, and to establish mechanisms designed to protect against the squandering or misuse of such assets.
This includes the authorization and payment of reasonable compensation and benefits to executives, and establishing mechanisms and internal controls to protect the organization’s expenditures.  Some states have specific laws requiring that compensation be reasonable.

The federal “intermediate sanctions” law, enacted by Congress in 1996, permits the IRS to impose excise tax penalties on charities executives who receive excess compensation (an “excess benefit transaction”) and on an organization manager or other person who is in a position to exercise substantial influence over the affairs of the organization.[2] 
In addition to paying a 25% excise tax on any excess compensation received, the executive must also make a correction and return the excess amount to the organization or face a confiscatory second tier tax.  The executive can be assessed the tax even if he or she acted in good faith and without knowledge that the compensation was excessive.

An organization manager can be assessed an excise tax only when he or she participated in an excess benefit transaction “knowing that it is such a transaction, … unless such participation is not willful and is due to reasonable cause.” 
If a board member or other organization manager has relied in good faith on professional advice that the compensation paid is reasonable, this would provide a strong defense against any IRS claim that excise taxes should be imposed.

It is significant to note that, under formal IRS rules, an executive is entitled to a rebuttable presumption that his or her compensation is reasonable if a three-step test has been satisfied.  

First Requirement: Compensation Fixed by An Independent Board
Board members must act independently and at arm’s length, and relatives and business associates of an executive should be excluded from any participation in fixing such individual’s compensation and benefits.

Second Requirement: Reliance on Appropriate Data as to Comparability
The IRS Regulations specify that the relevant information upon which the authorized body may rely “includes, but is not limited to, compensation levels paid by similarly situated organizations, both taxable and tax-exempt, for functionally comparable positions; the availability of similar services in the geographic area of the applicable tax-exempt organization; current compensation surveys compiled by independent firms; and actual written offers from similar institutions competing for the services of the disqualified person.”

Third Requirement: Adequately Document Basis for Determination of Compensation
The board of a charity should, through formal board minutes, a written employment contract, an independent compensation survey, and/or other relevant documentation demonstrate the basis for the compensation paid.

Improper excess benefits can be quite varied. 
Areas which might be scrutinized by government regulators could include: purchases or leases of automobiles; payments of country-club dues; use of apartments, interest-free loans; travel expenses; use of charity credit cards without documentation; and blanket amounts to spend on expenses.

Summary: General Considerations in Fixing Compensation

• Decisions should be made by an independent board of directors at arm’s length.
• There should be Board minutes and/or other documents reflecting the criteria and basis for fixing compensation.
• Total compensation should reflect the fair market value of the executive’s services.
• Where appropriate, there should be reliance on an independent compensation survey.

[1] Founding Church of Scientology v. U.S., 412 F.2d 1197, 1200 (Ct. Claims, 1969), cert. denied, 397 U.S. 1099 (1970).

[2] The intermediate sanctions rules apply to both 501(c)(3) and 501(c)(4) organizations.  They do not apply to private foundations, as the well-established self-dealing rules in the Internal Revenue Code already barred payment of excessive compensation to executives of private foundations.

The post What Can They Be Paid? Advising Charitable Organizations on Executive Compensation first appeared on Perlman Sandbox.

In response to the enactment of New York State’s law, New York City also amended its own Paid Safe and Sick Leave Law and on October 21, 2020, New York City updated its Notice of Employee Rights which must be distributed to all employees in both English and the employee’s primary language –once the document has been translated by New York City’s Department of Consumer and Worker Protection  (“DCWP”) into that language on its website.  Below are some questions and answers relating to the New York City law which covers all employers–non-profit and for-profit– with employees working in New York City.

When Does the Amendment to NYC’s Law Take Effect?

The amendment to New York City’s Paid Safe and Sick Leave law (“PSSL”) took effect on September 30, 2020.  Specifically, as of September 30, 2020, employers must: 1) allow employees to use safe and sick leave as it is accrued; 2) reimburse employees for costs associated with getting documentation from a health care provider or other provider after the employee has taken more than three consecutive workdays of sick/safe leave; and 3) list on employees’ paystubs each pay period (or another document issued during each pay period) the amounts of accrued and used leave and the total balance of accrued leave.  With respect to the paystub information requirement, employers that could not satisfy that requirement by September 30, 2020 but are working in good faith on implementation had until November 30, 2020 to ensure compliance without a penalty.

How Much Leave is Required?

Just like New York State’s Paid Sick/Safe Leave law, under PSSL, the amount of leave required to be provided depends on the number of employees and/or net income of the organization:

• Employers with 100 or > employees in any calendar year must provide covered employees with: Up to 56 hours of paid sick/safe leave each calendar year;*
• Employers with fewer than five employees and net income of more than $1 million in prior calendar year: Up to 40 hours of paid sick/safe leave in each calendar year;*
• Employers with between 5-99 employees in any calendar year: Up to 40 hours of paid sick/safe leave in each calendar year; and
• Employers with fewer than five employees and less than $1 million in net income in prior calendar year: Up to 40 hours of unpaid sick/safe leave in each calendar year.                                                                                                                                                                                                                                            * These two requirements take effect on January 1, 2021.

What Can the Leave Be Used For?

Sick leave may be used for medical, health and emergency safety reasons.  Specifically, leave may be taken: 1) for an employee’s health, including to get medical care or to recover from illness or injury; 2) to care for a family member who is ill or has a medical appointment; 3) when an employee’s workplace or child’s school or childcare provider closes due to a public health emergency; or 4) for the safety of an employee or employee’s family member because of domestic violence, unwanted sexual contact, stalking, or human trafficking.   In the case of COVID-19, employees may use this leave if they feel ill or show COVID-19 symptoms, get tested for the flu or COVID-19, are under quarantine or self-isolating for preventative purposes, or are caring for a family member under a mandatory or precautionary order of quarantine.  (This leave is not limited, however, to COVID-related illness and is separate and apart from New York State’s own COVID-19-Paid Sick-Leave Law).

May an Employer Front-Load the Leave at the Beginning of a Calendar Year Rather than Require Employees to Accrue the Leave?

Yes.  An employer may elect to provide its employees with the total amount of sick/safe leave required to fulfill its obligations at the calendar year start, provided, however that the employer may not reduce or revoke any such leave based on the number of hours actually worked by an employee during the calendar year.

May an Employer Require Advance Notice for the Leave?

Yes, where the need for leave is foreseeable, an employer may require at least 7 days’ advance notice, but if the need for leave is unforeseeable, then the employee needs to give notice of leave as soon as practicable (reasonable).  The employer may also require an employee to provide written verification that the leave was taken for authorized sick or safe leave purposes.

May an Employer Require an Employee to Provide Documentation about the Nature of the Employee’s Illness as a Condition of Providing Sick Leave?

No, but an employer is permitted to require an employee to provide documentation from a licensed health care provider confirming the amount of sick leave used and whether the leave was used for an authorized purpose under the law: 1) after an employee uses more than three (3) consecutive workdays as sick/safe leave (and no less than seven (7) days after the employee returns to work under NYS law); and 2) for safe leave, reasonable documentation from a social service provider, attorney, court, law enforcement, clergy member, or notarized letter by employee indicating the need for safe leave (but not setting out the reason for the leave).   Under PSSL, employers may not, however, require that the documentation specify the reason for safe or sick leave.  NYC’s DCWP — which enforces this law– advises employees not to include details of their medical or personal situation in the documentation provided to the employer nor the reason for taking safe leave.

Does the Law Require Employers to Allow Carry Over Unused Sick/Safe Leave?

Yes.  Remember, however, that:

• An employer with fewer than 100 employees may limit the use of sick leave to 40 hours per calendar year; and
• An employer with 100 or more employees may limit the use of sick leave to 56 hours per calendar year.

Additionally, if the leave is front-loaded at the beginning of the calendar year fully available for use without the need to accrue it, there would not be a reason for an employee to carry it over.

Is the Leave Job-Protected and Are Employees Protected From Retaliation for Taking Leave?

Yes, an employee must be restored to their position following return from safe/sick leave with the same pay and other terms and conditions of employment.  The PSSL prohibits employers from discriminating or retaliating against an employee for exercising their rights, including, but not limited to, for requesting and using sick leave and reporting violations.  More specifically, the amendment to the PSSL prohibits employers from taking an adverse action that penalizes an employee for, or is reasonably likely to deter an employee from, exercising or attempting to exercise their rights under the law.  An “adverse action” is broadly defined to include, but not be limited to, threats, intimidation, discipline, reduction in hours or pay, informing another employer of an employee’s exercise of rights, blacklisting, and maintaining or applying an absence control policy that counts protected leave for safe/sick time as an absence that may lead to or result in an adverse action. Adverse actions include actions related to perceived immigration status or work authorization (like threatening to report an undocumented worker to the authorities).

What Information Must an Employer Provide to an Employee About Their Rights?

Employers must provide employees with a written safe and sick leave policy that explains how to use their benefits and inform employees of the amount of their sick/safe leave use and balance.  Employers may not require an employee to find coverage for that employee in order to take the sick/safe leave.  Additionally, the law prohibits retaliation against employees, as noted above. (Remember too, that under NYS law, employers must also provide a summary of the accrued and used sick leave amounts, if requested by the employee, within three business days of such request.)

Are There Additional Penalties Under the Amendment to NYC’s Paid Sick/Safe Leave Law?

The amendment to the PSSL includes a new remedy: For each employee covered by an employer’s official or unofficial policy or practice of not providing or refusing to allow the use of accrued safe/sick time, $500.

As you may recall, NYC Department of Consumer and Worker Protection’s Office of Labor Policy & Standards (OLPS) enforces the PSSL. Employers who fail to provide compensation for the leave may owe three times the wages that should have been paid (or $250, whichever is greater), fines for each instance where an employer denies the leave or  unlawfully conditions the leave upon an employee searching for or finding a replacement worker, or for each instance an employer requires an employee to work additional hours without the mutual consent of such employer and employee to make up for the original hours during which such employee is absent. Employers are also subject to civil penalties on a per employee basis.

Employees do not have a private right of action to proceed in court but the corporation counsel may bring a civil action in court to enforce any order of OLPS or seek injunctive relief (to stop an employer from violating the law) or to sue for a pattern or practice of violations.  If a pattern or practice violation of the law is found, an employer may be subject to civil penalties of up to $15,000 plus additional relief of $500 to each employee covered by an employer’s policy or practice of not providing or refusing to allow the use of earned time.

Additionally, employers who did not provide employees with a proper notice of employee rights may receive a civil penalty of no more than fifty dollars, per each employee who was not given appropriate notice.

Finally, an employer who retaliates against an employee for exercising their rights may be liable for an employee’s lost wages and benefits, a fine, and equitable relief (like reinstatement in the case of an employee who has been unlawfully terminated).

What Should Organizations with NYC Employees Do Now?

Review, and where needed, update your employee handbooks to address New York City’s amended paid sick/safe leave law and distribute those updated policies together with the updated Notice of Employee Rights (distribute notices electronically, if employees are working remotely).  Get a signed acknowledgement of receipt (or “read receipt”) of the notice of employee rights, and train your managers regarding employees’ rights under this law, including to be free from retaliation.  Review payroll records to ensure they are consistent with the law’s new requirements.

If you seek assistance with updating your policies, training your managers on the new laws, and advising on compliance or have any questions, please contact Lisa M. Brauner, Esq., Perlman & Perlman LLP,  Head of Employment Law practice, lisa@perlmanandperlman.com, 212-889-0575.

The information provided in this document does not constitute legal advice, and is not intended to substitute for legal counsel.

The post N.Y.C. Employees Get Additional Paid Sick/Safe Leave Rights: Update Your Policies and Distribute Notices first appeared on Perlman Sandbox.

Each State has its own laws regarding whether and how much time off employees are permitted on November 3^rd in order to vote and whether employers must post a workplace notice of employees’ voting rights in the workplace (yes, for New York and California).

New York amended its Voting Leave law on April 3, 2020, requiring employers to offer employees “up to two hours’ paid voting leave (not three) if employees do not have sufficient time to vote,” and to conspicuously post a notice in the workplace regarding employees’ rights for time off to vote at least 10 working days before Election Day.  An employee has “sufficient time to vote” if s/he has four consecutive hours to vote either from the opening of the polls to the beginning of their work shift, or between the end of a working shift and the closing of the polls to vote.  New York employers may not require employees to use their paid time off to vote.  (The time off and notice posting requirements do not apply to early voting periods, however).   Employees must notify their employers at least two working days before their intention to take paid time off to vote, but not more than ten working days.

New York employers should once again update their voting leave policies in their employee handbooks and ensure they have posted notices of voting leave rights in a conspicuous location in the workplace (if staff is working remotely, email copies of employee voting rights to all such employees).

Reminder to Nonprofits:   In October, the New York State Attorney General’s Charities Bureau issued guidance for certain tax-exempt organizations on prohibitions against political activity and permissible election-related activities.   The guidance notes that, with respect to pre-election and lobbying activities, 501(c)(3) organizations may not: 1) make or solicit contributions for, on behalf of, or against any candidate for public office or to a political party; 2) endorse or oppose a candidate for public office at the federal, state or local level; 3) allow their resources—including letterhead stationery, electronic communications systems, telephones, and other property or equipment– to be used in support of or opposition to any campaign of a candidate for public office; 4) make statements in support of or in opposition to a candidate or a political party, whether orally, recorded or in writing, including by in-person distribution, mail, email, text, or posting on social media or the Internet; or 5) provide funds to a 501(c)(4) organization without controls to assure that the funds are used solely for 501(c)(3) exempt activities, and not for political campaign activity.  It further notes that “violation of these prohibitions may result in the denial or revocation of tax-exempt status by the IRS, the loss of exemption from New York income, sales and use taxes, and enforcement or regulatory actions by the New York Attorney General.”  That said, charities may conduct nonpartisan activities that educate the public and help them participate in the electoral process. For example, presenting at public forums and publishing voter education guides does not constitute prohibited political campaign activity if the activity is conducted in a non-partisan manner.

To find out more about employer legal obligations with respect to employee voting rights, see https://www.workplacefairness.org/voting-rights-time-off-work.  To learn more about the elections and ballot measures occurring in each state on November 3^rd, you can refer to this link: https://www.ncsl.org/research/elections-and-campaigns/ncsl-state-elections-2020.aspx.

If you have any questions about your legal obligations, please contact Lisa Brauner, Esq., Head of Perlman & Perlman LLP’s Employment Law Practice, lisa@perlmanandperlman.com, 212-889-0575.

The information provided in this document does not constitute legal advice, and is not intended to substitute for legal counsel.

The post It’s Time to Vote – Know Your State Law! first appeared on Perlman Sandbox.

On August 27, 2020, the U.S. Department of Labor (“DOL”) updated its FFCRA guidance and “Questions and Answers” in an FAQ, addressing some “Return-to-School” issues which may be helpful to nonprofit organizations and businesses covered by the FFCRA.

As set forth more fully in the FAQ, the DOL stated that if the school of an employee’s child only allows for remote learning and an employee is unable to work—including telework—because they do not have another person to care for their child due to COVID-19-related reasons, that employee may be eligible for FFCRA expanded paid family leave.   If, however, an employee chooses to have their child attend school remotely 100% of the time even when there is an option for “in-person” or “hybrid” learning, then an employer is not obligated to pay for that employee’s leave in order to provide childcare.

By way of background, the FFCRA is a law which requires covered employers to provide job-protected paid sick leave and extended paid family and medical leave due to COVID-19 to employees of employers with fewer than 500 employees (unless those employers qualify for and have sought a small business exception).  The FFRCA took effect on April 1^st and remains in effect through December 31, 2020.

If Congress does not extend the end date of the FFCRA past December 31^st, then employers will need to consider how or if they will allow employees to continue to take paid (or unpaid) leave  to address parents’ ongoing need to care for children continuing remote school past December 31^st.

Organizations and businesses should keep in mind that State and local anti-discrimination laws, including recently passed COVID-19 specific laws, may offer job protection to employees out on leave due to COVID-19 to care for their children.

Employers should also be mindful that some State and/or local jurisdictions prohibit discrimination against employees because of an employee’s caregiver status or obligations.

What Should Employers Do Now?

• Review and update employee policies as needed regarding paid leave and the interplay between federal, State and local laws relating to paid or unpaid sick, family leave, other leaves of absence and COVID-19. Consider now how paid sick and family leave policies will need to be modified depending on whether FFCRA is extended beyond December 31, 2020, and ways in which your organization can support its employees in order to retain them.
• Train managers on their legal obligations with respect to the various COVID-19- and other paid leave-related laws at issue and ensure that managers are not treating caregivers less favorably than others seeking to take leave for other reasons (as certain jurisdictions have laws prohibiting discrimination based on caregiver status).
• Confer with employment counsel before deciding not to provide a leave of absence to an employee due to a care-giving need.

The post Back in Session!  COVID-19 Paid Leave for Employees Caring for School-Age Kids first appeared on Perlman Sandbox.

What Change Would the Rule Bring?

The U.S. Department of Labor (DOL)’s proposed new rule would:

• Adopt an “economic reality” test to determine whether a worker is an employee or an independent contractor under the FLSA. That is, whether a worker is economically dependent on an entity for work and would be an employee, or conversely, whether the individual is in business for him/herself (independent contractor);
• Identify and explain two “core economic reality factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. The DOL would weigh these two factors more heavily than any others to help determine if a worker is economically dependent on an entity’s business or is in business for themselves. The DOL believes that taking this approach will likely encourage the creation of independent contractor jobs that provide autonomy and satisfying entrepreneurial opportunities;
• Identify three other factors that the DOL will consider: 1) amount of skill required for the work; 2) degree of permanence of the working relationship between the worker and the potential employer (the more permanent, the more likely there is an employee status); and 3) whether the work is part of an integrated unit of production and if so, that would weigh in favor of finding employee status (meaning where a worker is a component of a potential employer’s integrated production process that “requires the coordinated function of interdependent subparts working toward a specific unified purpose.” For instance, if a worker depends on the overall process to perform work duties as would a computer programmer on a software development team, that person would be more likely to be classified as an employee.
• Advise that the actual practice of what the parties are doing is more relevant to determining whether the worker is an independent contractor or an employee than what may be contractually or theoretically possible.

What Should Employers Do Now?

Nonprofit organizations and businesses have an opportunity to provide public comment on the proposed rule until October 26, 2020.  Even if the final rule is substantially unchanged from the proposed rule, organizations should remain mindful that their respective State Departments of Labor and court rulings relating to State labor laws and wage orders may impose stricter definitions or interpretations of “independent contractor” than under the FLSA.  Therefore, employers should speak with their legal counsel before determining whether a worker is properly classified as an independent contractor rather than an employee to help minimize legal risk.

The post U.S. Department of Labor Proposes Rule to Clarify Independent Contractor Status first appeared on Perlman Sandbox.

That means that organizations and companies that choose to take this payroll tax deferral would then withhold additional amounts from those affected employees’ paychecks from January 1, 2021 through April 30, 2021 to repay that deferred tax obligation.  The payroll tax deferral would not excuse the requirement of payment of such taxes. Additionally, the deferral is not retroactive meaning that an employer may only defer payment of taxes prospectively through December 31, 2020 (it may not include deferral of taxes or reimbursement of taxes to employees that were already withheld starting September 1).

There remain questions about the legality of President Trump’s memorandum in the absence of approval from Congress which constitutionally holds the power over the federal “purse strings”— to tax and spend public money for the national government. Although the Internal Revenue Service (IRS) issued guidance on August 28, 2020 (Notice 2020-65), employers are still awaiting further IRS guidance regarding how the deferral would be implemented, including whether (or how) an employee’s obligation to pay those deferred taxes or an employer’s obligation to withhold will be forgiven in the absence of Congressional approval, written confirmation that the choice of whether to implement deferrals rests with the employer, not the employee, and employer obligations with respect to such taxes if an employee is no longer employed with that employer at the time that repayment is due.

The payroll tax deferral is simply a deferral, not a forgiveness of taxes.  If an employer does not pay the deferred payroll tax to the IRS by April 30, 2021, it could potentially be liable for penalties, interest and late fees.

Organizations should confer with their legal counsel and accountant before deciding to defer payroll tax withholding and to discuss structuring any agreements with affected employees concerning repayment if those organizations do decide to defer payroll tax withholdings.

The post Employee Payroll Tax Deferral Causes Confusion and Uncertainty for Employers first appeared on Perlman Sandbox.

These and other considerations are discussed in my article Avoiding Legal Pitfalls When Re-Opening Your Workplace: What Nonprofits and Businesses Need to Know.

The post Avoiding Legal Pitfalls When Re-Opening Your Workplace first appeared on Perlman Sandbox.

Effective April 3, 2020, New York amended its paid election leave law, again, to require an employer to provide an employee with up to two hours—not three hours—of paid voting leave if the employee does not have sufficient time to vote. The State has issued an FAQ, explaining the amendment.  An employee is deemed to have “sufficient time to vote” if he/she has four consecutive hours to vote either from the time the polls open to the beginning of their work shift, or four consecutive hours between the end of a working shift and the time the polls close.   An example is provided of an employee who is scheduled to work from 9 am to 6 pm.  In that instance, where the polls open at 6 a.m. and close at 9 p.m., the employee is eligible for paid time off to vote, because the employee only has three consecutive hours off at the beginning of their shift and end of their shift.

Employees must provide their employers with at least two working days’ notice of an intent to take voting leave before an election, but not more than 10 working days.

The amendment explains that employers may not require employees to use their “personal” time off to vote.

Employers should update their voting leave policies and notices to comply with this change in the law.

As you may know, due to COVID-19, Governor Cuomo cancelled the June 23, 2020 Presidential primary in New York though other Congressional and local primaries in New York are scheduled to occur on that date.

The post New York State Amends Paid Election Leave Law, Again, to Provide Up to 2 Hours’ Paid Voting Leave first appeared on Perlman Sandbox.

The Empire State Development (ESD) guidance on which organizations are deemed “essential” in New York State was updated on April 9, 2020, and can be found here.  Businesses and organizations deemed “essential” by ESD must continue to comply with the New York State Department of Health’s guidance and directives for maintaining a clean and safe work environment.

Every business is being strongly urged by New York State to continue to maintain social distancing measures to the extent possible.  Governor Phil Murphy of New Jersey has recently issued a similar executive order for essential businesses in New Jersey.

Governor Andrew Cuomo also directed that, effective at 8 p.m. on Friday, April 17, 2020, any individual who is over age two and able to medically tolerate a face-covering, must cover their nose and mouth with a mask or cloth face-covering when in public and unable to maintain, or when not maintaining, social distance.  This includes but is not limited to, when walking on the sidewalk or in a park, traveling on public transit or in an Uber, Lyft, Via, etc. 

On April 16th, 2020, Governor Andrew Cuomo also ordered “New York on PAUSE” extended to May 15, 2020.  The Executive Order requires all workers at non-essential businesses, including nonprofit organizations, to work from home, schools to remain closed, and individuals to maintain a 6-foot distance from others in public, as per an Executive Order.

If you have any questions, please contact Lisa M. Brauner, Esq., Head of Employment Law Practice, Perlman & Perlman LLP, lisa@perlmanandperlman.com, 212-889-0575 ext. 207.

The post Mask Up! New York “Essential” Businesses and Nonprofit Organizations Must Provide Face Masks to Public-Facing Employees first appeared on Perlman Sandbox.