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Labor and Employment News – 2023 Year-End Reminders and a Look Ahead to 2024

As the year draws to a close, employers are faced with a myriad of crucial tasks, deadlines, and essential legal updates. In anticipation of year-end responsibilities and strategic planning for the upcoming year, this LEGALcurrents offers a concise overview of recent developments and timely reminders that businesses need to be aware of as they move into 2024.

New York’s Ban on Non-Compete Agreements

The Senate bill that would prohibit employers from entering into non-competition agreements with their employees was sent to the Governor’s desk on December 12, 2023. If signed as is, New York would join a growing list of states around the country clamping down on non-competition covenants. The “Act shall take effect on the thirtieth day after it shall have become a law and shall be applicable to contracts entered into or modified on or after such effective date.”  Stay tuned for a further legal update from HSE if Governor Hochul signs the bill into law.

UPDATE: Late Friday, December 22, 2023, Governor Hochul vetoed S3100A, bowing to numerous industry groups that opposed the New York State Legislature’s attempt to ban non-competition agreements. We expect efforts to reach compromise legislation will continue in 2024.

New Amendments to Nondisclosure Law Expands Complainant Protections

On November 17, 2023, Governor Hochul signed into law Senate Bill 4516, further limiting the utility of non-disclosure and non-disparagement provisions in certain employment agreements.

Key Changes

NY law prohibits the use of non-disclosure provisions in settlement agreements involving claims of discrimination. Such agreements cannot prohibit the disclosure of the underlying facts and circumstances of a person’s discrimination claim unless certain procedural requirements are met. Confidentiality has to be the complainant’s preference reflected in a separate written agreement, and he/she has to be given twenty-one days to consider the non-disclosure agreement. Additionally, the complainant can revoke the agreement for seven days after signing. Additionally, the law provides that any non-disclosure provision in a contract between an employer and employee that prevents the disclosure of factual information concerning future claims of discrimination is void and unenforceable unless the agreement specifically provides that it does not prohibit the employee from speaking with law enforcement, federal/state/local fair employment agencies (i.e., the EEOC, SDHR, or NYCCHR), or a private attorney. 

The amendments to this law:

  • Clarify that it applies to settlement agreements involving harassment and retaliation claims, in addition to discrimination claims. 
  • Allow an individual to sign prior to the conclusion of the 21-day consideration period, similar to what is allowed for the 21-day review period required for a waiver and release under the Federal Age Discrimination in Employment Act (ADEA).  Previously, the 21-day period for consideration of a non-disclosure agreement under NY law could not be shortened. 
  • Require non-disclosure agreements with independent contractors regarding future claims of discrimination to preserve their right to disclose factual information related to their claims with any federal, state, or local administrative agency, the Attorney General (also newly added by the amendment), or a private attorney.
  • Invalidate the release of any discrimination, harassment, or retaliation claim if the agreement resolving such claim:
    • Requires the complainant to pay liquidated damages for violating a non-disclosure or non-disparagement clause;
    • Requires the complainant to forfeit all or part of the consideration for the agreement as a result of a violation; or
    • Contains an affirmative statement requiring the complainant to admit that they were not in fact subject to unlawful discrimination, harassment, or retaliation.

Notably, failure to follow the procedural process for a non-disclosure provision in a settlement agreement simply invalidates the non-disclosure provision. However, the amendment to the law regarding forfeiture or liquidated damages provisions in a settlement agreement does not state that such provisions are invalid; rather, it provides that including such provisions in a settlement agreement invalidates the release of claims contained in such settlement agreement, which is exactly what the employer pays for in such circumstances! Thus, the consequences of clawing back settlement payments or assessing liquidated damages in the event of a violation of a non-disclosure and/or non-disparagement provision in a settlement agreement could deprive an employer of the benefit of its bargain. However, an employer can still attempt to enforce the settlement agreement by suing the former employee for actual damages caused by a violation of a non-disclosure and/or non-disparagement provision, although it may not be worth the time and expense of doing so in the absence of significant harm.

Action Item

For employers seeking non-disclosure provisions as part of a settlement of discrimination, harassment, and/or retaliation claims, attention to the procedural details of obtaining an enforceability confidentiality provision is important. Non-disclosure agreements entered into with employees and independent contractors should also be reviewed to ensure they contain the required disclaimer regarding the right to disclose factual information related to future discrimination claims with any federal, state, or local administrative agency, the Attorney General, or a private attorney. Finally, settlement agreement templates should be reviewed to eliminate any forfeiture or liquidated damages provisions.  Even though the prohibition of such provisions appears to apply only to settlement agreements, employers should review their separation and severance agreements with counsel as well to ensure compliance with applicable law.

New York State Minimum Wage and Minimum Salary Increases, Changes to Certain Exemptions Regarding Payment of Wages

The new year will bring changes to New York State wage and salary laws.

Minimum Wage: Effective January 1, 2024, minimum wage will increase throughout New York State. This chart summarizes the schedule of increases:

 

New York City

Nassau, Suffolk and Westchester Counties

Remainder of NYS

Eff. January 1, 2024

$16.00 per hour

$16.00 per hour

$15.00 per hour

Eff. January 1, 2025

$16.50 per hour

$16.50 per hour

$15.50 per hour

Eff. January 1, 2026

$17.00 per hour

$17.00 per hour

$16.00 per hour

In connection with these increases, the minimum cash wage and maximum tip credits for tipped employees will increase across the state on January 1, 2024, with additional increases scheduled through 2026. Please contact us for specific information about these and other changes.

Minimum Salary: In October, the state issued proposed regulations containing a schedule of increases to the minimum salary threshold for exempt Administrative and Executive employees throughout New York State, and there is near certainty that these regulations will become final and take effect by January 1. This chart summarizes the anticipated schedule of increases for Administrative and Executive employees:

 

New York City

Nassau, Suffolk and Westchester Counties

Remainder of NYS

Eff. January 1, 2024

$1,200.00 per week

$1,200.00 per week

$1,124.20 per week

Eff. January 1, 2025

$1,237.50 per week

$1,237.50 per week

$1,161.65 per week

Eff. January 1, 2026

$1,275.00 per week

$1,275.00 per week

$1,199.10 per week

Note that there is no minimum salary requirement for exempt Professional employees in New York, but the minimum salary threshold of $684 per week under the federal Fair Labor Standards Act still applies.

Certain Labor Law Exemption Thresholds Increased: Separate from the minimum salary requirement discussed above, the New York State Labor Law sets a salary threshold for certain protections regarding, among other things, the method and frequency of wage payment.  A bill signed into law by Governor Hochul, which takes effect on March 13, 2024, increases this threshold, thereby expanding the law’s reach.

Under the current law (and until March 13, 2024), bona fide executive, administrative or professional employees who make more than $900 per week are not covered by the Labor Law’s pay frequency requirements, its prohibition against mandated direct deposit, and its 30-day deadline for providing final “benefits or wage supplements.” Under the new law, this threshold will increase to $1,300 per week, meaning that more employees, including certain exempt employees, will now become covered by these laws.

Although this change only impacts a small number of employees (i.e., exempt employees who make $1,300 a week or less), it serves as a reminder that New York State imposes strict requirements (with severe penalties) on how often most employees must be paid, the method of such payment, and how soon final benefits must be provided after termination.

Action Item

Review employee payroll and make any required minimum wage and salary increases. Consider how raises may affect wage compression and perceptions of pay inequity among employees. Note that some employees may be exempt from certain state labor laws regarding minimum wage and overtime requirements but still be subject to other state labor laws regarding pay frequency, method of pay, and benefit or wage supplement payments.

Please contact a member of our Labor and Employment team if you have any questions. 

Attorney Advertising. Prior results do not guarantee a similar outcome. This publication is provided as a service to clients and friends of Harter Secrest & Emery LLP. It is intended for general information purposes only and should not be considered as legal advice. The contents are neither an exhaustive discussion nor do they purport to cover all developments in the area. The reader should consult with legal counsel to determine how applicable laws relate to specific situations. ©2023 Harter Secrest & Emery LLP