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It is that time of the year again. 2021 is nearly here and New York State has once again increased the minimum wage and the overtime exempt salary threshold effective December 31, 2020.

Minimum Wage Increase

Employers generally must pay nonexempt employees at least the minimum wage. Minimum wage throughout New York State may vary based on the employer’s size, geographic location, or industry.  There are different hourly rates for workers in the fast food industry and those who receive tips. The table below outlines New York State’s 2021 minimum wage:

Next year, for Nassau, Suffolk, and Westchester Counties, the minimum wage will rise to $15.00 per hour on December 31, 2021. For the remainder of New York State, annual increases to minimum wage will continue until the rate reaches $15.00 per hour. The annual increases will be published by the New York State Commissioner of Labor starting October 2021. These annual increases will be based on percentage increases determined by the New York State Director of the Division of Budget, based on economic indices, including the Consumer Price Index.

* Unlike previous years, there is no distinction among number of employees for New York City employers.

Increased Salary Threshold for Overtime Exemption

Both federal law (Fair Labor Standards Act (FLSA)) and state law (New York State Minimum Wage Act and applicable regulations) generally require the payment of overtime wages for work performed after 40 hours per week. However, there are exemptions for certain salaried employees from federal and state minimum wage and overtime pay requirements. In addition to New York State’s minimum wage increase, the minimum salary that must be paid to workers classified as exempt under New York State Labor Law’s administrative and executive exemptions increased for 2021. As with minimum wage, the salary thresholds vary depending on the employer’s location and the number of employees. The table below outlines the revised salary thresholds in New York State:

For Nassau, Suffolk, and Westchester Counties, the salary threshold will increase to $1,125.00 per week ($58,500.00 annually) on December 31, 2021.

* Numbers provided are pursuant to New York State law and are higher than the federal FLSA thresholds.  Employees must meet certain duties tests in addition to their earnings or they will otherwise be eligible for overtime pay.

Future Minimum Wage Implications Across the Country

Twenty-nine states and D.C. have minimum wages above the federal minimum wage of $7.25 per hour. During the 2020 election, Florida residents voted to raise the state’s minimum wage, from $8.56 per hour to $15 an hour, in steps by 2026. Florida marks the eighth state in the county to adopt a $15 minimum wage (the other states are California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and New York). This begs the question as to if there will be a national $15 minimum wage. According to a June 2019 study by the Congressional Budget Office, it is estimated that raising the minimum wage to $15 per hour would bring 17 million people out of poverty, but alternatively it could lead to 1.3 million job losses. In 2019, the House approved a plan to gradually lift the federal minimum wage to $15 per hour by 2025, but the Senate dismissed that legislation. President-elect Joe Biden has stated that he would like to raise the minimum wage to $15 per hour; however, the federal government does not currently have any plans for a potential increase.

It is very possible that legislation will be enacted to create a national $15 minimum wage, although this will most likely not affect employers in Nassau/Suffolk and the surrounding areas. Nonetheless, employers should review their wage and hour practices annually to ensure that their employees are properly classified as exempt or non-exempt and that current minimum wage and overtime rates are being paid to qualified workers. Take advantage of the new year to give your practices a fresh look.

If you have questions about minimum wage, overtime, or wage and hour exemptions, please contact us here or call (631) 738-9100.

By Christine Malafi

Updated guidance was issued by New York State on January 20, 2021. Learn more here.

On April 3, 2020, during the peak of the COVID-19 pandemic, New York State enacted mandatory paid sick leave for full-time and part-time employees as part of the state’s 2020-2021 budget.[1] The new leave provisions, which amend the New York Labor Law,[2] take effect on September 30, 2020. Touted as “the strongest Paid Sick Leave in the nation,” the law provides for varying amounts of sick leave based on employer size and revenue,[3] with the employee being restored to the same position, with the same pay and conditions of employment upon return to work.

All New York employers should review the provisions summarized below and revise their current leave policies accordingly.

How much paid sick leave is required?

The amount of paid sick leave (at an employee’s regular rate of pay) is dependent upon the employer’s size within a calendar year (January 1 to December 31) and net income in the prior tax year.

• Businesses with four or fewer employees in any year must provide each employee with at least 40 hours of paid sick leave per year, unless their net income is $1 million or less in the previous tax year, in which case such leave time may be unpaid.
• Businesses with between five and 99 employees in any year must provide up to 40 hours of paid sick leave per year.
• Businesses with 100 or more employees in any year must provide up to 56 hours of paid sick leave per year.

Employees must accrue paid sick leave at a rate of one hour for every 30 hours worked, beginning September 30, 2020, or upon the first day of employment. However, employee use of the required sick leave may be restricted for use until January 1, 2021. Alternatively, employers can opt to frontload the required time at the beginning of the calendar year.

Will unused accrued time carry over?

Any unused accrual amount must carry over to the following year; however, employers can limit the carry over to a maximum of 40 hours (if the employer has 100 or fewer employees) or 56 hours (if the employer has more than 100 employees).[4]

Unused sick time need not be paid out upon termination or separation of employment.

When can paid sick leave be used?

Sick leave may be used in partial days, but employers are permitted to set a minimum number of hours to be used at a time of not more than four hours. Covered reasons for taking sick leave under the requirement include:

• Care, treatment, preventative care,[5] or diagnosis of mental or physical illness of the employee or the employee’s family member, regardless of whether the condition has been diagnosed or requires medical care; and
• Needs related to the employee or employee’s family member concerning domestic violence, stalking, human trafficking, sexual offenses, shelters and service programs, safety planning, relocating, participating in legal proceedings or meeting with an attorney, social services provider, law enforcement, enrolling children in school, or taking other safety precautions for themselves or their family members.[6]

A “family member” includes an employee’s child or legal dependent, spouse, domestic partner, parent including legal guardian, sibling, grandchild, grandparent, and the child or parent of an employee’s spouse or domestic partner.

Employers are restricted in what information they can request from an employee requesting sick leave,and cannot request anything of a confidential nature from the employee.[7]

Correlation to Existing Policies

Employers may provide more generous sick leave policies if they wish, but those policies must be uniformly applied and should be maintained in writing.

Businesses with sick leave policies that comply with current New York City and/or Westchester County requirements may not need to make changes, but it would be wise to have your current sick leave policies and other leave policies reviewed to make sure you are in compliance with the new legal requirements in New York.

As the effective date approaches, we highly advise all New York employers to review their employee handbooks, PTO policies, and internal procedures to make sure there is no conflict between existing policies and the new legal requirements. Please contact our Labor and Employment Department at (631) 738-9100 if you need a policy revision, overhaul, or guidance on implementation for your business.

[1] All private-sector workers in New York State are now covered under NYSPSL, regardless of industry, occupation, part-time status, overtime exempt status, and seasonal status. Nonprofit employees must also comply with the law. Out-of-state employers must provide NYSPSL to employees who physically work in New York State.

[2] N.Y. Labor Law §196-b.

[3] Under NYSPSL, the amount of sick leave a covered employer must provide is determined by an employer’s size and net income in a given calendar year.

[4] Employers may set a calendar year to mean any 12-month period regarding use and accrual of leave.

[5] Because sick leave can be used for preventive medical care, it would cover absences for routine medical appointments, such as dentist and eye doctor appointments, and it may cover absences due to temporary closure of the employer’s place of business due to a public health emergency.

[6] The need for bereavement leave is not a valid reason under NYSPSL.

[7] Employers cannot require employees to work from home or telecommute instead of taking sick leave. However, an employer can offer employees the option of working from home or telecommuting as an alternative to using NYSPSL. If employees voluntarily agree to work from home or telecommute, they will retain any paid or unpaid sick leave they have accrued.

Note: this article was originally published in March 2020. It has been updated as of November 16, 2020.

The New York State Worker Adjustment and Retraining (WARN) Act requires covered businesses to provide early warnings of closures and layoffs to workers, employee representatives, the Department of Labor, and others. Unfortunately, as the coronavirus pandemic wreaks havoc on the economy, some businesses will be forced to close. Note that the WARN Act’s requirement to provide 90 days advance notice has not been waived, because the WARN Act already recognizes that businesses cannot always predict sudden circumstances. Learn more below about what businesses are covered, the steps you must take, and the information to file. Please reach out to us for guidance – we are here for you.

THE DETAILS

The WARN Act is administered by the U.S. Department of Labor Employment and Training Administration on the federal level and by the New York State Department of Labor on the state level.  Whether you are a longtime business owner or purchasing a new business, you must familiarize yourself with the complex requirements of the WARN Act.

On the federal level, a WARN notice is required when a business with more than 100 full-time workers is laying off at least 50 people at a “single site of employment.”  New York is one of a handful of states (New Jersey, California, Illinois, Wisconsin, and Tennessee) to establish more stringent WARN laws at the state level.

The New York WARN Act applies to private businesses (for-profit or not-for-profit) with 50 or more full-time employees within New York State.  WARN requires businesses to give advance written notice to all its employees as well as certain government agencies prior to particular layoffs, downsizing, or reductions in force.  It covers:

• A “mass layoff” occurs when, over a 30-day period, a reduction-in-force results in an “employment loss” of more than six months for: (a) at least 25 full-time employees who represent at least 33% of all of employees at the work site; or (b) at least 250 full-time employees.
• A “plant closing” is defined as an “employment loss” of 25 or more full-time employees during a 30-day period due to a permanent or temporary shutdown of the worksite.
• Under WARN, a “relocation” occurs when “all or substantially all” operations are relocated to a location at least 50 miles from the current location and where 25 or more full-time employees suffer an “employment loss.”

Previously, under the WARN Act in New York, the government agencies required to be notified were the New York State Department of Labor and the relevant local Workforce Investment Board. But in an amendment signed by Governor Cuomo that went into effect on November 11, 2020 (Assembly Bill 10674-A), employers must now also provide advance notice to:

• The chief elected official of the unit of local government in which the mass layoff, relocation, or employment loss will occur;
• The chief elected official of the school district in which the mass layoff, relocation, or employment loss will occur; and
• Each locality that provides emergency services to the site of employment where the employment loss will occur.

The New York WARN requirements are complex.  To complicate matters further, employment losses are aggregated over a rolling 90-day period.  So, employers not only have to look at whether employment losses taking place at a particular point in time meet the thresholds above, but they must also be mindful of employment losses in the recent past and anticipated employment losses in the near future when determining whether notice is required.  Also, certain workers, such as part-time employees working fewer than 20 hours per week or employees that have worked less than six months in the past year, are not counted when calculating the number of employees for WARN.

Employers should be mindful of WARN when buying or selling a business.  In M&A transactions, the seller is responsible for providing WARN notice for employment losses up to and including the effective date of the sale.  The buyer is responsible for providing WARN notice for employment losses post-closing.  On the closing date, employees of the seller automatically become employees of the buyer for purposes of the WARN notice requirement.  Because of this, post-closing WARN liability is commonly negotiated between buyers and sellers.  The parties are best served to work together when it comes to transitioning employees or letting them go.

Businesses that do not comply with WARN’s requirements may be required to pay back wages and benefits to workers as well as a civil penalty to the Department of Labor.  Each scenario is different and employers should consult with experienced legal counsel before making employment decisions.

Business owners, if you received a PPP loan and are now contemplating a change of ownership, you may need consent from your lender and even the SBA under certain circumstances. Read on to learn what qualifies as a “change of ownership” and what to be aware of before moving forward with the sale.

For purposes of the PPP, what is a “change of ownership”?

1. At least 20 percent of the common stock or other ownership interest of a PPP Borrower is sold or otherwise transferred.
2. The Borrower sells or otherwise transfers at least 50 percent of its assets.
3. A Borrower is merged with or into another entity.

Regardless of any change of ownership, the Borrower remains responsible for a variety of tasks, most notably, the performance of all obligations under the PPP loan. Additionally, prior to the closing of any change of ownership transaction, the Borrower must notify and provide the Lender with a copy of the proposed agreements.

What if the PPP Note is fully satisfied prior to the change of ownership?

There are no restrictions on a change of ownership if, prior to closing the sale or transfer, the Borrower has:

• Repaid the PPP Note in full; or
  • Completed the loan forgiveness process in accordance with the PPP requirements; and
    • SBA has remitted funds to the Lender in full satisfaction of the PPP Note; or
    • The Borrower has repaid any remaining balance on the PPP loan.

What if the PPP Note is NOT fully satisfied prior to the change of ownership?

Prior approval of the SBA IS NOT required:

• If the change of ownership is structured as a stock sale of 50 percent or less of the common stock of the Borrower, or if the Borrower completes a forgiveness application reflecting its use of all PPP loan proceeds and submits it to the Lender, and an interest-bearing escrow account is established with funds equal to the outstanding balance of the PPP loan.

• If the change of ownership is structured as an asset sale, if:
  • The Borrower completes a forgiveness application reflecting its use of all the PPP loan proceeds and submits it to the Lender, and an interest-bearing escrow account is established with funds equal to the outstanding balance of the PPP loan.
  • After the forgiveness process is completed, the escrow funds must be disbursed first to repay any remaining PPP loan balance plus interest.
  • The Lender must notify the appropriate SBA Loan Servicing Center of the location of, and the amount of funds in, the escrow account.

Prior approval of the SBA IS required if a change of ownership does not meet the conditions above. When this approval is needed, contact us or your accounting professional for guidance on how to make the submission.

If you have an outstanding PPP loan and are contemplating a sale of your business or its assets, our attorneys are ready to answer questions regarding this latest guidance or any other COVID-19 related legal concerns. For assistance, please contact us at (631) 738-9100 and visit our Mergers & Acquisitions practice area to learn more about our services.

The information in this article is from: SBA Procedural Notice, Small Bus. Admin. (Oct. 2, 2020)

Thank you to Daniel Axelrod for his research and writing assistance for this article.

Campolo, Middleton & McCormick, LLP is proud to announce that seven attorneys at the firm, in multiple practice areas, have been named to the 2020 Super Lawyers list. The CMM attorneys recognized this year, in practice areas including Business and Corporate, Personal Injury, Real Estate, Business Litigation, Mergers & Acquisitions, Construction Litigation, Employment Litigation, Civil Litigation, and Appeals, are:

• Joe Campolo
• Scott Middleton
• Patrick McCormick
• Christine Malafi
• Jeffrey Basso
• Donald Rassiger
• David Green (Rising Star)

The rigorous Super Lawyers selection process is based on peer evaluations, independent research, and professional achievement in legal practice. The “Rising Stars” recognition denotes superior professional achievement by attorneys who have been in practice for under 10 years or are under age 40. No more than 2.5 percent of lawyers in New York State are named to the Rising Stars list.

Learn more about CMM’s outstanding legal professionals here.

By Christine Malafi

As Election Day approaches, employers should take note: last year, you may recall that New York State’s Election Law was amended to increase the amount of paid time off that employees could take to vote from two hours to up to three hours. This year, the law has reverted to the previous provisions with additional changes outlined below.

As of April 12, 2019, Election Law § 3–110 required that employees in New York who are registered voters may request and receive up to three hours paid time off to vote, regardless of their work schedule and without loss of pay. Under the 2020 amendments, the law reverts back to up to two hours of paid time off to vote, but only if the employee did not have four or more consecutive hours off between either the time the polls opened and the start of their shift, or the end of their shift and the time the polls closed.

Every employer must post the new Election Law requirements in a noticeable place, accessible to all employees and on company grounds, at least 10 days prior to every election, and leave the notice up through at least the close of the polls on Election Day. Additionally, employee handbooks need to be updated to reflect the new Election Law requirements.

Employees are allowed time off to vote only at the beginning or at the end of their work shift, at the employer’s discretion, unless another time is agreed upon between employee and employer. Employees must also notify their employer at least two working days prior, though not more than ten, to an election if they require time off to vote. Notably, the time off is “up to” two hours, not two hours. The law states that employees cannot be required to utilize any form of earned leave time or paid time off (PTO) to vote.

This law applies to all elections under the Election Law in its entirety—including primary and special elections. Specifically, the Election Law covers federal, state, county, city, town, or village office elections, as well as elections on ballot questions that are submitted to voters either state, county, city, town, or village-wide.  It does not apply to school district, fire district, or library district elections and budget votes, as these are generally governed by laws other than the Election Law. The amended law does not indicate whether an employer is permitted to request proof of voter registration or require a voting receipt or other proof that the employee actually used their time off to vote.

Changes such as this one can leave businesses, especially small businesses, scrambling to stay on top of the requirements and at increased risk for non-compliance. For any questions about how to implement these changes at your organization in the least disruptive way possible, please contact our office.