It can be a challenge to stay on top of the ever-changing employment laws in New York State. Let us help. Attorneys in Goldberg Segalla’s Employment and Labor practice group synopsized 12 recent changes that impact the majority of New York businesses and pulled them together here for easy reference.

1. Non-Compete Ban Halted in New York
2. New York Enacts Freelance Isn’t Free Act
3. New York Enacts the Clean Slate Act
4. New York Increases Salary Threshold for Wage-Payment Protections
5. New York Minimum Wage Levels Increase
6. New York Increases Salary Threshold for Minimum Wage and Overtime Exemptions
7. New York Codifies Employee Intellectual Property Rights
8. New York Prohibits Liquidated Damages Provisions in Certain Non-Disclosure Agreements
9. New York Prohibits Employers from Requesting that Employees/Applicants Provide Access to Electronic Personal Accounts
10. New York Codifies Employer Requirement to Notify Employees of Unemployment Benefit Rights
11. New York Extends Statute of Limitations to File Employment Discrimination Claims with the Division of Human Rights
12. New York Amends Penal Law to Increase Penalties for Employee Wage Theft

1. Non-Compete Ban Halted In New York

On December 22, 2023, Gov. Hochul vetoed S3100A/A1278, a law passed by the New York State legislature in June 2023. The bill would have created a section in the New York Labor Law, defined “non-compete agreement” and “covered employees,” prohibited the imposition of a non-compete on a covered employee, voided any non-compete entered into after the effective date of the bill, and provided a mechanism for aggrieved employees to enforce the bill.

While Gov. Hochul voiced support for a prohibition of non-competes on middle-class to low-wage earners, she did not agree with the one-size-fits-all approach the bill employed.

As a result of the veto, non-compete agreements in New York continue to be governed by the landmark Court of Appeals case BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999). In BDO Seidman, the Court of Appeals articulated the “prevailing standard of reasonableness” applied by New York courts in determining the validity of employee agreements not to compete. BDO Seidman held that “a restrictive covenant will only be subject to specific enforcement to the extent that it is reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the general public, and not unreasonably burdensome to the employee.”

New York employers that choose to use restrictive covenants in employment agreements should continue to be mindful of the framework of enforceability laid out in BDO Seidman, how BDO Seidman has been applied in specific industries, and potential future legislation in New York that may limit the scope of the enforceability of non-compete agreements.

2. New York Enacts Freelance Isn’t Free Act

Gov. Hochul signed S5026/A6040, enacting the Freelance Isn’t Free Act (FIFA). FIFA is modeled after a New York City Law, and mandates the payment of freelance workers as independent contractors, including requiring written contracts, timely payment of compensation, and the handling of controversies relating to payment, complaint procedures, and penalties.

The law becomes effective May 20, 2024. Any employer that utilizes independent contractors (with the exception of construction contractors, as defined by the law), should evaluate their independent contractor relationships to first ensure that it is a true independent contractor relationship, and then to confirm compliance with FIFA.

3. New York Enacts the Clean Slate Act

Gov. Hochul signed S7551A/A1029 enacting the Clean Slate Act.

The law amends the criminal procedure law, the executive law, the correction law, the judiciary law, and the civil-rights law. Specifically, it automatically seals certain convictions after a certain passage of time from the imposition of sentence, release from parole or probation, and if the defendant does not have a current charge pending. Notably, the law does not alter employer obligations under the Fair Credit Reporting Act or New York Corrections Law Article 23-A, which prohibits an employer from unlawfully discriminating against a person previously convicted of one or more criminal offenses.

The law goes into effect on November 16, 2024. Employers should review their hiring processes to ensure compliance.

4. New York Increases Salary Threshold for Wage-Payment Protections

Gov. Hochul signed S5572/A6796, which increases the threshold for applicability of wage-payment protections under Article 6 of the New York Labor Law for certain persons employed in a bona fide executive, administrative, or professional capacity, from $900 to $1,300 per week. The law becomes effective on March 13, 2024.

5. New York Minimum Wage Levels Increase

The Minimum Wage rate varies by region and industry, and will be increased on January 1, 2024. Specifically, the minimum wage is scheduled to increase on January 1, 2024 to $16.00 per hour for New York City and the counties of Nassau, Suffolk and Westchester, and to $15.00 per hour for the rest of the state. In addition to this increase, the labor law provides further increases by $0.50 per year on January 1, 2025 and January 1, 2026.

6. New York Increases Salary Threshold for Minimum Wage and Overtime Exemptions

In October 2023, the New York State Department of Labor released proposed regulations to increase the salary threshold for minimum wage and overtime exemptions under the New York Labor Law. After a comment period, and on December 27, 2023, those changes were adopted by the NYSDOL in the New York State Registrar. Employers should audit their employees that are currently classified as exempt to ensure they are still properly classified.

7. New York Codifies Employee Intellectual Property Rights

Gov. Hochul signed S5640/A5295 enacting New York Labor Law Section 203-f, which renders any employment agreement unenforceable if it requires employees to assign the rights to inventions developed using the employee’s own property and time. The law does specify exemptions for intellectual property created with actual or demonstrably anticipated research of the employer, or from work performed by the employee in the course of their work for the employer.

The law became effective immediately when it was signed by Gov. Hochul in Fall 2023. It highlights the importance for employers to clearly delineate the scope of employee duties that are involved in developing products, services, or technologies that potentially have intellectual property value.

8. New York Prohibits Liquidated Damages Provisions in Certain Non-Disclosure Agreements

General Obligations Law Section 5-336 was enacted in 2018 with the intent of limiting an employer’s authority to include or agree to include in any settlement, agreement or other resolution of any claim, the factual foundation for which involves discrimination, any term or condition that would prevent the disclosure of the underlying facts and circumstances to the claim or action.

Gov. Hochul recently signed S4516/A581, amending General Obligations Law Section 5-336. The law includes a change indicating that the 21-day period that an employee is given to consider an agreement that keeps the underlying facts and circumstances of a discrimination, harassment, or retaliation claim confidential, is now waivable if it is pre-litigation. This is because the law changes the language in General Obligations Law Section 5-336 to state “up to twenty-one days,” but did not change Civil Practice Law & Rules 5003-b, which continues to include the language “shall have twenty-one” days. The law also adds that it applies to employees and independent contractors.

Finally, the law enacts a subsection c(3) to General Obligations Law Section 5-336, which prohibits the following from a release of a covered claim:

1. Clauses where the complainant is required to pay liquidated damages for violations of non-disclosure or non-disparagement clause.
2. Clauses where the complainant is required to forfeit all or part of the consideration for the agreement for a violation of a non-disclosure or non-disparagement clause.
3. Clauses that contain or require any affirmative statement, assertion, or disclaimer by the complainant that the complainant was not in fact subject to unlawful discrimination, harassment, or retaliation.

The newly enacted subsection c(3) has an arguably narrower application than other portions of the statute. Specifically, General Obligations Law Section 5-336(c) uses the phrasing “if as a part of the agreement resolving such claim,” whereas General Obligations Law Section 5-336(a) refers to “any settlement, agreement or other resolution of any claim.” As a result, there is currently ambiguity as to the whether the amendments apply to a typical severance agreement with a general release, where no claim of discrimination has been asserted by the employee. As of the date of this alert, New York State has not updated its FAQs on these amendments.

This law is effective immediately. Employers should review their agreements that include a release of employment claims in light of these amendments.

9. New York Prohibits Employers from Requesting that Employees/Applicants Provide Access to Electronic Personal Accounts

Gov. Hochul signed S2518A/A836, enacting New York Labor Law Section 201-h.

The law imposes restrictions on employers from forcing applicants/employees to provide employers with access to electronic personal accounts, such as social media websites.

There are a number of exceptions to the law, which focus on the employers continued right to access such accounts if they relate to the employer’s business or if it is needed for compliance with a court order. Employers continue to be allowed to view information on applicant/employee social media accounts that are available publicly.

The law is effective on March 12, 2024. Employers are advised to review this law in conjunction with their hiring practices.

10. New York Codifies Employer Requirement to Notify Employees of Unemployment Benefit Rights

Gov. Hochul signed S4878A/A298. The law amends New York Labor Law Section 590 by adding a section that requires employers provide notice to employees that they may be eligible for unemployment benefits whenever the employee’s scheduled hours are reduced or the employee’s employment is terminated. Such notice must include the employer’s name and registration number and a contact address for the employer.

New York State has since released FAQs about the amended law. Employers should review their employment processes to ensure employees receive this notice when required.

11. New York Extends Statute of Limitations to File Employment Discrimination Claims with the Division of Human Rights

Gov. Hochul signed S3255/A501. In 2019, the legislature amended the law to increase the statute of limitations to file a claim with the New York State Division of Human Rights from one to three years for unlawful discriminatory practices that constitute sexual harassment in employment.

The law amends New York Executive Law Section 297 to extend the statute of limitations for filing complaints about any alleged unlawful discriminatory practices to the New York State Division of Human Rights from one year to three years, consistent with the current statute of limitations for administration complaints alleging sexual harassment in employment.

The new statute of limitations will take effect in February 2024 and apply to claims arising on, or after, the effective date.

12. New York Amends Penal Law to Increase Penalties for Employee Wage Theft

Gov. Hochul signed S2832A/A154. The law amends the penal law to add wage theft to the types of activities included in the crime of larceny.

Specifically, it defines wage theft as the following: A person obtains property by wage theft when he agrees to hire a person to perform services and the person performs such services and the defendant withholds such wages from said person. In a prosecution for wage theft, for the purposes of venue, it is permissible to aggregate all takings from one person from one defendant into one larceny count, even if the takings occurred in multiple counties. It is also permissible to aggregate takings from a workforce into one larceny count.

The purpose of the law is to allow prosecutors to seek stronger penalties against employers who steal wages from workers. Employers should regularly conduct wage and hour audits to ensure they are in compliance with the various wage and hour laws at the state and federal levels.