The New York State Department of Financial Services (“DFS”) Superintendent revealed the new Paid Family Leave (“PFL”) benefit and employee contribution rates on Friday August 30. By law, those on PFL will receive up to 60% of the New York State average weekly wage (which the DFS set at $1,401.17 for 2020), for the up-to-10 weeks of PFL taken during the year. Accordingly, most employees who take PFL in 2020 will receive $840.70 per week, up about $100 from 2019, and it will be interesting to see if more employees seek to take it. The employee contribution for PFL will be .270% of wages per pay period in 2020, up to a maximum of $196.72 for the year.

Under the federal Fair Labor Standards Act, employers who agree with employees who work a fluctuating number of hours each week to pay them a base salary regardless of the number of hours worked, are then able to pay those employees half-time for their overtime hours.  This somewhat unknown, and not often used, structure generally saves employers money and gives employees the certainty of the salary during weeks working less than 40 hours. One drawback to the current law, according to some employers and employee, is that additional compensation, such as through bonuses or commissions, are not permitted for those utilizing the fluctuating work week/half time overtime option.  The DOL has recognized the value of the option to employers and employees and has indicated that it will publish a proposed rule to “grant employers greater flexibility to provide additional forms of compensation to employees whose hours vary from week to week”. The proposed new rule is expected out soon. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

On June 25, we wrote about new anti-harassment legislation that we expected Governor Cuomo to sign into law.  On August 12, he did, in fact, sign that legislation and expanded the definition of what is considered legally actionable harassment in the workplace.  The traditional standard that harassment must be “severe and pervasive” will no longer apply.  Now, a complainant must show that the conduct in question rises above the level of “petty slights and trivial inconveniences.”  Additional changes are: NYS employers of any size are covered by anti-discrimination and anti-harassment laws.  Previously, this was only true in sexual harassment cases. Traditionally, a NYS employer had a strong defense to a claim if an employee did not use the internal complaint procedure.  Now, whether an employee made a complaint or not will not be determinative of the employer’s liability in the employee’s claim. Individuals claiming discrimination will not be required to show that a comparator was treated better than them to allege or establish such a claim.  Punitive damages will be available in discrimination, harassment, and retaliation cases.  A prevailing employee “shall” be awarded attorney’s fees, while a prevailing employer may seek attorneys’ fees if it can show the employee brought a frivolous claim. Employers must distribute their harassment policy both at the time of hire and during annual sexual harassment prevention training.  The policy must be given in English as well as in the language identified by each employee as that employee’s primary language so long as NYS published a model policy in that primary language.  Most of these changes go into effect 60 days after the law was signed.   The law also expands the definition of “employer” to include not only a corporation or entity, but “any person” acting as the employer.  This means individuals acting as an employer as defined by law can be held personally liable for illegal conduct.  Previously, individuals could only be personally liable for discrimination and/or harassment if they “aided and abetted” the discriminatory conduct.     As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Many years and two law firms ago, my boss brought in a case for Tony, one of his best friends. Tony had purchased some property for his business that turned out to have subsurface petroleum contamination. The seller, a paving company that had used the property to store its equipment, had given Tony an indemnification agreement at closing, under which the seller agreed that if any contamination was discovered, it would pay the cost to clean up whatever contamination it had caused. After the closing, Tony discovered contamination during the construction of a building on the property, and the DEC ordered him to remediate the contamination. Tony hired an environmental remediation company to excavate tons of contaminated soil, and then made a demand on the seller for indemnification. The seller denied that it caused the contamination and refused to honor the indemnification agreement. My boss assigned the case to one of the firm’s environmental lawyers, and that lawyer commenced an action against the seller and started discovery. When that lawyer left the firm in the middle of the case, my boss had me take it over. I handled the depositions of the parties, made and won a summary judgment motion for an order that the seller had breached the indemnification agreement, and defeated the seller’s appeal from that order. Following the appeal, the case was scheduled for a jury trial. When I received the scheduling order, I told my boss that I would put together the case for him to try, as was our usual practice. My boss said that I would try the case. I reminded him that I had never done a jury trial. He said, “Don’t worry, you’ll be fine. Just don’t tell Tony.” Although I had argued many motions and appeals, prepared many cases for trial and participated in those trials as second chair, and attended “trial school” at the National Institute for Trial Advocacy, I was a little nervous. Opposing counsel was an experienced trial lawyer. I found a book in the firm library called “Preparing for and Trying the Civil Lawsuit,” edited by one of the firm’s senior partners. I read it when I started trial preparations, and that book became my operating manual. I also had the help of the firm’s best litigation paralegal. As I dug into the file, I realized that the previous lawyer, who was not really a litigator, had done a poor job in developing the necessary scientific proof, and the evidence showing that the seller (and not some other party) had caused that contamination was not quite as strong as I had been told. I had to play the hand I was dealt. I retained two expert witnesses: an environmental engineer to testify that the seller had caused the contamination, and a commercial real estate appraiser to testify on the value of the property with and without the contamination. I subpoenaed the DEC’s file on the contamination. I met with Tony and the other witnesses to prepare them for their direct testimony and cross-examination, and the paralegal and I put together our trial notebooks in the same way we had always done. I read the rules, and re-read the chapter in the book, on jury selection the night before jury selection, but the jury selection process remained a metaphysical mystery to me. Nevertheless, we ended up with a decent jury. Every night, I re-read the chapter on the next phase of the trial (opening statement, direct examination, expert testimony, etc.) in order to be ready for the next day’s events. Along the way, I anticipated, and defeated, an oral defense motion in limine based on an argument that one of our interrogatory answers (written by the previous lawyer) did not sufficiently articulate Tony’s damages. Once the trial started, I tried to act like I had been there before. I gave my opening statement. I got all my evidence in. I handled the direct and cross-examination. The seller’s owners wore beautifully tailored suits and were very smooth. When my questions on cross-examination cut too close to the bone, they pretended they did not understand English very well. I made objections and responded to objections, even when I was not exactly sure of the grounds. I had the judge take judicial notice of the fact that unleaded gasoline was not even available for sale at the time the seller’s owners testified that they had installed an unleaded gasoline tank on the property (that was important for some now-forgotten reason). I made it through with the help of the book and a great paralegal. Tony, the judge and opposing counsel never guessed that this was my first jury trial. But after I finished my closing argument, my paralegal asked me why I was fidgeting around so much in front of the jury. When the jury retired to begin its deliberations, Tony said, “You did a great job.” The jury came back and awarded Tony damages, but not as much as he wanted. When we went out for a drink afterwards, Tony said, “You did a good job.” I couldn’t blame him for being disappointed but thought that sudden change of opinion was amusing. When I told my boss what Tony had said, he laughed and told me to get used to it. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

“Brevity is important.” — Chief Judge Carl L. Bucki, Chief Bankruptcy Judge for Western District of New York This summer, I am mentoring and coordinating assignments for a talented, rising 3L at the University at Buffalo School of Law, who returned to our law firm for a second year as a summer associate. During quieter periods between assignments, we have discussed how discrete research and writing projects fit into the larger proceeding of a pending case and, in those moments, I have had an opportunity to reflect on advice I received as a young litigator. This reflection dovetailed with a program I attended at the annual gathering of the bankruptcy bars of the Western District of New York — a wonderful joint venture of the Erie County and Monroe County Bar Associations. This year’s event fell on a warm, sunny Friday in June. Attendees were invited to submit questions to a panel of the bankruptcy judges presenting at the conference, who graciously answered questions for an hour in a lecture hall after lunch. This article offers a sampling of what the bankruptcy judges shared last month, as well as some select advice received from trusted mentors during my early days of law training. Good writing counts. “Aim for brief, concise, pithy.” Those were the words of instruction I received on my first motion drafting assignment. I was reminded of that exchange with a senior litigation partner — which occurred nearly 15 years ago — during the recent afternoon Q&A session when Chief Judge Bucki responded to the question of what advice would the judges give to young practitioners. Judge Bucki responded, without pause, “Brevity is important.” The judge continued by saying that every time he looks at court papers, he thinks about someone having had to pay for the submission. To the extent possible, the chief judge would like to keep costs out of the justice equation. The response struck me as a variation on a theme of similar advice from Abraham Lincoln who, in an 1850’s lecture to law students, said that although the law may be a profitable profession, “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how often the nominal winner is a real loser — in fees, expenses and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good man. There will still be business enough.” First impressions count. “If your name is on papers and you are unknown to the Court, lots of first impressions will be made on the quality of your written submission. Be obsessive regarding the quality of the papers you send into Court.” — Judge Robert E. Littlefield, Jr., U.S. Bankruptcy Judge for the Northern District of New York. Judge Littlefield’s comment resonated as I thought back to my legal writing professor’s oft-repeated maxim, “There is no such thing as good writing, only good rewriting.” In 14 years of practice, I have yet to find an exception to this principle. Use correct form. “Use a separate memo of law in pleading form when submitting argument to the court. Do not cite law in affidavits or in letters.”—Judge Paul R. Warren, U.S. Bankruptcy Judge for the Western District of New York. Those who have appeared at Special Term before Hon. Evelyn Frazee (ret.) will have heard the judge’s regular admonition against submission of “briefadavits” or “affirandums of law.” Many local rules in New York provide that affidavits must not contain legal argument but only factual and procedural background relevant to the motion the affidavit supports. See, e.g., U.S. District Court for Northern District of New York Local Rules of Practice, Rule 7.1(a). Indeed, at least a few federal court decisions have struck affidavits of counsel because they contained legal argument. Local practitioners will do well to develop the habit of creating a separate memorandum of law before submitting legal argument — especially those appearing on cases in Judge Warren’s courtroom. Effective advocacy involves good form and accuracy. “If you’re going to cite a case as authority, be sure any quote is thoroughly vetted and proofread.” — Judge Michael J. Kaplan, U.S. Bankruptcy Judge for the Western District of New York. Judge Kaplan advised that he does not appreciate it when authority is cited, and the Court goes to look up the case and finds the proposition cited does not actually square with that for which the brief says it stands. Pro bono matters. “Have new lawyers take one, two or three cases through VLSP. It is a practice opportunity, and it will give the lawyer a chance to see what debtors are actually going through.” — Judge Bucki. I agree with the judge. Good quality pro bono helped me to develop as a lawyer and as a person. VLSP cases provided firsthand experience delivering news — both good and bad — to clients. My first argument in federal court was on a motion for summary judgment on an assigned civil rights case. My preparation for oral argument on multiple interesting questions of law served as a good data point regarding how much preparation is required for good, effective argument. Civility counts. Finally, Judge Littlefield offered a concise reminder for a time when participants in public discourse seem to be increasingly challenged to work constructively and disagree respectfully. “Be civil. You can still be an effective advocate and be civil.” Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

The NYS Legislature recently approved changes to the state’s discrimination and harassment laws. Governor Cuomo has indicated that he intends to sign the legislation. Among the major changes are the following: •NYS employers of any size are covered by anti-discrimination and anti-harassment laws. Previously, this was only true in sexual harassment cases. •Traditionally, a NYS employer had a strong defense to a claim if an employee did not use the internal complaint procedure. Now, whether an employee made a complaint or not will not be determinative of the employer’s liability in the employee’s claim. •Individuals bringing claims will not have to meet as stringent evidentiary requirements. •The traditional standard that harassment must be “severe and pervasive” will no longer apply. Now, a complainant must show that the conduct in question rises above the level of “petty slights and trivial inconveniences.”  •Individuals claiming discrimination will not be required to show that a comparator was treated better than them to allege or establish such a claim.  Punitive damages will be available in discrimination, harassment, and retaliation cases.  •A prevailing employee “shall” be awarded attorney’s fees, while a prevailing employer may seek attorneys’ fees if it can show the employee brought a frivolous claim. •Employers must distribute their harassment policy both at the time of hire and during annual sexual harassment prevention training. The policy must be given in English, as well as in the language identified by each employee as that employee’s primary language so long as NYS published a model policy in that primary language.  Please note that this law applies to NYS claims but not to federal Title VII claims for discrimination and sexual harassment. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800. #LaborLaw #EmploymentLaw

Over the last decade, development of shale gas through hydraulic fracturing has blossomed in Pennsylvania. The shale gas boom has led gas companies, including National Fuel Gas Supply Co. from New York, to explore and expand opportunities south of the New York border. Production of natural gas from Pennsylvania sources has led to the need to ship the gas to market. Several years ago, National Fuel proposed a Northern Access Pipeline Project of about 100 miles to bring the gas to Buffalo and link up with a Canadian pipeline under the Niagara River. In order to develop the pipeline, National Fuel applied to the Federal Energy Regulatory Commission (FERC) for a federal permit. Corresponding to the pipeline permit, National Fuel sought a Clean Water Act (CWA) water quality certificate for the pipeline from DEC. The proposed pipeline route runs through Alleghany, Cattaraugus and Erie counties and includes 192 creek and stream crossings. Not surprisingly, after having refused to permit hydraulic fracturing in New York in 2015 following its protracted environmental impact review process, DEC took a similar dim view of a pipeline project that sought to take advantage of the natural gas produced in Pennsylvania through that method. In March 2016, National Fuel and its subsidiary, Empire Pipeline, requested the water quality certification from DEC. Under the CWA, the DEC had one year to act on the request, but DEC did not act until April 7, 2017, by denying the request. The DEC asserted that the agency and applicant agreed in January 2017 that the application date was revised to April 8, 2016, making the denial timely. FERC granted National Fuel a certificate of public convenience and necessity to construct the pipeline on Feb. 3, 2017, in Pennsylvania and New York. However, under Section 401 of the CWA, the company was required to obtain state water quality certificates from both states prior to proceeding with construction of the pipeline. The Pennsylvania Department of Environmental Protection granted a state water quality certification on Feb. 11, 2018. As a regulatory agency, FERC ruled that DEC was 44 days late in 2017 when it denied the water quality certification for the Northern Access Pipeline. In 2018, FERC determined that the CWA does not permit an agreement to alter the application date and rejected DEC’s request for a rehearing. Earlier this month DEC appealed FERC’s denial of the rehearing to the U.S. Second Circuit Court of Appeals. This is the second time that the parties will be before the Second Circuit regarding the Northern Access pipeline. Following DEC’s April 2017 denial, National Fuel petitioned the Second Circuit for review of the decision under the Natural Gas Act. In a Feb. 5, 2019, unpublished summary order, the Second Circuit reversed DEC’s denial of a water quality certification for the pipeline and remanded it back to the state for further elaboration. In its decision, the Court first determined that DEC complied with the requirements of the federal law, namely the CWA. In a second element of its decision, the Court considered with the DEC’s decision was arbitrary and capricious, the standard of review set forth under the Administrative Procedure Act. Applying the arbitrary and capricious standard, the Court determined that “[a]lthough this is a close case, the Denial Letter here insufficiently explains any rational connection between the facts found and choices made.” Significantly, the Court found that DEC did not provide any citations to the record considered in making the agency decision, to specific projects, or to studies DEC may have considered in reaching its conclusion. In addition, the Second Circuit found that DEC based its decision on factors beyond National Fuel’s proposal, including stream crossing methods that were not proposed by National Fuel and identified incorrect project features as part of the determination. Finally, although DEC was free to disagree with FERC’s findings regarding potential impacts on water quality, the agency should have addressed evidence in the record underlying FERC’s water quality findings. The Court held that “[b]ecause the Department did not sufficiently articulate the basis for its conclusions, on appeal we cannot evaluate the Department’s conclusions and decide whether they are arbitrary and capricious.” Consequently, the Court vacated the decision of DEC and remanded it for DEC “to more clearly articulate its basis for denial and how that basis is connected to information in the existing administrative record.” Despite the Court’s acknowledgment that arbitrary and capricious review is narrow and judges lack expertise on matters for which the agency determination rely, the holding and discussion is somewhat striking in the extent to which the DEC failed to substantiate its denial of the water quality certification for the pipeline. After an adverse decision on the substance of the DEC’s decision, the instant appeal by DEC seeking a rehearing on the timeliness of the agency’s denial may face similar challenges at the Second Circuit. It appears that DEC and the State of New York are committed to fighting the Northern Access Pipeline at every level through regulatory agency and court determinations. Although National Fuel has identified a proposed date of 2022 to open the pipeline, it will remain to be seen whether the regulatory and court proceedings are concluded in a time and manner that will allow for that to take place. Download the Reprint from The Daily Record As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

The determination of the regular rate of pay for employees who are non-exempt under the Fair Labor Standards Act (“FLSA”) and, therefore, eligible for time-and-one-half overtime pay for all hours worked over forty (40) in a week is a crucial and sometimes complicated one for employers under current law. In an effort to simplify that law, reflect the 21st-century workplace, and encourage employers to provide additional and innovative benefits without worrying about their inclusion in the regular and overtime rates of pay (or fear of litigation regarding same), the Federal Department of Labor (“DOL”) has issued new proposed clarifications and rules and requested any comments by June 12, 2019. The clarifications are: That the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services may be excluded from an employee’s regular rate of pay That payments for unused paid leave, including paid sick leave, may be excluded from an employee’s regular rate of pay That reimbursed expenses need not be incurred “solely” for the employer’s benefit for the reimbursements to be excludable from an employee’s regular rate That reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and meets other regulatory requirements may be excluded from an employee’s regular rate of pay That employers do not need a prior formal contract or agreement with the employee(s) to exclude certain overtime premiums described in Sections 7(e)(5) and (6) of the FLSA; and That pay for time that would not otherwise qualify as “hours worked,” including bona fide meal periods, may be excluded from and employee’s regular rate unless an agreement or established practice indicates that the parties have treated the time as hours worked. Similarly, the DOL proposes to clarify that truly discretionary bonuses in fact (not merely in label) may be excluded from the regular rate and submits some examples of same. The DOL also proposes to provide examples of accident, unemployment, and legal services benefit plans that will not be included in regular rates. As a final clarification, the DOL proposes that tuition reimbursement plans can be excludable under various provisions of the FLSA. As to substantive changes to existing regulations, the DOL proposes to eliminate the requirement that “call-back” and similar pay be “infrequent and sporadic” in order to be excludable from regular rate. However, the requirement that such payments not be so regular that they amount to be pre-arrangements  will remain. The DOL also proposes to update its “basic rate” regulations so that now employers using an authorized basic rate can make an additional payment to the employee as long as the total overtime computation if it were calculated as part of the regular rate would not increase by more than $2.90 per week. For many employers, nothing will change with these proposed DOL regular rate clarifications/changes, but for those with existing or new benefits plans or compensation systems that implicate any of the topics above, please contact us. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

On April 12, 2019, Governor Cuomo signed into law the New York Fiscal Year 2020 Budget, which included an amendment retroactively extending the three-year “clawback” provisions of Section 954(a)(3) of the New York Tax Law to certain taxable gifts made by New York residents within three (3) years of death up through the new expiration date of January 1, 2026 (the “three-year clawback”). The three-year clawback had previously expired on January 1, 2019, and, by its terms, was to no longer apply to New Yorkers who previously made gifts and subsequently died after December 31, 2018, meaning that gifts that were made within three years of a resident’s death that occurred after January 1, 2019 would not have been included as assets for New York estate tax purposes. How Will the Retroactive Three-Year Clawback Impact New York Residents? The Federal exemption for estate and gift tax under the 2017 Tax Reform Act was significantly increased to a current rate of $11,400,000 per person, or $22,800,000 per married couple. For New York purposes, there is currently no gift tax, and the estate tax exemption amount is currently $5,740,000 per person. If a New York resident is considering making a large gift, nothing will change in regard to the federal estate tax. By way of example, if a New York resident makes a significant gift, he can still take advantage of the $11,400,000 federal estate and gift tax exemption amount for federal estate tax purposes. For New York purposes, however, the resident must take into account how the lifetime gift could potentially impact him for New York estate tax purposes. In the case of most New York residents, the pros/cons of making a large gift should be considered in relation to the New York estate tax. In many cases, however, a resident will be no worse for wear if the resident makes the gift, meaning that if the resident dies within three years of making the gift, the value could potentially subject him to New York State estate tax, but if the gift was never made by the resident in the first place, the value would still be included in the resident’s estate. That said, if a resident is older or in poor health, it may be prudent to make large gifts sooner rather than later since the three-year clawback timeline begins when the gift is made. In that case, making a gift earlier could increase the likelihood that the resident will survive beyond the three-year clawback limit and, therefore, the resident would be successful in making a significant reduction in his New York State Estate. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800. #LaborLaw #EmploymentLaw

As part of the New York fiscal year 2020 budget announced April 1, 2019, Election Law Section 3-110 was immediately amended to allow workers to take up to three hours off of work, without loss of pay, in order to vote in any election. In a significant change from the prior law, the employee need not establish insufficient time to vote during off hours in order to take advantage of voting leave (previously, most employees were not able to show insufficient off hour time). However, nothing in the law entitles employees to more time than needed to vote. Also, employees need to request the voting leave at least two business days prior to the election, and the employer may require that the time be taken at the beginning or end of the work shift. As always, please contact us with any questions about this law or the myriad and ever-changing labor and employment law landscape here or call us at 585.258.2800.

This question and answer was printed in a Monroe County Medical Society 2019 Bulletin. Over the last ten years, there has been a lot of discussion about the shift from volume-based to value-based reimbursement models. The Centers for Medicare & Medicaid Services (CMS) defines value-based care as programs that “reward health care providers with incentive payments for the quality of care they give to people with Medicare.” Programs are part of an overall strategy to provide: better care for individuals, better health for populations, and lower cost. As the healthcare system continues to evolve from fee-for-service payment models to value-based care, physicians practices will need to adapt. The transition is not easy and comes with challenges. Here are five key steps physicians should follow to successfully navigate the transition to value-based programs. 1. Introduce Risk Gradually: Value-based care requires healthcare providers to take on more financial risk than with traditional fee-for-service payment models. Shifting financial risk onto the provider will need to be incremental while investing in care management. 2. Invest in Data Management: Proper preparation and investment in data management is key to understanding the increased financial risk of value-based care. Identify patient population and understand which patients are driving highest costs. Utilizing data management to understand patient population will help identify target population and opportunities for improvement. 3. Enlist Patients: Communicate with patients and keep them engaged as active participants in achieving better care for all individuals. 4. Monitor Progress: Reevaluate, quarterly and annually, how well the practice is achieving predetermined goals of improved patient care and better health outcomes. 5. Collaborate: Consider partnering with hospitals, urgent care centers, physician groups, or other organizations to enhance provider resources, communication and coordination across the continuum of care. Bonus tip: consult an attorney to review any contracts with payers as there may be regulatory requirements to consider. Value-based care is transforming the healthcare industry. Although providers may face challenges in transitioning to the new model, proper planning and monitoring progress will ensure success so that patients and providers can reap the benefits of value-based care. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

Last week the Supreme Court accepted three cases that ask whether federal anti-discrimination laws protect LGBT people from job discrimination.  There is disagreement in lower Federal Courts regarding whether sexual orientation and gender identity are included in Title VII’s prohibition of discrimination based on race, color, religion, sex and national origin. While this decision will have consequences for Federal civil rights litigation, New York employers will still be subject to New York State anti-discrimination laws.  New York’s Human Rights Law has prohibited discrimination on the basis of sexual orientation since 2003.  With New York’s Gender Expression Non-Discrimination Act (GENDA) becoming effective on February 24, 2019, discrimination on the basis of actual or perceived gender identity, expression or transgender status is also prohibited. No matter the decision from the Supreme Court, New York employers may not engage in discrimination or harassment on the basis of sexual orientation or gender identity in New York.  Those who do face civil penalties including back pay, front pay and other damages such as pain and suffering. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.