News and Articles

December 2015 Newsletter

Yogi Patel - Wednesday, December 02, 2015

Dear valued clients and supporters: This month's newsletter will focus on: (1) The nation-wide increase in the usage of arbitration clauses in employment agreements; (2) Negotiating a more favorable employment offer/agreement; (3) The "Alter Ego" doctrine; and (4) New York City's Fair Chance Act.

 

Arbitration Agreements
In recent years, there has been a nation-wide spike in the usage of arbitration clauses by employers in their employment agreements. The motivation for employers to include such clauses is that they typically require employees to settle any grievances through arbitration, effectively preventing them from bringing an action in court. The clauses also usually require that all disputes be brought individually, which can have the effect of prohibiting employees from bringing class action suits. In the wake of United States Supreme Court decisions upholding the validity of arbitration clauses that prevent employees from bringing a collective suit, many employers are now requiring that all employees agree to arbitration as a term of employment. Employers and employees are advised to consider the implication of this trend, as employers may seek to include arbitration clauses while employees may seek to negotiate the removal of this term when possible.


Negotiating A More Favorable Employment Offer/Agreement
Many employees may not be aware that when they are offered a new position, they often have significant leverage at their disposal to negotiate for better terms of employment. Prospective employees who bring years of experience or unique skills and knowledge should not sell themselves short at the bargaining table, especially prior to accepting an offer of employment. From increases in salary, stock options and other benefits, to more favorable terms of severance, grounds for termination, and restrictive covenants, employees should consider what they can gain through such negotiations. An in-depth article addressing terms that an employee should consider negotiating as well as how to negotiate effectively so that an employer is not "put-off" by your ask is now available here on our website.


"Alter Ego" Liability
The number one reason why business owners form corporate entities is to insulate their personal assets from the liabilities of the company--if the business has an issue that causes it to owe money, the owner's house, bank account, and other personal property cannot be used to pay the company's debt. However, when a business owner abuses this protection and primarily uses the entity for her own personal gain rather than to transact the corporation's business, a court may find that the business is actually the "alter ego" of the owner. Upon such a finding, the owner and the business are treated as one and the owner's personal assets become at risk. To find out more about the factors New York courts look at under an "alter ego" analysis and the consequences of a determination stripping a business owner of the protections of her corporation, please read a more in-depth article posted here on our website.


New York City's Fair Chance Act
On October 27, 2015, the New York City Fair Chance Act went into effect. The law makes it illegal for employers to ask applicants about a criminal record before making a job offer. The Act bans reference to criminal histories or background checks in employment ads, job applications and during interviews. An in-depth article analyzing the Act and an employers obligations under the new law are now available here on our website.


Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on this and other issues throughout the month.

The New York City Fair Chance Act Requires Employers to More Carefully Evaluate Applicants With Criminal Records

Yogi Patel - Monday, June 29, 2015

The newly passed Fair Chance Act (the “Act”) will prohibit employers from inquiring about a job applicant’s criminal history, including arrest and conviction records, during interviews before a conditional offer of employment is made. In addition, the Act, which Mayor Diblasio is expected to sign shortly, will ban employers from conducting pre-offer searches of public records and certain consumer reports that contain criminal conviction information. Once a job applicant is given a conditional offer of employment, the employer can do a background check and ask for information about convictions that may be relevant to the job. 

The reasoning behind proponents of the Fair Chance Act is simple: job applicants should not be automatically screened out of the hiring process based solely on past mistakes before they’ve had an opportunity to prove their qualifications for the position they seek.  Under the Fair Chance Act, employers will now be required to evaluate these applicants’ fitness for the job, just like any other applicant, instead of screening them out before they’ve even had a chance. The Fair Chance Act passed the New York City Council by a vote of 45-5-1.

New York State law already limits when employers can inquire about or make employment decisions based on past arrests that never led to any conviction. The law also already requires employers with four or more employees to do a careful analysis of any applicant with a criminal record before they rule out the applicant on that basis. Employers unfamiliar with those restrictions should seek legal guidance to develop a consistent procedure and policy for handling applications by individuals with criminal histories. 

Let’s be clear: the Fair Chance Act is not a requirement that employers hire individuals with criminal convictions and does not change existing law; it simply requires them to judge these applicants on their merits before considering their prior convictions. 

The Fair Chance Act takes the criminal record question off the table until a conditional offer of employment is made, leveling the playing field for job seekers with criminal histories and ensuring that all New Yorkers have a “fair chance” at employment, especially if the applicant’s past conviction really has no bearing on the job they are applying for. The Fair Chance Act does not apply to employers with less than four employees. However independent contractors who are not employees are considered persons in the employ of the employer if they are hired to carry out work in furtherance of the employer’s business enterprise, so small businesses that use independent contractors should still take note.

After making a conditional offer of employment, the employer must notify the job applicant that a background inquiry will be performed; this is a new requirement. If the applicant has a prior conviction, the employer must first perform the careful analysis required under previously existing law—evaluating the particular crime the applicant was convicted of and its potential relationship with the position and the job—and then provide a copy of its inquiry and analysis to the applicant. If, after receiving information regarding the applicant’s record, the employer no longer wants to employ the applicant, the employer must explain why and provide a copy of the record it relied on in making that decision. The position must then be held open for three days so the employer and applicant can engage in an interactive discussion, considering the employer’s requirements and the applicant’s evidence of good conduct, if the applicant so chooses. This time also allows the applicant to question any inaccuracies on the record, which is not as uncommon as one might assume.

Failure to adhere to the strict notice procedure will result in an automatic presumption that the employer has engaged in unlawful discrimination based upon the applicant’s criminal history in any future litigation. The presumption can only be overcome by “clear and convincing” evidence presented by the employer. Of course, this means that like all employment decisions, employers must keep very good records of their decision-making process and have a solid and consistent policy and procedure in place that is closely followed.

Other laws currently in place still require background checks and prevent people with certain serious convictions from working in daycares and as home health aides, among other positions. The Fair Chance Act does not affect these jobs or change the background check requirements. These employers are allowed to tell applicants that the jobs are subject to a background check. Employers that are required by law to conduct background checks and exclude people with specific convictions may still do so. Employers may still conduct criminal background checks and deny employment to workers with conviction histories that are directly related to the job or pose an unreasonable risk.

The attorneys at Lloyd Patel LLP are available to help employers develop or modify their employment manuals and policies to comply with the law and to consult with employees who believe they have been the victim of unlawful discrimination. Contact us at info@lloydpatel.com or (212) 729-4266.


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