When a contract dispute arises and you have to bring a lawsuit against the other party, who’s responsible for the legal fees? Many clients are surprised to find that the general rule in New York is that you’re responsible for your own attorneys’ fees unless there’s a law that applies to the situation, which isn’t terribly common.
As a result, even where the other party clearly violates the contract, you’ll generally be responsible for the cost of pursuing the wrongdoer and any associated fees. This upsets many clients because, honestly, who wants to pay the costs of a lawsuit to recover something to which you’re already entitled?
And what happens when the proceedings drag on and the fees pile up? Isn’t there anything to do?
One way to protect yourself or your company is to include a contract clause that awards reasonable attorneys’ fees to the prevailing party in a dispute. In New York, this sort of language must make it unmistakably clear that the prevailing party is entitled to receive legal fees and expenses. Attorneys familiar with contract litigation can draft this and put you in the best position to protect yourself in case of a dispute. It’s a precautionary measure that can be a great bargaining chip if a dispute arises and ultimately can help to offset the costs of litigation.
Entering into a contract sometimes creates risk. One way to limit that risk is to have a well-drafted indemnification or hold harmless provision. The words indemnification and hold harmless essentially mean the same thing, so you may see them both ways in contracts.
This language shifts responsibility for damages from one of the contracting parties to another. Say, for example, there’s a construction project, and the general contractor requires its subcontractor to provide indemnification for any loss arising out of the work. This incredibly wide hold harmless net may very well result in the subcontractor’s having to step up to the plate if a worker employed by almost anyone on the project is injured and then sues the GC. The GC uses this language to shift responsibility to its subcontractor.
As you can see, it’s better to get hold harmless language to favor you. If your bargaining power isn’t strong enough, though, one way to limit exposure is by agreeing to cover only damages that you cause instead of being more broadly responsible for any damages relating to the contract or arising out of the work.
An effective way to limit risk is to have your attorney include a hold harmless provision in your favor that creates protection for circumstances that may crop up down the road.
On June 1, 2017, the Insurance Department issued its final regulations on the Paid Family Leave law which is scheduled to become effective January 1, 2018. Regulations by an agency are a common way for a statute to be implemented. Stated differently, regulations provide the details we need in order to know how to comply with laws.
One important aspect we’ve been waiting for is how much will this benefit cost? This is an expense that’s appropriate to pass along to employees via payroll deduction.
We now know the answer. The rate is based on a percentage of an employee’s compensation and is set at 0.126% of the weekly wage. Total cost is capped by reference to New York State’s current average weekly wage which is $1,305.92. So it becomes a simple math problem: at most the cost per employee will be $1,305.92 x 0.126%.
Practical Pointer: This translates into a maximum employee contribution of $1.65 per week.
In the coming months, we’ll be revisiting the regulations to provide useful information for New York employers who are updating their policies and procedures in order to prepare for the January 1st implementation date. As always, we welcome your comments and questions.
As employers prepare for New York’s Paid Family Leave (PFL) law which becomes effective January 1, 2018, you’ll notice that employer obligations under PFL are broader than under federal FMLA. And while many 50+ employee businesses are familiar with FMLA, PFL will apply to many more New York businesses than the federal law. As a result, it expands the universe of eligible employees.
While PFL has broad applicability, the law contains exceptions, and employers are well-advised to review, understand and ultimately incorporate these exceptions into their policies.
For example, employers won’t be required to provide PFL for:
The proposed regulations add two additional exceptions:
The New York Department of Labor hasn’t yet provided concrete information on when the PFL regulations will become final or whether implementation will be delayed so these last two exceptions are subject to change.
Finally, while it probably goes without saying, PFL doesn’t apply to independent contractors. An independent contractor isn’t a W-2 employee.
Feel free to contact us for assistance in drafting policies that suit your business and comply with the new law.
We’ve been writing about the many changes New York employers should be preparing for in order to comply with New York’s Paid Family Leave (PFL) law. Another change that employers should be aware of is whether your employees must use their accrued PTO before taking advantage of PFL benefits.
PFL allows the employee to choose between using her accrued PTO or to take PFL. For employers, this means you can’t require an employee to use her accrued PTO before taking PFL. For employees, this means when you return from paid leave under PFL, your unused PTO must still be available for you to use for another purpose.
If an employee chooses to use her PTO instead of PFL leave, the employer can request reimbursement out of the PFL benefits owed to the employee. This is done by filing a claim for reimbursement from the PFL insurance carrier, and it must be done before the benefits are paid.
In addition, even where an employee chooses to use her PTO instead of PFL leave, she still is entitled to the other benefits of the statute, including reinstatement to the same or a similar position when she returns.
This change may come as a surprise for employers familiar with the federal Family and Medical Leave Act (FMLA). FMLA allows employers to require employees to first use up accrued PTO or personal leave for the unpaid leave. New York’s PFL does not require this.
Employers should be aware that once PFL takes effect, their employees may take PFL while keeping the PTO that they’ve accrued. This likely will need to be reflected in your company’s policies.
We’ll continue to provide updates as details develop.
Our last few posts have discussed how a New York employer can determine if an employee is entitled to leave under New York’s Paid Family Leave (PFL) law. Once you determine an employee is eligible for PFL, you may be wondering what to do about the benefits that she’s receiving.
Are you required to keep an employee on your company’s benefit package during leave? Who pays for this?
PFL requires you to maintain an employee’s health insurance as if she were still working. This means if you were making contributions towards that employee’s health insurance before she took leave, you must make the same contributions while she’s on leave. Just the same, if the employee were making contributions towards her health insurance before her leave, she must continue making contributions towards the cost of her health insurance while on leave.
It’s key that you treat an employee on leave as though she were still working. For example, you must continue to provide the employee on leave with notice of any opportunities to change plans or benefits. This also means that if the cost of health insurance premiums changes while the employee is on leave, both your contributions and the employee’s contributions should increase or decrease as they would if the employee were still showing up to work each day.
What happens if the employee stops paying her share of the contributions?
If an employee is more than 30 days late on payments for her health insurance premiums, you generally no longer are obligated to contribute towards the plan. To drop health insurance coverage for that employee, you must provide her with written notice that her payment has not been received. This notice must specify the date her coverage will end if payment is not received and must be mailed to the employee 15 days before that date.
If an employee’s health insurance lapses during her unpaid leave for any reason, you must restore the employee to the same or equivalent benefits when she returns to work. This is true even if the employee chooses to not retain the health insurance coverage during her leave.
These practices are consistent with the obligations you may have if your company complies with federal FMLA. If you’re unfamiliar with these obligations, we’re happy to assist you.
New York employers should begin preparing to comply with New York’s Paid Family Leave (PFL) law which will become effective January 1, 2018. Your employees will have new rights, and you’ll have new responsibilities.
An employee eligible for PFL is entitled to a continuation of certain benefits during her leave, such as health insurance, in the same manner as if she were working. For instance, if the employee contributes towards her health insurance premiums, she will be required to do so during her leave. And if your company pays the premiums, it must continue to do so during her leave.
When she returns to work, you must reinstate her to her original or a comparable position.
In addition to these logistics, soon you’ll be required to purchase a PFL insurance policy or self-insure for this coverage so be sure to check with your insurance professionals in advance. The policy’s premium can be paid for by your employees through a payroll deduction you’ll have to set up.
Of course you’ll want to ensure PFL is used appropriately as there are some exceptions. Consequently, it’s important to assess how the new PFL law interacts with FMLA (a federal law) as well as with New York disability coverage.
We can work with you to update your policies to reflect the many nuances of this new law.
New York’s Paid Family Leave is right around the corner. Here’s some guidance on which employees are covered.
Do all employees benefit? No, not all. But most will.
Any employee who works more than 26 consecutive weeks for an employer is going to be covered under the new law. But there’s no threshold number of hours worked in order to qualify. Stated differently, this means that regularly-employed, part-time workers are covered under the statute, and it generally includes employees who work for any employer covered by New York Workers’ Compensation Law, regardless of the size of the business.
So who’s not covered? Well, it’s reasonably likely that seasonal employees – people who don’t work at least one-half year’s worth of weeks (26 weeks) in a row – are not covered by the law. Employers that have a primarily seasonal workforce, then, likely will not be affected by the change in the law.
All employers may be impacted by this State law, regardless of whether the federal Family Medical Leave Act applies to their business. Now is the time to begin preparing, including planning for necessary changes to employee handbooks and policies.
We’ve all seen the teeny-tiny type on the back pages of many contracts. Most hate reading it because it’s small, dense, and simply uninspiring. But it can make all the difference in a business deal.
Two of these boilerplate provisions are called venue and choice-of-laws, and although they address similar concepts, they couldn’t be more different. A venue provision is one that chooses where any dispute arising from the contract will be held. In other words, a contract that provides for a venue – another word for a place – is saying that if one party sues another, the lawsuit may be filed only in the place identified in the contract.
Therefore, if you’re a New York business (or individual, for that matter) and your vendor’s contract says that any dispute must be determined in the State of Montana, well, that’s where you must go. No, you can’t file suit in New York, and if you do, it’s likely your counterpart will have the lawsuit moved to their great western home state, creating considerable angst for you.
Choice-of-laws, on the other hand, identifies which State’s laws govern any dispute arising from the contract. Assuming you’re a New Yorker, it’s likely you (and your lawyer) are far more familiar with the laws of your home state than, say, the laws of Iowa. If, however, your vendor is from Iowa and its boilerplate calls for Iowa’s laws to govern the contract, then even if you’re able to file suit in New York, the New York judge likely will be required to use only Iowa’s laws in deciding the lawsuit.
Drilling it down to its essence, venue determines where a dispute is heard while choice-of-laws determines which State’s laws will guide the court in making its decision. Both clauses are important, and both can measurably affect the outcome of a dispute.
The next time you’re faced with a contract, check out the teeny-tiny type to see if there’s a venue or choice-of-laws clause, and use your new knowledge to negotiate the best outcome for you.
Slated to begin around July 1st, most New Yorkers who work for private employers will see an additional disability insurance payroll deduction which is intended to cover the cost of New York’s new Paid Family Leave (PFL), an employment benefit that becomes mandatory on January 1, 2018.
The New York PFL law covers more employees than its federal counterpart as it applies to employers of any size. Covered employees may take up to eight weeks off in any given 52-week period beginning in 2018. In successive years, the time-off benefit increases to 10 weeks (2019-2020) and then ultimately 12 weeks (2021). The 52-week clock starts on the first day the employee chooses to take leave.
Similar to the federal law, leave must be granted for the birth or adoption of a child, to care for an ill family member, and for those eligible for federal leave due to the military deployment of a family member.
Implementing regulations are in the works, so more details will be known in the coming months, and you can be sure we’ll report on them when they’re available. For now, employers are well-advised to start thinking ahead, because New York’s PFL, like the federal law, requires employers to ensure the job position remains available to the employee after her leave period is concluded. Among other things, employee policies are sure to need updating. Reach out to us with any questions you may have.