© 2021 American Payroll Institute, Inc. New York City Fair Workweek Law Upheld by Court, Chipotle Sued for Violations New York City’s Department of Consumer and Worker Protection (DCWP) continues rigorous enforcement of the city’s Fair Workweek Law. A New York state appellate court recently upheld the law [Int’l Franchise Ass’n v. New York, Index No. 655987/18 (N.Y. App. Div., 4-20-21)]. After the court ruling, the DCWP filed an administrative complaint against Chipotle Mexican Grill (Chipotle), alleging the company owes more than $151 million to workers because of scheduling-related violations. State appellate court ruling According to the appellate court, the New York City Fair Workweek Law does not conflict with state labor law provisions, which were established to protect workers and ensure their adequate and fair compensation. The court rejected arguments that state labor laws regulating employee scheduling, work hours, rest breaks, and minimum wages are so broad as to supersede existing and future local regulation on those topics. The court said absent a clear expression of state intent, the mere fact that the state and local laws touch upon the same area is insufficient to support a determination that the state has preempted (taken over) the entire field of regulation in those areas. Allegations against Chipotle The DCWP alleges in an administrative complaint against Chipotle that the company maintained the type of irregular scheduling system the law was meant to prevent and failed to provide good faith schedule estimates to employees, in violation of the law. The period covered in this lawsuit is from November 2017 to September 2019. The DCWP initially sued Chipotle for widespread violations of the New York City Fair Workweek Law in September 2019, after workers from five Chipotle locations in Brooklyn filed complaints with DCWP. The alleged violations included the failure to: (1) provide good faith estimates of work schedules, (2) provide work schedules at least two weeks in advance, (3) get consent and pay premiums for last-minute schedule changes and “clopenings” (i.e., back-to-back opening and closing shifts separated by insufficient rest time), and (4) offer newly available shifts to current employees. DCWP also found that Chipotle had an illegal sick leave policy. DCWP action The DCWP has highlighted its efforts to crack down on predictive scheduling violations in its recently released annual report on workers’ rights and a recent DCWP press release that says the department has “secured a total of $14.35 million in restitution and fines for 28,914 workers from resolutions in cases against” companies for violations of the city’s workplace laws, including the fair workweek law. Enforcement of predictive scheduling laws during pandemic Jurisdictions have taken a variety of stances on predictive scheduling laws during the COVID-19 pandemic, with some temporarily suspending enforcement of premium payments related to last-minute schedule changes to assist struggling companies (see Philadelphia, Pennsylvania: PAYSTATE UPDATE, Issue 6, Vol. 23) and others continuing to enforce them to protect employees (see local ordinances in California: PAYSTATE UPDATE, Issue 6, Vol. 22). Indiana to Require Payroll Service Provider Registration Effective January 1, 2022, the Indiana Department of Revenue (DOR) will require payroll service providers (PSPs) to register annually with the DOR. The DOR may charge an annual fee for the registration, which will be imposed in a range of amounts based on the number of clients of the PSP [S.B. 234, L. 2021]. PSP definition A PSP is defined as a “third-party service provider that is authorized to prepare and file returns, withdraw funds, and hold the funds in the PSP’s bank account, remit payment, and take other similar reporting and compliance actions on behalf of a business client.” It does not include businesses registered as professional employer organizations (PEOs). Registration requirements The DOR will create the registration form, and it will include: (1) a list of all responsible persons at the PSP that provide third-party payroll services and (2) a certification and acknowledgement by the PSP that the bank account used by the PSP for employer withholding tax deposits will only be used for employer withholding tax liabilities and other payroll obligations of client employers that the PSP is holding and is required to remit and may not be used for another purpose, including for the payment of operating expenses or personal use, and that a PSP’s withdrawal or use of the funds in the account for any other purpose constitutes fraud. A responsible person is defined as an officer or director of a PSP, or an employee or any other person affiliated with a PSP, who is responsible for collecting, accounting for, and paying withholding taxes on behalf of a business client of the PSP. Note that a PSP will be permitted to retain any income May 17, 2021 Volume 23 Issue 10
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