Posts filed under ‘Legal Watch’

Are You Responsible for “Take Home” Covid?

Although the decision by the Supreme Court to block OSHA’s implementation of an emergency vaccine mandate/ testing requirement for businesses with 100 or more employees has understandably gotten a lot of attention, all employers should remain mindful of their ongoing responsibility to ensure a safe workplace during the pandemic. A case pending in California demonstrates precisely what I am talking about.

Rose Gomez vs LOGIX Federal Credit Union, et al. involves a credit union employee who is suing the credit union for negligently protecting its employees against Covid resulting in the death of her relative after she contracted the virus. The plaintiff alleges that despite the known risks of Coronavirus spreading after the declaration of local, state, and national emergencies, the Credit Union continued to group employees close together. This case and another in California dealing with a closely related issue are being scrutinized nationally as courts begin to examine employer responsibilities in responding to the pandemic.

Among the issues that are being litigated in New York and other states are the extent to which Worker’s Compensation laws block employees from making claims such as the one being brought against the California credit union and the extent to which these laws also shield employers against the claims of third parties who claim to have been made ill after an employee “took home the Coronavirus.”

And of course because New York is New York there are increased legislative and regulatory requirements of which New York credit unions should be aware. As I have explained in previous blogs, New York’s HERO Act mandates that employers promulgate baseline protocols in response to airborne infectious diseases and authorizes employees to sue over the violation of these protocols.

In other words, if you think yesterday’s decision by the Supreme Court made your life easier you are sadly mistaken. Employers have an ongoing obligation to respond to the Covid pandemic and the courts will be defining the contours of those obligations for years to come.

January 14, 2022 at 9:23 am Leave a comment

OSHA Mandate Alive and Well, For Now

Usually I dedicate my last blog of the year to highlighting what’s best about the credit union movement, but recent events have made me feel like an extra in a movie where Scrooge meets Groundhog Day. Here’s more news on the OSHA mandate with which employers of 100 or more individuals must be in compliance with, starting January 10th.

On November 5th OSHA issued an Emergency Temporary Standard (ETS) generally requiring employers with 100 or more employees to either mandate all of their employees wear masks and agree to get tested on a weekly basis or mandate all of their employees get vaccinated.

Groups opposed to this standard ran to court quicker than the Omicron variant is spreading. The Court of Appeals for the Fifth Circuit issued an order banning OSHA from enforcing the emergency standard. On Friday, the Court of Appeals from the Sixth Circuit reversed this ruling meaning that you should be preparing to comply with OSHA’s mandate. The next stop is the Supreme Court.

Remember that the core legal issue that the courts are ultimately deciding is not whether employers can mandate that their employees get vaccinated or wear a mask but whether OSHA has the legal authority to issue health and safety standards related to a pandemic. In the meantime none of this has any impact at all on New York City’s mandate requiring employers to mandate that employees working in an office be vaccinated starting December 27th.

This is not a very merry note on which to end my last blog of the year, so Merry Christmas, Happy New Year, thanks for reading and let’s hope that 2022 is a heck of a lot better than the last two years that have preceded it.

December 22, 2021 at 9:09 am Leave a comment

High Noon for Key Legislative Priorities

Good morning, folks.  Under New York State law, as interpreted by its Court of Appeals, all bills passed by the Legislature must be presented to the Governor by the end of the year. As a result, while many normal people are getting ready to take a long winter nap, those involved in the legislative process are experiencing an outburst of legislative activity. I wanted to highlight some of the key bills we are still keeping an eye on as we head into the Christmas break.

Later this week, we will find out whether the Governor has approved legislation which will legalize remote online notarization [S1780-C Skoufis] for New York State starting next April. This legislation has been a major priority of the industry. If it is signed by the Governor it will allow New Yorkers to get documents notarized without leaving their homes while permitting those credit unions that choose to do so to continue to provide notary services the old fashion way. In addition to being a huge benefit for the disabled and elderly, as well as individuals who live in communities that lack access to notaries, this legislation will bring us one step closer to a virtual mortgage transaction.

On the negative side of the balance, the Governor has yet to act on legislation which would reduce to 2% the amount of interest that can be charged on money judgments involving consumer debts. [S5724-A  Thomas]

Let’s say your credit union offers credit cards.  A member goes delinquent and ultimately your credit union gets a legal judgement against her for the outstanding debt. Under existing law you can charge up to 9% interest on that debt. If the Governor signs this law it will impact this process in two ways:

First, it will reduce the maximum interest rate from 9% to 2%. Even more controversially, however, the 2% cap would retroactively apply to judgements that have been entered but not yet executed. Operationally, I haven’t heard a good explanation yet of how this is going to be implemented.

Last but not least, the Governor is considering what action to take on Senate bill S1579A Parker which would require lenders and mortgage servicers to take responsibility for maintaining homes subject to delinquent mortgages earlier in the foreclosure process. Specifically, under the law, servicers and lenders would be responsible for maintaining property that is or becomes vacant or abandoned at the commencement of a foreclosure. Currently lenders and servicers must take on these responsibilities only for vacant and abandoned property after approximately 90 days.

December 20, 2021 at 9:54 am Leave a comment

Where Do Credit Unions Stand With Vaccine Mandates?

In September the President took two dramatic steps in response to COVID-19, both of which are now subject to litigation: He issued an Executive Order requiring all executive branch agency employees and their contractors to get vaccinated. Secondly, he ordered OSHA to promulgate emergency workplace safety standards mandating employers with 100 or more employees require their employees get vaccinated or agree to get tested for the vaccine on an ongoing basis.

In yesterday’s blog, I explained that credit unions are not subject to the President’s Executive Order because NCUA is an independent agency. In response, a reader asked me if this also meant that credit unions with 100 or more employees were exempt from the OSHA mandate. With the usual caveat that my opinions are my own, and not a substitute for legal advice from your retained attorney, the answer is that credit unions would be subject to OSHA’s vaccine mandate, but it remains to be seen whether or not it will ever take effect.

The financial service industry has not had to give much thought to OSHA in the past because it has never been made subject to industry specific workplace safety standards. Under the law regulating OSHA, however, an employer is any business engaged in commerce, a category which certainly includes credit unions of all shapes and sizes. As a result, if the OSHA mandated vaccine requirement ever takes effect, every credit union with 100 or more employees will have to comply. 

But it is far from certain that this requirement will ever make it through the legal gauntlet. The Court of Appeals for the Fifth Circuit has already issued a nationwide order blocking OSHA from implementing the emergency standard. In its decision, the Court explained that OSHA was exceeding the power given to it by Congress because the vaccination mandate “is a one-size-fits-all sledgehammer that makes hardly any attempt to account for differences in workplaces (and workers) that have more than a little bearing on workers’ varying degrees of susceptibility to the supposedly “grave danger” the Mandate purports to address.” BST Holdings, L.L.C. v. Occupational Safety and Health Administration, United States Department of Labor, 2021 WL 5279381, at *4 (C.A.5, 2021)

The next stop is the Sixth Circuit, but there is virtually no doubt that the issue will ultimately be decided by the Supreme Court, a court which has taken an increasingly narrow view of administrative powers.

So where does this leave credit union HR professionals as they ponder next steps? Most importantly, if you were hoping that the law would mandate that your employees be vaccinated, then you should prepare yourself for disappointment. That being said, no matter what happens with the President’s proposals, your credit union still has all the authority it needs to mandate vaccination and/or testing if it chooses to do so for those employees in the workplace.

On that note, enjoy your Thanksgiving and don’t let your crazy Uncle Al get under your skin.

November 23, 2021 at 10:13 am 1 comment

Why Executive Orders Don’t Apply To Your Credit Union

Since President Biden issued an executive order in September mandating that Executive Branch employees and their contractors get vaccinated against COVID-19 the industry has parsed the text with an intensity worthy of a Talmudic scholar, hoping to divine whether or not credit union employees are federal contractors for purposes of this mandate. After all, as drafted, an argument can be made that share insurance is a government contract to which credit unions are subject.

But the truth is much more straightforward: because credit unions are not subject to this or any other executive order issued by this or any other president. The NCUA, as an independent agency, is not an executive agency subject to the president’s executive orders. Instead, NCUA was created by congress to exercise independently of the president and make its own policy judgments. 

This is not a radical pronouncement but simply a common sense application of prevailing law. Since Humphrey’s Ex’r v. U.S., 55 S.Ct. 869, 874, 295 U.S. 602, 629 (U.S. 1935) the Supreme Court has recognized the right of congress to create independent agencies specifically designed to be free of direct executive branch oversight. Furthermore, the court has taken a very narrow view of the president’s power to issue executive orders and apply them beyond the executive branch. As the court explained in Youngstown Sheet & Tube Co. v. Sawyer, 72 S.Ct. 863, 867, 343 U.S. 579, 587–88 (U.S. 1952) “The Constitution limits his functions in the lawmaking process to the recommending of laws he thinks wise and the vetoing of laws he thinks bad. And the Constitution is neither silent nor equivocal about who shall make laws which the President is to execute.” Congress.

Against this backdrop, there is a long line of examples of independent agencies pushing back against executive branch encroachments on their power. For example, the general counsel of the Securities and Exchange Commission once wrote a 24 page “Declaration of Independence” from a Carter administration proposal that regulations be submitted in plain English for public review, on the grounds that the order could set a precedent to undermine the agency’s independence

In short, a credit union can choose to follow an executive order’s mandates if it chooses to do so, but is not required to do so. In fact, an argument to the contrary has as much validity as suggesting that the credit union down the street can mandate what policies your credit union follows. 

One caveat: The exemption just applies if the only basis for complying is your connection to the NCUA. If your CU rents space from a federal agency for example, then you are a federal contractor.

November 22, 2021 at 10:00 am Leave a comment

Suing for Consumer Debts Just Got More Complicated

It’s been a busy week for yours truly, but I wanted to give you at least one piece of important information before the weekend.  Suing to collect consumer debts in New York State is about to involve a heck of a lot more procedural hurdles.  Those of you who sue to collect these debts should be setting up a phone call with the law firm you use and start discussing what additional steps will need to be taken in the debt collection process. 

Let’s start with the basics.  Section 105(1)(f) of New York Civil Practice Laws and Rules defines a consumer credit transaction as a  “transaction wherein credit is extended to an individual and the money, property, or service which is the subject of the transaction is primarily for personal, family or household purposes.”

A2382/S153 (Weinstein/Thomas) has been germinating in the legislative hopper since at least 2009.  Its overriding goal is to reduce perceived abuses in the debt collection process involving consumer credit transactions.  The bill generally does this by reducing the statute of limitations to bring such actions from six to three years; ensuring that consumers receive extensive notices explaining that they are being sued; and providing them resources with which to defend themselves against such claims. 

How much it directly impacts your credit union’s operations will depend in part on your credit union’s existing record keeping processes.  For example, Rule 3016 of the Civil Practice Law and Rules is amended by adding a new section (j) addressing these lawsuits to require that the complaint include a copy of the contract upon which the action is based or, in the case of revolving credit accounts, the charge off notice.  In addition, the member must be informed of the original creditor.  This last requirement might not seem like a big deal, but since credit card accounts, like mortgage loans, are often sold in bulk to third parties, it may not be as easy to find the original creditor.  My guess is that this new law will trigger increased emphasis on chain-of-custody record keeping for consumer loans.

Parts of the bill take effect immediately, but other sections are phased in over the next six months. 

On that note, have a good weekend.  I will be celebrating my eldest daughter’s 19th birthday.  Incidentally she has already contributed to the credit union movement by transcribing the occasional blog.

November 12, 2021 at 9:38 am Leave a comment

Can You Challenge A Hardship Declaration?

When the New York State Legislature gathered in early September and approved legislation extending New York’s foreclosure and eviction moratorium until January 15, 2022 for individuals suffering a COVID related hardship, it included a provision permitting landlords and lenders to challenge the validity of a person’s hardship claim. At the time that this bill was passed, it was unclear how much value this exception to the moratorium would actually have. We may get clarity on that issue in the near future.

The New York Law Journal is reporting that Justice Lawrence Knipel, administrative judge for civil matters in Kings County, has sent a letter informing homeowners facing foreclosure that they must attend in-person “foreclosure conferences” starting on October 25th. The letter explains to recipients that failure to attend these conferences could result in losing their foreclosure cases and informs the delinquent homeowners that they should bring any documents concerning their loan and current financial situation.

Attorneys from Brooklyn Legal Services sent a letter to the State’s Chief Administrative Law Judge, Lawrence Marks on Wednesday that these proposed hearings “plainly violate ‘New York’s foreclosure moratorium.”  Marks is responsible for the day-to-day operations of the court system in New York State.

Under the law, any party facing foreclosure and eviction can declare that their financial situation has been negatively impacted by the COVID-19 pandemic. Furthermore, these declarations are presumptively valid; this means that the burden is on the foreclosing party to prove that the delinquent homeowner is not suffering a COVID related hardship. What the lawyers seem to be questioning is whether the judge has the authority to mandate hardship conferences even in cases where lenders have not challenged these declarations. Stay tuned.

CUSOs Just Got More Powerful

You probably already know this, but in case you don’t, over the objection of Chairman Todd Harper, NCUAs Board voted two-to-one to expand the authority of Credit Union Service Organizations. The Board’s vote was the first in what may ultimately be a series of steps it takes to expand the flexibility federal credit unions have in relation to CUSO investments. Under the new rule, the list of permissible CUSO activities is being expanded to include any type of loan that an FCU may originate. The new rule also allows the Board the flexibility to grant future CUSO powers outside of the formal rulemaking process. The new rule is effective 30 days after it is published in the Federal Register.

A second regulation passed by the Board yesterday amends the CAMEL rating system by creating a separate category assessing a credit union’s sensitivity to market risk. This change puts NCUA on par with banking regulators. On that note, enjoy your weekend.

October 22, 2021 at 9:49 am Leave a comment

Three Things You Should Know To Start Your Credit Union Day

Municipal Deposit legislation, A8289, gained a key sponsor yesterday when the new Chairwoman of the Assembly Banks Committee became the prime sponsor of the legislation in that chamber.

Assemblymember Pat Fahy is the new chairperson of the Banks Committee. She replaces former Bronx Assemblymember Victor Pichardo who resigned from the Legislature this past summer. Pichardo’s departure means that the legislation will have to be reconsidered by the Banks Committee. Last year the legislation advanced to the Assembly Ways and Means Committee.

Assemblymember Fahy is a familiar face in the Capital Region who represents parts of Albany and Bethlehem. In September, the Association met with her office to discuss credit union priorities.

Court Clarifies Foreclosure Notice Requirements

When it comes to foreclosing in New York, minute mistakes can make a huge difference. Most readers of this blog know that state law requires mortgage holders to mail a 90 day pre-foreclosure notice to delinquent homeowners before commencing foreclosure (RPAPL 1304). When there are multiple borrowers, how is this requirement satisfied? In this recent decision a New York Appellate Court addressed this issue for the first time. It ruled that lenders must mail a separate 90 day notice to each borrower in separate envelopes.

Is this arcane? You bet it is. But if this procedure isn’t followed, a foreclosure will be dismissed, at least in Long Island, Westchester, Brooklyn, Queens and Staten Island over which this court exercises its jurisdiction. Wells Fargo Bank, N.A. v Yapkowitz, 2021 N.Y. Slip Op. 05139, 2021 WL 4448061

Yellen Continues To Push For Transaction Monitoring

Treasury Secretary Janet Yellen continues to insist that requiring banks and credit unions to report almost every account transaction by their members is no big deal. Ironically, she is making this argument even as America wakes up to the danger of Facebook controlling so much of our personal information. People don’t trust the IRS any more than they trust Mark Zuckerberg, although it might be close at this point. 

Yellen’s continued advocacy underscores that we have to continue to tell anyone that will listen that intrusive transaction reporting is a bad idea.

I will be back on Tuesday.  Enjoy your long weekend. This year’s World Series prediction, which has been certified as acceptable Secondary Capital by the NCUA, is the Milwaukee Brewers against the Houston Astros, with the Brewers winning in a seven game classic.

October 7, 2021 at 9:55 am Leave a comment

What To Do When Your Employee Requests A Religious Accommodation

There are three things I know for certain this morning: One is that I will get more sleep with the Yankees not in the playoffs (I have no idea why they have to start games so late).

Secondly, the Bronx Bombers will overpay for marquee talent in the off-season and be proclaimed World Series favorites by the baseball intelligentsia even though they have won only one World Series in the last 19 years.

Finally, your credit union will most likely have to decide how to respond to an employee who wants a workplace accommodation based on their religious beliefs. As much as I would like to continue my Yankee diatribe, I have a sneaking suspicion that the last topic has more relevance to your credit union day. Here is a quick primer designed to get you thinking about your own HR protocols.

First, under both state and federal law, employers are responsible for working with employees whose genuine and sincere religious beliefs conflict with their employment obligations. This means that if your credit union either mandates vaccinations or is ultimately mandated to make sure it’s employees are vaccinated, there may be employees who refuse to get vaccinated on religious grounds. 

What is a genuine and sincere religious belief? Suffice it to say that the courts are not comfortable with employers second guessing what constitutes a religious belief. In one recent case, a West Virginia coal miner successfully sued for religious discrimination after he resigned rather than use a hand scanner to check into work. He explained that hand scanners constituted the mark of the devil. In upholding his lawsuit the court explained that “it is not an employer’s place, nor a court’s place, to question the correctness or even the plausibility of an employee’s religious understandings.” [U.S. Equal Employment Opportunity Commission v. Consol Energy, Inc., 860 F.3d 131 (C.A.4 (W.Va.), 2017)]. On a practical level, this means that if you find yourself debating how religious the employee really is or debating doctrine you are going down the wrong path. You can, however, ask for a connection between the religious beliefs and refusal to get vaccinated. 

Assuming the employee has a genuine and sincere religious belief which conflicts with a vaccine mandate, are you required to accommodate the employee? Maybe, maybe not. Under both state and federal law an employer doesn’t have to accommodate an employee where doing so would constitute an “undue burden.” Under federal law, an undue burden has been defined as any accommodation that requires an employer to make any accommodation for an employee’s religion if doing so would pose more than a “de minimis” burden. Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977).

In contrast, New York has a much higher standard for employers claiming hardship under New York law [N.Y. Exec. Law § 296(10)(d)(1)]. An undue hardship means an accommodation requiring significant expense or difficulty including a significant interference with the safe or efficient operation of the workplace. What standard will ultimately be applied to your credit union may vary depending on the legal basis for a vaccine mandate. For now, keep in mind that as New York employers, your credit union may have to deal with a higher standard. 

So what does all this mean? It means that you are not going to categorically reject an employee’s request for religious accommodation. Instead, you are going to discuss the need for a religious accommodation and assuming that the requested accommodation is genuine and sincere you are going to develop a framework for accommodating employees when it is reasonable to do so and be prepared to explain to both the employee and the courts when you decide doing so constitutes an undue burden. You want to make sure that you treat all accommodations in as fair and equitable a way as possible given the need to run your credit union.

As you can see, these are tricky issues.  If you are confronted with a request, you are being penny wise and pound foolish if you don’t consult with your friendly neighborhood HR attorney.

On that note, Go Rays!

October 6, 2021 at 10:53 am Leave a comment

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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