Posts filed under ‘New York State’

NYS Issues Guidance On Cannabis Use In The Workplace

When it comes to employee use of cannabis in the workplace, you better be using a scalpel and not a sledge hammer. That’s my Captain-Obvious takeaway from recently released and helpful guidance issued by New York’s Department Of Labor answering a series of questions it has received from New York employers scrambling to comply with New York law now that the recreational use of pot is legal for individuals 21 years of age or older. 

The Marijuana Regulation and Taxation Act (MRTA) has two major components. First, it authorizes the creation of a licensed industry to facilitate the production, sale, and distribution of recreational cannabis to individuals 21 years or older in New York State. This component of the bill is behind schedule as the state has only recently appointed the key individuals who will be responsible for overseeing the creation of this new industry. A second component of the bill legalized the recreational use of cannabis. This part of the bill is already in effect. This has several challenging implications for employers big and small in New York State.

To provide just one narrow example of the type of issues employers have to deal with, keep in mind that, subject to certain exceptions, an employer can only take action against an employee when the employee, while working, manifests specific articulable symptoms of cannabis impairment that interfere with the employer’s obligation to provide a safe and healthy workplace as required by state and federal workplace safety laws. This promises to be one of the great tripwires of litigation for years to come. There is no definitive list of what satisfies this criteria. Instead, the determination will be an extremely fact sensitive one. 

This means of course that if you haven’t started training your supervisors on what steps to take when confronted with a potentially stoned employee you better start now. This is just one small example of the type of issues raised by the new law. The guidance won’t provide you all of the answers but it will give you a concise place to find all the questions you should be asking. 

FinCEN Documents Sharp Rise in Ransomware Attacks

A report released by FinCEN on Friday confirms what we have known anecdotally for months: the COVID 19 pandemic has been accompanied by a sharp rise in ransomware attacks over a broad cross section of industries. There have been a total of 590 million ransomware SAR filings in the first 6 months of the year. According to FinCEN this represents a 42% increase compared to the same period last year.

Of course, this makes it the perfect time to increase financial reporting requirements for perfectly legal account transactions. Note the sarcasm.

On that happy note enjoy your day. 

October 18, 2021 at 9:30 am Leave a comment

Are You Prepared To Comply With New York’s Gender Recognition Act?

This December, a new law takes effect which expedites the process for individuals to change their name and gender identification on public documents such as driver’s licenses and birth certificates and increases the privacy of individuals submitting these petitions. A recent phone call into our Compliance department reminded me that this change in law will have important implications for your credit union’s operations.

Under existing law, a petition for a name change must be published. The purpose of the Gender Recognition Act (GRA) is to protect the privacy of members of the LGBTQ+ community and protect them from discrimination by providing a mechanism to more quickly change their name and gender identity. Crucially, for our purposes, documentation of a name change may be used to request a “public or private” entity update its records to reflect the new name. This term clearly includes banks and credit unions. The refusal of an entity to honor such a request may result in legal actions for violating several provisions of New York law.

In order to prepare for this law, credit unions should examine their existing protocols to determine what documentation may be subject to a name change request. You may also wish to consider putting your front line staff on notice to expect an increase in such requests as the law’s effective date nears. More generally, the underlying purpose of the law is to ensure people can efficiently change their name and gender identity in a way which maintains their privacy. So the need for employee discretion should be emphasized.  The law takes effect on December 21st but businesses may already be fielding requests for changes.

October 15, 2021 at 9:15 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

Levy and Restraint Protocols Impacted by NY’s Minimum Wage

Your faithful blogger has just turned the heat on meaning that fall has officially arrived and it’s a good time to remind you of the impact that New York’s minimum wage law has on your levy and restraint protocols.

In 2016 New York approved Legislation with the ultimate goal of phasing in a $15 state wide minimum wage.  But in order to account for regional differences, different regions of the state, New York City, Long Island and Westchester and Upstate were subject to different wage scales.  In addition, the state was given authority to scale back mandated wage increases depending on their economic impact.  On September 22, the Division of the Budget released the mandated regional assessment and confirmed that the minimum wage will rise to $15 on Long Island and Westchester in 2022, joining New York City which already has a $15 minimum wage.  In contrast, the minimum wage for the “Upstate Area” will be $13.20 for the 2020 calendar year. 

Not only do these changes impact your credit union as a New York State employer, but it has an impact on your levy and restraint practices as well.  Under the Exempt Income Protection Act (EIPA) a minimum amount equal to 240 times of the state minimum hourly wage is exempt from levy and restraint.  As a result, in this 2017 guidance, DFS advised banks and credit unions “…that they should, to the extent practicable, calculate the exempt amount based on the account holder’s address and the size of the employer.  However, if, after reasonable due diligence, this information is unavailable, DFS has advised banks to exempt from collection an amount that corresponds to the highest minimum wage in effect in the State at the time of the calculation”, which is now going to be $15.

On that note, enjoy your weekend.

October 1, 2021 at 9:07 am Leave a comment

New York Proposes Disclosure Regulations For Small Business Financing

New York’s Department of Financial Services yesterday issued proposed regulations outlining disclosure requirements for non-bank entities that provide financing of up to $2.5M for businesses. The regulations are the final step in a two year effort by the Legislature designed in part to regulate the activities of third-party lending platforms.

The legislation generally mandates that providers of commercial credit provide TILA like disclosures when offering commercial financing. It applies to a broad range of financing activity including factoring as well as traditional open-ended lines of credit and close-end loans. The mandated disclosure requirements must be provided by the Providers of these loans. So the key to understanding its reach starts with understanding what a Provider is. The legislation defines a Provider as:

“…a person who extends a specific offer of commercial financing to a recipient. Unless otherwise exempt, “provider” also includes a person who solicits and presents specific offers of commercial financing on behalf of a third party. For the avoidance of doubt the extension of a specific offer or provision of disclosures for a commercial financing, in and of itself, shall not be construed to mean that a provider is originating, making, funding or providing  commercial  financing.”

Crucially, for our purposes, the legislation specifically excludes credit unions and banks from the definition of a Provider. Nevertheless, those credit unions that work with lending platforms will see the impact of this new requirement. Many credit unions are already working with internet based platforms that connect businesses and lenders but don’t actually make loans. As explained in this analysis of the bill in the Banking Law journal ”even if the entity that makes a commercial loan or other commercial financing transaction is exempt from the New York Law’s requirements, a typical online lending platform would still have to comply. As such, fintech companies operating commercial lending platforms are required to comply with the new law even if they rely on a bank partner arrangement and the bank is exempt”.

We will be reading the proposed regulations in the coming days, to make sure that they don’t impose any additional requirements on credit unions and we will keep you posted on what we find.

September 22, 2021 at 9:33 am Leave a comment

Can You Answer These Questions?

Just like there are people out there who read the obituaries, taking silent satisfaction from the fact that they are not the ones being written about, let’s face it, there are those of us who are silently relieved when they read the latest blogs and trade press and confirm that their credit union has not been victimized in a way that makes the news. 

Recently there has been a lot of talk in credit union land about the fired credit union employee who plead guilty to taking revenge on her former employer by destroying sensitive information maintained on the credit union’s computer network. The credit union apparently had the right procedures in place but the employee’s access to the computer network was not turned off, resulting in $10,000 in recovery costs.

While you may be relieved that your credit union is not the victim, the incident underscores that, irrespective of your credit union’s size, it is incumbent to know precisely where your information is, and who has access to it. By the way, this is important not only to guard against an employee going mad but because federal and state law will increasingly make it essential for your financial institution to know who has access to what information and why as well as to accommodate the requests of your member’s to transfer or delete information.

With that long winded lead-in, how would you answer these questions?

  • Does your computer network allow you to make distinctions between the level(s) of access provided to employees?
  • Assuming it does, who decides what person(s) get access to the different parts of the network?
  • In your vendor contracts, do you require that vendors only have access to the computer network that they need to perform their job?
  • That vendors will only use the information for the purposes for which they have contracted?
  • That they have protocols in place to ensure that access to your network is terminated when employees leave or the job is done?
  • Do you require your employees to use multi factor identification to access the computer network?
  • Do you hold employees accountable for repeatedly failing to comply with basic cyber security protocols such as repeatedly clicking on suspicious links?
  • Most importantly, do you think Toronto is going to pass the Yankees or the Red Sox to get a wild card spot? I asked that last question to see how many of you were still paying attention.

The point I’m trying to make with all these questions is that your credit union must design safety protocols which limit network access to employees that need the access; that allow you to track where your information is located and that allow you to quickly access this information. No one is capable of anticipating or guarding against all of the wacky ways your network may be attacked, but proper compartmentalization of data will help minimize damage and help prepare you for data portability standards.

September 9, 2021 at 9:57 am Leave a comment

Time To Activate Your Infectious Disease Safety Plan

On September 6th, New York’s Commissioner of Health triggered increased employee protections by classifying COVID-19 as a communicable disease that presents a “serious risk of harm to the public health in New York State.” This means that all New York State credit unions should review and activate their workplace safety plans. Remember, failure to do so is a violation of the law.

As readers of this blog know, former Governor Cuomo signed legislation mandating that the State’s Department of Labor, in consultation with the Department of Health, promulgate model standards describing the minimum steps employers must take to protect their employees in the event of an outbreak of an airborne infectious disease. Under the law, all employers had to have these policies and procedures in place by August 5th. However, since the Commissioner of Health had not formally designated COVID-19 as an infectious disease under the statute the policies and standards were not in effect. The Department of Health’s announcement changes all that.

Now that the designation has been made, your credit union should be reviewing its policy and implementing its provisions. I’m assuming that for many of you, this won’t be difficult as many of your practices already complied with steps that have been taken to mitigate the spread of COVID, such as rearranging work spaces and having appropriate PPE. However, for those of you who need to take additional steps, or worse yet, have not gotten around to adopting a policy and standard, you should do so now.

In activating these policies remember that one of the primary purposes of the law was to provide employees increased protections in the event that adequate workplace safety procedures are not being implemented or complied with. Your employees are protected against retaliation in the event they bring alleged violations to your attention and your credit union could be fined and sued for violating the law.  Remember, this applies to you whether you are a state or federal credit union. 

September 8, 2021 at 9:27 am 1 comment

New Governor Moves Quickly To Extend Foreclosure Protections

Good morning, Folks. New York Governor Hochul convened an Extraordinary Session yesterday in which the legislature extended foreclosure and eviction protections for individuals claiming COVID related hardships until January 15th of next year. The measures impact both state and federally chartered credit unions that start foreclosure actions against delinquent homeowners and businesses.

Notice that I did not say that the legislation simply extends New York’s eviction and foreclosure ban. In response to recent rulings by the Supreme Court, landlords and lenders now have the ability to challenge an individual’s assertion that they are delinquent because of a COVID related hardship. The hardship exception applies to mortgages that are held by state or federally chartered credit unions. It does not apply to mortgages held by GSE’s.

We will have to see how this new framework is implemented. But if your credit union is interested in pursuing this option it should start identifying cases where this new exception might be applicable.

Guidance Issued On Lending To Same-sex Couples

In another important move, the Department of Financial Services issued guidance detailing steps lenders should take to prevent lending bias when making loans to same-sex couples. DFS has been working on the guidance for weeks. I will be providing more information about its specifics in a future blog. This guidance just applies to state chartered entities and licensed institutions such as state chartered credit unions and mortgage CUSO’s.

Hochul Nominates New DFS Superintendent

The above guidance was issued the same day that the Governor announced that she had chosen Adrienne Harris to lead New York’s Department of Financial Services. Harris replaces Linda Lacewell who resigned when Governor Cuomo left office.

Judging by her resume, Harris, a Columbia law school graduate, has a broad range of experience. She has served as an economic advisor during the Obama administration and as an adviser to Fintechs.

New York State’s Superintendent has historically been among the highest profile state regulators in the country. She not only oversees the banking industry but the insurance industry as well.

September 2, 2021 at 9:33 am Leave a comment

Life After The CDC Eviction Ban

The Supreme Court yesterday ruled that the CDC exceeded its authority when it enacted a nationwide ban of evictions against tenants who claim to be suffering a COVID-19 related hardship.

The court’s ruling surprised absolutely no one who has been following the issue. Just weeks ago, the court signaled that a similar moratorium was most likely unconstitutional but allowed it to expire so that there was more time to distribute federal aid intended to help states like New York avoid the need for evictions.

The precise legal issue was whether the CDC had the regulatory authority to ban evictions absent Congressional action. The court explained that “it is indisputable that the public has a strong interest in combating the spread of the COVID–19 Delta variant. But our system does not permit agencies to act unlawfully even in pursuit of desirable ends…It is up to Congress, not the CDC, to decide whether the public interest merits further action here.”

The Court’s ruling put the focus squarely back onto the states. Although the Court recently invalidated a New York statute which prohibited evictions of individuals suffering a COVID-19 hardship, the Court’s emergency ruling was not a decision on the merits and the statute under review did not give landlords the ability to contest a hardship determination. 

Without further action by Congress the primary federal regulation of which credit unions have to be mindful is the CFPB’s regulation which takes effect on September 1st, mandating that servicers take additional steps to inform delinquent homeowners of loss mitigation options that may be available to individuals delinquent because of a COVID hardship. Crucially, unlike the eviction moratorium struck down by the Court, the CFPB’s new regulation does not mandate that specific relief be made available.

August 27, 2021 at 9:12 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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