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New Law Protects New York Employees From Discrimination Based on Legal Off-Duty Conduct

October 1, 1992

Under a new statute, New York employers may not take adverse employment actions against employees or applicants for employment on the basis of their legal, off-duty conduct. The new law, section 201-d of the Labor Law, which takes effect on January 1, 1993, grew out of efforts by the tobacco lobby to prevent employers from discriminating against employees who smoke. The final version of the law, however, goes beyond merely protecting smokers. The statute broadly defines a variety of legal activities that, if engaged in on an employee's own time and without the use of company property or equipment, may not form the basis for adverse employment decisions.

The law creates four areas of "protected" employee activities: (1) political activities, such as campaigning or fund-raising; (2) legal recreational activities, broadly defined to include virtually all non-compensated leisure time activity; (3) the legal use of consumable products, off company property and outside of working time; and (4) membership in a union or the exercise of rights related to union activity. It is unlawful for an employer to "refuse to hire, employ or license, or to discharge from employment or otherwise discriminate against" an employee because of the employee's protected activities. An aggrieved employee may file suit for equitable relief and damages, or the Attorney General may sue for injunctive relief and for a civil fine. The statute does not provide for recovery of attorney's fees by a prevailing plaintiff.

As with many broadly worded anti-discrimination statutes, this new law is subject to several exceptions. Employers should be wary, however, when seeking to take advantage of the exceptions to the law because the courts have not yet had the opportunity to interpret the sometimes ambiguous terms. The major exceptions to the law's scope are: (i) professional journalists, and civil servants who are prohibited by law from engaging in political activity, are excluded from the protection for political activity; (ii) off-duty conduct is not protected where engaging in the activity "creates a material conflict of interest related to the employer's trade secrets, proprietary information or other proprietary or business interest" or, as to any public employee, would violate local ethics or conflict of interest regulations; (iii) an employer does not violate the statute if actions are taken in accordance with obligations imposed under a collective bargaining agreement or a personal services contract with a professional employee; and (iv) an employer does not violate the statute if actions are taken against an employee "based on the belief" that the action is "required by statute, regulation, ordinance, or other governmental mandate" or is warranted based on behavior "deemed by an employer to constitute habitually poor performance, incompetency or misconduct."

Of particular concern to employers is the application of the new law to employee anti-smoking rules, drug and alcohol abuse programs, anti-dating and anti-moonlighting rules, and employee benefit plans. First, despite the origins of the statute as a protection for employees who smoke, it is critical to note that the statute only protects activity that occurs off company property and outside of working time. Therefore, a company policy prohibiting smoking either during working hours or on the company's premises is permitted under the new statute. Similarly, compliance with local ordinances concerning smoking in public places may be observed without running afoul of the new law.

The statute also specifically authorizes actions taken by employers under an established substance abuse program or workplace policy, including such provisions in a collective bargaining agreement. Thus, a workplace rule prohibiting the consumption of alcoholic beverages before reporting to work may be exempt from the new law's protection. Of course, any employee's conduct while on working time (such as being under the influence of alcohol) is clearly outside the protection of this new law. Of greater concern are employer-sponsored drug testing programs. Although the use of illegal drugs is not protected by the new law, the use of legal drugs (such as prescription medication) is protected. Consequently, any drug testing program that does not effectively differentiate between an employee's legal and illegal drug use may be in violation of the law.

The new law has no application to an anti-moonlighting rule, because only non-compensated leisure time activities are protected. An employer's policy prohibiting dating between co-workers, however, may be prohibited by the statute, depending on whether the courts interpret dating to be a "recreational" activity (although, even then, an employer could argue that a particular dating relationship creates such a serious conflict of interest that it would fall within one of the exceptions to the law's prohibitions discussed above).

Finally, with respect to employee benefit plans, the law specifically permits an employer to maintain a health or benefit plan "that makes distinctions between employees for the type of coverage or the price of coverage based upon the employees' recreational activities or the use of consumable products." Thus, medical insurance may be charged to a smoker at a higher rate than to a non-smoker, without violating the new law.

For most employers, the impact of this new law on the day-to-day operation of the company will be limited. Unless an employer has an established policy prohibiting dating between co-workers or of not hiring smokers (whether or not they smoke on the job), democrats, or employees who have high-risk hobbies, the new law may be of little practical consequence. Nevertheless, the new law represents a significant limitation on the traditional New York rule of employment-at-will, and employers should be sensitive to the possible ramifications of the new law for employment actions based on employee conduct that occurs off the job.