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Small Business Laws and Considerations in New York due to COVID-19

small business laws in new york

Effective March 22, 2020, New York State Governor Andrew Cuomo's executive order "New York State on PAUSE" went into effect. It was an unprecedented move to contain the outbreak of COVID-19. The NY State coronavirus disaster turned the state into an international red zone and threatened to overwhelm the health care system. NY State on PAUSE was a culmination of efforts where Cuomo increasingly tightened up the extent of which the public could work, socialize and gather at events. The coronavirus in NY meant all non-essential businesses, statewide, had to close in-personnel functions and ban all non-essential gatherings of individuals of any size for any reason. On May 28th, NY State on PAUSE was lifted for those regions that could meet and sustain certain criteria in a phased reopening called "New York Forward."

Collectively, NY PAUSE and NY Forward have had a tremendous impact on business owners who are tasked with sorting out layoffs, staying compliant with guidelines and laws for reopening, and knowing what benefits may be available to them and their employees. The following topics should help give you, the NY business owner, some clarity.

Mandatory Face Coverings

In staying consistent with Centers for Disease Control's (CDC) recommendations on face coverings, on April 14th, NY adopted a mandate for face coverings to be worn by employees when in direct contact or routinely close contact with customers or members of the public. It is the employer's obligation to provide face coverings, which can be made of cloth (homemade/sewn, quick cut, bandana), surgical masks, N-95 respirators or face shields. Reasonable accommodations for those who can't wear them should be considered. If an employee has a medical condition that prevents them from wearing a mask, a best business practice is to ask for medical documentation that supports that employee's medical restrictions from wearing a mask.

While seen as an inconvenience or discomfort, face coverings are worn to protect both employees and customers. While it's not mandated that businesses require customers to wear face coverings, it is up to a business owner to decide to do so. Business owners who insist that customers wear face coverings may be seen by employees as a compassionate act that demonstrates that a company truly cares about the health and welfare of its staff during the time of coronavirus in NY.

Matilda's "Law"

Named after NY Governor Andrew Cuomo's elderly mother, Matilda's "Law" is a set of guidelines to protect individuals identified as uniquely vulnerable to COVID-19. Specifically, it's an extra mandate to stay home and for others to take precautionary measures when interacting with them. There are numerous co-morbidities or circumstances that make someone uniquely vulnerable. Primarily this group consists of individuals over age 70 or those with compromised immune systems or with underlying respiratory or other illnesses (cancer, asthma, etc).

For businesses navigating the NY state coronavirus, there are a number of accommodations that can be implemented to support the Matilda's "Law" guidelines. For essential workers who fall into Matilda's "Law" criteria, employers should seek to provide remote work. If a business has never accommodated remote work, there are a number of technologies and strategies available for managing remote employees. If remote work is not possible, other accommodations are available such as providing personal protective equipment (PPE), alternate work locations, and/or fewer interactions with the public.


To protect workers from a sudden and unexpected mass layoff, NY has the New York State Worker Adjustment and Retraining Notification (WARN) Act that requires covered businesses to provide early warnings of closures and layoffs to workers, employee representatives, the Department of Labor, and local workforce development boards. NY WARN is known as the "mini WARN" law because there is a federal WARN Act, which was passed in 1988.

While this may answer the general definition of what is a WARN Act, employers may be confused about how to navigate the federal and state versions. In short, employers must stay compliant with both. The NY WARN Act is more stringent on employers than its federal counterpart. It is more burdensome to an employer while offering greater protection and benefits to employees.

The NY WARN Act covers any business that employs 50 or more employees, excluding part-time employees, or 50 or more employees that work in the aggregate at least 2,000 hours per week (the equivalent of 50 full-time shifts at 40 hours per week). In contrast, the federal WARN covers any business of 100 or more employees. If you are an employer of a covered business, the NY WARN Act references a written and highly visible notification that you may be required to provide in the event of a plant closing, mass layoff, or dramatic reduction of hours. For the NY State coronavirus, the majority of businesses are grappling with mass layoffs and hours reduction rather than a plant closing.

Plant closings

A plant closing under the NY WARN Act is the shutdown of a single site of employment or one or more facilities or operating units within a single site of employment if the shutdown results in an employment loss at that site for 25 or more employees. For example, if an employer operates a franchise consisting of two or more stores, each store is considered a single site.

Mass layoff

Under the NY WARN Act there are four criteria that must be met to trigger the need for notification due to a mass layoff. These are:

  • A reduction of the workforce resulting in an employment loss at a single site of employment for at least 25 employees, excluding part-time employees (the federal WARN act sets this number at 50 employees).
  • These 25 employees must constitute 33% or more of the workforce at that single site of employment.
  • The layoff must last longer than six months.

If your business meets the criteria outlined above, you have the responsibility to provide a written notice informing employees 90 days in advance of the closure (60 days under the federal Act).

In response to the coronavirus in NY, it's reasonable for business owners to have had no way of anticipating a closure or mass layoff 90 days in advance. With the WARN Act, there is an unforeseeable business circumstance exception that recognizes the reality of disasters like COVID-19 and its sudden, dramatic impact on employers. Employers forced to conduct mass layoffs in NY due to COVID-19 are exempted from the 90-day notice but must still provide notice as soon as possible.

Certainly, there are many employers who are confused on how to appropriately manage the six-month timeline of the mass layoff criteria. In a grasp for genuine optimism during the height of the crisis, many business owners likely did not anticipate NY State coronavirus layoffs to extend longer than six months. However, the moment it's clear that these layoffs will last longer than six months, employers must provide notification to employees to stay compliant with the law. Moreover, as New York State begins its phased reopening, COVID-19 no longer constitutes an unforeseen circumstance for businesses that are facing a new round of layoffs. NY State wants to protect business owners who are trying to help their workers. The future of the reopening is evolving and subject to change. New laws implemented under NY Forward may give employers a new unforeseen circumstance which may make them eligible for certain exceptions to the NY WARN Act. It's important to talk to your HR service provider to stay current of your options and ensure compliance.

Hours reduction

An employee is considered "laid off" under the federal and NY WARN Act if he/she suffers a reduction in hours of more than 50% in each month of the consecutive six-month period. This means if an employer has, for example, 25 employees and their hours are cut in half, the threshold for the WARN Act is met.

New York sick leave laws

With the coronavirus in NY, there are new protections available to employees due to COVID-19. Effective March 18, 2020, employers are required to provide sick leave and/or certain employee benefits such as Paid Family Leave (PFL) or Disability Benefits Law (DBL) when an employee or an employee's minor child is subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19, as issued by the state of NY, the Department of Health, local board of health, or any governmental entity duly authorized to issue the order. There is currently no sunset provision. Employees are not entitled to take advantage of the sick leave law more than once.

Paid leave laws were also expanded under the federal Families First Coronavirus Response Act. Restrictions and caps do exist, as well as tax credits for business owners, so it's important for employers to be familiar with the details of this sophisticated law.

Running a business in NY can be challenging even in normal times let alone navigating the NY workplace during COVID-19. The state places a high value on protecting employee rights and the constant changes through the COVID-19 outbreak reflect this approach. These difficult times are shared by business owners across the country. To help business owners understand the effects of the novel coronavirus in every state, Paychex has put together an easy-to-navigate, coronavirus state resource page designed to give employers the direction and guidance they need to stay strong during these tricky times.


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* Este contenido es solo para fines educativos, no tiene por objeto proporcionar asesoría jurídica específica y no debe utilizarse en sustitución de la asesoría jurídica de un abogado u otro profesional calificado. Es posible que la información no refleje los cambios más recientes en la legislación, la cual podrá modificarse sin previo aviso y no se garantiza que esté completa, correcta o actualizada.

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