By: Howard M. Wexler and Samuel Rubinstein

Seyfarth Synopsis: On December 31, Governor Cuomo signed the Healthy Terminals Act, which among other things, grants local governments the authority to set prevailing wages and overtime rates for covered airport workers.  Starting September 1, 2021, covered airport employers must pay a covered airport worker the prevailing wage, as set by the comptroller of a city.  Due to the Port Authority of New York and New Jersey’s status as a bi-state entity, there are some questions as to whether the Healthy Terminals Act would apply in the absence of a corresponding New Jersey law.

Introduction

On July 22, 2020, after a year of sitting in committee, Senate Bill S6266D (also known as the Healthy Terminals Act) passed in both the New York State Senate and Assembly.  The purported impetus behind the Act was the high number of uninsured airport workers.  Months after its passage, on December 31, Governor Cuomo signed the Act, which went into effect the very next day.

Prevailing Wage

As previously reported, worker groups sought to have a prevailing wage for covered airport workers.  Now that the Governor signed the Act, the “fiscal officer,” usually the comptroller of a city, will determine the prevailing wage every September 1st beginning in 2021 “for the various classes of covered airport workers in the locality.”  “Wage” includes the “basic hourly cash rate of pay” and a supplemental benefits rate for fringe benefits, including “medical or hospital care, pensions or retirement or death compensation for injuries or illness resulting from occupational activity, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, and other bona fide fringe benefits not otherwise required by federal, state, or local law to be provided by [the] covered airport employer.”  The obligation to pay prevailing supplements may be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential payments in cash under the fiscal officer’s rules and regulations.  At this time, there are no rules and regulations posted, but as we inch closer to September 1, we expect the fiscal officer to promulgate them.

Overtime Rates

The bill amends the existing Prevailing Wage for Building Service Employees law to include “covered airport employers” and “covered airport workers.”  (For more information on the vague definitions of “covered airport employers,” “covered airport workers,” and excluded employees, see our prior alert).  Pursuant to this amendment, covered airport workers will be entitled to overtime at a rate not less than one-and-one-half times the prevailing basic cash hourly rate for work of more than eight hours in any one day or more than forty hours in any workweek.  Currently, New York does not specify a daily overtime limit for most employees, but this new Act creates a daily overtime limit for covered airport workers.

Legal Issues

One major question is whether the State of New York is able to unilaterally impose these requirements.  Unlike other airports across the nation, the Port Authority of New York and New Jersey is a bi-state agency.  To affect the internal operations of the Port Authority, New York cannot unilaterally impose requirements without New Jersey passing a similar law.  As for the external operations of the Port Authority, New York or New Jersey can unilaterally impose requirements.  A major debate is whether the Act affects the internal or the external operations of the Port Authority.

Another wrinkle is that the Act does not impose requirements directly on the Port Authority, but on lessees, permittees, and contractors operating under the jurisdiction of the Port Authority of New York and New Jersey within the state.  There have been only a handful of cases analyzing this wrinkle, however, and further litigation is expected given the passage of this new law.

If New Jersey joins New York and enacts its own version of the Healthy Terminals Act, then the above jurisdictional question would likely become moot.  However, at the time of this writing, the New Jersey version of the Healthy Terminals Act is still in committee.

Employer Takeaways

It is imperative for employers with New York City-based airport operations to consider how this Act will impact them.  For now, employers must keep a close eye on when the fiscal officer will release the rules and regulations, and what the prevailing wage rate will be.  Employers should reach out to the authors of this Alert or their Seyfarth contact to discuss compliance questions or possible defenses to coverage of this Act.