On August 18, 2021, New York City amended its law to require contractors and subcontractors to enter into labor peace agreements with labor organizations as a condition to being awarded or renewing a city service contract with NYC agencies. Covered employers must now submit certifications to NYC agencies along with their bid for a service contract or request for a renewal, which must be updated annually. In addition, covered employers must now submit an attestation within 90 days of entering into a city service contract confirming the status of the labor peace agreement.
What is a Labor Peace Agreement?
Labor peace agreements generally require that a covered employer and a labor organization agree to the uninterrupted delivery of services pursuant to the underlying service contract and to refrain from actions that would interrupt those services.
Who is Covered?
This law applies to any contractor or subcontractor that enters into city service contracts with NYC agencies. City service contracts are defined under the law as any written agreements between any person and contracting agency where (i) the agency is committed to expending or does expend funds, (ii) the purpose of the agreement is to provide human services, and (iii) the value of the agreement is greater than the city’s small purchase limit pursuant to section 314 of the New York City Charter.
A contract for human services includes, but is not limited to, any services related to day care, foster care, home care, health or medical services, housing and shelter assistance, preventive services, youth services, the operation of senior centers, employment training and assistance, vocational and educational programs, legal services and recreation programs.
Who is Exempted?
The law exempts building service employees and subcontractors whose principal purpose is to provide supplies, or administrative services, technical support or other similar services that do not directly relate to the performance of human services. Building service employees include any person whose majority of their employment consists of performing work in connection with the care or maintenance of a building or property, including guards, doorpersons, building cleaners, handyperson, janitor, gardeners, groundskeeper, elevator operator, or window cleaner, to name a few.
This new requirement does not apply to any human services contracts that were entered into prior to the effective date of the law nor does it include any emergency contracts procured pursuant to section 315 of the NYC Charter.
What is Required?
Covered Employers Must Submit a Certification Prior to Entering Into or Renewing a Contract With a NYC Agency
A bidder seeking to be awarded a city service contract or the contractor seeking a renewal of such contract must provide the NYC agency with a certification stating the following:
- The name, address, and telephone number of the chief executive officer of the bidder or contractor seeking renewal;
- A statement that if the contract is awarded or renewed, the bidder or contractor will agree to comply with the requirements of this law; and
- A record of any instances in the past five years where the bidder or contractor has been found by a court or government agency to have violated federal, state, or local laws regulating labor relations.
The certification must be signed by an officer of the bidder or contractor under penalty of perjury and should be annexed as part of the city service contract. The certification and city service contract will be considered public documents and should be updated each year throughout the term of the contract.
Covered Employers Must File an Attestation Within 90 Days of Entering Into a Service Contract
Within 90 days after an award or renewal of a human services contract, the covered employer must submit an attestation stating that either (i) the covered employer has entered into one or more labor peace agreements with a labor organization, or (ii) no labor organization has sought to represent their employees.
If a covered employer has entered into a labor peace agreement or intends to, the attestation must identify (i) the classes of employees covered by the labor peace agreement, (ii) the classes of employees not represented by a labor organization and that no labor organization has sought to represent, and (iii) the classes of employees for which labor peace agreement negotiations have not yet concluded. Note that the employees identified in the attestation should only be those employees who directly render human services under a service contract.
If the 90-day period following the award date of the city service contract has passed and a labor organization expresses an interest in representing the employees, the labor organization must first provide notice to the covered employer and NYC agency. The covered employer then has 90 days after the date of notice to submit an attestation to the NYC agency indicating that it has entered into a labor peace agreement or that negotiations have not yet concluded. The attestation must also be signed by the labor organization.
Consequences in the Event of Non-Compliance
Contracting agencies are now required to include a provision in future city service contracts explaining that a failure to comply with this requirement may constitute a material breach of the contract. A failure to cure such a breach within 30 days of notice (or longer if provided for under the terms of the contract) will provide the NYC agency with the right to terminate the contract or pursue any remedies outlined in the contract. Those remedies may include requiring the non-performing contractor to pay the difference in price resulting from any alternative arrangement, assessing any administrative charges, or invoking sanctions where appropriate.
Further, if the comptroller suspects that a covered employer is not in compliance, they will conduct an investigation and provide the results to the contracting agency. The contracting agency may then, depending on the circumstances, issue a disposition (i) directing the filing or disclosure of any records that were not previously filed; (ii) directing payment of the amounts withheld at the commencement of the investigation and any interest that has accrued; (iii) finding the covered employer in default or terminate the contract; (iv) withdrawing approval of the covered employer; (v) assessing actual and consequential damages; or (vi) entering into an agreement allowing the covered employer to cure the violation. The appropriate remedy will be based on the employer’s size of business, good faith, the gravity of the violation, the history of any prior violations or failure to comply with recordkeeping. Before issuing a disposition, the covered employer shall receive notice along with a statement of the facts disclosed during the investigation.
If a covered employer receives a disposition indicating that it has failed to comply with this requirement twice within a consecutive six-year period, they will become ineligible to submit a bid or proposal or be awarded a city service contract for a five-year period from the date of the second disposition.
Covered employers should be vigilant as this requirement will become a material term to any city service contract that is entered into or renewed going forward. Employers subject to this law are encouraged to consult knowledgeable counsel for further guidance regarding their obligations.