New York City Mayor Eric Adams on Tuesday, January 4, 2022, signed an executive order intended to support small businesses amid the COVID-19 pandemic.  Executive Order 2, titled “Small Business Forward: Review and Reform of Compliance Costs on Businesses” (Order), is designed to “reform existing business regulations, ensuring local businesses face fewer needless fines and penalties.”  Mayor Adams at a recent press conference said his goal in issuing the Order is to “cut red tape and bring[] real relief to the entrepreneurs who have made their dreams a reality and keep our local economy strong.”

The Order requires various New York City agencies¹ identify, by March 31, 2022, the 25 provisions of laws or rules that are most frequently enforced through the issuance of notices of violation, and to the extent practicable, identify those violations that are most frequently issued to “small businesses.”  The Order does not define “small business.”  For each identified provision, the agency shall evaluate whether:

1. the provision is necessary to promote an important public purpose, and if not, assess whether such provision should be amended or repealed to better effectuate the public purpose at issue;

2. the civil penalties established to enforce such provision are in an amount appropriate to achieve the public purpose sought to be achieved by the provision or, whether such civil penalties should be reduced; and

3. the provision of law establishing such civil penalties requires a warning or a cure period for persons who violate such provision for the first time, or whether rules should be adopted implementing such warning or cure period.

If an agency, after conducting the foregoing analysis, recommends that a provision be revised or reformed, then the agency will be required to specify whether legislation or rulemaking, or any other administrative action, is recommended to achieve the revision.  On the other hand, if an agency determines that no legislation, rulemaking or administrative reform is recommended, the agency will be required to explain its reasons for such determination. 

Executive Order 2 further requires each of the agencies identified to undertake a review of the systems used to enforce each of the violations identified in its analysis.  The review shall include, but not be limited to, evaluating procedures used to train inspectors and investigators, administer inspections, and track the issuance of warnings and cure periods for businesses that incur first time violations. 

Finally, Executive Order 2 establishes an Inter-Agency Working Group in the mayor’s office to evaluate the submissions of each identified city agency and oversee the advancement of the legislative, regulatory or administrative reforms identified by the Working Group.  Per the Order, “[t]he Working Group shall seek to prioritize reforms that, to the extent practicable, should benefit small businesses.”  The Working Group will, within 45 days of receiving the submissions of each identified city agency, submit to the first deputy mayor a plan to accomplish the recommendations set forth by each agency. 

Employers and small business in New York City should keep close track of Executive Order 2, as the Order could result in reforms that have a significant impact on how agencies enforce city laws against small businesses.  For instance, the DCWP actively enforces a number of city laws that contain heavy fines for non-compliance, such as the New York City Fair Workweek Law and the New York City Earned Sick and Safe Time Act.  The Order could bring about change in the way the DWCP issues fines for first-time violators and/or conducts its investigations.  By signing the Order within days of his new administration, Mayor Adams appears committed to creating a regulatory climate in which businesses can rebuild, grow and thrive in New York City.  

Littler will continue to track developments with respect to the Small Business Forward Executive Order, including the identified agencies’ reports due by March 31, 2022.