April 7, 2020
The U.S. Department of Labor has published “temporary regulations” to explain how small businesses (fewer than 50 employees) may exercise the exemption from certain leave obligations under the Families First Coronavirus Response Act (“Families First Act”).
As previously reported, the Families First Act has two leave components: paid leave under the Emergency Paid Sick Leave Act (“PSLA”), and paid and unpaid leave under the Emergency Family and Medical Leave Expansion Act (“EFMLA”).
A small employer (less than 50 employees) is exempt from the PLSA’s and EFMLA’s leave requirements if the requested leave would jeopardize the viability of the business as a going-concern. Importantly, the exemption applies only to child-care related leave, where an employee is unable to work or telework due to the need to care for his/her minor child whose school/daycare has been closed or whose childcare provider is unavailable as a result of COVID-19. (PSLA qualifying reason #5, and EFMLA’s only qualifying reason).
A small employer may invoke the carve-out if an authorized officer of the business determines that:
The DOL’s regulations require a small employer seeking to invoke the exemption to document its determination, including which of the above criteria it relied on. At this time, employers need not send the documentation to the DOL but must retain it, presumably in the event of a future DOL inquiry or audit.
Finally, all employers, including small employers exercising this exemption with respect to one or more employees, must post (or deliver via email) the DOL’s poster informing employees of these new laws which can be found here.
April 2, 2020
Yesteray, the U.S. Department of Labor (“DOL”) announced a “new action” regarding the protections and relief available under the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act, both part of the Families First Coronavirus Response Act (“FFCRA”). The Department’s Wage and Hour Division “posted a temporary rule issuing regulations pursuant to the new law, effective April 1, 2020,” available here.
FFCRA requires all private employers with less than 500 employees (subject to exemptions) to provide up to 80 hours (or 10 days) of paid sick leave for a “qualifying reason” related to COVID-19. In exchange, employers will receive a “tax credit” for the cost. According to the DOL, “[t]he legislation will ensure that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus, while at the same time reimbursing businesses.”
For any questions regarding your obligations under FFCRA, please feel free to contact any member in our Labor and Employment Practice Group.
March 26, 2020
As we all continue to struggle with the impact of the coronavirus, the pandemic has highlighted why employers must stay vigilant with regard to updating their personnel policies and employee handbooks.
Those businesses considering furloughs (unpaid leaves of absence), individual terminations and/or downsizings must consider whether those affected have written employment agreements and whether they are covered by any stand-alone personnel policies or policies contained within an employee handbook. This must be done while at the same time analyzing numerous employment statutes and laws. For example, what does an employee’s contract say about the right to terminate with or without cause? What does it provide for vacation and sick pay? Similarly, what does your businesses personnel policies and handbooks say about whether the company must pay paid time off, vacation and/or sick days if an employee is terminated?
Once an employer understands its contractual obligations, an analysis must be done of state paid sick leave laws, wage and hour laws, whether the adverse employment action could result in a discrimination or retaliation claim or implicates the WARN Act, whether it complies with the new Families First Coronavirus Response Act (“FFCRA”), enables those terminated to receive the benefits of the stimulus package that should be approved tomorrow, and on and on.
While it may or may not be too late to change an employers’ employee handbooks now to deal with immediate employment actions that employers are considering, it is important to make certain immediate changes that could protect the company as we continue down the rocky road still ahead of all of us as a result of the pandemic.
Employers who wish to have their personnel policies and employee handbooks reviewed should contact Steven Adler at email@example.com.
March 26, 2020
With hundreds of millions of workers advised or required to stay at home, employers and employees are left with no other alternative but to work remotely. The sudden emergence of the COVID-19 virus pandemic has resulted in a virtual stampede into remote computing, or “remoting”. Businesses should understand that now, more than ever, they must address not only the logistics of remoting, but also grapple with an issue joined at the hip with remoting: cybersecurity.Social distancing and working from home has, for now, become the new normal. While keeping employees productive and companies in business, however, migrating to operating away from the watchful eyes of information technology and cybersecurity staff could leave firms even more vulnerable to technology-related issues and a variety compromises.
March 25, 2020
As we previously reported, on March 18, 2020, effective immediately, all New York employers must provide sick leave for any employee (with limited exceptions) “who is subject to a mandatory or precautionary order of quarantine or isolation issued by New York, the Department of Health, local board of health, or any government entity duly authorized to issue such order due to COVID-19.”
New York’s Short-Term Disability and Paid Family Leave have also been expanded to provide these leave benefits for employee absences due to COVID-19 related quarantine/isolation.
Governor Cuomo’s “New York State on PAUSE” Executive Order 202.6 of Friday, March 20, 2020, also known as the “Stay-At-Home” Executive Order (the “Executive Order”), required all non-essential businesses to close by 8 p.m. beginning on March 22, 2020, and for all of their employees to stay home and work remotely if possible.
Since the COVID-19 Paid Leave Law extended disability and paid family leave benefits to employees under quarantine or isolation required by the State; and since the Executive Order required all non-essential workers to stay home; it was initially interpreted that all employees subject to this Executive Order would be entitled to this Leave.
However, the New York Department of Labor (NYDOL) has now issued a “correction” that the expansion of disability and paid family leave under the COVID-19 Paid Leave Law, does not apply to all employees who have been ordered to stay home under the Executive Order; even though it is clearly a state order of quarantine or isolation for all workers to “stay home,” except for workers in essential businesses. NYDOL now corrects its prior announcement and says that these benefits only apply to employees who have an individualized order of quarantine or isolation.
We expect this is not the first roll-back “correction” or interpretation” we are going to see as the government calculates the cost of providing these benefits under this and other emergency statutes.
March 25, 2020
Today, the U.S. Department of Labor’s Wage and Hour Division announced “its first round of published guidance” to provide information to employees and employers about the protections and relief offered by the Families First Coronavirus Response Act (“FFCRA”) when it takes effect on April 1, 2020.
The FFCRA requires private businesses with fewer than 500 employees to provide eligible employees with paid leave under its two component parts, the Emergency Paid Sick Leave Act and the Family and Medical Leave Expansion Act, in exchange for which employers will receive tax credit. The legislation is intended to support employees during the pandemic while offsetting employers for the cost of the new benefits.
The guidance includes:
A Fact Sheet for Employees
A Fact Sheet for Employers
A Questions and Answers (FAQ) that addresses specific questions relevant to both employers and employees
March 25, 2020
As previously reported the Sick Leave Law applies to all employers (regardless of size) with NJ-based employees and all NJ employees (full and part-time), excluding construction industry employees covered by a collective bargaining agreement, per diem healthcare workers, and public employees who had this benefit.
Employees accrue and may use up to 40 hours of paid “sick leave” in an employer-designated 12- month period (a “benefit year”). At the end of a benefit year, employers must either payout, or allow employees to carry over to the next benefit year, up to 40 hours of accrued, unused leave.
Coronavirus. Significantly, “sick leave” may be used for such reasons as:
The New Jersey Department of Labor and Workforce Development (“NJDOL”) recently posted a Question & Answer section on its website that specifically addresses the use of sick leave during the COVID-29 emergency available here.
New Rules. On January 6, 2020, the NJDOL issued new “Earned Sick Leave Rules” over a year after the Sick Leave Law went into effect on October 29, 2018. The 50+ page document attempts to provide clarity and to address employer and employee’s questions and concerns.
Job Protection. On March 20, 2020, New Jersey enacted an Anti-Retaliation Protection Law that prohibits retaliation and includes job protection for workers impacted by COVID-19. Although the law was enacted in response to the COVID-19 emergency, the law does not include a sunset provision. The law does not, however, require employees be paid out for earned/unused leave upon termination.
March 24, 2020
Facing the impact of COVID-19 while wishing to reserve the capacity of New Jersey’s health care system for the most vulnerable, Governor Phil Murphy on March 21st signed Executive Order No. 107 which directs all New Jersey residents to stay at home until further notice. This unprecedented measure effectively puts many New Jersey workers and their employers out of work or out of business with the exception of those performing “essential services” or whose workers can perform services remotely from their homes.
Employers that do not fit into these exceptions now face potentially massive losses and the need to address employment issues with now idled employees. Employers want to know what they can/must do under such circumstances. Contract law and New Jersey’s complex and comprehensive employment laws, such as the NJ Paid Sick Leave law, create substantial legal impositions for employers.
An employer’s first step should be to evaluate each employee’s current status. Termination may be necessary, but assuming that it is intended for the employee to resume employment once conditions permit, how should the termination be classified? A term that is frequently applied to such circumstance is “lay off.” But what is that?
In the absence of contractual authority, a lay-off is frequently defined to be an involuntary employment separation occurring through no fault of the employee. A “temporary” lay-off implies the parties’ intention that the affected employee will be re-employed once conditions permit. Laid-off employees are usually eligible to collect unemployment compensation up to a maximum of 26 weeks or until re-employed if sooner.
In the turmoil and confusion of the present time, employers are attempting assess what must be done to survive. As a first step, determine what is owed to employees, starting with a review of the Company’s Employee Handbook if one exists and other pay policies. What do these policies say regarding the grant of non-statutory paid time off (PTO)? New Jersey law permits the forfeiture of unused PTO days if employment has ceased for any reason provided the policy provides for such forfeiture. If an employee has the protection of a written employment agreement, such agreement may address the issue of severance. It is not too late to revise your Handbook (at least prospectively) provided the Handbook expressly states that it is not a contract and may be revised at any time.
Regarding New Jersey’s Paid Sick Leave Act, the law provides that payment must be made for:
…Time during which the employee is not able to work because of a closure of the employee's workplace, or the school or place of care of a child of the employee, by order of a public official due to an epidemic or other public health emergency, or because of the issuance by a public health authority of a determination that the presence in the community of the employee, or a member of the employee's family in need of care by the employee, would jeopardize the health of others….
While there is and should be much concern for the welfare of the affected employees, many employers now face a struggle to survive. Effective on April 2, 2020, the Families First Coronavirus Response Act (“FFCRA”) wil l go into effect . This decisive Congressional action creates two new programs: first, the grant of ten (10) paid sick days for employees to permit the paid absence from work due to personal or familial COVID-19 illness issues; and second, the grant of a very liberalized paid family leave for all employers with 500 or less employees and covering virtually all employees who have worked for 30 or more days.
The law provides for possible recompense to employers for such costs through tax credits and/or possible tax refunds if credits are insufficient, but such relief will not be realized tor at least 90+ days. In many cases, smaller employers in particular may not survive to receive such benefit.
The FFCRA will be effective as of April 2nd. We expect that it will be applied only prospectively. Struggling employers must carefully consider whether layoffs should be imposed before that law is effective as a defensive measure. Waiting until the effective date will guarantee the payment of two weeks’ pay to all employees who are still employed as of that date (unless it is determined that employees can be terminated while being paid pursuant to the FFCRA) plus the possible grant of the many other benefits attendant to the drastically revised FMLA: paid leave under certain circumstances at 2/3rds pay plus the possible continuation of health insurance for a maximum of 12 weeks.
These are difficult times for both employers and employees. Unfortunately, the hope of survival may require strategic actions that are very unpleasant and difficult. All legal and economic exposures must be carefully reviewed, and there is little time to take such action.
Please speak with a Member of the Mandelbaum Salsburg's Employment Law Department for further advice.
March 24, 2020
On March 24, 2020, New Jersey’s Director of Emergency Management, Colonel Patrick Callahan, issued Administrative Order 2020-5, expanding the list of “essential retail businesses” permitted to operate during according to their normal business hours under Governor’s Murphy’s Executive Order 107.
Effective immediately, the following were added to the categories of “essential retail businesses” listed in Executive Order 107:
Essential retail businesses that remain operational must comply with the social distancing requirements of Executive Order 107.
The Administrative Order also clarifies that municipalities may impose additional restrictions on beaches and boardwalks.
Employers and employees of essential retail businesses that reduce staff, close or remain closed, need to consider the eligibility requirements for paid and unpaid leave under the federal Families First Coronavirus Response Act and New Jersey’s Earned Sick Leave Law.
More information concerning the operation of essential businesses during the Coronavirus emergency is available on the state’s here.
March 23, 2020
The spread of Coronavirus has caused unprecedented changes to many aspects of life, with ramifications for immigrant workers. Here are a few major changes employers should know about:
These are just a few of the situations that have arisen, and every day brings a new question - sometimes without answers- about the impact of COVID-19 on employers' obligations and employees' ability to enter or remain lawfully in the U.S. For these and other situations employers and employees may be facing, it is important to obtain as much up to date and accurate information as possible to remain in compliance with labor and immigration law.
March 22, 2020Federal Families First Coronavirus Response Act (the “Family First Act” or “Act”) was signed on March 18, 2020. The Act’s employment provisions become effective no later than April 2, 2020 and last until December 31, 2020.
March 21, 2020
Much has been written the past few days about the Families First Coronavirus Response Act (“FFCRA” or the “Act”). As we have reported, the Act provides two specific benefits for employees of companies with less than 500 employees. First, it provides paid sick leave of up to ten (10) days in addition to whatever paid sick leave states may have already granted by statute. Second, it provides for paid family leave but only under very limited circumstances. There is an exemption, however, for “health care providers” and emergency responders. The Mandelbaum Salsburg Coronavirus Task Force has fielded many questions since our Webinars this past week concerning the breadth of the exemption and how it works.It is clear the exemption was included in the law to keep health care providers and emergency responders at work and on the front lines to fight the pandemic. Obviously, we don’t want to force those providers who have the virus to expose others. However, the law did not want to give health care providers and emergency responders the unfettered right to stay home and be paid to care for healthy children who are unable to go to school or childcare because of the coronavirus. Both the paid sick leave and paid family leave provisions of the Act allow those who are not health care providers or emergency responders to receive these benefits at least to the extent that they cannot telework.
March 21, 2020
On March 21, 2020, New Jersey Governor Phil Murphy issued Executive Order 107 (the “Order”), which requires, among other things, that retail businesses, other than certain enumerated essential retail businesses, close their brick-and-mortar premises, beginning at 9:00 p.m. on March 21, 2020, until the Order is revoked by the Governor.
The Order neither requires medical practices or other health care services to close their brick-and-mortar premises nor prohibits NJ residents from seeking medical attention. Indeed, the Order expressly provides that it shall not be construed to limit, prohibit, or restrict in any way the provision of health care or medical services to members of the public. Accordingly, the Order does not require the closure of medical practices and closely-allied healthcare practices (e.g., physical therapy, chiropractic, etc.) or healthcare facilities (e.g., laboratories, ambulatory care facilities or hospitals) (“Healthcare Businesses”). Underscoring the nature of the public health crisis that the State is facing as a result of the COVID-19 pandemic, the Order includes certain healthcare-related retail businesses, such as medical supply stores, pharmacies, medical marijuana dispensaries, and “ancillary stores within healthcare facilities” among the Order’s enumerated “essential retail businesses” that are allowed to remain open.
However, the Order requires Healthcare Businesses to accommodate their workforce, wherever practicable, for telework or work-from-home arrangements. In other words, for example, if a medical practice offers medical services that do not necessarily require an in-person physical examination of the patient, such a medical practice would be required, under the terms of the Order, to allow its physician and non-physician employees to provide telemedicine services from their home.
For those Healthcare Businesses whose brick-and-mortar premises remain open to the public, the Order requires that they “make best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue.” In other words, for example, if a medical practice has employees whose duties need not be performed on-site and may be performed remotely (e.g., administrative personnel who assist with scheduling of appointments and other administrative matters), then the medical practice should endeavor to enable such employees to work-from-home.
If you have any questions, please contact Mohamed Nabulsi at 973.979.1150 at any time.
March 18, 2020
Pursuant to the Coronavirus Preparedness and Response Supplemental Appropriations Act, which was signed on March 6, 2020, businesses injured by the coronavirus pandemic may be eligible for Economic Injury Disaster Loans funded by the SBA. On March 17, the Administrator of the SBA announced guidance that made it easier for a state to be declared a disaster by the SBA and expanded businesses’ access to Economic Injury Disaster Loans in disaster areas.
Economic Injury Disaster Loans are designed to provide small businesses or non-profits with low interest rate loans of up to $2 million. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; however businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%. SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
According to the March 17, 2020 guidance, Economic Injury Disaster Loans will now be available to businesses on a state-wide level, provided that the state has been declared a disaster by the SBA. The White House has tentatively allocated $50 billion to fund these loans in response to the coronavirus outbreak and has insisted the SBA implement processes to expedite the evaluation of applications.
To determine if you are eligible for an SBA loan, please contact your local SBA Office to determine if your state has been declared a disaster by the SBA, and initiate the application process. The application can also be completed online (located here).
As of March 17, 2020, the SBA has declared disasters from the coronavirus in 22 states. To see an updated list states declared disasters by the SBA, follow this link.
March 18, 2020
On Monday, March 16th, Ocean Grill, a New Orleans restaurant filed the first-of-its-kind lawsuit asking a state court judge to find that its property and business interruption policy covers losses due to Covid-19 government-mandated closures.
Oceana Grill argued that its "all risk" policy with Lloyd's of London cover its losses since the policy does not exclude losses resulting from viruses or global pandemics.
The Complaint seeks “[a] declaratory judgment determining that the coverage provided under the policy will prevent the plaintiffs from being left without vital coverage acquired to ensure the survival of their business should operations cease due to a global pandemic virus and civil authorities' response.”
At the time the suit was filed, Louisiana Governor John Bel Edwards had only barred public gatherings of 250 or more, with no exception for restaurants. Later Monday night, the Governor and New Orleans Mayor LaToya Cantrell issued new directives limiting restaurants to carry-out, drive-through and delivery services. (Gov. Edwards also further reduced public gatherings to no more than 50 people).
Multiple States (and local governments) have imposed similar restrictions on restaurants which are certain to impact those businesses and their employees. Stay tuned….
The file Petition is available here.
March 18, 2020
On March 16, 2020, the New Jersey legislature introduced a bill that would prohibit employers from terminating or otherwise penalizing an employee who “requests or takes time off from work” for a “specified period” based on the “written “recommendation” of a New Jersey licensed “medical professional” that such time is required because the “employee has, or is likely to have,” Covid-19, “which may infect others at the workplace.”
Employers would also be required to “hold” the employee’s job open during such absence. Specifically, the Bill provides that employers
“shall not, following that specified period of time, refuse to reinstate the employee to employment in the position held when the leave commenced with no reduction in seniority, status, employment benefits, pay or other terms and conditions of employment.”
A $2,500 fine is proposed for each violation.
The Bill is currently pending and the full text is available here.
March 18, 2020
Effective immediately, and with limited exceptions, all New York employers must provide sick leave for any employee “who is subject to a mandatory or precautionary order of quarantine or isolation issued by New York, the department of health, local board of health, or any governmental entity duly authorized to issue such an order due to COVID-19.
The amount and type of sick leave (paid or unpaid) depends on the number of employees a business had as of January 1, 2020. In addition, businesses with ten or fewer employees must look at their 2019 net income. Based on those variables, employers must provide sick leave as follows:
Supplemental Sick Leave Benefit. These new benefits are in addition to any other sick leave already provided by the employer. They must be provided without loss to any other accrued sick leave.
Both the federal Families First Coronavirus Response Act, and the New York-specific act were passed on March 18, 2020. In anticipation of the federal act, the New York law provides that to the extent it overlaps with any federal sick leave and/or employee benefits law “related to COVID-19” the New York “quarantine law” benefits are “not available…provided, however, that if the provisions” of New York’s law provides for “sick leave and/or employee benefits in excess of the benefits provided by the federal [act]” an employee is entitled to “to claim such additional sick leave and/or benefits” in the amount of such difference.
Exceptions. New York’s leave law does not apply to an employee who is:
Reinstatement. In addition,employees returning from this leave must be restored to the position they held prior to taking the leave, with the same pay and other terms of employment. Discrimination or retaliation for taking or requesting leave is prohibited.
Finally, employers should be aware that New York’s Short-Term Disability and Paid Family Leave programs have been expanded to provide coverage for COVID-19 quarantine-related absences (for more information see here).
March 16, 2020
Late Friday, the United States House of Representatives passed a relief bill aimed at containing the widening effects of the coronavirus on the United States economy and public health. The bill H.R. 6201, the Families First Coronavirus Response Act, is supported by President Trump and still needs to pass the Senate.
Here are some of the key features of the bill:
March 16, 2020Over the last couple of weeks, clients have asked for our advice on how to properly deal with health care providers who are refusing to treat a patient suspected of having Coronavirus. It is well-known that doctors take the Hippocratic Oath to treat patients in need of medical care to the best of their abilities. This Oath state “I swear by Apollo the physician, and Asclepius, and Hygeia and Panacea and all the gods and goddesses as my witnesses, that according to my ability and judgement, I will keep this Oath and this contract: …I will benefit my patients according to my greatest ability and judgement, and I will do no harm or injustice to them.” However, does this Oath require doctors and other health care providers to treat patients who have contagious diseases, such as Coronavirus?
March 9, 2020New York City's Fair Workweek Law requiring predictable scheduling for retail and fast-food workers, adopted in November 2017, withstood its most serious challenge last month from several business groups.
March 3, 2020
Employers should be gearing up for a possible outbreak of coronavirus in their geographic areas. This includes establishing certain safety precautions as well as issuing a policy concerning certain protocols to be followed in the workplace. The policy should include:
Policies need to be in conformity with the requirements of the Americans with Disabilities Act (“ADA”) and state disability laws such as the New Jersey Law Against Discrimination (“NJLAD”) concerning inquiring about employee’s health and the need to provide any reasonable accommodations. Leaves of absence also may be necessary and must comply with the federal Family and Medical Leave Act (“FMLA”) for employers with at least fifty (50) employees and the New Jersey Family Leave Act (“NJFLA”) for employers with at least thirty (30) employees. Employers should also review the EEOC’s guideline entitled “Pandemic Preparedness in the Workplace and the Americans with Disabilities Act.” We are here (or working remotely) should you need further guidance.
January 30, 2020
On January 21, 2020, New Jersey Governor Phil Murphy signed into law what appears to be first of its kind state legislation regulating arbitration organizations, such as the American Arbitration Association (AAA) and JAMS. On its face, the Act (S1490) is directed at “consumer arbitration,” meaning an arbitration involving consumer disputes involving goods and services, wherein arbitration is compelled by what is essentially a contract of adhesion. Indeed, the first three sections of the Act clearly seek to level the playing field for consumers, including a prohibition on financial conflicts of interest and fee-shifting, and fee waivers for indigent consumers. Yet, it is Section 4 of the Act mandating publication of data that may have the most wide-ranging, long-term impact on arbitration not just in New Jersey, but across the country.
The Mandate of Section 4
Section 4 of the Act requires that an arbitration organization that administers fifty or more consumer arbitrations each year publish quarterly and make publicly available certain information “regarding each consumer arbitration within the preceding five years.” That information required to be publicly available includes, but is not limited to:
Section 4 further requires publication of data showing whether the consumer had legal counsel, the name of the arbitrator and fee collected in the arbitration, and how many times the business was previously a party to arbitration or mediation administered by the arbitration organizations. This Section is also notable for what it does not require: publication of the consumer’s identity.
The Implications of Section 4
Section 4 has several implications and, at the same time, gives rise to several questions.
Organizations like AAA and JAMS now must publish the above information for “each consumer arbitration.” Based on the Act’s definitions, a “consumer arbitration” encompasses disputes between a business and consumer who signed a standard contract written solely by the business to obtain “any goods and services primarily for personal, family, or household purposes,” including financial and healthcare services and real property. That definition is expansive, but is largely in line with the definition of consumer arbitration in AAA Consumer Arbitration Rule 1.
Notably, the Act would seem to require publication of the listed information not solely for consumer arbitrations that occurred in New Jersey or involved New Jersey-based parties. Instead, the Act appears to force arbitration organizations operating in New Jersey to publish the information for each “consumer arbitration” no matter where the arbitration was conducted or who was involved. Thus, the Act appears to have the effect of requiring arbitration organizations to collect and publish the required information for consumer arbitrations across the country, potentially numbering in the thousands. It is not hard to imagine a future challenge to the facial scope of the Act.
Perhaps most conspicuous is the Act’s de facto prohibition on confidentiality concerning the disposition of consumer arbitrations. The public will now be entitled to see several material aspects of each and every arbitration, most notably the name of the business, and nature and amount of the award or relief granted. While each consumer’s name will not be published, the Act clearly lifts the veil of confidentiality often associated with private arbitration. In fact, JAMS Rule 26 requires JAMS and the arbitrator to “maintain the confidential nature of the Arbitration proceeding and the Award,” except as “otherwise required by law.” Certainly, the Act now requires non-confidentiality of the award (at least the amount and relief). While AAA Consumer Arbitration Rule 43(c) does allow AAA to publish awards, it requires redaction of the parties’ names absent party consent. Under the Act, of course, the name of the business party will be known.
In this same vein, Section 4’s publication requirements would seem to nullify any attempt by the parties to agree to the confidentiality of, for example, the arbitration award. Suffice it to say, the Act largely wipes away confidentiality associated with consumer arbitration dispositions—at least as far as businesses are concerned.
Last, but certainly not least, despite purporting only to target defined “consumer arbitration,” Section 4 contains curious language invoking employment disputes. Subsection 2 requires publication of the type of dispute involved, including “employment.” Indeed, it goes on to specify that in an “arbitration involving employment,” the published data must specify employees’ annual wage range. It is difficult, if not impossible, to envision a scenario in which a “consumer arbitration” as defined is simultaneously an employment dispute. This begs the question of whether—wittingly or unwittingly—Subsection 2 roped employment arbitration into the publication requirement, thereby similarly eliminating certain confidentiality. However, given the structure of Section 4, wherein qualification as a “consumer arbitration” is a condition precedent to requiring publication of information, arbitration organizations likely will confine publication of information strictly to consumer arbitrations.
The Act takes effect May 1, 2020, and applies only to consumer arbitrations commenced thereafter. Therefore, we likely will not see the full implications of the Act, including Section 4, until much farther into the future. Nonetheless, qualifying businesses that utilize arbitration or are contemplating utilizing arbitration in their form contracts with consumers should now begin considering the impact of, among other things, the publication of arbitration results mandated by Section 4. Relatedly, it remains to be seen which option for dissemination each arbitration organization selects: a searchable online database or hard copy. Based on arbitration organization’s larger business interests, it seems likely that non-electronic publications will be preferred.
January 24, 2020
On January 20, 2020, Governor Phil Murphy signed into law a legislative package concerning worker misclassification and exploitation. The law cracks down on employee misclassification by allowing stop-work orders against employers who violate state wage, benefits and tax laws. The new law provides for penalties and requires employers to post a notice for their employees regarding misclassification.
From his first day in office, Governor Murphy has focused on the problems caused by worker misclassification. By misclassifying workers as independent contractors rather than employees, businesses avoid minimum wage and overtime laws, family and medical leave laws, tax withholdings and unemployment insurance contributions. This results in workers being exploited and the State not receiving its fair share of payroll taxes.
Under the new law, employers face an administrative “misclassification penalty” up to $250 per misclassified employee for a first offense and up to $1,000 per employee for each subsequent violation. It also provides for a penalty of not more than five percent (5%) of a worker’s gross earnings over the past twelve (12) months. An amendment also makes an owner, director, officer or manager of the employer liable for violations of the State’s wage and hour laws and employer tax laws.
The take-away: promptly have labor law counsel review your pay practices to ensure your business is not misclassifying workers. Ignoring these obligations exposes companies and executives to penalties and personal liability.
Category: Wage & Hour
January 20, 2020
Remember Johnny Carson’s soothsaying alter-ego Carnac the Magnificent? No? Fine. Instead, settle in for some prognostication from me, the Fearless Forecaster. Once again I will gaze (not Adam Gase who, by the way, I predict will be back next year as the Jets head coach) into my crystal ball and predict what employment laws companies need to be most concerned about in 2020.
Just as the Fearless Forecaster predicted last year, sexual harassment will continue to haunt employers in 2020. My prescient comments a few years ago also will hold true in 2020, that as long as men retain positions of power, and men and women work together in the workplace, there will be work for employment lawyers. New Jersey’s new law, S-477, which just became effective on Dec. 1, 2019, and which permits victims of sexual assault and abuse a new two-year window to bring claims that were previously time-barred, will also provide some additional work for employment lawyers in 2020. New York recently passed a similar law, the Child Victims Act, extending the time for those type of claims.
Employers have other claims to worry about as we enter 2020. New Jersey adopted one of the strongest wage theft laws in the country in 2019. The Wage Theft Act (WTA) significantly enhances penalties should employers not pay workers what they are owed. The WTA provides in appropriate cases for treble damages and there is a six year statute of limitations, exposing employers to much larger claims. It also makes it far more likely that a successor entity will have liability for the sins of the predecessor, so corporate transactional lawyers need to be cognizant of this change when handling sales of businesses.
There also is personal liability under the WTA. The Fearless Forecaster predicts a huge uptick in wage and hour litigation over the next few years as a result. This will also include wage and hour class actions. Finally, just in case the above predictions are not enough to cause lost sleep, employers need to worry about another type of litigation that could prove extremely costly. In 2018 New Jersey adopted the Diane B. Allen Equal Pay Act, requiring pay equality across all protected categories, not just gender. Therefore, if a company pays people of color, for example, less on average than white employees, beware.
Employers can defend these claims if the pay differential is based on a seniority, a merit system or other bona fide factors such as education, experience and training. However, this law lends itself to class-action treatment. A six-year statute of limitations also ups the ante.
The Fearless Forecaster is more confident than ever before concerning his predictions. Let’s see this time next year whether he had 20/20 vision in 2020.
January 9, 2020With the economy remaining strong, and qualified employees being in demand, employers must act, if they haven't already, to protect their trade secrets and their other confidential information, including customer lists and other key documents. This should include having employees sign confidentiality, non-compete and non-solicitation agreements. It is often too late to deal with these types of issues as an employee is walking out the door to go to your largest competitor.
December 27, 2019
The New Jersey Legislature recently continued its efforts to remain one of the leading states in the Country in protecting employee rights. On December 19, 2019, Governor Phil Murphy signed a law banning discrimination based on hairstyles associated with race.
The law, entitled “Create a Respectful and Open Workplace for Natural Hair Act,” or the “CROWN Act,” amends the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”) to include “traits historically associated with race including … hair texture, hair type and protective hairstyles” such as afros, dreadlocks and cornrows. The law is not limited to the workplace. It also makes it illegal to target people at school and in public spaces.
According to the Guidance on Race Discrimination Based on Hairstyle issued by the New Jersey Division on Civil Rights, “just as it would likely violate the NJLAD to refuse to hire an Orthodox Jewish man because he wears payot, or to refuse to hire a Muslim woman because she wears a hijab, or refuse to hire a Sikh person because he wears uncut hair, it is unlawful to otherwise treat a Black person differently because he wears his hair in a style that is closely associated with being Black. New Jersey is only the third State to pass this type of legislation, following California and New York.
December 6, 2019
On December 3, 2019, Mandelbaum Salsburg P.C. obtained another significant victory in its fight to protect doctors and other healthcare providers from being unfairly removed by UnitedHealthcare (“UHC”) from its dual Medicare and Medicaid Community Health Plan (The “Plan”).
“An emergency arbitrator in an American Arbitration Association (“AAA”) hearing enjoined and restrained UHC from taking any action to terminate or not renew our client-physician’s contract pending a final award by a permanent arbitrator, according to Steven Adler, lead trial counsel from Mandelbaum Salsburg in Roseland, New Jersey. “In addition, the arbitrator ordered UHC to treat our client like all other active providers under the Plan. Specifically, UHC was enjoined from telling patients that our client is not accepting patients or would be removed from the Plan,” according to Adler.
Testimony during the hearing confirmed that the appeal panels UHC hand-selects to review its decisions terminating health care providers simply rubber-stamp UHC’s actions without considering whether there is any legitimate basis for the terminations and non-renewals. “This opens the door for all health care providers who are being removed by UHC to prove that they were denied a fair procedure and must be reinstated,” Adler stated. Mohamed Nabulsi, the Chair of Mandelbaum Salsburg’s Health Care Group, and Adler, Co-Chair of the Firm’s Litigation Department, are handling the case.
November 13, 2019
On October 8, 2019, the United States Supreme Court heard arguments concerning whether Title VII of the Civil Rights Act, which includes, among other things, discrimination based upon sex, also covers discrimination based on gender identity and sexual orientation. These cases raise the most important issues for the LGBTQ community since the Supreme Court legalized gay marriage in 2015.
The first case, R.G.& G.R. Harris Funeral Homes, Inc. v. EEOC, concerns an employee who was fired because her employer allegedly disapproved that she is transgender. The other cases, Altitude Express, Inc. v. Zarda, and Bostock v. Clayton County, involve gay men who allege they were fired because of their sexual orientation. A decision against these workers could affect not just employment but healthcare, housing and education. Until now, plaintiffs have argued that these types of cases were a form of sex stereotypes and come within Title VII. However, that statute generally deals with sex discrimination, how one sex is treated as compared to the other. In the transgender case, the Trump administration is asking the Supreme Court to find that employers can discriminate based on sex stereotypes as long as they treat both sexes the same.
While these important cases could have a tremendous impact on LGBTQ workers’ rights, they will not have much impact in New Jersey considering the comparable state statute, the New Jersey Law Against Discrimination, already protects workers based upon their gender identity or expression, and affectional or sexual orientation.
September 30, 2019
While not a new issue, the next wave of employment claims will likely be led by state and federal departments of labor pursuing claims against employers for misclassifying as independent contractors workers who meet the test for being employees.By classifying employees as independent contractors employers are able to avoid paying various benefits to these workers, ignore the minimum wage and overtime laws, deprive them of state and federal Family Leave laws and social security, and avoid unemployment claims. Misclassification denies states and the federal government many millions of dollars in revenues each year. States and the federal government have attempted to crack down on these abuses in the past, but now, with so much revenue at stake, their efforts are likely to take hold to many employers’ financial detriment.
September 26, 2019
This past Tuesday, the U.S. Department of Labor (“DOL”) issued its final rule updating the commonly referred to “white collar” exemptions to the Fair Labor Standard Act’s (“FLSA”) overtime requirements. These updates include a long-anticipated second attempt at raising the “standard salary level” threshold for the exemptions. A similar increase was published in 2016, however, it was ultimately invalidated by a District Court in Texas. Now, three years later, the DOL is issuing a broader final rule with four key provisions that will require employers to take immediate action to have their current workforce assessed for possible reclassification.
The “standard salary level” provision previously mentioned raises the threshold weekly salary from $455 (or $23,660 per year) to $684 (or $35,568 per year). In other words, for a worker to qualify for the existing “Executive, Administrative, or Professional Employee” (“EAPE”) exemption, they must receive a weekly salary no less than $684. Similarly, a second provision adjusts the annual compensation requirement to classify employees as exempt as “Highly Compensated Employees” (“HCE”). Now, in addition to satisfying the traditional HCE test, employees must receive a total annual compensation of $107,432 (up from $100,000) to be exempt from the FLSA’s overtime requirements.
Of note, but likely less of a concern, the third provision supplants the new “standard salary level” for workers in the U.S. Territories and/or in the motion picture producing industry, who will instead be subject to “special salary levels” (e.g., $380/week for American Samoa; $455/week for Puerto Rico, Virgin Islands, Guam, and Northern Mariana Islands; and $1,043/week for motion picture industry workers).
Due to these significant changes, employers face legal exposure if they fail to reassess their employees’ status for the possibility of reclassification. Where a previously exempt employee no longer meets the thresholds, employers will need to weigh the costs and benefits of adjusting the employee’s weekly and annual compensation (which may be significant compared to the expected overtime worked by the employee). However, this is where the fourth and final key provision becomes critically important. In recognition of “evolving pay practices,” the DOL will allow employers to consider “nondiscretionary bonuses and incentive payments” to satisfy up to ten (10%) percent of the standard salary level. Obviously, this may be the make-or-break factor in some reassessments.
These new provisions become effective on January 1, 2020. Employers are encouraged to take the next three months to assess their current workforce for possible reclassifications. As part of the process, employers would be wise to seek legal consultation to ensure that the non-salary requirements of the exemption are understood and well-established for each exempt employee, in order to avoid the costly results of misclassification under the FLSA.
Category: Wage & Hour
September 24, 2019
Last Friday, new legislation known as the Forced Arbitration Injustice Repeal Act (the FAIR Act), HR 1423, was passed in the US House of Representatives. There is also a companion Senate bill, S. 610. The new legislation is aimed at giving consumers, employees, patients and those whose civil rights allegedly were violated the right to file suit in Court by invalidating any pre-dispute arbitration agreement. The FAIR Act would amend the Federal Arbitration Act to prohibit any “pre-dispute arbitration agreement or pre-dispute joint-action (class action) waiver” for any employment, consumer, antitrust or civil rights dispute. This law would overturn United States Supreme Court decisions allowing such pre-dispute agreements, including Epic Systems Corp. v. Lewis, which allows pre-dispute class action waivers.The new legislation would guaranty workers the right to go to court, which could have devastating impact on employers because it would expose them to public scrutiny and allow claims to be decided by juries rather than arbitrators. The new legislation would invalidate previously signed arbitration agreements if the dispute arises after the legislation becomes law. There is also similar legislation pending, including the Restoring Justice for Workers Act, which also would prohibit mandatory, pre-dispute arbitration in the employment context. These proposed laws must also be approved by the Republican controlled Senate, which is probably unlikely.
August 27, 2019
This summer has been a very active regulatory period for employers in New Jersey. On July 1, 2019, the minimum wage was increased by $.50. Beginning with January 1, 2020, the minimum wage will increase each January 1st by $1.00 per hour until reaching $15.00 per hour in 2024. After 2024, the wage rate will continue to increase based on increases in the federal consumer price index for all urban wage earners and clerical workers.
In July, New Jersey passed another new law that prohibits employers from asking job applicants about past wages or salaries or screening applicants on the basis of wage history unless such information is voluntarily offered by the applicant. The law is intended to curb workplace discrimination and wage inequality for women and minorities.
On August 6, 2019, the Anti-Wage Theft bill was passed, creating one of the strongest wage protection laws in the country. Under this new law, employers who violate New Jersey’s wage and hour laws could be sued to recover back wages, treble damages and attorneys’ fees. The law aims to protect employees whose pay may not properly reflect all hours worked, minimum wage, overtime or other wage payments as required by law. The law also extends the timeframe for employees to file a claim from two years to six years.
Employers should understand that the law makes no distinction between documented and undocumented employees. Any attempt to avoid the minimum requirements of the wage & hour law will be punished without regard to the employee’s immigration law status. The law also holds employers and labor contractors jointly and severally liable for any violations, meaning an employer will be held liable for wage theft violations perpetrated by the labor contractor it hires. The law defines an employee as “any person suffered or permitted to work by an employer” thereby seeking that the law applies to every person working in the state.
Employees now have a rebuttable presumption in their favor if their employer fails to keep records of all hours worked in accordance who the New Jersey State Wage and Hour Laws. Additionally, an employer cannot escape liability from present or past employees by forming a new entity if the facts prove it to be a successor entity.
Business owners must become fully aware of these new employment requirements. It is important to confirm your employees’ classifications (i.e. exempt, non-exempt, independent contractor), ensure that complete records are being kept in accordance with state law requirements, update all Federal and State postings and employee notices and ensure that the company’s hiring practices, wage payment and sick leave policies are in full compliance.
With the passage of these laws, it is clear that New Jersey legislators are aiming to be leaders in advancing employee rights. Please speak to an Employment Lawyer at Mandelbaum Salsburg to be sure that your company is now doing what these new laws require.
August 9, 2019
On July 25th, New Jersey Bill A1094 was signed into law and will be effective on January 1, 2020. The new law prohibits employers from asking job applicants about past wages or salaries or to screen applicants based upon wage or salary history unless such information is voluntarily offered by the applicant. The law is intended to curb workplace discrimination and wage inequality for women and minorities. It is recognized that women make roughly $10,000 less per year than men. The act of acquiring knowledge of past wages has been found to taint the hiring process by perpetuating prior discrimination. Violations of the new law carry heavy consequences: $1,000 for a first violation, $5,000 for the second and $10,000 per violation after that. Such violations are also violations of the New Jersey Law Against Discrimination and expose employers to lawsuits.
How does this prohibition change the dynamic of the interview process for New Jersey employers? Employers must be cautious about the information that they request. Even oblique wage inquiries can be illegal. Questions on the application such as “applicant’s desired salary” or “applicant’s desired hourly rate” may seem to be directed at the employee’s desire but now might be found to be prohibited as pre-employment offer questions.
Employers may consider salary history in determining salary, benefits, and other compensation, and may verify an applicant’s salary history, if the applicant voluntarily, without employer prompting or coercion, provides salary history. Employers may also, after making an offer of employment which includes an explanation of the overall compensation package to the applicant, request the applicant to provide a written authorization to confirm salary history. However, the applicant may refuse to provide such information without adverse consequence.
Questions regarding wages, salaries, or benefits must be deferred until after the offer of employment has been accepted. These prohibitions do not apply to applications for internal transfer or promotion or knowledge obtained from prior employment with that employer. The prohibition also does not apply to employers acting pursuant to any federal law or regulation expressly requiring disclosure or verification of salary history for employment purposes. Employers may verify disclosures of non-salary information when conducting a background check provided the employer stipulates that salary information is not to be disclosed. Where the application is for a position involving incentive or commission plans, an applicant’s previous experience with incentive and commission plans and the terms and conditions of those plans may be solicited, provided there is no disclosure of the applicant’s prior earnings.
Business owners should now begin preparations for 2020 compliance by reviewing their hiring process, including application forms and questions to be asked during a job interview. This would be an excellent opportunity to critically review the hiring process and to weed out all illegal inquiries that may have remained due to inertia or other forms of inaction. Asking the wrong things, including past wage history, is dangerous and can be costly.
August 1, 2019
The New Jersey Supreme Court recently granted certification in Skuse v. Pfizer, Inc., 457 N.J. Super. 539 (App. Div. 2019), an Appellate Division case that addresses the appropriate manner in which employers should seek an employee’s agreement to arbitrate, when consent is sought through electronic means, such as online modules. The Court’s view on this issue will shed light on how employers can achieve legally enforceable arbitration agreements through the use of digital techniques.
Skuse examined two issues: (1) the enforceability of an arbitration agreement that was transmitted to employees through a mandatory online “training module”; and (2) whether an employee who did not acknowledge his/her agreement to be bound by the arbitration agreement was nevertheless bound by “default” because she continued to work for the company for more than sixty days after receiving the arbitration agreement. On the second issue, the Skuse panel expressly acknowledged that it was diverging from the view taken by a sister panel in a previous published case, Jaworski v. Ernst & Young U.S. LLP, 441 N.J. Super. 464 (App. Div. 2015), which was almost certainly a critical factor in the Supreme Court’s decision to grant certification.
In Skuse, Pfizer presented its mandatory arbitration policy to thousands of employees as part of a four-slide “training module” or “activity” or “course” sent via mass email. The email in turn linked to the company’s computer-based training portal. In a separate email, Pfizer provided a link to frequently asked questions concerning the arbitration policy which included questions such as “Do I have to agree to this?” and “Can I change any parts of the terms of the Arbitration Agreement?” The first slide stated that employment was conditioned on the parties’ agreement to resolve certain disputes through arbitration; that the agreement was contained in the Mutual Arbitration and Class Waiver Agreement that would be available to review and print of the following slide; that it was important the employee be aware of the terms of same; and that the employee would be asked to acknowledge receipt of the agreement. The second slide provided employees with access to a “resource” link to the full text of the policy. On the third slide of the module, employees were asked to “acknowledge” the policy by clicking a box or electronic button. Further, this slide expressly stated that continuing to work for the company for more than sixty days would constitute agreement to the policy. The final slide of the module thanked employees for reviewing the arbitration agreement and provided an email address where they could direct any questions.
Three months after being terminated from Pfizer for her failure to receive a yellow fever vaccination, employee Amy Skuse filed a Complaint against Pfizer alleging violation of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-41 to 49, based on religious discrimination and failure to provide reasonable accommodation for her religious beliefs against receiving injections containing animal protein. In response to the Complaint, Pfizer filed a motion to dismiss the action and to compel Skuse to submit the claims to binding arbitration pursuant to the arbitration agreement Skuse admittedly “acknowledged.”
The trial court granted Pfizer’s motion. In reversing the trial court’s decision, the Appellate Division held that Pfizer’s procedure was inadequate to substantiate Skuse’s knowing and unmistakable assent to arbitrate any claims. In so holding, the court re-emphasized the Supreme Court’s holding in Leodori v. CIGNA Corp., 175 N.J. 293 (2003), which requires explicit, affirmative, and unmistakable assent to arbitration.
Importantly, in its decision, the Appellate Division provided guidance as to best practices for seeking an employee’s legally binding assent to arbitration policies transmitted through electronic means. The following represents a summary of these best practices:
A company’s binding arbitration agreement should be conveyed in a manner that emphasizes the “legal significance and necessary mutuality of contractual process.” Pfizer’s conveyance of its arbitration agreement through a “training module” or “training activity” failed in this respect. To this end, the Appellate Division clearly stated: “obtaining an employee’s binding waiver of his or her legal rights is not a training exercise.”
An arbitration policy must be “presented in a fashion that produces an employee’s agreement and not just his or her awareness or understanding.” Stated differently, an employee’s mere receipt or acknowledgement of the company’s arbitration policy is not enough to make it enforceable against him. The employee must voluntarily agree to the policy. Thus, the acknowledgment “click box” on the third slide of Pfizer’s training module critically failed to extract Skuse’s “explicit, affirmative agreement.”
The material terms of an arbitration agreement cannot be inconsistent or vague. With regards to Pfizer’s training module, the Appellate Court found that although the Company intended for the employee’s click of the acknowledgment box to substitute for a physical signature and thus represent an agreement to the policy, the term “acknowledge” near the click button was made vague by language in the opening slide explaining that the employee would be asked at the end of the presentation to “acknowledge receipt” of the agreement, without mentioning the employee’s need to also convey his assent to the terms of the policy. Further, the court found that the final slide of the module merely thanked the employee for “reviewing” the document. Finally, Pfizer referred to the entire process as a “training activity,” thus further confusing whether the employee was engaging in an agreement and waiver of rights.
If an employer wishes to obtain an employee’s knowing and voluntary consent to an arbitration agreement by electronic means, the employee’s click of a button or electronic signature must be “tethered to and spotlighted with a clear and proximate direction that, by clicking the button, the employee is knowingly agreeing to waive his or her legal rights” to access the courts and have a trial. To this end, although the words “agree” and “agreement” appeared several times on the slides in Pfizer’s module and also within the linked policy, the use of these words outside of the click button was deemed insufficient to satisfy the requirements of Leodori.
To comply with the tenets of Leodori, the Appellate Court suggested that in order to seek an employee’s legally binding response to an arbitration agreement, a “click box” could read as follows: “Click here to convey your agreement to the terms of the binding arbitration policy and your waiver of your right to sue.” Indeed, the panel also noted that Pfizer could use a touch screen or other electronic method for employees to supply their signatures.
July 30, 2019
We recently blogged about changes in the law concerning equal pay for women. See, U.S. Soccer Team Sues for Equal Pay, March 11, 2019. This included advice concerning steps to take by employers to ensure compliance with the law. See, The Importance of Engaging in a Pay Equity Study, February 4, 2019.
Last Wednesday, four Democratic senators, including Dianne Feinstein (CA), Amy Klobuchar (MN) and Kirsten Gillibrand (NY), proposed a bill known as the Even Playing Field Act to require equal pay regardless of sex for members of United States national sports teams. Finding that the U.S. Women’s national soccer team has outperformed men on the field and generated slightly more revenue than the men’s national team, the women were paid just 38 cents for every dollar paid to their male counterparts. The pay disparity is not unique to soccer. In 2017, the U.S. Women’s Hockey Team threatened to boycott competition if they did not receive a pay raise from its governing body.
In 2016, the U.S. Senate unanimously passed a resolution calling for the U.S. Soccer Federation to immediately eliminate gender pay inequality, but the pay gap persisted thereafter. Based upon the recent success of the USWNT at the World Cup, it appears that their equal pay goal (no pun intended) now will finally find “the back of the net”.
Category: Equal Pay Act
July 29, 2019
Mark Twain, upon learning his obituary was mistakenly published, wrote that the reports of his death are greatly exaggerated. The same can be said about arbitration agreements.
In 2018, New York passed a statute to deal with the “scourge of sexual harassment.” Codified as CPLR Sec. 7515, the law prohibits contracts that require “the parties to submit to mandatory arbitration to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.” In 2019, the New York Legislature passed a bill to expand this prohibition to agreements that require arbitration of all discrimination claims.
As predicted, the ban on arbitration is now under attack based upon the Federal Arbitration Act (“FAA”). Just a few weeks ago, federal Judge Denise Cote in Latif v. Morgan Stanley & Co., LLC, No. 1:18-cv-11528 (S.D.N.Y. June 26, 2019), rejected Plaintiff’s argument that New York law voids an arbitration agreement. In reliance upon Supreme Court precedence, Judge Cote held that state laws prohibiting the use of arbitration to resolve particular disputes are preempted by the FAA.
The take-away: New York employers should continue to require employees to arbitrate harassment and discrimination claims. Having employees sign arbitration agreements serves two purposes. First, it may result in employees believing they have no choice but to file their claims in arbitration. Second, if employees try to assert their claims in court, defense counsel relying on recent precedence, can argue that the FAA preempts New York state law. Accordingly, employers should not be so quick to give up on arbitration agreements. Their death has greatly been exaggerated.
July 12, 2019On June 26, 2019, United States District Court Judge Denise Cote, Southern District of New York, held in Latif v. Morgan Stanley & Co., LLC, et al., No. 1:18-cv-11528 (S.D.N.Y. June 26, 2019), that New York’s ban on mandatory arbitration agreements of employment-related sexual harassment claims is preempted by the Federal Arbitration Act (“FAA”)
June 17, 2019
Remember the long lines at polling sites last midterm? New York State has mitigated one obstacle to exercising the right to vote – unavoidably impacting employers.
On April 1, 2019, New York amended Election Law §3-110, effective immediately, and now requires employers to permit employees to “take off so much working time as will enable him or her to vote at any election”, including up to three-hours of paid leave.
What are the rules?
Although the law limits the paid portion of “voting leave” to three hours, it is silent on whether any portion of the leave may be charged against an employee’s general paid time off (“PTO”) bank.
Other rules include:
Employees must provide at least two (2) days advance notice and be registered to vote. (The law is silent on whether written, advance notice is required, or whether an employer may require proof of voter registration).
The time off must be taken “at the beginning or end” of the employee’s “working shift, as the employer may designate,” unless the employer and employee “otherwise mutually agree.”
As under the prior version of §3-110, at least “ten working days before every election,” employers must post notice of the law in a “conspicuous place” until “the close of the polls on election day.”
The current posting requirement is available here.
Category: Wage & Hour
May 23, 2019
The answer in New York City is, in most instances, “NO,” and that’s new.
Recently, NYC banned pre-employment marijuana and THC testing.
On May 10, 2019, New York City enacted Int. 1445-A, which makes it unlawful for employers, labor organizations, employment agencies (and their agents) to require a prospective employee to submit to testing for marijuana or tetrahydrocannabinols (“THC,” the active ingredient in marijuana) as a condition of employment, with limited exceptions. The bill became law after Mayor de Blasio took no action on it for thirty (30) days.
When does this new law go into effect?
The law becomes effective May 10, 2020, and amends Section 8-102 of the New York City Code by prohibiting such pre-employment testing as an “unlawful discriminatory practice.”
Are there any limitations?
Notably, the law is limited to “pre-employment drug testing” and does not address testing of current employees and a condition of continued employment.
The law also includes several “safety-related” exceptions, which pre-employment testing for positions in law enforcement, positions that require OSHA training to work on constructions sites, or a commercial driver’s license, and any position that involves the supervision or care of children, medical patients or “vulnerable person” (as defined under New York Social Services Law §488). Other exceptions are intended to avoid testing that may be required by a collective bargaining agreement, federal law, or a federal contract or grant.
What should employers do?
Employers should stay tuned -- the New York City Commission on Human Rights is required to promulgate rules to facilitate the implementation of this law.
May 20, 2019
Over fifty years ago on their Sgt. Pepper album the Beatles sang about turning sixty-four. But executives should be asking companies: “[w]ill you still need me, will you still feed me when I’m sixty-[five]?”
You may be aware that there are no age parameters under the New Jersey Law Against Discrimination. See N.J.S.A. 10:5-1 et seq. (“NJLAD”). You can sue if you suffered an adverse employment action because you were considered too old (regardless of age) or even too young for a job. Bergen Commercial Bank v. Sisler, 157 N.J. 188 (1999). The one exception under the NJLAD is with regard to job applicants who are at least age 70. Employers may refuse to hire them, but cannot refuse to renew their contracts based upon their age. In Nini v. Mercer County Community College, 202 N.J. 98 (2010), the New Jersey Supreme Court held that the NJLAD protects those workers over seventy (70) who have a pre-existing relationship with the employer from being pushed out of the workforce based on age.
Under the 1967 Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §623 and §631(a), the upper limit for bringing a federal age discrimination claim was age 65. In 1978 the cap was moved to age 70 and in the 1986 amendments to the ADEA the upper limit age cap was totally removed, enabling a Plaintiff to bring an ADEA claim no matter how old they are. For example, an eighty (80) year old can pursue an age discrimination claim if the plaintiff can establish that he or she was still qualified for the job but was denied it due to his or her age. However, these are two exceptions where an employee lawfully can be fired because of his or her age.
One exception is where an employer can establish that age is a bona fide occupational qualification (“BFOQ”). For example, the Federal Aviation Administration used to have an Age 60 Rule which barred individuals who reached their sixtieth birthday from serving as pilots or copilots on commercial flights because their age allegedly caused them to no longer be qualified to fly. An EEOC regulation sets forth what an employer must prove to establish that age is a BFOQ: That (1) the age limit is reasonably necessary to the essence of the business and either (2) that all or substantially all individuals are excluded from the job involved are in fact disqualified, or (3) that some of the individuals so excluded poses a disqualifying trait that cannot be ascertained except by reference to age. If the employer’s objective in asserting a BFOQ is the goal of public safety, the employer must prove that the challenged practice does indeed effectuate that goal and that there is no acceptable alternative which would better advance it or equally advance it with less discriminatory impact. 29 C.F.R. §1625.6(b)(2006).
The other, lesser known, exception to the age discrimination law applies to executives. At age 65 or older, companies are permitted to fire executives to make room for younger employees to run their businesses. Does this law make sense today? As we age, it is more likely that we consider age 65 to be the new 55, but whether the ADEA needs to be amended to increase the age from 65 to 70 or some other age when companies can force executives to retire is a debate for another day.
29 C.F.R. §1625.12 permits the compulsory retirement of any employee who is 65 and who, for the two year period immediately before retirement, is employed in a bona fide executive (as defined in one of the white collar exemptions to the overtime laws) or higher policymaking position, but only if the employee is entitled to an immediate, nonforfeitable annual retirement benefit of at least $44,000. Alternatively, a company can offer a position of lesser status or a part-time job (but if the employee accepts a position of lesser status or a part-time position, he or she cannot be treated any less favorably, on account of age, than any similarly situated younger employee).
Management-side attorneys who draft executive contracts should make note that companies lose the ability to let an executive age 65 or older go if the executive’s retirement benefit is forfeitable. For example, if a pension, profit-sharing, savings or deferred compensation plan provides for the cessation of payments to a retiree if the executive engages in litigation with the company or goes to work for a competitor, the exemption from the ADEA for a bona fide executive is lost.
Do executives lose their touch at 65? As baby-boomers get older they probably don’t think so. Experience outweighs any slowing down. On the other hand, companies are entitled to set long range plans and have executives young enough to see them through. Therefore, even executives who ran their companies for many years, and steered them down “The Long and Winding Road,” are subject to being terminated even if the company’s decision is based upon their age.
April 25, 2019
On April 24, 2019, the United States Supreme Court decided Lamps Plus, Inc. v. Varela, No. 17-988, in which it held (by a 5-4 vote) that, under the Federal Arbitration Act (FAA), parties have not agreed to class arbitration where the arbitration clause at issue is ambiguous about the availability of such arbitration. There, a Lamps Plus employee sued the company on behalf of a putative class of employees after a data breach exposed approximately 1,300 employees’ tax information, but the employee had signed an arbitration agreement at the outset of his employment. The agreement stated that all disputes arising out of the employment relationship would be resolved by arbitration and provided that the claims would be resolved in accordance with the rules of the arbitral forum.
Reversing both the district court’s order compelling class arbitration and the Ninth Circuit’s affirmance, the Supreme Court, relying on one of its prior decisions in 2010, reasoned that ambiguity—like silence—in an arbitration agreement regarding class arbitration is insufficient to infer that the parties affirmatively agreed to such arbitration. The Court also rested heavily on what it deemed the fundamental differences between class and individual arbitrations, only the latter of which the Court claimed was envisioned by the FAA. Class arbitration, the Court proffered, does not allow for “lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes.” The Court also eschewed the lower courts’ reliance on the contra proferentem doctrine (ambiguity in a contract construed against the drafter), which it called a “doctrine of last resort,” reasoning that its use by the lower courts was inconsistent with the fundamental rule that arbitration is a matter of consent.
In dissent, Justice Ginsburg pilloried the majority for “how treacherously the Court has strayed from the principle that arbitration is a matter of consent, not coercion.” Observing the current state of arbitration and its present uses, her dissent called for urgent action by Congress to “correct the Court’s elevation of the FAA over the rights of employees and consumers to act in concert. In a separate dissent, Justice Kagan believed that resort to the neutral state contract law principle of contra preferendum—a neutral interpretive principle utilized by all 50 states—was appropriate and required if the arbitration agreement was ambiguous. Justice Kagan chided the majority for disregarding the parties’ actual arbitration agreement.
The Lamps Plus decision is important because it signals that arbitration agreements that are ambiguous as to the availability of class arbitration will be construed as prohibiting the same. Indeed, Lamps Plus (and the Court’s prior decision in Stolt-Nielsen regarding an arbitration clause completely “silent” as to class arbitration) raises an interesting question: is there even a need for an affirmative class arbitration waiver? While in the abstract, perhaps the answer is “no,” the safer and less expensive answer for employers and other companies seeking to preclude class arbitration (and class actions) is “yes.” Dissents notwithstanding, Lamps Plus is yet another win for companies in the Roberts’ Court.
March 26, 2019
On March 18, 2019 groundbreaking employment legislation was enacted in New Jersey. While it is only a few paragraphs long, it makes three significant changes to the employment law landscape in the Garden State.First, Senate Bill No. 121 bars provisions in an employment agreement that waive any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment (although it does not apply to union employees covered by a collective bargaining agreement (“CBA”)).
March 25, 2019
The New Jersey Department of Labor and the New Jersey Division of Consumer Affairs have reminded employers that under N.J.S.A. 43:21-1 et seq., the New Jersey Unemployment Compensation Law (NJUCL), if a service is performed for remuneration or under any contract of hire, written or oral, express or implied, it is considered to be covered employment, unless the potential employer is able to establish the following with regard to the service at issue and the individual providing that service:(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
Category: Employee Benefits
March 25, 2019
Effective March 17, 2019, employers with four or more employees in New York City must provide employees with break time and a private place to express milk. Like with other protected classes, employers can refuse to make these accommodations if they impose an undue hardship.Under New York City law, employers must notify employees about the new law in a detailed, written policy. The New York City Commission on Human Rights has posted three sample policies on its website. Companies needing help drafting a lactation policy should contact counsel.
March 11, 2019
We have written a number of times in this blog about recent changes in New Jersey to the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”) relating to equal pay. See our blog from November 21, 2018 concerning the passage of the Diane B. Allen Equal Pay Act amending the NJLAD. See also our February 4, 2019 article on conducting Pay Equity Studies. We also predicted in other publications that lawsuits involving gender equality in terms of pay and working conditions would become more prevalent. Our prediction was prescient.
On March 8, 2019 the U.S. Women’s Soccer Team filed a class action lawsuit in federal court in California under the federal Equal Pay Act (“EPA”) and under Title VII of the Civil Rights Act of 1964 for gender discrimination. It follows a wage discrimination charge of discrimination filed with the United States Equal Employment Opportunity Commission (“EEOC”) in 2016 by five of the U.S. players. In February, the EEOC issued the players a right-to-sue letter.
In the lawsuit, the women complain about unequal pay and disparate treatment from the US Men’s Team in terms of travel arrangements and being required to play on turf fields. This suit is on the heels of a number of suits filed by the US Women’s Hockey Team and Norway’s women’s team‘s successful suit to be paid equally to its men’s counterpart.
The US women allege better results and higher TV ratings than the US Men’s team. However, there are some complicating factors at play here. The US Women’s Team and the US Men’s Team have different collective bargaining agreements. While the men receive higher game bonuses, they are paid only if they make the team, while the women receive guaranteed salaries supplemented by smaller match bonuses. Additionally, FIFA (soccer’s world governing body) pays men’s teams significantly more than women’s teams. In any event, stay tuned. We expect other, similar suits alleging discrimination in pay and working conditions.
March 11, 2019
The federal Fair Labor Standards Act (“FLSA”) requires employers to pay at least minimum wage for all hours worked and overtime at one and one-half times employees’ regular hourly rates of pay for all hours over forty (40) in a workweek. However, Section 13(a)(1) of the FLSA provides an exemption from both the minimum wage and overtime for employees employed in bona fide executive, administrative, professional (the “white collar exemptions”) and outside sales positions. Sections 13(a)(1) and 13(a)(17) also exempts certain computer employees. Certain “Highly Compensated Employees” earning $100,000 or more per year also are deemed exempt.
On March 7, 2019, the United States Department of Labor (“USDOL”) issued a Notice of Proposed Rulemaking (“NPRM”) that would make more than one million more workers eligible for overtime pay. Previously, employees coming under the white collar exemptions also needed to earn $455/week ($23,660/year) to be exempt. The NPRM proposes increasing the amount to $679/week ($35,308), which would result in employers needing to pay more employees overtime. The proposal does not call for automatically updating of the salary threshold. In addition, the USDOL proposal would raise the bar for Highly Compensated Employees from $100,000 to $147,414. Finally, for the first time, it is proposed that employers be allowed to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent (10%) of the standard salary level.
The federal and state wage and hour laws are some of the most misunderstood and misapplied employment statutes. If your Company has questions concerning any employee’s eligibility for overtime or whether your workers are independent contractors or employees, we are here to help.
Category: Wage & Hour
February 12, 2019
In a recent unreported decision of the New Jersey Appellate Division, the Court reaffirmed that the two year statute of limitations for claims under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”), begins to run from the first day after a plaintiff comes off payroll.
In Turner-Barnes v. Camden County College, N.J. Super. App. Div. L-2623-17 (Jan. 31, 2019) Plaintiff was terminated by letter, dated January 23, 2015, but it indicated she would remain on the payroll through June 30, 2015. Plaintiff filed her age and race discrimination complaint on June 29, 2017.
NJLAD is subject to a two year statute of limitations under N.J.S.A. 2A:14-2(a) which means that an adverse employment action must have occurred within two years of filing suit. In Alderiso v. Medical Center of Ocean County, 167 N.J. 191 (2001), a whistleblower suit under the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et seq. (“CEPA”), our Supreme Court held the controlling date for limitations purposes is not the date the employee receives notice of termination but the date on which pay ends, i.e., the first full day of unemployment. For clarity, the Supreme Court noted that “… the date of discharge for limitations purposes does not include any subsequent date on which severance, health or other … extended benefits are paid.” Id. at 199-200. Accordingly, in Turner-Barnes, the Appellate Division reversed the trial Court and held that Plaintiff’s Complaint was timely filed. As with CEPA claims, suits under the NJLAD must be brought within two years from the date of discharge, even if a Plaintiff receives severance thereafter.
February 4, 2019
Background on the Need for a Pay Equity Study
The recent passage of the Diane B. Allen Equal Pay Act (the “Act”) amended the New Jersey Law Against Discrimination (“LAD”) to strengthen protections against employment discrimination and to promote equal pay for women and employees in other protected categories. The Act became effective on July 1, 2018. Being proactive under these new strict protections is of the utmost importance. As such, If you are a New Jersey employer, we urge you to engage in a “pay equity study.” The goal of which would be to develop an understanding of the Company’s current pay structures, and to either explain differences in pay among comparable employees or to correct pay differences that cannot be justified. Mandelbaum Salsburg's employment law attorneys stand ready to assist in this capacity.
It is now an unlawful employment practice under the LAD for an employer to pay any employee who is a member of a protected class less than the rate paid to other employees not members of that protected class for “substantially similar work when viewed as a composite of skill, effort and responsibility.” The Act does much more than just advocating gender pay equity. It expands equal pay on the basis of membership in the protected classes of the LAD, to include race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces.
There are very limited exceptions where an employer may pay a different rate of compensation to members of the protected class, including where a pay differential is due to seniority or a merit system. In all pay discrepancies, the employer must demonstrate each of the following:
What Exactly is Unlawful?
The Act provides that an unlawful employment practice occurs each time pay practices discriminate against an employee, and the employee can seek back pay for up to six (6) years. In this way the Act substantially lengthens the statute of limitations for claims based on pay equity to beyond the LAD’s normal, two (2) year statute of limitations.
If an employer is found guilty of violating the equal pay practices required by the Act, a judge or jury can award treble damages for the violation. Treble damages are also available to an employee who proves that the employer retaliated against her/him for requesting, discussing, or disclosing to (i) any other employee or former employee of the employer, (ii) a lawyer from whom the employee seeks legal advice, or (iii) any government agency, information regarding employee compensation/pay practices. Likewise, treble damages are available to an employee or prospective employee who is asked by the employer to sign a waiver regarding discussing or disclosing pay practices or rates.
A successful claimant will also be entitled to attorneys’ fees in a practice called “fee shifting.”
For all of these reasons, it is necessary to carefully review Company hiring and compensation practices to insure there is pay equity for employees who perform “substantially similar work” –the so-called pay equity study.
Advantages of a Pay Equity Study
A pay equity study will help your company reduce its potential liability by addressing three questions:
Ultimately, Employers will need in-depth information to effectively explain and defend pay differences. Information that can be collected and analyzed through a pay equity study and maintained at the ready include:
Two caveats: first, the above factors must be dealt with as objectively as possible and, if capable of measurement, must not be tainted by cognitive bias; second, the law specifically does not permit the perpetuation of past discrimination. Thus, basing a hiring pay offer on previous pay, where such previous pay could be tainted, would only propel discrimination into the future. Employees must be placed into the pay scale in a manner that is rational and disciplined.
Ultimately, the adoption and maintenance of job descriptions is an integral part of a transparent, fair pay system. Having accurate job descriptions makes it much easier to evaluate and grade different jobs – and ensure that employees doing equal work receive equal pay. Job descriptions should follow job evaluation scheme factors. This will make jobs easier to evaluate and help avoid aspects of jobs more commonly performed by women being omitted or undervalued in the evaluation process, compared to those of jobs more commonly carried out by men. To the extent that current job descriptions exist, they should be reviewed as part of the preliminary review.
In addition to job descriptions, the second part of this comprehensive analysis involves the development of Salary Guides for all identified positions. One of the required Affirmative Action Plan reports, the Workforce Analysis, requests that the Company sort the jobs in each Department by wage or salary. Salary Guides are used by many businesses to help managers manage the compensation of new employees and to establish appropriate pay increases for existing employees while maintaining equity among the jobs in the company. Salary Guides provide a structure and logic for fairly compensating employees and managing the Company’s payroll costs.
Mandelbaum Salsburg’s Employment Law Practice can provide assistance and advice and help companies conduct this important survey. Involvement of legal counsel will provide you with necessary expertise and the protection of attorney-client privilege. If engaged, we would be prepared to work with one or more Company executives to review personnel information and compensation data. While it is clear that this process is no easy task; to do nothing (our usual default option) can lead to some very serious consequences. If you wish to learn more or to engage in this process, please contact Gary S. Young at firstname.lastname@example.org.
Category: Equal Pay Act
January 16, 2019
After a sixteen year battle, New York state legislators passed a bill this week to specifically outlaw gender identity and gender expression discrimination. The Gender Expression Non-Discrimination Act (“GENDA”) adds gender identity and expression as protected classes in employment, housing and public accommodations. Governor Andrew Cuomo has indicated he will sign the bill into law.
GENDA will give those working in New York State similar protection to that already provided in New York City by adding these protected categories to New York State’s anti-discrimination laws. Should you have any questions concerning this, or any other labor or employment topic, contact Steven Adler.
December 7, 2018
Company holiday parties are often great for camaraderie and employee morale but are fraught with danger, whether it be harassment, religious discrimination or drinking and driving.
We don’t want to be accused of being the Grinch that stole Christmas. We are all in favor of holiday parties, so long as they are done right. Here are our top ten (10) tips:
Remind employees in advance of the Company's anti-harassment policy;
Consider no alcohol or using drink tickets
Designate a member of management to monitor employees
Have rides home available or remind employees to consider Uber/Lyft, etc.
Consider day-time parties
No slow dancing;
No unsupervised speeches or skits;
Avoid religious symbols and religious music;
If during off hours, do not require attendance or there may be exposure to wage and hour claims;
If exchanging gifts, instruct employees as to what is appropriate and no gag-gifts;
When selecting a menu, make sure it is inclusive to accommodate religious needs, i.e. Kosher meals; and
If all else fails, promptly investigate any claims!
November 29, 2018
The New Jersey Department of Labor and Workforce Development ("DOL") has published a list of Frequently Asked Questions ("FAQs") intended to address various unanswered (and unclear) questions regarding the new Sick Leave Law.
The FAQs are available at:
The DOL's mandatory workplace poster is available at:
Naturally, if you have any questions regarding your obligations or rights under the Sick Leave Law, or other employment-related laws, please do not hesitate to contact any member of the Firm's Employment Law Group.
Category: Paid Sick Leave
November 27, 2018
The Labor and Employment Law Group at Mandelbaum Salsburg, P.C. prides itself on being able to handle difficult employment litigation cases that also involve commercial disputes. These days, more and more cases straddle employment and other areas of the law. One such case, Metro Commercial Management Services, Inc. v. Istendal, was just decided by the New Jersey Appellate Division on November 19, 2018.
In Metro Commercial an at-will employee brought a minority shareholder oppression claim pursuant to N.J.S.A. 14A:12-7(1)(c), which provides that an action may be brought:
[where] the directors or those in control have acted fraudulently or illegally, mismanaged the corporation or abused their authority as officers or directors or have acted oppressively or unfairly toward one or more minority shareholders in their capacities as shareholders, directors, officers, or employees.
Oppression in the context of an oppressed minority shareholder action, however, does not require illegality or fraud by majority shareholders. Brenner v. Berkowitz, 134 N.J. 488, 506 (1993); “Oppression has been defined as frustrating a shareholder’s reasonable expectations.” Id. Often in these cases, the minority shareholder, as in Metro Commercial, is also a terminated employee and argues that the majority interfered with his reasonable expectation of continued employment by firing him, causing him lost wages and other benefits.
The Appellate Division in Metro Commercial indicated that termination of a minority shareholder’s employment may constitute oppression because a person who acquires a minority share in a closely-held corporation often does so “but for the assurance of employment in the business in a managerial position,” citing Muellenberg v. Bikon Corp., 143 N.J. 168, 181 (1996). Such a person has a reasonable expectation that they will enjoy “the security of long-term employment and the prospect of financial return in the form of salary,” and will have “a voice in the operation and management of the business and the formulation of its plans for future development.” Id. Where these expectations are frustrated by majority shareholders, a court may find that oppression occurred.
In Metro Commercial, the Appellate Division noted that there was no case law in New Jersey that addresses whether an at-will employee’s status is relevant when analyzing whether an employee has a reasonable expectation of continued employment. In Metro Commercial, the Appellate Court affirmed the trial Judge’s finding that the former employee and minority shareholder could not have a reasonable expectation of continued employment where the shareholder agreement provided that “[e]ach [s]hareholder acknowledges that he is an ‘employee-at-will’ and this can be terminated by the corporation at any time for any reason …” The Appellate Division’s decision is not surprising. However, one wonders how the Appellate Court would have ruled had the minority shareholder been an at-will employee without any form of written agreement. It appears likely that the holding would have been different because the Appellate Division, commenting on the case law from other jurisdictions relied upon by the minority shareholder, stated that in those other matters “there were no written employment agreements …” The Metro Commercial case, thus leaves the door open for minority shareholders to bring wrongful termination claims under the Minority Oppression statute in circumstances where they are employed at-will without any form of written agreement.
The take-away from the Metro Commercial decision is that corporations awarding minority shareholder interests to employees should do so only if there is a provision in the shareholders’ agreement or separate employment agreement making it clear that the corporation may terminate the minority shareholder’s employment with or without cause. It would also be helpful to include a provision confirming that, as an at-will employee, the minority shareholder has no reasonable expectation of continued employment.
Category: Employment Litigation
November 27, 2018
As we are now in the middle of the holiday season, it is worth noting a recent, interesting decision concerning an employer’s obligation to accommodate an employee’s religious beliefs. In Miller v. The Port of Authority, 15-cv-6370 (KM)(MAH), the District Court rejected a worker’s suit that the Port Authority of New York and New Jersey (the “Port Authority”) failed to accommodate his religious beliefs that precluded him from working on the Sabbath.
There are two types of religious discrimination, a disparate treatment claim (where an employee claims he is being treated differently because of his religion) and a claim for a failure to accommodate. In Miller, plaintiff argued the latter, that his request for an accommodation was rejected by his employer. In contrast, the employer argued that it offered various options to Miller, including the option to swap shifts with other employees, or that he could use vacation, personal excused time or compensatory time for religious purposes. The Port Authority also argued that exempting Miller from work on the Sabbath, without first offering that option to more senior employees, would have violated the governing collective bargaining agreement’s (“CBA’s”) seniority provision. The Hon. Kevin McNulty held that the religious accommodation offered by the Port Authority was reasonable and that the blanket exemption proposed by plaintiff would have imposed more than a de minimis hardship. Therefore, the employer was not required to accept it, and granted summary judgment in favor of defendant.
Judge McNulty’s decision is interesting for a number of reasons. First, it notes that “the standard imposed on employers for a religious accommodation is not as demanding as the accommodation of a disability required under the Americans with Disabilities Act.” As noted above, the Court held that an accommodation would impose an “undue hardship” if it would impose more than a de minimis burden on the employer. “Such a burden may take the form of economic costs, but may also include non-economic costs, such as damage to employee morale or compromise of a CBA …” Second, the decision confirms that an employer’s accommodation proposal simply must be “reasonable.” It is not required to totally eliminate any conflict and an employer is not required to accommodate the religious practices of an employee in exactly the way the employee would like. Third, while noting that the Third Circuit Court of Appeals hasn’t endorsed the approach, Judge McNulty held that an employer could offer a combination of accommodations, and found that what the Port Authority offered was reasonable.
November 21, 2018
Without question, the most aggressive and wide-ranging Equal Pay Act in the country was enacted this past year by the New Jersey Legislature. It is wide-ranging because it applies not only to pay disparity based on sex, but also based on an employee’s race, age, religion, disability, or any other classification of employees who are protected from discrimination in employment by the New Jersey Law Against Discrimination (“NJLAD”). There are more than a dozen such classifications.
It is the most aggressive Equal Pay Act because it goes far beyond the concept of “equal pay for equal work.” An employer must pay an employee, who is in any one of these protected classifications, equal to any employee who is not so-protected, if the work the two employees perform is “substantially similar,” that is, nearly equivalent or approximately the same work. This also applies to equality in terms of other benefits, such as health insurance.
Compliance with the Act effectively requires that the employer conduct an analysis of its entire workforce, and on an ongoing basis, as new employees are hired and/or changes are made in the workforce.
The Act provides truly draconian penalties, in terms of treble damages and the employer having to pay the employee’s attorneys’ fees.
The Labor and Employment Law Department has been assisting a number of its clients, along with Human Resource consultants we have retained, to perform the detailed workforce audits required to comply with this Act.
Category: Equal Pay Act
November 14, 2018As the weather gets colder and the days shorter, the end of the year can’t be too far away. Now is a good time to start reviewing your Company’s personnel policies so that your house can be in order to start the new year.
Category: Employee Benefits
November 13, 2018
We hope you enjoyed Veterans Day yesterday but we should honor our military every day throughout the year. In that regard, we want to remind employers of their legal obligations to those in the military, including those in active or reserve military status.
The Uniformed Services Employment and Reemployment Rights Act (“USERRA”) was signed into law by President Bill Clinton in 1994 to protect the civilian employment of active and reserve military personnel called into active and reserve military duty. Its main purpose is to eliminate employment discrimination by employers, regardless of size, because of an employee’s military status. USERRA ensures that persons who serve or have served in the Armed Forces, Reserves, National Guard or other uniformed services (1) are not disadvantaged in their civil careers because of their service; (2) are promptly reemployed in their civil jobs upon return from duty; and (3) are not discriminated against based upon past, present or future military service. It, therefore, provides protection for both active military service and veterans.
The New Jersey Law Against Discrimination (“NJLAD”) also protects those in the military by making service in the military a protected class. Just last year the NJLAD was amended to broaden the protection for those in the military by prohibiting discrimination in the context of, among other things, housing and loans. It also requires that contractors and subcontractors on state projects guarantee equal employment opportunities to all veterans.
So let’s honor our military throughout the year by treating them right, as required by USERRA and the NJLAD.
October 9, 2018
Every employer in New Jersey, regardless of size, needs a written Paid Sick Leave policy in place and distributed to employees no later than October 29, 2018. Please contact us if you need assistance drafting this policy or updating your other personnel policies.
Whether as stand-alone policies or those accumulated in an employee manual, the following are the types of policies which must, or at the very least should, be in writing in NJ:
Category: Paid Sick Leave
October 8, 2018
The Diane B. Allen Equal Pay Act (“the Act”) is unique from other employment anti-discrimination laws in New Jersey which creates a compliance nightmare for employers. It is important to understand the four main differences of the Act and the challenges they bring.
First, the Act is not an equal pay for equal work law. It is actually an equal compensation for substantially similar work law. Employees, who are in those categories protected from employment discrimination under the New Jersey Law Against Discrimination (“NJLAD”), must receive not only equal pay, but also equal employment benefits, (i. e., insurances, retirement plans, paid time off, severance pay, etc.), when these protected employees perform substantially similar work as employees who are not protected by the NJLAD. This comparison must be made based on a composite considerations of skill, effort and responsibility.
“Similar work” is not the same as equal work. Similar work means almost or nearly the same work. And “substantially” means in most respects but not in all. Consequently, if an employee, who is in a category protected by the NJLAD, performs almost the same work in most respects as an employee who is not in a protected category, then this protected employee must receive equal salary and all other benefits of employment.
Deciding what equal work is appears to be an easy task by comparison to this type of analysis which an employer must perform to ensure compliance with the Act.
Secondly, the Act is not an anti-discrimination law for women in the workforce. It was initially proposed as such but, as ultimately enacted, it applies to all approximately 14 categories of employees who are protected against employment discrimination by the NJLAD. (Just some of these protected categories include, in addition to women, race, color, national origin, age, religion, disability, family and marital status, veterans status, and sexual orientation, among others.) This means that an employer with any degree of diversity in its employees must analyze its entire workforce to ensure compliance with the Act.
Third, the Act does not appear to require that the employer have any intent to discriminate. Apparently, for an employer to have violated the Act, an employee need only prove that he/she is a member of a protected category under the NJLAD; that the employee performed substantially similar work as another employee who is not in a protected category; and that this protected employee received less compensation, in salary and/or in any benefits of employment, as the employee not in a protected category.
Admittedly, an employer can raise three defenses: that the differential in compensation is due to a seniority system, a merit system, or some legitimate, bona fide and job-related difference(s) in characteristics between the employees in the protected categories and those that are not so protected. For example, inequality in compensation does not violate the Act if it is directly and wholly the result of job-related differences in training, education, experience or the quantity and quality of production. Obviously in many situations these differences will be subjective; difficult to measure; will require extensive supporting documentation developed over time; and the burden will be on the employer to prove them.
Fourth, the most distinctive and troublesome aspect of the Act is what actions employers must take to comply with it. For most employment discrimination laws an employer need only adopt a personal policy to implement the law, and then follow the policy wherever situations arise to which the law applies. But with the Act, an employer needs to implement and maintain, on an on-going basis, a comprehensive compliance plan.
The plan necessitates a comparative evaluation of the education, training, knowledge/skills and experience of each employee and their individual productivity; an analysis of the duties, tasks and responsibilities of each position in the workforce; then a determination of which employees in which positions are performing substantially similar work. Once these substantially similar employees are identified, then the final step, undoubtedly the easiest, is to determine if the salary and other benefits of these employees are equal as between protected and non-protected categories of employees under the NJLAD. (The employer cannot reduce the compensation of the higher paid substantially similar employee; but must raise the compensation of the lower paid employee).
Such an in-depth analysis of an entire workforce is a monumental task for an employer, even with a fully staffed HR Department. We appreciate the even greater difficulty for an employer with far less HR resources. Nevertheless, the need for compliance is of paramount importance because of the severe penalties for a failure to do so. These include trebel damages (i.e., the employee receives three dollars for each dollar of equal compensation which the employee did not receive in violation of the Act), and the employer having to pay the employees attorneys’ fees.
In addition, the Act provides a six (6) year statute of limitations, and allows an employee to potentially claim damages for even a longer period of time in the past under the “discovery rule.” This rule means that the six (6) year statute of limitations only begins to run after the employee discovers that he/she was not paid equally. Finally, a separate violation of the statute occurs each time the employer issues a paycheck which is less than equal pay for substantially similar work.
The “bottom line” is that, while implementing a compliance plan for the Act may be a nightmare, failure to comply could be a real life horror show for any employer.
September 5, 2018In what may seem to some a matter of political expediency, and to others a long-overdue effort to eradicate workplace sexual harassment, New York Governor Andrew Cuomo and New York Mayor Bill de Blasio appear to be competing for the “#MeToo Movement Championship.” Whatever their motivations, they have signed into law sweeping legislation that affects all New York employers.
August 31, 2018
Billy Joel wrote in his song “Shades of Grey” that what was “perfectly clear with the vision of youth” is not quite so clear anymore. “Black and white is how it should be, but shades of grey are the colors I see.” This holds true with regard to secretly tape recording at work, too.
In the past, employment lawyers told employers they should strictly prohibit employees from secretly recording anything at work. There were a number of reasons for this advice. First and foremost, audio or video recording could result in the misappropriation of an employer’s trade secrets. In fact, for trade secret protection, a company must show that it took reasonable steps to protect that information and, therefore, a written policy is important. Second, fear among supervisors that they are being surreptitiously recorded could lead them to mistrust certain employees, which is not conducive to a healthy work environment.
But times have changed somewhat. From the #MeToo movement, we now know that harassment and even sexual assault have been rampant in certain industries. If employees are allowed to secretly record at work, would the likelihood of harassment be reduced? It could, but probably not. However, it would make it easier to prosecute such a claim against the harasser — and also the employer. This is why the harassment claims of Gretchen Carlson against Roger Ailes supposedly settled so quickly. It also is why we were able to recover millions of dollars to resolve whistleblower claims of a senior executive against the CEO of a major brokerage firm. This type of proof is powerful, because harassment cases often are “he said-she said” situations with no other witnesses. Juries also often expect to hear this type of evidence because they know how easy it is to obtain.
Recordings also allow employees to fend off false accusations by others at work. Recent examples include Omarosa Manigault Newman, the former White House communications director, who allegedly has audio and video recordings of President Donald Trump, and attorney Michael Cohen, who secretly tape recorded discussions he had with his client, Trump. On rare occasions, secretly taping at work can also be harmful to an employee’s case. Years ago, we defended a Berkshire Hathaway company in a gender discrimination and sexual harassment lawsuit involving an employee who had about 10 hours of recordings. The people recorded said nothing inappropriate and we were able to make good use of the plaintiff’s numerous admissions on those tapes to tear apart her case.
The National Labor Relations Board also has held that blanketly denying employees, whether unionized or not, the right to secretly tape record could violate their right to engage in concerted activity regarding their conditions of employment. The NLRB held that photographs and recordings, as well as the posting them on social media, are protected by Sec. 7 of the National Labor Relations Act if “employees are acting in concert for their mutual aid and protection and no overriding employer interest is present.” For example, employees should be allowed to document unsafe equipment or hazardous working conditions. As a result, employers should have their policies reviewed to make sure they explain the business justification for the restrictions on recordings and to confirm that they don’t ban all recordings.
Regardless of a company’s prohibition against recordings, recording no doubt still will take place, considering how easy it is to do these days from anyone’s phone. For this reason, in all harassment and discrimination litigation, it is important to inquire about the existence of this evidence. Keep in mind that improperly obtained evidence, such as a secret recording in a state that requires both parties’ consent, or a recording in violation of an employer’s policy, still can be admissible in a civil case. Unlike criminal cases, where an improper search and seizure by the government may lead to the discovery of other evidence that will be suppressed at trial based upon the “fruit of the poisonous tree” doctrine, that doctrine is inapplicable in civil cases in New Jersey. In other words, secretly recorded conversations are admissible at a civil trial even if improperly obtained.
Weighing all the pros and cons, it is still best for employers generally to preclude covert tape recording, but the policy should be tailored to the specific client especially where employers have valuable trade secrets. Employers should combat harassment using other tools, including anti-harassment training and strong policies.
In the past, black and white were easy to see, but now drafters of employee handbooks and policies need to also see various shades of grey.
August 8, 2018
Gather round employers, there’s a battle outside and it’s ragin’. The new employment laws will soon shake your windows and rattle your walls, for the times in New Jersey they are a-changin’.
Nobel laureate Bob Dylan was writing about different times, but his song “The Times They Are a-Changin’” surely applies to the state of employment law since New Jersey Governor Phil Murphy took office in January.
No New Jersey employment lawyer would argue with the general proposition that, for decades, our state has been far more liberal than most when it comes to protecting employees’ rights. While Governor Christie did his best to put a halt to that trend, since his first day in once our new governor has made it clear the direction he wants to travel. The train is now barreling down the tracks toward more employee rights.
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July 6, 2018
In January 2018, the federal government conformed its website accessibility requirements to the Web Content Accessibility Guidelines (WCAG), an international set of standards intended to make web content more accessible to users with perceptual or physical challenges. The WCAG addresses low vision, color perception, cognition, manual dexterity, screen reading technology, and other issues related to user abilities. The Department of Justice (DOJ) promised to do the same in the private sector by mid-year, but that initiative has been deferred.
As a consequence, there has been a surge of class action lawsuits alleging Americans with Disabilities Act (ADA) violations based on access to website information that the Courts have been addressing individually. The first federal court decision that a website violated the ADA was in early 2017. The decision was followed by 800 federal lawsuits that year alone, alleging ADA as well as state law civil rights violations. (New York led the way with more cases than any other state). Until a clear standard is set by Congress or the appropriate regulatory agency, web site ADA lawsuits will continue to increase.
The ADA prohibits discrimination on the basis of a disability “in places of public accommodations”. As such, any business is potentially an ADA class action target. Class actions require only one named plaintiff (who brings suit individually and on behalf of those “similarly situated”), and one defendant (potentially, you). Whether you are a large or small business, brick and mortar, or web-based only, defending an ADA/Human Rights Law class action promises to be costly in two ways. Not only is there the risk of a potential damage award, the ADA is a “fee shifting statute.” As a result, a defendant must pay its own legal costs to defend the action and may be required to pay those of a successful plaintiff as well. These costs alone may run into the tens or hundreds of thousands of dollars.
Now, with the website accessibility lawsuit floodgate open, it imperative for businesses to ensure ADA compliance. The easiest and most economical approach is a website compliance audit and action-item checklist conducted by legal counsel experienced in ADA website accessibility issues. For instance, does your website include:
Many of these features are easy (and inexpensive) to implement once you (and your website consultant) know what is required. Please contact the firm’s cybersecurity practice attorneys Steven Teppler or Lauren Topelsohn to discuss our fixed fee consultation details.
June 13, 2018
New Jersey’s Sick Leave Law (the “Law”) takes effect on October 29, 2018. It establishes a uniform, state-wide law that pre-empts all municipal sick leave laws and prohibits the passage of similar, local laws.
Who is Covered?
The Law applies to all NJ employees (full and part-time) and any business with NJ-based employees (regardless of size). The only exclusion are construction industry employees covered by a collective bargaining agreement, per diem healthcare workers, and public employees who already receive this benefit.
How is Time Accrued?
Employees accrue one (1) hour of paid sick leave for every thirty (30) hours worked, up to forty (40) hours (five days) in a benefit year. Alternatively, an employer may "frontload" the entire forty (40) hours on the first day of a benefit year (as well as implement a more generous program).
A “benefit year” is any 12 consecutive months designated by the employer. Once established, an employer may only change the “benefit year” by first notifying the NJ DOL.
Sick leave benefits begin to accrue for:
Employers must either (a) allow up to 40 hours to carry over from one benefit year to the next or (b) pay employees for that time. It is the employee’s choice which alternative to accept.
Employers may comply with the Law if they already offer employees paid sick leave or paid time off (“PTO”) that accrues at a rate equal to or greater than one (1) hour of leave per 30 hours worked, and the policy is otherwise consistent with the Law.
“Sick Leave” Uses?
Earned sick leave may be used for:
“Family members” is broadly defined to include an employee’s child, spouse, domestic partner, civil union partner, parent (including adoptive, foster or step-parent, or legal guardian), sibling (including foster or adoptive siblings), grandparent or grandchild, and the parent, grandparent or sibling of the employee’s spouse, domestic partner or civil union partner. Indeed, an employee may also use their sick leave for the care of a non-related individual whose close association with the employee is the “equivalent” of a family relationship.
What May Employers Do?
Employers are subject to private claims, and the penalties and remedies contained in the New Jersey Wage and Hour Law, including fines and possible imprisonment.
Employers with NJ-based employees should review and adjust their current paid time off policies to ensure compliance with the New Jersey Sick Leave Law prior to October 29, 2018.
Category: Paid Sick Leave
May 29, 2018
On May 21, 2018 the United States Supreme Court delivered another blow to employee rights. In Epic Systems v. Lewis, the Court issued a monumental decision protecting employers from class action lawsuits.In Epic Systems, the Court upheld the right of employers, as a condition of employment, to require employees to arbitrate claims individually on a one-on-one basis rather than collectively or as a class. According to the Court, this can be accomplished simply by sending an e-mail to employees informing them if they don’t note their objection, they will be considered to have consented to arbitration on an individual basis. This decision effectively precludes workers from suing in court or filing for arbitration when their claims are small, such as when suing for an employer’s failure to pay minimum wages or overtime pay. According to Justice Ruth Bader Ginsburg in her dissent, “[t]he inevitable result of today’s decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.” Tip to Employers: Consider requiring employees to sign arbitration agreements or send an e-mail informing employees that, if they don’t object, they will be bound to arbitrate their dispute on an individual basis.
May 29, 2018
How healthy is your Company? Does it comply with all of its obligations under ever-expanding employment laws? Considering all of the recent developments in New Jersey and New York employment law, now is an appropriate time to take your Company’s temperature.
If your Company has an employee manual, now is the time to update it especially considering that New Jersey and New York recently passed legislation dealing with paid sick leave which may impact your current sick leave policy.
As a result of the #Metoo movement, and as reported recently in this blog, there have been significant changes concerning having employees sign settlement agreements in sexual harassment cases or separation agreements containing non-disclosure/confidentiality provisions waiving these claims. Both New York and federal law have changed in this regard. It is, therefore, important to review any form releases your Company uses when terminating employees.
As also reported previously in this blog, the law also has changed concerning equal pay. In New Jersey, it will not only apply to women who are paid less than men but also all other protected classes in the New Jersey Law Against Discrimination. It is, therefore, important to take your Company’s temperature with regard to employee pay.
Lastly, based upon an executive order recently signed by Governor Murphy organizing a task force to review the issue of misclassification of workers, we expect a crackdown on employers who misclassify workers as independent contractors. Now is the time to review those relationships as well.
In summary, having experienced legal counsel help in taking your Company’s temperature now will enable your Company to avoid costly litigation not too far down the road.
Category: Employee Benefits
May 26, 2018
Today we are not blogging about a recent development in employment law. Instead, we wish to call attention to an entertaining source to help non-lawyers understand how we arrived at the current state of the law concerning gender equality.
A must-see movie, regardless of your political persuasion, is the documentary R.B.G. which premiered at the 2018 Sundance Film Festival. The movie starts off with a bang when the notorious Ruth Bader Ginsburg quotes abolitionist and women’s suffragist Sarah Grimke’, stating that she asks “…no favor for my sex. All I ask of our brethren is that they take their feet off our necks.”
Ginsburg, the diminutive dynamo, was one of only nine women in a class of 500 at Harvard Law School and the first woman on the Harvard Law Review. She accomplished this feat while caring for her ill husband and young child. Ginsburg did for gender discrimination in the 1970’s what Thurgood Marshall accomplished for blacks during the civil rights movement in the 1960’s.
The movie chronicles Ginsburg’s quest for equal protection for women, including the six cases she argued before the Supreme Court (five of which she won), including United States v. Virginia, in which the Supreme Court held that qualified women could not be denied admission to the all male Virginia Military Institute. Ginsburg also trumpeted male gender equality by successfully arguing in Weinberger v. Wiesenfeld, 420 U.S. 636 (1975) that widowed fathers were entitled to the same benefits under the Social Security Act as widowed mothers. More recently, Ginsburg has been a dissenter to many decisions rendered by our conservative Supreme Court, including in the Lilly Ledbetter equal pay case. While the Supreme Court denied Ledbetter relief, Ginsburg’s dissent resulted in Congress creating new law effectively overruling the Supreme Court’s majority decision and making it easier for women to sue for previously unknown disparate pay.
The #MeToo movement has resulted in the media refocusing on gender discrimination and harassment. The R.B.G. documentary does an excellent job of explaining how we arrived at the current state of the law and Ginsburg’s role in shaping gender equality.
May 16, 2018
On May 5, 2018, NYC’s Earned Safe and Sick Time Act (the “ESSTA”) went into effect. It amends NYC’s Earned Sick Time Act by (a) permitting an employee to use accrued “sick leave” for “safe leave” and (b) expanding the definition of “family member.” Employers are required to provide notice to employees by June 4, 2018.
Under the ESSTA, employees have the right to use leave for the medical care of themselves or a family member, as well as the right to seek assistance or take other safety measures if the employee or a family member is a victim or has been threatened with domestic violence, “unwanted sexual contact”, stalking or human trafficking.
“Safe leave” includes absences to:
“Family member” is now defined as:
Employers with five (5) or more employees must provide up to 40 hours of paid sick/safe leave; all other employers must provide up to 40 hours of unpaid sick/safe leave.
For more information, see: http://www1.nyc.gov/assets/dca/downloads/pdf/about/Paid-Safe-and-Sick-Leave-Law-Rules.pdf
Category: Paid Sick Leave
May 9, 2018
On April 12, 2018, Governor Cuomo signed New York’s latest budget that includes six laws reflecting the concerns of the Metoo# movement that employers need to know.
Effective July 11, 2018:
Effective October 9, 2018:
Mandatory Sexual Harassment Policy, Prevention Training and Complaint Procedure. The New York State Department of Labor and Division of Human Rights are required to develop and publish a model sexual harassment prevention policy and a model sexual harassment prevention training program for use by employers. All New York employers are required (a) to adopt the model policy and training program or, establish their own that equals or exceeds the minimum standards of the model policy and program; and (b) distribute the written policy and provide sexual harassment training to all employees at least annually.
Effective January 1, 2019:
Government Contractors. As part of the bidding process for State contracts, bids must include a statement certifying that the bidding entity has implemented a written policy addressing sexual harassment in the workplace and sexual harassment training to all of its employees. With respect to no-bid projects, the State has the discretion to request such certification.
May 7, 2018
On May 3rd Governor Phil Murphy continued his efforts to protect workers in New Jersey by signing an Executive Order establishing a Task Force on Employee Misclassification. The Executive Order estimates that misclassification of workers may deprive New Jersey of over $500 million annually in tax revenue and deprive workers of employment related benefits and protections.
Employers have a duty to withhold social security, Medicare and unemployment taxes from employees’ paychecks. Failing to do so could result in significant liability, including penalties and interest.
Courts in New Jersey now apply the ABC Test when deciding whether workers are independent contractors under the New Jersey Wage Payment Law and the Wage and Hour Law. Employers must show each of the following:
Similarly, the Internal Revenue Service now uses an eleven factor test that is a refinement of its previous twenty (20) factor test. Its test looks at the extent of behavioral and financial control over the worker as well as the type of relationship (including whether benefits are provided and the permanency of the relationship.)
The Take-away for Employers: Promptly review your relationship with all consultants and workers you treat as independent contractors using these stringent tests.
Category: Wage & Hour
April 23, 2018
The Governor is now about to sign legislation amending the New Jersey Law Against Discrimination (“NJLAD”) that will ban employers from paying women and other employees in a protected category less for “substantially similar work.” Rather than a two year statute of limitations, like other types of discrimination, this amendment provides for a six year statute of limitations for these pay disparity claims. It also calls for treble (triple) damages. The law also provides that employers cannot preclude employees from discussing their compensation. Finally, it precludes employers from requiring employees to agree to a shorter statute of limitations for any claims under the NJLAD or to waive any other protections provided by that law. A copy of the Bill is attached here.
Category: Wage & Hour
April 22, 2018
The recently enacted Tax Cuts and Jobs Act (the “Act”) has had a tremendous impact on the settlement of sexual harassment cases. Section 13307 of the Act, found here, does away with a tax deduction for the settlement amount paid in a sexual harassment case if the settlement is confidential. This new provision also precludes a tax deduction for attorneys’ fees if there is a requirement of confidentiality. It seems that this also applies to a plaintiff’s own legal fees. This tax change adds new variables to settling sexual harassment claims. In the past, employers always insisted on confidentiality. Time will tell whether this changes and whether this provision of the tax law will cause the amount paid to settle these claims to increase. Plaintiffs will want more money for these claims in order to pay the extra tax liability while employers will want to pay less since they would no longer be able to deduct the settlement amount and their legal fees.
March 21, 2018
The Me Too and Time's Up movements rekindled the nation's collective awareness concerning sexual harassment and abuse which had all but disappeared since the Clarence Thomas Supreme Court confirmation hearings in 1991.
What contributed to this lack of discourse concerning the prevalence of sexual harassment in our society over the past 25 years? The use of nondisclosure agreements (NDAs) and confidentiality clauses in settlement agreements surely played a part -- as have mandatory arbitration agreements required by employers.
NDAs and confidentiality clauses are standard fare when parties settle sexual harassment and abuse cases.
In exchange for a settlement payment -- such as the $130,000 payment made on President Trump's behalf to Stormy Daniels -- the victim of harassment agrees not to discuss the claims made, or the terms, and sometimes even the existence, of the settlement.
These agreements usually also call for significant financial penalties should the plaintiff violate the confidentiality clause. For example, in the agreement at issue in the Trump-Daniels lawsuit, Daniels, whose legal name is Stephanie Clifford, is required to pay the president $1 million for each of her breaches of the confidentiality clause. Trump's lawyer claims she has violated the terms 20 times.
Is this agreement enforceable?
Probably not because the $1 million liquidated damage amount for each breach appears to be an unenforceable penalty rather than an estimation of likely damages should confidentiality be breached. For the same reason, it also isn't fair and most plaintiffs' attorneys would never allow a client to sign such a provision (unless their client is desperate for the money or the attorney believes the clause is unenforceable).
So far, however, this confidentiality clause has kept Daniels relatively quiet. Had there been no such provision, or if the court in the pending litigation refuses to uphold it, she undoubtedly will "tell all" of the sordid details in a book deal, which is likely to follow -- and, regardless, she may possibly do so on "60 Minutes" this weekend.
Meanwhile, as the porn star touted passing a polygraph test to prove she's not lying about her 2006-2007 tryst with Trump, another woman is suing to get out from under a 2016 confidentiality agreement so she can discuss her alleged affair with Trump. This week former Playboy Playmate of the Year, Karen McDougal, has filed suit in Los Angeles.
Confidentiality clauses serve useful purposes.
They protect the reputation of the alleged harasser when frivolous claims are brought. They also protect the plaintiff who does not want it known that she was subjected to sexual abuse or that she sued her employer. Finally, confidentiality clauses make it easier to settle cases because they protect the good will of the employer.
In fact, companies will pay more to a victim of harassment as hush money to avoid the impact of these types of allegations on their bottom-lines. Bad publicity from these cases can be devastating, as Harvey Weinstein's now bankrupt company recently learned.
On the other hand, as seen lately, confidentiality clauses enable harassers to continue their pattern of abuse and expose other unsuspecting victims to this same treatment. Weighing the advantages and disadvantages of these provisions, the time has come to limit the use of these "gag-orders" and Congress agrees.
Buried deep inside the new Tax Cuts and Jobs Act is a provision which disallows tax deductions for monies employers pay to harassment victims and for legal fees if the parties enter into a confidentiality agreement. In essence, since late December parties must choose between deductibility and confidentiality.
For now this seems to be a fair middle ground. It enables companies to protect themselves and alleged harassers against frivolous claims by insisting upon confidentiality while at the same time also providing victims with some leverage to insist upon no confidentiality.
Lawyers of course will find some work-arounds, whether through stronger clauses confirming that the settlement is not an admission of liability or requiring the victim to confirm in an agreement -- whether or not it is true -- that there simply was no harassment. The settlement value of harassment cases also might go down somewhat to make up for a company's loss of the tax deduction when it is insisting upon confidentiality.
Only time will tell whether this law goes far enough to expose harassers and deter their behavior in the first place.