PERC Decision Lays Groundwork for Negotiations Once Chapter 78 Contributions are Fully Implemented

New Jersey’s Public Employee Relations Commission (“PERC” or the “Commission”) has weighed in on the issues of (1) when health insurance contributions become negotiable once the fourth tier of contributions under Chapter 78 is completed and (2) at what level of contributions do negotiations commence once the contributions are negotiable. In Clementon Board of Education v. Clementon Education Association, P.E.R.C. NO. 2016-10, Docket No. SN-2015-041, August 13 2015, PERC agreed with the school board, ruling that the teachers’ union cannot  negotiate premium contributions for the successor agreement until the next collective negotiations agreement after Chapter 78 contributions become fully implemented.

To review, in 2011, the legislature passed a pension and health benefit reform act, P.L. 2011, c. 78, commonly referred to as “Chapter 78″ which required a four-tiered implementation of health care contributions based on employee salary. Although the law went into effect on June 28, 2011, for unionized employees, Chapter 78’s implementation date was tied to the expiration of the collective negotiations agreement. Thus, once an agreement expired after June 28, 2011, the four-year implementation period began.  For many public employers the implementation date for Chapter 78 contributions varied with each bargaining unit.

In Clementon, the final year of the four-year phase-in of higher health insurance contributions overlapped with the first year of a new agreement. The teachers union argued that as soon as full implementation of Tier 4 has occurred, health benefit contributions should become immediately negotiable for the successor agreement even if full implementation occurs mid-term in the agreement. The school district disagreed, arguing health benefits should remain as is under Chapter 78 until the next round of negotiations for a new contract. The Commission sided with the school board, deciding negotiations of health benefit contribution should not occur until the next contract is negotiated.

PERC found that Chapter 78 expressly, specifically and comprehensively sets forth that health benefit contribution levels become negotiable in the “next collective negotiations agreement after … full implementation” of the four-tiered level of employee contributions is achieved. In so deciding, PERC laid the groundwork for handling negotiations of health insurance contributions once Chapter 78 is fully implemented.

For example, if Tier 4 payments are fully implemented on December 31, 2015 and the collective negotiations agreement does not expire until December 31, 2016, then health insurance contributions do not become negotiable until January 1, 2017.  This is true whether or not the collective negotiations agreement is expired or not.  Negotiations are tied to when Chapter 78 contributions are fully implemented, i.e. the full year of Tier 4 payments are completed, regardless of term.

Additionally, PERC determined that health insurance contributions shall be negotiated from the Tier 4 structure once negotiations are permitted.  Therefore, once negotiations begin on this issue pursuant to the timeframe explained above, the parties shall treat contributions as if the Tier 4 payments are part of the collective negotiations agreement.

According to the New Jersey Education Association’s (“NJEA”) website, NJEA plans to appeal the Commission’s decision in Clementon.

For more information on the Commission’s decision and how it will affect a public employer’s existing and future contracts, please contact Joseph M. Hannon, Esq. at or Jennifer Roselle, Esq. at


Second Circuit Rules Court Approval or USDOL Supervision of Settlements Required in FLSA Suits

On August 7, 2015, the Second Circuit ruled that suits brought under the Fair Labor Standards Act (“FLSA”) cannot be resolved privately and require approval of a federal court or supervision by the U.S. Department of Labor (“DOL”).

In Cheeks v. Freeport Pancakes House, Inc., 2d Cir., No. 14-299, 8/7/15, the plaintiff sued his former employer seeking to recover unpaid overtime wages, liquidated damages and attorneys’ fees under the FLSA and New York labor laws.  After engaging in some discovery, the parties reached a private settlement to dismiss the employee’s claims with prejudice and, pursuant to Rule 41 of the Federal Rules of Civil Procedure (“Rule 41”), filed a joint stipulation and order to dismiss the lawsuit.  Under Rule 41, parties may voluntarily agree to dismiss an action without court order unless there is a federal statute prohibiting such agreement.  The District Court denied the parties’ application to dismiss the lawsuit.

As part of its ruling, the District Court directed the parties to file a copy of the settlement agreement on the public docket and to “show cause why the proposed settlement reflects a reasonable compromise of disputed issues rather than a mere waiver of statutory rights brought by an employer’s overreaching.”  The parties jointly sought certification of an appeal to the Second Circuit instead, seeking a ruling on whether the parties could stipulate to dismissal of the action without court approval.

In affirming the lower court’s decision to deny the stipulation of settlement, the Second Circuit decided, given the unique policy considerations underlying the FLSA, that the FLSA fell within Rule 41’s “applicable federal statute” exception, thus making district court or DOL approval a requirement to dismiss an FLSA cause of action with prejudice via private settlement.  The Court reasoned that “the FLSA is a uniquely protective statute … with a strong remedial purpose: to prevent abuses by unscrupulous employers and remedy the disparate bargaining power between employers and employees.”  Accordingly, the Second Circuit held that judicial or DOL approval will protect susceptible employees from feeling coerced into accepting unreasonable or discounted settlement offers quickly.

The Cheeks ruling makes it clear that, at least in the Second Circuit, a privately negotiated settlement agreement requires court or DOL approval in order to extinguish FLSA claims in a lawsuit. This means the settlement agreement must be filed in open court.  Failure to do so in New York, Connecticut and Vermont puts the employer at risk that it will be sued again by the same claimants.

For more information regarding this decision and best practices, please contact John Vreeland, Esq., Director of the Wage & Hour Compliance Practice Group, at or 973-533-0777.



Third Circuit Rules A Paid Suspension Is Not An Adverse Employment Action

On August 12, 2015, the Third Circuit ruled that a suspension with pay does not constitute an adverse employment action within the meaning of Title VII of the Civil Rights Act of 1964 (Title VII) and the Pennsylvania Human Rights Act.  Title VII prohibits employers from “failing or refusing to hire, discharging, or discriminating against any individual with respect to compensation, terms, conditions, or privileges or employment, because of such individual’s race, color, religion, sex, or national origin.”  In Jones v. SEPTA, the plaintiff was suspended with pay in December 2010 by her employer, Southeastern Pennsylvania Transportation Authority (“SEPTA”) for apparent timesheet fraud.  After a lengthy investigation by SEPTA’s Office of Inspector General, the plaintiff was suspended with pay in February 2011, and formally terminated in April 2011.  In her complaint, the plaintiff alleged her termination was the result of years of unlawful sexual harassment, gender discrimination, and retaliation.  The District Court ruled for SEPTA and the plaintiff appealed.

On appeal, the Third Circuit agreed with the District Court’s finding that the plaintiff was unable to show that she suffered from an adverse employment precisely because paid suspension does not constitute an adverse action under Title VII.  The suspension neither changed compensation nor did it effect a “serious and tangible” alteration of the “terms, conditions, or privileges of employment.”  Thus, suspension with pay, without more, is not an adverse employment action under the substantive provision of Title VII.  Prior to this case, the Third Circuit had not decided the issue of paid suspensions.  Other federal circuit courts, however, have unanimously reached the same conclusion that placing an employee on paid administrative leave, where there is no presumption of future termination, does not constitute an adverse employment action.

The Third Circuit also held that both instances of the plaintiff’s suspension, paid and unpaid, failed to establish a violation of Title VII.  Moreover, because the suspension and subsequent termination were based on fraudulent activity by the employee and the organization’s investigation of the same, there was no causal relationship between her gender and the treatment by SEPTA.  Despite additional allegations that she was a victim of a hostile work environment, the plaintiff had not sought to employ any of the safeguards or other means of protection provided by SEPTA to formally file a complaint prior to the accusation of fraud.  As such, SEPTA was not be liable for informal or nonexistent claims of a hostile work environment.

Employers’ Takeaway:

  • Suspensions with pay do not constitute an adverse employment action and, therefore, are not viable claims under Title VII.
  • Employers should ensure that any suspensions or leaves of absences do not alter compensation or any terms, conditions, or privileges of employment.

For more information regarding this decision and best practices, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.

NJ Attorney General Releases New Directives and Guidance on Police Use-of-Force Investigations and Body Cameras

On July 28, 2015, John J. Hoffman, Acting Attorney General, issued a supplemental directive regarding the Uniform Statewide Procedures and Best Practices for Conducting Police Use-of-Force investigations (“Supplemental Directive”) and also issued Directive No. 2015-1, regarding Police Body Worn Cameras (“BWCs”) and Stored BWC Recordings (“BWC Directive”).

Deadly Force Investigations

The Supplemental Directive supplements, and to the extent it is inconsistent, supersedes contrary provisions of prior Directive 2006-5.  It concerns use-of-force investigations, which pertains to any use of force by a law enforcement officer involving death or serious bodily injury, or where deadly force is employed with no injury, or where any injury to a person results from the use of a firearm by a law enforcement officer.

The Supplemental Directive requires a comprehensive conflicts inquiry when use-of-force investigations are conducted by the County Prosecutor or the Division of Criminal Justice, followed by appropriate action to, for example, reassign the investigation or order recusal of specific persons so as to not compromise the impartiality and independence of the investigation.  It also requires that prior authorization be granted by the assistant prosecutor or assistant/deputy attorney general supervising the investigation, prior to disseminating investigative information to the principal of the investigation and/or other witnesses.

Additionally, employees of the police department or agency that employs the principal of the investigation are generally not permitted to participate in the investigation (although they can still act as first responders to a scene, help secure a scene, and facilitate medicate assistance to injured parties).  There are some exceptions to the rule for good cause, when such employees are necessary to assist in the investigation (e.g. those with specialized crime scene investigation skills and forensic testing expertise).

Furthermore, the Supplemental Directive provides that generally, use-of-force matters investigated must be presented to a grand jury for independent review if the use of force resulted in death or serious bodily injury, or if the interests of justice would be served by having the matter reviewed by a grand jury.  Such matters are not required to be presented to the grand jury where the undisputed facts indicate that the use of force was justifiable under the law.  However, where the matter is investigated by the County Prosecutor, and he/she determines that the matter does not need to be presented to the grand jury for independent review, the Prosecutor must prepare and submit a report summarizing the results of the investigation and explaining the reasons for such recommendation.  Such report shall be reviewed by the Director of the Division of Criminal Justice (“Director”), who will make the determination as to whether the matter should be presented to the grand jury.  Where the matter is investigated by the Attorney General Shooting Response Team, and the Director determines that the matter does not need to be presented to the grand jury, the Director must prepare a similar report, to be reviewed and acted upon by the Attorney General in similar fashion.

The Supplemental Directive gives specific direction on what types of instructions are required to be given to the grand jury in such matters.  Moreover, it provides that two different grand juries are needed in such cases, as two separate determinations need to be made:  (1) the underlying offense giving rise to the police use of force (i.e. crime alleged to have been committed by civilian injured by police force); and (2) whether the police use of force was unlawful.

For such matters that are not presented to a grand jury or where the grand jury returns a “no bill”, the County Prosecutor (or Director in matters investigated by the Attorney General Shooting Response Team) must prepare a statement for public dissemination with specific information, including but not limited to specific findings regarding the factual circumstances of the incident and the lawfulness of the police use of force.  Such statement must be provided to the Attorney General or his/her designee, and, after being released to the public, must be made available on the internet.  Furthermore, in such circumstances (no presentation to grand jury or “no bill”), the matter shall be referred to the appropriate agency for administrative review in accordance with the AG’s Internal Affairs Policy and Procedures manual.

The Supplemental Directive can be accessed here, and a Deadly Force Investigation Fact Sheet can be accessed here.

Body Worn Cameras

The BWC Directive applies when a police department decides to deploy body cameras, in which case such police departments must promulgate and enforce a policy that complies with the BWC Directive within 60 days of its issuance.  For those police departments that have not deployed body cameras, they must first promulgate such a policy prior to adopting their use.  However, the BWC Directive does not mandate that police departments require the use of such body cameras.  Additionally, while the BWC Directive provides foundational requirements concerning the use of body cameras, individual police departments are permitted to impose additional requirements that are not inconsistent with the BWC Directive.

The BWC Directive requires that certain notice be given to generally inform citizens that the police department deploys body cameras, as well as specific notice to certain individuals during an encounter.  It also requires that, in most circumstances, officers respond truthfully when a civilian inquires as to whether or not the device is activated.

The BWC Directive sets forth instances wherein body cameras must be activated, which include instances such as traffic stops, witness interviews, custodial interrogations, protective frisks, searches, and arrests.  Moreover the body cameras must be kept on during deadly force incidents and related on-scene investigations.  By contrast, body cameras may not be activated where it would expose an undercover officer or a confidential informant, or where a civilian requests that the device be turned off in certain circumstances.  Further limitations are placed on private homes, schools, hospitals, or places of worship, unless the situation involves responding to a crime or emergency.

Furthermore, the BWC Directive requires that BWC recordings be retained for a period of not less than 90 days, subject to additional or extended retention periods for certain criminal investigations, prosecutions, and internal affairs complaints.  It also provides restrictions on access to, use, and dissemination of BWC recordings, and public disclosure of same.

The effective date of the BWC Directive is 60 days after its issuance.  The BWC Directive can be accessed here, and a Body Camera Police Fact Sheet can be accessed here.

For more information regarding these directives and best practices for implementing appropriate policies and procedures concerning use-of-force investigations and/or body cameras, please contact Joseph M. Hannon, Esq. at or Brett M. Pugach, Esq. at, attorneys in the firm’s Labor Law Practice Group, or call 973-533-0777.

NJ Appellate Division Rules that Continued Employment Means Consent to Arbitration

On July 23, 2015, the New Jersey Appellate Division upheld Ernst & Young’s alternative dispute resolution (“ADR”) policy statement as valid and enforceable.  In Jaworski v. Ernst & Young, No. A-5259-13T2, three former employees brought suit in the Superior Court alleging that their termination, which came after more than ten years of employment, was motivated by their age in violation of the New Jersey Law Against Discrimination.  Prior to their terminations, Ernst & Young had implemented and periodically revised its ADR policies, notifying its employees that any claims, controversies, or other disputes would be resolved through the corporate Common Ground Program.  Ernst & Young’s program prohibited employees from filing lawsuits and proceeding to a jury trial.  Employees were also told that continuing with their employment for a certain period of time was an acknowledgement and acceptance of the program’s arbitration requirements.  The employees were also provided with notices of periodic changes to the arbitration policy by electronic distribution.  The plaintiffs argued that the arbitration language created an illusory agreement because Ernst & Young retained the right to unilaterally modify its terms and the Common Ground Program, violated their constitutional right to a jury trial, and that the program was unconscionable because it imposed substantial forum costs.

The Appellate Division held that the continued employment by each plaintiff following receipt of the policy did, in fact, constitute an agreement to settle claims by alternative methods.  The Appellate Division also found that Ernst & Young repeatedly responded to developments in the law by amending its ADR procedures to provide “great, not fewer protections.”  Because the employees only had to give written notice of the intention to mediate no later than thirty days after receiving the second electronic notice of an amendment or termination of the program, the Appellate Division found that the ADR provision not illusory.  Moreover, the ADR policy specifically included state statutory anti-discrimination claims as “Covered Disputes,” Ernst & Young had “clearly and unequivocally” put its employees on notice that these types of claims were subject to mandatory arbitration.  Finally, the Appellate Division rejected the unconscionability claim as the ADR provision specifically contained a fee-sharing provision which stated in the event of arbitration, costs would be shared equally by the company and the employee.

Given that the New Jersey Supreme Court has yet to address the issue of illusory agreements in ADR policies, there is a strong likelihood the Supreme Court will accept review on appeal.  In New Jersey, continued employment has already been found to constitute sufficient consideration to support certain employment-related agreements including non-compete agreements.

Employers’ Takeaways:

  • This decision allows Employers to obtain consent to ADR policies without an actual written agreement between the Employee and Employee.
  • Employers should clearly specify that an Employee indicates his or her agreement to ADR by beginning or continuing employment with the Employer.
  • Ensure that your company’s policies with respect to ADR are clear and unequivocal, and ensure that any and all revisions to ADR policies are distributed to employees.

For more information regarding this decision and best practices when implementing or revising alternate dispute resolution policies, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.

EEOC Issues Ruling on Workplace Sexual Orientation Discrimination

On July 15, 2015, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued its ruling in Complainant v. Foxx finding that all types of discrimination based on sexual orientation are forms of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964.  The ruling is a victory for the Lesbian Gay Bi-Sexual and Transgender (“LGBT”) community and means that LGBT employees now have protection comparable to other employees in the workplace.  Previously, the EEOC limited sexual orientation discrimination claims to cases where workers alleged they were victims of stereotypes based on sex.

The case was brought by a federal air traffic control specialist in Miami, who contended he was denied a promotion because he was gay.  While the EEOC noted that the language contained in Title VII does not distinguish “sexual orientation” from “sex,” the EEOC found that there could no longer be a distinction between the two.  Further, the EEOC noted that “[a]n employee could show that the sexual orientation discrimination . . . experienced was sex discrimination because it involved treatment that would not have occurred but for the individual’s sex.”  According to the EEOC, to interpret the protections granted under Title VII as exclusionary with regard the LGBT community, is to incorrectly interpret Congress’s intent.  The EEOC also reasoned that that if Congress intended for the statute to apply solely to heterosexual individuals, a revision to the language would have already been made.  The EEOC based its ruling in part on the U.S. Supreme Court’s 1989 decision in PriceWaterhouse v. Hopkins, which held that is was a violation of Title VII to discriminate against an individual for failing to conform to gender-based stereotypes.

While the EEOC’s decision is persuasive, it is up to the federal courts to give weight to the EEOC ruling and decide whether to apply this ruling to claims by private-sector employees.  In many states, including New Jersey, it is already illegal for employers to discriminate on the basis of sexual orientation and gender identity in employment, education, housing and public accommodations.

On July 23, 2015, federal legislation to ban discrimination against LGBT individuals was introduced by U.S. Senator Cory Booker (D-N.J.) and 39 of his fellow Senators.  U.S. Sen. Robert Menendez (D-N.J.) is one of the bill’s co-sponsors. The new law, entitled the Equality Act of 2015, would explicitly add sexual orientation and gender identity to Title VII and would cover employment, housing, public accommodations, education, jury service and credit.

Employers’ Takeaways:

  • The EEOC’s decision extending Title VII’s protections to claims based on sexual orientation is binding on all federal agencies, departments and employees.
  • Both public and private employers should consider revising their non-harassment, non-discrimination and EEO policies and practices, to conform to the EEOC’s decision.
  • Employers must advise and train their managers and employees to ensure a work environment free of harassment, discrimination, or retaliation based on sexual orientation.

For more information regarding the EEOC’s decision and how it impacts your workforce, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.  This blog post was written with the assistance of Amanda Frankel.

New Jersey Supreme Court Rules that CEPA is a Watchdog’s Best Friend

On July 15, 2015 in a 5-0 decision, the Supreme Court of New Jersey issued its long awaited decision in Lippman v. Ethicon, Inc., which affirmed and modified the Appellate Division’s ruling that employees, whose core job duties include monitoring whether their employers comply with standards and regulations, are protected under the New Jersey Conscientious Employee Protection Act (“CEPA”).  While advocates hailed the decision as a major victory for workers’ rights, employers fear it will expose companies across New Jersey to more lawsuits.

In Lippman, the plaintiff brought an action under CEPA against his former employer, Ethicon, Inc., a subsidiary of Johnson & Johnson, alleging that he was terminated due to his whistleblowing activities with regard to safety concerns he had with some of the pharmaceutical products developed by the defendants.  Lippman’s high-level position however required him to assess health risks posed by products and to provide medical input in determining whether corrective measures were required.  After he complained, Lippman was terminated.  Ethicon maintained that Lippman was fired for engaging in a romantic relationship with a subordinate employee.  The Superior Court granted the defendants’ motion for summary judgment and dismissed Lippman’s case finding that, since Lippman’s job duties included raising issues regarding product safety, he was not entitled to protection under CEPA.  On appeal, the Appellate Division reversed finding that “watchdog employees” are the most vulnerable to retaliation because they frequently speak out and that CEPA does not limit protection based on an employee’s job title or function.

The New Jersey Supreme Court agreed and ruled that CEPA is remedial legislation and that the statutory cause of action created by CEPA applies equally to all employees regardless of their specific job duties.  The Court found that there is no evidence of legislative intent to have CEPA operate any other way due to its liberal construction.  The Court also found that CEPA protects employees who “refuse to participate” in any activities they believe are unlawful, implying it protects activities related to an employee’s normal job duties, since “it would be likely that the employee would be asked to participate in employer activity within the course of, or closely related to, his or her core job functions.”  Thus, there can be no additional requirements imposed on watchdog employees unless and until the legislature specifically expresses such intent to distinguish employees who are entitled to CEPA protection.  The Court also rejected the Appellate Division’s requirement that employees must demonstrate they pursued and exhausted all internal means of securing compliance in order to bring a claim under CEPA.  The Supreme Court found that this requirement was “incompatible with prior precedent and imposes an obligation nowhere found in the statutory language.”

Employers’ Takeaways:

  • CEPA’s protections extend to all employees regardless of their job duties; even those who are employed for the explicit purpose of bringing concerns or potential issues to the attention of the company
  • There is no longer a requirement that employees must demonstrate an exhaustion of all internal means of securing compliance in order to secure whistleblowing protections under CEPA.
  • Employees, however, still need to demonstrate that they have suffered an adverse employment action (such as demotion, termination and the like), and that the adverse action occurred because they engaged in protected activity.
  • Companies that hire professionals to specifically engage in risk analysis such as the pharmaceutical industry should take extra precaution when making employment decisions regarding these types of employees. Management and Human Resources professionals must be trained and sensitized to protected conduct in all its forms.

For more information regarding this decision and to learn how you can protect your company from whistleblowing claims, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.

Second Circuit Outlines The Way for Employers to Hire Unpaid Interns

On July 2, 2015, in a matter of first impression, the Second Circuit issued a ruling in Glatt v. Fox Searchlight Pictures, Inc., Nos. 13-4478, 13-4481 (2d Cir. July 2, 2015), and provided a new test for whether a worker can be classified as an unpaid intern under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). and thus entitled to compensation, including minimum wage and overtime.  The ruling by the Second Circuit rejected both the Department of Labor (“DOL”)’s six-factor test to determine whether or not an intern should be classified as an employee, and the U.S. District Court for the Southern District of New York’s previous reliance on the DOL’s test.

In 2013, the U.S. District Court for the Southern District of New York followed the DOL’s 2010 guidance for whether unpaid interns working in the for-profit private sector should be classified as employees.  The DOL test lays out six factors, including, for example, whether the internship experience is for the benefit of the intern, whether the intern displaces regular employees, and whether the employer derives an immediate advantage from the intern’s work. The DOL test requires that each and every factor must apply in order for a position to be an unpaid internship.  The District Court held that since not all of the DOL’s six factors applied, the plaintiffs in Glatt should have been classified as employees under the FLSA and the NYLL.

The Second Circuit, however, held that a “primary beneficiary test” should be utilized when determining whether or not employers need to pay their interns.  In other words, it must be determined whether the employer, rather than the intern, is the primary beneficiary of the relationship.  The Second Circuit found that the DOL six factor test was “too rigid” and unpersuasive, and was not entitled to deference.

To aid in determining whether the worker or the employer is the primary beneficiary, the Second Circuit articulated a “non-exhaustive” list of seven factors that should be considered and balanced when deciding whether the employer or intern is the primary beneficiary of the relationship:

  • The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
  • The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutes;
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
  • The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship

The Second Circuit made clear that no one factor is dispositive and that every factor need not point in the same direction to conclude that the intern is not an employee. Thus, Courts are free to look to other factors, and the failure to satisfy any one factor is not dispositive.  While the Second Circuit’s list of factors only adopted three of the DOL’s factors, it retained the DOL’s requirement that the position provide an educational value, suggesting that it is crucial to include an educational aspect in an unpaid internship.  The Second Circuit opined that this new test takes into account the “relationship between the internship and the intern’s formal education…by focusing on the educational aspects of the internship our approach better reflects the role of internships in today’s economy.”

The Glatt decision signals positive news for employers in New York, Connecticut and Vermont when determining whether or not they need to pay interns.  Private sector for-profit companies with internship programs should evaluate their programs to ensure that they are in compliance with all state and federal laws.  As the Second Circuit explained, a bona fide internship must “integrate classroom learning with practical skill development in a real-world setting.” It will be interesting to see whether or not other Circuit Courts find this ruling persuasive.

For more information regarding this decision and to learn how your business can implement best practices when implementing internship programs, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.

New York City Restricts Use Of Criminal Records In Hiring Giving Job Applicants a “Fair Chance” at Employment

As expected, on June 29, 2015, New York City Mayor Bill de Blasio signed into law the Fair Chance Act (Intro. No. 318-A), making New York City the latest jurisdiction to prohibit employers from conducting pre-offer criminal background checks when hiring. The new law prohibits private employers who operate in New York City with four or more employees, from inquiring about applicants’ past criminal convictions until a conditional job offer has been made. After a conditional offer, an employer can commence a criminal background check and make inquiries related to criminal history. If a company decides to withdraw the offer after learning of the applicant’s criminal history, it needs to give the applicant a written explanation of the decision. The employer must conduct an individualized evaluation of any criminal conviction it discovers pursuant to the factors under existing New York State law. Further, the employer needs to hold the position open for three days to allow the applicant an opportunity to respond and provide any proof of rehabilitation. The Act also includes individual independent contractors performing work for the employer, if those individuals do not themselves have employees. Moreover, employers must not specify in job advertisements or other written statements that any position entails restrictions based on criminal records, unless expressly allowed by law (e.g., for law enforcement agencies).

Under the new law, the NYC Human Rights Commission is charged with enforcing its key protections. The Fair Chance Act does not affect federal and state laws that allow employers in certain industries to consider applicants’ criminal histories, including law enforcement, positions of public trust, and jobs that entail working with children.

The new law takes effect on October 27, 2015. Employers in New York City should begin consulting with legal counsel to ensure that their hiring process forms, job applications and hiring policies are in compliance with the new law. Legal compliance should also include educating managers, supervisors and recruiting personnel regarding these new standards to ensure they are communicated throughout the organization.

For more information regarding the Fair Chance Act and to learn how your business can implement best practices when hiring and conducting background checks, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at or 973-533-0777.

N.J. Supreme Court Finds Chapter 78 Did Not Create an Enforceable Contract Right

In Burgos v. State of New Jersey, the New Jersey Supreme Court held that the 2011 pension and health benefit reform statute, known as Chapter 78, did not create an enforceable contract that was binding on the State to make the pension payments required by that legislation.

The decision is the result of multiple actions filed by individuals and unions, on behalf of New Jersey State employees, after the fiscal year 2015 budget included contributions that were less than 1.57 billion dollars that Chapter 78 required.  The Law Division accepted the Unions’ argument that Chapter 78 created a contractual right to the payment and failure to do so was an impairment of that contract.  The Supreme Court reversed.

The plain language of Chapter 78 set forth a clear statement that the failure to make the required pension contributions results in a contractual impairment.  Although the Supreme Court recognized the good intentions of the legislature in passing Chapter 78, the Court simultaneously rejected the legislature’s authority to do so.  The Court’s rationale was largely based upon two clauses within the New Jersey Constitution.

First, the Debt Limitation Clause of the New Jersey Constitution prohibited such action.  The intention of Chapter 78 could not set aside the broad, clear language contained in the Debt Limitation Clause.  In sum, this provision limits the amount of debt or liability the Legislature may incur on a year to year basis without a vote of public.  The Court found that the contributions required by Chapter 78 surpassed the permissible boundaries of the Debt Limitation Clause and therefore would require a vote of the public in order to pass constitutional muster.

Second, the Court reasoned that the mandates of Chapter 78 failed to meet the requirements of the Appropriations Clause of the New Jersey Constitution.  The Court reasoned that the legislature retains the power to annually appropriate funds as necessary.  The required contribution in Chapter 78 did not retain the legislature’s authority to annually appropriate such funds.

These two constitutional clauses were the linchpin in the Court’s decision to uphold the State’s failure to make the required Chapter 78 contributions.  While the Court explained the legal rationale for its decision, it also highlighted the practical imports of its decision as well, among which was the damage to the public trust.  In addition, the Court recognized the significant difficulties facing the pension system.  However, rather than fashion a judicial remedy, the Court called upon the public noting “it is the people’s responsibility to hold the elective branches of government responsible for their judgment and for their exercise of constitutional powers.”

The Court’s decision in Burgos negated the required State contributions of Chapter 78 to the pension system.  The issue of how to fund the depleted public employee pension system will continue to be at the forefront of future public debate.

For more information, or if you have any questions, please contact Joseph M. Hannon, Esq., at 973.535.7105,, or Jennifer Roselle Esq., at 973.646-3324,