Transgender Accommodation Issues at the Forefront of Employment and Education

Earlier this month, the Equal Employment Opportunity Commission (EEOC) released a new Fact Sheet, announcing its formal position on bathroom access rights for transgender employees.  The Fact Sheet provides employers with a nuanced look into what practices and procedures the EEOC will be investigating should a charge be brought alleging sex discrimination in the context of bathroom usage by transgendered individuals.

As noted therein, the EEOC defines the term “transgender” as referring to “people whose gender identity and/or expression is different from the sex assigned to them at birth,” and specifically notes that “[a] person does not need to undergo any medical procedure to be considered a transgender man or a transgender woman.”

The EEOC reiterates that it enforces Title VII of the Civil Rights Act of 1964 in instances of discrimination against transgendered individuals, as Title VII prohibits employer discrimination on the basis of sex where the action is “motivated by hostility, by a desire to protect people of a certain gender, by gender stereotypes, or by the desire to accommodate other people’s prejudices or discomfort.” The EEOC also noted that employers cannot and should not rely on state laws contrary to this guidance.

Bathroom Access Rights for Transgender Employees Under Title VII

The EEOC’s interpretation of “transgender” in the context of Title VII and bathroom usage is based upon two cases before the EEOC: Macy v. Dep’t of Justice, EEOC Appeal No. 0120120821, 2012 WL 1435995 (Apr. 12, 2012) and Lusardi v. Dep’t of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756 (Mar. 27, 2015), as well as a recent opinion from the Fourth Circuit in G.G. ex rel. Grimm v. Gloucester Cty. Sch. Bd., — F.3d –, 2016 WL 1567467 (4th Cir. 2016).

Lusardi held that prohibiting equal access to a common restroom corresponding to the employee’s gender identity is sex discrimination.  Further, in Macy, the EEOC noted that an employer cannot avoid the requirement to provide equal access to a common restroom for transgender employees by providing single-user restroom access instead.  However, the EEOC advised that an employer can make single-user bathrooms available to all employees who might choose to use them. In G.G., the U.S. Court of Appeals for the Fourth Circuit followed the Department of Education’s position that sex discrimination under Title IX is prohibited and that educational institutions are to give transgender students access to bathrooms and locker rooms consistent with their gender identity.

In the Fact Sheet, the EEOC reaffirms its position that any state law to the contrary of these decisions and interpretations is not a defense under Title VII.  Thus, employers would be wise to update their policies and procedures to conform with the EEOC’s directives as to transgendered individuals, rather than look to their resident state for guidance.

Transgender Access to School Bathrooms

On May 13, 2016, President Obama issued a directive that requires every public school to provide appropriate access for transgender students or risk the loss of federal funds. The directive has received strong backlash from conservative leaders who have accused the President of blackmailing and the federal government of getting involved in local issues.

On the same day, the Department of Education and the Department of Justice (“the Departments”) issued a Dear Colleague letter to assist in ensuring that transgender students can “enjoy a supportive and nondiscriminatory school environment.” Although the joint letter does not carry force of law, the intent is clear: schools must agree or lose federal funding.  Specifically, schools must agree that that it will not exclude, separate, deny benefits, or otherwise treat students differently on the basis of sex in its educational programs or activities unless Title IX so authorizes. Schools are required to treat transgender students according to the gender that they identify as soon as a parent or guardian notifies the district that the identity is different from previous records.

Much like the EEOC guidance pertaining to employers, the Departments do not require a medical diagnosis or treatment as a prerequisite to be considered transgender; they also explicitly state that accommodating the discomfort of others cannot be justified by excluding or singling out a particular class of students. The Departments provide specific guidance on sex-segregated activities and facilities and reiterate that schools may provide separate facilities (including housing) but must allow transgender student to access those which align with the gender that which the student identifies. Records must be kept consistent with the gender that which the student identifies with as well. There are some limitations. The Departments note that non-vocational elementary and secondary schools and private undergraduate institutions are permitted under Title IX to set their own sex-based admissions policies.

New York City Commission on Human Rights’ Transgender Guidance

On May 19, 2016, New York City’s Commission on Human Rights (NYCCHR) issued new guidelines requiring employers and landlords to implement transgender pronouns (“ze/hir”) as requested by transgender workers or tenants. Failure to comply may open organizations and individuals up to $250,000 in fines if that failure is motivated by malicious intent.

NYCCHR specifically notes that “harassment motivated by gender is a form of discrimination” and outlines examples of violation of its guidance in the context of failure to use an individual’s preferred name or pronoun, refusing to allow individuals to utilize single-sex facilities and programs consistent with an individual’s preferred gender, sex stereotyping, imposing different uniforms or grooming standards based on sex or gender, providing employee benefits that discriminate based on gender, considering gender when evaluating requests for accommodation, and engaging in discriminatory harassment and retaliation.

For more information regarding the EEOC’s Fact Sheet, related guidelines, and best practices with respect to transgender individuals in the workplace, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Major Changes to Federal Overtime Regulations Take Effect December 1. Are You Prepared?

This week, President Obama and Secretary of Labor Thomas Perez announced the publication of a final rule to take effect December 1 that will overhaul the Fair Labor Standard Act’s overtime regulations. The U.S. Department of Labor (USDOL) estimates that these changes will add more than four million employees to the overtime rolls.

Right now, in general, an employee is exempt from overtime pay if the employee satisfies three tests:

  • Duties Test: The employee’s primary job duties qualify as executive, administrative, or professional in nature, as these terms are defined in the regulations.
  • Salary Basis Test: The employee is paid on a salary basis, meaning the employee receives a predetermined and fixed salary that is not reduced because of variations in the quality or quantity of the work performed (i.e., no docking).
  • Salary Level Test: The employee’s weekly salary meets the minimum amount specified in the regulations.

The most significant change in the USDOL’s new rule is to the Salary Level Test. Today, the minimum salary needed to qualify for exempt status is $455 per week, or $23,600 annually. On December 1, 2016, this minimum will increase to $913 per week! This means in order to be exempt, an employee must be paid an annual salary of at least $47,476.

By more than doubling the minimum salary amount, many salaried employees who work long hours and currently qualify for an overtime exemption will on December 1 become eligible for overtime pay unless their salaries are increased. An employee whose weekly salary is below $913 will become overtime-eligible and you will have to track the employee’s hours of work through a verifiable timekeeping method and pay time-and-a-half for each hour worked over 40 in a workweek.

Employers need to start preparing now. First, you must identify your exempt employees whose salaries are below the new salary threshold. Then perform a business analysis to determine whether it is more cost effective to increase employee salaries to the minimum threshold, or treat these employees as overtime-eligible. We also recommend that you take this opportunity to evaluate whether your exempt employees are satisfying the other two tests. Many times we find that an employee’s exempt status is based on a job description that no longer accurately reflects the employee’s actual job duties. We recommend that employers self-audit their job classifications at least every two years to ensure employees classified as exempt currently satisfy a duties test and that pay practices for exempt employees meet the Salary Basis Test. Periodic self-audits are especially important now because the USDOL’s new rule establishes a mechanism for automatically updating the salary level every three years.

Employers cannot afford to be out of compliance with the FLSA. The Departments of Labor at both the federal and state levels have already signaled that they intend to aggressively enforce wage and hour laws. In addition, plaintiffs’ lawyers have become focused on wage and hour claims. Wage and hour litigation is by far the fastest growing type of employment litigation. Last year, more than 9,000 FLSA lawsuits were filed in the United States; many of them were filed as “collective actions” – the FLSA’s version of a class action. That is a 450% increase since 2000. This trend will almost certainly continue as plaintiffs’ lawyers hope to catch employers flat-footed and out of compliance with the new overtime regulations.

Wage and hour litigation can be expensive for employers. The FLSA provides for 100% liquidated damages – or double damages. It also shifts the plaintiff’s legal costs to the employer, meaning if the plaintiff proves a single violation of the law, the employer pays the plaintiff’s attorneys’ fees. This typically makes it difficult to resolve these types of suits early as the FLSA creates an incentive for a plaintiff’s lawyer to work the case and then recover attorneys’ fees when the lawsuit finally ends.

Again, the time to prepare is now, not when you receive the lawyer’s demand letter or the Department of Labor’s enforcement notice. A thorough self-audit, especially with the assistance of counsel, is an employer’s best protection against costly wage and hour enforcement actions and lawsuits.

For more information regarding these recent developments, please contact John R. Vreeland, Esq. Director of the firm’s Wage & Hour Compliance Practice Group, at jvreeland@genovaburns.com or 973-533-0777.

Federal Trade Secrets Act Now Law: What Companies Should Know

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act (“DTSA”).[i]  The measure had previously been passed by the U.S. House of Representatives 410-2 on April 27, 2016, quickly following the U.S. Senate’s unanimous passage of the bill on April 4, 2016.[ii]  The DTSA amends the Economic Espionage Act of 1996 to create a federal private right of action for trade secret misappropriation.  Its passage represents a major overhaul of intellectual property law in the United States, as companies were previously left to seek redress for trade secret misappropriation under a patchwork of state laws, the majority of which were adoptions of the Uniform Trade Secrets Act (“UTSA”).[iii]  While the DTSA mirrors many of the provisions and remedies found in the UTSA, which New Jersey and Pennsylvania have versions of, it does not do away with those state law protections, but rather provides additional tools for companies to utilize in protecting their intellectual property.

Here are some beneficial takeaways for companies:

A. DTSA Definition of a Trade Secret

The DTSA creates a broad, universal definition for the term “trade secret,” encompassing “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing” provided that:

  1. The company has taken reasonable measures to keep the information secret, and
  1. The information derives independent economic value to the company from not generally being known and not being readily ascertainable by others.

B. DTSA Definition of “Misappropriation”

The DTSA also details when “misappropriation” has occurred—i.e., when a trade secret holder may seek redress—as follows:

  1. When a trade secret has been acquired by someone who knew or should have known that the trade secret was obtained through “improper means,” or
  1. When a trade secret has been disclosed or utilized, without consent of its owner, by someone who knew or had reason to know either that (a) it is a trade secret or (b) it was obtained through “improper means.”

The term “improper means” is defined in the DTSA to include “theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means.”  However, the DTSA leaves an exception in the term for “reverse engineering, independent deviation, or any other lawful means of acquisition.”

C. Federal Cause of Action

While the majority of states have enacted the UTSA, there are slight differences between several of the state laws, and New York and Massachusetts have chosen not to adopt the UTSA.  Thus, companies seeking redress for trade secret misappropriation can now bring a suit in federal court without the requirement of diversity of citizenship between the parties.  Importantly, the DTSA does not replace or preempt the states’ existing trade secrets laws.  Thus, it provides more options to trade secret holders, who can now bring an action in federal court to assert parallel federal and state rights.  Note that while federal courts are normally the preferred venue for employers in employment discrimination suits, the same calculus does not necessarily hold as to equity matters, where state courts, for example in New Jersey with its chancery courts, are often the preferred venue for seeking to enforce restrictive covenants.

D. Remedies for Trade Secret Holders

The DTSA provides for several different measures of damages once misappropriation has been found.  These include the actual damages caused by the misappropriation, unjust enrichment damages, reasonable royalties in lieu of other damages, exemplary damages for willful or malicious misappropriation, and attorneys’ fees if the trade secret is found to have been misappropriated willfully or maliciously.  Notably, similar to the state statutes based upon the UTSA such as the New Jersey Trade Secrets Act, N.J.S.A. 56:15-1 et seq. (“NJSTA”), and Pennsylvania Uniform Trade Secrets Act, 12 Pa.C.S. 5301 et seq. (“PUTSA”), the DTSA allows for attorneys’ fees to be awarded if the claim of misappropriation was made in bad faith.  This reverse fee-shifting often leads to hesitation by companies and their attorneys in utilizing these statutes because of the possibility that a court may award fees if it holds that the claim was made in bad faith.  The same reluctance will attach to the use of the DTSA.

 E. Unique Provisions of the DTSA

  1. Early Seizure: Under extraordinary circumstances, a trade secret holder may apply ex parte to a court to seize the property that encompasses the trade secret “to prevent [its] propagation or dissemination.” This provision—certainly the DTSA’s most controversial—gives trade secret holders a remedy akin to a preliminary injunction by which they can prevent dissemination of a trade secret early in a case.  Such an application will be granted when a trade secret holder can show that immediate and irreparable harm will occur if a seizure is not ordered, that the harm to the alleged individual who misappropriated the trade secret is less than the harm to the holder, and that the holder is likely to succeed in their case on the merits.
  1. Remedies Against Former Employees: The DTSA makes clear that any injunction granted by a court with respect to trade secret misappropriation shall not be entered where it “prevent[s] a person from entering into an employment relationship,” or “otherwise conflict[s] with an applicable State law prohibiting restraints on the practice of a lawful profession, trade or business.” Moreover, the DTSA states that any “conditions placed on such [new] employment shall be based on evidence of threatened misappropriation” and not simply “information the person knows.”  These provisions address a frequent criticism often levied at restrictive covenants that prevent former employees from working for competitors in a certain geographic area for a certain time period—that they are preventing someone from earning a living.  The same rationale is the reason why non-solicitation agreements are more likely to be enforced by some courts as opposed to non-competition agreements, which restrict a former employee from working for a competitor.
  1. Whistleblower Immunity: The DTSA provides a safe harbor for employees who make a disclosure of a trade secret to the government “for the purpose of reporting or investigating a suspected violation of law,” as well as for employees who confidentially disclose a trade secret in an anti-retaliation action against their employer. Importantly, the DTSA provides that notice of this immunity must be provided by employers in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.  This may be accomplished by cross-referencing a separate policy document.  A failure to do so could result in exemplary damages and attorneys’ fees should the employee win on his or her anti-retaliation action.  Employers should immediately add this immunity language to all new or updated restrictive covenant agreements, non-solicitation agreements, and confidentiality agreements going forward from May 11, 2016, in order to ensure conformity with the DTSA.

F. How the DTSA Compares to State Equivalent Statutes in the Region

As the DTSA does not do away with state equivalent statutes, it is important to note that there remain benefits to utilizing the state statutes for companies operating in the region.

For example, the NJSTA is broader than many other state adoptions of the UTSA.  This is because where other states’ adoption of the UTSA may have pre-empted common law claims for trade secret misappropriation, the NJTSA included an express provision stating that:

The rights, remedies and prohibitions provided under this act are in addition to and cumulative of any other right, remedy or prohibition provided under the common law or statutory law of this State and nothing contained herein shall be construed to deny, abrogate or impair any common law or statutory right, remedy or prohibition . . . .

In interpreting this provision, at least one court has refused to dismiss common law counts brought in addition to a count for violation of the NJTSA.[iv]  Likewise, the PUTSA contains additional avenues for redress apart from the DTSA because its provisions have been interpreted to permit the issuance of preliminary and permanent injunctions preventing a former employee from accepting employment with a competitor where it can be shown that the employment will result in the trade secret’s utilization or disclosure.[v]

By contrast, as New York does not have an equivalent statute adopting the UTSA, its common law interpretation of trade secret misappropriation is very fact-intensive, as its courts have adopted the definition of a trade secret from the Restatement of Torts.  New York defines a trade secret as “any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it,” and the factors that New York courts utilize in deciding a trade secret claim include:

(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.[vi]

As the DTSA’s definition is more straight-forward, its enactment may make it easier for New York companies to demonstrate a trade secret and misappropriation thereof than under New York’s existing common law.

Finally, companies should still be aware that in other states, such as New Jersey, even if information does not rise to the level of a trade secret, it may still be protected under the individual state’s common law.[vii]

For questions about the Defend Trade Secrets Act and its implications, please contact Harris S. Freier, Esq., a Partner in the firm’s Employment Law and Appellate Practice Groups, at hfreier@genovaburns.com or (973) 533-0777.

 

[i] https://www.whitehouse.gov/photos-and-video/video/2016/05/11/president-obama-signs-s1890-defend-trade-secrets-act

[ii] https://www.congress.gov/bill/114th-congress/senate-bill/1890

[iii] http://www.uniformlaws.org/shared/docs/trade%20secrets/utsa_final_85.pdf

[iv] See SCS Healthcare Mktg., LLC v. Allergan USA, Inc., 2012 N.J. Super. Unpub. LEXIS 2704, at *19 (N.J. Super. Ct. Ch. Div. Dec. 7, 2012).

[v] See, e.g., Solar Innovations v. Plevyak, 2013 Pa. Super. Unpub. LEXIS 1230 (Pa. Super. Ct. 2013).

[vi] See Restatement of Torts § 757 cmt. b, at 5 (1939) (quoted in Ashland Mgmt. v. Janien, 82 N.Y.2d 395, 399, 624 N.E.2d 1007, 1008, 604 N.Y.S.2d 912, 913 (N.Y. 1993)).

[vii] See e.g., Ingersoll-Rand v. Ciavatta, 110 N.J. 609, 626 (N.J. 1988); Platinum Mgmt., Inc. v. Dahms, 285 N.J. Super. 274, 295 (N.J. Super. Ct. Law Div. 1995).

A Troubling Decision for Employment Arbitration Agreements with Potentially Ambiguous Language and What it Means for Employers Going Forward

On April 5, 2016, in a rare rebuke of an employment arbitration agreement by a federal court, the United States District Court for the District of New Jersey (Hon. Madeline Cox Arleo, U.S.D.J.) held that it would not compel arbitration mandated by an employment agreement because the agreement at issue was too ambiguously drafted.

In Ranieri v. Banco Santander S.A., Civil Action No. 15-3740, Plaintiffs were former Mortgage Loan Officers with the Defendants in their New Jersey branches who brought a collective action claim for wage and hour violations under federal and state law.  The collective action was on behalf of all current and former employees of Defendants whose job duties included working as a mortgage loan officer and who were not paid overtime or minimum wage in the past three years.

At the start of their employment, Plaintiffs received an offer of employment which mandated that Plaintiffs execute “the enclosed Mortgage Retail Development Officer Agreement” (“MDO”) and all attached exhibits, on or before the first day of work.  The offer letter also attached a copy of the Mortgage Sales Commission Plan.  The MDO Agreement contained six sections, including an arbitration clause which prohibited class, collective, and representative actions against Defendants.  Both Plaintiffs signed the MDO agreements on the bottom of the final page under a bolded sentence that read: “I certify, by my signature below, that I have received a copy of the Mortgage Sales Commission Plan, which has been provided to me.”  The MDO Agreement contained a Pennsylvania choice of law provision.

While the Court acknowledged that ordinarily a party’s signature on an agreement implies agreement to the entire contract, here the Court found that the language in the MDO Agreement was ambiguous, specifically the sentence above the signature line.  The Court found that the purpose of the signatures was too unclear: either the Plaintiffs could memorialize only that they received the Mortgage Sales Commission Plan or that they agreed to all of the terms of the MDO Agreement and that they were confirming receipt of the Mortgage Sales Commission Plan.  Due to the ability to logically construe the agreement in more than one way, the Court held that it would not compel arbitration because the intent of the parties could not be determined on the pleadings alone, and because the ambiguous language in the MDO Agreement should be construed against the drafters, the Defendants.  Defendants’ motion to compel arbitration was denied without prejudice and the Court ordered discovery on the question of arbitrability.

The Court’s decision is important because federal courts have traditionally viewed employment arbitration agreements very favorably based upon the Federal Arbitration Act and significant U.S. Supreme Court precedent.  Such agreements have also become more widespread.  Employers with arbitration agreements should have these agreements regularly reviewed by counsel, as the law is in a constant state of flux regarding the effectiveness of arbitration agreements as to state claims and the prohibitions on class claims that any good arbitration agreement contains.  Carefully drafted arbitration agreements are more likely to be enforced.  Note that beyond having employment counsel review arbitration agreements, employers should also discuss the need for such agreements to start with.  Employers often mistake employment arbitration agreements as a panacea to liability from claims by current and former employees, however, legal fees and discovery are often not significantly reduced and with appeal options severely limited, a bad decision by an arbitrator can be disastrous for an employer.  Instead, arbitration agreements are often most useful in industries and for employers who face significant potential wage and hour class and collective action exposure.  Careful consultation with an employment attorney is critical both in deciding whether to use employment arbitration agreements and if the decision is made to use such agreements, how to make sure that they remain enforceable in a constantly changing legal landscape.

For more information regarding employment arbitration agreements, please contact Harris S. Freier, Esq., a Partner in the firm’s Employment Law and Appellate Practice Groups, at hfreier@genovaburns.com or 973-533-0777.

New York Passes Trailblazing Paid Family Leave Starting in 2018

On March 31, 2016, the New York State Legislature passed a bill that included the country’s most wide-ranging paid family leave law. Beginning in 2018, all full-time and part-time workers employed for 6 months in New York State will be eligible for a guaranteed, job-protected 12 weeks of paid family leave (PFL), regardless of the size of their company. PFL covers time off to bond with a new child (including adopted or foster children), or to care for a seriously ill child, spouse, domestic partner, parent, grandchild, grandparent, sibling, or the parent of a spouse or partner parent. In addition, employees may also use PFL to address certain legal, financial, and childcare issues related to the military service of a spouse, domestic partner, child, or parent.

Starting in 2018, employees will receive 8 weeks of paid leave at half their salaries. The leave will be funded by employees through payroll deductions, will gradually phase up over 4 years to 12 weeks and 67 percent of pay in 2021.  Employee payroll contributions will cost from .70 cents a week up to $1.40. After the full benefits kick in, workers will be eligible for just 67% of the state’s average weekly wage, or a maximum of $848 per week for the highest paid workers. The PFL requires no additional contributions from employers or taxpayers.  The legislation also guarantees job protection for all workers who take leave, even those who work for businesses with fewer than 50 employees, which are not subject to the federal Family and Medical Leave Act (FMLA).

Within the same budget bill, the New York legislature passed a $15 minimum wage increase along with a middle-class tax cut, public education and transportation investments, and other progressive measures. The emphasis on family comes following personal challenges faced by New York’s Governor Andrew Cuomo and the evolution of the fight for workers’ rights, shifting from just a women worker’s issue to a broad workforce concern.

New York now joins New Jersey, California and Rhode Island as the only states that offer paid family leave. Despite a national 12-week unpaid family leave policy, in the United States overall, about 40% of employees are not covered under the FMLA because their employers have fewer than 50 employees, they work too few hours, or they have been employed there for under a year.

For more information regarding the potential impacts of this legislation or how your business can prepare to develop a compliant paid family leave policy, please contact Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

The Individual Liability You Never Knew You Had: Second Circuit Rules HR Directors May Be Liable for FMLA Violations

HR Directors, Beware: Your role in terminating employees may expose you to individual liability under the Family and Medical Leave Act (FMLA).

In Graziadio v. Culinary Institute of America, et al., Graziadio, a Payroll Administrator, took a three-week leave pursuant to the FMLA to care for her son suffering from diabetes, followed immediately by a second leave to care for her other son, who had broken his leg.  After Graziadio submitted the required paperwork, she heard from neither her supervisor nor the HR Director. When Graziadio tried to return work, the Culinary Institute required “additional paperwork” to justify her absence.  Graziadio was notified that she had seven days to submit the paperwork but was not provided any specific detail about what paperwork was required.  Graziadio then retained an attorney. Prior to submitting the “additional paperwork”, Graziadio was informed that she was terminated on the basis of job abandonment and failure to comply with the FMLA. Graziadio thereafter brought suit alleging claims based on interference with her FMLA leave, retaliation and associational discrimination under the Americans with Disabilities Act (ADA) against the Culinary Institute, the HR Director and another supervisor.  The Southern District of New York granted the Culinary Institute’s motion for summary judgment and dismissed the complaint against the individual defendants.

On appeal, United States Court of Appeals for the Second Circuit held that the Culinary Institute’s HR Director can be individually liable under the FMLA.  Under the FMLA, an individual may be held liable if he or she is considered an “employer,” defined as “any person who acts, directly or indirectly in the interest of an employer to any of the employees of such employer.” Applying the “economic-reality test,” the Second Circuit held that individual liability can be found when the alleged employer (1) has the power to hire and fire employees; (2) supervises and controls the employee work schedules or conditions of employment; (3) determines the rate and method of payment; and (4) maintains employment records. The Second Circuit further noted that in the FMLA context, the economic reality of employment relationships exists if the putative employer controls in whole or in part the plaintiff’s rights under the FMLA.

While the Second Circuit found that the Culinary Institute’s Vice President held ultimate termination authority, it also found that its HR Director played a key role in terminating Graziadio.  The HR Director admitted Graziadio’s termination was a joint decision between her and the Culinary Institute’s Vice President. The Vice President also admitted to directing the HR Director to handle the dispute with Graziadio, rather than conducting an independent investigation. The Second Circuit found that sufficient evidence existed that the HR Director controlled Graziadio’s rights under the FMLA through her review of Graziadio’s paperwork, controlled Graziadio’s return ability to return to work and under what conditions, and was responsible for sending nearly all communication regarding Graziadio’s return to work after FMLA leave. Moreover, the HR Director instructed other human resources and payroll employees to refrain from communicating with Graziadio. Based on the totality of the facts, the Second Circuit found that the HR Director was an “employer” and could therefore be held individually liable for violations of the FMLA.

This decision serves as a chilling reminder that HR Directors, especially in the Second Circuit, need to be vigilant in complying with the requirements of the FMLA, mindful of their role in administering FMLA leave and tread cautiously when terminating employees.  Employers should also provide routine and updated training on FMLA leave administration and seek legal counsel prior to terminating employees who take FMLA leave in order to minimize exposure and the likelihood of individual liability.

For more information regarding FMLA procedures and best practices to mitigate liability, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Plainfield Becomes New Jersey’s 12th Municipality to Require Paid Sick Leave

On March 14, 2016, the City of Plainfield became the 12th municipality in New Jersey to require private sector employers to provide paid sick leave to their employees. The paid sick leave, which ranges from 24 to 40 hours a year, can be used by employees for their own illness, to care for an ill family member, or to care for a child in the event of certain school closures.  The law will take effect on July 12, 2016.

Amount of Sick Leave

Plainfield’s Sick Leave Law sets forth different obligations for small and large employers.  Small employers, or those with less than 10 employees, must give a maximum of 24 hours of paid sick leave per year.  Large employers, or those with 10 or more employees, must provide a maximum of 40 hours of paid sick leave per year.  All employees accrue 1 hour of paid sick leave for every 30 hours worked each calendar year. Exceptions apply to child care, home health care, and food service workers, who are entitled to accrue a maximum of 40 hours of paid sick leave, despite the size of their employer.

Plainfield’s Paid Sick Leave Law entitles employees to carry over a maximum of 40 hours of paid sick leave from year to year.  Despite this carry-over provision, an employer can limit the use of paid sick leave to just 40 hours a year.  The Paid Sick Leave Law also contains two other significant provisions.  First, if an employer already offers a paid time off policy that is just as generous as the new law, an employer need not provide additional leave.  Second, the Paid Sick Leave Law does not require employers to pay employees for unused sick time upon termination of employment.

Eligibility For Paid Sick Leave

An employee must work 80 hours in a year to be eligible for paid sick leave.  As to employer size, which dictates the amount of sick leave an employee can accrue (either 24 or 40 hours), an employer must count all employees performing work for compensation on a full-time, part-time, or temporary basis. Employers with more than 10 employees, in total, will be considered a large employer. Those employers with a fluctuating number of employees should use the average number of employees employed during the preceding calendar year to determine size.

Use of Paid Sick Leave

Employees in Plainfield can use paid sick leave to care for themselves or a family member with a mental or physical illness, injury or health condition.  This care includes time off for medical diagnosis, treatment, or preventative medical care for a condition.  It may also be used for the closure of the employee’s place of work, or the employee’s child’s school or place of care, due to a public health emergency or to care for a family member who has been exposed to a communicable disease. An employee may use paid sick leave in increments as small as the employer’s payroll system uses to account for other absences.

If an employee seeks to use sick time, and the need for the use is foreseeable, an employer may require seven days advance notice from the employee.  If the need for paid sick leave is unforeseeable, an employer may require notice before the beginning of the employees’ shift, or in emergent circumstances, as soon as practicable.  After an absence, an employer may also require the employee to submit written confirmation that the time used was in fact used for the purposes authorized under the Paid Sick Leave Law.  Further, after three consecutive days or instances of sick leave, the employer may require documentation from a healthcare provider to confirm that the employee’s absence was necessary; the employer must not require details of the health condition or the nature of the illness.

Notice and Posting Requirements

Plainfield employers must provide written notice (available on the City’s website) to employees explaining their rights upon hire or, for current employees, as soon as practicable after July 12, 2016. Employers must also post the notice a conspicuous and accessible location at the work place.  The notices must be in English and in any language that is the first language of at least 10% of the employer’s workforce.

Fines and Penalties

Penalties include a fine not exceeding $750 for each day of the violation, and restitution in the amount of any paid sick time unlawfully withheld.  The Paid Sick Leave Law also prohibits employers from retaliating against any employee for taking leave or for interfering with the employee’s rights in connection with that law.

For more information regarding implementing Plainfield’s paid sick leave or how our business can develop a compliant paid sick leave policy, please Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777 or Nicole M. Amato, Esq., Associate, in the firm’s Human Resources Practices Group at nmamato@genovaburns.com.

Appellate Division Reverses PERC Decision on Dynamic Status Quo

For many years, public employers were required to pay increments on an expiring salary guide for its unionized workforce under a doctrine known as the dynamic status quo.  This doctrine was created by the Public Employment Relations Commission (“PERC”) in interpreting the Employer-Employee Relations Act, N.J.S.A. 34:13A-1, et. seq.  Recently, PERC abandoned the dynamic status quo doctrine in two matters holding that the doctrine no longer served the purposes of prompt labor disputes.  Accordingly, public employers were not required to pay increments upon the expiration of a collective negotiations agreement.

In the companion cases of County of Atlantic and PBA Local 243, et. al. and Township of Bridgewater and PBA Local 174, the Appellate Division reversed  PERC and held that PERC acted outside of its legislative mandate in abandoning the dynamic status quo.

PERC utilized the tax cap levy law and the 2% cap on interest arbitration awards as reasons why the dynamic status quo doctrine no longer served the interests of the parties.  PERC, using its expertise in this area, reasoned that these restrictions on public employers put significant restrictions on the parties’ flexibility in negotiations.  Therefore, PERC determined that employers were not required to pay these increments.

The Appellate Division reasoned that PERC went too far in abandoning the dynamic status quo doctrine.  The court determined that the tax cap levy law and the cap on interest arbitration law did not prohibit the payment of increments on an expired collective negotiations agreement.  Further, the court indicated that PERC did not appropriately interpret the Act.  In essence, public employers are free to negotiate not paying the increments or determining other methods to recoup the salary increments.

The practical effect of the decision is that public employers will again be subject to the dynamic status quo doctrine.  Accordingly, unless negotiated otherwise, salary increments will have to be paid once a collective negotiations agreement has expired and an agreement on a successor contract has not been reached.

For more information regarding the effects of this decision, please contact Joseph M. Hannon, Esq. at jhannon@genovaburns.com or 973-533-0777.

The EEOC’s New One-Way Street: Providing Position Statements to Charging Parties

Effective February 18, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) will uniformly allow employees bringing unlawful discrimination claims to gain access to the employer’s Position Statement submitted in response to the filing of a Charge of Discrimination. The disclosure will also retroactively apply to all requests for Position Statements made on or after January 1, 2016. Instead of verbally advising the Charging Party of the contents of the employer’s Position Statement, the EEOC will now provide the employer’s Position Statement and non-confidential attachments to Charging Parties upon request. The EEOC will also allow the Charging Party with an opportunity to respond within 20 days. The Charging Party’s response, however, will not be provided to the employer during the pendency of the investigation. The EEOC maintains that the new “Nationwide Procedures for Releasing Respondent Position Statements and Obtaining Responses from Charging Parties” are meant to unify approaches across all of its offices and will allow it to gain better information to strengthen its investigations.

The EEOC’s new policy also fails to assure employers that documents provided in support of their Position Statement will remain confidential.  The EEOC only advises that its “staff may redact confidential information as necessary prior to releasing the information to a Charging Party or her representative.” Thus, when submitting a Position Statement, employers must now carefully review whether or not any confidential proprietary business information is being produced. If so, employers should clearly mark exhibits as “confidential” to alert the EEOC that the document(s) should not be provided to the Charging Party. The EEOC also advises that employers should provide an explanation justifying the nature of the information contained in the attachments. The EEOC suggests that the following information should be segregated into separate attachments and designate them as follows:

  • Sensitive medical information (except for the Charging Party’s medical information).
  • Social Security Numbers.
  • Confidential commercial or confidential financial information.
  • Trade secrets information.
  • Non-relevant personally identifiable information of witnesses, comparators or third parties, for example, social security numbers, dates of birth in non-age cases, home addresses, personal phone numbers, personal email addresses, etc.
  • Any reference to charges filed against the employer by other charging parties.

The EEOC also warns that it will not accept “blanket or unsupported assertions of confidentiality.” In addition, the EEOC announced the implementation of a new Digital Charge System. Now, employers can upload Position Statements and attachments into the digital Charge file rather than faxing or mailing the documents to the EEOC.

For more information regarding the potential impacts of the EEOC’s new procedures and best practices on how to respond to a Charge of Discrimination, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Proposed NJ Equal Pay Bill Could Lead to More Wage Gap Disputes if Passed

On February 4, 2016, a bill that would close the wage gap amongst women and men advanced out of the New Jersey Senate Labor Committee.  On average in New Jersey, studies have shown that women make 80.4 cents for each dollar a man earns, making it slightly more than the national average of 79 cents.  Further, the wage gap is larger for African-American and Latina women, who make 58.1 cents and 42.7 cents, respectively, for every dollar men earn. If signed into law, the new Equal Pay Bill (Senate Bill 992) will amend the New Jersey Law Against Discrimination (LAD).

What Will the New Equal Pay Law Require?

The two year statute of limitations for pay discrimination claims would restart with each unlawful paycheck that is issued by the employer. The new law would allow employees to file claims after termination if the employee was unaware that the pay disparity existed during the course of his or her employment. The proposed bill will also expand back pay awards for successful plaintiffs for the entire period of time if the violations continued to occur within the statute of limitations. Employers will also be prohibited from requiring employees or prospective employees to consent to the shortening of the statute of limitations period or to waive any violations of the law.

The Equal Pay Bill will also require employers to prove that any disparity in pay was based on a factor other than sex, such as a seniority system, a merit system, training, education or experience (including position title), or the quantity or quality of production.  Employers would also have to prove that reasonable application of these factors accounts for the entire wage differential, that the factors are job-related and consistent with job necessity, and that there were no other alternative business practices that would serve the same purposes without causing a difference in pay between female and male employees. Employers will also be prohibited from retaliating against employees for disclosing information about job title, occupational category, and rate of compensation of any employees or former employees.

What Should Employers Do Now?

Given the increased fervor to close the pay gap for women and minorities, the advancement of the new Equal Pay Bill and U.S. Equal Employment Opportunity Commission’s new requirements with regard to EEO-1 pay data reporting beginning in 2017, the time is now for employers to begin to take preemptive action to correct any discriminatory pay practices that may exist.

  • Employers should review and update their policies to ensure that employees are not discriminated against or retaliated against for discussing or questioning compensation.
  • Employers must ensure that their wage rates in all of their operations and facilities are similar and should document that their pay-related decisions are based on a legitimate, business necessity.
  • Managers and supervisors should also be trained to comply with the employer’s nondiscriminatory pay practices.
  • Employers who are engaging in pay disparity can certainly expect an increase in pay discrimination cases both under the LAD as well as cases brought by the EEOC for illegal pay practices.

For more information regarding the potential impacts of this legislation and how to implement nondiscriminatory pay practices, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.