Refusing to Attend a Fitness-For-Duty Exam May Not Be Grounds For Termination under the ADA

On January 25, 2016, the New Jersey Appellate Division clarified the requirements set forth by the Americans with Disabilities Act (ADA) and the related guidance issued by the U.S. Equal Employment Opportunity Commission (EEOC) as to when employers may require a medical examination or make inquiries of an employee as to whether such employee is an individual with a disability. In the case of In Re Paul Williams, the appellant-employee began working as a truck driver for the Department of Public Works for the Township of Lakewood in November 2003. In March 2013, the Township received an anonymous letter, purportedly written by another Public Works employee, expressing concern regarding Mr. Williams’s mental state and fear for his and his co-workers’ safety. More than eight months later, the Township scheduled psychological examinations and warned Mr. Williams that he would be subject to discipline should he fail to attend. Mr. Williams refused to attend and maintained that the examinations were not job-related and were thus illegal under the ADA. Under the ADA, examinations are lawful if they are “job-related and consistent with business necessity.”  The Township thereafter issued a Preliminary Notice of Disciplinary Action seeking his termination on the grounds of incompetency, inefficacy or failure to perform duties and other related charges. After the departmental hearing, the matter was appealed to the Office of Administrative Law.

The Administrative Law Judge (“ALJ”) found that there was not adequate evidence of the Township’s investigation into the anonymous letter to determine its veracity and thus agreed with Mr. Williams that the demand to attend the examinations was not related to work performance or any allegation of disruptive behavior. Moreover, the ALJ found that while Mr. Williams had failed to attend the exam, the request lacked a reasonable basis and thus, he could not be disciplined. The Township appealed the decision to the Civil Service Commission which reversed the ALJ’s determination.

On appeal, the Appellate Division affirmed the guidance set forth by EEOC which defines “job-related and consistent with business necessity” as instances where an employer reasonably believe (through direct observation or reliable information from credible sources) that an employee’s medical condition is impacting his or her work or that, because of the medical condition, the employee serves as a direct threat. As the EEOC points out, “[t]hen and only then, may the employer lawfully require the employee to undergo a psychological fitness-for-duty examination.” The EEOC’s guidance also provides that employers may not require an employee to take a medical exam when the information received is based in whole or in part on information learned from third party unless it is reliable and would suggest that the employee’s ability to perform job duties or that a direct threat exists as a result of the medical condition.

The Appellate Division affirmed the EEOC’s guidance and sided with Mr. Williams, noting that the Township waited over eight months to require psychological examinations based largely on “innuendo and rumor” contained in the anonymous letter. Thus, the Court found that the Township failed to meet its burden under the ADA of demonstrating the examinations were “job-related and consistent with business necessity” and that Mr. Williams was a direct threat to himself, others or property. The Appellate Division ordered Williams reinstated and back pay calculated for his time suspended.

Employer Takeaways:

  • Requiring employees to attend a fitness-for-duty examination must be “job-related and consistent with business necessity.” Employers must have objective evidence to support any required medical examination.
  • An employer must conduct a timely individualized assessment to determine the reliability of third party information regarding an employee’s medical condition: the relationship of the source to the employee, the seriousness of the medical conditional the possibility motivation of the third party providing the information, how the third party learned of the information, as well as other evidence that the employer has that bears on the reliability of the information.

For more information regarding compliance with accommodating disabilities, requiring independent medical examinations in compliance with the ADA, and EEOC’s guidance regarding same, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

EEOC to Require Pay Data From Employers Starting in 2017

In an on-going effort to close the pay gap for women and minorities, on January 29, 2016, the Obama Administration announced that the U.S. Equal Employment Opportunity Commission (EEOC) will now require federal contractors and employers with 100 or more workers to provide data related to pay practices. Starting in September 2017, the EEOC will request data on pay ranges and hours worked for all employees in addition to the information collected on employer EEO-1 reports. The EEO-1 report, also known as the “Employer Information Report,” is a compliance survey mandated by federal statute and regulations which must be submitted and certified no later than September 30th, annually. The report currently requires federal government contractors and companies with 100 or more employees to disclose employment data to be categorized by race, ethnicity, gender and job category.  In addition, employers will must report job categories and pay bands but will not be required to report specific salaries of each individual employee.  Employers will also be required to report on the total W-2 earnings as the measure of pay.

The new requirement will provide the EEOC and the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) with more insight into pay disparities across different industries and occupations as well as assist the agencies in investigating those employers who appear to be engaged in wage discrimination.  The EEOC’s announcement was made on the seventh anniversary of the Lilly Ledbetter Fair Pay Act which provides employees with a 180-day statute of limitations for filing an equal-pay lawsuit regarding pay discrimination after each paycheck.

The Obama Administration estimates that compliance with the new EEO-1 reporting requirements will cost less than $400 per employer the first year and a few hundred dollars per year after that.  The EEOC’s proposed revisions to the EEO-1 report were published as of February 1, 2016. Public Comment on the proposed changes will be open until April 1, 2016.

What This Means For Employers:

  • For the 2016 EEO-1 reporting cycle, all employers will submit information that is identical to the information collected by the currently approved EEO-1 report.
  • Starting in 2017, federal contractors and employers with 100 or more employees will submit the EEO-1 report with pay and related information before September 30th. These employers must report all W-2 earned income.
  • Although EEO-1 reporting is due on or before September 30th each year, the EEOC guidelines suggested that W-2 data can be imported into a human resources information system (HRIS), and a data field can be established to accumulate W-2 data for the EEO-1. Alternatively, employers could obtain this pay information by utilizing quarterly payroll reports for the previous four quarters. Employers that do their payroll in-house will be able to report this data utilizing most major payroll software systems or by using off-the-shelf payroll software that is preprogrammed to compile data for generating W-2s. For employers that outsource their payroll, there would be a one-time burden of writing custom programs to import the data from their payroll companies into their HRIS systems. Employers then must count and report the number of employees in each pay band. During the comment period, the EEOC seeks employer input with respect to how to report hours worked for salaried employees.
  • Beginning in 2017, all filers will be required to submit the proposed EEO-1 report electronically.

Given the EEOC’s new requirement, employers should start to audit their pay policies and practices as those employers who are engaging in pay disparity can expect an increase in pay discrimination cases based on the data collected as a result of the revised EEO-1 reports.

For more information regarding compliance with EEO-1 reporting obligations and how the new rule will affect your business, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

NJ Employers May Need to Revisit Arbitration Clauses Following Appellate Division Ruling

On January 7, 2016, the New Jersey Appellate Division found that an arbitration provision contained in an Employee Handbook was unenforceable. This decision is of critical importance to New Jersey employers when it comes to reviewing their own arbitration agreements and Employee Handbook disclaimers.

In Morgan v. Raymours Furniture Company, Inc. et al., plaintiff-employee alleged that in response to a complaint of age discrimination, he was given an ultimatum by the defendant-company, sign an arbitration agreement or be terminated. Plaintiff-employee refused to sign the arbitration agreement and was subsequently terminated. Plaintiff-employee sued alleging violation of the New Jersey Law Against Discrimination (“LAD”), wrongful termination, and other similar claims.  Despite plaintiff-employee’s refusal to sign the arbitration agreement, defendant-company moved to compel arbitration on the basis of Employee Arbitration Program contained in the company’s Employee Handbook.  The at-will disclaimer contained in the company’s Employee Handbook, however, stated in pertinent part: “Nothing in this Handbook or any other Company practice or communication . . . creates a promise of continued employment, [an] employment contract, term or obligation of any kind on the part of the Company.”  Relying on the disclaimer language, the trial court denied the defendant-company’s motion to compel arbitration.

On appeal, the Appellate Division affirmed finding that despite plaintiff-employee  acknowledging receipt of the Employee Handbook and the Employee Arbitration Program contained in the Handbook in August 2011, February 2012 and April 2013, the acknowledgements only signify that the employee received a copy of the Employee Handbook, not that he or she necessarily read and/or understood the contents. Relying on the New Jersey Supreme Court’s 1985 decision in Woolley v. Hoffman-LaRoche, Inc., the Appellate Division also reiterated that a disclaimer advising an employee that the Employee Handbook does not create a contract of employment will prohibit an employer from enforcing an arbitration provision contained in the same handbook. The Appellate Division found that it would be inequitable for an employer to claim certain policies contained in an Employee Handbook are binding contracts while others are not. The Appellate Division found that the purported waiver of plaintiff-employee’s right to sue, clearly conveyed that its “rules, regulations, procedures and benefits . . . are not promissory or contractual in nature and are subject to change by the company.”  Thus, the Appellate Division agreed with the trial court that the plaintiff-employee did not clearly and unambiguously waive his right to sue defendant-employer in court.

This decision makes clear that a court will not enforce an arbitration provision when the Employee Handbook includes an at-will disclaimer.  Given this decision, employers should carefully check their Employee Handbook to ensure that arbitration agreements are not contained therein. Employers who seek to arbitrate claims and disputes with their employees arising from employment must utilize a separate, stand-alone arbitration agreement which employee’s must separately sign and acknowledge receipt.

For more information regarding this decision and how your company can craft binding and effective arbitration agreements and Employee Handbook disclaimers, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

New Brunswick Now Requires Paid Sick & Safe Leave for Employees

On December 17, 2015, the City of New Brunswick joined the growing list of municipalities in New Jersey requiring private sector employers to provide paid sick leave to employees.  The new law, effective January 6, 2016, also adds safe leave for domestic violence which is uncharacteristic of ordinances previously enacted by other municipalities in New Jersey.

Accrual of Paid Sick and Safe Leave:

Employees will now accrue one hour of paid sick or safe time for every 35 hours actually worked within the City of New Brunswick.  For employers with 10 or more full-time equivalent employees, full-time employees can accrue up to 40 hours of paid sick and safe leave in a calendar year. Employers with 10 or more employees are required to provide part-time employees with up to 24 hours of paid sick leave in a calendar year. For purposes of the Ordinance, an employee who averages 35 hours per week of work time is considered to be “full-time” and an employee who averages between 20 hours and 35 hours per week is considered to be “part-time.”  Employers with fewer than 10 employees are required to provide employees with up to 24 hours of paid sick leave in a calendar year.

Employees, however, must wait until May 5, 2016 (or 120 days after they started work, if hired after January 6, 2015) to start using their accrued paid leave.  Employers must allow unused paid sick or safe time to be carried over to the following calendar year.

Individuals working from home, working per diem, temporary hospital employees and individuals defined as an independent contractor are not subject to the provisions of this Ordinance.  The Ordinance also does not apply to employees covered by a collective bargaining agreement,  to the extent that such requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms.

Qualifications for Sick and Safe Leave

Employees are entitled to use sick leave for their own mental or physical illness, injury, or health condition, need for medical diagnosis or treatment, or need for preventative medical care,  the care of a family member, or instances necessitated by a public health emergency.  Safe leave is also available to enable employees to obtain, or assist a family member, to obtain legal, medical or other assistance related to an incident of domestic violence, sexual assault, or stalking.

Where the need to use paid sick or safe time is foreseeable, an employer may require reasonable advance notice of the intention to use paid sick or safe time.  The Ordinance also permits employers to request “reasonable documentation” evidencing the need for sick or safe time.  For safe leave, “reasonable documentation” may include a police report, court order, documentation that the employee or the employee’s family member is experiencing domestic violence, sexual assault, or stalking, or an employee’s written statement.

The Ordinance also includes specific provisions for employees of “eating and/or drinking establishment[s]” which allows the employer to request “reasonable documentation” to substantiate the use of time under the Ordinance on certain federal and other recognized holidays.

Notice and Posting Requirements:

New Brunswick employers must also 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 January 6, 2016. Employers must also post that same notice to inform employees of their rights under the Ordinance in a conspicuous and accessible location.  The poster shall also 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 for non-compliance range from $100.00 to $2,000.00.  An employer will also be subject to payment of restitution in the amount of any paid sick and safe time unlawfully withheld. The Ordinance also includes a provision prohibiting an employer from retailing against an employee for taking leave or for interfering with, restraining or denying any rights guaranteed by the Ordinance.

For more information regarding implementing New Brunswick’s sick and safe leave requirements 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.

NYC To Provide Municipal Employees With Six Weeks of Paid Maternity, Paternity, Adoption And Foster-Care Leave As of January 1, 2016

On December 22, 2015, New York City Mayor Bill de Blasio announced that he will sign an Executive Order granting municipal managers and non-unionized workers up to 6 weeks of paid maternity, paternity, adoption and foster-care leaves.  Starting on January 1, 2016, New York City employees are eligible to take the 6 weeks of paid leave at 100 percent of salary and it can also be combined with accrued sick leave and/or accrued vacation – so that employees will be able to take up to 12 weeks maternity, paternity, adoption, or foster care leave without losing pay.

To cover the $15 million cost, all non-union employees will see their vacation time reduced by two days, from 27 to 25 and the City will be repurposing the existing managerial raise of 0.47 percent scheduled for July 2017. The City’s unionized workers are not covered, unless a deal is reached with their representatives through collective bargaining. The new policy puts New York City at the forefront of city and state policies around the country.  New York City joins Portland, San Francisco and Cincinnati which have also recently approved paid parental leave policies.  In the private sector, companies such as Facebook, Amazon, Apple, Twitter and Netflix have also joined the growing trend to provide workers with paid paternal leave.

For more information regarding how your business can implement paid sick leave, please Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Stronger Rules Issued for Protection of Transgender Employees in New York City

On December 21, 2015, the New York City Commission on Human Rights released new enforcement guidelines pertaining to its Transgender Rights Bill. The guidelines were issues two months after Governor Andrew Cuomo moved to add transgender New Yorkers to the list of protected classes in the state.  Initially enacted in 2002, the Transgender Rights Bill expanded gender-based protections guaranteed under the New York City Human Rights Law (NYCHRL) and ensures protection for individuals whose “gender and self-image do not fully accord with the legal sex assigned to them at birth.” The NYCHRL defines gender discrimination as instances when an individual is treated less than others on the basis of gender and when harassment is motivated by gender.

The NYCHRL specifically prohibits gender discrimination in employment, public accommodation, housing discriminatory harassment, bias-based profiling by police and exists whenever there is disparate treatment of an individual on account of gender. Gender-based harassment can include unwanted sexual advances or requests for sexual favors; however, the harassment does not have to be sexual in nature. Refusal to use a transgender employee’s preferred name, pronoun (such as he, she, him, her, Mr. and Ms.) or title may constitute unlawful gender-based harassment. Comments, unwanted touching, gestures, jokes, or pictures that target an individual based on gender constitute gender-based harassment.

Under the NYCHRL, it is not only illegal for employers to refuse to hire or promote a transgender individual but it is also unlawful to fire or assign different work or benefits to employees on the basis of gender. The guidelines provide remedies to avoid violations, such as implementing internal policies to educate employees, tenants and program participants of their rights and obligations under the NYCHRL. In addition, the guidelines caution that a business will be in violation of the law if it chooses to enforce dress codes, uniforms or grooming standards either against employees or patrons, on the basis of sex-stereotyping. It is also recommended that employees should be regularly trained on these issues and should be provided with internal reporting measures without fear of adverse action.

With its new enforcement guidelines, the Commission can impose fines up to $250,000 for employers, business owners and landlords who commit willful or malicious violations. Civil penalties of up to $125,000 for violations can also be assessed. These penalties are in addition to the other remedies available to people who successfully resolve or prevail on claims under the NYCHRL, including, but not limited to, back and front pay, along with other compensatory and punitive damages. The Commission may consider the lack of an adequate anti-discrimination policy as a factor in determining liability, assessing damages, and mandating certain affirmative remedies.

For more information regarding the New York City Commission on Human Rights’ new enforcement guidelines related to transgender individuals and to learn how your business can implement best practices, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

Philadelphia Enacts Sweeping Changes to City’s Ban-the-Box Law

On December 15, 2015, Philadelphia Mayor Michael Nutter signed far-reaching amendments to the city’s “Ban the Box” law, the Philadelphia Fair Criminal Records Screening Ordinance (“the Ordinance”). In enacting the amendments, Philadelphia joins New York City and New Jersey in requiring that employers remove any questions on job applications related to criminal convictions as well as revise their entire criminal record screening programs. The amendments are set to become effective in 90 days, on March 14, 2016, and apply to all employers in the city — public and private — with 1 or more employees, as opposed to 10 workers in the original law. Employers hiring for domestic services, such as child or elderly care, however, are exempt from this law.

Notable amendments to the Ordinance include: (1) deferring any criminal record inquiries until after a conditional offer has been extended; (2) removing any and all questions related to criminal records from job applications (multi-state applications also may not include the question with an instruction for Philadelphia applicants not to answer); (3) removing any question in employment materials regarding the applicant’s willingness to submit to a background check before a conditional offer; (4) permitting employers to go back only 7 years when inquiring about criminal history, instead of being able to look into a candidate’s record indefinitely (employers may add to the 7 year period any time of actual incarceration served because of the offense); (5) rescinding any automatic rules employers may have in place to exclude candidates with criminal records from employment; (6) establishing a process for an individual assessment for each applicant; (7) reconsidering procedures when rejecting applicants based on criminal record histories; and (8) revising posted workplace notices to include notice of the Ordinance, once a poster is issued by the Philadelphia Commission on Human Relations.

The Ordinance also requires the employer to give notice of its intent to conduct a criminal background check after any conditional offer is made. The Ordinance specifies that the notice must be “concise, accurate, made in good faith, and shall state that any consideration of the background check will be tailored to the requirements of the job.”

Should an applicant voluntarily discloses information regarding his or her criminal convictions during the application process, an employer may discuss the issue with the applicant at that time but must still all the prospective employee to continue with the application process.

Individual Assessment Requirements

In requiring the elimination of any automatic rule excluding candidates with specific types of criminal records, the new amendments specifically require that employers consider the following for each employee: (a) the nature of the offense; (b) the time that has passed since the offense; (c) the applicant’s employment history before and after the offense and any period of incarceration; (d) the particular duties of the job being sought; (e) any character or employment references provided by the applicant; and (f) any evidence of the applicant’s rehabilitation since the conviction.

Notification Requirements

If an employer rejects an applicant for a job opening based in whole or in part on criminal record information, the employer shall notify the applicant in writing of such decision and its basis, and shall provide the applicant with a copy of the criminal history report.  Applicants would then have 10 business days following the rejection to provide evidence of an inaccuracy on the report or to provide an explanation, and will have an additional 300 calendar days to file a complaint with the Philadelphia Commission on Human Relations.

Penalty Provisions

The Ordinance carries penalties including damages, attorneys’ fees, and up to $2,000 in punitive damages per violation.  The Ordinance also permits a private right of action for actual damages, attorneys’ fees, equitable relief, and punitive damages.

If you have any questions or for more information about the requirements of Philadelphia’s ban-the-box amendments and its impact on your business’s hiring procedures, please contact James Bucci, Partner in the Firm’s Camden, New Jersey and Philadelphia, Pennsylvania offices at 856-968-0686 or jbucci@genovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at 973-533-0777 or dmastellone@genovaburns.com.

Additional Restrictions for Employer Credit Checks Could Be On the Way For New Jersey Employers

Legislation advanced by the New Jersey State Assembly (A2298) on December 14, 2015 could signal tougher restrictions on employer credit checks of existing or potential employees.  The pending legislation also would also prohibit discrimination against those individuals based on credit report information.  An earlier version of the legislation passed the Senate in May 2012 in a 22-16 vote but was never voted on in the full Assembly.

The new Assembly bill however does not prevent an employer from performing a credit inquiry or taking an employment action if credit history is a bona fide occupational qualification of a particular position or employment classification, including: (1) a managerial position which involves setting the financial direction or control of the business; (2) a position which involves access to customers’, employees’, or employers’ personal belongings or financial assets or financial information, other than information customarily provided in a retail transaction; (3) a position which involves a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts or involves leases of real property; (4) a position which provides an expense account for travel; or (5) a law enforcement officer for a law enforcement agency, or a governmental or non-governmental security personnel position, including security personnel in a homeland security agency.

The bill also prohibits an employer from requiring a prospective employee to waive or limit any protection granted under the bill as a condition of applying for or receiving an offer of employment.  Employers also may not “discharge, demote, suspend, retaliate, refuse to hire, or otherwise discriminate” against a current or prospective employee with regard to promotion, compensation, or the terms, conditions or privileges of employment, based on information in a credit report on the employee.

Furthermore, any current, prospective, or former employee aggrieved under the provisions of the bill may bring an action in a court of competent jurisdiction for appropriate injunctive relief and damages, including reasonable attorneys’ fees and court costs. In addition, the bill provides for the imposition of civil penalties in an amount not to exceed $2,000 for the first violation, and $5,000 for each subsequent violation, collectible by the Commissioner of Labor and Workforce Development.

For more information regarding this legislation and to learn how your business can implement best practices for credit checks, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.

The New Jersey Department of Labor Issues Final Ban-the-Box Regulations

On December 7, 2015, the New Jersey Department of Labor and Workforce Development (the “NJDOL”) issued regulations clarifying the requirements of New Jersey’s Opportunity to Compete Act (the “Ban the Box Law”), which take effect immediately.  The Ban the Box law generally prohibits New Jersey employers from inquiring about a job applicant’s criminal history during the “initial interview process.”  The regulations answer three important questions: (1) what is the “initial interview process”? 2) can a New Jersey employer use one standard job application when hiring employees in those states that allow early criminal history inquiries? and 3) which New Jersey employers are subject to the Ban the Box Law?

The NJDOL’s recent regulations provide parameters to define the initial employment application process.  The process begins when an applicant makes inquiries about a job or when an employer makes inquiries to the applicant about a potential job.  The process ends when the employer conducts a first interview.  This first interview need not be conducted in person.  The regulations clarify that an interview is “any live direct contact by the employer with the applicant … to discuss the employment being sought to the applicant’s qualifications.”  This means that the employer may conduct the first interview in person, by phone, or by video conference.  However, under the regulations, e-mail exchanges between the applicant and employer do not constitute a first interview.  The submission of written or electronic questionnaires also does not rise to the level of a first interview.  After the employer completes this initial employment application process, the employer may proceed to make inquiries about the applicant’s criminal history.

The regulations also tackle the issue of using one standard application in various states, some of which may allow criminal history inquiries at any stage in the hiring process.  The regulations clarify that in these standard applications for multi-state use, New Jersey employers may inquire about criminal history.  However, the application must state “[t]hat an applicant for a position the physical location of which will be in whole, or substantial part, in New Jersey is instructed not to answer this question.”

Finally, the regulations provide clarification on which New Jersey employers are subject to the Ban the Box Law.  This law applies to companies with 15 or more employees over 20 calendar weeks, whether or not those 15 employees work in New Jersey.  If the employer takes employment applications in New Jersey, conducts business in this state, or employs individuals in this state, and the employer employees 15 individuals company-wide, than it is subject to the Ban the Box Law. In light of these clarifying regulations, now is the time to update employment applications, especially those used for multi-state hiring and to train supervisors and human resources personnel on the nuances of New Jersey’s Ban the Box Law.  For more information, please contact Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practices Group, at dmastellone@genovaburns.com or Brigette N. Eagan, Esq., Counsel in the firm’s Human Resources Practices Group, at beagan@genovaburns.com.

Third Circuit Adopts New Test for Determining Whether Meal Breaks Are Compensable

On November 24, 2015, a divided U.S. Court of Appeals for the Third Circuit found that the “predominant benefit” test should be applied when determining whether mealtime breaks constitute compensable time under the Fair Labor Standards Act (“FLSA”).

In Babcock v. Butler County, No. 14-1467 (3d Cir. November 24, 2015), the Third Circuit ruled that meal periods are compensable if the meal period is primarily for the employees’ benefit. In Babcock, the named-plaintiff, a county corrections officer, brought a putative collective action under the FLSA seeking overtime compensation for 15 minutes of an hour long meal break for which the plaintiffs were not compensated (the employer did pay plaintiffs for the remaining 45 minutes).  The prison’s meal period policy provided that corrections officers were not permitted to leave the prison without permission, must remain in uniform and in close proximity to the emergency response equipment, and must be prepared to respond to emergencies.  Plaintiffs argued these restrictions interfered with their ability to use their meal period for their own benefit, such as running personal errands, sleeping, taking fresh air breaks or smoking a cigarette, and that they were therefore entitled to be paid for the full hour long meal period and not just the first 45 minutes.

After noting that the FLSA does not directly address the issue of the compensability of meal periods, the Third Circuit analyzed the two tests commonly used in other circuits – (1) the “predominant benefit test” – whether the employee is primarily engaged in work-related duties during meal periods; or 2) the “relieved from all duties test” – whether the employee is relieved from performing all work-related duties during the meal period.  The Third Circuit held that the predominant benefit test was the more appropriate standard.

The predominant benefit test is a fact-intensive inquiry focusing on the totality of the circumstances. Factors considered include whether the employee is free to leave the premises, the frequency and number of interruptions during the meal period, whether the employee is in fact relieved from work for the purpose of eating a regularly scheduled meal, and the existence of collective bargaining agreement (“CBA”) provisions addressing meal periods.

While the employer in Babcock placed a number of restrictions on the corrections officers’ meal periods, the Court concluded that the officers were not primarily engaged in work-related duties during the meal period and therefore the meal break predominantly benefited the officers, not the employer. In its analysis, the Court highlighted the fact that the corrections officers had the ability to request permission from the employer to leave the prison for their meal period and were not required to eat at their desks or stations.

Additionally, the corrections officers were covered by a CBA which required partial meal period compensation and overtime compensation if the meal period was interrupted by work, which suggested a recognition that the officer generally is not working during the meal period.  Under the totality of these circumstances, the Court concluded that the 15 minute meal period was not compensable.

The Third Circuit now joins the Second, Fourth, Fifth, Seventh and Eighth Circuits in adopting the predominant benefit test for determining if employee time is compensable. The Ninth and Eleventh Circuits follow the relieved of all duties test.

In light of the Third Circuit’s decision, employers should review their policies on meal periods to determine whether a meal period is compensable under the FLSA.  Employers should also be mindful that the Babcock decision represents the Third Circuit’s position on when a meal period is compensable and the State Departments of Labor for the states within the Third Circuit (New Jersey, Pennsylvania, and Delaware) are free to take a different enforcement posture. For assistance in reviewing meal period break policies or other Wage and Hour issues, please contact John R. Vreeland, Esq., Director of the Wage & Hour Compliance Practice Group, at 973.535.7118 or  jvreeland@genovaburns.com.