Employer Can Be Liable For Its Predecessor’s FLSA Violations

The Third Circuit Court of Appeals recently held that an employer can be liable for its predecessor’s violations of the Fair Labor Standards Act. Thompson v. Real Estate Mortgage Network, No. 12-3828 (3d Cir. Apr. 4, 2014). The Third Circuit joins the Seventh and Ninth Circuits on the list of federal circuit courts that have extended successor liability –  a doctrine which has been applied to violations of Title VII, the NLRA, ERISA, the MPPAA, and the ADEA – to violations of the FLSA.

In light of Thompson, every employer in the Third Circuit that intends to acquire another business should fully vet its predecessor’s wage and hour practices for the three-year period that precedes acquisition. Such employers should also take into consideration that owners, officers, and other supervisory personnel may be personally liable for violations under the FLSA.

For more information about the impact of Thompson and our firm’s wage and hour compliance audit services, please contact John R. Vreeland, Esq., Director of the firm’s Wage & Hour Compliance Practice Group, jvreeland@genovaburns.com, or Joseph V. Manney, Esq., jmanney@genovaburns.com.

NJ Federal Court Rules Pension Plan Established by Church-Controlled Hospital Not an ERISA-Exempt Church Plan

On March 31, 2014 the U.S. District Court in New Jersey held that a defined benefit pension plan established by St. Peter’s Healthcare System was not a church plan exempt under ERISA despite the fact that St. Peter’s is controlled by and associated with the Roman Catholic Church and its employees are considered employees of the Roman Catholic Church. Kaplan v. St. Peter’s Healthcare Sys., 2014 U.S. Dist. LEXIS 44963.

The suit arose from a claim by a former St. Peter’s employee that the pension plan was under-funded to the tune of $70 million. St. Peter’s moved to dismiss the complaint on the grounds of lack of subject matter jurisdiction claiming that the pension plan is an ERISA-exempt church plan. The Court denied St. Peter’s motion and found that the plan did not qualify as an ERISA-exempt church plan.

The Court focused its analysis on the plain meaning of ERISA’s church plan exemption and held that “Congress has explicitly provided two ways to fall within the church plan exemption: (1) a plan established and maintained by a church, or (2) a plan established by a church and maintained by a tax-exempt organization, the principal purpose or function of which is the administration or funding of the plan, that is either controlled by or associated with the church.” The Court held that St. Peter’s satisfied neither of these requirements because, while St. Peter’s sponsored the plan and is controlled by and associated with the Roman Catholic Church, the plan was not established by the Church in the first instance and therefore is not an ERISA-exempt church plan. Judge Shipp relied on a recent decision by a federal court in California which found that ERISA “requires that a church establish a church plan …[defendant’s] effort to expand the scope of the church plan exemption to any organization maintained by a church-associated organization stretches the statutory text beyond its logical ends.” The Court declined to defer to an IRS Ruling that St. Peter’s plan was an ERISA-exempt church plan.

Sponsors of defined benefit pension plans, especially those plans that converted to church plan status, should review the status of these plans to confirm that they comply with ERISA and the “established by a church” requirement. If you have any questions or for more information about this decision or ERISA and its impact on your organization or your employees’ benefit plans, please contact Patrick W. McGovern, Esq., pmcgovern@genovaburns.com or Gina M. Schneider, Esq., gmschneider@genovaburns.com in the Firm’s Employee Benefits Practice Group.

Northwestern University Scholarship Football Players Receive the Right to Organize

Region 13 of the National Labor Relations Board delivered a Final Decision and Direction of Election in the closely-watched case concerning Northwestern University’s football players’ attempt to unionize.   In Northwestern University v. College Athletes Players Association (“CAPA”), the NLRB ruled that those football players who currently are recipients of the grant-in-aid scholarships and who have not exhausted their four-year NCAA eligibility will be eligible to vote in the election to name CAPA as their bargaining representative for collective bargaining purposes.  The NLRB excluded football players who are not receiving scholarships as it found such players were not “employees” under the Act.  This decision has the potential to alter the landscape of the collegiate athletics system with lasting impact on future university athletic department recruiting and programs.

The Decision

In its decision, the Board analyzed the process of player recruitment, the structure of the training program, the athletic and academic commitments required and the responsibilities the athletic program demanded of its players.

The Board found that the 85 players receiving grant-in-aid scholarships in the football program fall within the common law definition of employee.  Under NLRB v. Town & Country Electric, an employee is “a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment.”    526 U.S. 85, 95 (1995).  The Board concluded that the grant-in-aid scholarship football players perform services for the benefit of the Employer and receive compensation for these services.  The players helped generate approximately $235 million in revenue from 2003-2012 for Northwestern, as well as the intangible benefit of bolstering the University’s reputation among donors and possible recruits.  The Board found that the grant-in-aid scholarships were compensation in exchange for the athletic services the players performed throughout the year.  The Board further found that the demanding control by the University in order to maintain the scholarship evidenced an employment relationship.  The players were required to adhere to strict schedules throughout the year, plan their academic life around the demands of the football season, commit a large amount of time towards their athletic endeavors, and were subject to monitoring by their coaches in both their athletic and personal lives.  The rules and regulations imposed by the University had to be followed or the players risk losing their scholarships.

Importantly, the Board rejected Northwestern’s argument that Brown University’s finding that graduate students were not employees was controlling in this case.  The Board concluded that Brown University did not apply because the football players’ duties were separate and apart from their academic studies, unlike graduate students.  The Board further distinguished Brown by finding that scholarship football players do not receive academic credit for their participation in the football team and that participation in the football program is not a requirement in receiving their educational degree.  Unlike the graduate students in Brown University, football players were not supervised by faculty and subject to their control in academic research and education, but were rather overseen by the football coaches, who are not members of the faculty.

The Board similarly rejected Northwestern’s contention that the grant-in-aid scholarship players were temporary employees.  While temporary employees are, in fact, ineligible to vote for collective bargaining representation, the Board emphasizes that individuals will not found to be temporary employees solely because their employment term has a definitive termination date.

Implications

Northwestern University will most likely appeal the Regional Director’s decision.  However, should the football players be permitted to unionize, this could have a major effect on college athletics.  The decision may well change the way in which institutions design their athletic programs.  The decision also has the potential to pave the way for other paid or grant-in-aid students to consider unionization.

If you have any questions or for more information about this decision, please contact James J. McGovern, Esq., jmcgovern@genovaburns.com or Allison Gotfried, agotfried@genovaburns.com.

 

New Jersey DOL Issues New Unemployment Compensation and Temporary Disability Benefits Poster

In February 2014, the New Jersey Department of Labor updated its Unemployment Compensation and Temporary Disability Benefits poster. Employers should replace their current posters immediately. This poster notifies employees of their eligibility for such payments and provides instructions as to how to apply for benefits. The process for obtaining state disability applications has been updated on this new poster.

The NJDOL has made the new Unemployment Compensation and Temporary Disability Benefits poster available on its website at http://lwd.dol.state.nj.us/labor/forms_pdfs/EmployerPosterPacket/PR-1.pdf.

If you have any questions or for more information about the new poster and its impact on your company’s Unemployment Insurance and Temporary Disability Benefits policies, please contact James J. McGovern, Esq., jmcgovern@genovaburns.com or Allison Gotfried, agotfried@genovaburns.com.

New OFCCP Rules Establish Hiring Benchmarks and Goals for Veterans and Qualified Individuals with Disabilities

Effective March 24, 2014 federal contractors and subcontractors subject to Section 503 of the Rehabilitation Act of 1973 (“Rehabilitation Act”) or the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”) must comply with new affirmative action requirements for individuals with disabilities and for veterans. New OFCCP regulations were issued as Final Rules on September 24, 2013 to further the purposes of the Rehabilitation Act and VEVRRA, which prohibit discrimination on the basis of sex, race, color, religion, national origin, disability, and status as a protected veteran. The new rules are aimed at providing more job opportunities for applicants and employees who have disabilities or are veterans. Current federal contractors that already have affirmative action programs will have additional time to ensure their programs are in compliance with the new regulations.

The Final Rules to Improve Job Opportunities for Protected Veterans and Qualified Individuals with Disabilities (“QIWD”) require contractors to, among other things:
• Collect data and update quantitative comparisons on the number of veteran and QIWD job applicants and hires;
• Request applicants (pre- and post- offer) to complete a self-identification form (see below);
• Use specific equal opportunity language when incorporating the EEO clause into a subcontract;
• Create job opening listings in compliance with State and local job services;
• Allow the OFCCP to review documents for compliance checks.

In addition, contractors hiring protected veterans must elect between two methods to establish veteran hiring benchmarks. Contractors must also establish for each job group a 7% hiring goal of qualified individuals with disabilities. However, the commentary that accompanies the Final Rules clarifies that 7 percent is “not a quota or a ceiling, but is a management tool that informs decision-making and provides real accountability,” and failure to meet the goal “will not lead to a fine, penalty, or sanction.” Small employers will be expected to make progress on the 7% goal across their workforce as a whole, rather than on a job group basis.

Federal contractors and subcontractors must provide a self-identification form requesting self-disclosure of disabled status to job applicants before and after each applicant receives a job offer, and to employees every five years. Completion of these forms is entirely voluntary.

The OFCCP has made available a Voluntary Self-Identification of Disability form to be used by covered contractors at the OFCCP’s website at http://www.dol.gov/ofccp/.

If you have any questions or for more information about the new Final Rules and their impact on your company’s affirmative action policies, please contact Patrick W. McGovern, Esq., pmcgovern@genovaburns.com or Allison Gotfried, agotfried@genovaburns.com.

Jersey City Employers Must Provide Sick Time

Beginning today January 24, 2014, businesses in Jersey City with 10 or more employees must provide up to 40 hours of paid sick time to each employee each calendar year, including part-time and temporary employees who work at least 80 hours in the year. Jersey City employers with fewer than 10 employees must provide unpaid sick time to their employees, including part-time and temporary employees who work at least 80 hours in the year.

Generally, employees accrue one hour of sick time for every 30 hours worked beginning on the first day of employment. However, employees may not use sick time until the 91st day of employment. Sick time may be used for one of the following reasons: the employee’s health care, the care of a family member, the closure of the employee’s place of business due to a public health emergency, or to care for the employee’s child whose school is closed due to a public health emergency. Sick time may be taken in hourly increments or the smallest increment that the employer’s payroll system uses to account for absences or use of other time, whichever is smaller.

Employers that already have a paid leave policy in place that provides at least an equal amount of paid leave for the same qualifying events covered by the ordinance are not required to provide additional paid sick time, but should have their leave policies reviewed carefully by counsel to ensure that their policies comply. Jersey City’s new law provides for carry-over of accrued but unused sick time from one calendar year to the next, however employees are not required to pay employees for accrued but unused sick time at the time of separation from employment.

Employers must provide written notice to new hires, display a poster approved by the Jersey City Department of Health and Human Services, and retain records of employee pay and sick time usage for three years. Employers who violate the notice and posting requirements may face fines up to $100 for each employee who did not receive a notice and up to $500 for each establishment where a poster was not displayed. This new law also prohibits retaliation, and employers found in violation can face a fine of up to $1,250 and/or up to 90 days of community service per violation.

Some Frequently Asked Questions about Jersey City’s new law can be found here.

For more information on the new ordinance, or for information on paid sick time laws in other jurisdictions, please contact Patrick W. McGovern, pmcgovern@genovaburns.com, or Rebecca Fink,rfink@genovaburns.com, in the firm’s Labor Group.

Affordable Care Act Update: Volunteer Firefighters And Other Emergency Responders Are Not Full-Time Employees Or FTE’s Under ACA

On January 10, 2014 the U.S. Department of Treasury announced that volunteer firefighters and other emergency responders (“volunteer emergency personnel”) at governmental or tax-exempt organizations “generally” need not be counted as full-time employees or full-time equivalents (“FTE’s”) under the Affordable Care Act’s (“ACA”) final regulations.  The Treasury also announced that the final regulations will issue “shortly.”

Effective January 1, 2015 an employer with 50 or more full-time employees or FTE’s will be subject to ACA’s penalties unless it offers affordable health coverage to an employee who works an average of at least 30 hours per week or 130 hours per month.  Although the tax treatment of stipends and other reimbursements paid to volunteer emergency personnel provides some precedent for treating volunteer firefighters as employees, ACA’s proposed regulations do not address whether these workers will be treated as full-time employees or FTE’s.  Local fire and EMS departments could potentially exceed the 50-employee threshold and be subject to ACA’s penalties if volunteer emergency personnel must be counted as full-time employees or FTE’s under ACA.

The Treasury’s announcement this week clearly states that volunteer emergency personnel hours will not count in determining whether an employer meets the 50-employee threshold.  Likewise, an employer that exceeds the 50-employee threshold will not be subject to ACA’s penalties on the sole grounds that it does not offer coverage to volunteer emergency personnel.  Consequently, municipalities that offer volunteer emergency services avoid a potential financial burden with the final regulations’ exemption of voluntary emergency personnel.  If you have any questions or for more information about ACA and its impact on your organization or your employees’ benefit plans, please contact Patrick W. McGovern, Esq., pmcgovern@genovaburns.com, Gina M. Schneider, Esq., gmschneider@genovaburns.com, or Phillip M. Rofsky, Esq., profsky@genovaburns.com, in the Firm’s Employee Benefits Practice Group.

Must-Be-Employed Job Ads Banned in NJ

The New Jersey Appellate Division recently upheld a New Jersey law that bans employers from stating in a job advertisement that applicants must be employed elsewhere in order to be considered for employment.  The law was passed by the legislature in 2011 to ensure that many laid-off workers who were searching for jobs did not face an additional barrier of being required to be employed in order to apply for a particular position.

Following the passage of the 2011 law, Crest Ultrasonics posted a small ad in the Burlington County Times for a service manager.  The ad read, in part, that the applicant “must be currently employed.”  The New Jersey Department of Labor and Workforce subsequently investigated Crest Ultrasonics and its ad.  After the investigation was complete, the Department sent Crest Ultrasonics a letter notifying them of its determination that their ad violated New Jersey law and that they were consequently being fined $1,000.  Crest Ultrasonics filed an administrative appeal, however the fine was upheld.  Crest Ultrasonics then appealed to the Appellate Division arguing that the statute violated its free speech rights.  The Appellate Division disagreed.

In upholding the fine, the Appellate Division held that the 2011 law is narrowly tailored with a limited but significant goal of helping unemployed workers present their qualifications to potential employers. Specifically, the Appellate Division opined that the modest restrictions that the state has placed upon job advertising are constitutionally valid and directly advance the governmental purpose of increasing job opportunities for unemployed workers.  As a result, the court held that must-be-employed job ads are impermissible under NJ law.

Employers should carefully craft job advertisements to ensure they comply with New Jersey and federal laws.  If you have any questions, please contact Dena B. Calo, Esq., Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, at dcalo@genovaburns.com, or Kathryn E. Dugan, Esq., Associate in the Employment Law & Litigation Group, at kdugan@genovaburns.com.

NJ Requires Many Notifications to Employees in 2014

As New Jersey employers ring in the new year, they should be mindful of the New Jersey Department of Labor’s notice distribution requirements.  The DOL publishes several important notices which, in addition to posting in the workplace, must be individually distributed to employees as follows:

Right to Be Free of Gender Inequity (new Amendment, effective January 6, 2014)

  • On or before February 5, 2014, employers must provide a written copy of this notice to each employee who was hired on or before January 6, 2014.
  • Employers must provide a written copy of the notice to each employee who is hired after January 6, 2014 at the time of his or her hire.
  • Annually, on or before December 31 of each year, employers must provide each employee a written copy of the notice.
  • Employers also must provide each employee a written copy of the notice upon request.
  • The required written notice can be distributed electronically or in hard copy form.
  • In every instance in which a written notice is required to be provided to an employee, the written notice must be accompanied by an acknowledgment that the employee has received it and has read and understands its terms. This acknowledgment must be signed by the employee (in writing or by means of electronic verification) and returned to the employer within 30 days of the employee’s receipt of the notice.

Employer Obligation to Maintain and Report Records

  • Any new employee hired after November 7, 2011, must be provided a written copy of this notice at the time of hiring.
  • The notice may be distributed to employees by hard copy or via electronic mail.

New Jersey Family Leave Insurance

  • Employers must provide employees with a written copy of this notice: (i) at the time of the employee’s hiring; (ii) whenever an employee provides notice of a potential claim; and (iii) upon the first request of the employee.
  • Written notification may be electronically transmitted to employees.

New Jersey Conscientious Employee Protection Act

  • This notice must be distributed annually to all employees.
  • Written notification may be distributed electronically.

It is important to note that merely posting these notices, although also required, will not fulfill the DOL’s distribution requirements.  Nor will including these notices in your company’s Employee Handbook.  Moreover, the inclusion of required notices in an Employee Handbook is not recommended – only critical employment law and HR policies should be set forth in Employee Handbooks.

For more information on employer obligations in 2014 and beyond, please contact Dena B. Calo, Esq., Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, at dcalo@genovaburns.com, or Eileen Fitzgerald Addison, Esq., Associate in the Human Resources Practice Group, at eaddison@genovaburns.com.

New Jersey Employers Required to Post and Distribute Gender Equity Notice

More than a year after Governor Chris Christie signed legislation requiring many New Jersey employers to notify employees of their right to gender equality in compensation and benefits under existing state and federal law, New Jersey’s Department of Labor and Workforce Development (“NJDOL”) has finalized the mandatory notice.  Entitled “Right to be Free of Gender Inequity or Bias in Pay, Compensation, Benefits or Other Terms and Conditions of Employment,” the “gender equity notice” briefly summarizes the various state and federal prohibitions on employment discrimination based upon an individual’s sex, and directs employees to contact the United States Equal Employment Opportunity Commission (“EEOC”), New Jersey’s Division on Civil Rights (“NJDCR”), or the NJDOL for further information.

Beginning January 6, 2014, New Jersey employers with a total of 50 or more employees (regardless of whether those employees work inside or outside of New Jersey) will be required to do the following:

  1. Conspicuously post the gender equity notice (in English and Spanish) in a place accessible to all employees in each of the employer’s workplaces (which may include an employer’s internet or intranet site);
  2. Provide each employee who was hired on or before January 6, 2014 a written copy of the gender equity notice no later than February 5, 2014;
  3. Provide each employee who is hired after January 6, 2014 a written copy of the gender equity notice at the time of the employee’s hiring;
  4. Provide each employee with a written copy of the gender equity notice once per calendar year; and
  5. Provide each employee with a written copy of the gender equity notice upon their first request.

Employers may distribute the gender equity notice to employees, to satisfy requirements (2) through (5) above, through e-mail delivery, printed material, or through an internet or intranet website (so long as the site is for the exclusive use of all employees, can be accessed by all employees, and the employer provides notice to the employees of its posting).  In addition, the distribution of the gender equity notice must be accompanied by an acknowledgment that the employee has received, read, and understands its terms.  The employee must sign and return the acknowledgment to the employer within 30 days of receipt.

For more information on New Jersey’s new gender equity notice, and employers’ new requirement to post, distribute, and obtain employee acknowledgment, or for assistance in drafting your company’s employee acknowledgment, please contact Dena B. Calo, Esq., Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, at dcalo@genovaburns.com, or Joshua E. Knapp, Esq., Associate in the Employment Law & Litigation Group, at jknapp@genovaburns.com.