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.

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.