New York City Bans Employer Inquiries Into Salary History

On May 4, 2017, New York City Mayor Bill DeBlasio signed a law amending the New York City Human Rights Law, barring all public and private New York City employers from asking job applicants about their prior wages and salary history.  The law will take effect on Tuesday, October 31, 2017. The new law makes it an unlawful, discriminatory practice for an employer to inquire about or rely upon the salary history of a job applicant to determine their salary amount during the hiring process.

The salary inquiry law bans New York City employers from:

  • Making an inquiry, either verbally or in writing, to an applicant and/or the applicant’s current or prior employer, to obtain the applicant’s salary history;
  • Searching public records for an applicant’s salary history; and/or
  • Relying on a job applicant’s salary history when making an offer of employment or extending an employment contract to the applicant.

Salary history is broadly defined in the bill as the applicant’s “current or prior wage, benefits or other compensation.”  However, salary history inquiries do not include inquiries into the objective measure of the applicant’s productivity, for example, through inquiries on revenue, sales, or production reports.  Further, employers may still discuss the applicant’s salary and benefits expectations, including the amount of unvested equity and deferred compensation an applicant would forfeit through resignation from his or her current employment.

The law contains several other exceptions to the prohibition on salary inquiries, which include the following:

  • Employers can consider and verify an applicant’s salary history if the applicant discloses the information voluntarily and without prompting;
  • Where federal, state, or local law specifically authorizes the disclosure or verification of salary history;
  • Where salary is determined by procedures in a collective bargaining agreement;
  • When current employees are transferred or promoted within the company; and
  • When a background check for non-salary related information inadvertently discloses salary history, provided the employer does not rely on that information in making an offer of employment.

The New York City’s Commission on Human Rights (NYCCHR) will be responsible for investigating complaints and enforcing the new law.  The NYCCHR will also have the authority to impose fines ranging from up to $125 for intentional violations and up to $250,000 for intentional malicious violations.

New York City employers must start to update their employment applications and train their recruiters and human resources personnel on the new requirements to ensure compliance by the October 31, 2017 deadline.  Employers may also be forced to limit the scope of their background checks and revise their notices under the Fair Credit Reporting Act.

For questions on this new law, background check laws, or other employment and hiring requirements, please contact Dina M. Mastellone, Esq., Chair of the firm’s Human Resource Training & Audit Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Fate Uncertain for HHS’s Extension of ACA Discrimination Protections to Abortion & Gender Transition

In May 2016 HHS issued a final rule implementing the Affordable Care Act’s Section 1557 nondiscrimination provision, which applies to recipients of funding from HHS. The rule prohibits discrimination on the basis of gender identity and termination of pregnancy, as well as race, color, national origin, sex, age, and disability. The new rule has been interpreted to require covered entities to perform and provide insurance coverage for gender transitions and abortions, regardless of their contrary religious beliefs or medical judgment.

The HHS rule has been challenged in court at least twice. On December 31, 2016, the U.S. District Court in Wichita Falls, Texas enjoined nationally the portions of the rule prohibiting discrimination on the basis of gender identity and termination of pregnancy. Franciscan Alliance, Inc. v. Burwell, Civil Action No. 16-cv-00108. The Order was appealed by the ACLU and the River City Gender Alliance and the appeals remain pending.

The Trump Administration has not indicated whether it will challenge the Court’s injunction and enforce the rule. The current Administration position favoring repeal of ACA in its entirety is consistent with the policy changes already made by the Trump administration. On February 22 the Departments of Education and Justice withdrew agency guidance that mandated transgender student access to restrooms consistent with gender identity. In late March President Trump appointed Roger Severino to head HHS’s Office of Civil Rights (OCR) which is charged with enforcing the HHS rule. Although Severino’s appointment has been controversial, as yet there is no indication from the OCR as to its enforcement position under new HHS leadership.

In the only other reported case brought under the rule’s prohibition of discrimination based on gender identity, on December 6, 2016 the U.S. District Court in Oakland, California stayed further proceedings in a case challenging an employer’s denial of gender transition health coverage. Robinson v. Dignity Health, Civil Action No. 16-cv-3035. The stay was granted pending the outcome of Gloucester County School Bd. v. G.G., a case scheduled for hearing before the Supreme Court. However, on March 6 the Supreme Court remanded the case back to the Court of Appeals for further consideration in light of Justice’s and Education’s withdrawal of guidance on February 22.  The California court has continued the stay in the Robinson v. Dignity Health case based on the pending bankruptcy of the plaintiff and scheduled the next hearing for May 19.

The Supreme Court’s action suggests that courts across the country may be taking a “kick the can down the road” approach on the Section 1557 rule as the Trump Administration has promised to repeal and replace ACA, or alternatively that the Court prefers to review the case only when the Court is back to full strength. Currently, the HHS rule’s provisions relating to gender identity and termination of pregnancy remain enjoined nationally.

If you have any questions or would like to discuss how the Section 1557 rule affects you or your business, please contact Patrick W. McGovern, Esq. at 973-535-7129 or pmcgovern@nullgenovaburns.com, Gina M. Schneider, Esq. at 973-535-7134 or gmschneider@nullgenovaburns.com or Ryann M. Aaron, Esq. at 973-387-7812 or raaron@nullgenovaburns.com.

New York City Seeks to Ban Employer Inquiries Into Applicants’ Salary History

On April 5, 2017, the New York City Council passed a law amending the New York City Human Rights Law, barring all public and private New York City employers from asking job applicants about their prior wages and salary history.  The bill has been sent to Mayor DeBlasio for signature.  This new proposed law will take effect 180 days after Mayor DeBlasio signs it.

This bill would prohibit New York City employers from:

  • Making an inquiry, either verbally or in writing, to an applicant and/or the applicant’s current or prior employer, to obtain the applicant’s salary history;
  • Searching public records for an applicant’s salary history; and/or
  • Relying on a job applicant’s salary history when making an offer of employment or extending an employment contract to the applicant.

Salary history is broadly defined in the bill as the applicant’s “current or prior wage, benefits or other compensation.”  However, salary history inquiries do not include inquiries into the objective measure of the applicant’s productivity, for example, through inquiries on revenue, sales, or production reports.  Further, employers may still discuss the applicant’s salary and benefits expectations, including the amount of unvested equity and deferred compensation an applicant would forfeit through resignation from his or her current employment.

The bill contains several other exceptions to the prohibition on salary inquiries, which include the following:

  • Employers can consider and verify an applicant’s salary history if the applicant discloses the information voluntarily and without prompting;
  • Where federal, state, or local law specifically authorizes the disclosure or verification of salary history;
  • Where salary is determined by procedures in a collective bargaining agreement;
  • When current employees are transferred or promoted within the company; and
  • When a background check for non-salary related information inadvertently discloses salary history, provided the employer does not rely on that information in making an offer of employment.

The New York City’s Commission on Human Rights (NYCCHR) will be responsible for investigating complaints and enforcing the new law.  The NYCCHR will also have the authority to impose fines ranging from up to $125 for intentional violations and up to $250,000 for intentional malicious violations.

If Mayor DeBlasio signs this law, employers must immediately update their employment applications and train their recruiters and human resources personnel on the new requirements.  Employers may also be forced to limit the scope of their background checks and revise their notices under the Fair Credit Reporting Act.  For questions on this new proposed law, background check laws, or other employment and hiring requirements, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Virginia Federal Judge Upholds Trump Immigration Executive Order Signalling Possible Split in Circuits

On March 24 President Trump’s revised immigration ban which took effect March 16, 2017 (March Order) was found to be enforceable for the first time. U.S. District Judge Anthony J. Trenga in Alexandria, Va., denied an emergency request for a temporary restraining order (“TRO”) to suspend enforcement of the March Order. Judge Trenga diverged from his counterparts in Hawaii and Maryland who granted temporary restraints against the March Order. On March 15 U.S. District Court Judge Derrick Watson in Honolulu issued a TRO pending further order of the Court and blocked core provisions of the March Order on the basis that the Order is an unconstitutional establishment of religion and inflicts immediate harm on Hawaii’s economy, education and tourism; this order is on appeal to the Ninth Circuit. Specifically, Judge Watson blocked the 90-day ban on entry of foreign nationals from the six Muslim-majority countries (Iran, Syria, Libya, Sudan, Yemen and Somalia) and the 120-day ban on U.S. entry by all refugees. The next day U.S. District Court Judge Theodore D. Chuang in Greenbelt, Maryland issued a nationwide preliminary injunction blocking the part of the March Order that suspended the issuance of visas to citizens of the six banned countries; Judge Chuang’s decision is on appeal to the Fourth Circuit which will hear arguments on May 8. Judge Chuang and Judge Watson both found that the March Order was intended to discriminate against Muslims. On March 29, Judge Watson converted the TRO into a nationwide preliminary injunction blocking provisions of the March Order indefinitely.

The Virginia lawsuit was brought by Linda Sarsour, national co-chair of the Women’s March on Washington and a Muslim activist. Ms. Sarsour relied on Trump’s public remarks and argued that the “long and unbroken stream of anti-Muslim statements made by both candidate Trump and President Trump, as well as his close advisors, which, taken together, makes clear that [Trump’s January and March Orders] are nothing more than subterfuges for religious discrimination against Muslims.” In deciding not to enjoin the March Order, Judge Trenga reasoned that the March Order was “explicitly revised in response to judicial decisions that identified problematic aspects of EO-1 [Trump’s January Order]…” and cited that part of the March Order that “expressly excludes from the suspensions categories of aliens that have prompted judicial concerns and which clarifies or refines the approach to certain other issues or categories of affected aliens.” Judge Trenga found no violation of the Establishment Clause on the grounds that the March Order “clearly has a stated secular purpose: the ‘protect[ion of United States] citizens from terrorist attacks, including those committed by foreign nationals.’” Judge Trenga also concluded that the substantive revisions reflected in the March Order precluded findings that the predominant purpose of the March Order is religious discrimination against Muslims and that the March Order is a pretext for this purpose. Judge Trenga wrote that to proceed otherwise required his “extending [the] Establishment Clause jurisprudence to national security judgments in an unprecedented way.”

Judge Trenga’s March 24 decision is not immediately appealable; Sansour’s court challenge will proceed and the Administration must answer the complaint. If Judge Trenga dismisses the complaint, an appeal to the Fourth Circuit Court of Appeals is expected and may then be consolidated with the pending appeal of Judge Chuang’s preliminary injunction. Given the increased likelihood of a split in the Circuits, the March Order may ultimately be reviewed by a fully constituted Supreme Court. Meanwhile, Judge Watson’s national injunction remains in effect and the attorneys general for California, Maryland, Massachusetts, New York and Oregon have joined Washington in filing another complaint challenging both the January and the March Orders.

If you would like to discuss how the March Executive Order or these court decisions affect your employees and your business, please contact Patrick W. McGovern, Esq., Partner in the Firm’s Immigration Law Practice at 973-535-7129 or at pmcgovern@nullgenovaburns.com.

New District of New Jersey Case Shows Importance of Requiring Drivers to Form Corporate Entities in Misclassification Cases

Late last month, District of New Jersey Judge Robert B. Kugler partially granted FedEx Ground Package Systems Inc. (“FedEx”)’s Motion to Dismiss in a trucking misclassification case.  The court dismissed several claims but preserved the plaintiff’s wage claim.  One key in getting several of the claims dismissed for FedEx was that it had required the plaintiffs to form LLCs or corporations prior to contracting with them.

In Carrow v. FedEx Group Package Systems, Inc., No.: 16-3026, plaintiffs brought claims against FedEx arising under the New Jersey Consumer Fraud Act (“NJCFA”), misrepresentation, rescission, New Jersey Wage Payment Law (“NJWPL”), and breach of the covenant of good faith and fair dealing. The contract between the driver plaintiffs and FedEx classified the drivers as independent contractors and, for some agreements, first required the drivers to create a limited liability company or corporation and sign the agreement through the business entity.  Plaintiffs argued that despite language in the operating agreements, they were treated as employees as the agreements regulated the vehicle appearance, vehicle maintenance, liability insurance, driver reports, driver uniforms, and driver service areas.  FedEx was also responsible for determining the prices charged for services, route schedules, electronic equipment used, forms for paperwork, and approval of substitutes and assistants. It also actively monitored how drivers operated their vehicles, carry packages, and completed paperwork to ensure adherence to company policies.

Based on the fact that the name plaintiffs had formed corporate entities at FedEx’s request and therefore as individuals were not direct parties to the operating agreements with FedEx, the court dismissed the plaintiffs’ claims of breach of the covenant of good faith and fair dealing and rescission.  The court also dismissed the plaintiff’s NJCFA claim because the plaintiffs’ theory was that the fraud related to FedEx’s employment of the plaintiffs which is not a basis for a NJCFA claim.  Further, the court held that plaintiffs could not state a cognizable claim under the NJCFA because business opportunities are not covered by the NJCFA.  The court did, however, allow several claims to proceed, most importantly, the plaintiff’s NJWPL wage claim finding that the fact that the plaintiffs were not parties to the operating agreements was not in and of itself enough on a motion to dismiss to determine if an employment relationship existed between the plaintiffs and FedEx.

For our clients in the transportation, trucking, and logistics industries, requiring that drivers form LLCs or corporations before entering into contracts with them helps to defeat misclassification claims.  However, as this case shows, corporate status is not enough by itself to definitively defeat a misclassification claim as it is one of many factors that a court will consider.

For questions about employment issues involving the trucking and logistics industries, please contact John Vreeland, Esq., Chair of the Transportation, Trucking & Logistics Group and Partner in the Labor Law Practice Group at jvreeland@nullgenovaburns.com or (973) 535-7118, or, Harris S. Freier, Esq., Partner in the Firm’s Employment Law and Appellate Practice Groups, at hfreier@nullgenovaburns.com or (973) 533-0777.  Please also sign-up for our free Labor & Employment Law Blog at www.labor-law-blog.com to keep up-to-date on the latest news and legal developments effecting your workforce.

Second, Eleventh and Seventh Circuits Disagree Whether Title VII Extends to Claims of Sexual Orientation Discrimination

On March 27 the Second Circuit held that Title VII does not provide protection against workplace discrimination based on sexual orientation. In Christiansen v. Omnicom Group Inc., the plaintiff alleged that his employer discharged him because of his sexual orientation and his nonconformity to gender stereotypes.  On appeal to the Second Circuit, the employer sought dismissal of the claims, and argued that claims of sexual orientation discrimination cannot be brought under Title VII.  Plaintiff urged the court to expand Title VII’s scope to reach these claims and, alternatively, that his suit claimed sexual stereotyping, as opposed to sexual orientation discrimination.  The Second Circuit held that it was bound by Second Circuit precedent in this regard and the plaintiff could not state a cognizable claim for sexual orientation discrimination under Title VII.  The Christensen court relied heavily on the Second Circuit’s 2000 decision in Simonton v. Runyon where the court held that Title VII does not prohibit sexual orientation discrimination.

The Christensen court observed that the landscape of sexual orientation and the law have changed significantly since Simonton.  Most notably, in 2013, the Supreme Court struck down the Defense of Marriage Act and in 2015, held that same-sex couples have the right to marry.  However, the Christensen court found that neither of these decisions relates to Title VII protections, but instead they reflect a change in social and judicial perceptions regarding protections for same-sex couples.

The Eleventh Circuit is in agreement with the Second Circuit.  However, on April 4 the Seventh Circuit en banc held that sexual orientation discrimination is cognizable under Title VII. Hively v. Ivy Tech Comm. College. The Seventh Circuit reversed a Circuit panel that found for the employer with reasoning consistent with the Christiansen decision. The EEOC’s enforcement position during the Obama Administration was that discrimination based on sexual orientation is prohibited by Title VII, although it remains to be seen whether this will change under the current administration.

Given the split in the Circuits and the rapid development of the law in this area, employers cannot ignore discrimination or harassment claims based on sexual orientation.  Several jurisdictions already have state and local laws that prohibit these workplace behaviors, including New Jersey, New York, and New York City.  Employers must review their anti-harassment and discrimination policies to ensure compliance not only with Title VII but also with state and local laws, and promptly and effectively respond to complaints of unlawful harassment and discrimination.

For more information on this decision, on the applicability of Title VII to your organization, or to ensure compliant employment practices, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Two Federal Courts Dismiss ADA Website Accessibility Claims

In the last two months, at least two federal district courts have dismissed website accessibility lawsuits filed against private companies under the Americans with Disabilities Act (“ADA”), proving that this issue continues to be the Achilles Heel of the Department of Justice’s (“DOJ”) Regulatory Arena.

For context, imagine a blind person who is unable to make online mortgage payments because his bank’s website did not provide him the means.  The DOJ is tasked with enforcing the ADA, a federal statute that provides for equal access to places of public accommodation, including private businesses, for such persons with disabilities.  However, the text of the ADA is silent about public accommodations’ websites, and a recent executive order aimed at decreasing federal regulations has all but eliminated any chance that the DOJ will issue regulations on that topic.  The absence of such regulations has emboldened disability advocacy groups across the nation to flood the courts with lawsuits against companies alleging a failure to provide equal access to audio, audiovisual, or other content made available online.

Not so fast, said the U.S. District Court for the Central District of California.  On March 20, 2017, in the case of Robles v. Domino’s Pizza LLC, No. 16-06599, the federal court dismissed ADA web accessibility litigation brought against the enormous food retailer, Domino’s.  The court relied on the “primary jurisdiction doctrine,” which allows courts to dismiss complaints pending the resolution of an issue that is “within the special competence of an administrative agency.”  Noting that Congress has vested exclusive authority with the DOJ to promulgate regulations defining what web accessibility standards to impose on private companies, the court concluded that it was inappropriate to render judgment against Domino’s in the absence of such regulations.

There are various other legal issues that arise in ADA web accessibility cases, including the concept of standing, which means having a concrete injury that can be rectified by a court order, and whether a website is a place of public accommodation.  The U.S. District Court for the Southern District of Florida, in the case of Gomez v. Bang & Olfusen America, Inc., No. 16-23801, shed light on both issues.  The Gomez court dismissed an ADA web accessibility claim brought by a plaintiff who contended that the company’s website could hypothetically impede a blind person from enjoying all the benefits of the company’s retail stores on the basis that the plaintiff did not have a particularized injury (i.e., standing).  As the court concluded, “[h]is generalized grievances are wholly unconnected to any harm he actually suffered at the place of public accommodation (i.e. the concrete, physical store) and are therefore insufficient to survive a motion to dismiss.”  The court also recognized that websites are not included in the ADA’s express list of public accommodations: “If Congress – recognizing that the internet is an integral part of modern society – wishes to amend the ADA to define a website as a place of public accommodation, it may do so.  But the Court, having no legislative power, cannot create law where none exist.”

Although these cases may suggest a shield to ADA web accessibility litigation, there are just as many courts across the country taking completely opposite views.  For example, only one year ago, a Massachusetts federal court rejected the “primary jurisdiction doctrine” (relied upon in Robles) as a basis to dismiss ADA web accessibility claims made against Harvard University and the Massachusetts Institute of Technology.  See Nat’l Ass’n of the Deaf, et al., v. Harvard Univ., et al., No. 15-30023; Nat’l Ass’n of the Deaf, et al. v. Massachusetts Inst. of Tech., No. 15-30024.  Given the national split over these issues and the unlikelihood that the DOJ will issue clarifying regulations, businesses should be cautious.

The first step a business should take to minimize the risk of expensive litigation and exhausting DOJ investigations is to designate an ADA coordinator/compliance group to audit its website.  Companies should simultaneously work with counsel so that reports and findings from these audits are generated under privilege.  In addition, companies should adopt strong website accessibility polices and staff training materials.  Moreover, one of the most effective ways to stave off litigation is to provide a customer service, like a hotline, devoted to assisting customers who encounter difficulties in accessing a company’s web content.

Those with questions about these emerging issues or looking for a preliminary assessment of their legal exposure under the ADA should contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Brigette N. Eagan, Esq., Counsel with the firm’s Human Resources Practice Group, at beagan@nullgenovaburns.com or 973-533-0777.

 

The D.C. Circuit Vacates NLRB Ruling on Driver Status in FedEx Case

In early March 2017, the D.C. Circuit in FedEx Home Delivery v. NLRB, 2017 U.S. App. LEXIS 3826 (D.C. Cir. 2017) vacated a National Labor Relations Board (“NLRB” or “the Board”) ruling that Connecticut FedEx drivers constitute employees under the National Labor Relations Act (“NLRA”). The D.C. court said that the case was indistinguishable from a 2009 case before the panel involving a group of Massachusetts drivers.

In 2007, single-route FedEx drivers based in Hartford, CT elected Teamsters Local 671 (“Union”) to represent them which lead to FedEx filing subsequent objections to the NLRB. While the appeal was pending, the D.C. Circuit decided FedEx Home Delivery v. NLRB (FedEx I), 563 F.3d 492 (D.C. Cir. 2009), finding that FedEx drivers based out of the company’s Wilmington, MA terminal constituted independent contractors under the NLRA. In its holding, the court vacated the NLRB’s order to engage with the union and denied the Board’s cross-motion for enforcement. The court held that the NLRB was bound to apply the common-law ten factor agency test as set forth in the Restatement (Second of Agency), but explained that rather than a control inquiry, that the emphasis of these factors should be on  “entrepreneurial opportunity” for gain or for loss as it relates to the determination of a worker’s status.  FedEx identified three specific entrepreneurial opportunities available to the drivers: (1) drivers’ ability to hire other drivers; (2) drivers’ ability to sell routes; and (3) drivers’ ability to operate multiple routes.  Persuaded by these arguments, the court held that the FedEx drivers were independent contractors.

In 2014, the NLRB issued a revised decision in FedEx Home Delivery, 361 N.L.R.B. No. 55 (Sept. 30, 2014) which found that the facts pertaining to the Hartford drivers and those discussed in FedEx I were “virtually identical.” Still, however, the NLRB declined to adopt the D.C. Circuit’s 2009 interpretation of the NLRA because it disagreed with the court’s emphasis on “entrepreneurial opportunity” as the key factor in determining a worker’s status. Specifically, it said that the Board should give weight to actual, not merely theoretical, entrepreneurial opportunity, and it should evaluate the constraints imposed by a company on the individual’s ability to pursue that opportunity. Moreover, it noted that FedEx unilaterally drafts, promulgates, and changes the terms of its agreements with drivers, a feature that weighs “heavily in favor of employee status” along with the Board’s view that the drivers lacked independence and were disallowed the initiative and decision-making authority normally associated with an independent contractor   The Board also found that FedEx engaged in unfair labor practices affecting commerce under the NLRA by refusing to recognize and bargain with the union.

In the present case, FedEx argued that the question had already been argued before the D.C. Circuit in FedEx I and involved the same parties, thus the same result should follow. The court agreed and denied the Board’s cross-application for enforcement, granted FedEx’s petitions for review, and vacated the Board’s orders. The D.C. Circuit noted that in FedEx I, the Board considered all common-law factors and was still persuaded that the drivers were independent contractors. The court also noted that the U.S. Supreme Court previously held that that the question whether a worker is an “employee” or “independent contractor” under the NLRA is a question of “pure” common-law agency principles that a court can review and does not require special administrative expertise.

The takeaway for employers is that in determining whether workers are employees or independent contractors, employers must remember that despite significant overlap, there are in fact different tests as related to the NLRA, federal taxes, the Fair Labor Standards Act, state wage and hour law, ERISA, the Affordable Care Act, and various other circumstances.  While the D.C. Circuit has for the moment clarified (or rather reinforced) its view as to the proper test under the NLRA, employers should always focus on where their greatest liability is and attempt to cater to the relevant test as much as possible.

For questions about independent contractors or trucking and logistics, please contact John Vreeland, Esq., Chair of the Transportation, Trucking & Logistics Group and a Partner in the Labor Law Practice Group at jvreeland@nullgenovaburns.com or (973) 535-7118, or, Harris S. Freier, Esq., a Partner in the Firm’s Employment Law and Appellate Practice Groups, at hfreier@nullgenovaburns.com or (973) 533-0777. Please also sign-up our free Labor & Employment Blog at www.labor-law-blog.com to keep up-to-date on the latest news and legal developments effecting your workforce.

How to Avoid Disney’s Not-So-Fairy Tale $3.8 Million Payment of Employee Back Wages

On Friday, March 17, 2017, the U.S. Department of Labor (“DOL”) and two subsidiaries of The Walt Disney Co. (“Disney”), the Disney Vacation Club Management Corp., and the Walt Disney Parks and Resorts U.S. Inc., reached an agreement to resolve claims under the Fair Labor Standards Act (“FLSA”), requiring the payment of back wages of over $3.8 million to more than 16,000 employees of the two Florida-based Disney companies.

According to the DOL, Disney deducted a uniform (or “costume”) expense from employee pay, which lead some employees’ hourly rate to fall below the federal minimum wage rate of $7.25 per hour. The subsidiaries also did not compensate the employees for performing pre- and post-shift duties while additionally failing to maintain required time and payroll records.

As part of the agreement, Disney agreed to start training all Florida-based managers, supervisors, and non-exempt employees on what constitutes compensable worktime and emphasizing the need to record all records pertaining to time accurately.

There are certain steps that employers can do to avoid the significant damages Disney incurred including:

  • Maintain accurate payroll, time, and schedule related records. This is particularly important to our hospitality and restaurant clients where record keeping can be especially difficult.  Also, remember that under the FLSA, the records must be  maintained for a minimum of three years for payroll records and six years under New Jersey and New York law.
  • Deductions are an easy target for the plaintiffs’ bar. Employers must make sure that any deductions are legal under state law and that the deductions if permissible do not bring the affected employee below the state or federal minimum wage;
  • Perform a wage and hour self-audit every two years to avoid misclassification issues and to ensure your recordkeeping and pay practices are consistent with the law;
  • To avoid donning and duffing claims (claims involving changing into and out of uniforms, costumes, and protective equipment for example), employers must take care to distinguish between non-compensable time when changing into and out of the uniform is merely for the employees’ convenience as opposed to compensable time when the job cannot be accomplished without wearing the designated uniform or costume or safety equipment and it is impractical to arrive at work wearing same.

If you have any questions or would like to discuss best practices in complying with federal wage regulations, please contact John R. Vreeland, Esq., Partner & Chair of the  Wage and Hour Compliance Practice Group at jvreeland@nullgenovaburns.com or call 973-533-0777 or Harris S. Freier, Esq., a Partner in the Employment Law and Appellate practice groups, at hfreier@nullgenovaburns.com, or call 973-533-0777.  Mr. Vreeland and Mr. Freier routinely work together in defending wage and hour class actions.  Please visit our free Labor & Employment Blog at www.labor-law-blog.com to stay up-to-date on the latest news and legal developments affecting your workforce.

District of New Jersey Ruling Leaves Employers High and Dry as to Guidance on Dealing with Medical Marijuana Users

On February 21, 2017, the District of New Jersey dismissed a wrongful termination lawsuit by a medical marijuana user who claimed that the employer failed to accommodate his disability in violation of the New Jersey Law Against Discrimination (“NJLAD”).  See Thomas Barrett v. Robert Half Corporation, et al., No. 15-624.  The case raises key issues for New Jersey employers whose employees are legally using medical marijuana, however, the court avoided dealing with the significant substantive issues for employers and their employees raised by medical marijuana, including preemption issues, by focusing on a defect in how the complaint was plead.

The New Jersey Compassionate Use Medical Marijuana Act (“NJCUMMA”), protects medical marijuana patients “from arrest, prosecution, property forfeiture, and criminal and other penalties” for using medical marijuana to alleviate suffering from debilitating medical conditions.  Since the law was passed in 2010, ambiguities remain regarding the rights of employees who use medical marijuana.  Currently, the NJCUMMA does not require employers to provide reasonable accommodations for “the use of marijuana in any workplace.”  However, the statute is silent on use of medical marijuana outside of the workplace, and there is currently no case law clarifying this provision.  Employers who drug test their employees are obviously left in limbo because if an employee tests positive for marijuana, the employer will be hard pressed to prove that the positive test results from workplace use of marijuana as opposed to use outside of the workplace.

In Thomas Barrett v. Robert Half Corporation, et al., No. 15-6245, the plaintiff suffered chronic pain resulting from a car accident and was issued a license from the State of New Jersey Department of Health’s Medicinal Marijuana Program.  Mr. Barrett alleged that he notified his employer, Robert Half Corp., a staffing company, that he was issued a medical marijuana license and that it was for treatment of his disability.  Prior to a new work assignment, his supervisor required him to submit to a drug test, to which Mr. Barrett alleges he responded by again informing his employer that he was licensed to use medicinal marijuana.  He claimed that his employer responded by telling him not to worry about failing and to simply present his license at the time of the test.  Nevertheless, about a week after starting his new work assignment, Mr. Barret was terminated due to a positive drug test.

In moving to dismiss, the employer argued (i) the plaintiff failed to request accommodation with enough specificity, (ii) the NJCUMMA is preempted by the federal Controlled Substances Act (“CSA”) and should not prohibit employers from terminating employees whose conduct violates federal law, and (iii) even if not preempted by federal law, the NJCUMMA does not confer employment protections.

In the order dismissing the action, the court only ruled that Mr. Barrett failed to plead a request for accommodation of his disability, and therefore failed to state a claim.  The court held that it was insufficient for the plaintiff to simply notify his employer that he was licensed to use medical marijuana as treatment for his disability.  Instead, a plaintiff must allege that he requested an accommodation in connection with his disability.  By ruling strictly on whether the plaintiff requested an accommodation, the court left the other points raised in the employer’s motion to dismiss unaddressed – particularly, whether an employee who does properly request an accommodation has a right to such an accommodation under the NJLAD for medical marijuana use, assuming that any marijuana use takes places outside of the workplace.  Currently, there is legislation pending in the New Jersey State Senate and Assembly, Bill S-2161, that would make it unlawful for an employer to take adverse employment action (e.g., termination) against an employee for being enrolled in the State medical marijuana program or failing a drug test.  However, the bill has yet to come out of committee.  Moreover, even if the bill does become the law in New Jersey, it is an open question as to whether the law and the NJCUMMA are preempted under federal law by the CSA, especially with a new federal Department of Justice which has issued public comments indicating a desire to continue to strictly enforce marijuana prohibition.

As a practical matter, employers are in a bind because anyone who has a license to legally use medical marijuana is likely going to have a disability under the NJLAD (and possibly the Americans with Disabilities Act).  Plaintiff employees may try to conflate any adverse employment action as being related to the underlying disability as opposed to marijuana use.  As  a result, the standard advice to employers that they must have anti-discrimination policies in place, policies regarding reasonable accommodations, and training on these policies, is more important than ever.  Any adverse action against an employee based upon performance should always be backed up with the appropriate paper trail of performance reviews and/or employee discipline documents to help to show that the termination was not based upon a protected characteristic such as disability.

As to potential adverse action that an employer takes against legal medical marijuana users based solely on failing a drug test for marijuana, employers are in a difficult position.  For employers in the transportation and logistics industry where the federal Department of Transportation mandates drug testing and does not allow exceptions for medical marijuana, an employer is going to have a strong legal defense if a fired truck driver attempts to sue after being terminated for testing positive for marijuana, even if he or she has a license to use medical marijuana.  However, in other industries where there is no federal drug testing requirement, employers must carefully weigh the benefits and risks before taking adverse action against an employee for a failed drug test based upon marijuana if the employee has a legal license for medical marijuana.  Any employers dealing with issues involving medical marijuana should consult with an attorney as the law is constantly evolving in this area.

If you have any questions or would like to discuss employers’ obligations regarding medical marijuana users, please contact Harris S. Freier, Esq., of the firm’s Employment Law and Appellate practice groups, at hfreier@nullgenovaburns.com, or call 973-533-0777.  Please visit our free Labor & Employment Blog at www.labor-law-blog.com to stay up-to-date on the latest news and legal developments affecting your workforce.