Third Circuit Allows “Subgroup” Disparate-Impact Claims to Proceed Under The ADEA

Employers are well aware of the federal Age Discrimination in Employment Act (“ADEA”), which protects individuals over the age of forty, as well as its disparate-impact provision, which makes it unlawful for an employer to adopt a facially-neutral policy that adversely affects an individual employee’s status “because of such individual’s age.” However, in a precedential opinion filed on January 10, 2017, the U.S. Court of Appeals for the Third Circuit held that the ADEA allows plaintiffs to proceed with a disparate-impact claim whereby only a “subgroup” or segment of employees over the age of forty are alleged to have been disfavored relative to younger employees.

In Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435, the defendant-employer underwent several reductions in force (“RIFs”) to offset disappointing sales during the height of the recession. Several employees who were terminated in one particular RIF, all of whom were over fifty years old, brought a putative ADEA collective action against the employer asserting, among other things, a disparate-impact claim. The district court thereafter decertified the plaintiffs’ collective action, which was “to be comprised of employees terminated by the RIF who were at least fifty years old at the time.” Additionally, the district court granted the defendant-employer’s motion for summary judgment as to the disparate-impact claim, holding that plaintiffs’ “fifty-and-older” disparate-impact claim was not permitted under the ADEA.

On appeal, the Third Circuit reversed the district court’s grant of summary judgment as to the disparate-impact claim. The court noted that disparate-impact claims may proceed under the ADEA “when a plaintiff offers evidence that a specific, facially neutral employment practice caused a significantly disproportionate adverse impact based on age.” In Karlo, the plaintiff alleged that the specific RIF disproportionately impacted only a portion of the forty-and-older employee population: employees older than fifty. The Third Circuit found that this claim was cognizable, holding that plaintiffs may demonstrate the impact of facially-neutral policy “with various forms of evidence, including forty-and-older comparisons, subgroup comparisons, or more sophisticated statistical modeling, so long as that evidence meets the usual standards for admissibility.”

The court heavily relied upon the Supreme Court’s decision in O’Connor v. Consolidated Coin Caterers Corp., which held that the ADEA “does not ban discrimination against employees because they are aged 40 or older; it bans discrimination against employees because of their age, but limits the protected class to those who are 40 or older.” Thus, the court held that ADEA claims by subgroups of those aged forty or older are cognizable because “evidence that a policy disfavors employees” of such a subgroup “is probative of the relevant statutory question: whether the policy creates a disparate impact ‘because of such individual[‘s] age” under the plain language of the ADEA. The court found that it is “utterly irrelevant” whether the employer’s policy benefits younger members of those employees over forty, so long as an employee can show that his or her subgroup was adversely affected.

Following Karlo, employers should review their policies to confirm that they are in compliance with the ADEA and do not unintentionally discriminate against employees who are in “subgroups” over forty years old. For more information on the implications of the Karlo decision, 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.

Morristown Becomes New Jersey’s 13th Municipality to Mandate Paid Sick Leave

On January 11, 2017, Morristown will join the growing list of municipalities in New Jersey requiring private sector employers to provide paid sick leave to employees.  The Morristown ordinance, initially passed by a 6-1 vote in September 2016 and opposed only by Councilwoman Alison Deeb, is anticipated to impact approximately 4,600 workers. Morristown Mayor Timothy P. Dougherty issued an Executive Order on September 27, 2016 delaying implantation until January 11, 2017 explaining that more time was needed to prepare the required posters and for employers to prepare for compliance. The new law does not replace more generous sick time policies offered by employers.

Amount of Required Paid Sick Time – Covered employees will be entitled to 1 hour of paid sick time for every 30 hours worked.  Employers with 10 or more employees need only give employees 40 hours (5 days) of paid sick time per year, and those with less than 10 employees need only give employees 24 hours (3 days) of paid sick time per year.   All child care workers, home health care workers and food service workers are entitled to earn up to 40 hours (5 days) per year regardless of the size of the workforce, for public health reasons.

Who is Covered – The ordinance applies to all full-time, part-time and temporary employees of private employers in Morristown.  However, it does not apply to employees currently covered by a collective bargaining agreement until that CBA expires, unless the paid sick leave terms of the expired CBA are more generous than the town ordinance, in which case the expired CBA’s paid sick leave terms will apply.

Accrual of Paid Sick Time – Under the new ordinance, paid sick time begins accruing on an employee’s first day of the job.  Unused, accrued leave time may be carried over to the next year, but an employer will not be required to provide more than 40 hours of paid leave time in one calendar year.  Moreover, an employee will not be entitled to payment for any accrued, unused sick time at the time of his/her separation from employment.

Use of Paid Sick Time – An employee will be able to use the accrued time beginning on the 90th calendar day of his/her employment.  Qualifying reasons include personal health reasons or to care for sick children, spouse (including domestic partners and civil union partners), siblings, parents, grandparents, or grandchildren.

Anti-Retaliation – An employee may not be retaliated against for requesting to use paid sick time. Retaliation may include threats, discharge, discipline, demotion, hour reduction, demotion, or related adverse action.

Notice & Recordkeeping Requirements – Employers may require that employees provide advance notice of the intention to use sick time, but may not require that a requesting employee find a replacement before taking the sick time.  Employers will be required to provide written notice to all employees of the new mandatory paid sick time. Employer must also display a poster (in English and in any language that at least 10 percent of the workforce speaks) containing sick leave entitlement in a conspicuous place. Posters will be provided by Morristown’s Department of Administration.

Employers must ensure adequate maintenance of records as failure to do so creates a presumption that they have violated the ordinance.  The Department of Administration will be free to assert its rights to access records in order to ensure compliance.  There is no distinction amongst exempt and non-exempt employees under the ordinance in terms of record-keeping requirements.

Consequences for Non-Compliance – Employers who violate the Morristown ordinance will be subject to a fine of up to $2,000.00 per violation, plus payment of the value of sick time that was unlawfully withheld.

How Morristown Compares to Other NJ Municipalities – Though Morristown is the first town in Morris County to mandate paid sick days for private-sector employees, it is New Jersey’s thirteenth municipality to enact such a law.  The idea of federally-mandated paid sick leave backed by the Obama administration did not gain much momentum, and there are only a handful of states, often limited to a few cities, that require employers to provide paid sick leave.  New Jersey does not have a statewide mandate, but it has the highest number of local paid leave laws (including now Morristown).  The following provides a glimpse of the states and cities with similar laws:

  • Arizona
  • California (statewide & the following municipalities: Berkeley, Emeryville, Long Beach, Los Angeles, Oakland, San Diego, San Francisco, Santa Monica)
  • Connecticut
  • Washington D.C.
  • Illinois (statewide & local laws in Chicago and Cook County)
  • Louisiana (statewide & local law in New Orleans)
  • Montgomery County, Maryland
  • Massachusetts
  • Minneapolis, Minnesota
  • Paul, Minnesota
  • Bloomfield, New Jersey
  • East Orange, New Jersey
  • Elizabeth, New Jersey
  • Irvington, New Jersey
  • Jersey City, New Jersey
  • Montclair, New Jersey
  • Morristown, New Jersey
  • Newark, New Jersey
  • New Brunswick, New Jersey
  • Passaic, New Jersey
  • Paterson, New Jersey
  • Plainfield, New Jersey
  • Trenton, New Jersey
  • New York City, New York
  • Oregon
  • Philadelphia, Pennsylvania
  • Pittsburgh, Pennsylvania
  • Puerto Rico
  • Vermont
  • Washington (statewide & the following municipalities: SeaTac, Seattle, Spokane, Tacoma)

There is a counter-trend across the nation aiming to eliminate the hodgepodge of local laws and foster statewide uniformity in mandatory paid sick leave.  Some states have passed laws affirmatively banning local governments from mandating paid sick leave for private employers, including Alabama, Florida, Georgia, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Oregon, Tennessee, and Wisconsin.  Similar legislation prohibiting local laws has been introduced in Pennsylvania and New Jersey.

Advocates of mandatory paid sick leave laws told the Morristown Town Council that providing paid sick time is good for businesses, as it will create a happier, healthier and more productive workforce, resulting in less worker turnover and leading to reduced costs incurred for potential new hiring.  However, opponents of the new law argue that small business owners will face cost-issues in order to remain in compliance.  Morristown Councilwoman Deeb, who provided the lone dissenting vote, believes the law will drive small businesses out of Morristown.

For more information on the ordinance and how the new sick leave requirements will affect your business, 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.