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.

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.

Uber Scores Victory Compelling Arbitration in Wage & Hour Misclassification Suit

Just a few days after being in the news and facing consumer boycotts for allegedly seeking to profit as a result of a taxi boycott of JFK International Airport related to President Trump’s immigration Executive Order, Uber received good news when it received a pro-employer legal ruling in a suit brought against the company by its New Jersey drivers.

In a published opinion filed on January 30, 2017, Hon. Freda L. Wolfson, U.S.D.J. of the U.S. District Court for the District of New Jersey held that a proposed class of Uber drivers must arbitrate their claims that Uber misclassified them as independent contractors, failed to pay overtime compensation, and required drivers to pay business expenses purportedly incurred for Uber’s benefit.  In Singh v. Uber Technologies Inc., No. 16-03044 (D.N.J. January 30, 2017), the District Court made two significant findings that are favorable to employers: (1) employment agreements incorporating so-called “clickwrap” or hyperlinked agreements by reference are enforceable—whether or not the employee actually reviews the agreement—so long as the employer provides reasonable notice that the terms and conditions of that agreement apply; and (2) Uber’s agreement with its drivers is not considered a contract involving “transportation employees,” and therefore is not subject to the exemption provisions of the Federal Arbitration Act (FAA), which the court construed narrowly.

In Singh, plaintiff registered with the Uber App (the “App”) in order to become a driver with Uber’s “uberX” platform. Registration required him to electronically accept an Agreement provided by Uber’s technology service provider Raiser, LLC (the “Raiser Agreement”).  When plaintiff logged onto the App, he was able to review the Raiser Agreement by clicking a hyperlink to the Raiser Agreement within the App.  To advance within the App past the hyperlink and actively use the App, plaintiff had to twice confirm that he reviewed and accepted the Raiser Agreement by clicking “YES I AGREE.”

The first page of the Raiser Agreement also contained a paragraph, written in large bold and capital text, indicating that a voluntary arbitration agreement was contained therein.  The arbitration provision required Uber drivers—if they do not opt out within a 30-day period—to individually arbitrate all disputes arising out of, or relating to, the Raiser Agreement, or their relationship with Uber, including disputes alleging breach of contract, wage and hour, and compensation claims on an individual and class or collective basis.  Importantly, the Raiser Agreement’s 30-day opt out provision noted that the arbitration provision was not mandatory, and should the driver choose to opt out of arbitration, Uber would not retaliate against him or her.  Plaintiff was also permitted to spend as much time as he found necessary in reviewing the Raiser Agreement on his smartphone or other electronic devices before accepting it.

Following the filing of litigation by plaintiff, Uber moved to dismiss the complaint and compel arbitration.  In his opposition, the plaintiff first asserted that because Uber only provided a hyperlink, or “access” to the Raiser Agreement, as opposed to providing the document itself, he should not be bound to the Raiser Agreement’s arbitration provision.  In rejecting this argument, the District Court noted that for hyperlinked agreements to bind parties, they must provide “reasonably conspicuous notice of the existence of” the terms of the agreement, citing favorably to ADP, LLC v. Lynch, No. 16-01111 (D.N.J. June 30, 2016), a decision that our firm helped to achieve on behalf of a long-time client.  The District Court determined that since the plaintiff was required to review and agree to the hyperlinked Raiser Agreement before utilizing the App, and the link was prominently displayed, he was provided with sufficient notice of the terms and conditions and therefore manifested intent to be bound by the agreement.

The District Court also held that the parties’ agreement is subject to the FAA, granting the court authority to compel arbitration. Plaintiff argued that his employment with Uber fell within the exemption contained in Section 1 of the FAA, which excludes from the FAA’s ambit contracts involving “transportation employees.”  However, the court noted even if plaintiff was an Uber employee (as opposed to an independent contractor, as Uber argued), Section 1 of the FAA only excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  The court found that although the Third Circuit has yet rule on the issue, virtually every other Circuit Court having considered the issue found that the exclusion is to be narrowly construed as only applying “to those employees who are actually engaged in the movement of goods, as opposed to the transportation of people, in interstate commerce.”  Coupled with Congress’s intent to only exclude contracts involving certain categories of workers in this way from the application of the FAA, the District Court held that plaintiff’s job was “too far attenuated from the types of employees to whom the FAA’s exclusion is intended to apply.”

Finally, the District Court also rejected plaintiff’s argument that the Raiser Agreement violated Section 8 of the National Labor Relations Act (NLRA).  While noting that it is an open question whether “an employee may enter into an arbitration agreement requiring the resolution of labor disputes on an individual basis” (indeed, the Supreme Court recently granted certiorari to review this exact issue), the court found it did not need to reach this issue because Uber did not “restrain, or coerce” the plaintiff into being bound by the arbitration agreement contained within the Raiser Agreement because it was optional.

The court’s decision in Singh shows that if crafted correctly, employers are permitted to execute agreements with their employees in more contemporary fashion, and with dispute resolution provisions that are fair and efficient for all parties.

For questions about Singh v. Uber Techs. Inc. and its implications on your company’s arbitration agreements, please contact 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 you up-to-date on the latest news and legal developments effecting your workforce.

EEOC Releases 2016 Enforcement Data: Charges Increase, Downward Trend in Litigation & Monetary Recovery, LGBT Charges Highlighted

Each year, the U.S. Equal Employment Opportunity Commission (EEOC) releases data detailing the charges of workplace discrimination it receives, the number of enforcement suits filed and resolved, and any areas of targeted investigations and compliance initiatives from the prior year.  On January 18, 2017, the EEOC released its Fiscal Year 2016 Enforcement and Litigation Data summarizing its findings.

Rising Number of Discrimination Charges – According to the EEOC, in 2016 it received 91,503 charges of discrimination, making 2016 the second consecutive year that the agency has seen an increase in the number of charges.  2016 also marks the third consecutive year in which retaliation was the most frequently filed charge.  Below is a chart summarizing the EEOC’s breakdown of the categories of charges filed in 2016 along with a comparison to those charges filed in New Jersey and New York:

  National New Jersey New York
Retaliation:  

42,018 (45.9%)

 

731 (1.7% of total Retaliation charges in US)  

1,604 (3.8% of total Retaliation charges in US)

 

Race:  

32,309 (35.3%)

 

624 (1.9% of total Race charges in US)  

1,084 (3.4% of total Race charges in US)

 

Disability:  

28,073 (30,7%)

 

583 (2.1% of total Disability charges in US)  

1,061 (3.8% of total Disability charges in US)

 

Sex:  

26,934 (29.4%)

 

500 (1.9% of total Sex charges in US)  

1,202 (29% of total Sex charges in US)

 

Age:  

20,857 (22.8%)

 

437 (2.1% of total Age charges in US)  

865 (4.1% of total Age charges in US)

 

National

Origin:

9,840 (10.8%)

 

254 (2.6% of total National Origin charges in US)  

601 (6.1% of total National Origin charges in US)

 

Religion:  

3,825 (4.2%)

 

104 (2.7% of total Religion charges in US)  

180 (4.7% of total Religion charges in US)

 

Color:  

3,102 (3.4%)

 

42 (1.4% of total Color charges in US)  

208 (6.7% of total Color charges in US)

 

Equal Pay:  

1,075 (1.2%)

 

Info not available Info not available
Genetic

Information:

 

238 (.3%) Info not available Info not available

Steady Increase in Charges Filed by LGBT Individuals – For the first time, the EEOC included details in its year end summary about sex discrimination charges filed specifically by members of the LGBT community.  In fiscal year 2016, it settled 1,650 of such charges, recovering $4.4 million.  This accounts for roughly 40% of the 4,000 sex discrimination charges filed by LGBT individuals since fiscal year 2013, which indicates a notable, steady rise in the number of charges filed by members of the LGBT community.  Also trending are the issues involving transgendered employees’ restroom rights.  In July 2015, the EEOC ruled that denying an employee equal access to a common restroom corresponding to the employee’s gender identity constitutes sex discrimination violated Title VII of the Civil Rights Act, as does conditioning an employee’s such right on proof that the employee underwent a medical procedure, and/or restricting a transgendered employee to a single-user restroom.

Overall Decrease in Monetary Awards – The EEOC recovered a total of over $482 million in fiscal year 2016, down from the $525 million in 2015, broken down as follows:

  • $347.9 million for private-sector, state, and local government employees through mediation, conciliation, and settlements;
  • $52.2 million through litigations; and
  • $82 million for federal employees.

Downward Trend in Litigation – Over 76% of cases that were referred to mediation in 2016 were resolved successfully, though conciliation had a lower success rate of only 44%.  Litigation by the EEOC is experiencing a downward trend, with only 165 active cases on the EEOC’s docket at the end of 2016, as opposed to the 218 that existed at the end of 2015.  In addition, the EEOC filed only 86 lawsuits alleging discrimination in 2016, down from its 142 filed in 2015 and 133 in 2014.

New Online Charge Status System – The EEOC launched digital services allowing employers and charging parties to receive and file documents electronically, check the status of charges online, and communicate electronically with the EEOC.  These services are intended to streamline the charge process and reduce the number of paper submissions and phone inquiries, easing administrative burdens on the EEOC.  These changes may make it easier not only for the agency to handle more charges and resolve them more quickly, but for complainants to file them.

New ADA Regulations on Employer-Sponsored Wellness Plans – The EEOC issued regulations and interpretive guidance advising that employers may provide limited financial and other incentives in exchange for an employee answering disability-related questions or undergoing medical exams as part of a wellness program.

Employers should review the EEOC’s 2016 charge and enforcement data in order to remain vigilant when responding to complaints of harassment and/or discrimination in the workplace.  The EEOC’s statistics also reinforces the need for employers to train managers, supervisors, and employees on those policies.

For more information on the EEOC’s year-end summary, the EEOC’s strategy for future enforcement of federal employment discrimination statutes, or ways to ensure that your company is in compliance with the EEOC’s mandates, 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.

Key 2017 Legal Changes that Employers and Federal Contractors Must Know About

Ready or not, 2017 is upon us and with it come many regulatory changes and important deadlines for employers and individuals. Make sure your New Year’s resolutions include compliance with the following changes and deadlines pertinent to employers and federal contractors.

Affordable Care Act

Employer Reporting. In November, the IRS extended the deadline for employers to meet their ACA reporting requirements. Employers required to furnish employees with Forms 1095 now have until March 2, 2017 to do so. The deadline to submit the Forms to the IRS remains February 28, 2017 for paper returns or March 31, 2017 for electronically-filed returns.

Marketplace Insurance. The deadline for individuals to obtain marketplace insurance coverage beginning January 1, 2017 expired on December 15, 2016. Individuals who want to enroll in marketplace insurance coverage for the balance of 2017 must do so by January 31, 2017. After the January 31 deadline, individuals may enroll in marketplace coverage only if they qualify for a Special Enrollment Period.

Required Contribution Percentages. For tax years and plan years beginning on and after January 1, 2017, the IRS increased to 9.69% of employee household income the maximum cost of coverage the employer can charge the employee for purposes of the employer mandate penalty. The IRS also increased to 8.16% of the employee’s household income the maximum cost of coverage the employer can charge the employee for purposes of determining whether the employee is eligible for an affordability exemption from the individual mandate.

IRS 2017 Contribution Limits for Retirement Plans and IRAs

The following are the IRS contribution limits for 2017:

  • 401(k) and 403(b) employee contribution limit: $18,000.
  • 401(k) and 403(b) catch-up contribution limit: $6,000.
  • IRA employee contribution limit: $5,500.
  • IRA employee catch-up contribution limit: $1,000.
  • 401(a)(17) compensation limit: $270,000.

Benefit Plan Changes

In May, the HHS Office of Civil Rights issued final rules implementing Section 1557 of ACA. Health programs must comply with these nondiscrimination rules effective January 1, 2017. Additionally, in May, the EEOC issued rules implementing Title I of the ADA and Title II of GINA as they relate to employer wellness programs. Employers must conform their wellness programs with these rules effective January 1, 2017. Plan sponsors that made material modifications to their benefit plans in the past plan year must provide participants with a Summary of Material Modifications within 210 days after the end of the plan year of the modification. For plan years ending on December 31, 2016, the SMM must be provided by July 30, 2017.

New York Minimum Wage and Overtime Salary Exemption Increase

Effective December 31, 2016, the N.Y. minimum wage and salary threshold exemption for time-and-a-half overtime pay increase based on the employer’s size and region as follows:

Minimum Wage Increase

  • New York City: Large Employer (11 or more employees): $11.00 per hour.
  • New York City: Small Employer (10 or fewer employees): $10.50 per hour.
  • Nassau, Suffolk and Westchester Counties: $10.00 per hour.
  • Remainder of New York: $9.70 per hour.

Overtime Salary Exemption Increase

  • New York City: Large Employer (11 or more employees): $825.00 per week.
  • New York City: Small Employer (10 or fewer employees): $787.50 per week.
  • Nassau, Suffolk and Westchester Counties: $750.00 per week.
  • Remainder of New York: $727.50 per week.

New Jersey Minimum Wage Increase

Effective January 1, 2017, the New Jersey minimum wage increases to $8.44 per hour.

EEO-1 Report

During 2017, no federal contractor or subcontractor is required to file an EEO-1 Report with the EEOC or DOL Office of Federal Contract Compliance Programs. The next filing date is March 31, 2018. For the March 31, 2018 filing and all future filings, EEOC and DOL will not accept paper filings. All filings must be done online. Finally, the snapshot pay period for the EEO-1 Report due on March 31, 2018 will be from October 1 to December 31, 2017 instead of July 1 to September 30.

Pay Transparency

Beginning January 1, 2017, pursuant to E.O. 13673 and the DOL Final Rule, a federal contractor or subcontractor must furnish a wage statement to each individual performing work under the federal contract if the individual is subject to the wage requirements of the FLSA, the Davis Bacon Act or the Service Contract Act. The wage statement must be provided each pay period and must include 1) the number of straight time hours worked; 2) the number of overtime hours worked; 3) the rate of pay; 4) gross pay; and 5) itemized additions to or deductions from gross pay. The federal contractor or subcontractor must inform an overtime-exempt individual in writing of the exempt status. For individuals treated as independent contractors, the federal contractor or subcontractor must provide a written notice that the individual is classified as an independent contractor.

Paid Sick Leave

Beginning January 1, 2017, pursuant to E.O. 13706 and the DOL Final Rule, a federal contractor or subcontractor must provide an employee with at least 56 hours per year of paid sick leave or permit an employee to accrue not less than one hour of paid sick leave for every 30 hours worked under a covered federal contract.

If you have any questions or would like to discuss how these changes and dates affect you or your business, please contact Patrick W. McGovern, Esq. at 973-535-7129 or pmcgovern@nullgenovaburns.com, or Nicole L. Leitner, Esq. at 973-387-7897 or nleitner@nullgenovaburns.com.

Meet Trump’s Pick for the U.S. Department of Labor – CEO Andrew Puzder

President-elect Donald Trump tapped Andrew Puzder to lead the U.S. Department of Labor (“USDOL”) in his administration, an appointment that could have important implications for employers in terms of the USDOL’s recent hardline enforcement policies on joint employer relationships and independent contractor status. It also may signal how vigorously the USDOL will defend certain regulatory changes made under the current administration, such as the revised Persuader Rules (which significantly hinder an employer’s ability to use law firms during a union organizing campaign) and the amendment to the Fair Labor Standard Act’s “White Collar” exemptions (which more than doubles the minimum salary an employee must be paid in order to qualify for an overtime exemption). Both of these regulatory changes were blocked by federal courts last month and remain unenforceable unless the USDOL successfully appeals the federal courts’ injunctions.

Mr. Puzder has been CEO of CKE, which owns fast food chains Hardee’s and Carl’s Jr., since September 2000. CKE has 75,000 employees in the U.S. and nearly 100,000 worldwide. Mr. Puzder was an outspoken critic of the Labor Department under the Obama administration. He wrote multiple Wall Street Journal op-eds against any increase in the minimum wage or changes in overtime rules. Mr. Puzder has advocated for employers to consider automation in the face of rising employee costs.  Concerning automation, Mr. Puzder commented, “[machines are] always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.” Mr. Puzder has written about how overregulation from Obamacare has held back the restaurant industry and has made the case for less regulation in the labor market.  In 2010, Mr. Puzder released a book with professor David Newton entitled “Job Creation: How it Really Works and Why Government Doesn’t Understand It.” Leading up to the 2012 election, Mr. Puzder was an economic advisor and spokesman for the Romney Campaign for President. This election cycle, Mr. Puzder was an advisor and fundraiser for the Trump campaign.

If you have any questions or would like to discuss how the change in the administration could affect your business, please contact John Vreeland, Esq., Chair of the firm’s Wage and Hour Compliance Group, at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at (973) 646-3275 or acarter@nullgenovaburns.com.

$15 Minimum Wage Bill Heads to Governor Christie’s Desk

In a close 21-18 vote the New Jersey State Senate passed bill S15, the $15 Minimum Wage Bill. The bill will now head to Governor Christie’s desk after its previous stamp of approval from the New Jersey State Assembly.  The vote proceeded along party lines with the 18 Republican legislators raising objections to the increased costs on businesses and the 21 Democratic legislators fighting to provide a living wage.

Governor Christie has not commented on whether he will veto the bill but it is highly unlikely he accepts the $15 wage increase. State Democratic leaders have promised to submit the $15 minimum wage to the voters in a constitutional referendum if Governor Christie vetoes the bill.

$15 minimum wage bills have already been signed into law in New York and California.  Massachusetts, Vermont and Connecticut are currently considering similar bills. In addition to the $15 minimum wage there are potential costs for insurance and payroll taxes.  Employers should continue to stay informed on the movement of this legislation with an eye on implementation in early 2018.

For more information regarding the potential impacts of Bill S15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

New Jersey Assembly Picks Up Fight For $15 Minimum Wage

The fight for a $15 minimum wage is gaining steam in the New Jersey Legislature. On May 26, 2016, the New Jersey Assembly passed Bill A15, which would raise the minimum wage to $15 an hour by 2021. Currently, the New Jersey State minimum wage is $8.38 per hour.

The $15 minimum wage would not get there all at once. Under the recently passed bill, the minimum wage first would increase to $10.10 per hour on January 1, 2017.  Then, between 2018 and 2021, the minimum wage would increase by the greater of $1.25 an hour or $1.00 an hour plus the CPI each year. An identical version of the Assembly’s bill has already passed the New Jersey Senate’s Labor Committee (Bill S15). If the full Senate passes the bill it will head to the Governor’s desk where it most likely will be vetoed.

But the Governor’s veto may not be the end of the bill. The Legislature is proposing that in the event of a Governor veto, the bill be put to a constitutional referendum for the voters to decide during the New Jersey General Election on November 7, 2017. This would not be the first time the Legislature managed to get around a veto to increase the minimum wage. The minimum wage was previously raised by constitutional referendum in 2013 when voters amended the State’s Constitution to increase the minimum wage to $8.25 per hour despite a Governor Christie veto.

While the proposed $15 minimum wage may seem a long way away, employers should start thinking now about how this would affect their business. Many employers are still struggling from the more than 15% increase in the minimum wage over the last two years. An increase to just $10.10 in 2018 (which is when the increase would take effect if the bill is vetoed but then approved through referendum) would reflect another 20% increase, or an almost 40% increase since 2013.  Such increased labor costs may be more than some employers can or are willing to absorb. For instance, Wendy’s recently stated it would replace some workers with automated machines in response to significant increases in minimum wage.

For more information regarding the potential impacts of Bill A15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

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@nullgenovaburns.com or 973-533-0777.