No Roman Holiday: New Jersey Appellate Division Says Employees Must Submit Sexual-Harassment and Discrimination Claims to Arbitration

August 23, 2018 was a busy day for the New Jersey Appellate Division on the arbitration front when it issued two opinions effectively upholding the enforceability of arbitration agreements.  Both cases involved sexual-harassment and discrimination claims brought by employees against their former employers under the New Jersey Law Against Discrimination (“NJLAD”).  In D.M. v. Same Day Delivery Service, Inc., et al., the Appellate Division held that a former employee was bound by the terms of an arbitration agreement, even though the language in a few sentences were “poorly written” and “didn’t make sense.”  In Roman v. Bergen Logistics, LLC, et al., the Appellate Division held that a former employee was required to arbitrate her claims, but added that, contrary to the terms of her agreement, she could also seek punitive and exemplary damages in arbitration.

Same Day provides some clarity for Arbitration Agreement language

In Same Day, an employee filed a complaint in New Jersey state court against both her former employer and her former manager, asserting claims under the NJLAD.  The employee had been hired as a delivery person by Same Day Delivery, Inc. and worked as a driver for just over two months.  During the time of her employment, the employee alleged that her manager had made “sexually provocative comments” about her body and subjected her to a hostile work environment on account of her sex and sexual orientation.  Furthermore, the employee maintained that she was fired in retaliation for rejecting her manager’s advances.

The employer moved to dismiss the complaint and compel arbitration, asserting that the employee had electronically signed an arbitration agreement along with her employment application, which she had submitted through the company’s online recruiting platform, and was therefore required to submit her claims to binding arbitration.  In response, the employee argued that the arbitration agreement was unenforceable and pointed to certain sentences with ambiguous and unclear language, which she contended made the whole agreement incomprehensible to an employee of average intelligence and thus invalid.  Particularly at issue was the wording of the last sentence of the agreement, which stated “I am agree to waive my voluntarily and knowingly, and free from any duress or coercion whatsoever to a trial by a trial judge or jury as well as my right to participate in a class or collective action.”  The trial court found that, although this sentence “doesn’t make sense,” the rest of the agreement was sufficiently clear to make the agreement enforceable and therefore entered an order directing arbitration and dismissing the complaint.  The employee appealed.

Giving further support to the federal and state policies favoring the arbitration of disputes, the New Jersey Appellate Division affirmed the trial court’s finding that the poorly drafted language did not make the whole agreement ambiguous to the extent that it was invalid because the remainder of the document was clearly written.  In reaching this conclusion, the Appellate Division addressed the issue of what language would make an arbitration agreement clear and understandable to an ordinary reader.  At the outset, the Appellate Division noted that the standard in New Jersey for an enforceable arbitration agreement is that the language clearly state that the employer and employee(s) are 1) agreeing to arbitrate and 2) agreeing to waive the right to pursue a claim in court.  Notably, this standard does not require a “particular form of words,” but, being mindful that these agreements involve a waiver of rights, the language must be such that the employee has full knowledge of his/her legal rights and, by signing, demonstrate his/her intent to surrender those rights.  The Appellate Division also noted that such an agreement will pass muster when it is phrased in plain language that is understandable to an average member of the public, who may not know that arbitration is a substitute for the right to sue.

Roman: don’t waive punitive damages goodbye

In Roman, the court confronted an arbitration agreement which stated, among other things, that the employee had waived her right to pursue punitive damages for all employment matters, including those related to wrongful termination, discrimination, harassment, retaliation, and any other violation of state and federal law.  The employee was hired by Bergen Logistics, LLC as a human resources generalist and signed an arbitration agreement as an express condition of her hiring and continued employment. The employee was terminated within four months of her hire date, after which point she filed a complaint in New Jersey state court against her employer and her former supervisor, asserting claims under the NJLAD and for intentional infliction of emotional distress.  The employee alleged that, during the time of her employment, her supervisor had sexually harassed her and had created a sexually hostile work environment and she further alleged that her termination was retaliation for her objecting to the supervisor’s sexual advances.

The employer moved to dismiss the complaint and compel arbitration, asserting that the employee was obligated to arbitrate her claims pursuant to the agreement that she had signed at the outset of her employment.  In response, the employee argued that the arbitration agreement was unenforceable because it barred the recovery of punitive damages, which the NJLAD makes explicitly available to victims of discrimination.  Unpersuaded, the trial court found that the agreement was a clear and unambiguous waiver of claims for punitive damages, that the employee knowingly signed the agreement, and that the agreement covered the claims set forth in the complaint.  The trial court accordingly entered an order upholding the enforceability of the agreement and dismissing the complaint.  The employee then appealed, again contending that a waiver of punitive damages should not be enforced.

In reviewing the trial court’s decision, the New Jersey Appellate Division noted that the federal and states policies favoring arbitration are “not without limits.”  In this vein, the Appellate Division focused its review on the relationship of the waiver-of-rights provision in arbitration agreements to the rights afforded by the NJLAD.  The Appellate Division determined that the NJLAD permits the recovery of punitive damages to victims of discrimination for an important, public-interest purpose, namely the deterrence and punishment of the most egregious discriminatory conduct by employees who, by virtue of their positions in upper management, control employer policies that should prevent discriminatory conduct in the workplace.  The Appellate Division held that this is a “substantive right” that cannot be waived by agreement between an employee and his/her employer.  Therefore, that Appellate Division modified the trial court’s decision by affirming that the employee must arbitrate her claims and adding that she was permitted to include claims for punitive and exemplary damages in the arbitration proceeding.

Bottom Line

While these opinions reaffirm the compelling federal and state policies that favor the arbitration of disputes, they also illuminate equally compelling, and at times competing, public interests at play within the broader scope of employer-employee relations in the state of New Jersey.  Courts in New Jersey have consistently recognized the benefits of arbitration as providing an inexpensive and efficient means of dispute resolution.  Furthermore, the agreement between the employee and employer to pursue arbitration as expressed in the form of a contract has been strictly enforced, in most instances.  However, these recent opinions make it clear that the enforceability of arbitration agreements depends, in part, on the clarity of the plain language used as well as on the rights that the employee and employer have agreed to waive.  These recent opinions should serve as cautionary tales that the public interests of clarity in contract and an employee’s right to a discrimination-free workplace are some of the many considerations that employers must have when crafting arbitration agreements with the assistance of counsel.

For more information on what your company can do to ensure its arbitration agreement will be enforceable, 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.

Federal Judge Clears the Haze for New Jersey Employers in the Weeds with Medical Marijuana Users

States across the country, including New Jersey, continue to legalize medical marijuana, but it remains an illegal substance under federal law, and employers’ confusion continues to bud.  The complication that employers have – especially in states such as New Jersey with expansive disability protections under the New Jersey Law Against Discrimination (“NJLAD”) – is that any employee who is using marijuana for a medicinal purpose under the New Jersey Compassionate Use Medical Marijuana Act (“NJCUMMA”), likely would be considered to have a disability and thus be protected under the NJLAD.

One way an employer can be considered under NJLAD to have discriminated against a disabled individual is by failing to offer him/her a reasonable accommodation.  While the NJCUMMA explicitly states that a reasonable accommodation would not include allowing an employee to use marijuana at work, the statute is not so blunt on the topic of workplace drug testing.  Does NJLAD require that employers accommodate a medical marijuana user by waiving the requirement that he/she pass a drug test for federally-prohibited narcotics?  Issuing a dose of relief to employers who feared that NJCUMMA would set their drug test requirements ablaze, a New Jersey federal judge recently ruled that the answer is no.

In Cotto v. Ardagh Glass Packing, Inc., et al., the plaintiff worked for about 5 years as a forklift operator for a glass packaging company.  In 2016, he injured his head on the job and was placed on light duty work.  He was subsequently asked to take a drug test before returning to work as a condition of continued employment.  He informed his employer that he would test positive for medical marijuana, which he was legally prescribed to treat a neck and back injury that occurred in 2007.  Seeking an accommodation, the plaintiff requested that his employer waive the requirement that he pass a drug test for marijuana.  Apparently, the plaintiff had told the employer upon hire that he was prescribed medical marijuana.  After his employer refused to waive the requirement that he pass a drug test before returning to work, he sued for disability discrimination based on a failure to accommodate.

Judge Robert B. Kugler of the U.S. District Court for the District of New Jersey held that the NJCUMMA does not require an employer to waive its requirement that employees pass a drug test for illegal drugs.  Addressing the issue as one of first impression in New Jersey, Judge Kugler relied on the current federal prohibition on marijuana.  He also relied on the express language of the NJCUMMA, which provides that legal medical marijuana users shall not be subject to criminal or civil penalties related to their use of the drug, but expressly excludes employers from its scope, as follows: “Nothing in this act shall be construed to require . . . an employer to accommodate the medical use of marijuana in any workplace.”  N.J.S.A. § 24:6I-14.  Judge Kugler also observed that most courts outside New Jersey have concluded that, unless their state statute’s language explicitly provides otherwise, the decriminalization of medical marijuana does not shield employees from adverse employment actions related to their use of the drug.

Last year, in Barbuto v. Advantage Sales and Marketing, LLC, the Supreme Court of Massachusetts was faced with a similar set of facts: an employee suffering from Crohn’s disease who was legally prescribed medical marijuana under Massachusetts’ medical marijuana statute, sought a waiver of her employer’s policy barring from employment those who test positive for marijuana.  Like the NJCUMMA, Massachusetts’ statute also explicitly states that employers are not required to accommodate any on-site medical marijuana use.  The employer in Barbuto argued that because the only accommodation the employee sought – her continued use of medical marijuana – is a federal crime, it was facially unreasonable.  The Barbuto Court disagreed, noting that such an argument respects federal law alone and ignores Massachusetts voters’ and legislators’ recognition of marijuana as an acceptable method to treat debilitating medical conditions.  The Court further held that, even if an accommodation of continued use of medical marijuana were facially unreasonable, the employer still had a duty to engage in the interactive process and explore with the employee whether there was an alternative accommodation that would allow her to work, such as allowing her to use the drug off-site during non-working hours.

Cotto concerned the reasonable accommodation request of waiving a drug test while Barbuto involved the reasonable accommodation request of using marijuana off-site during non-work hours.   The parties and judge in Cotto seem to have gone out of their way not to cite or distinguish Barbuto, so while New Jersey employers now have clarity about drug testing, they remain dazed and confused as to whether allowing an employee to use medicinal marijuana off-site during non-work hours would be a legitimate reasonable accommodation.

In addition, employers should understand that their knowledge that an employee uses the drug almost invariably imputes knowledge that an employee suffers from a protected disability.  The Cotto case concerned employer conduct resulting from an employee’s treatment, not the employee’s disability, as the plaintiff admitted that his employer knew about his disability for years and never discriminated against him until he was asked to take the drug test.  However, in the absence of such favorable facts, employers should take caution not to make employment decisions based solely on their knowledge that an employee is a medical marijuana user.

For more information about the interplay between the decriminalization of medical marijuana and disability discrimination law, please contact Harris S. Freier, Esq. of the firm’s Employment Litigation Practice Group, at hfreier@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Unhappily, Ever After: NJ Supreme Court Rules Divorcing Employees Protected by NJLAD

Unfortunately, not all marriages are happily ever after.  When divorce seems inevitable, losing your job as a result of a looming divorce is something no employee wants to worry about.  On June 21, 2016, the New Jersey Supreme Court in Smith v. Millville Rescue Squad (074685 (A-19-14) unanimously ruled that the New Jersey Law Against Discrimination’s (“NJLAD”) protection against discrimination on the basis of marital status also includes protection for divorced employees.  The New Jersey Supreme Court upheld the 2014 decision of the Appellate Division which concluded that the Millville Rescue Squad’s decision to terminate the plaintiff, Robert Smith, based on an assumption about his ability to work with his ex-wife was discriminatory.  In finding that the protections afforded by NJLAD’s marital status are not limited to the state of being single or married, the New Jersey Supreme Court effectively extended the reach of the NJLAD to include those who are separated, going through a divorce or divorced and recently widowed. Employers are prohibited from assuming, based on “invidious stereotypes,” that an employee will be disruptive or ineffective simply because of their marital status.

Smith, a 17-year veteran at Millville Rescue Squad (“MRS”), was allegedly fired when his supervisor heard the news about an impending separation from his then-wife and coworker.  Knowing the contentious nature of divorces, and worried about the spillover effect of a potential divorce involving two of his employees, Smith’s supervisor allegedly warned him that his continued employment with Millville was contingent on how the separation turned out.  After receiving confirmation from Smith that an amicable reconciliation was unlikely, Smith’s supervisor allegedly stated that he could not promise that it would not affect plaintiff’s job, as he believed Smith and his co-worker wife would certainly have an “ugly divorce”.  Smith was subsequently terminated for performance based on “company restricting” reasons.

Smith ultimately filed suit for wrongful termination and discrimination in violation of the NJLAD based on marital status, claiming the reasons given for his departure were discriminatory, improper and pretextual.  At oral argument before the New Jersey Supreme Court, the attorney for MRS conceded that although Smith’s supervisor’s comments were made in reference to the potential negative impact the divorce would have in the workplace, the disparaging comments were not signifying a bias against divorce itself.  Smith contended that the supervisor’s ugly comment demonstrated clear evidence of prejudice given his stellar performance record.

Notably, the New Jersey Supreme Court was careful to emphasize that the presumptive extension of NJLAD does not preclude employers from implementing and enforcing “anti-nepotism” policies in the workplace, confirming that the ability of an employer to restrict employees related by blood or marriage from working together has not been diminished.  Nonetheless, such policies must be enforced in a nondiscriminatory manner and in strict adherence the precedent set by NJLAD.  Additionally, the Court further clarified that employers are allowed to discipline employees based on performance and conduct, irrespective of their marital status so long as the reason for their discipline is not related to circumstances in his or her personal life.

As a result of this decision, employers must use caution when terminating an employee who is either in the process of getting divorced or is divorced.  The decision to terminate an employee cannot be based on an assumption about an employee’s inability to perform their job given for reasons related to their marital status.  The decision to terminate must only be based on actual workplace conduct or performance issues unrelated to marital status that has been clearly and routinely documented.

For more information on this decision and best practices regarding employee documentation and termination, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq, Director of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Please, Take Your Time: NJ Supreme Court Voids Contracts That Limit Workers’ Time to Sue

On June 15, 2016, the New Jersey Supreme Court issued its long-awaited decision in Sergio Rodriguez v. Raymours Furniture Company, Inc., in which it addressed whether the two-year statute of limitations under the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1 to -49, may be altered pursuant to a private agreement.  The issue was a matter of first impression for New Jersey courts.  In a unanimous opinion authored by Justice Jaynee LaVecchia, the Court held that “a private agreement that frustrates the LAD’s public-purpose imperative by shortening the two-year limitations period for private LAD claims cannot be enforced.”

Plaintiff, Sergio Rodriguez, was hired by defendant, Raymours Furniture Company, Inc., the parent company of furniture retailer Raymour & Flanigan, in September 2007, and sustained an injury to his knee in April 2010.  After having undergone surgery for the injury, along with a brief recovery period, Rodriguez was cleared to resume his work duties in September 2010.  Just two short days after his return to Raymour & Flanigan, Rodriguez was terminated as part of a company-wide reduction in force. Rodriguez instead contended that he was targeted because of his injury and asserted that others with less seniority or distinguishing features were retained.

Rodriguez brought a lawsuit in the Superior Court against Raymours in July 2011, seven months after his termination, alleging wrongful termination based on an actual or perceived disability under the LAD, which carries a two-year statute of limitations. However, Raymour & Flanigan’s employment application, which Rodriguez signed, included a provision shortening the period for an employee to file a claim against the company to six months. The provision stated that “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit,” adding, “I waive any statute of limitations to the contrary.”

The trial court granted summary judgment in favor of Raymours, upholding the validity of the contractual limitation as clear and unambiguous and neither unreasonable nor against public policy.  On appeal, the Appellate Division also sided with Raymours, holding that employers are generally able to shorten a statutory limitation through an employment contract so long as the provided language is clear and unambiguous.  While pointing out that the language of the provision was acceptable and not misleading, the Appellate Division noted that “[t]he disputed contract provision was not buried in a large volume of documents.  It was contained in a two-page application and set forth very conspicuously in bold oversized print and capital lettering, just above the applicant’s signature line. The terminology was clear and uncomplicated.”  Ultimately, the trial court and Appellate Division held that the provision met the aforementioned threshold and by signing the document, Rodriguez waived his rights to access the LAD after the six-month period expired.

On appeal to the Supreme Court, the plaintiff made two arguments, generally focusing on principles of contract unenforceability based on unconscionability.  Because this contract was one of adhesion, the plaintiff contended that it was both procedurally and substantively unconscionable and unenforceable due to the inherent imbalance of power in an employment application.  Furthermore, the plaintiff argued that permitting such a contractual shortening of the limitations period would frustrate the remedial scheme of the LAD.  The defendant-employer argued that it is well established under New Jersey law that parties may privately contract to shorten statutes of limitation and that the waiver at issue here was clear and unambiguous.

This case drew significant interest from the legal community.  The New Jersey State Bar Association, the New Jersey Association for Justice, the American Civil Liberties Union of New Jersey, and the National Employment Lawyers Association all submitted amicus curiae briefs generally supportive of the plaintiff’s position, focusing on the “singular public-interest importance of the LAD.”  The Academy of New Jersey Management Attorneys filed a brief in support of the defendant, arguing that shortening the limitations period under the LAD did not frustrate public policy and was within private parties’ ability to contract.

While recognizing the “strong belief” in the freedom to contract in New Jersey, the Court emphasized the public interest that the LAD serves to protect in trying to eliminate discrimination.  In making its determination, the Court relied heavily on its decision in Montells v. Haynes, 133 N.J. 282 (1993), where the two-year statute of limitations for claims under the LAD was first established.  In addition, the Court looked to the State Legislature’s more than two-decades-long acceptance of that limitations period, noting that the LAD has been amended in other respects during that time period.  The Court offered several reasons in support of its decision:

  • Shortening the time period for bringing an LAD action in the Superior Court would undermine the integrated nature of the statutory avenues of relief and election of remedies made available to claimants;
  • A limitations period of shorter than two-years would effectively eliminate claims because it takes time for an individual to bring the claim forward and the two-year period established in Montells was purposefully designed to impose uniformity and certainty;
  • A shortened limitations period might compel a person to file a premature LAD action where investigation might reveal a lack of a meritorious claim; and
  • Case law has incentivized employers to first receive workplace complaints, investigate them, and respond and any shortening of the period would “seriously affect an employer’s ability to protect itself.”

The Court emphasized that its decision was “rooted in the unique importance of our LAD and the necessity for its enforcement.”  The Court further noted that “[r]estricting the ability of citizens to bring LAD claims is antithetical to that societal aspiration and defeats the public policy goal” of the law.  While the Court’s decision was rooted in the public policy importance of the LAD, the Court also noted that it would have reached the same outcome based on the argument of unconscionability, though it did not go into a detailed analysis.  The Court said that if such an analysis were to be performed, it would have struck down the agreement because the provision was located in an employment application, the plaintiff could not bargain, and it was an adhesion contract containing “indicia of procedural unconscionability.”

What does this decision mean for employers in New Jersey?  The Court’s decision affirms its longstanding commitment to the public policy goals and remedial nature of the LAD.  Unless and until the State Legislature decides to alter the limitations periods for claims under the LAD, it remains a two-year period and that time frame may not be amended through a private agreement.

While it appears that employers can no longer alter the two-year statute of limitations for LAD claims by private agreement, employers need to take action to ensure that they are in the best positon possible when litigation does arise, which can be achieved by:

  • Thorough documentation of performance issues;
  • Regular Anti-Discrimination and Harassment Training;
  • Proper paperwork for all reductions-in-force; and
  • Ensuring that prompt and thorough investigations of employee complaints are conducted.

Finally, when terminating an employee, employers may want to consider severance payments in exchange for a release of all claims. Most importantly, employers should consult with counsel to evaluate their arbitration agreements, employment policies and procedures, and ensure conformity with the Court’s ruling.  For more information, please contact John C. Petrella, Esq., Director of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq, Director of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

New Jersey Employers Required to Post and Distribute Gender Equity Notice

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

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

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

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

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

More Protections for Pregnant Workers in New Jersey

Governor Chris Christie recently signed S-2995, the Pregnant Women’s Fairness Act, a bill sponsored by Senator Loretta Weinberg, which prohibits workplace discrimination against pregnant women. Specifically, the bill adds language to the state’s Law Against Discrimination barring employers from treating pregnant women less favorably than others who are not pregnant but have similar work abilities. The bill protects female employees affected by pregnancy, childbirth or related medical conditions, including recovery from childbirth.

Under the bill, employers are required to make reasonable accommodations for pregnancy related conditions when the employee, with the advice of her physician, requests an accommodation. Accommodations may include bathroom breaks, breaks for increased water intake, modified work schedules and light duty or assistance with manual labor. However, employers are not required to provide pregnant employees with additional paid or unpaid leave. In addition, employers have the right to refuse an accommodation if they can demonstrate that it would cause an undue hardship on business operations.

To ensure that your company’s policies and practices do not discriminate against pregnant employees, please contact Dena B. Calo, Esq., Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, at dcalo@nullgenovaburns.com, or Kathryn E. Dugan, Esq., Associate in the Employment Law & Litigation Group, at kdugan@nullgenovaburns.com.