KFC Counted Its Chickens Before Complying with NY City’s Fair Workweek Scheduling Law and Pays $80,000 in Restitution

On November 19, the New York City Department of Consumer Affairs (“DCA”) announced a settlement with an operator of 30 Kentucky Fried Chicken restaurants across the City for violations of the NYC Fair Workweek Scheduling Law. A DCA investigation concluded that the KFC employees were required to sign waivers of premium pay for any last-minute changes in their work schedules. The settlement agreement invalidates the waivers and requires payments to more than 600 employees of $80,000 in restitution for working consecutive shifts that were shorter than 11 hours apart. The settlement further requires that the KFC operator undergo comprehensive monitoring by an independent investigator for 18 months.

The NYC Fair Workweek Scheduling Law took effect in November 2017 and gives fast food workers the right to a more predictable work schedule. Employers are required to give employees advance notice of their work schedules and any changes to work schedules, post and electronically transmit work schedules, update and re-post any changed schedules, and provide historical schedules to employees upon request. Each violation of this section of the law carries a $200 penalty and an order of compliance. The law imposes mandatory penalties on fast food employers that give employees insufficient notice of a schedule change, ranging from $10 to $75, depending on the amount of notice given.

The Law prohibits covered employers from scheduling fast food employees to work two shifts over two consecutive calendar days if the end of the first shift is less than 11 hours before the beginning of the next shift, unless the employee has given written consent to work the second shift and is paid an extra $100 in a lump sum for the second shift. A violation of this section of the law carries a $500 penalty, an order of compliance, in addition to the $100 lump sum payment. The law also imposes job preference and posting requirements that prefer current employees.

The NYC Fair Workweek Scheduling Law also applies to retail workers and regulates on call shifts, cancellation of shifts, notice of work assignments and mandatory employee reporting availability to work. Retailer employers must provide employees with a written work schedule no later than 72 hours before the start of the schedule’s first shift, post work schedules in a conspicuous location at least 72 hours before the first scheduled shift, electronically transmit the schedules to the employees, and directly notify any affected employee of changes in the work schedule. Violations of these sections carry various penalties.

In just its first year of enforcement, the NYC Fair Workweek Scheduling Law has led to settlements benefiting almost 1,200 workers and requiring over $217,000 in restitution payments. Given the active compliance environment, fast food operators in the City must ensure their scheduling practices are updated to meet legal requirements and understand that the City will not enforce employee waivers of this Law. The law can be found here.

For more information regarding on the Fair Workweek Scheduling Law and management’s legal requirements under this Law, please contact one of the Partners in the firm’s Labor Law Practice Group:

You can also call us at 973.533.0777.

Appellate Division Rules Independent Contractor Agreements Signed by Driver’s Corporation Not Bullet Proof Against Class Action Overtime and Wage Deduction Claims

On October 29, 2018 a N.J. Appellate Division panel reversed a dismissal of class action overtime pay claims brought against a freight-forwarding company that convinced the lower court that the company’s drivers and deliverers lacked standing to sue because they signed independent contractor agreements to provide services through their separate corporations. In an unpublished opinion, the Appellate Division found that the court below prematurely ended its inquiry into whether the plaintiff was an employee or an independent contractor, and directed the lower court to look beyond the terms of the contract to consider the totality of the circumstances surrounding the relationship between the drivers and the company.  Veras v. Interglobo North America, Inc., et al., Docket No. A-3313-16T1 (Oct. 29, 2018).

In 2014, Raymond Veras, through his corporation J&K Trucking Solution, signed a “Contractor Lease Agreement” (CLA) with Interglobo and then provided driver services to Interglobo.  He claimed that he routinely worked in excess of 40 hours each week but received no overtime pay, and that Interglobo took illegal deductions from his pay. In 2015 he filed a class action under the N.J. Wage and Hour Law (WHL) and the Wage Payment Law (WPL) against two Interglobo entities. The CLA clearly stated that J&K was an independent delivery operator. However, Veras’s complaint alleged that, despite the CLA which his corporation signed, he was an employee protected by the WHL and WPL since he took direction from Interglobo and its employees, wore its uniforms, dealt with its customers’ invoices, and was subject to discipline and termination by Interglobo.

The lower court dismissed Veras’s complaint on the grounds that he lacked standing to bring the action. The Appellate Division reversed and held that the A-B-C test articulated by the N.J. Supreme Court’s 2015 decision in Hargrove v. Sleepy’s applied to determine whether Veras’ relationship with Interglobo was that of an employee as opposed to an independent contractor. The Appellate Division held that “a court is not limited to the terms of the contract between the parties” and the court should review “the substance, not the form of the relationship … to determine if [the relationship] is exempt from the WPL and WHL.”

The A-B-C test presumes that a service provider is an employee, unless the service recipient can prove A, B and C: (A) the service provider is free from direction or control by the service recipient, (B) the services rendered to the recipient are outside the recipient’s usual course of business, or are performed outside all places of the recipient’s business, and (C) the service provider is customarily engaged in an independently established trade, occupation, profession, or business.

Interglobo argued that the A-B-C test did not apply because Veras’s employer was his own corporation, J&K Trucking Solution, and under the economic realities test, Interglobo was not the employer. The court rejected this argument, too, and held that the economic realities test does not apply to WHL and WPL claims.

The Appellate Division held that the A-B-C test applied to Veras regardless of whether the CLA was signed by Veras as an individual or by his corporation, and stated that the A-B-C test presumes that Veras was an employee, not an independent contractor. The Appellate Division reasoned that even if the economic realities test did apply, dismissal of the complaint at the motion to dismiss stage was not warranted solely because of the CLA, because this test is fact-intensive, and courts rarely decide a worker’s status on a summary judgment motion, let alone on a motion to dismiss before discovery is taken.

Ultimately, this Appellate Division panel decided that the mere fact that the service provider’s corporation, and not the driver himself, signed an independent contractor agreement with the service recipient was not dispositive of the issue of employee versus independent contractor status at the motion to dismiss stage, and the underlying facts must be examined to determine whether, despite the contract, the service provider is an employee and has standing to sue the service recipient under the WHL or the WPL.  As businesses attempt to create more separateness between themselves and their service providers, this court cautions that employee status will not depend on the existence of a contract alone, but will be analyzed under the rigorous A-B-C test.

For more information on this court development, wage and hour law compliance, or independent contractor agreements, please contact Patrick W. McGovern, Esq., Partner in the firm’s Labor Law, Employee Benefits and Executive Compensation, Immigration Law and Wage and Hour Compliance Practice Groups, at PMcGovern@nullgenovaburns.com.

Supreme Court Bids Farewell to Mandatory Public-Sector Union Agency Fees in Janus Ruling

On June 27, the Supreme Court issued a 5-4 opinion in Janus v. American Federation of State, County, and Municipal Employees, Council 31, Dkt. No 16-1466, holding that compulsory payment of public-sector union fees by non-union members violates First Amendment free speech rights.

The petitioner in Janus, challenged the constitutionality of an Illinois law requiring public employees to pay union agency fees, despite an employee’s choice not to join the union and his strong objection to the union’s positions in collective negotiations. The petitioner argued that the payment of mandatory agency fees by nonmembers in connection with collective negotiations for government employees is inherently political and violates the First Amendment. Siding with the petitioner and striking down the Illinois law, the Supreme Court overturned its prior 1977 decision in Abood v. Detroit Board of Education, 431 U.S. 209 (1977).

In Abood, the Supreme Court held that a union could constitutionally collect from dissenting employees financial support for collective negotiations so long as the fees were not used for ideological or political causes not germane to the union’s duties as the collective negotiations agent. In the Janus opinion, Justice Samuel Alito wrote that “Abood was wrongly decided and is now overruled,” concluding that the mandatory payment of public-sector agency fees violates the free speech rights of nonmembers by compelling them to subsidize private speech. Under Janus, “States and public-sector unions may no longer extract agency fees from nonconsenting employees.” However, the Court stated that unions could require payment from nonmembers for union representation in disciplinary matters and grievances.

The Janus decision leaves open the specific timeframe by which an employee may revoke compulsory payment of public-sector union fees.

For New Jersey public employers, the Janus decision must be applied in light of the requirements of the recently enacted Workplace Democracy Enhancement Act (“WDEA”). The WDEA includes requirements regarding an employee’s withdrawal of consent for the union to collect fees. Additionally, the WDEA prohibits public employers from encouraging employees to revoke their union fee deductions and from discouraging employees to join, form or assist a union. Public employers should be prepared to receive employees’ withdrawals of consent and should continue to follow the current statutory WDEA requirements.

If you have any questions or would like to discuss how the Janus decision or the WDEA affects you, please contact Joseph M. Hannon, Esq. at 973-535-7105 or jhannon@nullgenovaburns.com, or Jennifer Roselle, Esq. at 973-646-3324 or jroselle@nullgenovaburns.com.

Putting Employees in the “Penalty Box” Could Have Courts Blowing the Whistle on You

While the National Hockey League’s Capitals are in Washington D.C. celebrating their Stanley Cup win, a Prosecutor’s Office in New Jersey may be in hot water for putting an employee in the penalty box following complaints about department misconduct.

Last month, the Appellate Division held that the transfer of an employee to a “less desirable” position can be considered an act of retaliation that violates the Conscientious Employee Protection Act (CEPA). This is true even if the employee’s primary terms and conditions of employment – compensation, hours, and physical location – remain unchanged after the transfer.

Jeffrey Scozzafava, a detective with the Somerset County Prosecutor’s Office, had been assigned to the forensic Crime Scene Investigation Unit since his hire in 2007.  In 2015, after he complained about the mishandling of evidence and deficient casework in his unit, he was transferred to the fugitive squad. Scozzafava brought a claim for retaliation against his employer. The Prosecutor’s Office argued that he did not suffer an adverse employment action because Scozzafava’s rank, position, pay and benefits remained the same, and it arguably improved his scheduled working hours.  Therefore, the Prosecutor’s Office argued, the move was a lateral transfer and not a demotion.

The Appellate Division disagreed and held that there was more to the analysis than merely ensuring that an employee is not terminated, suspended, or demoted after making a complaint, and that all of the attendant circumstances surrounding the employment action will be closely examined.

Scozzafava had previously been a forensic detective with the New Jersey State Police, and had 12 years of extensive training and experience in the forensic field prior to his employment with the Somerset County Prosecutor’s Office. He was a member of numerous forensic professional associations, devoted time as an instructor, and was qualified as an expert in various courts.  His abrupt transfer to the fugitive squad deprived him of using and building upon his twenty years of expertise in the forensic field.

The Court acknowledged that “not every employment action that makes an employee unhappy constitutes an actionable adverse action,” but held that under the circumstances of this case, the transfer was “objectively demeaning” to Scozzafava. It certainly did not strengthen the employer’s argument that when asked for the reasoning behind the transfer, Scozzafava’s lieutenant told him “everybody does time in the penalty box.”

Scozzafava also claimed that his transfer to the fugitive squad offered fewer opportunities to earn overtime pay. While the lower court found that the potential for overtime was “too nebulous” to be considered as part of an employee’s compensation, the higher court suggested that this could be independent grounds for the finding of a retaliatory act.  It has already been established by the New Jersey Supreme Court that “any reduction in an employee’s compensation” is considered an adverse employment action, and the Appellate Division suggests that reduced opportunities for overtime, standing alone, would qualify as a reduction in pay.

Bottom Line:  Here, the employer was well aware that its transfer of Scozzafava was not neutral, and the purpose was admittedly to put Scozzafava “in the penalty box.”  The new standard emerging from this decision expands the inquiry into the type of employment action that is considered retaliatory.  In addition to a review of the standard terms and conditions of employment – compensation, benefits, hours, and job title, the employee’s skills, training, and job history will be examined to determine whether the transfer is truly lateral, or whether it instead could be considered “objectively demeaning” – a phrase the Court twice repeated in its decision.  If it can be, and it comes on the heels of an employee objection or complaint about conduct that the employee reasonably believes is unlawful, the employer could face exposure for an act of retaliation. It is important to carefully review any management decision that could appear as if the purpose of the employment action is to bench an employee for not being a team player. A job transfer intended to be punishing will likely be flagged by the courts.

“Burn Files” and Employee Self-Help: Effective Policies Protect Documents Wrongfully Taken by Former Employee

A New Jersey appellate court recently upheld the disqualification of a former employee’s attorneys in a whistleblower claim against his former employer, because the employee had improperly taken documents containing privileged attorney-client communications to use against the employer “when they try to get him.”

Facts

The defendant, Maquet Getinge Group (“Maquet”), a German pharmaceutical company, designs, develops, manufactures, and distributes medical devices.  Because of the medical and technological focus of defendant’s business, Maquest maintains sensitive research and development data, new products, quality processes and procedures and protocols for the preparation of inspections by the Food and Drug Administration (“FDA”) on its computer systems.  Maquet had in place comprehensive policies designed to protect its confidential, proprietary information, including a “Standards of Conduct” policy, an “End User Acceptable Use Policy.”  Plaintiff, Oscar Sanchez (“Sanchez”), was employed by Maquet as the Chief Quality and Compliance Officer for approximately 18 months, until he was terminated in April 2015.  As a condition of his employment, Sanchez and other similarly situated employees had to sign a “Confidential Information, Invention Assignment, and Non-Compete Agreement.”  This agreement contained, inter alia, a “Covenant Not to Disclose” and a provision on “Return of Company Documents.”  Two months prior to his termination, Sanchez was disciplined after an investigation into numerous complaints about his conduct and deportment involving employees who reported to him.  After receiving the complaints, Sanchez informed a Senior Vice President of Marketing at Maquet that “he had personally retained copies of all kinds of Maquet-owned documentation – which he referred to as his ‘burn files’ and which included copies of . . . two executives’ hard drives and a binder full of emails and documents,” which he allegedly told his co-worker he “would use the ‘burn files’ to “f***” Maquet ‘when they tried to get him.’”

On July 2, 2015, Sanchez filed a complaint against Maquet alleging he had been wrongfully terminated for whistleblowing activities, in violation of the Conscientious Employee Protection Act (“CEPA”).  Maquet served Sanchez with its First Request for the Production of Documents in October 2015, to which plaintiff responded on February 1, 2016.  Upon receipt of the documents, Maquet claimed the documents plaintiff’s counsel had produced were owned by Maquet and had been improperly taken by Sanchez without Maquet’s knowledge or consent. Further, Maquet claimed the documents produced contained privileged attorney-client communications between Maquet’s staff and its attorneys, including correspondence regarding FDA compliance issues, results of third-party audits, budgeting issues, research and development, quality processes and procedures, and FDA findings.

Lower Court Decision

Defendant moved to preclude plaintiff from using these documents against defendant, and to remove plaintiff’s chosen counsel and his firm from continuing to represent plaintiff in the case.  In its decision, the lower court rejected plaintiff’s argument that Maquet had waived the attorney-client privilege. The Judge then found that Plaintiff’s chosen counsel “knew or should have known the material was privileged” yet failed “to promptly notify the opposing side that they had received privileged information” until nine (9) months after the case had been initiated. In disqualifying chosen counsel from serving as plaintiff’s counsel, the Judge found he would neither be harmed in the prosecution of the case nor that he would be unable to secure competent substitute counsel, as the case was still in its early stages.

Appellate Court’s Decision

Sanchez appealed arguing that the motion judge erred in reaching her decision to disqualify his chosen counsel without conducting an evidentiary hearing and that the judge misapplied the multi-factor analysis the NJ Supreme Court established in the seminal case, Quinlan v. Curtiss-Wright Corp. The Appellate Division rejected these arguments and affirmed the lower court’s decision.

The Appellate Division concluded the motion judge properly found the documents in question to be covered by the attorney-client privilege, particularly finding that the motion judge had noted the documents in dispute contained communications between Sanchez, Maquet’s Global Chief Quality Assurance & Regulatory Officer, and Maquet’s General Counsel. The record also indicated the documents included emails labeled “ATTORNEY CLIENT PRIVILEGE” by plaintiff. The Appellate Division found no legal basis to question the motion judge’s conclusion that Maquet’s counsel was included in the communications to offer legal advice and guidance if he so chose.

The Appellate Division then rejected as untimely and legally unnecessary, plaintiff’s argument that the motion judge should have conducted an evidentiary hearing to consider the Quinlan factors.  Quinlan set forth seven (7) factors to consider when an employee may take or use documents belonging to his or her employer. The first consideration a judge must make is “how the employee came to have possession of, or access to, the document.” In reviewing the record, the court found that Sanchez removed the documents at issue in direct violation of Maquet’s policies related to confidential documents containing proprietary information in an act that was outside of his ordinary duties because he wanted to [get] the company when they tried to get him.  The court also noted that Sanchez copied the documents to share with his attorneys for the purpose of evaluating whether he had “a viable cause of action” against Maquet and conversely, that Maquet had a strong interest in keeping the materials confidential.

Finally, while recognizing that the disqualification of counsel is a harsh discretionary remedy that must be used sparingly, the Appellate Division concluded that Sanchez’ extra-judicial self-help measures deprived Maquet of the opportunity to prevent the disclosure of the privileged information and that plaintiff’s counsel’s unreasonable delay in disclosing this information rendered futile any attempt to mitigate this harm.

Bottom Line

Employers need to maintain robust policies related to maintaining and access to proprietary and confidential information, and in appropriate circumstances, agreements like those used by Maquet. These policies should: (1) set forth what materials are confidential or proprietary; (2) specify who within the company is permitted access to the proprietary and confidential information, whether by job title, level, need to know basis, etc.; and (3) set forth the purpose for which the employee is granted access and any limitations on access to the proprietary and confidential information. These policies and agreements will be critical in allowing a court to determine the employee was unauthorized in taking the documents and acted outside their ordinary duties of employment.

For more information about the potential impacts of this ruling or what steps your company can take to effectively prevent and address whistleblower complaints, 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.

U.S. Supreme Court’s Epic Decision Validates Class Action Waivers

On May 21 the U.S. Supreme Court resolved the question whether the National Labor Relations Act prevents an employer from enforcing an employee’s contractual waiver of the right to sue the employer on a class or collective basis. In a 5-4 decision, the Court held that arbitration agreements requiring the processing of claims one-by-one and prohibiting class actions must be enforced, and neither the Federal Arbitration Act’s saving clause nor the National Labor Relations Act “permits this Court to declare the parties’ agreements unlawful.”  Epic Systems Corp. v. Lewis; Ernst & Young v. Morris; NLRB v. Murphy Oil USA, Inc.

In each of these three cases, the employee signed a contract mandating the resolution of workplace disputes through arbitration on an individualized basis, and later brought collective action claims under the Fair Labor Standards Act for unpaid wages.  In seeking to void their class action waivers, the employees relied on the NLRB’s 2012 decision in D. R. Horton, Inc. and also argued that the FAA’s savings clause allowed the Court to deny enforcement of the arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract.”

In the D. R. Horton case, the NLRB ruled that the NLRA effectively nullified the FAA in cases where an employer seeks to compel arbitration of employee claims on an individual basis only, by expanding the definition of “concerted activity” to include the right to bring a class or collective action. The NLRB ruled that an agreement not to bring a class or collective action is unenforceable as violative of the NLRA, even though waivers of other NLRA rights are enforceable.

The Court majority rejected the NLRB’s holding and held that the NLRA focuses on the rights to organize unions and bargain collectively. The Court commented that it “has never read a right to class actions into the NLRA – and for three quarters of a century neither did the [NLRB].” Justice Gorsuch, writing for the majority, reasoned that it is “pretty unlikely” that the NLRA was intended to protect the right to bring class or collective actions, especially since the NLRA makes no mention of them, and as recently as 2010 the NLRB’s General Counsel opined that the NLRA does not protect these rights.

The Court also relied on the FAA’s policy favoring arbitration agreements and legal precedent acknowledging the “unmistakably clear congressional purpose that the arbitration procedure, when selected by the parties to a contract, be speedy and not subject to delay and obstruction in the courts.” To hold all such provisions unenforceable, the Court stated, would cause arbitration to “wind up looking like the litigation it was meant to displace.”

This sweeping decision will likely eliminate some of the reservations and indecision that the employer community has had regarding including in their new employee orientation paperwork agreements requiring arbitration of employment-related claims on an individual basis only.

For more information regarding the value that mandatory arbitration agreements and class action waivers may add to your organization and how to design and roll out arbitration procedures that will survive legal challenge, please contact one of the Partners in the firm’s Labor Law Practice Group: James J. McGovern III, Esq., at jmcgovern@nullgenovaburns.com, Patrick W. McGovern, Esq., at pmcgovern@nullgenovaburns.com, Douglas E. Solomon, Esq. at dsolomon@nullgenovaburns.com, or John R. Vreeland, Esq., at jvreeland@nullgenovaburns.com  — or call us at 973.533.0777.

Public Employer Obligations Under the Workplace Democracy Enhancement Act

Governor Murphy has signed the Workplace Democracy Enhancement Act (“WDEA”) into law. The WDEA takes immediate effect and creates new obligations of which public employers must be aware.

First, the WDEA extends the negotiations unit to include all full and part time employees who perform negotiation unit work. For example, employees who were not included in the unit because they had not met the threshold number of hours or percent of time worked, must be included in the unit within 90 calendar days from the law’s signing.

In addition, the WDEA requires public employers to provide “access” to organization members, and grants the exclusive representative employee organization specific rights, including, but not limited to:

  • The right to meet with members on the premises of a public employer during the workday to investigate and discuss grievances or other workplace related complaints, or to address any other workplace issue;
  • The right to conduct worksite meetings on the employer’s premises during lunch and other non-work breaks, as well as before and after the workday, in order to discuss workplace issues, collective negotiations, administration of a collective negotiation agreements, and other matters related to the organization’s duties and internal union matters;
  • The right for representatives to meet with new employees for a minimum of 30 minutes within 30 calendar days from that employee’s date of hire, without charge for such time against the employee’s pay or leave time;
  • The right to certain employee contact information, to be produced in a specific timeframe;
  • The right of email use, for matters such as collective negotiation agreements administration, the investigation of grievance, other workplace related complaints or concerns, and internal union matters; and
  • The right to demand negotiations over rights of access, subject to binding arbitration.

The WDEA furthermore prohibits public employers from encouraging employees to resign or relinquish membership in a union, and from encouraging them to revoke their authorization of fee deductions. Public employers likewise are prohibited from either encouraging or discouraging employees from joining, forming, or assisting a union. An employer who violates these provisions will be deemed to have engaged in an unfair labor practice, and the WDEA requires the Public Employment Relations Comission to order the employer to make the union whole for any harm that may result from such actions.

Finally, the WDEA amends existing law to provide that union fee deductions may be authorized by means of electronic communication and electronic signatures. In addition, employees of a public employer that have previously authorized deductions must give written notice to the employer “during the 10 days following each anniversary date of their employment” if they wish to revoke their authorization. Upon receipt of an employee’s revocation, the public employer is required to provide notice to the union within five days. The revocation takes effect on the 30th day after the anniversary date of employment.

For further information, please contact Joseph M. Hannon, Esq.,  or Jennifer Roselle, Esq., Counsel with the Labor Law Practice Group.

New Jersey Passes Mandatory Paid Sick Leave

On May 2, New Jersey Governor Phil Murphy signed a law mandating all private and public New Jersey employers, regardless of size, offer paid sick leave. This makes New Jersey the 10th state to adopt mandatory paid sick leave legislation. The Paid Sick Leave Act (“the Act”) also permits employees to use the leave for their own care or for the care of a family member and expands how paid sick leave can be used, encompassing protections beyond the federal Family Leave and Medical Act, the New Jersey Family Leave Act as well as other leave laws. The new law also fully pre-empts the 13 municipalities in New Jersey with local paid sick leave ordinances, allowing employers to adopt a state-wide uniform paid sick leave policy.

Coverage

Permissible use of sick leave includes the following:

(i) Diagnosis, care, treatment, recovery and/or preventive care for the employee’s own mental or physical illness or injury or the employee’s family member’s mental or physical illness or injury;

(ii) Absence due to a public health emergency declared by a public official that causes the closure of the employee’s workplace or the school or childcare facility of the employee’s child or requires the employee or an employee’s family member to seek care;

(iii) A necessary absence for medical, legal or other victim services because of domestic or sexual violence perpetrated on the employee or the employee’s family member; or

(iv) To attend a school-conferences, meetings, or any event requested or required by a child’s school administrator, teacher, or other professional staff member responsible for the child’s education, or to attend a meeting regarding a child’s health or disability.

The Act also broadly defines “family members” to include an employee’s child, spouse, domestic partner, civil union partner, parent (including adoptive, foster or step-parent, or legal guardian), sibling (including foster or adoptive siblings), grandparent or grandchild, and the parent, grandparent or sibling of the employee’s spouse, domestic partner or civil union partner. Notably, an employee has the opportunity to use their sick leave for the care of a non-related individual whose close association with the employee is the “equivalent” of a family relationship.

Exemptions & Employees Covered by a CBA

Per diem healthcare employees, construction workers subject to a collective bargaining agreement (CBA), and public employees who are provided with sick leave with full payment pursuant to any other law, rule or regulation are exempt from the new law. Non-construction employees covered by a CBA at the time the law goes into effect are also not effect, but will apply once the agreement expires. Further, employees and their representatives may waive the rights available under the law and address paid leave in collective bargaining.

Accrual of Paid Sick Leave

Under the new law, employees accrue 1 hour of paid sick leave for every 30 hours worked. Employees may accrue up to 40 hours of paid sick leave per benefit year.  Employers are also permitted to designate the “benefit year” as any 12-month period but may not modify it without notifying the New Jersey Department of Labor and Workforce Development (NJDOL).

Employees become eligible to use earned sick leave beginning on the 120th day after they are hired, and may use their earned sick leave as it is accrued. Employers are also permitted to offer, or “frontload” 40 hours of paid sick time or utilize a paid-time-off (“PTO”) policy as long as it provides equal or greater benefits and accrue benefits at an equal or greater rate than the benefits provided under the Act. There is no requirement to payout accrued and unused sick leave upon termination absent a company policy to the contrary.

Upon the mutual consent of the employee and employer, an employee may voluntarily choose to work additional hours or shifts during the same or following pay period, in lieu of hours or shifts missed, but shall not be required to work additional hours or shifts or use accrued earned sick leave. In addition, an employer may not require, as a condition of an employee’s using earned sick leave, that the employee search for or find a replacement worker to cover the hours during which the employee is using earned sick leave.

Notice

Employers are entitled to 7 days advance notice of “foreseeable” absences and can restrict employee’s use of “foreseeable” paid sick leave on certain dates.  Where the need is unforeseeable, an employer may only require notice “as soon as practicable,” if the employer has notified the employee of this requirement.  In addition, employers are only permitted to ask the employee for documentation to substantiate the sick leave if the employee is absent for 3 or more consecutive days.

Compliance

Employers will be required to maintain records documenting the hours worked and earned sick leave used by employees. Records must be maintained for 5 years and made available for inspection by the NJDOL. If an employee claims an employer violated the Act, and that employer that has failed to maintain adequate records, then there is a presumption that the employer failed to provide paid sick leave.

Employers must also post a notification and distribute a written notification alerting employees of their rights within 30 days of the notice being issued by the NJDOL and provide the notification to all new employees at the time of hiring.

Anti-Retaliation

Employers are prohibited from retaliating or discriminating against employees under the Act. The Act broadly defines retaliation to include not only retaliatory personnel action like suspension, demotion, or refusal to promote, but also includes threatening to report the immigrant status of an employee or family member of the employee. Employers are also prohibited from retaliating or discriminating against an employee who files a complaint with the commissioner or a court alleging the employer’s violation of the Act, or informs any other person of their rights under the Act.

There is a rebuttable presumption of unlawful retaliatory action whenever an employer takes adverse action against an employee within 90 days of when that employee opposes any violation of the Act, informs any person about the employer’s alleged violation of the Act, files a complaint alleging a violation of the Act, or cooperates in an investigation into an alleged violation of the Act.

Penalties

Any failure of an employer to make available or pay earned sick leave as required by the new law, or any other violation of the law, shall be regarded as a failure to meet the wage payment requirements of the New Jersey Wage and Hour Law.  Employers will also be subject to the penalties and remedies contained in the New Jersey Wage and Hour Law, including fines and possible imprisonment, reinstatement of a discharged employee to correct any discriminatory action and payment of all lost wages in full.

Bottom Line

The New Jersey Paid Sick Leave Act takes effect in 180 days, on October 29, 2018. Employers in New Jersey, in consultation with legal counsel, must review and revise existing policies, practices and procedures related to calculating employee’s sick leave to ensure compliance with the Act.  Human Resources and Benefits personnel should also be trained on the new paid sick leave law requirements and Managers should also receive updated training to ensure that internal recordkeeping processes are sufficient to keep track of time taken under the new law.

For more information about the potential impacts of the Paid Sick Leave Act or what steps your company can take to effectively ensure compliance with wage and hour laws, 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.

New Laws in New York State & City on Workplace Sexual Harassment

Governor Andrew Cuomo recently signed several new laws imposing requirements on employers in New York State regarding sexual harassment.  New York City employers will be subject to additional requirements, as the city council just passed a package of bills, collectively called the “Stop Sexual Harassment in New York City Act,” which Mayor Bill de Blasio is expected to sign.  New York State and City employers should prepare for these changes and their varying effective dates summarized below.

New York State

  • Employers Cannot Mandate Arbitration of Sexual Harassment Claims – Employers can no longer mandate that employees arbitrate sexual harassment claims unless that prohibition is inconsistent with (a) federal law or (b) a collective bargaining agreement. This provision is sure to be challenged based on preemption under the Federal Arbitration Act, however, unless or until a court rules otherwise, the law will be effective as of July 11, 2018.
  • Most Nondisclosure Agreements are Banned from Sexual Harassment Settlements Unless Sufficient Consent and Notice – Employers who settle sexual harassment claims can no longer include provisions in their settlement agreements preventing the disclosure of facts underlying the claims, unless the complaining party consents to it. He/she must be given 21 days to consider the nondisclosure language and 7 days thereafter to revoke it.  He/she cannot waive this right.  This law takes effect on July 11, 2018.
  • Employers Must Adopt a Policy and Provide Annual Training on Sexual Harassment – The state will establish a model sexual harassment policy and training program that will address specific topics, including information related to what laws workplace sexual harassment violates, remedies available to victims, complaint and investigation procedures, and the additional obligations imposed on supervisory employees to address sexual harassment. Effective October 9, 2018, employers will be required to adopt a policy that meets or exceeds the model policy’s standards, distribute that policy in writing to all of its employees, and implement an annual training program that meets or exceeds the model training program’s standards.  Effective January 1, 2019, most companies bidding for a state contract will be required to accompany their bids with a certification stating that they have a written policy and training program that meets or exceeds the models.
  • Employers Are Now Liable to Non-Employees for Sexual Harassment – Employers will be held liable for sexual harassment committed against contractors, subcontractors, vendors, and others providing services under a contract, where it can be shown that the employer (a) knew or should have known that such non-employee was being harassed but did nothing about it, and (b) has sufficient control and “legal responsibility” with respect to the conduct of the harasser. This law takes effect immediately.
  • Government Employees Must Refund any Taxpayer-Funded Payouts for Sexual Harassment Awards – Effective immediately, employees of the state, political subdivisions or other public entities (including elected officials), who have been found personally liable for sexual harassment in the workplace, must refund to the state/other public entity any payments it made to the plaintiff on that employee’s behalf, within 90 days.

New York City

  • NYC’s Anti-Harassment Statute Will Apply to All Employers – The NYC Human Rights Law (“NYCHRL”), which governs harassment in the workplace, currently applies to employers with 4 or more employees. Effective immediately following Mayor de Blasio’s signature, the NYCHRL will apply to all employers, regardless of size, with respect to liability for sexual harassment.
  • Sexual Harassment Claims Will be Subject to a Three-Year Statute of Limitations – In its current form, the NYCHRL imposes a one-year statute of limitations on claims of discrimination and harassment. Effective immediately upon signature, that limitations period will be extended to three years for claims of gender-based harassment.
  • NYC Employers Must Provide Annual Sexual Harassment Training – The City will establish a model sexual harassment training program designed to explain what sexual harassment is and what laws it violates, and inform employees about the complaint processes and legal remedies available to them, that retaliation is prohibited, and the heightened duties imposed on supervisory employees to address sexual harassment. Effective April 1, 2019, private City employers with 15 or more employees will be required to provide all employees annual sexual harassment training that meets or exceeds the model program’s standards.  New employees must receive the training within 90 days of hire.  The program must be interactive, but it need not be live.  Employers will be required to maintain records of trainings, including acknowledgement forms.
  • NYC Employers Must Hang a Poster & Distribute a Hand-Out Regarding Sexual Harassment – The City will create a poster and hand-out setting forth employees’ rights regarding workplace sexual harassment. Effective 120 days after Mayor de Blasio’s signature, all employers will be required to mount the poster in a conspicuous place and distribute the handout to all employees.  The poster must be at least 8.5 by 14 inches in size, using at least 12-point font, and posted in both English and Spanish.

Employer To-Do List

The following is a non-exhaustive list of some action items that New York State and City employers are strongly encouraged to follow, in consultation with legal counsel:

  • Review and revise your existing policies, practices, procedures, and training programs, as well as employment contracts, severance agreements, and other contracts to ensure compliance with these new state and city laws.
  • Even if your existing harassment policies comply with the new laws, best practice suggests that you redistribute them.
  • Now that contractors and other non-employees are protected from sexual harassment, you should consider providing training to them if you have not done so already.
  • Do not blindly adopt the state and/or city’s model policies or training programs. These are designed to provide minimum thresholds that you should adjust and build upon based upon the needs of your company.

For more information on what your company can do to ensure compliance with the many new sexual harassment laws imposed on New York State and New York City employers, 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.

New Jersey Takes the Lead in Equal Pay Act Legislation

Following up on his January 16, 2018 Executive Order promoting equal pay for equal work, New Jersey Governor Phil Murphy signed a historic and sweeping equal pay law on April 24, 2018. The “Diane B. Allen Equal Pay Act” was named after former Republican Senator Diane B. Allen, herself a victim of bias, who was part of the original negotiations surrounding the bill when it was first proposed under former Governor Chris Christie. The new Equal Pay Act applies to all employers in New Jersey regardless of size and is scheduled to take effect on July 1, 2018. The new law combats not only gender pay discrimination but also wage discrimination against those protected by the New Jersey Law Against Discrimination (NJLAD).

Coverage

The Equal Pay Act amends the NJLAD and now makes it illegal for an employer to pay any employees who are members of a protected class recognized under the NJLAD at a lower compensation than other employees who are not members of a protected class, for “substantially similar work,” unless a pay differential is justified by legitimate business necessity. Under the NJLAD, protected classes include race, creed, sex, color, national origin, ancestry, nationality, disability, age, pregnancy or breastfeeding, marital, civil union or domestic partnership status, affectional or sexual orientation, gender identity or expression, military status, and genetic information or atypical hereditary cellular or blood traits. “Substantially similar work” is determined by a combination of the “skill, effort and responsibility” required for that position and is not limited to employees who work within a specific geographic area or region.

Moreover, although the legislation carves out an exception for differential pay based on certain factors like merit, seniority, and education, this exception is only so long as these factors do not perpetuate a sex-based differential in compensation. For example, if one employee has a different title than another employee or even works in a different department, but both employees perform the same types of tasks with similar levels of responsibility, both employees should be paid the same.

An employer may pay a different rate of compensation only if the employer demonstrates that the differential is made pursuant to a seniority system, a merit system, or the employer demonstrates:

  • The differential is based on one or more legitimate, bona fide factors other than the characteristics of members of the protected class (like training, education, experience, or the quantity or quality of production);
  • The factors are not based on, and do not perpetuate, a differential in compensation based on sex or any other characteristic protected under the NJLAD;
  • Each of the factors must be applied reasonably;
  • One or more factors account for the entire wage differential; and
  • The factors are job-related with respect to the position in question and based on a legitimate business necessity.

Prohibitions

The new law also makes it easier for employees to win pay-discrimination cases since all they would need to show is that they were paid unequally for “substantially similar” work, rather than the previous standard of “substantially equal” work. Employers are also not permitted to reduce the rate of compensation of any employee in order to achieve compliance.

The new law also prohibits employers from retaliating against employees who (1) oppose any practices or acts forbidden under the Act; (2) seek legal advice regarding rights under the Act; (3) share relevant information with legal counsel or a governmental entity; or (4) file a complaint, testifies or assists in any proceeding.  The Act also forbids coercion, intimidation, threats or interference with any person in the exercise or enjoyment of, or on account of that person having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by the Act.

Statute of Limitations

In addition to any other relief authorized by the NJLAD, liability under the new law shall accrue, and an aggrieved person may obtain relief for back pay, for up to 6 years, so long as the violations continue within the 6-year period. The law also makes it unlawful to require employees or prospective employees to consent to a shortened statute of limitations or to waive any of the protections afforded under the NJLAD.

Available Damages

In addition to the damages permitted under the NJLAD, the new law allows victims of discrimination to recover triple damages should a jury, or the New Jersey Division of Civil Rights, determine that the employer is guilty of an unlawful employment practice as defined by the law.

Reporting Obligations

To ensure companies doing business with the state comply, companies that win contracts from public agencies are required to submit reports to the Commissioner of Labor and Workforce Development. These reports would need to include the gender and race of employees in every job title or pay band, and the total compensation for each category of employees.

Bottom Line

Employers should carefully analyze their existing pay practices to ensure compliance. Prior to July 1, 2018, employers must review the current job descriptions, employee handbooks and policies to determine which employees perform “substantially similar work” in order to ensure they are being compensated at the same rate. If, after doing this review, there is a pay differential, the employer must be able to show that the difference is not based on sex or any other characteristic of members of a protected class. Existing handbooks and policies must also be revised to prohibit pay discrimination for substantially similar work, and prohibit retaliation against employees who request, discuss or disclose compensation or other job-related information covered by the law. Human resources and benefits personnel should also be trained on the new requirements and managers should also receive updated training.

Employers must also be aware that the provision for back pay damages is much more extensive than federal law, and the possibility of treble damages should a jury find that an employer is guilty of an unlawful employment practice should serve as a powerful deterrent to correct discriminatory pay differentials.  Lastly, employers who work with public entities must ensure that payroll records and other information regarding the “gender, race, job title, occupational category and rate of compensation” of every employee that is part of the project is up to date and sent to the public entity.

For more information regarding the impacts of this legislation and how to implement nondiscriminatory pay 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., Director of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com or 973-533-0777.