Employment Law Monitor : Employment Lawyer & Attorney : Cole Schotz Meisel Forman & Leonard Law Firm : NJ, Mid-Atlantic Wage & Hour, Wrongful Termination

As most employers are aware, the use of social networking sites such as Google, Facebook, LinkedIn and Twitter is on the rise as both employees and employers utilize these sites for business and personal purposes. Employers must be aware of the pitfalls associated with using social networking sites, however, to avoid potentially expensive and time-consuming litigation. The following highlights the most common risk areas associated with social networking sites.

Using Social Networking Sites to “Google” Applicants

While many hiring managers “Google” applicants to uncover useful information, they overlook the potential legal problems that arise when an employer learns personal information about an applicant that it would be prohibited from obtaining through traditional sources pursuant to applicable state and federal law. For instance, while the law prohibits an employer from asking an applicant his/her age, sexual orientation, religion, national origin, etc. during a conventional application/interview process, the employer may unwittingly learn this information simply by doing a quick “Google” search. Once an employer has such information, it may face discrimination claims from applicants who are not hired and contend that the company’s decision was based on some illicit factor. Similarly, applicants may allege discrimination where the employer only conducts Google searches on some applicants (for example, minorities), and not others, or holds certain groups to a higher standard than others when viewing and considering information on social media sites. In using such sites, employers must also comply with the federal Fair Credit Reporting Act and related state laws.

To reduce risk in this area, employers are well-advised to prepare and distribute a comprehensive Internet background search policy and train supervisors in this area. In addition, employers may have a third-party or “screened” employee conduct any Internet background checks and send only information relevant to the employment search to the company’s hiring decisionmakers.

Providing LinkedIn Recommendations

The provision of LinkedIn recommendations is another area in which employers may potentially run into trouble. Unfortunately, employers may only realize the danger of a LinkedIn recommendation in a subsequent employment discrimination lawsuit. For instance, an employee who is terminated for performance reasons and claims his/her discharge is discriminatory may argue that his/her performance was not substandard, and may point to a LinkedIn recommendation provided by his/her supervisor as proof that he/she was performing satisfactorily.

Review of Employees’ Private Emails and Chat Rooms

Another area in which employers are overreaching is in their review of employees’ private emails and/or review of employees’ posts in private chat rooms. In two recent cases, courts have favored employees’ privacy rights in their Web-based email accounts and private chat rooms, and held that employers violated these rights by their unauthorized review of such emails/posts. In Stengart vs. Loving Care Agency, 408 N.J. Super. 54 (App. Div. 2009), about which we recently posted, New Jersey’s Appellate Division held that Loving Care violated the attorney-client privilege by viewing private Web-based emails between Stengart and her attorney even though the emails were drafted on the Company’s computer and Loving Care’s email policy made clear, at least in some areas, that Stengart had no privacy interest in such emails. The New Jersey Supreme Court is currently reviewing this case.

In Pietrylo v. Hillstone Restaurant Group, 2008 WL 6085437 (D.N.J. 2008), a Newark jury held that the employer, Houston’s Restaurant, violated the federal Stored Communications Act and the New Jersey Wiretapping and Electronic Surveillance Control Act, by secretly monitoring employees’ postings on a private password-protected Internet chat room. The Court affirmed the jury’s finding.

Accordingly, these cases make clear that an employer’s review of an employee’s private communications is not unlimited and employers must be very cautious about reviewing private emails. To reduce risk in this area, employers should clearly address employees’ expectations as to the privacy of their use of Company-provided technology and properly draft and communicate email, Internet, blogging and social media policies. Finally, employers should use great caution and consult counsel before entering an employee’s password-protected site or email account.

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As employers who have experienced employee terminations within the past fifteen (15) months are aware, the American Recovery & Reinvestment Act of 2009 (“ARRA”) provides a COBRA premium subsidy of 65% for qualified beneficiaries who suffer an “involuntary termination” between September 1, 2008 and December 31, 2009 and who are eligible for COBRA within the same time period and elect such continuation coverage.  The question has arisen whether employees who are terminated in December 2009 and are set to begin COBRA on January 1, 2010 are eligible for this subsidy.

Pursuant to IRS and DOL guidance, the answer is no. In fact, “both the involuntary termination and eligibility for COBRA continuation coverage must occur during September 1, 2008 through December 31, 2009.” See IRS Notice 2009-27,Q/A 13114.  Because COBRA eligibility only begins after an individual ceases to be an active employee, an employee who ceases to be an employee in December 2009 and is first eligible to begin COBRA coverage on January 1, 2010 will not be entitled to the subsidy. See Id.  Accordingly, if the employee and his/her dependents are covered through December 31, 2009, they will not technically become eligible for COBRA until January 2010 and, therefore, will fall outside the ARRA subsidy program.  Employers should be clear on this guidance so that they may properly advise employees and not inadvertently promise anyone a subsidy in 2010.

Employers should also note that Congress is considering certain bills that might extend the COBRA premium subsidy to June 30, 2010.  We intend to keep readers updated on the status of such proposed legislation in future blog posts.

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The United States Equal Employment Opportunity Commission ("EEOC") has released a new mandatory "EEO Is The Law" poster, which is required to be posted by employers as of November 21, 2009.  Employers can either download and post a supplement alongside the existing September 2002 EEOC poster or replace the older poster with the new one.  The new poster and supplement can be downloaded at http://www1.eeoc.gov/employers/poster.cfm. The November 2009 poster incorporates the 2008 amendments to the Americans with Disabilities Act ("ADA") as well as the recent amendments to the Genetic Information Nondiscrimination Act of 2008 ("GINA"), which also became effective on November 21, 2009.

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The New Jersey Supreme Court recently ruled in Best v. C&M Door Controls, Inc., _N.J._ (Oct. 14, 2009) that defendants can never be awarded counsel fees under the offer-of judgment rule in any case in which plaintiffs benefit from a statutory fee-shifting provision, including the Prevailing Wage Act (“PWA”).

The offer of judgment rule, New Jersey Court Rule 4:58, provides that any party may, at any time more than 20 days before the actual trial date, serve on any adverse party, without prejudice, and file with the court, an offer to take a momentary judgment in the offeror’s favor, or as the case may be, to allow judgment to be taken against the offeror, for a sum stated therein (including costs). Historically, the offer-of-judgment rule permits an award of counsel fees and costs to a prevailing party whose offer of judgment had been rejected by the other side. The recent decision in Best attempts to reconcile the offer of judgment rule, which uses fee awards to penalize parties who do not accept reasonable settlements, with laws that allow fee shifting for plaintiffs in workplace rights cases.

In Best, the plaintiff, a window installer, claimed that his employer violated the PWA and the Conscientious Employee Protection Act (“CEPA”). The defense made an offer of judgment of $25,000 which was rejected by the plaintiff. The jury then returned a no-cause verdict on the CEPA claim and a verdict below the defense offer on the PWA claim. The defense, thereafter, sought legal fees as provided by the offer-of-judgment rule. The defense, however, was faced with a obstacle because the rule was amended in 2006 to bar fee awards to the defense if such an allowance would conflict with the policies underlying a fee-shifting statute or rule of court. The Appeals Court in Best held that while the amendment covered CEPA, it did not apply to the PWA because that law was intended to benefit both employees and employers. The New Jersey Supreme Court, however, held that whether the law intended to benefit both employees and employers did not matter and only employees can win fees in suits under the PWA.

Despite the holding in Best, there still remains incentive for defense counsel to consider making an offer of judgment in a fee-shifting case. The Court noted that in awarding reasonable attorneys’ fees to prevailing plaintiffs in such cases, judges should consider whether the defendant’s offer of judgment was reasonable and whether plaintiff’s fee award for time spent after the offer was warranted.
 

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New York employers should be aware that New York State recently amended both the New York Labor Law, which governs wage and hour issues, as well as the State’s Human Rights Law.

Changes to the Labor Law 

On July 28, 2009, the New York Labor Law was amended and now requires employers to provide all employees who are hired on or after October 26, 2009 with written notice of their rate of pay and the employer’s regular pay dates. In addition, employers will now be required to notify new non-exempt employees who are eligible for overtime of their regular hourly rate and their overtime rate of pay. Employers will also be required to obtain acknowledgments from each new employee evidencing their receipt of this notice.

On August 27, 2009, Governor Paterson signed a bill into law that will increase the penalties for employers who retaliate against employees exercising their rights under the Labor Law. The minimum penalties will increase from $200 to $1,000 and the maximum penalties will increase from $2,000 to $10,000. In addition, the new law will make the State law consistent with the Federal Fair Labor Standards Act by permitting employees to automatically recover “liquidated damages” from their employers, unless the employer provides a “good faith basis” to show that it believed its wage underpayment was in compliance with the law.  Considering the Labor Law’s six (6) year statute of limitations, liquidated damages at the New York statutory rate of 25% of the unpaid wages could be significant. The law will now impose liability on officers and agents of limited liability companies where such individuals retaliate against employees who exercise their rights. Finally, the law gives the Commissioner of Labor the power to bring an administrative action, in addition to a court action, where the Commissioner finds violations of wage payment laws.

The bill also expanded the Labor Law §215(1) to expand the statute’s whistleblower protections to include those who have complained to their supervisor as opposed to filing a formal complaint. This way, New York law will be consistent with New Jersey’s Conscientious Employee Protection Act.

Changes to the Human Rights Law

On July 7, 2009, the State Legislature also amended the State Human Rights Law to include victims of domestic of violence as a protected category. As with other protected categories, employers may not refuse to hire or otherwise discriminate against an individual, in any aspect of employment, because the individual is a domestic violence victim. Pursuant to the statute, “domestic violence victim” is defined as, “an individual who is a victim of a family offense under New York’s Family Court Act, including disorderly conduct, harassment, stalking, reckless endangerment or assault between spouses or former spouses, or between parent and child or between members of the same family or household.” The New York State Human Rights Law was further amended to now provide for civil fines and penalties of up to $50,000.00 for unlawful discriminatory acts that occur on or after July 6, 2009. In addition, the Act provides for penalties and fines of up to $100,000.00 where the discrimination is willful, wanton or malicious.

Changes to New York’s “Mini-COBRA” Law

On July 28, 2009, Governor Paterson also signed into law a bill that will extend an employee’s right to continue his/her health insurance under New York’s “Mini-COBRA” law. New York’s “Mini-COBRA” applies to employers with less than twenty (20) employees while employers with more than twenty (20) employees are subject to federal COBRA. Prior to this bill, those subject to Mini-COBRA were entitled to continuation coverage for eighteen (18) months from their separation in the event of termination, reduction in hours of employment, or loss of eligibility. Now, however, an employee may continue coverage for up to thirty-six (36) months. If the employee has exhausted his/her continuation coverage under COBRA, he/she is also permitted to maintain coverage for up to thirty-six (36) months. 

Employers conducting business in New York should make note of these important changes to the State’s employment laws.

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Under the New Jersey Law Against Discrimination an employee's supervisor may not be held individually liable for sexual harassment of an employee, even if the supervisor is aware of the harassment, unless the supervisor has "aided and abetted" the sexual harassment. A recent New Jersey Federal Court decision provides important guidance regarding the conduct which renders a supervisor individually liable for aiding and abetting sexual harassment in the workplace. In certain circumstances, supervisors will be found individually liable for aiding and abetting the sexual harassment even where they have no direct supervision of the alleged victim of the sexual harassment and are not directly involved in the employer's decision on how to address it. A Court may also find supervisors personally liable if it views their conduct as aiding and abetting their own alleged sexual harassment of the employee. On the other hand, under certain circumstances, supervisors may not be held personally liable even where sexual harassment is rampant within their department, where there is a proliferation of pornographic material in the workplace or where the supervisor was aware of the sexual harassment and failed to take effective action to stop it. For a full analysis of this recent case, click here.

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In July, the United States Department of Labor released an updated "Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues."  The FAQ can be found at http://www.dol.gov/esa/WHD/flsa/FurloughFAQ.pdf and answers basic questions regarding how the Fair Labor Standards Act ("FLSA") impacts reductions in pay or in hours worked by employees.

Given the current economic environment many employers are reducing their workforce.  Other employers, instead of terminating employees, are reducing the compensation their employees' receive or reducing the hours worked in order to reduce payroll.  Any employer seeking to reduce pay or hours should be familiar with how the FLSA might impact such a decision.  Many of the questions an employer may have are covered by the FAQ, which answers questions such as whether it is legal to reduce salary or hours of employees under the FLSA.  The FAQ includes discussions of situations involving both exempt and non-exempt employees under the FLSA and can help employers avoid violating the FLSA. 

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On April 22, 2009, we wrote about Stengart v. Loving Care Agency, Inc., a case in which the New Jersey Superior Court held that an employee who used her personal web-based Yahoo email account on the company’s computer to communicate with her attorney waived her attorney-client privilege. In a sharp rebuke of the trial court, on June 26, 2009, the Appellate Division reversed the lower court’s decision and held that, “the policies undergirding the attorney-client privilege substantially outweigh the employer’s interest in enforcement of its unilaterally imposed regulation…” In so holding, the court first recognized the ambiguities in the employer’s handbook policies. While some policies clearly indicated that employees could not hold an expectation of privacy in their email communications, whether on the company computer or their web-based email accounts, other provisions conflicted and provided for occasional personal use. Notwithstanding these ambiguities, the court went on to find that the attorney-client privilege outweighs the “company’s claimed interest in ownership of or access to those communications based on its electronic communications policy.” Thus, although the Appellate Division’s decision confirms the importance of properly drafting handbook policies to protect a company’s interests, it leaves open the question of whether a company’s electronic communications policy could ever trump the attorney-client privilege.

Finally, the court went on to remand the matter for a hearing as to whether Loving Care’s attorneys should be disqualified as counsel given their review of Ms. Stengart’s emails to her attorneys.
 

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In a ruling applauded by employers, the United States Supreme Court ruled in Gross v. FBL Financial Services Inc., No. 08-441 (June 18, 2009), that an employee must demonstrate that age is the decisive, “but-for” cause of the employer’s adverse employment decision in order to prevail in age discrimination claims brought under the federal Age Discrimination in Employment Act (“ADEA”). Prior Court holdings required employees to establish that age was only a “motivating factor” in the employer’s decision and gave the employer the opportunity to show that it would have taken the same action regardless of age.
 

In Gross, Gross claimed that FBL discriminated against him because of his age when it reassigned him, at age 54, to a different position and transferred many of his responsibilities to a new position created for a woman in her early forties. During trial, he presented evidence that FBL was motivated in carrying out its action, at least in part, by his age. The company denied this claim and maintained that his demotion was part of a larger corporate restructuring. Relying on the burden-shifting framework set forth in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), the trial court held that Gross had to prove by a preponderance of the evidence that his age was a “motivating factor” in the Company’s decision to demote him. See Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) (addressing burden of proof in “mixed motive” cases where employer is motivated by both illicit and lawful reasons). The jury then returned a verdict for Gross. On appeal, the U.S. Court of Appeals for the Eighth Circuit held that the trial court failed to properly instruct the jury about the Price Waterhouse burden-shifting framework, and sent the case back to the trial court.
 

In reviewing this case, the Supreme Court surprised employers and employees alike in vacating application of the Price Waterhouse framework for ADEA cases, although lower federal courts had applied this framework to such cases for years. The Court found a distinction between Title VII cases, to which the Price Waterhouse framework clearly applies, and ADEA cases. Reading the text of each statute, Justice Clarence Thomas noted that Title VII itself provides that an unlawful employment practice is established where an employee proves that an unlawful criterion was a “motivating factor” in the employer’s decision. Dissimilarly, the ADEA does not have any such “motivating factor” language. Based on the ADEA’s clear terms, the Court held that application of the Price Waterhouse framework is not appropriate in ADEA cases.
 

Practically, and because typically plaintiffs lack any direct evidence of age discrimination, the Gross decision will make it increasingly difficult for employees to prevail in ADEA claims. It remains to be seen whether Congress will amend the ADEA to address Gross, as it did in response to the Lilly Ledbetter case.
 

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