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Employment Law Monitor

Insights on Recent Developments in Federal and State Labor & Employment Matters

New York Votes to Protect Unpaid Interns from Discrimination

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

On March 26, 2014, the New York City Counsel voted unanimously to amend the New York City Human Rights Law (the “NYCHRL”) to allow unpaid interns to sue for harassment and discrimination.  The bill was likely drafted in response to a federal judge’s decision in October 2013, which dismissed an unpaid intern’s sexual harassment claim against her boss, because she was not an “employee” under the NYCHRL.  New York City joins Oregon and Washington, DC as places that are extending such significant protections to unpaid interns.

The bill is expected to be signed by Mayor Bill de Blasio, and could become effective sixty (60) days thereafter, just as the summer internship season kicks into high gear.  The bill changes the scope of the existing NYCHRL to extend coverage to unpaid interns.  The bill will allow unpaid interns to sue for harassment, as well as discrimination based on their age, sex, race, creed, color, national origin, sex, disability, marital status, partnership status, sexual orientation, citizenship status, or status as a victim of domestic violence, sex offense or stalking.  The bill defines an intern as:

An individual who performs work for an employer on a temporary basis whose work: (a) provides training or supplements training given in an educational environment such that the employability of the individual performing the work may be enhanced; (b) provides experience for the benefit of the individual performing the work; and (c) is performed under the close supervision of existing staff.

Importantly, the bill makes clear that “interns” include “individuals without regard to whether the employer pays them a salary or wage.”  Interns will now be entitled to bring civil lawsuits under the NYCHRL.

When the bill is signed by the Mayor, unpaid interns will require the same protections as regular employees against harassment and discrimination.  Employers should take the opportunity to review their applicable discrimination and harassment policies to make sure all classes of persons are adequately protected.

Third Circuit Embraces Successor Liability for Wage-and-Hour Violations of the Fair Labor Standards Act

Posted in Employment Policies and Practices, Wage and Hour and Executive Compensation

In a recently decided case, Thompson v. Real Estate Mortgage Network, Case No. 12-3828 (3d Cir. Apr. 3, 2014), the Third Circuit Court of Appeals determined for the first time that a successor-employer may be held financially accountable for its predecessor’s wage-and-hour violations under the Fair Labor Standards Act (“FLSA”).  This ruling potentially exposes employers to additional claims under the FLSA and provides plaintiffs with further potential sources of recovery for wage-and-hour claims.

The plaintiff in Thompson sought to hold her previous employer, as well as its predecessor company, liable for alleged failures to pay her overtime compensation in violation of the FLSA and the New Jersey state wage-and-hour laws.  (Slip Op. at 4-5).  The FLSA allows employees to recover damages where employers fail to pay sufficient overtime compensation when an employee works over forty (40) hours in a given week, among other things.  See 29 U.S.C. § 207(a)(1).  New Jersey’s wage-and-hour law similarly requires employers to compensate certain employees for overtime worked “in excess of 40 hours in any week.”  N.J.S.A. § 34:11-56a4. 

Thompson filed suit under both laws against Security Atlantic Mortgage Company (“Security Atlantic”), her original employer, and Real Estate Mortgage Network (“REMN”), the successor company to Security Atlantic.  (Slip Op. at 3-4).  One issue addressed by the Third Circuit in evaluating whether Thompson sufficiently plead her claims against either defendant was whether REMN, as an alleged successor to Security Atlantic, could be held liable for any wage-and-hour violations committed by its predecessor.  In determining that issue of first impression, the Third Circuit examined whether the New Jersey state law test for successor liability applied or the less burdensome federal common law approach.

As the Third Circuit explained, the federal common law “presents a lower bar to relief than most state jurisprudence” to protect employment-related policies.  (Slip Op. at 16).  It requires consideration of the following factors in determining whether successor liability should be imposed: “(1) continuity in operations and work force of the successor and predecessor employers; (2) notice to the successor-employer of its predecessor’s legal obligations; and (3) ability of the predecessor to provide adequate relief directly.”  Id.  By contrast, under New Jersey law, successor companies are considered legally distinct from their predecessors and do not assume any debts or obligations of the predecessor unless: (1) the successor agrees to assume such liabilities; (2) the transaction amounts to a consolidation or merger of the buyer and seller; (3) the purchasing company is merely a “continuation” of the selling company; or (4) the transaction was consummated to fraudulently escape its liabilities and debts.  (Id. at 14-15).

The Court determined the federal common law standard governed whether successor liability applied to Thompson’s claims as “the logical extension of existing case law,” pointing to the Seventh and Ninth Circuit’s adoption of the same broad test.  (Slip Op. at 17).  In part, the Court reasoned that adopting the less stringent standard for successor liability would make it more difficult for violators to escape liability by selling assets without the buyer assuming the associated liabilities.  (Id. at 18).  The Court also explained the broader approach comports with the federal statute’s purpose of fostering labor peace and protecting workers’ rights.  (Id. at 17).

Under the approach embraced by the Third Circuit, the Court determined Thompson satisfied her pleading burden.  As to the first factor, she alleged “all facets of the business at issue, including operations, staffing, office space, email addresses, employment conditions and work in progress, remained the same” after the successor company took over, thus showing a “continuity in operations and work force.”  Id. (citations omitted).  As to the second factor of notice to the successor company, Thompson alleged Security Atlantic was controlled by a small management group, including two individuals who worked at both companies and possessed ongoing knowledge of the “systematic” FLSA violations.  (Id. at 22).  Finally, as to the third factor, she alleged the predecessor company was now “defunct”, meaning it would likely be unable to satisfy any damages awarded to Thompson.  Id.  Accordingly, the Court found Thompson asserted a plausible claim for relief under the FLSA through the federal common law theory of successor liability.

As a result of the Third Circuit’s adoption of this less stringent successor-liability test, employers should understand and inquire about potential FLSA and state wage-and-hour violations when acquiring new business operations to assess the risk of successor liability for a predecessor’s non-compliant actions.

Newark Becomes Second City in New Jersey to Pass Paid Sick Leave Ordinance

Posted in Employment Policies and Practices

The City of Newark, New Jersey recently passed a paid sick leave ordinance (the “Ordinance”) which requires private employers to provide paid sick leave to employees who work at least 80 hours per year in Newark.  Newark is the second city in New Jersey to adopt such legislation, following Jersey City.  Newark Mayor Luis A. Quintanta signed the Ordinance into law on January 29, 2014, and the Ordinance takes effect on May 29, 2014. 

Under the Ordinance, employees of private-sector employers who work at least 80 hours per year in Newark are eligible to earn such paid sick time.  The Ordinance, however, specifically exempts public employees, employees of construction unions covered by collective bargaining agreements, and employees covered by collective bargaining agreements that specifically waive paid sick leave requirements.  Employers with ten or more employees are required to provide up to 40 hours of paid sick leave per year.  Employers with fewer than ten employees are required to provide up to 24 hours of paid sick leave per year.  Child care workers, home health workers, and food service workers can accrue up to 40 hours of paid leave time in any given year, regardless of the number of employees their employer employs.

Eligible employees will earn one hour of paid sick time for every 30 hours worked.  Eligible employees can also carry up to 40 hours of paid sick time from year to year under the Ordinance.  Employees became eligible immediately upon being hired, but are not eligible to use the paid sick time until they have been employed for at least 90 days. 

The Ordinance allows eligible employees to use paid sick time for: (i) their own or a family member’s mental or physical illness, injury or health condition; (ii) for closure of the employee’s place of business by order of a public health official; (iii) to care for a child whose school or daycare has been closed by order of a public health official; or (iv) to care for a family member whose exposure to a communicable disease would jeopardize the health of others in a community. 

In addition to providing the proper paid sick time under the Ordinance, employers must also provide notice to workers of their right to paid sick leave, the right to be free from retaliation for properly requesting such time off under the Ordinance, and the accrual rate and amount of paid sick time.  Newark’s Department of Child and Family Well-Being has been tasked with enforcing the Ordinance.  Violators can face a fine of up to $1,000 for each infraction of the Ordinance and potential lawsuits. 

Employers with business locations in Newark should review their current paid sick leave policies to ensure they comply with the Ordinance, and employers should also prepare the proper notices required by the Ordinance.  Employers with sick leave policies that are more generous than the Ordinance are not required to provide additional paid sick leave under the Ordinance.

Second Circuit Weighs In On Tort Litigation During Pending EEOC Proceeding

Posted in Harassment, Discrimination and Retaliation

Last week, the Second Circuit Court of Appeals ruled that a plaintiff’s filing of a charge of discrimination with the United States Equal Employment Opportunity Commission (“EEOC”) does not toll the statute of limitations for corresponding state-based tort claims, even if such claims arise out of the same common nucleus of facts.

In Castagna v. Luceno, — F.3d –, 2014 WL 840964 (2d Cir. Mar. 5, 2014), the plaintiff, Patricia Castagna, filed a charge with the EEOC against her former employer, Majestic Kitchens, Inc. (“Majestic”), and its majority owner, Bill Luceno (“Luceno”), alleging employment discrimination based on her gender.  The EEOC complaint was filed approximately 3 ½ months following Castagna’s July 9, 2008 resignation from Majestic.  After receiving a right-to-sue letter from the EEOC on August 14, 2009, Castagna proceeded to file a complaint in November 2009 in the United States District Court for the Southern District of New York (the “Federal Complaint”), nearly a year and a half after her resignation.  The Federal Complaint asserted claims against Majestic and Luceno under Title VII of the Civil Rights Act of 1964, the New York State Human Rights Law, and also alleged several state-based tort claims including intentional infliction of emotional distress and assault and battery (collectively, the “Tort Claims”).  The defendants subsequently moved to dismiss the Tort Claims as barred by New York’s one-year statute of limitations, and the Southern District Court granted their motion, dismissing the Tort Claims.  Castagna appealed, arguing that the statute of limitations on the Tort Claims was tolled as a result of her EEOC filing.

As a matter of first impression, the Second Circuit relied upon the rationale from the Courts of Appeals for the Seventh and Ninth Circuits to conclude, as a matter of law, that the commencement of an EEOC action does not toll the statute of limitations for state tort claims.  The Court declared that this holds true even, where here, Castagna’s tort claims arose out of the same alleged misconduct that formed the basis for her EEOC charge.  Essentially, the Second Circuit found that there was no evidence suggesting that Congress intended to provide claimants with the ability to delay filing state-based tort claims during a pending EEOC proceeding, and Castagna therefore never lost her “unfettered right” to pursue her tort claims during that time.

New York City Amends Earned Sick Time Act

Posted in Employment Policies and Practices

As we previously reported, last summer the New York City Council passed the Earned Sick Time Act (the “Act”), requiring businesses with at least 20 employees to provide employees with five paid sick days (i.e. 40 hours) per year starting in April 2014.  The Act also requires employers with 15 or more employees to provide paid sick days starting in October 2015.

Under the new de Blasio Administration, the Act has now been amended (the “Amendment”) to reduce its threshold to employers with five or more employees.  Employers with less than five employees are still required to provide unpaid sick time.  The Amendment removes the prior phase-in of the paid sick time requirements, and the Act will now go into effect for all employers on April 1, 2014.  The Amendment also expands the definition of “Family member” under the Act to include siblings, grandchildren, and grandparents.

Because of the scope and specific requirements of the Act, all employers in New York City, even those with existing paid sick leave policies, should consult with counsel to ensure compliance with the Act.

U.S. Supreme Court Clarifies Meaning of Compensable Donning and Doffing

Posted in Employment Policies and Practices, Wage and Hour and Executive Compensation

On January 27, 2014, the United States Supreme Court clarified the meaning of “changing clothes” under the Fair Labor Standards Act’s (“FLSA”) donning and doffing protections.

In Sandifer v. U.S. Steel Corporation, 571 U.S. ___ (2014), the Court was faced with a challenge from a putative class of current and former steelworkers at U.S. Steel’s Gary, Indiana plant.  The workers were demanding back-pay for time spent donning and doffing (taking on and off) 12 items of protective gear as part of their job, including a flame-retardant jacket, pants, hood, hardhat, snood, wristlets, work gloves, leggings, metatarsal boots, safety glasses, earplugs and a respirator.  While the time spent engaging in this activity is normally compensable under the FLSA, the collective bargaining agreement between the workers’ union and the company provided that it was not.  The validity of the bargaining agreement’s preclusion of such typically compensable time hinged on 29 U.S.C. §203(o), which allows such agreements to determine whether “time spent in changing clothes . . . at the beginning or end of each workday” is compensable or noncompensable.  The question before the Court was whether the workers’ taking on and off their protective gear constituted “changing clothes,” as defined in the FLSA, or whether such activities fell outside the scope of §203(o).

Affirming both the District Court and 7th Circuit Court of Appeals, the Supreme Court held that “changing clothes” included the donning and doffing of the steelworkers’ protective gear, and the union’s bargaining agreement precluded any right to back-pay under §203(o).  In arriving at this conclusion, the Court focused its analysis on the definitions for “changing” and “clothes” at the time of the FLSA’s 1949 amendment of §203(o). 

The common dictionary definition of “clothes” at that time encompassed a broad range of items designed and used to cover the body.  Though leaving much room for latitude, the Court split the difference between the two definitions proffered by the workers (i.e., narrow in scope and exclusive of items worn to protect against workplace hazards) and U.S. Steel (i.e., broadly including anything worn on the body).  The Court adopted a middle-ground, flexible definition of “clothes” that allows room to distinguish between clothes and wearable, non-clothing items.  The Court found this preferable rather than demanding the more rigid construction of clothes proposed by either side, thereby leaving future decisions on this question to be resolved on a fact-specific basis.

In defining “changing”, the Court again looked to the historical definitions of the word at the time of §203(o)’s enactment.  At that time, “changing” included both “substituting” and “altering”.  In adopting this definition that includes “substituting” (i.e., changing in and out of) as well as “altering” (i.e., layering work clothes over “street clothes”), the Court successfully warded against an employee being able to opt in or out of §203(o) coverage at random.  By way of example, the Court pointed to the situation where an employee’s compensable donning and doffing time would depend on whether he/she took off the shirt they wore to work in a given day. 

Under these definitions of “changing” and “clothes,” 9 of the 12 items of protective gear (all except glasses, earplugs and the respirator), were deemed to fall within §203(o)’s “changing clothes” requirements.  The statute therefore covered U.S. Steel’s collective bargaining agreement, which precluded compensation time for the donning and doffing of these items.

With respect to the other 3, non-“clothing” items of protective gear, the Court rejected use of the de minimis doctrine, which would have called upon the Court (and federal judges at the district and circuit court levels) to act as “time-study professionals” by separating minute-by-minute time devoted to changing in and out of a particular item of protective gear.  Rather, looking at the “vast majority” of the activity, the Court decided that this question must be decided more practically based upon whether the particular donning and doffing on the whole is spent “changing clothes”.  In Sandifer, the time spent donning and doffing the 9 “clothing” items overrode any time spent with the glasses, earplugs and respirators, and the Court determined that the collective bargaining agreement precluded any claim for back-pay.

The Sandifer decision provides new clarity for employers on how courts will assess what donning and doffing activities are compensable.  While leaving room for interpretation as to what specific items may be excluded from compensation under a collective bargaining agreement consistent with §203(o), the analysis employed by the Supreme Court is anticipated to have a far-reaching impact on future applications of the law.

“Pregnancy” Becomes a Protected Class Under New Jersey’s Law Against Discrimination

Posted in Uncategorized

Last week, Governor Christie of New Jersey signed the “Pregnancy Bill,” which amends New Jersey’s Law Against Discrimination, N.J.S.A. 10:5-12 (“NJLAD”), to provide that it shall be “an unlawful employment practice” or “an unlawful discrimination” to consider pregnancy in making an employment determination.  Pregnancy is now one of many protected classes under NJLAD, which also includes race, national origin, age, marital status, sexual orientation, and disability, among others. 

The amended law broadly defines pregnancy as “pregnancy, childbirth, or medical conditions related to pregnancy or childbirth.”  Employers are required to grant reasonable accommodations for affected employees who make such requests with the advice of a physician, and employers cannot penalize an employee for requesting an accommodation or taking time off if the requested accommodation is not feasible. 

Penalties for violating NJLAD include payment of attorneys’ fees and a statutory penalty.  As such, employers should consult counsel to ensure compliance with the amended NJLAD and in order to properly respond to employees’ requests under the new provision.

New Jersey Appellate Court Upholds Restrictions on Employer Job Postings

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

In a case of first impression, the New Jersey Appellate Division recently upheld the constitutionality of a New Jersey statute that bars employers from publishing job postings requiring that applicants be currently employed elsewhere.

In the case of New Jersey Department of Labor and Workforce Development v. Crest Ultrasonics [opinion available here], the Appellate Division analyzed the constitutionality of N.J.S.A. 34:8B-1 (the “Statute”), which was enacted in 2011.  The Statute, entitled “Restrictions upon use of employment as qualification for position vacancies,” explicitly bars employers from “knowingly or purposefully” publishing job advertisements stating, amongst other things, “that the qualifications for a job include current employment.”  [The full text of N.J.S.A. 34:8B-1 is available here]  The court determined that the Statute was borne out of legislative concerns in the midst of the national recession where New Jersey’s unemployment rate was climbing, businesses were downsizing, and new job opportunities were becoming increasingly scarce.  The Statute seeks to protect the increasing number of unemployed New Jersey residents, many of whom were unfortunate victims of the difficult financial times, from having an insurmountable initial hurdle when trying to rebuild their careers.

Claiming an unawareness of the Statute, Crest Ultrasonics placed an employment advertisement in the Burlington County Times in August 2011, seeking applicants who, amongst other prerequisites, “must be currently employed”.  After receiving a modest $1,000 fine by the New Jersey Department of Labor and Workforce Development that was affirmed on appeal, a three-judge New Jersey Appellate Division panel was presented with Crest Ultrasonic’s challenge to the Statute on grounds that, among other things, it infringes on employers’ First Amendment rights to free speech under the New Jersey and United States Constitutions.

The appellate panel applied the United States Supreme Court’s long-standing intermediate scrutiny four-prong test established in Central Hudson Gas & Electric Corporation v. Public Service Commission, 447 U.S. 557 (1980), to assess the constitutionality of the Statute’s restrictions over commercial speech (i.e. advertising job openings).  That test essentially asks whether the restricted speech involves lawful activity that is not misleading, whether there is a substantial governmental interest, whether the regulation advances said governmental interest, and whether the restriction is sufficiently narrowly tailored to serve its intended purpose.

Under the Central Hudson analysis, the Court held that the Statute’s restrictions on employers is constitutionally sound and does not violate any First Amendment rights.  Of particular note, the Court acknowledged that the advertising restrictions merely limit employers’ publicly-stated position as to applicants’ current job status.  By contrast, nothing in the Statute further restricts or compels employers’ hiring decisions and, “in fact, explicitly allows employers to restrict potential candidates based on other criteria”, including holding certain professional licenses or having a particular number of years of experience/training in a given field.

The Crest Electronics opinion offers clarity to the Statute’s restrictions for employers across the State of New Jersey.  While employers are strictly prohibited from posting job advertisements that explicitly require candidates to be currently employed elsewhere, employers remain free to establish their own hiring criteria and ultimately select whoever they choose for the job, even if that decision is dependent in part upon an applicant’s current job status.  Employers concerned about running afoul of the Statute’s restrictions should consult with an employment attorney for further analysis.

Gender Equity Notice Must Be Posted By Covered New Jersey Employers By January 6, 2014

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

Federal and State Law prohibit discrimination in pay, compensation, benefits, or other terms, conditions or privileges of employment based on one’s sex.  See Title VII of the Civil Rights Act, the Equal Pay Act of 1963 and the New Jersey Law Against Discrimination.  New Jersey employers with 50 or more employees are required to post the gender equity notice (the “Notice”) required by the recent September 2012 amendment to the Equal Pay Act.  The Notice can be found here

The regulations recently published by the New Jersey Department of Labor set forth the requirements regarding posting of the Notice.  Beginning January 6, 2014, covered employers (that is, employers in New Jersey which have a total of 50 or more employees, whether those employees work inside or outside of New Jersey) must conspicuously post the Notice in a place or places accessible to all employees in each of the employers’ workplaces.  In the event that a covered employer has an internet site or intranet site for exclusive use by its employees and to which all employees have access, posting of the Notice on the covered employer’s internet site or intranet site will satisfy the conspicuous posting requirement.

In addition to being posted, the Notice must also be (i) provided to newly hired employees at the time of hiring (or by February 15, 2014 for employees already hired), (ii) redistributed annually, and (iii) provided upon an employee’s first request. Employers may comply with the notice requirement by sending the Notice to employees through email, printed material, or through an internet site or intranet site, as noted above.

Finally, employers must require employees to sign acknowledgement forms indicating that each employee has received the Notice and has read and understands its terms.  The acknowledgement is to be read and signed by all employees and returned within 30 days of receipt.  The rules regarding the publishing and distribution of the Notice will be available at N.J.A.C. 12:2-2.1 through 2.4

5 Reasons Why Your Business Needs to Have and Update its Employee Handbook

Posted in Employment Policies and Practices

Employee handbooks are crucial to protect a business from needless lawsuits and assist with smooth business operations. Nevertheless, many employers fail to either implement a handbook or update an existing one. Attached/below are the top five reasons your business should implement or update its handbook.

  1. A handbook helps the business comply with its legal obligations to provide employees with written notice of certain legal rights.
  2. A properly implemented anti-harassment and discrimination policy in a handbook demonstrates the business’ commitment to a harassment and discrimination free workplace and assists in providing the business with a defense to civil rights claims.
  3. A handbook clearly and uniformly communicates the business’ policies and expectations, which promotes consistency in the company’s treatment of employees.
  4. A handbook provides a single reference to employees for questions.
  5.  A handbook prevents employees from alleging promises or expectations contrary to those set forth in the handbook.