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

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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The New Jersey Legislature became the third state to provide for paid family leave in May of 2008. The New Jersey Paid Family Leave law extends the State Temporary Disability Insurance system to provide any eligible worker with up to six (6) weeks of paid family leave during the first twelve (12) months after the birth or adoption of a child, or to care for a family member who is suffering from a serious medical condition. The New Jersey Department of Labor and Workforce Development (“NJDOL”) recently issued regulations interpreting this new law. 

Beginning on January 1, 2009, the law imposed a minor additional tax (the rate is currently 0.09 percent) on the portion of employee wages that are subject to the State Temporary Disability Insurance Tax. Employees may start receiving benefits under this new law on July 1, 2009. The regulations provide for the maximum weekly benefit rate of $546.00 in 2009.

The regulations also indicate that employers have affirmative obligations under this law. Employers are required to give notice of the Paid Family Leave law to their employees, which includes posting notice of an employee’s rights under the Paid Family Leave law in an accessible worksite area. Employers are also required to distribute a copy of the printed notification to all employees. 

The benefits under this statute may be paid under the State plan or employers may obtain private plans. All proposed private plans must be submitted for review and approval by the New Jersey Division of Temporary Disability Insurance (the “Division”). If an employer fails to obtain the approval of the Division for its private plan, the employer shall be deemed to be covered by the State plan and will be responsible for the deduction of employees’ contributions and payments of employees’ contributions to the requisite fund, as required by the statute, until the private plan becomes effective.

Remember, employees are eligible to receive benefits beginning in July. When an employee applies for benefits under the new law, the Division may send a request for information to the employer with respect to a period of family leave. The employer must respond within ten (10) days to the request and failure to do so subjects the employer to statutory penalties.

Employers should currently be familiar with the statute and the NJDOL’s regulations in anticipation of the benefits employees can start receiving on July 1, 2009. These regulations can be accessed by clicking here http://lwd.dol.state.nj.us/labor/fli/content/fli_law_regulations.html.

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