While growing in popularity, mediation still remains underutilized in employment disputes. Steven Adler, Chair of the Employment Law Department of Cole Schotz, recently had an article on the subject published in the August 25, 2010 issue of Law360. Click here to read the article.
As explained in our April 7, 2010 post, earlier this year the New York Department of Labor (NY DOL) issued substantial revisions to the regulations governing the New York Worker Adjustment and Retraining Notification Act (NY WARN). In July, the NY DOL issued new rules, which replace the former ones and are effective immediately.
As explained in our previous post, NY WARN, like the federal WARN Act, requires employers, in certain circumstances, to give employees advanced, written notice of a mass layoff or plant closing. The NY WARN is, however, broader in scope than the similar federal WARN Act covering employers with only 50 or more employees (as opposed to 100 or more) and can be triggered by a layoff affecting 25 or more employees (as compared to 50 or more). Similarly, the notification period is also greater under NY WARN, requiring 90 days notice, instead of the 60 days required by the federal WARN Act.
The new regulations include, among other provisions: (1) revisions to the required language to be included in NY WARN notices; (2) clarification that the term “affected employee” excludes an officer, director or shareholder; (3) clarification that the calculation of the number of employees for notice purposes is determined based upon the date the first notice is required to be given under the Act; and (4) a new requirement to provide a “rescission notice” to affected employees if, after giving NY WARN notice of a mass layoff or plant closing, an employer determines to continue operations.
Any New York-based employer contemplating a mass layoff or plant closing should be familiar with these new regulations and consult legal counsel for guidance in navigating the requirements of NY WARN and the federal WARN Act.
High school and college students often are willing to work for little or no pay during the summer months to bolster their resumes. Businesses see this as a good opportunity to get some extra help around the office. However, private sector, "for-profit" employers need to be aware that they are required to pay at least minimum wage and overtime to summer help unless these internships or training programs meet the following criteria:
See U.S. Dept. of Labor, Wage and Hour Division, Fact Sheet #71.
The determination whether an internship or training program meets all six requirements depends upon all the facts and circumstances of each program. In addition to owing unpaid wages and potentially hefty fines, unpaid programs that do not meet all of the Department of Labor's criteria could lead to legal problems involving workers' compensation, employee benefits, unemployment insurance and federal and state taxes.
Employers should structure unpaid internships to meet the above criteria. Also consider having a written agreement with the interns outlining the nature of the work and that the program is being operated to provide a learning experience for the interns. If in doubt about compliance, employers should pay at least minimum wage and overtime to avoid legal problems because the Fair Labor Standards Act, the federal statute that covers minimum wages and overtime, as well as state wage and hour laws, define “employ” very broadly.
In City of Ontario v. Quon, decided on June 17, 2010, the United States Supreme Court held, for the first time, that the City of Ontario’s review of a police officer’s text messages was reasonable and, therefore, did not violate the Fourth Amendment. In Quon, Jeff Quon repeatedly exceeded the character limit on his work-issued pager. The City therefore audited his text messages, and uncovered hundreds of personal messages, some of which were sexual in nature. Although the Court declined to address whether Quon had a reasonable expectation of privacy in his text messages, the Court held that, even if he did, a public employer may reasonably search an employee’s property at work where the search is non-investigatory, work-related or incident to an investigation of work-related misconduct, without violating the Fourth Amendment.
Here, the Court found that the search was reasonable and “justified at its inception,” as the City’s review stemmed from an investigation as to whether the character limit was sufficient to meet the City’s needs. In addition, the City’s review of Quon’s text messages was reasonable as an “efficient and expedient way to determine whether Quon’s overages were the result of work-related messaging or personal use.” Finally, the Court found that the review was not “excessively intrusive” because the City only reviewed two (2) months of messages, although more were available.
As with cases arising in the private sector and impacting issues of technology in the workplace, Quon also provides several instructive lessons for employers. First, employers must be reminded that it is crucial to develop and distribute comprehensive workplace communications policies, which make clear that employees’ communications through technology are not private. In addition, employers are well advised to only review such employee communications where there is a legitimate, work-related reason to do so.
The United States Department of Labor has just announced that it is raising fines for employers that illegally employ child workers. Under its new, tougher penalty structure, employers who illegally employ minors will face penalties of up to $11,000 per worker for each violation. When children work, the work must be age appropriate, safe and it must not interfere with their schooling.
No minor under the age of 18 may work in hazardous jobs. Similarly, no minor under the age of 16 may work in, about or in connection with, power driven machinery.
With regard to hours of employment, with limited exceptions, no minor under 18 may work more than six consecutive days in one week, more than 40 hours in one week or more than eight hours in a day. No minor between 16 and 18 may work before 6 a.m. or after 11 p.m. They may, however, work after 11 p.m. during school vacations and on days which do not precede a regularly scheduled school day, provided they have written permission from their guardian. Similarly, they may work in a seasonal amusement or restaurant after 11 p.m. and into the following day if they start their shift before 11 p.m. either during any regular school vacation period or on workdays which do not begin on a day which precedes a regularly scheduled school day. However, under no circumstances may a minor between 16 and 18 work after 3 a.m. or before 6 a.m. on a day which precedes a regularly scheduled school day.
With regard to breaks, no minor under the age of 18 may be employed or allowed to work for more than five continuous hours without at least a thirty (30) minute lunch break.
There are also special schedule posting and recordkeeping requirements for minors, and employers are subject to criminal penalties for violating either state or federal wage and hour laws relating to minors. Each day, and with respect to each minor, constitutes a separate offense. Finally, minors may sue employers in court for work related injuries, unlike adults who must bring a workers' compensation claim.
Considering that state wage and hour laws may differ, employers outside New Jersey need to consult their state's laws.
According to the New Jersey Supreme Court in Nini v. Mercer County Community College (decided June 1, 2010), New Jersey employers can refuse to hire or promote individuals who are over 70 years of age on the basis of age, but will violate the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1 et seq., if the employer refuses to renew a contract for the same reason. LAD prohibits an employer from refusing to hire, firing or otherwise discriminating against an employee because of a protected category such as age. However, LAD contains what is known as the “over 70 exception”, which provides that, “nothing herein contained shall be construed to bar an employer from refusing to accept for employment or to promote any person over 70 years of age….” N.J.S.A. 10:5-12(a). Thus, a New Jersey employer can refuse to hire or promote an individual who is over 70 years old on the basis of that individual’s age without running afoul of LAD. The Court in Nini, however, held that the “over 70 exception” does not apply to the non-renewal of a contract, likening a non-renewal to a termination, which is unlawful, instead of a refusal to hire. In reaching this holding, the Court relied upon LAD’s remedial nature and strong public policy of eradicating discrimination in the workplace.
New York City employers should take note of a recent decision that will make it easier for employees to hold employers liable for harassment in the workplace. Since the late 1990s, many employers have relied upon what is commonly termed the “Faragher-Ellerth Defense” to defend against claims of unlawful harassment. On May 6, 2010, in Zakrzewska v. The New School, 2010 WL 1791091 (2010), the New York Court of Appeals (New York’s highest Court) held that the Faragher-Ellerth Defense is not available to claims brought under New York City’s Human Rights Law (“NYCHRL”).
Under Supreme Court decisions, Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), an employer is entitled to an affirmative defense against a harassment claim where: (i) there is no tangible employment action (i.e., the employee is not terminated, demoted, subject to reassignment), (ii) “the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and (iii) “the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Zakrzewska v. The New School, 598 F.Supp.2d 426 (S.D.N.Y. 2009). In other words, where the employer has taken all appropriate action and the employee declines to avail him/herself of the policies and opportunity for correction, the employer may avoid liability for harassment. This defense has proven quite valuable to diligent employers.
The Zakrzewska Court based its decision to reject this defense on the specific language of the NYCHRL, as well as its legislative history. The Court noted the law’s language, which provides that anti-discrimination policies and procedures may be considered “in mitigation” of the amount of penalties and punitive damages awarded. However, the Court held that under the NYCHRL such policies do not provide an absolute defense to such claims.
The impact of this decision is that it will now be easier for employees to bring harassment claims under the NYCHRL and to hold employers liable for their supervisor’s actual harassment and/or failure to properly respond to claims of harassment in the workplace. Given Zakrzewska, it is even more important for New York City employers to establish suitable anti harassment workplace policies and train supervisors regarding appropriate workplace conduct.
On March 23, 2010 President Obama signed into law The Patient Protection and Affordable Care Act (“PPACA”), which amends section 7 of the Fair Labor Standards Act (“FLSA”), to require employers to provide “a reasonable break time” for nursing mothers to express breast milk. The new amendment further requires that employers provide such breaks for one year after the child’s birth. In addition, it requires employers to provide a private place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which the employee may use to express breast milk. Employers are not required, however, to pay for these breastfeeding breaks under the PPACA.
Employers with less than 50 employees are exempt from the PPACA amendments to the FLSA if providing the break or place to express breast milk would impose an “undue hardship” on the employer by causing the employer “significant difficulty or expense” in light of the employer’s size, resources and business structure.
Effective immediately, employers should be aware of break requirements under the PPACA and consider what private locations they may be able to use to accommodate nursing mothers. In addition, employers should consult counsel in formulating appropriate practices and policies, especially in light of the PPACA’s failure to provide any guidance as to the definition of “reasonable break time” and its failure to set forth any limit to the number of breaks that may be taken per day.
The COBRA subsidy about which we have recently written several times, has been extended again and is now available for “involuntary terminations” through May 31, 2010. As we wrote in our recent posts, the COBRA subsidy provides that “assistance eligible individuals” are responsible for only 35% of their COBRA premiums during the subsidy period and employers are responsible for the remaining 65% of the premium, but receive a payroll tax credit for this cost. The COBRA subsidy was originally set to expire on December 31, 2009, but was extended to February 28, 2010, then to March 31, 2010, and now to May 31, 2010.
Employees who are involuntarily terminated between September 1, 2008 and May 31, 2010 are eligible for the COBRA subsidy for up to 15 months. This period is measured from the first day of the first period of coverage for which the individual is eligible. Additionally, the subsidy is available to individuals who were subjected to a reduction of hours between September 1, 2008 and May 31, 2010, followed by an involuntary termination occurring between March 2, 2010 and May 31, 2010. Such individuals are eligible for the COBRA subsidy regardless of whether they elected COBRA coverage at the time of their reduction in hours.
The New Jersey Supreme Court’s much-awaited March 30, 2010 decision in Stengart v. Loving Care Agency, Inc. provides guidance to all New Jersey employers issuing electronic communications policies. On April 22, 2009 and July 27, 2009, we wrote about Stengart, a case that is providing necessary guidance on the use of technology in the workplace. The New Jersey Supreme Court’s decision affirmed the Appellate Division and held that Stengart “could reasonably expect that email communications with her lawyer to her personal account would remain private, and that sending and receiving them via a company laptop did not eliminate the attorney/client privilege that protected them.” The Court thus found that Loving Care Agency and its attorneys violated Stengart’s privacy rights by reviewing emails sent between Stengart and her attorneys even though the emails were composed on a company computer.
In following the Appellate Division, the Stengart Court ruled that Stengart had a reasonable expectation of privacy in her emails. First , the Court noted that Loving Care’s electronic communications policy, as contained in its administrative and office staff employee handbook, was ambiguous. While the policy indicated that emails sent on company equipment could not be considered private or personal to any individual employee, it then acknowledged that “occasional personal use of email is permitted.” Keeping the policy’s ambiguity in mind, the Court also considered whether Stengart had a subjectively reasonable expectation of privacy in her communications with her attorney. The Court found that she did, noting that Stengart took steps to protect the privacy of her emails by using a personal, password-protected email account and by not leaving her password on her company’s computer. Finally, in assessing Stengart’s privacy expectations, the Court confirmed the important public policy concerns protecting her communications and underlying the attorney-client privilege.
New Jersey employers should heed the message of Stengart by immediately reviewing their electronic communications policies to ensure that such policies clearly communicate the employer’s rules and expectations.
The New York Department of Labor (NY DOL) recently issued substantial revisions to the regulations governing the New York Worker Adjustment and Retraining Notification Act (NY WARN). NY WARN, like the federal WARN Act, requires employers, in certain circumstances, to give employees advanced written notice of a mass layoff or plant closing. The NY WARN is, however, broader in scope than the similar federal WARN Act. For example, while the federal act applies to employers with 100 or more employees, the NY Warn Act covers employers with only 50 or more employees. Similarly, NY WARN can be triggered by a layoff affecting 25 or more employees, as compared to 50 employees under the federal WARN Act. The notification period is also greater under NY WARN, requiring 90 days notice, instead of the 60 days required by the federal WARN Act.
Some of the revisions to the regulations include new requirements as to what information must be provided to employees affected by a qualifying mass layoff or plant closing, as well as to the Commissioner of Labor and other individuals or entities required to receive notice. The revised regulations also clarify the definitions of certain terms in the Act, such as “affected employee,” “employment loss,” “hours of work,” “mass layoff,” “relocation,” and other terms.
Of note is the definition of “date of layoff”, which now means “the last day an employee is eligible or permitted to work for his/her employer." This change is significant in that the closing of a plant sometimes occurs due to events that do not allow an employer to give the required advanced notice. In such circumstances, employers often close the plant, but retain the employees on the payroll for the required notice period in order to avoid the notice obligations. This practice now appears to be prohibited, but an employer who is unable to give the required notice can still avoid liability under NY WARN by paying its employees all wages and benefits due under the Act within three weeks of the employees’ last day of work.
Any New York-based employer contemplating a mass layoff or plant closing should be familiar with these new regulations and consult legal counsel for guidance in navigating the requirements of NY WARN and the federal WARN Act.
On March 18, 2010, President Obama signed into law the “Hiring Incentives to Restore Employment Act” (the “HIRE Act”). The HIRE Act includes a number of tax incentives for employers to hire new workers, including a payroll tax exemption.
The main focus of the HIRE Act is a provision that provides Social Security tax forgiveness for private employers, state colleges, and universities under certain circumstances. Employers will be exempt from paying their portion of the 6.2% Social Security payroll tax in 2010 for every worker who was previously unemployed for a period of at least sixty (60) days, hired between February 3, 2010, and the end of 2010. In order for the employer to receive the exemption, the newly hired employee must: (1) certify by affidavit that he/she did not work more than forty (40) hours in the preceding sixty (60) days, and (2) not replace another employee of the company, except where the former employee quit or was terminated for cause.
The HIRE Act also provides an incentive for employers to maintain new workers. Employers will receive a $1,000 income tax credit for every new employee hired during the specified time period and retained for fifty-two (52) consecutive weeks. Additionally, under the Act, businesses can write off investments they make in equipment this year.
By some estimates, the HIRE Act will create as many as one million jobs. The implication of the tax incentives alone are anticipated to provide as many as 300,000 jobs.
Employers should factor the tax credit and payroll tax exemption into their hiring decisions this year and consult their counsel if questions arise regarding its applicability.
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (the "Act"), which extends COBRA subsidy eligibility through March 31, 2010. As we wrote in our January 10, 2010 post, the COBRA subsidy provides that assistance eligible individuals are responsible for only 35% of their COBRA premiums during the subsidy period and employers are responsible for the remaining 65% of the premium, but receive a payroll tax credit for the cost. The COBRA subsidy was originally set to expire on December 31, 2009, but was extended to February 28, 2010. The Act is a stop gap measure while Congress considers legislation that could further extend the COBRA subsidy through December 31, 2010.
Under the Act, employees who are involuntarily terminated between March 1, 2010 and March 31, 2010, are eligible for the COBRA subsidy. Additionally, the Act expands eligibility to cover individuals who were subjected to a reduction of hours between September 1, 2008 and March 31, 2010, followed by an involuntary termination occurring between March 2, 2010 and March 31, 2010. Such individuals are eligible for the COBRA subsidy regardless of whether they elected COBRA coverage at the time of their reduction in hours. The Act also provides further guidance to employers regarding their determination as to whether an employee's termination was involuntary.
Relative to the perceived threat, infections from the 2009 H1N1 flu (swine flu) have produced fewer cases than expected. Nevertheless, employers should not let their guard down and need to remain vigilant to prevent worker exposure to the flu. A flu outbreak can impact productivity and ultimately the bottom line.
To assist employers in minimizing workplace exposure to the flu, on November 9, 2009, the Occupational Safety and Health Administration (“OSHA”) announced the publication of a fact sheet [link “Fact Sheet” to http://www.osha.gov/h1n1/index.html] informing employers and employees of ways to reduce risk of exposure to the 2009 H1N1 virus at work. By being proactive and following OSHA’s recommendations, an employer may be able to reduce potential exposure to employees and customers. The OSHA fact sheet provides the following guidance to reduce worker exposure:
Employers and employees can obtain information regarding OSHA’s 2009 H1N1 guidance document at www.osha.gov.
On December 21, 2009, President Obama signed into law the Department of Defense Appropriations Act of 2010 (the “Act”). Among other things, the Act extends the COBRA premium subsidy previously enacted by the American Recovery and Reinvestment Act (“ARRA”), from December 31, 2009 until February 28, 2010. As most employers are aware, and as discussed in our March 6, 2009 post, under ARRA, assistance eligible individuals are responsible for 35% of the premiums during the subsidy period and employers are responsible for 65% of the premium, but receive a payroll tax credit for the cost.
The Act makes clear that the qualifying event (involuntarily termination other than for gross misconduct or reduction in hours, which causes a loss of coverage) must occur before February 28, 2010. The individual need not actually lose coverage before February 28, 2010 to be eligible for the extended subsidy. This provision differs from ARRA, which required both the qualifying termination and the loss of coverage to occur before the end of the subsidy period. The Act also extends the subsidy period from nine (9) months to fifteen (15) months.
In addition, employers should be aware that the Act imposes upon them additional notice requirements. By February 17, 2010, employers must provide additional notice to assistance eligible individuals informing them of the changes made by the Act. In the event of a qualifying event occurring after December 19, 2009, the employer must give notice to assistance eligible individuals of their COBRA subsidy rights, consistent with the requirements of the ARRA.
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.
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.
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.
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.
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.
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.
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.
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.
The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) is an economic stimulus package enacted by Congress and signed into law by President Obama on February 17, 2009. The Recovery Act is based largely on proposals made by President Obama and is intended to provide a stimulus to the country’s economy in the wake of the recent economic downtown. The Recovery Act includes federal tax relief; expansion of unemployment compensation benefits and other social welfare provisions; and domestic spending in education, health care and infrastructure. Often overlooked, but of particular importance to employers and employees, are the powerful “whistleblower” protections created by the Recovery Act. The Act’s whistleblower provisions apply to employers that receive a contract, subcontract, grant or other payment funded in whole or in part by the federal stimulus package.
The Recovery Act protects both traditional whistleblowers who report fraud or illegal activity as well as employees who complain about mismanagement, waste, dangers to public health or safety, or an abuse of authority. The terms of the Recovery Act’s protections are broader in scope than other whistleblower statutes such as the New Jersey Conscientious Employee Protections Act (“CEPA”) or Sarbanes Oxley. For example, the Recovery Act protects employees who informally complain to their direct supervisor or to any other employer representative with the authority to investigate, discover or remedy misconduct. Specifically, it protects complaints made by employees in the ordinary course of their job duties.
Not only does the Recovery Act expand the scope of protected employee activity, but it also sets forth a relatively easy burden for employees to satisfy to establish they were the subject of retaliation. The Recovery Act provides that employees need only demonstrate that their protected activity was a “contributing factor” in the adverse action taken against them. Employees can meet this burden through the use of “circumstantial evidence.” On the other hand, employers have quite a difficult burden to defeat a whisteblower claim, since under the Recovery Act they must prove by “clear and convincing evidence” that they acted for a legitimate purpose unrelated to any protected whisteblower activity. Due to the scope of the protections provided to employees under the Recovery Act as well as the respective burdens of both employers and employees, employers must be aware of their potential liability.
In the midst of recent and widespread fear and panic surrounding the H5N1 swine flu virus, many employers are appropriately inquiring as to how they can protect their operations, employees, clients and customers from outbreaks and pandemics including the current swine flu and even the avian flu of years past.
Any actual or potential outbreak necessarily poses many legal employment issues including those relating to safety, health/medical leave, reasonable accommodation, privacy/confidentiality, shortage of staff, compensation, travel restrictions, communication, revenue/cash flow and possible reductions in force.
What do these issues mean for employers? First, employers should take this opportunity to develop a communicable disease policy, which may address (i) any employee obligations to report a diagnosis or symptoms of any communicable disease and/or any travel to areas in which the employee may have been exposed; (ii) any travel restrictions to be imposed on employees; and (iii) any infection control and/or personal protective equipment plans and practices. Employers should also develop business continuity/strategic plans and policies, which address all aspects of the company in the event of an outbreak including communications, information technology (including remote access systems), health/medical, legal, the appointment of crisis teams/captains and other related issues.
Employers must also plan for the impact that any outbreak may have on their business function and must consider how the company will operate without key employees, suppliers, materials, etc. Lining up alternate vendors, cross-training employees, and developing a backup plan in the event that travel is restricted or eliminated will all serve a company very well during any pandemic. Similarly, companies must prepare for the impact of any outbreak on employees. In particular, employers should consider and address the effect of employee absences, and how the company can reduce face-to-face contact, track vaccine information and monitor employee access to healthcare, mental health, and special needs.
While the current swine flu outbreak may not develop into the plague forecast by the media, employers should take advantage of the warning it provides to develop and ensure their communicable disease and business continuity plans and procedures are in place and appropriate to protect valuable business interests.
Recently, in State of New Jersey v. M.A., the New Jersey Appellate Division held that an employee did not have any expectation of privacy in the contents of his work computer. In M.A., the employee was terminated and the employer reported to the police that the employee had engaged in theft of company funds. The police conducted a warrantless search of two computers in the employer’s possession. One of the computers was maintained in the former employee’s office and the other was a laptop shared by the former employee and a co-worker. The former employee had created confidential passwords on both computers to block access to his personal information. At the employee’s criminal trial, the employee claimed that the search of his computers constituted an unlawful search.
The court, relying on several facts, rejected the employee’s argument. The key facts included: both computers searched were owned by the employer and maintained in the employer’s place of business; all employees had been advised upon hiring that all workplace computers were property of the employer; the desktop computer that was searched was connected to the employer’s network, giving the employer equal access to it; the laptop searched contained the employer’s business software and was shared by another employee; and lastly, the employee’s office was never locked.
Although a criminal case, this case highlights the importance of employers implementing and distributing a clear and unambiguous written policy informing employees that their work computers are the employer’s property and no employee should have any expectation of privacy in any materials contained therein. Employers should also be cautious about giving employees exclusive access to any computer.
The most recent case to highlight the importance of having properly drafted electronic personnel policies is Stengart v. Loving Care Agency. In Stengart, the New Jersey Superior Court held that an employee who used her web-based Yahoo email account on the Company’s computer waived her attorney-client privilege. In Stengart, the employee emailed her attorney during business hours from the laptop issued to her by her employer, Loving Care, before she left its employ.
After Stengart brought suit alleging hostile workplace and constructive discharge claims against Loving Care, the Company conducted a routine review of her computer to comply with the Court’s discovery rules. During this review, the Company came upon the privileged communication. While Stengart argued that the email should be returned or destroyed and the Company had no right to retain it, Loving Care countered that Stengart waived the privilege by communicating with her attorney on Company time and through the use of a Company-issued laptop. Importantly, the Court relied upon the Company’s comprehensive handbook provisions that prohibited employees from using the email system for “employment activities outside the scope of the Company business” or for “solicitation or outside business ventures.” Moreover, the Court cited the Handbook’s provision that emails sent on the Company’s server are not to be considered private or personal to any employee. Finally, the Court noted that Stengart herself helped create and distribute the Handbook and, therefore, she could not reasonably claim that she was unaware of the policy.
This decision confirms the importance of having properly drafted email, computer and personnel policies.
There have been recent changes to the statutes of limitation applicable to many employment claims. Steven Adler, Chair of the Employment Law Department of Cole Schotz and Kathryn Dugan, an associate in the Department, recently had an article on the subject published in the April 13, 2009 issue of the New Jersey Law Journal. Click here to read the article.
The New York Legislature recently signed three pieces of legislation aimed at enhancing employment opportunities for individuals with prior criminal convictions. The new laws relate to Article 23-A of New York’s Correction Law, which provides that employers are prohibited from discriminating against an applicant based on a prior criminal conviction unless (a) there is a “direct relationship” between one or more of the criminal convictions and the specific employment sought or held by the individual; or (b) granting or continuing employment would involve an “unreasonable risk” to property or to the safety or welfare of specific individuals or the general public. Article 23-A of the Corrections Law indentifies a list of factors that an employer must consider before making an employment decision on the basis of an individual’s criminal background. Some of these factors include: the relationship between the prior offense and the individual’s ability to perform specific duties of the job; the length of time elapsed since the offense; the individual’s age at the time of the offense; the seriousness of the offense; and information produced in regard to the individual’s rehabilitation and good conduct.
The first piece of legislation, effective September 2008, amends the New York Human Rights Law to protect New York employers from negligent hiring claims brought by third parties alleging an employee with a criminal conviction caused harm in the workplace. Under the amendment, if an employer has evaluated an applicant’s criminal history in accordance with the factors outlined in Article 23-A and decided in good faith to hire the individual, then the employer is afforded a rebuttable presumption that information regarding the individual’s criminal background should be excluded from evidence. The second piece of legislation, effective February 2009, requires all New York employers to post a copy of the Article and related regulations conspicuously in the workplace. The third piece of legislation, also effective February 2009, requires all New York employers to provide a copy of Article 23-A to (1) prospective employees subject to background checks and (2) any employee whose background check uncovers a prior criminal conviction, regardless of whether the employer takes adverse employment action against that individual.
Employers operating in New York should be mindful of these regulations and review and revise their employment policies and practices to ensure compliance with both the anti-discrimination and posting provisions of the new laws.
The American Recovery and Re-Investment Act of 2009 (“ARRA”), enacted on February 17, 2009, made significant changes to federal COBRA, as previously reported on this blog. New Jersey employers with less than twenty (20) employees, who are subject to New Jersey’s mini-COBRA statute (“NJ COBRA”), should also be aware that the ARRA makes significant changes to NJ COBRA.
“Assistance eligible individuals” who elect COBRA (or NJ COBRA) may receive a government subsidy equal to 65% of their health insurance premium for up to nine (9) months and remain obligated to pay 35% of the premium. Under NJ COBRA, “an assistance eligible individual” is an individual who loses group health coverage because of an employee’s involuntary termination between September 1, 2008 and December 31, 2009 and who is otherwise eligible for New Jersey continuation coverage. Under New Jersey law, employees who are terminated for “cause” are not eligible for continuation coverage. The NJ COBRA premium subsidy is also not available if the individual’s income that year exceeds $125,000.00 for an individual filer and $250,000.00 for a joint filer. Finally, the NJ COBRA premium subsidy is not available if the employee is otherwise eligible for other insurance coverage, such as through a spouse’s plan or Medicare.
New Jersey’s small employers with less than 20 employees should be aware of their obligations to provide NJ COBRA notices to eligible employees. Employees who are involuntarily terminated between September 1, 2008 and February 16, 2009 must elect the subsidy no later than April 18, 2009. Those who are involuntarily terminated between February 17, 2009 and December 31, 2009 must elect New Jersey continuation coverage within thirty (30) days after their coverage ended due to an involuntary termination of employment. These individuals must also sign up for the subsidy within that same thirty (30) day period. This thirty (30) day period is different than the election period applicable to COBRA.
Employers should also be aware that individuals who initially declined to elect group continuation coverage or initially elected coverage and then lost it due to their failure to pay premiums will have an additional opportunity to elect group continuation coverage and receive the subsidy. In this situation as well, individuals will have until April 18, 2009 to enroll. Coverage for eligible individuals who enroll will end on the date coverage would have ended had they initially elected continuation coverage following their termination.
Unlike COBRA, under NJ COBRA only the person who is involuntarily terminated may make a continuation election, and not the employee’s dependents.
Small employers should make note of those “take away” items referenced in the Firm’s March 6, 2009 posting on the ARRA and its impact on COBRA. Employers should also note that the Department of Labor has issued model forms for employers to use when notifying individuals of their rights under COBRA and NJ COBRA. These forms can be found at http://www.dol.gov\ebfa\COBRA.html.
On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (the “Act”) into law. The Act overrules a 2007 United States Supreme Court decision (Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 2007)), which held an employee must file a claim alleging wage discrimination within 180 days of the employer’s initial decision regarding wages or lose the right to file the claim forever. Essentially the Ledbetter Court had held that a new cause of action does not occur with each allegedly discriminatory payment of wages.
Under the Act, however, a discriminatory compensation decision occurs with each paycheck and permits an employee to recover back pay for up to two years from his/her filing of the charge or complaint of discrimination.
Significantly important to employers is that the Act is retroactive to May 28, 2007. Accordingly, employers should immediately review their pay policies through 2007 to ensure that no protected class is paid disproportionately to another for the same or comparable work.
On February 17, 2009, President Obama signed into law a $787 billion economic stimulus package entitled the American Recovery and Reinvestment Act of 2009 (the “ARRA”). The ARRA made some significant changes to COBRA. The ARRA provides for a sixty-five percent (65%) government subsidy of COBRA premiums for up to nine months for certain employees (and their dependents) involuntarily terminated during the period from September 1, 2008 to December 31, 2009. The 65% premium subsidy initially must be paid by employers who thereafter will be reimbursed by the government.
The COBRA Premium Subsidy
Under COBRA, terminated employees and their qualified beneficiaries may continue their health insurance at the group rate plus a two percent (2%) administrative fee. Under ARRA, the federal government for up to nine months will pay 65% of the cost of a qualified beneficiary’s COBRA premium if the qualified beneficiary (1) experiences a qualifying event that is an “involuntary termination” during the period September 1, 2008 to December 31, 2009; (2) elects COBRA coverage; and (3) pays 35% of the COBRA premium. The employer must initially pay the 65% of the COBRA premium and receive a credit for such amount against its federal payroll tax liabilities. Involuntary termination is not defined. However, it is clear that layoffs qualify but terminations for gross misconduct do not.
Employers agreeing to pay a portion of their employees’ COBRA premiums as part of a severance package should take note: employees are only obligated to pay 35% of their premium obligation. Moreover, employers will only be reimbursed by the federal government for 65% of their employees’ contributions. In other words, if as part of a severance package the employer agrees to pay all of a former employee’s COBRA contributions, the employer will not be reimbursed at all by the federal government. If an employer agrees to pay forty percent (40%) of the employee’s COBRA contributions, the employee only needs to pay 35% of his or her 60% obligation and the employer is only entitled to obtain reimbursement for 65% of the employee’s 60%. Stated differently, the employer will not be entitled to a payroll tax credit for the 40% of the premium the employer agreed to pay pursuant to a severance agreement.
There is an income threshold. If the individual’s modified adjusted gross income exceeds $145,000, or $290,000 for joint filers, the government’s premium subsidy must be repaid by the employee. The repayment is reduced proportionately for income between $125,000 and $145,000. Individuals can elect to waive the premium subsidy if they are above the income threshold to avoid being subject to a recapture tax.
Period of COBRA Premium Subsidy
The subsidy applies to periods of COBRA coverage that begin after February 17, 2009. If a company’s period of coverage under its plan is a calendar month, the employer will have to start providing the subsidy beginning March 1, 2009.
The subsidy is available for up to nine months so long as the individual remains eligible to continue COBRA coverage, but will end earlier if the individual becomes eligible for any other group health coverage or Medicare. Under COBRA, an individual eligible for Medicare does not need to terminate COBRA coverage. However, under ARRA, the subsidy will end.
There is a grace period under ARRA. For employers who charge qualified beneficiaries for the full COBRA premium for up to two billing periods after February 17, 2009, the employer must then either reimburse the qualified beneficiary for the amount of the premium subsidy or credit that amount toward future COBRA premium payments.
New Election Opportunity
Those who were terminated on or after September 1, 2008, who originally did not elect COBRA will have an additional opportunity to elect. They have sixty (60) days to make the election after notice is provided. The notice must be sent by April 18, 2009 to all qualified beneficiaries (not just to individuals who were involuntarily terminated). Coverage begins on February 17, 2009 (or March 1, 2009) but ends no later than the date that the original maximum COBRA continuation coverage period would have expired.
Take Aways
Effective January 16, 2009, the United States Department of Labor promulgated new regulations applicable to the Family and Medical Leave Act (“FMLA”). While the following contains only highlights of the recent rule changes, employers are well advised to make themselves aware of all modifications to the FMLA.
Perhaps the most significant changes to the FMLA relate to notice obligations. As the notification requirements have changed, employers must be aware that they must provide four different types of notice to employees. These notices include (i) general notice, (ii) eligibility notice, (iii) rights and responsibilities notice, and (iv) designation notice. If the employer’s work force is not literate in English, the notices must be translated into a language in which the work force is literate.
The general notice must provide a general statement of the FMLA’s provisions and must be placed in a prominent location, It should also be distributed in the employer’s handbook. The eligibility notice must notify the employee whether or not he or she is eligible for the FMLA within five (5) business days of the employee’s request for FMLA leave or from when the employer acquires knowledge that the employee’s leave may be covered under the FMLA. The notice should indicate whether the employee has been approved for FMLA and, if not, why the leave request has been denied. The Rights and Responsibilities Notice must advise the employee that the employer may designate and count the leave toward the employee’s FMLA entitlement. The notice is also required to provide additional information including whether the employee must substitute paid leave, and whether a certification will be required during the leave. Finally, the designation notice must be written and inform the employee whether the employer believes the employee is FMLA-qualifying.
Another major area in which the FMLA has been amended is with regard to military-related leave. Specifically, the National Defense Authorization Act extends FMLA leave to certain situations where employees need leave to care for an injured service member or due to a “qualified exigency in support of a contingency operation.” Eligible employees, including a “spouse, son, daughter, parent or next of kin of a covered service member” are eligible for leave of up to 26 work weeks in a single twelve month period to care for a injured service member. Leave can also be taken for a “qualifying exigency,” which includes situations in which an employee must address military-related issues such as short notice deployment, military events and related activities, urgent childcare and school activities, financial and legal tasks, counseling for the employee or a minor child, etc.
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