Employment Law Alert

Employment Law Alert

News and Updates on Employment Law

Massachusetts Passes Toughest Pay Equity Legislation in the Nation

Posted in Wage & Hour

Earlier this month, Massachusetts became the latest state to pass expansive pay equity legislation to combat the gender wage gap, surpassing even the rigorous new requirements passed by New York and California in late 2015. Notably, Massachusetts is the first state to ban employers from requesting salary history as part of the interview or employment application process. The legislation, which passed unanimously and was signed into law by Governor Charlie Baker, will go into effect on January 1, 2018. To prepare for its implementation, employers with employees in Massachusetts should begin to adjust their hiring process and compensation policies, and consider conducting a self-evaluation of their pay practices to take advantage of Massachusetts’ law’s affirmative defense.

New Standard
Expanding on the federal Equal Pay Act’s mandate of “equal pay for equal work,” the Massachusetts law will require “equal pay for comparable work.” The law prohibits discrimination by paying a different wage, including “benefits or other compensation,” to members of the opposite sex who are performing comparable work, which means work that is (1) “substantially similar in that it requires substantially similar skill, effort and responsibility” and (2) “is performed under similar working conditions.” The legislation goes on to define “working conditions” as “circumstances customarily taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, physical surroundings and hazards encountered by employees performing a job.” This definition follows the trend established by New York and California, broadening the standard for pay equity by including more positions when comparing compensation.

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NJ Supreme Court Broadens Scope of LAD’s “Marital Status” Protection

Posted in Discrimination

On June 21, 2016, in Smith v. Millville Rescue Squad, the Supreme Court of New Jersey addressed the scope of the marital status protection afforded to employees by the Law Against Discrimination (LAD). The Court ruled that the LAD’s marital status provision is not limited to the state of being single or married but protects employees who have announced “they will marry, have separated, have initiated divorce proceedings or have obtained a divorce.”

Background
From 1998 until 2006, Robert Smith was employed by the Millville Rescue Squad (“MRS”) as its Director of Operations. His wife was also an MRS employee. In 2005, he began an extramarital affair with a volunteer under his direct supervision. His wife learned of the affair and informed the CEO of the MRS, who was Smith’s direct supervisor. The volunteer subsequently left the MRS, but the affair continued. After leaving his marital home, Smith informed the CEO that his marriage had collapsed. During a February 2006 meeting, the CEO told Smith he had “had eight months to make things right with [his] wife[,]” that “he did not think there was any chance of reconciliation . . . and that he believed there would be an ‘ugly divorce.” The CEO informed Smith he would bring the issue before the MRS’s Board of Directors. Shortly thereafter, the MRS terminated Smith’s employment.

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Arbitration Clause Held Too Vague to Cover Statutory Claims

Posted in Alternative Dispute Resolution

Employers drafting arbitration clauses for employment contracts and others drafting arbitration agreements generally need to be familiar with the line of New Jersey cases involving arbitration clauses, including the Appellate Division’s recent opinion in Anthony v. Eleison Pharmaceuticals LLC, Docket No. A-932-15T4 (App. Div. July 18, 2016), where the court held that an arbitration clause that does not include reference to a waiver of plaintiff’s statutory rights or a jury trial does not constitute a valid waiver of the right to have claims decided in a judicial forum.

In Anthony, the plaintiff filed a five-count complaint in Superior Court against Eleison, including four alleged violations of the New Jersey Wage Payment Act for failing to pay him once a month, failing to pay him minimum wage, failing to pay him overtime compensation, and failing to pay him upon separation of his employment. Central to the dispute was plaintiff’s employment contract which contained the following dispute resolution provision: “The parties agree that should any dispute arise out of this Agreement, a phased dispute resolution process shall resolve the dispute.” The “phased” process culminated in binding arbitration. In response to the complaint, defendants filed a motion to compel arbitration, arguing in part that plaintiff had agreed to the dispute resolution provision in his employment contract, and, thus, to arbitration. The trial court agreed, finding that the arbitration provision was clear and the dispute “arose out of the Agreement.”

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Second Circuit Holds Human Resources Director May Be Individually Liable Under FMLA

Posted in Family Leave

Employers should be aware that the United States Court of Appeals for the Second Circuit has held, in Graziadio v. Culinary Institute of America, that supervising employees can be held individually liable under the Family and Medical Leave Act (“FMLA”) for retaliation and interference with an employee’s FMLA rights. The Court also formally adopted standards for FMLA interference claims and for claims brought pursuant to the associational discrimination provision of the Americans With Disabilities Act (“ADA”).

Background

The plaintiff, Cathleen Graziadio, was a Payroll Administrator at the Culinary Institute of America (“CIA”). At issue in Graziadio’s lawsuit were two FMLA leaves – one to care for a son with diabetes, and the second to care for another son who fractured his leg and required surgery. In connection with her first FMLA leave, Graziadio submitted a medical certification to the CIA without incident. When Graziadio attempted to return to work and use intermittent FMLA leave, CIA Human Resources Director, Shayan Garrioch, informed Graziadio that she needed to submit an updated certification to support the intermittent leave to care for her son with diabetes, as well an initial certification to support FMLA leave to care for her son suffering from a leg injury. Graziadio responded with multiple emails and phone calls to Garrioch, seeking clarification as to exactly what paperwork was needed and making clear her desire to return to work. Instead of providing specific instructions, Garrioch simply requested “additional paperwork,” prompting Graziadio to make repeated requests for clarification as to what specific paperwork was required. Although Garrioch ignored Graziadio’s request for clarification, Graziadio submitted a new FMLA certification, which went unacknowledged. Eventually, communications between Garrioch and Graziadio broke down completely and Graziadio was terminated for job abandonment.

Graziadio filed suit in the Southern District of New York against CIA and Garrioch, alleging interference with FMLA leave, FMLA retaliation, and associational discrimination under the ADA. The district court granted defendants’ motion for summary judgment and dismissed all claims.

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The EEOC Finalizes Wellness Program Guidance, Issuing Final Rules on Workplace Wellness Programs and a Sample Notice

Posted in Employee Benefits

After much anticipation (and confusion) regarding legally permissible parameters for certain employer-sponsored wellness programs, on May 16, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued two final rules concerning wellness programs that offer incentives in exchange for health information from employees and their spouses. Specifically, the rules describe how wellness programs can comply with Title I of the Americans with Disabilities Act (“ADA”) and Title II of the Genetic Information Nondisclosure Act (“GINA”). According to the EEOC’s press release, the rules provide guidance under the ADA and GINA consistent with the relevant provisions of the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Affordable Care Act (“ACA”). The EEOC’s proposed regulations were discussed in a previous post following our presentation entitled “Wellness Programs for a Healthy Workplace” at the Fifth Annual Gibbons Employment & Labor Law Conference. Then, in June, the EEOC issued a sample notice for employer-sponsored wellness programs. Here, we parse the rules into bright-line takeaways for employers.

The ADA Final Rule
The ADA final rule provides guidance to employers who wish to use incentives to encourage employee participation in wellness programs that involve disability-related inquiries and/or medical examinations. Thus, employers whose wellness programs screen for health-related factors such as high blood pressure or cholesterol and who use incentives to encourage employees to participate in these screenings must be aware of the final rule. The final rule applies to all wellness programs that include disability-related inquiries and/or medical examinations (not just those wellness programs that are part of a group health plan). What should employers know to comply?

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Federal Judge Imposes Nationwide Preliminary Injunction on DOL’s New “Persuader” Rule

Posted in Labor

On June 27, 2016, in National Federation of Independent Business v. Perez, Judge Sam R. Cummings of the United States District Court for the Northern District of Texas issued a nationwide preliminary injunction precluding the United States Department of Labor (“DOL”) from enforcing its recently introduced rule interpreting the Labor-Management Reporting and Disclosure Act’s (“LMRDA”) “advice” exemption. 81 Fed. Reg. 15,924 et seq.

Background
As discussed in our previous blog, the LMRDA requires employers and labor relations consultants, often referred to as “persuaders,” to file reports with the government detailing expenditures, activities, agreements, and arrangements undertaken to persuade employees regarding their rights to join or refrain from joining unions, but these requirements are waived if the consultants do nothing more than “giv[e] or agree[] to give advice to [the] employer.” Under the DOL’s previous interpretation of this “advice” exemption, employers and their consultants were not required to publicly disclose their arrangements unless a “persuader” made direct contact with company employees. The new rule reinterprets the meaning of “advice” so that employers and consultants must file reports whenever “[a] consultant undertakes, or agrees to undertake, ‘persuader activities’” – even if the consultant “has no face-to-face contact with employees” and has limited his or her engagement to “indirect persuasion.”

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U.S. Supreme Court Clarifies Statute of Limitations for Constructive Discharge Claims

Posted in Discrimination

On May 23, 2016, the U.S. Supreme Court, in Green v. Brennan, held that the statute of limitations for a constructive discharge claim begins to run when the employee gives notice of his or her resignation, not at the time of the employer’s last allegedly discriminatory act giving rise to the resignation. The “constructive discharge” doctrine refers to a situation in which an employer discriminates against an employee to the point that the employee’s working conditions become so intolerable that a reasonable person in the employee’s position would feel compelled to resign.

The Court’s decision in Green resolves a split in authority between federal appeals courts and provides greater certainty regarding when an employee’s constructive discharge claim accrues. Although the Green case arose in the context of a federal employee, its holding applies equally to public and private sector employment.

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N.J. Supreme Court Invalidates Agreements to Shorten the LAD’s Statute of Limitations

Posted in Discrimination

On June 15, 2016, the New Jersey Supreme Court, in Rodriguez v. Raymours Furniture Company, Inc., held that an agreement by an employee to bring claims against his employer within six months of the allegedly wrongful employment action was unenforceable insofar as the agreement applied to claims brought under the New Jersey Law Against Discrimination (“the LAD”). In 1993, the Court had held that New Jersey’s general two-year statute of limitations for personal injury actions provides the appropriate limitations period for LAD claims. In Raymours, the Court ruled that the employer’s attempt to reduce this limitations period to six months undermined the LAD’s specific enforcement scheme for the elimination of discrimination and thus, for public policy reasons, could not be judicially sanctioned. In addition, the Court found that the particular agreement at issue, set forth as part of the boilerplate in the employer’s standard employment application form, constituted an unenforceable contract of adhesion.

Background

When plaintiff, Sergio Rodriguez, applied for a job with defendant, Raymour & Flanigan, he was required to complete an employment application form that contained the following provision:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT. I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.

After working for Raymour & Flanigan for several years, Rodriguez left work due to a work-related injury. Within a few days after being cleared to return to work, he was terminated, ostensibly as part of a reduction-in force. More than six months after his termination, Rodriguez filed suit in New Jersey Superior Court, alleging that his employment with Raymour & Flanigan was terminated because of his disability or perceived disability in violation of the LAD. Raymour & Flanigan moved for summary judgment, arguing that the LAD claim was barred by the six-month limitations period to which Rodriguez had agreed. The trial court granted the motion, and its decision was affirmed by the Appellate Division. Both courts concluded that: (1) the agreement to limit the limitations period was not unconscionable and (2) the contractual shortening of the limitations period did not violate public policy.

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Seventh Circuit Creates Circuit Split, Striking Down Agreement to Arbitrate Employment Claims on an Individual Basis

Posted in Alternative Dispute Resolution

On May 26, 2016, the United States Court of Appeals for the Seventh Circuit issued its decision in Lewis v. Epic Systems Corp., becoming the first federal court of appeals to decide that an agreement between an employer and an employee to arbitrate wage-and-hour claims only on an individual basis, as opposed to a class action basis, is unenforceable. The court’s opinion has created a circuit split, as the Second, Fifth, and Eighth Circuits have enforced similar agreements.

Background

The plaintiff, Jacob Lewis, worked as a “technical writer” for Epic Systems, a healthcare software company. In 2014, he agreed to settle any future wage-and-hour disputes with the company through an arbitration process, rather than in court. He also agreed that he could not pursue any such claim through a class or collective action.

Despite that agreement, Lewis filed a collective action complaint in the Western District of Wisconsin alleging that Epic had deprived him and other employees of overtime pay in violation of the Fair Labor Standards Act (“the FLSA”) and Wisconsin law. Epic filed a motion to dismiss the complaint and to compel individual arbitration, citing the parties’ agreement. Lewis argued that the agreement was unenforceable because it interfered with his right to engage in protected, concerted activity under Section 7 of the National Labor Relations Act (“the NLRA”). Section 7 provides that employees “shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 Lewis argued and the District Court agreed, that Lewis’ collective action FLSA claim constituted a “concerted activity” under Section 7 and, thus, that his agreement to assert a claim only on an individual basis was illegal. Accordingly, the District Court denied Epic’s motion to dismiss the lawsuit.

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Department of Labor Final Overtime Rule

Posted in Wage & Hour

The United States Department of Labor (“the DOL”) has finally issued the long-awaited rules dramatically increasing the minimum salary level for the overtime-exempt classifications under the Fair Labor Standards Act (“the FLSA”). The new rules also incorporate mechanisms to adjust this salary level in the future. The effect of future adjustments will require an employer to pay wage increases unrelated to the employer’s financial condition or employee performance. The new rules will have the greatest impact on those employees currently classified as exempt but who will not meet the new minimum salary threshold. These rules go into effect December 1, 2016, a date later than DOL originally communicated, which gives employers an opportunity to conduct a self-analysis to prepare for these changes.

In 2014, President Obama directed the DOL to update and modernize regulations under the Fair Labor Standards Act governing overtime exemptions for “white collar” employees (i.e., executive, administrative and professional employees). On July 6, 2015, the DOL published a notice of proposed rule making to which it received more than 270,000 comments representing differing viewpoints. On May 18, 2016, the DOL issued the final rule updating the regulations. Under the final rule, the annual salary level for these exemptions will more than double from $23,660 ($455 per week) to $47,476 ($913 per week) beginning on December 1, 2016. (The increase will equal the salary level of the 40th percentile of weekly earnings for full-time salaried workers in the South, which is currently the lowest-wage Census region). These salary levels were last updated in 2004, and the DOL has stated that this new rule will “automatically extend” overtime to an estimated 4.2 million employees who are currently classified as exempt. The increase is less than that originally proposed by the DOL ($50,440 per year or $970 per week).

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