Employment Law Alert

Employment Law Alert

News and Updates on Employment Law

Federal Court Preliminarily Enjoins DOL From Enforcing Overtime Exemption Rules

Posted in Wage & Hour

On November 22, 2016, in Nevada v. United States Department of Labor, et al., a judge in the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the United States Department of Labor (“DOL”) from implementing and enforcing the Fair Labor Standards Act (“the FLSA”) final overtime rule that would otherwise become effective on December 1, 2016.

Brief Background
The final overtime rule, published on May 23, 2016, significantly increases the minimum salary threshold for the executive, administrative, and professional overtime exemptions (“the EAP exemptions”) under the FLSA from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and introduced other changes related to the new salary level discussed in detail in our earlier blog.

In response to the final overtime rule, the state of Nevada and 20 other states challenged the final rule by filing suit in the Eastern District of Texas on September 20, 2016 and moved for emergency preliminary injunctive relief on October 12, 2016. Over 50 business organizations also filed suit in the Eastern District of Texas to challenge the final rule, and the court consolidated the two actions on October 19, 2016.

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USDOL New Persuader Rule Permanently Enjoined

Posted in Labor

We are pleased to report that a federal court in Nat’l Fed’n of Indep. Bus. v. Perez issued a nationwide injunction permanently enjoining the United States Department of Labor’s new persuader rule last week. The decision is a major victory for the business community because the new rule placed employers’ abilities to freely seek labor counsel in jeopardy by expanding their obligations to publicly disclose arrangements into which they entered with the labor consultants, including their attorneys.

Persuader Rule
The “persuader rule,” which has been in place for over 50 years, generally requires employers and their labor consultants to disclose arrangements into which they enter to persuade employees regarding unionization. Significantly, the rule has an advice exemption that historically has protected these arrangements from disclosure provided that the labor consultants do not directly communicate with employees. Earlier this year, the USDOL issued a rule that effectively eliminated the advice exemption by requiring employers to disclose arrangements even if their consultants never make direct contact with their employees. The new rule led to a justifiable backlash from the business and legal communities. Critics of the rule saw it as a blatant attempt by the USDOL to discourage employers from retaining labor consultants and, in turn, facilitate union organizing drives particularly in light of recent pro-union actions by the National Labor Relations Board, including its new expedited union election rules.
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NYC Council Passes “Freelance Isn’t Free” Act

Posted in Wage & Hour

On October 27, 2016, The New York City Council unanimously passed a local law, the Freelance Isn’t Free Act, aimed to enhance protections for freelancers and purportedly to prevent wage theft. Under the law, freelancers include individuals (and organizations having no more than one person) retained as an independent contractor to provide services in exchange for payment. The law, however, excludes from coverage sales representatives (as defined in section 191 of the New York Labor Law), persons engaged in the practice of law under the contract at issue (and who are members in good standing of a bar and not under any restrictions with respect to the practice of law), and licensed medical professionals. The law does not apply to the United States government, New York City, and New York State (and their respective offices, departments, agencies, authorities, etc.) any local government, municipality, or county, along with any foreign government.

The law requires companies who retain the services of a freelancer, where the contract value is $800 or more (either standing alone, or when combined with other contracts between the parties over the prior 120 days), to enter into written contracts. Such contracts must include, at a minimum, the name and addresses of the hiring party and freelancer, an itemization of all services, the value of the services, the rate and method of compensation, and the payment date (or method for determining such a date). The law requires payment as specified under the terms of the contract, or if not specified, within 30 days after the services are completed.

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NJ Legislators Look to Prohibit Asking Applicants about Salary History

Posted in Discrimination, Employment Agreements

The New Jersey Legislature is poised to take up another thorny issue for employers, salary history. Described by legislative sponsors as an effort to promote pay equity, the legislation would amend the New Jersey Law Against Discrimination to bar employers from asking job applicants about their salary history, or relying on it to determine salary at any stage in the hiring process.

Two separate pieces of legislation have been introduced that prohibit an employer from inquiring about the salary history of an applicant. Assembly Bill 4119 was introduced on September 15, 2016 and referred to the Assembly Labor Committee. Senate Bill 2536 was introduced on September 15, 2016 and referred to the Senate Labor Committee.

New Jersey would be the second state to pass pay equity legislation prohibiting asking applicants about salary history. In August 2016, Massachusetts became the first state to pass such an Act. The Massachusetts Act banned employers from inquiring into an applicant’s salary history until “after any offer of employment with compensation has been made to the prospective employee.”

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Court Compels Arbitration of Lawsuit Filed by Employees Discharged After Discovery of Personal Text Messages About a Coworker on a Company-Issued iPad

Posted in Policies/Handbooks

A recent decision from the District of New Jersey granting a motion to compel arbitration not only reinforces the strong federal policy in favor of arbitration, but also highlights issues pertaining to company-issued devices and employees’ personal use of these devices.

While employed by Anheuser-Busch, Victor Nascimento received a company-issued iPad. Nascimento and other employees exchanged text messages about a coworker over their personal cell phones outside of the work day, but the messages were received on Nascimento’s company-issued iPad because the iTunes account on his iPad was linked to his personal cell phone. The company-issued iPad was later reassigned to the coworker who was the subject of the text messages, and that person discovered the text messages on the device and inferred that they were about him. Following an investigation by Anheuser-Busch, Nascimento and several other employees were fired. The terminated employees later sued Anheuser-Busch, alleging violations of the Law Against Discrimination.

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EEOC Issues New Enforcement Guidance on Retaliation

Posted in Discrimination

According to the Equal Employment Opportunity Commission (“EEOC”), retaliation has become the most frequently alleged basis of discrimination of all charges received by the EEOC. In light of this, and after allowing for public comment on the EEOC’s proposed enforcement guidance issued earlier this year, on August 29, 2016, the EEOC issued its new Enforcement Guidance on Retaliation and Related Issues. This replaces the EEOC’s Compliance Manual Section 8: Retaliation, which was issued in 1998. The enforcement guidance sets forth the EEOC’s position on retaliation and addresses retaliation under each of the statutes enforced by the EEOC by providing a number of illustrative examples. Helpful to employers, the enforcement guidance concludes by providing employers “promising practices” to reduce the risk of violations. A general outline of the enforcement guidance follows.

Elements of a Retaliation Claim
Section II of the enforcement guidance explains the elements of a retaliation claim, illuminating what constitutes protected activity, what a materially adverse action is, and what causal connection is needed to support a finding of retaliation. Although these three elements are not new to an alleged claim of retaliation, the enforcement guidance provides definitions and examples of what does and does not establish each element of a retaliation claim. For instance:

  • Protected Activity: There are two instances in which an individual is protected from retaliation and can establish the first element of a retaliation claim. That is, protected activity includes (1) “participating” in an EEOC process (e.g., “having made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under an EEOC enforced statute”) or (2) “opposing” discrimination either explicitly or implicitly (e.g., communicating opposition, accompanying a coworker to file a complaint, or refusing to obey an order reasonably believed to be discriminatory).
  • Materially Adverse Action: To satisfy the second element of a retaliation claim an individual must prove a materially adverse action was taken against him or her. A materially adverse action is “any action that might well deter a reasonable person from engaging in protected activity.” It can include work-related actions (e.g., denial of a promotion or refusal to hire) or actions that are not work-related (e.g., “an action that has no tangible effect on employment”).
  • Causal Connection: Lastly, unlawful retaliation is only established if it is proven that the employer took the materially adverse action because the individual engaged in protected activity. In private sector, state, and local government retaliation cases, the individual must establish a “but-for” retaliatory motive. Whereas, federal sector Title VII and ADEA retaliation is prohibited if it was a “motivating factor.”

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Ninth Circuit Holds Class Action Waivers Illegal Under the NLRA

Posted in Alternative Dispute Resolution

On August 22, 2016, in Morris v. Ernst & Young, LLP, the Ninth Circuit Court of Appeals joined the Seventh Circuit Court of Appeals in holding that class action waiver provisions in arbitration agreements governing employment disputes are illegal under the National Labor Relations Act (NLRA or the Act) because these waivers interfere with the right of employees to engage in concerted activity protected by Section 7 of the Act (Section 7). The holdings of these courts are in indirect conflict with an opinion of the Fifth Circuit Court of Appeals, which upheld the validity of such waivers in the face of a challenge under Section 7. Employers in jurisdictions whose courts have not yet decided this issue, and who employ such waivers in their arbitration agreements or otherwise, should be prepared for attacks on their arbitration agreements by employees seeking to bring class or collective actions or by the National Labor Relations Board (NLRB).

Background
Ernst & Young (E&Y) required its employees to sign agreements that they would (1) not join with other employees in bringing legal claims against the company and (2) pursue any claims against the company only through arbitration. Although former employee Stephen Morris had signed such a “waiver” agreement, he filed a complaint against E&Y under the Fair Labor Standards Act (FLSA) and the California labor laws in federal district court alleging the company had misclassified him as an “exempt” employee and had improperly failed to pay him overtime. Morris brought the Complaint as a class and collective action on behalf of similarly situated employees. Another former employee, Kelly McDaniel, who had also signed a waiver agreement, later joined the action. Based on the signed waiver/arbitration agreements, the district court dismissed the case and ordered individual arbitrations. The court rejected plaintiffs’ argument that the “waiver” agreements violated the National Labor Relations Act (NLRA), the Norris LaGuardia Act, and the FLSA.

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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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