Employment Law Alert : Gibbons P.C.: Labor Relations, Employment Contracts, Employee Benefits, & Wrongful Discharge Lawyers & Attorneys

In a case of first impression, the Third Circuit Court of Appeals held that a supervisor may be individually liable for violating the Family and Medical Leave Act (“FMLA”). While noting that individual liability is not recognized in some Circuit Courts, the Third Circuit in Haybarger v. Lawrence County Adult Probation and Parole reached a contrary conclusion.

Factual Background

The plaintiff in Haybarger had diabetes, heart disease and kidney problems requiring her to miss work frequently for medical attention. Her direct supervisor disciplined her concerning her attendance as well as her job performance and placed her on a 6-month probationary period. He also prepared an annual performance review which identified her attendance deficiencies. At the end of the probationary period, the supervisor recommended to his superior that the defendant County terminate the plaintiff’s employment. Although the supervisor did not have the authority to make the termination decision, it appears his recommendation to terminate was given significant weight, and he attended the termination meeting.

The plaintiff sued, asserting claims under the Americans with Disabilities Act, the Pennsylvania Human Relations Act (“PHRA”), the Rehabilitation Act and the FMLA. The defendant County moved to dismiss all of the claims, which the District Court granted except for the Rehabilitation Act claim against the County and the FMLA and PHRA claims against the individual supervisor. After discovery, the defendants moved for summary judgment. The District Court granted summary judgment to the individual supervisor, concluding that although the FMLA provides for individual liability, plaintiff did not present evidence of “sufficient control over the [employee’s] conditions and terms of employment” to impose such liability. On appeal, the Third Circuit reversed the decision of the District Court.

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On Monday, January 28, 2012 the United States Department of Labor (DOL) announced that it would publish a Notice of Proposed Rulemaking addressing statutory amendments to the Family and Medical Leave Act (FMLA) provisions concerning military family leave and flight crew eligibility. The proposed rules will be published in the Federal Register and interested parties may submit written comments within a defined period of time, which has not yet been specified.

The DOL’s proposed rules implement and interpret, as well as propose expansion of, amendments to the FMLA that were incorporated in the National Defense Authorization Act for Fiscal Year 2010 (NDAA 2010) and the Airline Flight Crew Technical Corrections Act (AFCTCA), which was enacted in 2009. Although the NDAA was silent as to its effective date, certain provisions required clarification or definition by the DOL. The proposed rules address those provisions as well as implement those that did not require definition or clarification.

A number of areas of the military family leave provisions of the FMLA are discussed in the proposed rules. Of primary interest, the rules: 

• Extend the period within which a military service member’s caregiver may apply for FMLA leave to 5 years beyond the service member’s separation from the military;
• Expand eligibility for caregiver leave to include caring for service members with conditions that arise after the service member has separated from military service; 
• Expand the definition of serious illness or injury to include those arising from a pre-existing condition;
• Increase to 15 days the allotment of time family members may spend with military members who are on rest and recuperation leave;
• Expand qualifying exigency leave eligibility to employees with service members deployed in the Regular Armed Forces (the DOL considers this provision effective October 29, 2009, the date the NDAA 2010 was enacted); and
• Clarify that qualifying exigency leave is contingent on deployment to a foreign country (the DOL considers this provision effective October 29, 2009, the date the NDAA 2010 was enacted).

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Last week, the New Jersey Supreme Court reiterated that lawyers who represent clients on a contingency basis in disputes brought under New Jersey laws that permit the recovery of attorneys’ fees can recover an additional fee “enhancement” pursuant to the framework the Court set forth nearly 20 years ago in Rendine v. Pantzer, 141 N.J. 292 (1995) . The decision, Walker v. Guiffre, Case Nos. 72-10, 100-10 (N.J. Jan. 25, 2012), is noteworthy for businesses that all too frequently must weigh the risk of paying their opponents’ attorneys’ fees when deciding whether to settle disputes – particularly those companies that wishfully thought the reins on contingency fee enhancers might be tightened in light of two recent decisions by New Jersey appellate courts.

The New Jersey Appellate Division ruled in Walker v. Giuffre, 415 N.J. Super. 597 (App. Div. 2010) and Humphries v. Powder Mill Shopping Plaza, Case No. 6038-08, 2010 N.J. Super. Unpub. LEXIS 2664 (N.J. App. Div. Nov. 4, 2010), that the framework established in Rendine required modification to comply with the U.S. Supreme Court’s decision in Perdue v. Kenny A., 130 S. Ct. 1662 (2010). The Court in Perdue examined attorneys’ fee awards under federal laws and held, in part, that contingency fee enhancements were improper under federal fee-shifting statutes. The N.J. Supreme Court in Walker analyzed the New Jersey appellate decisions on a consolidated basis and explained that the U.S. Supreme Court decision in Perdue had no impact on the longstanding holding of Rendine. It reasoned that the N.J. Supreme Court already had considered the very arguments and considerations set forth in Perdue when it decided Rendine, including the conclusion that contingency fee enhancements are improper under federal fee-shifting statutes. In short, the framework set forth in Rendine, which permits contingency fee enhancements under New Jersey fee-shifting statutes, remains good law.

Among New Jersey laws that permit the recovery of attorneys’ fees and, therefore, the potential for a contingency fee enhancer, are the two laws most frequently implicated in New Jersey employment lawsuits: the New Jersey Conscientious Employee Protection Act (“CEPA”) and the New Jersey Law Against Discrimination (the “LAD”). A number of laws outside the employment context likewise place businesses on the defensive and permit the recovery of attorneys’ fees, including the New Jersey Consumer Fraud Act (“CFA”). (A listing of New Jersey statutes that permit fee-shifting can be found here.) Notably, the court’s decision in Walker arose from claims brought under the CFA and LAD.

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The Federal Family and Medical Leave Act (“FMLA”), which, among other things, affords eligible employees up to 12 weeks of unpaid leave for the employee’s own serious medical condition and reinstatement to the employee’s former or equivalent position, includes stringent notice obligations for employers. A New Jersey District Court recently reinforced the importance of complying with the statute’s notice requirements. In Antone v. Nobel Learning Communities, Inc.,  the court denied the defendant employer’s motion to dismiss, rejecting its argument that the employee was not protected by the FMLA when she was terminated more than 12 weeks after she commenced leave because the employer failed to provide the requisite FMLA information to the employee. The Court similarly denied the employer’s motion to dismiss disability retaliation claims based on improper notification required by the FMLA.

Federal FMLA Notice Requirements

An employee seeking to take a leave of absence under the FMLA does not need to specifically request “FMLA Leave.” Rather, the employee need only notify the employer of the need for leave. This notification triggers the employer’s obligation to inform the employee of his/her eligibility to take FMLA leave within 5 business days absent extenuating circumstances and of his/her rights and responsibilities with regard to such leave. This eligibility and rights and responsibilities notice must detail the “specific expectations and obligations of the employee and explain any consequences of a failure to meet these obligations” and may be accompanied by an required Certification of Health Care Provider form. Once an employer designates a leave as covered by the FMLA, it must provide a designation notice which informs the employee of the amount of leave counted against the employee’s FMLA leave entitlement. The Department of Labor provides sample notices of eligibility and designation, as well as health care provider certifications for an employee’s own health condition and that of a family member, when applicable.

Relevant Facts

The Plaintiff in Antone experienced health problems which affected her ability to stoop, bend and walk. On or about May 28, 2009, Plaintiff informed Defendant’s Human Resources Administrator that she needed time off for medical treatment in a hospital, a reason permitted to take FMLA leave. More than a month later, Defendant sent Plaintiff a Certification of Health Care Provider Form. Defendant, however, failed to provide an eligibility notice or otherwise inform Plaintiff of her rights under the FMLA including her right to take 12 weeks of leave. Plaintiff timely returned the completed Health Care Provider form to Defendant indicating that she would return to work by August 28, 2009 – 12 weeks and 8 days after she began leave. In late August, Defendant informed Plaintiff that she would be terminated because her physician approved her to return on August 28, which is 8 days after the 12 weeks expired.

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In January and May 2011, we reported on a series of changes to New York Labor Law contained within the Wage Theft Prevention Act (“WTPA”). These changes are now applicable to all New York private-sector employers (including charter schools, private schools, and not-for-profit corporations). Affected New York employers must provide all employees with written pay notices at the time of hire on or before February 1 in each year.

Given that this deadline is fast approaching for 2012, now is a good time for employers to communicate with experienced wage and hour counsel regarding compliance strategies. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.

Peter J. Dugan is an Associate in the Gibbons Employment & Labor Law Department.

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Introduction

In a case of particular interest to New Jersey employers, the New Jersey Supreme Court has been asked to review an appellate ruling that an employee who reported violations of law to her superiors was not a “whistle-blower” because her reporting was required as part of her job duties. A decision by the Supreme Court will have a substantial impact on the scope of New Jersey’s whistle-blower statute, the Conscientious Employee Protection Act (“CEPA”) .

Factual Background

In White v. Starbucks, plaintiff Kari White was employed as a district manager in Starbucks’ Upper Mid-Atlantic Region, where she was responsible for the overall management of six Starbucks locations including some in New Jersey. According to the job description for plaintiff’s position, she was responsible for, among other things, “ensuring that employees adhere to legal and operational compliance requirements.” Prior to formally assuming her management role, plaintiff participated in a six-week training period, where she received instruction in retail management and compliance with public health laws. She also received and reviewed a manual titled “Starbucks Food Safety, Store Cleanliness and Store Condition Standards.”

Plaintiff’s Alleged “Whistle-Blowing” Activities

Throughout her six-week training period and subsequent employment, plaintiff notified her supervisors about various alleged violations of law and company policy, including: (1) stolen merchandise from a Hoboken store where plaintiff had trained; (2) the lack of thermometers in refrigerated food and beverage cases; (3) unsanitary conditions within the Newark store; (4) alcohol consumption by employees while on the job, the alleged physical attack of a customer, after-hours sex parties, and the electronic transmittal of a pornographic photograph between an employee and the Iselin store manager; and (5) inaccessible configuration of tables and chairs at one store.

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On January 11, 2012, the United States Supreme Court for the first time recognized the so-called “ministerial exception” to workplace discrimination laws. In Hosanna-Tabor Evangelical Lutheran Church v. Equal Employment Opportunity Commission, the Court unanimously found that the Establishment and Free Exercise Clauses of the First Amendment bar wrongful termination suits brought on behalf of “ministers” against their churches. While this decision is helpful for religious group employers, including religious schools and places of worship, the Court left open the important question of which employees actually qualify as a “ministers.” Accordingly, the decision may create some confusion for religious group employers going forward.

The underlying facts are straightforward. Cheryl Perich (“Perich”) worked at the Evangelical Lutheran Church and School (“School”) in Redford, Michigan as a “called” teacher. The School classified its teachers into two categories: “called” and “lay.” Unlike lay teachers, called teachers had to complete certain academic requirements, including a course of theological study. In 2004, Perich was diagnosed with narcolepsy, which required her to take a leave of absence from her employment. Upon her attempted return to work, the School asked her to resign. Perich refused and threatened to sue the School for disability discrimination. The School then terminated her employment because of her threat and specifically stated that its faith required disputes be resolved internally rather than through litigation. As a result, the U.S. Equal Employment Opportunity Commission filed a lawsuit against the School on behalf of Perich alleging that it had retaliated against Perich in violation of the Americans with Disabilities Act. Perich intervened in that lawsuit by filing her own complaint alleging claims under Michigan’s Persons with Disabilities Civil Rights Act. 

The district court dismissed the EEOC’s and Perich’s claims by applying the ministerial exception, a doctrine that was judicially developed by the lower courts and which exempts religious institutions from certain wrongful termination lawsuits. The Sixth Circuit, however, reversed the lower court by finding that the ministerial exception did not apply in this case because Perich spent the vast majority of her time teaching a secular curriculum. Perich spent only 45 minutes per day on religious activities.

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On January 3, 2012, The National Labor Relations Board issued its decision in D.R. Horton, Inc. Case No. 12-CA-25764. This is a significant decision for all employers as it prohibits the use of class action waivers in employment arbitration agreements. Specifically, the Board held that arbitration agreements that contain provisions that prohibit employees from filing joint, class or collective claims addressing their wages, hours or other working conditions against their employer, in any forum, violate Section 8(a)(1) of the National Labor Relations Act (NLRA).

The arbitration provision at issue in D.R. Horton, Inc., required employees, as a condition of their employment, to agree that they would not pursue class or collective litigation of claims in any forum, arbitral or judicial. The Board found that the provision violated the Section 7 NLRA because it expressly prohibited employees from excising their right to engage in “concerted activities for the purpose of ... mutual aid or protection ..." The Board explained that courts and the Board have long held that Section 7 protects the rights of employees to bring legal action addressing their wages, hours, and working conditions, and that this right includes the right to bring employment-related claims on a class wide or collective basis. Notably, union and non-union employees alike are covered by the NLRA, and thus the Board’s ruling is applicable to virtually all employers.

The Board’s decision is surprising in light of the U.S. Supreme Court’s recent decision in AT &T Mobility v. Concepcion. In AT &T Mobility, the Supreme Court struck down a California law that prohibited class action waivers in arbitration agreements, holding that the Federal Arbitration Act (FAA) preempts state law. In its decision, the Board distinguished AT &T Mobility by stating that AT&T Mobility did not involve a right protected by the NLRA or even employment agreements. The Board further opined that AT&T Mobility involved a conflict between the FAA and state law, which is governed by the Supremacy Clause, and that the instant case involved two federal statutes. In addition, the Board held that its decision did not conflict with the FAA, and even if there was a direct conflict, “there are strong indications that the FAA would have to yield under the terms of the Norris-LaGurardia Act.”

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New Jersey employers should be aware that yesterday Governor Chris Christie signed into law the New Jersey Trade Secrets Act (“the Act”), which for the first time codifies the law in New Jersey concerning the misappropriation of trade secrets. The new law is derived largely from, although is not identical to, the Uniform Trade Secrets Act, variations of which have been adopted in the great majority of states. New Jersey companies who are concerned about potential trade secret misappropriation by current or former employees should study the new law carefully.

Key Definitions:
The Act makes unlawful the “misappropriation” of “trade secrets” by “improper means.” The Act broadly defines “trade secrets” as:
information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process, that:

1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

“Misappropriation” is defined as:

1. Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
2. Disclosure or use of a trade secret of another without express or implied consent of the trade secret owner by a person who:

(a) used improper means to acquire knowledge of the trade secret; or

(b) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was derived or acquired through improper means; or

(c) before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired through improper means.

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