Appellate Division Holds that Transportation Workers Must Arbitrate on Individual Basis Notwithstanding the Federal Arbitration Act’s Exclusion for Transportation Workers

In New Prime Inc. v. Oliveira, 586 U.S. __, 139 S. Ct. 532, 543-44 (2019), the United States Supreme Court held that § 1 of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 to 16, prescribes that transportation workers may not be compelled to arbitrate their disputes by virtue of the FAA – notwithstanding their status as independent contractors or the existence of a delegation clause granting an arbitrator the authority to decide whether the parties’ dispute is subject to arbitration.  The decision represents a rare win for workers in its recent wave of pro-employer arbitration rulings in federal court.  However, the New Jersey Appellate Division’s subsequent decision in Colon v. Strategic Delivery Solutions, LLC, __ N.J. Super. __ (App. Div. June 4, 2019) effectively nullifies Oliveira in regard to New Jersey transportation workers based on its interpretation of the New Jersey Arbitration Act (“NJAA”), N.J.S.A. 2A:23B-1 to -32.  Employers in the transportation and logistics industry should review this decision for a primer on the latest issues surrounding arbitration. 

In Colon, truck drivers for Strategic Deliver Solutions, LLC (“SDS”), a licensed freight forwarder and broker, filed a class action suit claiming that SDS violated the New Jersey Wage Payment Law and Wage and Hour Law by paying them as independent contractors as opposed to employees.  SDS moved to dismiss the action and to compel arbitration on an individual basis pursuant to the “Independent Vendor Agreement for Transportation Services” (the “Agreement”) that the plaintiffs had executed.  In that Agreement, the plaintiffs agreed to “waive any right to a trial by jury in any suit filed hereunder and agree to adjudicate any dispute pursuant to [p]aragraph 20 . . . .”  Paragraph 20 provided, among other things, that the parties “agree[d] to comply and be bound by the [FAA]”; agreed to abide by the “Rules for Commercial Arbitration of the American Arbitration Association (“AAA”) in effect at the time such arbitration is initiated”; agreed that the question of arbitrability shall be delegated to an arbitrator; and agreed that any arbitration or suit “shall be conducted and resolved on an individual basis only and not on a class-wide, multiple plaintiff, collective or similar basis unless mutually agreed to in writing by all interested parties.” The parties further agreed that the law of the signatory’s home state would apply. 

The Appellate Division vacated the trial court’s order granting SDS’s motion to dismiss and compel arbitration, and remanded the matter for consideration of whether the plaintiffs are exempt under § 1 of the FAA; that is, whether they were providing transportation services on an interstate basis pursuant to the principles set forth in Oliveira.  The Appellate Division then proceeded to address the critical issue:  whether, notwithstanding the applicability of § 1 of the FAA, the plaintiffs would still be required to arbitrate their wage-and-hour claims on an individual basis pursuant to the NJAA.  The Appellate Division answered that question in the affirmative, concluding that the plaintiffs’ acknowledgement that the Agreement would be governed by New Jersey law reflected their understanding that the NJAA would apply.  Ibid.  The panel was unpersuaded that the Agreement’s reference to the FAA indicated otherwise. 

The Appellate Division further held that the arbitration provision satisfied the prerequisites for the formation of a valid contract under New Jersey law, which, in the specific context of arbitration, requires clear and unambiguous language that the signatory understands that arbitration constitutes the waiver of the right to a jury trial and judicial forum.  In connection with the waiver of class proceedings, the panel found that the waiver was “clear and ambiguous,” and distinguished the holding in Muhammad v. County Bank of Rehoboth Beach, 189 N.J. 1, 15-16 (2006) that class-arbitration waivers in adhesive consumer contracts are unconscionable. 

Following Oliveira, transportation workers are no longer required to arbitrate wage-and-hour claims on an individual basis pursuant to an otherwise valid arbitration agreement under the FAA.  However by invoking the NJAA, Colon provides the transportation industry an independent basis to enforce their contractual agreements within New Jersey. 

Use It or Lose It: The United States Supreme Court Holds That Title VII’s Charge-Filing Requirement Is Not Jurisdictional, and As Such This Defense to a Title VII Claim Must Be Timely Raised

When presented with a lawsuit filed in federal court asserting violations of Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C.S. §§ 2000e to 2000e-17, it is wise for defense counsel to compare the claims in the federal complaint to those asserted in the Complainant’s Charge of Discrimination filed with the Equal Employment Opportunity Commission (“EEOC”).  It has long been the belief (although nowhere in Title VII has it been stated as such) that a “jurisdictional” requirement for plaintiff to proceed with a Title VII claim in federal court is to have first asserted such a claim before the EEOC. 

     Not so anymore; the United States Supreme Court recently clarified that the EEOC charge-filing process is a “mandatory” requirement, but not a “jurisdictional” one, meaning the defense that plaintiff failed to bring the charge to the attention of the EEOC before filing suit can no longer be asserted at any point in the litigation.  Rather, such a defense will be forfeited “’if the party asserting the rule waits too long to raise the point.’” Fort Bend County, Texas v. Davis, 587 U.S. ___ (2019) (quotation omitted).  As discussed herein, the distinction between a “mandatory” and “jurisdictional” requirement – terms which have long been conflated – should impact the way any Title VII workplace discrimination lawsuit is defended.

A. The EEOC Charge-Filing Process
     Employee complaints of on-the-job harassment and discrimination are common. Between September 30, 2017 and September 30, 2018, the EEOC received 76,418 charges of workplace discrimination; 53,694 of those charges asserted violations of Title VII or were filed concurrently under other anti-discrimination statutes such as the ADA, ADEA, EPA and/or GINA. There were 1,527 charges (or 2.0%) which emanated out of New Jersey; 3,478 charges (or 4.6%) emanated out of New York State.

     Workplace-related claims under Title VII may be brought against an employer by a terminated employee, current employee, or applicant. The EEOC must notify the employer and investigate the allegations upon receipt of a charge. §2000e‒5(b). The EEOC has no has no authority itself to adjudicate discrimination complaints, but may “endeavor to eliminate [the] alleged unlawful employment practice by informal methods of . . . conciliation.” Ibid.

     If conciliation fails, or is not initiated, and the EEOC chooses not to bring a civil action against the employer, a Complainant is entitled to a “right-to-sue” notice 180 days after the charge is filed. §2000e‒5(f)(1); 29 CFR §1601.28. Armed with a right-to-sue notice, the Complainant may commence a civil action in federal court against the employer. §2000e‒5(f)(1).

B. Lois Davis’ EEOC Charge against her Employer, Fort Bend County, Texas.

Lois Davis worked for Fort Bend County (Texas) and after developing the belief that she was subjected to harassment and retaliation, executed an Intake Questionnaire in February 2011, which evolved into a Charge of Discrimination the next month.  During the pendency of her Charge, Ms. Davis developed the belief that she was being subjected to discrimination on the basis of her religion. She attempted to ”supplement” the allegations in her Charge but apparently did not do so properly, and no change was made in the formal Charge document.  She received a Right to Sue notice and filed a Complaint in the United States District Court for the Southern District of Texas in January 2012, alleging, inter alia, religion-based discrimination.

     Fort Bend County moved for Summary Judgment, which was granted by the District Court in September 2013, but the Fifth Circuit reversed that Order (as to the religion-based discrimination claim) in 2014.  A petition for certiorari was denied in 2015.

     Upon remand to the District Court, Fort Bend County for the first time – and “years into the litigation” – asserted the defense that the court lacked jurisdiction over Ms. Davis’ religion-based discrimination claim because the claim was not stated in her EEOC Charge of Discrimination.  In 2016, the District Court granted Fort Bend County’s motion to dismiss, holding that the religion-based discrimination had to be raised before the EEOC, and that such a requirement was “jurisdictional” and thus nonforfeitable.  In 2018, the Fifth Circuit reversed; holding that charge-filing requirement was (as the United States Supreme Court put it) a “prudential prerequisite to suit” and that Fort Bend County could not wait until after “an entire round of appeals all the way to the Supreme Court” to raise it.

    The United States Supreme Court granted Fort Bend County’s petition for certiorari in 2019.

C. The Supreme Court’s Findings Concerning the Mandatory (But Not Jurisdictional) Requirement that Plaintiff Exhaust Remedies with the EEOC.

     The Supreme Court noted prior precedent that “jurisdiction . . . is a word of many, too many meanings” and that there has been “profligate use of the term.” Challenges to subject-matter jurisdiction may be raised at any time and the District Court must consider them sua sponte.  This is to be distinguished from nonjurisdictional claim processing rules, which “seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specific times.”

    In the context of the EEOC charge-filing requirement, the Court noted its similarity to many “mandatory claim processing rules” which, if not raised, can be forfeited.  Title VII itself does not describe the requirement as jurisdictional, and is more of a “processing rule” which does not “delinat[e] the adjudicatory authority of courts.”  Therefore, the Court held that “if the party asserting the rule waits too long to raise the point” it risks losing the defense.

     The Court’s ruling should not impact how a Title VII Complaint is defended.  It was, and remains, prudent to examine the EEOC Charge to confirm that a plaintiff’s federal claims overlap with the charges investigated by the EEOC. The Supreme Court did not delineate, but rather left grey, the specific amount of time in which a defendant must raise the defense that plaintiff failed to bring a charged before the EEOC.  However,  affirmative defenses need be raised in the defendant’s answer.   Why would defense counsel wait? As the Supreme Court noted, defendants “have good reason to promptly raise an objection that may rid them of the lawsuit filed against them” and a “Title VII complainant would be foolhardy consciously to take the risk that the employer would forego a potentially dispositive defense.”

The Appellate Division Clarifies Disability Discrimination Claims Based on Obesity under the Law Against Discrimination

Ryan Savercool

The Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, protects individuals from discrimination based on a person’s actual or perceived disability.  However, obesity is not considered an actionable disability under the LAD unless the plaintiff demonstrates that the condition is “caused by bodily injury, birth defect[,] or illness.”  Viscik v. Fowler, 173 N.J. 1, 17 (2002) (quoting N.J.S.A. 10:5-5(q)).  In Dickson v. Community Bus Lines, Inc., __ N.J. Super. __ (App. Div. Apr. 4, 2019), the Appellate Division clarified the contours of a valid hostile work environment claim premised on a plaintiff’s perceived disability stemming from his or her obesity.  The panel held that “a perceived disability claim based on obesity must be grounded upon direct or circumstantial evidence that defendants perceived the plaintiff to be disabled due to a medical condition that caused him or her to be overweight.”   In the absence of such evidence, an employer is entitled to the summary judgment dismissal of a LAD claim predicated on alleged weight discrimination. 

In Dickson, the plaintiff Corey Dickson, who weighed between 500 and 600 pounds, worked for the defendant Community Bus Lines as a driver for approximately ten years.  Dickson alleged that he was subjected to rude comments about his weight by his co-workers in the break room after work.  However, there was no evidence that Dickson was perceived as disabled during his ten years with the company. 

As a condition of his employment, Dickson was required to possess a valid Commercial Driver’s License (CDL) and a medical certification card that indicated his physical fitness to drive a bus.  From 2005 to 2015, Dickson passed the required medical certification examinations.  Following two independent medical examinations in 2015, however, Dickson was temporarily disqualified from driving pending further testing regarding potential adverse consequences from his weight.  Critically, no determination was made that Dickson was disabled; rather, the doctors determined that additional testing was required pursuant to United States Department of Transportation regulations. 

Dickson subsequently filed suit, claiming that he was subjected to a hostile work environment based upon a perceived disability (obesity).  The trial court granted summary judgment dismissing the case, finding that Dickson’s obesity did not constitute an actual or perceived disability under the LAD and that his co-workers’ conduct was not sufficiently severe or pervasive  to constitute a hostile work environment. 

The Appellate Division affirmed the trial court’s decision, and reiterated several key principles governing hostile work environment claims predicated on weight discrimination.  The panel explained that “the factfinder’s first inquiry is whether the plaintiff has proven that he or she had a disease or condition recognized as a disability under the LAD.”  Dickson, slip op. at 10 (quoting Delvecchio v. Twp. of Bridgewater, 224 N.J. 559, 573 (2016)).  In this case, the Appellate Division found that “plaintiff failed to meet this threshold requirement under the LAD because his obesity was not a disability caused by a bodily injury, birth defect, or illness.”  Id. at 11. 

The Appellate Division emphasized that “LAD claims based upon a perceived disability still require ‘a perceived characteristic that, if genuine, would qualify a person for the protections of the LAD.’”  Ibid. (quoting Cowher v. Carson & Roberts, 425 N.J. Super. 285, 296 (App. Div. 2012)).  The panel thus distinguished a religious discrimination claim premised on a mistaken perception that an individual belonged to a protected religious group from Dickson’s claims because “obesity alone is not protected under the LAD as a disability unless it has an underlying medical cause, a condition that plaintiff failed to meet in the present case.”  Id. at 12.

The Appellate Division concluded that the plaintiff “did not establish that defendants viewed him as anything other than obese, which is not a protected class under the LAD,” and that Dickson “did not demonstrate that defendants perceived him as being disabled.” Ibid. The panel noted that there was no evidence that Dickson’s supervisors “took any actions to change the conditions of his employment as the result of any ‘perceived disability,’” and that, notwithstanding his weight,  Dickson was subject to the same work conditions as his co-workers, received several awards, and had passed his medical certification examinations for the ten years preceding his temporary leave.  Moreover, none of the independent doctors who examined plaintiff determined that he was disabled. 

In sum, the Appellate Division reaffirmed that obesity alone is not a protected category under the LAD.  Rather, a plaintiff claiming hostile work environment based on weight discrimination must additionally prove that (1) the obesity has an underlying medical cause; or (2) the plaintiff’s co-workers perceived him or her as disabled, rather than as merely obese. 

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Governor Signs Bill Barring Certain Non-Disclosure and Waiver of Rights Provisions in Employment Contracts and Settlement Agreements

David J. Reilly

On March 18, 2019, Governor Phil Murphy signed into law an amendment to the New Jersey Law Against Discrimination (“LAD”) barring enforcement of certain non-disclosure provisions in employment contracts and settlement agreements, as well as employment contract provisions which waive “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment . . . .”  Although this amendment was enacted largely in response to the recent wave of highly publicized cases in which prior victims of sexual harassers and abusers had signed non-disclosure agreements, it broadly covers all claims of workplace discrimination, retaliation and harassment.   The new law applies to “all contracts and agreements entered into, renewed, modified, or amended on or after” March 18, 2019.

A. Prohibition Against Non-Disclosure Provisions

Under the new amendment, any provision in an employment contract or settlement agreement which would conceal the “details relating to” a discrimination, retaliation or harassment claim under the LAD is unenforceable against any current or former employee, and contrary to public policy. The term “details,” however, is undefined, and therefore it is unclear whether an agreement to keep certain settlement terms confidential, such as the amount of payment, still would be enforceable under the new law. Unfortunately, there will be no definitive answer to this question until the term is clarified either through regulation or by the courts.

The new law does permit non-disclosure provisions in an employment contract or a settlement agreement to be enforced against an employer, unless the employee or former employee has publicly revealed “sufficient details of the claim so that the employer is reasonably identifiable . . . .” 

The new law also does not prohibit employers from requiring employees to sign non-competition agreements and agreements not to disclose non-public trade secrets, business plan and customer information. 

B. Notice Requirement

The new law requires that every settlement agreement resolving a workplace discrimination, retaliation or harassment claim include a bold, prominently placed notice providing that “[a]lthough the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”  The new law requires this notice even if the settlement agreement does not contain a non-disclosure provision.

C. Prohibition of Waivers of Rights or Remedies

The new law also prohibits provisions in any “employment contract” which prospectively waive any substantive or procedural rights or remedies relating to a discrimination, retaliation, or harassment claim.   This section of the law, however, does not apply to collective bargaining agreements. 

This section of the new law effectively prohibits agreements to arbitrate discrimination, retaliation and harassment claims, as well as agreements to waive jury trials, shorten statutory limitations periods, place caps on damages, and any other provisions relating to a substantive or procedural right or remedy under the LAD.   To the extent the new law prohibits agreements to arbitrate, however, it likely will be challenged in court as pre-empted by the Federal Arbitration Act (“FAA”).  Although we cannot predict the outcome of such a court challenge, courts generally have held that the FAA preempts statutes which purport to render agreements to arbitrate unenforceable. 

D. Meaning of “Employment Contract”

Neither this amendment nor any other part of the LAD defines an “employment contract.”  However, it is likely that courts will construe the term broadly to include any agreement between an employer and employee (excluding collective bargaining agreements) which sets forth terms and conditions of employment.  This could include, for example, an employer’s handbook or policies, which under some circumstances might be construed as an implied contract between the employer and employee.  Because the new law applies to “employment contracts” that are modified or amended after March 18, 2019, employers would be well-advised to obtain legal advice before making any changes to an employee handbook or employee policies.     

E. Potential Remedies Under the Amendment

The new law prohibits employers from enforcing or attempting to enforce the prohibited provisions against employees or former employees, who may be entitled to recover their attorney’s fees and costs incurred in defending against an action to enforce such a provision.  The law also provides that anyone claiming to be “aggrieved” by a violation of the new amendment may file a lawsuit, in which a prevailing plaintiff potentially would be entitled all of the remedies available under the LAD and common law, including attorneys’ fees and costs.   The new law is unclear, however, as to whether a current or former employee is “aggrieved” only when an employer seeks to enforce a prohibited provision, or whether a cause of action would arise from simply including such a provision in an employment contract or settlement agreement.

Compensation Obligations for Vocational Students and Unpaid Interns under the FLSA

Ryan Savercool

Young professionals enroll in vocational programs and internships to gain hands-on experience that is required for licensure or to obtain an advantage over their peers in the marketplace for coveted jobs.  These individuals, oftentimes students, “work” for no remuneration beyond academic credit or the incremental advancement towards completion of the program.  Recently, interns and vocational students have filed class action lawsuits contending that some employers and vocational schools have violated the Fair Labor Standards Act (“FLSA”) by failing to pay them as “employees.”  Thankfully, guidance on this issue has emerged from the federal courts and the Department of Labor (“DOL”). 

The FLSA requires employers to pay all “employees” a specified minimum wage and overtime of time and one-half for hours worked in excess of forty hours per week.  However, the FLSA defines “employee” somewhat vaguely as an “individual employed by an employer.”  29 U.S.C. § 203(e)(1).  Federal courts and the DOL have applied a “primary beneficiary” test to determine whether an intern or vocational student is an “employee” covered by the FLSA.  Recent decisions from the Second Circuit are illustrative of how courts resolve this issue.

In Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 536-37 (2d Cir. 2016), the Second Circuit adopted seven non-exhaustive factors to determine whether an intern is an “employee”:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee — and vice versa.

2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.

3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.

4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.

5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.

6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.

7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The court stressed that “[n]o one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee entitled to the minimum wage. 

            More recently, in Velarde v. GW GJ, Inc., — F.3d — (2d Cir. Feb. 5, 2019), the Second Circuit extended the application of the primary beneficiary test to individuals enrolled in for-profit vocational schools, and held that a former cosmetology student was not entitled to unpaid wages from the for-profit vocational school he attended while in pursuit of his state cosmetology license.  The Second Circuit held that the primary beneficiary test “is equally suitable for distinguishing between ‘employees’ and ‘bona fide students’ of vocational schools or vocation-related programs (such as a training salon) where trainees acquire necessary skills by practicing their craft in a real-world setting.”  Id. at 10.  “Like interns,” the Court explained, “vocational students enter a course of study with ‘the expectation of receiving educational or vocational benefits that are not necessarily expected with all forms of employment.’”  Id. at 10-11 (quoting Glatt, 811 F.3d at 536). 

            In its opinion, the Velarde Court made the following observations:

  • “a vocational school is more likely to be found to ‘employ’ its students if it does not have a ‘formal education program’ with ‘integrated coursework,’ and instead exclusively requires students to perform tasks that are the same as those done by regularly compensated employees”;
  •  “a vocational school that runs a training program whose duration far exceeds ‘the period in which the program provides the student with beneficial learning’ may well be the primary beneficiary of that relationship.”
  • “state licensing requirements may often serve as strong evidence of the amount of practical training necessary for a student to become a competent professional, but will not always be determinative.”

            The Court rejected the plaintiff’s assertions that he should have been able to allocate his time differently among the various areas of study and that he should not have been required to do clerical and janitorial tasks:

That a vocational school does not provide the optimal learning experience for a student does not necessarily transform it into the primary beneficiary of the relationship. This is especially so where the school (as did the Academy here) provides a state-accredited course of vocational study, requires no more than the number of hours specified by the state, the state’s required numbers of hours are not challenged as unreasonable, and the school adequately prepares students for that state’s licensure exam . . . .

The Court concluded that“[t]his is not a case in which a business uses the façade of a vocational school to deceive students into working unexpectedly long hours without compensation, replacing the labor of its paid employees, or working hours well beyond the long-standing state requirements.”  Id. at 16-17.

            Accordingly, vocational schools and for-profit entities should familiarize themselves with the primary beneficiary test when designing academic programs. Courts determine compensation obligations under the FLSA on a case-by-case basis by analyzing the economic realities of the parties’ relationship.  In the vocational school setting, adherence to licensing requirements is probative evidence of the student’s status as the primary beneficiary of the relationship.   

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Joint-Employer Status: The National Labor Relations Board Set to Change Standard (Again)

On September 14, 2018, the National Labor Relations Board (NLRB) published a Notice of Proposed Rulemaking addressing its joint-employer standard, which governs when two distinct business entities will be considered a joint employer under the National Labor Relations Act (Act).  Under the Proposed Rule, the NLRB would return to its long-standing test that an entity must both possess and exercise direct control over employees’ terms and conditions of employment in order to be considered a joint employer.  The effect of the Proposed Rule would be to avoid unintentionally drawing third parties, who have not played an active role in deciding wages or other essential terms and conditions of employment for employees of a separate entity, into a collective-bargaining relationship.  With the Proposed Rule’s imposition of a more concrete and stringent standard, businesses will have greater certainty that they will not be held jointly and severally liable for unfair labor practices committed by their business partners.  Although this development should be of particular interest to franchisors and entities that utilize the services of vendor employees and staffing agencies, it has the potential to affect all entities covered by the Act.

The Act does not define the term “joint employer,” which has prompted an ongoing dispute over how to address situations where the working conditions of a group of employees are affected by two separate companies engaged in a business relationship.  For over thirty years, a joint-employer relationship arose if two independent business partners shared or codetermined those matters governing employees’ essential terms and conditions of employment; the putative joint employer possessed the right to control the terms and conditions of its business partner’s employees’ employment; and the putative joint employer exercised that control directly, immediately, and in a broad manner.

That changed in 2015 when the NLRB issued its decision in Browning-Ferris Industries of California.  In that decision, the NLRB greatly expanded the joint-employer standard by holding that the “right to control” any matter governing the “essential terms and conditions of employment” in and of itself is “probative of joint-employer status.”  No longer was direct control or the exercise of control required; a company could be deemed a joint employer even if its “control” over the essential working conditions of another business’s employees was indirect, limited, and routine, or was contractually reserved, but never exercised.  The Browning-Ferris decision thus rests on the premise that the rights of employees under the Act are best advanced if an independent business partner (the putative joint employer) participates in the collective-bargaining process any time that business partner has the potential to impact, even in a limited fashion, the represented employees’ terms and conditions of employment.

The relaxation of the standard prompted an appeal to the D.C. Circuit, which remains pending.  Shortly after the appeal was filed, a newly recomposed majority of the NLRB overruled Browning-Ferris in Hy-Brand Industrial Contractors, Ltd., and restored the preexisting standard that required proof that a joint employer actually exercised direct and immediate control in a manner that was neither limited nor routine.  The return to prior precedent was short-lived.  On February 26, 2018, the NLRB vacated its decision in Hy-Brand for reasons unrelated to the merits of the decision.   The vacatur of Hy-Brand effectively reinstated Browning-Ferris.

Now, a majority of the NLRB has resolved to address the issue and overrule Browning-Ferris through rulemaking.  If adopted, the Proposed Rule will require a finding that the putative joint employer “possess[ed] and actually exercised[ed] substantial direct and immediate control over the employee’s essential terms and conditions of employment” before a joint employer relationship is established.  Accordingly, businesses and employers should welcome the new standard as it will provide greater clarity to joint-employer determinations and ensure that only those employers who can meaningfully contribute to collective bargaining are at the table.

The Notice of Proposed Rulemaking, along with the full text of the Proposed Rule, is available here.  Following the Notice and Comment period, the NLRB may adopt its proposed joint-employer standard in a final rule, issue a supplemental proposed rule, or terminate the rulemaking process.  Until a final rule is adopted, a majority of the NLRB overrules Browning-Ferris, or, perhaps, the D.C. Circuit Court of Appeals renders a decision, the joint employer standard continues to be governed by the expanded Browning-Ferris definition.  Given this state of flux, all employers should carefully watch developments in this area.

The New Jersey Paid Sick Leave Act

Dayne R. Johnson

Add New Jersey to the growing ranks of states that have adopted laws guaranteeing paid sick leave to employees. On May 2, 2018, New Jersey Governor Phil Murphy signed into law the New Jersey Paid Sick Leave Act, requiring paid sick leave for full and part-time employees in New Jersey. Every New Jersey employer (except for certain public employers), regardless of the size of the business, must comply with the Paid Sick Leave Act by October 29, 2018. The Paid Sick Leave Act excludes from eligibility employees in the construction industry who work under a collective bargaining agreement, certain employees covered by a collective bargaining agreement in effect as of October 29, 2018 until the agreement’s expiration, certain per diem health care employees, and public employees provided sick leave with full pay under any other state law.

At a minimum, employers must provide workers with one hour of paid sick leave for every thirty hours worked. Paid sick leave can be capped at forty hours per year. Employees may use sick leave beginning on the 120th calendar day after the employee commences employment, unless the employer agrees to an earlier date. Afterwards, employees may use sick leave as soon as it is accrued. An employer is not permitted to require that the employee find a replacement to cover the hours during which the employee is absent. Furthermore, the Paid Sick Leave Act requires businesses to pay employees for earned sick leave time at their regular rate of pay.

Employers are not required to allow employees to use more than forty hours of sick leave in one calendar year and are not required to carry over more than forty hours for an employee from a prior calendar year. Employers may offer employees a payout of unused but accrued sick leave in the final month of the employee’s benefit year. Thereafter, employees must choose within 10 calendar days whether to accept or reject the employers’ offer, or alternatively, accept a partial payout for 50 percent of the amount of unused sick leave and carry-over the rest, so long as employees do not carry-over more than 40 hours. The Paid Sick Leave Act does not require employers to compensate employees for unused sick time upon termination of employment; however, if an employee is rehired after a separation of six months or less, that employee’s previously accrued sick leave must be reinstated.

Leave can be taken for the employee’s illness or medical care, as well as for certain other designated purposes.  Specifically, paid sick leave can be used for the following reasons:

  • Diagnosis, care or treatment of—or recovery from—an employee’s own mental or physical illness, including preventive medical care;
  • Aid or care for a covered family member during diagnosis, care or treatment of—or recovery from—the family member’s mental or physical illness, including preventive medical care;
  • Circumstances related to an employee’s or their family member’s status as a victim of domestic or sexual violence (including the need to obtain related medical treatment, seek counseling, relocate or participate in related legal services);
  • Closure of an employee’s workplace or of a school/childcare of an employee’s child because of a public official’s order relating to a public health emergency;
  • Time to attend a meeting requested or required by school staff to discuss a child’s health condition or disability.

The Paid Sick Leave Act requires that employers provide notice to employees. The required notice includes both (1) the provision of written notice upon commencement of employment and (2) the conspicuous display of a poster within the workplace, both of which must provide notice of the rights available to the employee under the law.

An employer may require up to seven days advance notice of the employee’s intent to use paid sick leave where the need for leave is foreseeable, as well as reasonable documentation that the leave is being used for a permissible purpose when the leave taken exceeds three or more days. The Paid Sick Leave Act provides a safe haven for employers who offer any other type of paid leave that may be used for the purposes enumerated by the Act, and which accrues at the same or greater rate. Any paid leave meeting these requirements would be deemed compliant with the law.

An employer violates the Paid Sick Leave Act by denying paid sick leave or by retaliating against employees who attempt to exercise rights protected by the law. Notably, the Paid Sick Leave Act contains a broad anti-retaliation provision that creates a presumption of an unlawful retaliatory personnel action whenever an employee suffers an adverse employment action within 90 days of filing a complaint with the Department of Labor, informs any person of an employer’s violation of this law, or opposes any policy, practice or act of the employer that the employee has a good faith belief is in violation of this law. An employer’s failure to comply with the Paid Sick Leave Act would be considered a violation of the New Jersey State Wage and Hour Law and subject to the remedies, penalties, and other measures provided by that law in addition to civil actions.

 

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Considerations Before Terminating An Employee On Medical Leave

Vimal K. Shah

Among the most frequent calls we management-side employment lawyers receive are from clients asking whether they may lawfully terminate an employee who has been on an extended leave for medical reasons. Usually, the call comes just after the client has received a doctor’s note from the employee advising that he is unable to return to work by the previously-planned return-to-work date, and requires several more weeks off. The client’s frustration is palpable; in an exasperated tone, she often notes that the employee is a marginal performer anyway, and clearly implies that she wants to hear only five words from us — “It is okay to terminate.”

Not so fast. Whether an employer can safely terminate an employee on medical leave depends on the answers to several critical questions.

An obvious, but sometimes overlooked, issue is has the employee exhausted his leave allotment under the federal Family and Medical Leave Act (“FMLA”), and any parallel state or local leave law, and under the employer’s policies?  Under the FMLA, an employee is entitled up to twelve weeks of unpaid leave annually for (among other reasons) his own serious health condition. Some states’ laws and some companies’ policies provide for more leave.  If the employee has not exhausted his leave entitlement under each, the employer generally should not terminate.

Another critical question is, has the employer correctly handled the employee’s leave up to now? At the start of the leave, the FMLA requires that the employer expressly tell the employee that it is designating the employee’s absence as FMLA leave and is counting each day or week of absence against the employee’s twelve-week allotment. Further, where the employee has provided at least an estimated length of his leave, the employer must also tell the employee the amount of leave it will designate as FMLA leave, how much of the leave allotment will remain at the leave’s expected conclusion, and the date by which it expects the employee to return. If the employer has not documented its compliance with each of these notice requirements, the employer probably should not terminate.

Assuming the employee has exhausted each of his leave entitlements and the employer has provided all required notices, the next question is, has the employer asked the employee whether he requires a workplace accommodation? Under the federal Americans With Disabilities Act (“ADA”) and its parallel state disability laws, an employer must engage in a dialog (known as the “interactive process”) with any employee it has reason to know may be disabled and who may need a workplace accommodation. Through this process, the employer must determine whether the employee wants an accommodation, and if so, whether there exists some reasonable accommodation that would enable the employee to perform the essential functions of his job. Where, as in the above scenario, an employee has been absent for his own medical condition for a significant period, the employer should initiate this interactive process. If the employer has not done so, it should probably not terminate.

And even if the employer has engaged in the interactive process, it should only terminate if it has concluded, after having consulted with counsel, that no reasonable accommodation is possible. Note that in the scenario presented here, where the employee’s doctor has advised that the employee requires a few more weeks off work, the client may have to grant the extended leave, because a leave extension beyond the FMLA’s twelve-weeks is often considered a reasonable accommodation.

So if the client can’t terminate the employee now, what can it do? First, it should continue to carefully track and document the employee’s absences, and keep the employee apprised of any amount of leave remaining. Second, it should consider asking the employee for a re-certification of his FMLA leave, which it is permitted to do every thirty days. Third, the client should engage in the interactive process to determine possible accommodations which would allow the employee to return to work. Only if the employee is still unable to return to work after having been given or offered a reasonable accommodation should the client consider terminating the employment. Because the reasonableness of a requested accommodation – including a leave extension — depends on the circumstances, the client should consult with counsel before taking this step.

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Connecticut Requires Reasonable Accommodation for Pregnant Employees

Bernard E. Jacques

On October 1, 2017 an “Act Concerning Pregnant Women in the Workplace” went into effect in Connecticut.  It has been illegal to discriminate against employees on the basis of pregnancy under both federal and Connecticut law.  However, generally under federal and to a lesser degree under Connecticut law, an employer was not required to make an accommodation for a pregnant employee.  As one court described the law: “employers can treat pregnant women as badly as they treat similarly affected but non-pregnant employees.”

That is no longer the law in Connecticut.  Now Connecticut employers are obligated “to make a reasonable accommodation for an employee or a person seeking employment due to pregnancy, unless the employer can demonstrate that such accommodation would impose an undue hardship on such employer.”  Pregnancy includes “childbirth or a related condition, including but not limited to lactation.”

A reasonable accommodation includes “being permitted to sit while working, more frequent or longer breaks, periodic rest, assistance with manual labor, job restructuring, light duty assignments, modified work schedules, temporary transfers to less strenuous or hazardous work, time off to recover from childbirth or break time and appropriate facilities for expressing breast milk.”

A Connecticut employer will be required to make these accommodations unless making them would require “significant difficulty or expense.”

The requirement to provide a reasonable accommodation to pregnant employees extends to employers with three or more employees.

In addition, employers are required to notify employees of the new law (i) at the time of hire; (ii) within ten days of learning that an employee is pregnant; and (iii) for all present employees before December 31. This requirement to notify employees may be met with by displaying a poster “in a conspicuous place, accessible to employees at the employer’s place of business” in English and Spanish.

The Connecticut Department of Labor has prepared a poster and employers can obtain the poster by visiting the Department’s web site.

If you have any questions about this or any other Connecticut employment issue, please contact Bernard E. Jacques (bjacques@mdmc-law.com).

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Connecticut Medical Marijuana Law Protecting Employees is Upheld

Bernard E. Jacques

In enacting its medical marijuana law, Connecticut added a provision barring employers from taking adverse employment actions against a “qualifying patient” because of the patient’s use of medical marijuana.  Questions were raised as to whether the Connecticut statute was preempted by federal law, which still makes it a federal crime to use, possess or distribute marijuana.  In a case of first impression, Noffsinger v. SSC Niantic Operating Company, LLC, U.S. District Court Judge Meyer held that the Connecticut statute was not preempted, and an employee could sue for discrimination based on the employee’s use of medical marijuana.

Katelin Noffsinger was diagnosed with post-traumatic stress disorder (“PTSD”) in 2012, and in 2015 her doctors recommended medical marijuana to treat her condition.  Ms. Noffsinger complied with the statute and registered with the Connecticut Department of Consumer Protection as a “qualifying patient.”  She began taking one capsule of Marinol, a synthetic form of marijuana, on a daily basis. At the time she began taking the medical marijuana, she was working a recreational therapist at a long term care facility.

In July 2016 Ms. Noffsinger was recruited for a recreation therapy director position at a skilled nursing facility.  After an initial phone interview, she had a personal interview with the director of the facility, who offered her the job. Ms. Noffsinger accepted and began filling out the pre-employment paperwork.  At the insistence of her new employer, she gave notice to her then-current employer.

When completing her pre-employment forms, Ms. Noffsinger revealed that she was a “qualifying patient” using medical marijuana in accordance with the Connecticut statute.  She showed her new employer her registration card with the Department of Consumer Protection, and told her that she took Marinol in the evening before going to bed. She offered to provide additional medical documentation. Her new employer did not ask for any additional information.

As part of her pre-employment process, Ms. Noffsinger submitted a urine sample. Before she started working, her new employer contacted her and told her that she had failed the drug test. She had tested positive for cannabis.  Ms. Noffsinger tried to return to her former job, but it already had been filled. She filed an action against her employer for discriminating against her because of her use of medical marijuana.

Her employer moved to dismiss her claim and argued that Connecticut’s medical marijuana statute was preempted by federal law, which makes it a federal crime to use, possess, or distribute marijuana.  Federal law provides no exception for medical use.  But the court noted that Ms. Noffsinger sought to enforce only that part of the Connecticut statute which prohibits employment discrimination against authorized medicinal marijuana users.  The federal law neither makes it illegal to employ marijuana user, nor does it regulate employment practices.  And the Connecticut statute does not protect use of marijuana on the employer’s property or its use during work hours.  Therefore, the court concluded, the Connecticut medical marijuana law is not preempted by federal criminal drug laws.

Nor is the Connecticut medical marijuana law preempted by the Americans With Disabilities Act (“ADA”). The employer argued that ADA explicitly states the current drug users are not protected.  But the court saw no conflict between the ADA, which does not protect current drug users, and the Connecticut statute, which does protect a “qualifying patient.”

Although the court’s decision upholding the Connecticut Medical Marijuana law is not binding on any other court, it is likely to be persuasive and employers ignoring the protections afforded a “qualifying patient” using medical marijuana will assume a significant risk.

However, the Connecticut Medical Marijuana law does not protect employees whose positions are regulated by federal law or regulation.  Employees, whose positions are deemed safety sensitive under the U.S. Department of Transportation regulations are still required to comply with those regulations regarding drug use and drug testing.  For those employees a positive marijuana test can result in loss of a job.

If you have any questions regarding this or any other issue of Connecticut employment law, please contact Bernard E. Jacques (bjacques@mdmc-law.com).

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