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NYC Dep’t of Consumer Affairs Updates FAQs about Paid Sick Leave Law

October 27, 2014

By Scott J. Wenner

New York City’s Department of Consumer Affairs quietly published in late August an updated set of Frequently Asked Questions (FAQs) concerning the complicated paid sick leave ordinance that became effective on April 1 of this year.

The City’s publication, available here, provides some sorely needed clarification for New York City employers that are subject to the requirements of the ordinance.  It is a testament to the complexity of the new paid sick leave law that the recently-published FAQs consume 25 pages of text.

To refresh, subject to narrow exceptions, New York City law now requires all employers with five or more employees in New York City who worked 80 or more hours per calendar year to provide paid sick leave to their employees.  Further, employers with fewer than five employees in New York City still must provide sick leave to their New York City-based employees, but the leave may be unpaid.  The amount of the paid leave entitlement depends on the number of hours an employee works in a calendar year, and accrues at the rate of one hour of leave for every 30 hours worked. An employee must work 120 hours before he or she can use accrued paid sick leave.  Within these broad outlines lies a substantial amount of detail, much of which is covered by the FAQs.  For further information contact your Schnader relationship partner or the author.

For more information regarding this or other labor and employment issues, please contact Scott J. Wenner, past chair of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation

Federal Court Dismisses Complaint Against EEOC for Unauthorized Use of Employer’s E-Mail System

October 23, 2014

By Scott J. Wenner

Late last year we reported that Case New Holland, Inc. (CNH) had sued the EEOC after learning that the agency, in the course of investigating a claim of age discrimination, had sent a blast email. This email was linked to a questionnaire and sent to 1300 employees at their work email addresses at the beginning of their workday. See our article on the subject here.

In Case New Holland Inc. v. EEOC, No. 1:13-cv-01176 (D.D.C.), CNH contended that the EEOC’s tactic violated its rights under the Administrative Procedure Act and the Fourth and Fifth Amendments of the United States Constitution. It cited,

  1. the EEOC’s failure to publish a regulation sanctioning the practice and putting employers on notice that the agency might invade their email networks;
  2. the absence of consent which, it claimed, amounted to trespass violative of the Fourth Amendment’s limits on government searches;
  3. the unilateral commandeering of the CNH email network without authority or compensation amounted to a due process clause violation; and
  4. 23.6(c)(1) of the EEOC’s Compliance Manual, which confirms an employer’s right to have counsel present at interviews of management employees – a right that obviously was bypassed by sending questionnaires directly to employees, including managers.

The EEOC moved to dismiss the complaint on purely technical grounds, arguing that CNH lacked standing to sue, that the case was not ripe for review and that the district court lacked subject matter jurisdiction to hear CNH’s claim. While its motion failed to mount a legal defense on the merits of the claim, the agency’s brief did make the following sweeping assertion of authority: “Just as the EEOC can conduct in-person interviews pursuant to its statutory investigative authority, it can also communicate in writing and by e-mail with employees and witnesses to pose questions and gather information pursuant to its broad statutory authority to investigate discrimination claims. The e-mail communication was an efficient and appropriate investigatory method for determining the existence and scope of any potential ADEA violation and for identifying aggrieved individuals entitled to relief if an ADEA violation is found.”

Nearly one year after the EEOC moved to dismiss, the court finally ruled, granting the EEOC’s motion after finding that CNH lacked standing to bring the action. Standing to bring a claim requires an assertion of “injury-in-fact”: an invasion of a legally protected interest that is “concrete and particularized” as well as “actual or imminent, not conjectural or hypothetical.” The injuries CNH claimed to have suffered consisted in part of disrupted productivity at work and of the employer-employee relationship. The court found these claims of injuries to be “conclusory, consisting of generalities and speculation” and insufficient to establish that any actual harm in fact had occurred. It observed that the complaint failed to aver that employees actually diverted their attention from their work to answer questions in the linked survey, and had they done so, what specific injury CNH suffered as a result. A second claimed injury was said to be the potential cost of class action litigation that the EEOC was attempting to prompt by sending the emails to CNH’s employees. The court brushed this claim aside based on the understanding that predictions of future events are too speculative to satisfy the concrete injury requirement needed to confer standing.

Meaning

Despite the EEOC’s seeming suggestion that sending blast emails to employees on employer-maintained networks is an appropriate investigative technique, there are no indications at this time that the agency has made widespread use of this tactic. Whether the agency’s victory against CNH’s challenge to the practice might lead it to employ the tactic more frequently remains to be seen. It certainly is too soon for the agency to conclude on the strength of this dismissal that its blast emailing of employees on employer-owned networks during investigations is an unreviewable exercise of discretion as a matter of law. The fact that CNH adequately failed to plead a concrete injury hardly means that no concrete injury can be pled in these circumstances, and that the merits of a challenge to this practice never can be reached.

Possible Action

The EEOC might well construe the CNH decision to be a green light to engage in blast emailing of employees on employer-owned networks as a more routine investigatory practice. Therefore, it would be sensible for employers to be alert to this possibility and to develop means of detecting the practice and responding. While care must be taken to avoid action that the EEOC could characterize as interference with its investigatory function, employers should, at a minimum, advise all management level employees to report to human resources and/or in-house legal staff any surveys or other communications from the EEOC that they may receive – unless, of course, the communication pertains to the employee’s own charge of discrimination. Management employees can be encouraged not to respond to such communications unless advised to do so by a company lawyer. In-house counsel may respond to such blast emails with objections insofar as they solicit information from management-level employees, who are agents of the company, which is represented by counsel. Citation to §23.6(c)(1) of the EEOC’s Compliance Manual, referred to above, also would be appropriate.

For more information regarding this or other labor and employment issues, please contact Scott J. Wenner, past chair of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation

EEOC Challenge to CVS Severance Agreement Dismissed Due to Agency’s Failure to Engage in Conciliation

October 13, 2014

By Scott J. Wenner

Late last year the United States Equal Employment Opportunity Commission (EEOC) sued CVS in the Northern District of Illinois claiming that the retail pharmacy’s standard form severance agreement and release violated Title VII. More specifically, the agency claimed that the CVS agreement failed adequately to inform separating employees that they were not waiving their rights to file a charge of discrimination with the EEOC and/or a state or local agency, and that they could still support discrimination claims of others being investigated by the Commission.

Especially of concern to the agency appeared to be routine non-disclosure and non-disparagement clauses, and a cooperation clause that required the signatory to advise the company if he or she were subpoenaed or otherwise contacted about matters being released. Because CVS’s agreement resembled garden-variety separation agreements in common use, and as it indeed notified employees of their continued right to complain to and assist the EEOC, the case caused considerable concern among  employers.

In the CVS Severance Opinion filed last week, the court dismissed the EEOC’s action. Unfortunately, the ruling was not based on the merits of the claim. Thus, it fails to provide guidance to employers on how, if at all, their standard form severance agreements should be changed to withstand legal challenge. Because the EEOC has continued to maintain that the CVS agreement interfered unlawfully with its enforcement of Title VII by deterring employees from exercising their rights, it seems unlikely that the issue will go away until the courts bring clarity to what had been thought to be a reasonably clear set of rules embodied in guidance the agency provided years ago.  See, Enforcement Guidance on Non-Waivable Employee Rights, EEOC Notice No. 915.002 (Apr. 10, 1997).

The court’s dismissal of the EEOC’s complaint against CVS nevertheless had a silver lining for employers, however. CVS’s motion to dismiss was in part founded on the agency’s admitted failure to engage in conciliation before suing CVS. The EEOC contended that it was not required statutorily to conciliate before bringing an action under the section of Title VII on which it sued CVS – §707(a). The court roundly rejected the Commission’s position based on the Act’s legislative history and because “the EEOC’s own regulations require the agency to use informal methods of eliminating an unlawful employment practice where it has reasonable cause to believe that such a practice has occurred or is occurring. See 29 C.F.R. § 1601.24(a).” Declaring that “The EEOC may sue only after it has attempted to secure a conciliation agreement acceptable to the Commission,” and as the Commission admitted that it did not conciliate, the court granted the CVS motion to dismiss.

This dismissal will resonate with employers that have experienced high-handed tactics by the Commission in refusing to engage in good faith conciliation before bringing an action against an employer. The issue the court addressed was slightly different from the question presented in EEOC v. Mach Mining, LLC, which the Supreme Court agreed to review this term. In Mach Mining, the Court will decide whether inadequate conciliation efforts constitute an affirmative defense to an action brought by the agency. In CVS, there was no dispute over the EEOC’s failure to engage in conciliation. The court found as a matter of law that the Commission’s conceded failure to conciliate with the employer was grounds for dismissal of the action.

For more information regarding this or other labor and employment issues, please contact Scott J. Wenner, past chair of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation

No Right to Jury Trial Under Pennsylvania’s Whistleblower Statute

August 21, 2014

 By Anne Kane

On August 19, 2014, the Pennsylvania Superior Court held that individuals bringing suit under the Pennsylvania Whistleblower Law have no right to a jury trial.  Writing for the court, Judge Judith Olson explains that “the plain language of the statute makes clear that Appellant did not possess a statutory right to a jury trial.”  Bensinger v. University of Pittsburgh Medical Center t/a/d/b/a Western Psychiatric Institute and Clinic, 2014 Pa. Super. LEXIS 2861 (August 19, 2014).  Because a whistleblower claim has no common law analogue that would give rise to a right to jury trial under the Pennsylvania Constitution, the court held that the trial court properly denied plaintiff John Bensinger’s jury demand.

The Bensinger decision is good news for Pennsylvania employers because it places decisions on liability and damages into the hands of judges who often are better qualified to decide complex employment cases, and who are usually less apt to be swayed by facts unrelated to the claims or defenses.

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For more information regarding this or other labor and employment issues, please contact Anne Kane, Co- Chair of Schnader’s Labor and Employment Practices Group. 

 The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

 

NJ “Ban the Box” Law Restricts Employers from Inquiring about Criminal Records of Prospective Employees During Initial Application Process

August 12, 2014

By Harris Neal Feldman

New Jersey Governor Chris Christie signed The Opportunity to Compete Act (A-1999) on August 11, 2014, barring private employers from asking prospective employees about their criminal records during the initial job application process – whether as a part of the employment application or by oral inquiry.

This law follows a trend among multiple jurisdictions in the United States to “ban the box” – meaning prohibiting employers from asking a prospective employee to check the box on an employment application as to whether the person has a criminal history. After the “initial” application process, which includes the first interview, the employer is free to inquire about an applicant’s criminal history. Thus, careful timing is key.

The law provides certain exceptions, such as jobs requiring high levels of security or where a criminal background check is otherwise required by law. Notably, should an applicant voluntarily disclose criminal record information during the initial application, then an employer may “make inquiries regarding the applicant’s criminal record during the initial employment application.”

Also, under this new law, employers will be prohibited from posting job advertisements that “explicitly provide that the employer will not consider any applicant who has been arrested or convicted of one or more crimes or offenses.”

While the law does not provide a private cause of action for violations, employers may face fines up to $1,000 for the first violation, $5,000 for the second, and $10,000 for subsequent violations. The law preempts any local/municipal laws that address criminal record inquiries in the employment context.

What Should NJ Employers Do?

With the new law’s effective date of March 1, 2015, employers have time for counsel to (1) review existing job advertisements, application forms, and related documents and (2) help train management who participate in the hiring process.

For more information regarding this or other labor and employment issues, please contact Harris Neal Feldman of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

NJ Appellate Courts Permit Employers to Shorten Statute of Limitations Period Through Employment Applications

July 31, 2014

By Michael J. Wietrzychowski

A New Jersey Appellate Court recently held that a provision in an employment application shortening the statute of limitation from two years to six months was enforceable under New Jersey law. As a result, the employee’s discrimination and retaliation claims that were filed nine months after his termination were dismissed. Subject to appeal, this decision encourages all employers to include similar provisions in their applications for employment.

In Rodriguez v. Raymours Furniture Co., the plaintiff sued his employer, alleging that he was fired in retaliation for filing a workers’ compensation claim and because of discrimination based on his disability. The plaintiff filed his complaint nine months after his alleged wrongful termination by his employer. The statute of limitations for each claim is normally two years, and therefore the plaintiff appeared to have filed his claims on time. However, the employer argued that the plaintiff filed his lawsuit too late, relying on a provision contained in the Plaintiff’s application for employment – part of which read:

 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.”

Looking at the totality of the application language (the above is an excerpt of the entire application language that the Court considered), and the circumstances surrounding the applicant’s signing of the application, the Rodriguez Court held that the language limiting the applicable statute of limitations to six months was enforceable. The Court stated that the language, its prominence, and circumstances regarding the signing of the application made it clear, conspicuous, reasonable, voluntary, and not contrary to public policy. In so holding, the Court upheld the lower court’s dismissal of the plaintiff’s complaint.

What Employers Should Do

As of the time of this posting, the Rodriguez decision is the law of New Jersey, and therefore, employers are encouraged to include waiver language in employment applications and contracts to shorten the statutes of limitation applicable to state employment actions. However, employers must take care to draft proper language and create an environment that will ensure enforcement and defend against claims of unconscionability, involuntariness, lack of clarity, and lack of consideration. Also, this holding applies only to state claims. It is not expected that federal courts will reverse decisions holding that the statute of limitations for certain federal claims, such as EEOC discrimination claims, cannot be shortened by agreement. Finally, this decision may be subject to further appeal or amendment to the law.

For more information regarding this or other labor and employment issues, please contact Michael J. Wietrzychowski, Co-Chair of Schnader’s Labor and Employment Practices Group.   

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

 

 

Senate Finance Committee Considering Measure to Largely Repeal IRC Section 530 Safe Harbor for Most Businesses Using Independent Contractors

July 8, 2014

By Scott J. Wenner

Sen. Sherrod Brown (D.Ohio) reintroduced the “Fair Playing Field Act,” S.1706, in November 2013. The bill, which first appeared in 2010 under then-Senator John Kerry’s sponsorship, purports to close an ostensible loophole in the application of the common law test generally used by the Internal Revenue Service to determine whether a worker is properly classified as an independent contractor. The purported loophole referred to by Sen. Brown and his predecessor sponsors is Section 530 of the Internal Revenue Code, which the bill would repeal for workers who do not provide professional services. The bill defines “professional services” as services performed in the fields of health, law, engineering, architecture, accounting, actuarial science, consulting, or financial services and insurance.

Section 530 of the Internal Revenue Code

Far from a mere “loophole” that permits big companies to cheat, Section 530 provides important protections for businesses, many of which are small, whose business model was and remains built around legitimate use of independent contractors, including independent sales representatives and mystery shoppers. Many of these businesses maintain that they have relied on Section 530 in growing their businesses, and that its repeal would have devastating consequences for them because, e.g., they cannot afford to employ a national network of workers who may work just a few hours at a time, two or three times per year, distributing surveys or undertaking some similar task. Moreover, because in many cases entire industries treat workers in a specific position as independent contractors using Section 530, one central thesis of the legislation – that some companies gain an unfair competitive advantage by misclassifying a position – in fact fails to justify repeal of Section 530.

Section 530 was added by Congress to the Internal Revenue Code by the Revenue Act of 1978. Under the Section 530 safe harbor, a qualifying employer is not responsible for payment of past employment taxes for workers who the IRS determines have been misclassified. Further, that employer is not required to reclassify such workers. The safe harbor permits an employer to continue to treat workers the IRS finds to have been misclassified as independent contractors for purposes of federal employment taxes so long as the employer satisfies the requirements of the safe harbor:

  • The employer consistently must have filed Forms 1099 for all those whom it classified as independent contractors.
  • The employer must treat each group of workers that holds similar positions consistently. That is, it must treat all workers holding substantially similar positions as independent contractors.
  • The taxpayer must have a “reasonable basis” for treating the workers in those positions as independent contractors. “Reasonable basis” includes reliance on court cases, published IRS rulings, an IRS ruling received by the employer, a past IRS audit that made no assessment on the class of workers at issue, by showing that a significant segment of the taxpayer’s industry treats similar workers as independent contractors, or some other reasonable basis.

Fair Playing Field Act

In addition to the repeal of Section 530’s safe harbor with respect to most positions, the Fair Playing Field Act would

  • Repeal the existing moratorium on IRS guidance addressing worker classification;
  • Permit the IRS to prospectively reclassify workers as employees;
  • Limit the IRS’s discretion to reduce penalties for misclassifying employees where a “reasonable basis” (defined above) does not exist. Presumably, this would affect the IRS’s authority to continue its Voluntary Classification Settlement Program, which we discussed here.

The bill, which has been stalled in the Senate Finance Committee, will be taken up in the form of an amendment by Sen. Brown to a bill entitled Preserving American’s Transit and Highway Act (PATH). PATH was introduced to provide revenue and authorize expenditures for the Highway Trust Fund, which purportedly will run out of money this year. Sen. Brown has linked the Fair Playing Field Act to PATH by making the increased misclassification penalties to be collected – estimated at $5.8 billion over ten years – a source of funding for the highway trust.

The Senate Finance Committee has scheduled a July 10 mark up session for PATH, including making decisions on which of the plethora of amendments to include. If the committee adopts the Fair Playing Field amendments and PATH is favorably reported out, it will go to the Senate floor for a vote. If passed with the Fair Playing Field amendments included, it still must gain House approval, which appears unlikely. Nonetheless, it is important to know that the Democrats’ effort on this legislation continues, and that monitoring of the campaign to narrow the lawful use of independent contractors continues to be a good idea.

For more information regarding this or other labor and employment issues, please contact Scott J. Wenner, past chair of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation

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