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New York City Council Votes to Limit Credit Checks by Employers

April 21, 2015

By Scott J. Wenner

On April 16, the New York City Council passed Intro 261A, which bans the use of credit checks to screen applicants for employment except in enumerated circumstances. The legislation, which was supported by Mayor Bill de Blasio and was sponsored by 40 of the 51 members of the Council, is expected to be signed and become law promptly.  It purports to prohibit “discrimination based on consumer credit history” – a practice that is said to adversely affect black and Hispanic workers disproportionately.

When the Mayor signs the credit check ban into law, New York City will join 10 states and several other municipalities that have curtailed this pre-employment practice.  While New York City is not the first jurisdiction to limit the use of consumer credit reports to screen applicants, its chief sponsor, Councilman Brad Lander of Brooklyn, claims that his bill is “the strongest of its type in the country”  – a characterization that might be correct.

Consumer Credit History Broadly Defined.  As passed by the City Council, the bill deems it an unlawful discriminatory practice for an employer to use individuals’ consumer credit histories in making employment decisions. In addition to consumer credit reports and credit scores, the bill defines “consumer credit history” to also include information obtained directly from the applicant or employee about prior bankruptcies, judgments, and liens, as well as “details about credit accounts.” This latter category of information includes “the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit [and] prior credit report inquiries.” The bill also defines “consumer credit report” to include “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity, or credit history. “

Exceptions.  The bill reportedly contains more exceptions than Councilman Lander had proposed initially as a result of discussions that included the Partnership for New York City – a group representing business interests – as well as labor union representatives. However, it does not contain the kind of broad, top-to-bottom exemption for financial institutions that most existing credit check laws contain. The exceptions to the credit check ban in the forthcoming New York City law will include (i) hiring for police or peace officer jobs, (ii) positions subject to NYC Department of Investigation background checks, (iii) jobs that require the employee to be bonded or demand a government security clearance, (iv) positions  (other than clerical jobs) that require regular access to trade secrets or national security information, (v) workers who operate digital security systems, (vi) employees having signatory authority over third party funds or assets valued at $10,000 or more, or fiduciary responsibility and authority to enter into contracts valued at $10,000 or more for their employer, and (vii) where the employer is required by state or federal law or regulations or by a self-regulatory organization to use an individual’s consumer credit history for employment purposes.

The law will become effective 120 days after it is signed by Mayor de Blasio

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

NY Attorney General’s Office Begins Campaign Against Scheduling Practices of Large Retailers

April 16, 2015

By Scott J. Wenner

In letters sent to 13 large retail chains on April 10, available here, the New York State Attorney General’s Office has questioned the lawfulness of a scheduling practice known as “on-call shifts,” and has requested wide-ranging information and documents.  In so doing, New York’s attorney general has joined a growing movement seeking to make the work schedules of employees – especially part timers – in the retail industry more steady and predictable.  That movement received a boost when San Francisco enacted its “Retail Workers’ Bill of Rights” late last year. That ordinance became effective in January 2015, and specifically outlaws many of the practices the New York attorney general appears ready to attack without the benefit of legislation that makes the practices unlawful.  Among the requirements in San Francisco are (i) 2-4 hours of pay to workers who are required to be on call for a shift but are not called into work, and (ii) a requirement that schedules be posted two weeks in advance with penalties for subsequent changes.

After citing the toll that unpredictable work schedules take, particularly on low wage earners, the letter, which is signed by Labor Bureau Chief Terri Gerstein, voices the AG’s particular concern about on-call shifts. Gerstein defines this practice as requiring employees to call in just hours before a shift is scheduled to start to learn whether they should report to work, without receiving any compensation if they are not directed to report for that shift.   Gerstein notes that the employees were not paid even though the employer required them to remain available had they been needed, and could not accept work elsewhere for that on-call shift.  According to the Labor Bureau, the practice, which is said to be “growing,” not only gives short shrift to the needs of the part-timers, but also suggests that it may violate New York’s call-in pay regulation at 12 N.Y.C.R.R. § 142-2.3.  That regulation, which is directed primarily at ensuring a minimum shift length if an employee reports to work, provides “[a]n employee who by request or permission of the employer reports for work on any day shall be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.”

The letter sent to the 13 retailers outlines the practice, advises them that the Bureau has reason to believe that they are using on-call shifts as a scheduling methodology, that the Bureau is looking into the practice, and that the agency wishes to examine each recipient’s use of on-call shifts by reviewing their responses to the information and document requests in the letter, which they are directed to produce be early May.

The scheduling systems that utilize the kind of on-call practices criticized in the AG’s letter generally are reliant on software that analyzes a variety of factors, including sales traffic, conversion rates, and even weather conditions, to arrive at a daily scheduling model to maximize revenue and minimize expense. While groups such as the Retail Action Project that are vociferously opposed to the scheduling practices targeted by the attorney general are critical of the retailers’ use of scheduling technology, it appears that these retailers simply are continuing to use the same factors that always drove retail schedules, but that software now is available to analyze the input more quickly and more accurately than in the past.

In addition to technology, what has really changed is the political environment that led to San Francisco’s bill of rights for retail workers, the current pressure for minimum wage increases, the enactment of paid sick time legislation in New York and other cities, and, in all likelihood, the activity commenced in New York to attack retailer scheduling practices.  It will be interesting to see whether the attorney general’s Labor Bureau proceeds against the retailers based upon an elastic interpretation of the regulations cited in the recent letter, or if instead his office waits for legislation that more specifically curbs the practices that the letter cites.

It does appear clear that New York City and/or State legislation will be enacted regardless of the path the attorney general chooses.

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

En Banc 6th Circuit Returns to Practicality, Finding Regular and Predictable Attendance to be Essential Function of Position

April 13, 2015

By Scott J. Wenner

In May 2014, we reported on an opinion of a divided panel of the Court of Appeals for the Sixth Circuit embracing the position of the Equal Employment Opportunity Commission (EEOC) that virtual full-time telecommuting could be a reasonable accommodation under the Americans with Disabilities Act (ADA) for an employee whose irritable bowel syndrome rendered her unable to maintain regular attendance at work.  The EEOC’s argument and the panel’s opinion both relied on assumptions that advances in technology required the abandonment of precedents permitting employers to require regular physical attendance at the workplace, while giving short shrift to the substantial evidence supporting the business judgment of the employer, Ford Motor Company, that personal interaction was a necessary part of the plaintiff’s job.  The panel’s reasoning was encapsulated in the following quote from the opinion: “the law must respond to the advance of technology in the employment context as it has in other areas of modern life, and recognize that the ‘workplace’ is anywhere that an employee can perform her job duties.”

In late August 2014, the appellate court vacated the controversial panel decision and set it for review by the entire Sixth Circuit bench.  The en banc opinions – a majority opinion by the panel’s dissenter and a dissent by the author of the vacated panel opinion – were announced on April 10th.  The majority found that the EEOC was unable to prove that the employee in question, Jane Harris, was a “qualified individual” under the ADA because the evidence showed “that Harris cannot regularly and predictably attend the workplace – an essential function, and a prerequisite to other essential functions. . . .” In reaching this conclusion, the majority found that the EEOC’s evidence failed to create a genuine issue of fact over whether on-site attendance was essential to performance of her job duties. First, it discounted Harris’s own testimony that physical attendance was not essential based both on Circuit precedent that self-serving testimony of this nature is given little weight and because she failed to establish that she could perform all of her duties remotely without lowering production standards – a consequence that employers need not endure.  (29 C.F.R. § 1630, App. At 395-396).  Secondly, the court rejected the EEOC’s argument that by permitting others to work from home (on one fixed day per week at most) Ford admitted that in-person attendance was not essential. Observing that Harris’s telecommuting demand was for four days per week that were not scheduled in advance, and that every person allowed to work from home one day per week was required to come to work on their fixed telecommuting day upon request, the majority found that what Harris had demanded was too dissimilar to the telecommuting privileges given to others to be of value to her claim.

The final prong of the EEOC’s argument that attendance was nonessential to Harris’s job was its literally naked appeal to technology, contending (without citation to the record or case law) that it is “self-evident” that “technology has advanced” sufficiently for employees to perform “at least some essential functions” from home.  The majority observed that the EEOC no doubt is correct: as an abstract proposition technology has advanced.  However, it added, “[t]he proper case to credit advances in technology is one where the record evinces that advancement. There is no such evidence here.”   Indeed, “email, computers, telephone and limited video conferencing were equally available when courts around the country uniformly held that on-site attendance is essential for interactive jobs.”

Concluding Thoughts

Although the Sixth Circuit’s en banc decision no doubt comes as a relief to employers that are concerned about telecommuting imposed by fiat, Ford Motor Company represents only a preliminary skirmish is what is likely to be a more protracted battle with the EEOC and other employee advocates.  It is fair to read the majority opinion as more about evidentiary requirements than about the substance of the ADA – as confirming that the EEOC cannot rely on platitudinous and “self-evident” propositions, at least without producing evidence to validate and link them more specifically to the issues in dispute.  For the opinion certainly suggests that had the EEOC produced competent evidence that specific technologies that are available that would permit the duties of Ms. Harris’s interactive position to be performed as effectively at home as on-site, the majority would not have affirmed the district court’s entry of summary judgment in favor of Ford.  One can only anticipate that the next time the EEOC argues that telecommuting is a reasonable accommodation under the ADA, it will armed with evidence to support its generalized observations on the march of technology.

Finally, a focal point of the dissent – but mentioned only in passing by the majority – concerned the weight to be given to Ford’s judgment in identifying the essential functions of the position.  While the majority did not purport to give particular weight to Ford’s opinion, focusing instead on the deficiencies in the EEOC’s evidence, the dissent spent several pages arguing that the employer’s judgment is entitled only to consideration – not deference – and is but one of more than half a dozen factors the EEOC’s regulations suggest should be considered in deciding what functions are essential.  Responding to the dissent, the majority opinion agreed that merely because an employer deems a function to be essential does not make it so: blind deference is not the standard. However, summary judgment is required when “the employer’s judgment as to essential job functions – evidenced by the employer’s words, policies and practices and taking into account all relevant factors – is job-related, uniformly-enforced, and consistent with business necessity.”

Like the debate over telecommuting, the debate over an employer’s freedom to identify which job functions are essential will continue as the EEOC aggressively inserts itself into what employers consider management decisions, including how a job is to be performed.

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

SDNY Judge Refuses to Approve Overbroad Use of Social Media to Notify Members of Opt-in Class of Action

March 31, 2015

By Scott J. Wenner

As we reported here in December, Judge Nathan of the U.S. District Court for the Southern District of New York ruled that putative class representatives in an FLSA collective action could notify former Gawker interns of their opt-in rights via social media – subject to her approval of a specific plan for disseminating that notice. The lawsuit accused Gawker of misclassifying student workers as interns to avoid paying them minimum wage.

Citing evidence of the widespread use of social media by the youthful age group that comprised the class to whom the notice was intended to reach, Judge Nathan approved in principle using social media for this purpose, but ordered the parties to jointly propose the sites for and content of the notice postings. She also stated that any dispute would be resolved by the court.

The representative plaintiffs proposed an extremely broad social media notification plan: it contemplated posting, notices on public pages of Twitter, LinkedIn, Facebook, certain highly political sites, and even on pop culture-specific sites like Tumblr and Reddit (including “r/occupy wall street”).

This proved too much for Judge Nathan, who firmly rejected the plaintiffs’ plan in her recent Mark v. Gawker Media order.  The judge explained that her initial order approved notice via social media as a conceptual matter, as she was persuaded that it was a reasonable way to reach the interns. However, her approval to use social media to disseminate notice to former Gawker interns was strictly as an “anologue to the typical mailing of class notice,” and the limited use of email to which the parties had agreed earlier in the case. While the court had contemplated using social media and other websites to post direct and targeted notice of the action to a specific group that arguably could not be reached in other ways, it held that the plaintiffs’ proposal to post generally visible notices on political, entertainment, and social media sites was far beyond the proper purpose of class notice.

In the court’s view, instead of targeting interns and directly notifying them of the litigation, the plaintiffs proposed to publicize it primarily to persons with no material connection to the lawsuit. Judge Nathan observed that it is improper to use class notice to advertise a defendant’s alleged wrongdoing, and concluded that  would be the primary effect of plaintiffs’ plan, whether intended or not.

In the end Judge Nathan would not approve a plan that might garner publicity for the case before wide audiences and which strayed substantially from the purpose of the notice – to inform former Gawker interns of the claims asserted in part on their behalf and of their right to opt in. The court’s message appeared clear: had class counsel’s plan more closely replicated the more targeted and direct methods typically approved for providing notice by mail and email, the court was prepared to approve it.

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

NJ Supreme Court Backs Employer Defense in Supervisor Harassment Suits

February 13, 2015

By Harris Neal Feldman

The New Jersey Supreme Court recently ruled that an employer may assert an effective and enforced anti-harassment policy as an affirmative defense in cases brought against the employer alleging that a supervisor engaged in sexual harassment under the New Jersey Law Against Discrimination.

Citing the long-standing U.S. Supreme Court cases of Burlington Industries v. Ellerth and Faragher v. Boca Raton, the N.J. Supreme Court in Aguas v. New Jersey held that when an employer has “exercised reasonable care to prevent and correct promptly any sexually harassing behavior” and “the plaintiff employee unreasonably failed to take advantage of any [such] preventive or corrective opportunities,” then the employer may assert this affirmative defense.  Notably, this defense remains unavailable if the employer took any adverse job action against the employee.

In analyzing the availability of the defense, the Court applied the five factors set forth in Gaines v. Bellino and in the seminal New Jersey case of Lehman v. Toys ‘R’ Us, Inc.:

[T]he existence of: (1) formal policies prohibiting harassment in the workplace; (2) complaint structures for employees’ use, both formal and informal in nature; (3) anti-harassment training, which must be mandatory for supervisors and managers, and must be available to all employees of the organization; (4) the existence of effective sensing or monitoring mechanisms to check the trustworthiness of the policies and complaint structures; and (5) an unequivocal commitment from the highest levels of the employer that harassment would not be tolerated, and demonstration of that policy commitment by consistent practice.

The Court’s opinion also adopted a broader definition of “supervisor” used by the EEOC.  Essentially, if the person has “the authority to take or recommend tangible employment actions affecting the complaining employee, or to direct the complainant’s day-to-day activities in the workplace” then that person is a supervisor for purposes of attributing vicarious liability to the employer under the LAD.

While practitioners have been following the Ellerth, Faragher, and Lehman guidance for years, this case clarifies the availability of this pro-employer defense and serves as a reminder to employers to review their anti-harassment policies to ensure they are clearly-written, uniformly enforced and effective. The other factors cited above, such as anti-harassment training, are also key to the employer’s ability to raise this affirmative defense.

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 Supreme Court Advises Courts to Follow NJDOL Test for Determining Employee vs. Independent Contractor Status for Wage Disputes

January 28, 2015

By Harris Neal Feldman

In Hargrove v. Sleepy’s LLC, the New Jersey Supreme Court recently held that the legal test for determining employee status under New Jersey unemployment compensation laws should also be used to determine employee status in state wage and hour disputes. The state Department of Labor has long used this three-prong “ABC” test, which places the burden on the employer to prove that the individual is an independent contractor and is not an employee.

To establish independent contractor status, a company must prove:

(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

If any of these three criteria are not proven by the company, then the individual will be deemed an employee and not an independent contractor.  The court held that mattress delivery drivers were employees even though their contracts specifically stated that they were independent contractors.  As a result, the drivers are entitled to New Jersey worker protections that cannot be contracted away, such as minimum wage.

Questions of independent contractor vs. employee status require careful legal and factual analysis.   The wrong decision exposes the employer to penalties for failure to make proper payroll deductions and/or non-compliance with various laws, such as FMLA, workers’ compensation, overtime, minimum wage, etc.

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.

Employer Error in Advising Employee of Eligibility for FMLA Leave Can Have Enduring Consequences

January 27, 2015

By Scott J. Wenner

The Family and Medical Leave Act does not require all employers to grant leave to all employees. One condition for eligibility requires an employee to work at, or within 75 miles of, a site at which the employer employs at least 50 employees. And while it is unlawful for an employer to interfere with or retaliate against an employee for the exercise of FMLA rights, an employee who is ineligible for FMLA leave logically cannot make such a claim. A recent opinion of the Court of Appeals for the Sixth Circuit is a reminder that careless action by an employer can result in an ineligible employee having the right to claim interference with or retaliation for exercising FMLA rights.

In Tilley v. Kalamazoo County Road Commission, the employer sent Terry Tilley a letter stating that he was eligible for FMLA leave, together with a “Notice of Eligibility and Rights & Responsibilities” that also stated he was FMLA-eligible. Three days later, the employer discharged Tilley for absence. Tilley filed a lawsuit alleging age discrimination and interference and retaliation under the FMLA. The district court granted the employer’s motion for summary judgment, finding a lack of evidence to support the age claim and holding that Tilley in fact was ineligible for FMLA leave because he did not work within 75 miles of a road commission site having 50 employees.

While it affirmed the dismissal of Tilley’s age discrimination claim, the Sixth Circuit reversed the summary dismissal of his FMLA interference and retaliation claims. Even though it recognized that Tilley was in fact ineligible for FMLA leave, the court held that the employer was equitably estopped from raising ineligibility as a defense because it had sent Tilley documentation denoting him as FMLA-eligible. In other words, even though Tilley was not entitled to FMLA leave as the statute defines eligibility, the court treated him as if he were eligible and refused to entertain his ineligibility as a defense.

The court held that to support a claim of equitable estoppel, the employee has to show only (1) a definite misrepresentation as to a material fact, (2) reasonable reliance on the misrepresentation, and (3) resulting detriment. The panel found that Tilley presented sufficient evidence on all three elements to withstand summary judgment.

Lessons Learned

Perhaps surprisingly, the Sixth Circuit’s Tilley decision hardly stands alone. At least four other circuits have approved application of equitable estoppel to FMLA cases where employees have relied on employer misstatements on eligibility for FMLA leave. Reed v. Lear Corp., 556 F.3d 674, 678 (8th Cir. 2009); Minard v. ITC Deltacom Communications, Inc., 447 F.3d 352, 358-59 (5th Cir. 2006); Woodford v. Community Action of Greene County, Inc., 268 F.3d 51, 57 (2d Cir. 2001); Dormeyer v. Comerica Bank-Illinois, 223 F.3d 579, 582 (7th Cir. 2000). (The Third Circuit also found it was appropriately used in a non-precedential decision: Leese v. Adelphoi Village, 12-2834 (3rd Cir. 2013))

The lesson for employers is clear: be prepared to live with any mistake made when informing an employee of eligibility for FMLA leave, and ensure that managers, supervisors and HR personnel are instructed not to retaliate against any employee for using FMLA leave that was granted in error. Indeed, it would be prudent to consult employment counsel before acting on any mistake uncovered in advising employees of their eligibility for FMLA leave.

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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