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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

Schnader Harrison Segal & Lewis LLP Publishes the Annual “15 Labor & Employment Resolutions For 2015” Alert

December 30, 2014

By Alizah Z. Diamond

While the looming deadline to comply with the federal Affordable Care Act’s (ACA) employer mandate may be causing sleepless nights for many an employer, employers should be mindful of the flurry of activity occurring in the labor and employment arena on issues that will impact their operations in the New Year. In 2014 we saw an ambitious, pro-employee federal regulatory agenda that originated during the first Obama administration come to fruition, and growing initiatives by state and local governments tackling many “hot button” employment issues.

Among the subjects of new state and local activity were discrimination against LGBT employees and unpaid interns in the workplace, paid sick leave, social media privacy, rights of pregnant employees, revisions to overtime exemptions and expanding rights of employees in same-sex marriages. To help employers navigate successfully through a number of these issues, we encourage employers to consider making these 15 Labor & Employment Resolutions For 2015.

For more information regarding this or other labor and employment issues, please contact Alizah Z. Diamond, a member 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 Permits Use of Social Media to Notify Potential Opt-In Plaintiffs of Conditionally Certified Collective Action by Unpaid Interns

December 29, 2014

By Scott J. Wenner

In an unpublished ruling last month, Federal Judge Alison Nathan of the U.S. District Court for the Southern District of New York granted the request of counsel for a putative class of unpaid interns to use social media to target potential opt-in plaintiffs. The action, Mark v. Gawker Media LLC, is a challenge under the Fair Labor Standards Act (FLSA) to the unpaid status of interns at Gawker Media.

Judge Nathan’s order permitting the use of social media was part of her post-conditional certification ruling on the process to be followed to notify those eligible to join the class of their right to do so. Unlike “opt-out” class actions, incollective actions authorized by the FLSA, potential class members must affirmatively choose to join the class. Obviously, they cannot do so if they are unaware of the pending class action. Collective actions, particularly in industries with youthful workforces, often fail to attract even half those eligible to join because, many believe, of the difficulty of providing notice through more traditional means such as U.S. mail.

The parties agreed to a form of notice to be provided by U.S. Mail, and also via stand-alone websites that would permit putative class members to download and submit consent forms electronically. Counsel for the putative class asked the court also for permission to use dedicated social media pages on sites such as Facebook, Twitter and LinkedIn whose names would match the URLs of the stand-alone websites. In determining this method to be effective, the court relied on a Pew Research Center study finding that “the vast majority [of current and former interns] likely have at least one [social media] account, if not more.“ (See “Social Networking Fact Sheet,” The Pew Internet Project.) Judge Nathan also brushed aside Gawker’s objection that use of social media sites would cause it to lose control over messaging to class members, noting the court’s limited role of assuring fairness and accuracy of communications to class members. She found Gawker’s concern to be more focused on discussions between potential class members, which she viewed as beyond the court’s role.

Class counsel did not cite any case law to support its request and Judge Nathan’s order also cited no legal authority. It is fair to anticipate, however, that the use of social media as part of the notification process, at least in opt-in collective actions, will be more routinely requested in the future.

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

NLRB Holds Employees May Use Employer Email for Union Organizing and Other Non-Business Purposes

December 11, 2014

By Scott J. Wenner

The National Labor Relations Board this morning released its aptly-named Purple Communications decision, 361 NLRB No. 126, available here.  Last May, the Board announced that in connection with its review of the administrative law judge’s decision in Purple Communications, it would re-examine whether employers may bar employee use of company email for union organizing and other collective purposes. In its 2007 Register Guard decision, the NLRB permitted employers to bar such communications, holding that “employees have no statutory right to use the[ir] Employer’s e-mail system for Section 7 [i.e., collective] purposes.”  According to the Board in today’s decision, the Register Guard decision was “clearly incorrect.”

Summarizing its ruling, the three-member Democratic majority, which includes Member Nancy J. Schiffer, whose term expires on December 16th, declared:

“We decide today that employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems…”

In reaching its conclusion the majority brushed aside a host of employer objections advanced by Purple Communications and in amicus briefs, including the inconsistency of the new rule with the established body of case law permitting restrictions on use of employer-owned equipment, such as telephones; the certain loss of productivity the new rule will engender; the difficulty this will create in permitting employers to lawfully monitor email use without risk of surveillance claims by employees; the threat to informational security; and the strains the free use of employer email systems will place on those systems.

Careful review and analysis of the Purple Communications decision will be required before employers can chart a way forward.

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

Voters in 4 States Elect to Raise Minimum Wage January 1, 2015

November 6, 2014

By Scott J. Wenner

Initiatives and ballot measures to raise the minimum wage in four states were approved by voters in four states on Election Day. By wide margins voters in Alaska, Arkansas, Nebraska and South Dakota approved measures that will increase the minimum wage in those states beginning January 1.  The Alaska, Arkansas and Nebraska measures will hike the minimum wage in those states in two or three stages over consecutive years.  The South Dakota initiative is a single year hike, but it also doubles the tip credit in that state from $2.13 to $4.25 per hour.

In addition to direct voting in the above states on minimum wage increases, the Illinois legislature included a referendum measure on that state’s ballot asking Illinois voters whether they would support the legislature’s increasing the minimum wage in Illinois from $8.25 to $10.00 per hour by January 1, 2015.  The voters approved the proposed increase by a two-to-one margin in Tuesday’s vote.

At the municipal level, voters in San Francisco approved Proposition J, to increase the present $10.74 minimum wage, already the highest in California, to $15.00 per hour in four steps from May 1, 2015 to July 1, 2018.  At $15.00 per hour, which annualizes at around $31,000 per year, San Francisco’s minimum wage would equal Seattle’s as the nation’s highest.  Undaunted by that distinction, San Francisco voters approved Proposition J by more than a three-to-one margin according to election website Ballotpedia.

Minimum Wage Increases Approved by Voters on Election Day

      Jurisdiction Effective Dates New Minimum Wage Current Minimum
Alaska 1/1/2015
1/1/2016
$8.75
$9.75 
$7.75
Arkansas 1/1/2015
1/1/2016
1/1/2017
$7.50
$8.00
$8.50 
$6.25
Nebraska 1/1/2015
1/1/2016
$8.00
$9.00 
$7.25
South Dakota 1/1/2015 $8.50  $7.25
San Francisco 5/1/2015
7/1/2016
7/1/2017
7/1/2018
$12.25
$13.00
$14.00
$15.00 
$10.74
Illinois
(Not yet law)
1/1/2015 $10.00 $8.25

A comprehensive report on 2015 increases will appear on this blog next month.

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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