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HR Resource Blog

This blog is published by the attorneys in Capehart Scatchard’s Labor and Employment Group. On this site, employers and human resources professionals will find useful tips as to how to keep the workplace, and workplace policies, in compliance with state and federal employment laws.
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Beware of Carelessly Drafted Employee Arbitration Agreements

Many employers today utilize employee arbitration agreements as a means of eliminating potential court litigation. In place of pursuing legal claims in a judicial forum, the arbitration agreement substitutes a private resolution mechanism, such as utilization of an arbitrator, to resolve employee legal grievances. Arbitration agreements are an effective way of keeping employee disputes outside of the public realm and, for many employers, there is a significant value in maintaining the privacy of such matters. Arbitration also in most instances is much less expensive than defending claims in a judicial forum. While arbitration agreements in the employment setting are enforceable here in New Jersey, they have to be drafted correctly, or otherwise, a court will not enforce them, as one New Jersey employer found out recently in a case that resulted in a significant appellate court decision addressing the specific requirements to make such agreements enforceable.

In Hernandez v. Fancy Heat Corporation, 2016 N.J. Super. Unpub. LEXIS 1805 (App. Div. August 1, 2016), the plaintiff brought suit claiming that she had been sexually harassed by a coworker. Four (4) days after allegedly reporting the harassment to one of her supervisors, the employee was terminated. The company claimed plaintiff was terminated for performance related reasons, but she asserted to the contrary that the termination happened in retaliation for her reporting the alleged sexual harassment.

The employee filed a complaint in New Jersey Superior Court alleging discrimination under the New Jersey Law Against Discrimination, retaliation, common-law negligence, and violation of the New Jersey Conscientious Employee Protection Act.  The employer sought to dismiss the case based on an arbitration provision included in the employment application that the plaintiff had executed prior to her hiring by the employer. The arbitration clause of the employment application specifically advised the plaintiff that all disputes related to her employment were to be addressed through final and binding arbitration before a neutral arbitrator. The arbitration clause likewise gave specific examples of the kinds of claims that the employee would need to pursue through arbitration, but nowhere in the arbitration clause did it mention that agreeing to arbitration meant that plaintiff would be giving up her right to a jury trial on such employment related claims.

The trial court enforced the arbitration clause, finding that the application’s provision encompassed the claims that plaintiff was seeking to pursue in court. This decision was appealed by the plaintiff, and the New Jersey Appellate Division reversed the trial court’s decision. In reversing the dismissal of plaintiff’s complaint, the Appellate Division ruled that, in order for an arbitration provision to be enforceable, it must specifically alert an employee that agreeing to arbitration means that they are giving up the constitutional right to have legal claims decided in a court of law with the possibility of a jury trial.  This is because, in the Appellate Division’s view, not every employee understands what potential rights are being waived when agreeing to arbitrate employment related claims. Thus, while the Appellate Division ultimately noted that no particular words are required to necessarily make an arbitration agreement enforceable, at a minimum, the agreement must explain that it is a substitute for the right to have the employee’s claim decided in a court of law. Without such an explanation, the arbitration clause will not be enforced.

In light of the Hernandez decision, it is wise for every employer to review all arbitration provisions that may exist in employment applications, employee handbooks, employment agreements or other related type documents to ensure that, at a minimum, the arbitration provision specifically notifies employees that they are giving up their right to have their legal claims decided in a court of law. Such notification should be drafted in a clear and unambiguous fashion so, if ever there is a need to enforce the arbitration right, there will be no reason for the court to deprive the employer of its substitute forum for resolution of the employee’s claim.

Workplace Disputes Do Not Necessarily Lead to a Conscientious Employee Protection Act Claim

Employers will be relieved to hear that the New Jersey Appellate Division recently handed down a pro-employer decision regarding the Conscientious Employee Protection Act (“CEPA”).  The case of Ortiz v. Penske Truck Leasing, No. A-3742-14T3 (App. Div. September 13, 2016) re-emphasizes the legal principle that in order for an employee to prevail regarding a CEPA claim, he/she must establish an objectively reasonable belief that an employer’s practice violates a law, regulation or clear mandate of public policy concerning public safety.  If an employee cannot provide an objectively reasonable belief as to why the employer’s practice(s) violates the law, a regulation or public policy, the employee’s CEPA claim should be dismissed as a matter of law.

Facts of the Case

Plaintiff, Julio Ortiz, was hired by Penske Truck Leasing (“Penske”) in 2004 as a technician and later became a foreman. In April 2011, Plaintiff and a former Penske supervisor sent an anonymous e-mail to Penske’s CEO and President alleging, among other things, violations of the preventative maintenance (“PM”) process.  Although the Penske vehicles received annual inspections, there was also an internal process of inspecting the vehicles every 6,000-20,000 miles (PM Process).  This process went above and beyond the federal requirements of an annual inspection.  In Plaintiff’s e-mail to the CEO and President, Plaintiff claimed that the PM process was falsified and the falsified process was known as a “Paper PM.” A Paper PM was a PM that was notated as completed in the computer system but no physical work was ever actually performed on the vehicle. Plaintiff was never told to perform a Paper PM but he had heard technicians talking about it during breaks.  Plaintiff did not have any information about Paper PMs directly.

In August 2011, over four months after Plaintiff had sent the anonymous e-mail to Penske CEO and President, Penske began investigating a grievance filed by Plaintiff and a report that Plaintiff had falsified a leave request form.  Following Penske’s investigation into the grievance and alleged forged report, Penske terminated Plaintiff for dishonesty during the grievance process.

Thereafter, Plaintiff filed suit against Penske claiming wrongful termination in violation of CEPA.  Plaintiff alleged that he was terminated because he objected to, and refused to participate in, alleged illegal business practices (Paper PMs).  The matter went to trial and a jury awarded Plaintiff $90,000 in damages. Thereafter, Penske filed for judgment notwithstanding the verdict (“JNOV”).  The court granted the JNOV and overturned the jury award based upon its determination that Plaintiff failed to provide any evidence that he objectively and reasonably believed that Penske’s conduct threatened public safety.  Plaintiff appealed the granting of the JNOV to the Appellate Division.

The Appellate Court reviewed the case and indicated that “a jury’s factual determination will be disturbed only if the court finds that the jury could not have reasonably used the evidence to reach its verdict.”  In this case, the Appellate Court found that even though Plaintiff believed that the Paper PM practice threatened people’s safety, Plaintiff never provided any evidence as to exactly how it threatened public safety.  Plaintiff never identified any paper document that caused any truck or vehicle to be unsafe. Moreover, Plaintiff never testified as to how the Paper PM practice threatened or endangered the public safety.

The applicable section of CEPA “bars any retaliatory action against an employee when the employee objects to or refuses to participate in any activity, policy or practice which the employee reasonably believes is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.” A plaintiff must establish a substantial nexus between the complained of conduct and a clear mandate of public policy.  This analysis distinguishes an employee’s objection to, or reporting of, an employer’s illegal or unethical conduct from a routine dispute in the workplace regarding the merits of internal policies procedures and practices.

Here, the Appellate Court held that Plaintiff failed to establish the existence of safety rules and regulations and a clear mandate of public policy applicable to Paper PMs.  There was no testimony that any vehicle ever left the premises in an unsafe manner.  In fact, all required yearly inspections were completed.  Thus, there was no evidentiary basis that a jury could conclude that Plaintiff had an objective reasonable belief that the Paper PM practice threatened public safety.  The Appellate Court affirmed the Court’s granting of the JNOV.

What does this mean for employers?

             Employers are encouraged to understand the requirements for an employee to prove a CEPA claim.  If your company is served with a Complaint and it looks as though the employee is claiming a violation of CEPA based upon an internal workplace dispute, rather than illegal activity or a violation of public policy, the case may be subject to dismissal. Contact your employment attorney immediately when served with any employment litigation so the attorney can evaluate the case and create a strategy to defend your company!

OSHA’s New Regulations and Its Restrictions on Post Accident Drug Testing

Does your organization require employees to undergo drug and alcohol testing automatically in every instance where there has been a workplace accident?  If so, new regulations from the Occupational Safety and Health Administration (“OSHA”) will greatly impact upon the continuation of such practices in your workplace.

In May, 2016, OSHA published regulations that ostensibly are designed to implement new rules barring discrimination and enhancing injury/illness reporting. On their face, these new rules appear to merely implement stricter rules against employee retaliation/discrimination for reporting workplace injuries. However, OSHA is broadly interpreting such regulations to prohibit all mandatory automatic post–accident testing, concluding that such policies discriminate against employees on the basis of injury and accident reporting. Because of this belief, OSHA is recommending that only narrowly tailored drug testing policies be used-ones expressly linked to situations where employee drug use is likely to have contributed to the happening of the incident and where the desired testing can accurately test for that impairment. Why has OSHA adopted this view?  OSHA believes that stringent testing polices deter injury reporting and therefore discriminate/retaliate against persons who have suffered workplace incidents.

So, what kind of drug testing would be inappropriate under these new regulations?  OSHA states:

For example, it would likely not be reasonable to drug-test an employee who reports a bee sting, a repetitive strain injury, or an injury caused by a lack of machine guarding or a machine or tool malfunction.  Such a policy is likely only to deter reporting without contributing to the employer’s understanding of why the injury occurred, or in any other way contributing to workplace safety.

However, employers which conduct automatic post-accident drug testing to comply with other federal and state legal requirements (such as Department of Transportation regulations) can continue with such testing because the motive for same in the eyes of OSHA is not retaliatory.

In light of these new regulations, which went into effect on August 10, 2016, employers must immediately review their current drug testing policies to ensure compliance with these new rules and regulations. Nevertheless, it is important to understand that these new regulations do not themselves bar post-incident drug testing-they merely require that the testing be based upon some form of reasonable suspicion that drug use contributed to the incident.

Moreover, you should also be aware that lawsuits are now pending challenging OSHA’s broad conclusions about the adverse effects of all mandatory post-accident testing on the reporting of workplace injuries and accidents. Nevertheless, in the meantime, employers must still satisfy these new legal restrictions, and with the assistance of knowledgable legal counsel, employers can effectively craft and administer compliant post-accident drug and alcohol testing polices despite these new regulations.

Do Co-Workers’ Discourteous Attitudes Establish FMLA Retaliation?

The Family Medical Leave Act (“FMLA”) is one of the laws about which employment lawyers get the most questions.  The FMLA can be complicated to apply to factual situations and employers are justifiably concerned that if they take disciplinary action against an employee after he/she returns from FMLA leave, even if the discipline is based upon clearly documented performance problems, that the employee will bring suit claiming FMLA retaliation.  In a recent case, the United States District Court for the District of Eastern Pennsylvania analyzed whether or not an employee made a valid retaliation claim when she alleged that upon her return to work from FMLA leave, co-workers were discourteous towards her and her employer chose to enforce her resignation, even after she had rescinded it.

Facts of the Case

In Checa v. Drexel University, No. 16-08, 2016 U.S. Dist. LEXIS 83524 (E.D.Pa June 28, 2016), the plaintiff, Debra Checa (“Checa”), was employed by Drexel University College of Medicine (“Drexel”) as a program manager and fellowship coordinator.  In June 2014, Checa took three months of FMLA qualifying leave of absence from Drexel in order to undergo carpel tunnel surgery.  While Checa was on leave, her mother passed away. Checa asked Drexel to extend her leave for a short period of time due to her mother’s passing.  Drexel approved the extended leave.

On the day that Checa returned to work, her co-workers allegedly did not give her a warm welcome and failed to offer condolences for her mother’s passing.  Also, on her first day back, Checa was called into a meeting with two co-workers, Christina Zervoudakes, the employee that had been performing Checa’s work while she was on leave and Kathy Lally, the employee who provided administrative support to Checa’s department, to discuss Checa’s transition back to work.  During the meeting, Ms. Zervoudakes presented Checa with a list of incomplete tasks which Checa had failed to complete before her leave, despite promising to do so.  Moreover, during the meeting, neither Ms. Zervoudakes nor Ms. Lally offered condolences to Checa regarding her mother’s passing. Checa became upset and told Ms. Zervoudakes and Ms. Lally that she was quitting.  Checa then returned to her office and called her supervisor and advised her supervisor that she quit. Later the same day, Checa emailed her supervisor to confirm that she had quit.  The next morning, Checa met with her supervisor and attempted to rescind her resignation.  Drexel did not allow Checa to rescind her resignation.  Thereafter, Checa brought suit in Federal Court against Drexel claiming FMLA retaliation/constructive discharge. Drexel filed for summary judgment.

In order to prevail on a FMLA retaliation claim, the plaintiff must prove that she 1) invoked her right to FMLA qualifying leave 2) she suffered an adverse employment action and 3) the adverse action was causally related to her invocation of rights.  The Court found in this case that Checa had not established a prima facie case of retaliation because she could not show that she suffered an adverse employment action.

Analysis

The Court held that the meeting between Checa and her co-workers was not an adverse employment action because it did not alter her terms or conditions of employment.  Moreover, attending the meeting did not significantly impact Checa’s ability to work or advance her career.  Checa’s co-workers, Ms. Zervoudakes and Ms. Lally, were providing Checa with performance feedback at the meeting related to Checa’s transition back to work.  This meeting was perfectly acceptable and lawful.  The Court also held that Ms. Zervoudakes and Ms. Lally’s failure to exchange pleasantries with Checa was not an adverse employment action under the law.

In regards to Checa’s constructive discharge claim, although the meeting upset Checa, the Court held that a reasonable employee in her position would not have found one meeting so intolerable that she had to resign.  This is supported by the fact that the day after the meeting, Checa attempted to rescind her resignation.

The Court also analyzed Drexel’s refusal to allow Checa to rescind her resignation and found that this refusal was not an adverse employment action. Checa’s resignation was completely voluntary and Drexel’s decision not to allow Checa to rescind her resignation did not alter her privileges of employment, deprive her of employment opportunities, or adversely affect her status as an employee because she had already resigned. Checa’s resignation was unprofessional and validated Drexel’s decision not to let her return to work.

Drexel’s motion for summary judgment was granted and Checa’s case was dismissed.

What does this mean for employers?

This case clarifies the meaning of “adverse employment” action as it relates to a retaliation case.  Employers have the right to hold meetings upon an employee’s return to work to discuss performance issues from before the employee left for leave.  Moreover, if co-workers are discourteous to an employee when she returns from leave, this does not automatically amount to retaliation or constructive discharge.  This case also clarifies that if an employee resigns from employment and then attempts to rescind that resignation, it is lawful for the employer to enforce the resignation.  If the resignation was unprofessional and unwarranted in the first place, employers are not required to allow employees to return to work.

OSHA and Its Increasing Focus on Workplace Violence

New Jersey employers are required to conform to safety and health standards issued by the Occupational Safety and Health Administration (“OSHA”) of the U.S. Department of Labor.  They are also required to comply with the so-called “General Duty Clause”, which is found at §5(a) (1) of the OSH Act (“the Act”).  The crux of the obligation imposed by the General Duty Clause is maintain the workplace free from “recognized hazards.”

OSHA defines the phrase “workplace violence” broadly to mean “violence or the threat of violence”.  Applying this definition, OSHA estimates that there are approximately 2,000,000 incidents of workplace violence in America per year.

The current yearly average of workplace fatalities in the U.S.A. is approximately 4,600, of which about nine or ten percent are homicides.  Homicide is the fourth highest cause of workplace fatalities.

Given the information in the two preceding paragraphs, it is unsurprising that OSHA has been taking a far greater interest in the topic of workplace violence.   This interest notwithstanding, OSHA has not promulgated a standard to address this issue.  Rather, it has: (1) issued a Factsheet with suggestions how to reduce the risk of workplace violence; (2) included a workplace violence section in its Field Operations Manual, which provides guidance to its personnel who conduct inspections of workplaces; (3) issued Guidelines for certain industries such as health care and social service; and (4) issued approximately 23 General Duty Clause citations to employers whose violence avoidance policies and practices, if any, were perceived as inadequate (permitting the existence of one or more alleged recognized hazards).

A New Jersey employer has been cited for a workplace violence General Duty Clause violation.  Specifically, health care workers at Bergen Regional Medical Center in Paramus, one of the nation’s largest hospitals with over 1000 beds, in a three month period experienced eight separate incidents including being bit, punched, kicked and threatened by patients.  This lead to a worker complaint to OSHA, an inspection and the issuance of a §5 (a) (1) citation.  This matter was informally resolved without a hearing.

That was not the outcome in a subsequent General Duty Clause workplace violence case, which is currently pending before the OSA Review Commission (“Commission”).   In Secretary of Labor v. Integra Health Management, Inc., the employer had professional social workers conduct mental and physical health assessments on behalf of insurers at the patients’ individual residences.  Tragically, one of the team of social workers was stabbed to death at a patient’s home.  The patient had a history of violent behavior and mental illness.

Intregra Health contested the General Duty Clause citation and the matter was tried in a hearing before an Administrative Law Judge (“ALJ’) for the Commission.  Thereafter, he found that OSHA had proven a §5(a) (1) violation.  In so doing, the ALJ concluded that the “workplace” could include a location over which the employer had no control.  Intrega Health asked the Commission to review the ALJ decision.

On September 18, 2015, the Commission took the highly unusual, but not unprecedented, step of inviting non-parties to file Amicus Curiae (friend of the Court) briefs.  The importance of this case is shown by those who in fact filed such briefs, including the U.S. Chamber of Commerce and the Service Employees International Union (“SEIU”).  Impressive arguments are included in the Amicus and party briefs.

A material part of the briefs, both party and Amicus focused on the unique factual context of where the workplace violence occurred.  Employer briefs point out that face-to-face in home interactions are critical to Intregra’s business and Integra does not control the patients’ residences.  They also stress that the Act itself is focused on conditions inherent in a workplace environment where an employer has practical means to minimize and abate a hazard.

Briefs in support of the ALJ decision point out that there is a wealth of learned writing preceding the issuance of OSHA’s guidelines that confirm the health risk to workers from violence and advocate for the establishment of legal requirements to mitigate this risk.  Indeed, Intregra used one of these learned sources as a basis to train its’ personnel.  Seen in this light, those supporting the OAL decision, suggest that OSHA’s guidelines simply mimic preexisting learned writing, and, thus, Courts should defer to OSHA’s guidelines.

The Integra case has been pending for almost a year.  The date for Commission decision is not known.  Regardless of the outcome of the Commission decision, further appeal is likely, possibly up to the Supreme Court. As this is the first fully litigated OSHA workplace violence case, it may well set national precedent on this topic.

Mentioned above is that OSHA has issued a Factsheet on Workplace Violence. This is a short and helpful primer on the subject and a valuable short resource to employer representatives, including safety and health and human resource professionals, as well as attorneys.   The factsheet offers some common sense suggestions; the outcome of Integra could convert these suggestions to legal obligations.

Divorcing Employees Deemed Member of Protected Class under the NJLAD

One aspect of the broad anti-discrimination protections afforded to employees under the New Jersey Law Against Discrimination (“NJLAD”) that is often overlooked involves the law’s prohibition on any type of workplace discrimination based upon an employee’s “marital status”.  The NJLAD does not define specifically what “marital status” actually means, but it has generally been understood to bar employment related decisions premised on whether or not someone was married or single. Given that understanding, the next logical question that arises is whether such protections apply to someone who is going through a divorce and transitioning from married to single status. That question was recently answered by the New Jersey Supreme Court in the case of Smith v. Millville Rescue Squad, ___ N.J. ___ (2016).

Plaintiff was employed as the director of operations for the defendant.  He was terminated a short time after he informed his supervisor that he was engaged in an affair with a volunteer worker and that he and his wife, who also worked for defendant, were separated and had commenced divorce proceedings. When allegedly informed of this, the supervisor told plaintiff that he could not promise that the revelation would not affect his job, and the same supervisor subsequently expressed his view that the divorce proceedings were going to “get ugly”.   Plaintiff was eventually terminated after a meeting of defendant’s board, purportedly for long standing job performance reasons, shortly after making this revelation about his on-going divorce proceedings.

In a lawsuit commenced challenging his termination filed against both the defendant and his own supervisor, the plaintiff alleged that he was wrongfully fired due to his sex and marital status.  At trial, at the conclusion of plaintiff’s case, the trial court granted the defense’s request for case dismissal.  The court determined that plaintiff failed to establish that he was terminated because (1) he was either married or unmarried, (2) because he was having an affair, or (3) because other employees were treated differently based on their marital status. The court likewise found that plaintiff’s evidence showed that he was terminated because defendant management was concerned about the likelihood of an acrimonious divorce, which the court declared did not give rise to a marital status discrimination claim. This ruling was eventually reversed on appeal, the Appellate Court determining that “marital status” under the law included the states of being separated and involved in divorce proceedings.

The Supreme Court upheld the decision of the Appeal Court, broadly ruling that the NJLAD protects employees going through a divorce from experiencing any adverse employment actions solely due to the fact that they were in the process of separating or ending their marriage. In justifying its decision, the Supreme Court believed that interpreting “marital status” to include married, single, and divorcing individuals, serves the statute’s remedial goal of ensuring that workplace decisions are made free of stereotypical notions that have no bearing on the employee’s ability to perform hisher job duties.

The Smith decision highlights again how broadly New Jersey courts interpret state anti-discrimination laws to cover things that most employers likely believe are not the subject of such legal requirements. In light of this decision, employers must again scrutinize their hiring and firing practices to ensure that employment-based decisions are being made free of any consideration of a person’s marital status, which now includes transitioning from married to being single.

 

 

Can an Employee Agree to a Shorter Statute of Limitations for Claims under the New Jersey Law Against Discrimination?

What if an employer chooses to require its employees to sign an agreement, which states that if the employee wants to sue the employer he/she must agree to abide by a shorter statute of limitations period than is established by law? Would that agreement be enforceable? This was precisely the question that the New Jersey Supreme Court addressed in its recent landmark decision, dated June 15, 2016, wherein it found such agreements to be unenforceable as they relate to the New Jersey Law Against Discrimination (“LAD”).

Facts of the Case and Procedural History

The plaintiff applied for a job with the defendant employer and as part of that process, he completed an application for employment.  On the last page of the job application there was a section that applicants were instructed to read very carefully before signing. The relevant section of the document read, in bold and capital letters, that by submitting the job application, the employee agreed that any claim or lawsuit relating to the employee’s service with the employer must be filed no more than six months after the date of the employment action that is the subject of the claim or lawsuit.  The relevant section of the application went on to further state that the employee “waive[s] any statute of limitations to the contrary.”  Plaintiff signed the application, including the section regarding his waiver of any statute of limitations contrary to the agreement language.

Plaintiff worked for the defendant employer for approximately three years before being terminated.  Upon plaintiff’s termination from his employment, plaintiff brought suit against his employer alleging illegal employment discrimination in violation of the LAD.  Plaintiff filed suit seven months after his termination from employment.  Although the statute of limitations for a LAD claim is two years from the discriminatory action, and plaintiff had filed well within two years from the discriminatory action (termination), the employer moved to dismiss the suit.  The employer reasoned that the plaintiff had already signed an agreement that the applicable statute of limitations for any claim would be six months and plaintiff filed his claim after the six month period had already passed. The court agreed with employer and dismissed plaintiff’s case. Plaintiff appealed the court’s decision and the Appellate Division upheld the lower court’s decision to dismiss the case due to the agreement regarding the statute of limitations that plaintiff signed. Plaintiff then requested review by the Supreme Court of New Jersey. The Supreme Court overruled the lower courts and found that plaintiff’s discrimination claim was not time barred and should proceed.

Supreme Court Findings

The New Jersey Supreme Court held that a private agreement that frustrates the LAD’s public purpose, by shortening two year statute of limitations, cannot be enforced. First, the Court reasoned that if a party were to agree to shorten the statute of limitations regarding a LAD claim, it would “directly impact and undermine the integrated nature of the statutory avenues of relief and the election of remedies that are substantively available to victims of discrimination under the LAD.”  In other words, if the statute of limitations was shorter than two years due to a private agreement, litigants would not have enough time to try to resolve the matter administratively with the Division on Civil Rights, before moving the claim to Superior Court if the administrative process extended too long.

Second, the Court reasoned that a shorter statute of limitations period would deprive litigants of the opportunity to bring suit because a person may not be aware of his/her potential claim(s) within the first six months after the employment action occurs. Third, a privately agreed upon statute of limitations frustrates the public purpose of uniformity and certainty as to a set statute of limitations for LAD claims.  Fourth, a shorter statute of limitations may compel attorneys to file premature LAD claims. Finally, allowing a private agreement shortening the LAD statute of limitations would also deprive an employer of the opportunity to investigate claims and possibly resolve a complaint before suit is filed because the employee would rushed to file claims in court. Thus, a waiver provision in an agreement shortening the LAD statute of limitations is unenforceable.

In order to review the full text of this decision see Rodriguez v. Raymours Furniture Co., Inc., _____ N.J. _____ (2016).

What Does this Mean to Employers?

The LAD statute of limitations is set in stone (for now) and cannot be changed by private agreement. Employees have two years to file their claims. This time period allows the employee time to analyze whether or not he/she has a claim, allows time for an employee to file with the Division on Civil Rights (if the employee desires to do so) and allows time for an employer to investigate a claim and possibly resolve a matter before a lawsuit is filed.

 

Legal Alert: Equal Employment Opportunity Commission’s Final Rule Amending the Americans with Disabilities Act Regulations

On May 17, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued its final rule amending the regulations implementing Title I of Americans with Disabilities Act (“ADA”) as they relate to employer wellness programs. In the section below you will find key information as to how the final rule applies to your workplace and the implementation of your employer wellness program.

Q:        What is an employer wellness program?

A:        Many employers have recently implemented health promotion and disease prevention programs for their employees as a benefit within the employer’s group health plan, or separately as a benefit of employment. These programs are referred to as “employer wellness programs.”

Q:        How is the ADA related to employer wellness programs?

A:        The ADA prohibits employers from discriminating against individuals on basis of a disability.  Furthermore, the ADA prohibits employers from obtaining medical information from applicants and employees but it does allow employers to inquire about employee health and/or conduct medical examinations as part of a voluntary health program, such as an employer wellness program. This special exception will be referred to hereafter as the “ADA exception.”

Q:        Why did the EEOC amend the regulations regarding the ADA?

A:        Previously, the EEOC’s ADA regulations did not define the term “voluntary” or explain what constitutes a “health program.” This led to confusion for employers as to when they are able to inquire about employee health or conduct medical examinations as part of the ADA exception explained above. The EEOC has now made efforts to correct these omissions in the amended regulations.

Q:        What is the ADA’s safe harbor provision and does it apply to employer wellness programs?

A:        The ADA’s safe harbor provision allows insurers and plan sponsors (including employers) to use information about risks posed by certain health conditions to make decisions about insurability and cost of insurance coverage. The safe harbor provision does not apply to employer wellness programs because the information that an employer collects from employees as part of an employer wellness program is not used to decide insurability of a specific employee or to set insurance costs.  The safe harbor provision does not apply to employer wellness programs even if they are offered as part of an employer’s health plan.

Q:        Under the amended regulations, when can an employer ask employees to provide medical information as part of a wellness program?

A:        The ADA allows employers to make disability-related inquiries and to require medical examinations as part of a voluntary health program (ADA exception). The key is that a program only fits the definition of a voluntary health program/wellness if it is “reasonably designed to promote health or prevent disease.” The program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a ruse for violating the ADA or other employment discrimination laws, or require employees to incur significant costs for medical examinations.

Q:        What type of wellness programs meet the criteria set forth in the amended regulations?

A:        A wellness program that asks employees to answer questions about their health conditions or have biometric screening or other medical examinations for the purpose of alerting the employee to health risks (ie. high cholesterol, elevated blood pressure) meets the criteria set forth in the regulations.  Also, it is appropriate for wellness programs to collect and use aggregate information from employee health risk assessments to design and offer programs aimed at specific conditions prevalent in the workplace (ie. diabetes, hypertension).

Q:        What type of wellness programs DO NOT meet the criteria set forth in the amended regulations?

A:        Employers cannot ask employees to provide information on a health risk assessment without providing feedback about risk factors or without using aggregate information to design programs or treat any specific conditions. Employers are also not permitted to create a wellness program if it exists merely to shift costs from the employer to the employee based upon their health or if it is used by employer only to predict future health costs.

Q:        Under the new regulations how is “voluntary participation” defined?

A:        In order for an employer wellness program to be considered “voluntary,” it must meet the following requirements:

  • Employer may not require employee to participate; and
  • Employer may not deny any employee who does not participate in wellness program access to health coverage or prohibit an employee from choosing a specific health plan; and
  • Employer may not take adverse action or retaliate against any employee who chooses not to participate in the wellness program or fails to achieve certain health outcomes; and
  • Employer must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and restrictions on disclosure

Also the employer must comply with the incentive limits, explained below.

Q:        What are the incentive limits?

A:        If a wellness program is open only to employees enrolled in a particular health plan, the maximum allowable incentive an employer can offer is 30 percent of the total cost for self-only coverage of the plan in which the employee is enrolled.

When an employer offers more than one group health plan, but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30 percent of the lowest cost major medical self-only plan it offers.

If an employer does not offer health insurance, but wants to offer an incentive program for employees to complete a health risk assessment or have annual medical tests, an employer can offer an incentive up to 30 percent of the cost that a 40 year old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care exchange in the location that the employer identifies as its principal place of business.

Q:        Do these incentive limits apply to all employer wellness programs?

A:        No. The incentive limits only apply to wellness programs that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty.

Q:        When do employer wellness programs have to comply with the final rule?

A:        The final rule applies to wellness programs as of the first day of the first plan year that begins on or after January 1, 2017 for the health plan used to determine the level of incentives permitted under the rule. Any provisions of the final rule which are only clarifying existing obligations apply now.

If you have any questions, please feel free to contact us!

Legal Alert: Department of Labor Issues Final Rule Updating Overtime Regulations

On May 18, 2016, the Department of Labor’s Final Rule updating the overtime regulations was published. The key changes to the overtime regulations set forth in the Final Rule are explained below:

Under the Fair Labor Standards Act (“FLSA”), employees who are employed in a bona fide executive, administrative or professional capacity are exempt from minimum wage and overtime protections (“white collar exemption”).  Under the Final Rule, in order to be exempt under the white collar exemption of the FLSA, the employee must meet all of the following three elements:

  1. the employee must be salaried (paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed); and
  2. the employee must be paid more than $913 per week (the equivalent of $47,476 annually for a full-year worker); and
  3. the employee must primarily perform executive, administrative, or professional duties, as defined in the Department of Labor’s regulations

The second prong of this test is the major change in the Final Rule. Under the Final Rule, any employee who earns less than $913 per week or $47,476 per year must be paid overtime for hours worked over 40 no matter what job duties that person may have (compared to $455 per week or $23,660 per year under the old regulations). Employers are able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level to meet prong 2 of the exemption, provided these payments are made on a quarterly or more frequent basis.

Moreover, the Final Rule also updates the highly compensated employee exemption to the overtime law, and increases the salary that employees must be paid in order to fall within this exemption to $134,004/yr. (compared to $100,000 under the old regulations).

The effective date of this Final Rule is December 1, 2016. On that day, the new standard salary level ($913 per week or $47,476 per year) and highly compensated employee compensation requirement ($134,004 per year) will take effect. Automatic updates to these salary levels will occur every three years, beginning on January 1, 2020.

Court Finds that Complaint to Supervisor about Overtime is Considered Protected Conduct under the Fair Labor Standards Act

The Fair Labor Standards Act (“FLSA”) is the federal wage and hour law and due to its complexity, employers often have questions as to what protections this law provides to employees in the workplace. In Childs v. Universal Cos.,no. 15-3507, 2016 U.S. Dist. Lexis 53929 (E.D.Pa April 22, 2016), a recent case from the United States District Court for the Eastern District of Pennsylvania, the Court analyzed what type of employee behavior is considered “protected conduct” under the FLSA.

Facts

Maurice Childs (“Childs”) was employed by Universal Companies (“Universal”) as a building engineer and was paid overtime when he was required to work over forty hours a week. In May 2013, Childs was promoted to head engineer. After Childs was promoted, his supervisor, Ms. Hinson, informed him that he would no longer be eligible for overtime pay.  Ms. Hinson explained that Childs’ hourly wage was too high and if Childs were to be pad for overtime, he would be taking away available funds from other employees. Childs’ responsibilities often required him to work more than forty hours per week. When this happened, Ms. Hinson would change Childs’ time cards to prevent him from receiving overtime. Childs was also required to work without pay on Sundays.

In September 2014, Childs made an internal complaint to his human resources representative (“HR”). Childs explained that he needed to work more than forty hours per week to complete his job duties and that his supervisor was changing his time card. HR told Childs that in order to keep his job, he needed to do what his supervisor told him to do (clock out and finish his work without payment).

Childs claims that after he complained to HR, his employer harassed him by issuing frivolous disciplinary write-ups. Childs was then terminated in April 2014 after Childs called Ms. Hinson and advised that he was sick and could not come to work and after he sent an e-mail to Ms. Hinson and HR again complaining about overtime and payroll.

Childs brought suit again Universal claiming violations of the FLSA, including retaliation. Universal filed a motion to dismiss Child’s retaliation claim, arguing that Child’s communications to his supervisor and HR do not qualify as “protected activity” (filing a complaint) under the FLSA. Under the FLSA, filing a complaint is considered statutorily protected activity but the FLSA does not define the word “complaint.”

The Court found that precedent, although not directly on point, indicates that the word Complaint in the FLSA’s anti-retaliation provision should be interpreted liberally. In 2011, the Supreme Court found that an employee engages in protected activity under the FLSA anti-retaliation statute when the employee’s complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context as an assertion of rights protected by the statue and a call for their protection” Kasten v. Saint-Gobain Perf. Plastics Corp., 563 U.S. 1, 14 (2011).  When the Court reviewed the facts from Childs’ case, it found that a reasonable jury could find that Childs’ complaints to Ms. Hinson and to HR were sufficiently clear assertions of rights protected by the FLSA. It was not necessary for Childs to explicitly refer to the FLSA when making his complaint in order for it to be considered “protected conduct” under the law. Moreover, the Court held that Childs’ reports to his supervisor regarding non-payment of overtime were necessary to the effective assertion of employees’ rights under the FLSA. Thus, Childs’ reports were considered “protected conduct” under the FLSA.

What does this mean to employers?

An employer must be careful when taking adverse action against an employee who previously brought forth complaints about overtime or pay practices.  Although an employee is not completely protected from adverse action once he/she engages in protected conduct under the FLSA, an employer must be sure that a non-retaliatory reason exists for the adverse employment action before such action is implemented.  As is always the best course of action, seek advice from legal counsel when taking employment action against an employee who has previously engaged in protected conduct.

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