The New Jersey Employment Law Firm Blog

October 6, 2017

Third Circuit Reinstates New Jersey Employment Misclassification Lawsuit

Workers asserting a cause of action against an employer under various employment statutes must establish multiple facts before any claim may proceed. Perhaps before anything else, they must demonstrate an employment relationship between the defendant and themselves. If a claimant is an independent contractor rather than an employee, the employer may have far fewer obligations, or none at all, under employment statutes and the common law. “Misclassification” involves classifying workers who meet a legal definition of an employee as independent contractors. A recent Third Circuit Court of Appeals decision allowed a New Jersey misclassification lawsuit to proceed, specifically addressing another early roadblock for complainants: a contractual clause purportedly mandating arbitration of all disputes. Moon v. Breathless, Inc., No. 16-3356, slip op. (3d Cir., Aug. 17, 2017).

No precise definition of “employee” exists in state or federal law. The federal Fair Labor Standards Act (FLSA) defines an “employee” as “any individual employed by an employer,” and “employ” as “to suffer or permit to work.” 29 U.S.C. §§ 203(e)(1), (g). Different jurisdictions have therefore developed their own definitions of “employee” and “independent contractor.” New Jersey’s definition is quite expansive, holding that an individual is an employee unless they meet a three-part test: (1) the employer lacks control over how the individual performs their job; (2) the individual’s job either is substantially different from the employer’s usual business activities or is not performed at the employer’s regular place of business; and (3) the individual has an “independently established trade, occupation, profession or business” that includes their work for the employer. Hargrove v. Sleepy’s, LLC, 106 A.3d 449, 458 (N.J. 2015).

Many employment contracts include clauses stating that both parties agree to arbitration of any disputes, often precluding the option of going to court. The arbitration process involves submitting a dispute to an arbitrator, a private individual with specialized training in dispute resolution. The process may involve something resembling a trial, in which each side presents arguments and evidence, and the arbitrator makes a decision. Whether the arbitrator’s decision is binding on the parties depends on the terms of the arbitration clause.

September 28, 2017

New Jersey Court Allows Wrongful Termination Case Under FMLA and State Law to Proceed

by Resnick Law Group, P.C.

State and federal laws protect workers from termination based on a protected category like race or sex, known as discriminatory termination; or because of participation in protected activities like reporting legal violations, known as retaliatory discharge. A claimant must make a prima facie case of a discriminatory or retaliatory purpose in order to get past a summary judgment motion. A federal court in New Jersey recently ruled in a plaintiff’s favor on claims of discriminatory discharge under state law and retaliatory discharge under federal and New Jersey wrongful termination laws. Ferren v. Foulke Mgt. Corp., No. 1:15-cv-03721, opinion (D.N.J., Feb. 16, 2017).

The New Jersey Law Against Discrimination (NJLAD) prohibits discrimination by employers on the basis of multiple categories, including disability. N.J. Rev. Stat. § 10:5-12(a). Unlawful discrimination includes discharging an employee solely or primarily because of a disability. It also prohibits retaliating against an employee because of a protected activity. The federal Family Medical Leave Act (FMLA) guarantees that qualifying employees of covered employers may take unpaid leave for certain purposes, and it prohibits employers from retaliating against employees for taking authorized leave or reporting violations of the statute. 29 U.S.C. § 2615.

The plaintiff in Ferren began working for the defendant in 2001 as a lot attendant at a car dealership. His job duties included lot maintenance and customer service. He took medical leave in October 2014 for a shoulder injury, according to the court, after informing his supervisor that he would be having surgery and was invoking his rights under the FMLA. The plaintiff was scheduled to return to work in January 2015. He reportedly provided a doctor’s note to the supervisor in December 2014, which stated that the plaintiff should not lift more than five pounds and should refrain from certain other activities. The supervisor allegedly told the plaintiff to “go home and get better.” Ferren, op. at 3. On the plaintiff’s scheduled return date, he was laid off.

September 22, 2017

Appellate Court Rules on Mixed-Motive Claim in FMLA Retaliation Case

by Resnick Law Group, P.C.

The Family and Medical Leave Act (FMLA) requires covered employers to provide qualifying employees with a minimum amount of unpaid leave for certain reasons. It also prohibits employers from interfering with employees’ use of authorized leave, discriminating based on the use of leave time, or retaliating against an employee for using leave. The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey employment disputes involving federal law, recently ruled on a case alleging retaliation under the FMLA. It found that the district court should have given the jury an instruction regarding the “mixed-motive” theory of liability, which shifts the burden of proof to the defendant if a plaintiff demonstrates that their “use of FMLA leave was a negative factor in the employer’s adverse employment decision.” Egan v. Del. River Port Auth., 851 F.3d 263, 267 (3rd Cir. 2017).

Employees who meet a minimum requirement for number of hours worked during the preceding 12-month period are eligible for up to 12 weeks of unpaid leave under the FMLA. 29 U.S.C. §§ 2611(2), 2612(a)(1). This only applies, however, if the employer has at least 50 employees. Id. at § 2611(4). Many workers do not qualify for FMLA leave because their employer is not big enough, or they have not worked for the employer long enough to become eligible. The FMLA provides numerous protections to help ensure that employees who are able to accrue leave are able to use it. This includes a prohibition on retaliating against an employee who uses or attempts to use leave to which they are entitled. Id. at § 2615(a)(1), 29 C.F.R. § 825.220(c).

Courts have identified two general theories for discrimination and retaliation claims: pretext and mixed-motive. In a pretext claim, a plaintiff asserts that an employer’s stated reason for an adverse action is false and is merely a pretext for an unlawful motive. A mixed-motive theory alleges that an employer had “both legitimate and illegitimate reasons” for the adverse action. Egan, 851 F.3d at 268 n. 1. The plaintiff must show that the “exercise of FMLA rights was ‘a negative factor’ in the employer’s employment decision.” Id.

September 15, 2017

Third Circuit Rules that a Single Incident Can Sustain a Workplace Harassment Claim

by Resnick Law Group, P.C.

Federal law prohibits discrimination by employers on the basis of numerous factors. Common examples of unlawful discrimination include refusal to hire, termination, or harassment in the workplace because of a claimant’s race, sex, religion, etc. The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey employment discrimination claims under federal law, recently ruled on the question of how much harassment a plaintiff must allege to maintain a claim for workplace harassment based on race. The defendant argued that a plaintiff must allege an ongoing pattern or multiple instances of harassment. The court, citing the plain language of precedent decisions, held that a single incident of race-based harassment can be sufficient to sustain a claim. Castleberry v. STI Group, No. 16-3131, slip op. (3rd Cir., Jul. 14, 2017).

Title VII of the Civil Rights Act of 1964 is probably the most well-known federal statute dealing with race discrimination in employment, but it is not the only one. The plaintiffs in Castleberry brought their claims under 42 U.S.C. § 1981 rather than Title VII. This statute addresses equal rights “to make and enforce contracts” and engage in certain other activities. It was originally enacted as part of the Civil Rights Act of 1866, and Congress amended it in the Civil Rights Act of 1991. This law added subsection (b), which clarifies that the contractual rights it protects include employment claims like wrongful termination.

The Castleberry lawsuit alleges workplace harassment on the basis of race in the form of a hostile work environment. The Third Circuit has defined a five-part test for establishing a hostile work environment based on race: the plaintiff experienced (1) intentional discrimination based on race (2) that was “severe or pervasive,” (3) that “detrimentally affected the plaintiff,” (4) that would have a comparable effect on “a reasonable person” in a similar situation, and (5) that occurred in a situation in which respondeat superior liability would apply. Castleberry, slip op. at 5, quoting Mandel v. M & Q Packaging Corp., 706 F.3d 157, 167 (3d Cir. 2013). The Third Circuit’s analysis in Castleberry focused on the “severe or pervasive” element.

September 12, 2017

Jury Awards $11.8 Million to Former Employee in New Jersey Disability Discrimination Case

by Resnick Law Group, P.C.

New Jersey employees are protected against discrimination under federal and state laws, as well as municipal anti-discrimination ordinances in many cities around the state. The New Jersey Law Against Discrimination (NJLAD) covers a broad range of protected categories, including disability. In addition to prohibiting discrimination based on an employee’s disability, the law also requires employers to provide reasonable accommodations for employees with disabilities. A jury recently found in favor of a former corrections officer in a New Jersey disability discrimination lawsuit, awarding her about $11.8 million in damages. Pritchett v. State of New Jersey, No. L-002189-13, complaint (N.J. Super. Ct., Mercer Cty., Oct. 10, 2013).

Under the NJLAD, an employer cannot discriminate against a worker “because such person is or has been at any time disabled.” N.J. Rev. Stat. §§ 10:5-4.1, 10:5-12. This applies to people with disabilities and people who are “perceived as having a disability.” Victor v. State, 4 A.3d 126, 142 (N.J. 2010). The NJLAD’s definition of a “disability” is also “significantly broader” than that of the federal Americans with Disabilities Act. Id. at 142 n. 11. Exceptions apply when a particular person’s particular disability “would prevent such person from performing a particular job.” N.J. Rev. Stat. § 10:5-29.1; Raspa v. Office of Sheriff, 924 A.2d 435, 442-43 (N.J. 2007).

The NJLAD also requires employers to make reasonable accommodations for employees with disabilities, provided this does not “impose an undue hardship on the operation of its business.” N.J.A.C. 13:13-2.5(b). Reasonable accommodations might include modifications of facilities and equipment for accessibility, flexible or modified work schedules, or reassignment of certain job duties. Factors employers may consider when determining whether something constitutes an undue burden include the nature of their business, the size of their operation and facilities, and the potential cost of the accommodations.

September 8, 2017

New Jersey Employee Misclassification Lawsuit Cites Obama-Era Overtime Rule

by Resnick Law Group, P.C.

Federal overtime rules seek to ensure that workers receive fair compensation for excess time spent working. Not all employees are entitled to overtime pay under the Fair Labor Standards Act (FLSA). Employees must be vigilant in identifying attempts by employers to avoid paying overtime, such as misclassification of employees under an FLSA exemption. In 2014, the Obama administration requested a review of certain FLSA overtime exemption categories, in an effort to bring them in line with the modern workplace. After the U.S. Department of Labor (DOL) published a final rule, a group of state governments and business groups filed suit and obtained a preliminary injunction. Nevada, et al. v. U.S. Dept. of Labor, et al., No. 4:16-cv-00731, mem. op. (E.D. Tex., Nov. 22, 2016). Now, a group of workers in New Jersey have filed a putative class action testing the scope and extent of the injunction. Alvarez, et al. v. Chipotle Mexican Grill, Inc., et al., No. 2:17-cv-04095, complaint (D.N.J., Jun. 7, 2017).

The FLSA requires employers to pay workers at least “one and one-half times the regular rate” for work time during any week that exceeds 40 hours. 29 U.S.C. § 207(a)(1). Some employees are exempt from this requirement, however, including anyone who works “in a bona fide executive, administrative, or professional capacity.” Id. at § 213(a)(1). The statute does not define “executive, administrative, or professional” (EAP), so the DOL developed definitions in 29 C.F.R. Part 541. These definitions have undergone multiple revisions since the FLSA was first enacted in 1938, most recently in 2004.

A memo issued by the White House in March 2014, addressed to the Secretary of Labor, sought “to modernize and streamline the existing overtime regulations for [EAP] employees.” 79 Fed. Reg. 18737 (Apr. 3, 2014). The DOL published a Final Rule in May 2016, which was scheduled to go into effect on December 1 of last year. 81 Fed. Reg. 32391 (May 23, 2016). Several months later, 21 states and a number of business groups filed suit against the DOL over the new rule.

August 31, 2017

How Medical Marijuana Is Affecting Employment Discrimination Laws in New Jersey and Around the Country

by Resnick Law Group, P.C.

More than half of the states in the U.S., including New Jersey, allow the use of marijuana for certain medical purposes with a doctor’s prescription, but it remains a strictly controlled substance under federal law. This has raised questions about the rights of an employee who uses marijuana in accordance with a doctor’s instructions. Does an employer violate anti-discrimination laws if they terminate or otherwise discriminate against an employee solely because of a lawful medical marijuana prescription? New Jersey’s employment laws still offer little protection, but proposed legislation and court decisions in nearby states suggest that the legal landscape is changing.

The New Jersey Compassionate Use Medical Marijuana Act (NJCUMMA), N.J. Rev. Stat. § 24:6I-1 et seq., became law in 2010. It defines an exception to the New Jersey criminal statutes dealing with the possession and use of marijuana. It is largely silent on the question of employment. New Jersey employers can cite several justifications for terminating employees who are known to use marijuana, even if only for medical purposes. Marijuana is still illegal under federal law, for example, and some employers may be obligated by federal laws or federal regulations to monitor employees’ drug use.

Most regulations requiring employers to drug-test their employees are based on safety concerns, along with an assumption that anyone using marijuana is abusing it. A worker who shows up to work high, endangering themselves and others, is not the same as a responsible medical marijuana patient. The law has not yet caught up to this distinction. A pair of bills pending in the New Jersey Legislature, A2482 and S2161, would amend the NJCUMMA to make it “unlawful to take any adverse employment action against an employee” with a valid medical marijuana prescription, unless the employer can show “by a preponderance of the evidence that the lawful use of medical marijuana has impaired the employee’s ability to perform [their] job responsibilities.”

August 21, 2017

Whistleblower Employees Receive Share of Settlement in New Jersey False Claims Lawsuit

by Resnick Law Group, P.C.

The typical employer/employee relationship includes an expectation that an employee will, at a bare minimum, not actively undermine their employer’s business. Employers may have legal recourse, for example, against employees who misappropriate trade secrets or other proprietary or sensitive information. In some situations, however, the law encourages going public with information about a company’s activities, such as when the company is engaging in illegal activities. Employees who report unlawful activities by their employers are commonly known as “whistleblowers.” Federal and state laws protect whistleblowers against employer retaliation when they report alleged fraud involving government programs. A pharmaceutical company recently agreed to settle a lawsuit filed in a New Jersey federal court, alleging fraud against Medicare and Medicaid. U.S., et al. ex rel Corsi, et al. v. Omnicare, Inc., No. 1:14-cv-01136, complaint (D.N.J., Feb. 21, 2014). The whistleblowers will share a portion of the settlement, in addition to receiving damages for unlawful retaliation.

The federal False Claims Act (FCA) imposes civil liability for false claims submitted to the government, with damages of $5,000 to $10,000 for each violation. 31 U.S.C. § 3729. Most states have comparable laws for fraud against state programs. See, e.g., N.J. Rev. Stat. § 2A:32C-1 et seq. The FCA allows employees to recover damages for “retaliatory actions” by employers in response to protected whistleblowing activities. 31 U.S.C. § 3730(h).

The FCA also allows whistleblowers to file suit on behalf of the government against their employer for the actual alleged fraud. This means that the whistleblowers can claim a portion of the damages for the fraud claims, as well as their own claims for damages. This type of lawsuit is known as a “qui tam suit,” and the individual or individuals filing it are known as “relators.” Once a relator has filed suit under the FCA, the government has the option of intervening in the case.

August 18, 2017

New Jersey Appellate Court Clarifies Important Definition of “Misconduct” by Employees

by Resnick Law Group, P.C.

New Jersey employment laws protect the rights of employees in a wide range of areas, including workers’ right to unemployment compensation, subject to various conditions. State agencies and the courts are charged with ensuring that employers and the state fairly apply the rules regarding eligibility for unemployment compensation. The New Jersey Superior Court, Appellate Division, recently invalidated part of a rule adopted by the state’s Department of Labor and Workforce Development (LWD). The challenged rule defined “misconduct,” in the context of unemployment, in a way that the court found “arbitrary and capricious.” In re N.J.A.C. 12:17-2.1, No. A-4636-14T3, slip op. at 3 (N.J. App., May 1, 2017). A consistent definition of “simple misconduct,” the court held, is required to protect workers’ rights.

The New Jersey Unemployment Compensation Law (UCL) states that eligible individuals shall receive benefits for a set period of time after they become “unemployed,” within the meaning established by the statute. See N.J. Rev. Stat. §§ 43:21-3, 43:21-19(m)(1). Benefits are paid from an unemployment insurance program funded by payroll tax deductions and employer contributions. In order to obtain benefits, an individual must file a claim with LWD. See N.J. Rev. Stat. §§ 43:21-4, 43:21-6.

An individual may be disqualified from eligibility for unemployment benefits if they were “suspended or discharged for misconduct” by their previous employer. Id. at § 43:21-5(b). The employer has the opportunity to respond to a former employee’s unemployment claim, including with allegations of misconduct. The statute identifies three levels of “misconduct”: simple, severe, and gross misconduct. The challenged LWD rule, codified at N.J.A.C. 12:17-2.1, defines the three levels of misconduct.

August 1, 2017

Court Awards $750,000 to Widow of Employee Who Received Insufficient Information About Employer-Sponsored Life Insurance

by Resnick Law Group, P.C.

Federal law does not require employers to provide employees with benefits like retirement plans, but it regulates employers that choose to do so. Employers may be liable to employees for failing to meet the requirements set by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. A federal court awarded $750,000 in damages in an ERISA claim for a failure to inform an employee of certain details of a life insurance plan. Erwood v. Life Ins. Co. of N. Am., et al., No. 2:14-cv-01284, opinion (W.D. Pa., Apr. 13, 2017). The case was in a Pennsylvania court but relied in part on New Jersey employment law claims.

ERISA covers a wide range of employment benefits, including retirement plans, deferred income plans, life insurance, and health insurance. Employers must designate an administrator, who has the duty of providing a summary of any covered plan, along with other information, to each beneficiary. 29 U.S.C. § 1021(a). Anyone who “exercises any discretionary authority or discretionary control respecting management of such plan” owes fiduciary duties to the beneficiaries. Id. at §§ 1002(21)(A), 1104(a).

If a plan does not provide any specific remedy for breaches of fiduciary duties or other violations, ERISA allows various forms of relief for aggrieved beneficiaries. Id. at § 1132(a)(3). These may include reformation of the plan and other equitable remedies, as well as “a surcharge remedy “extended to a breach of trust committed by a fiduciary.” Erwood, op. at 14, quoting CIGNA Corp. v. Amara, 563 U.S. 421, 440-42 (2011). See also Horan v. Reliance Standard Life Ins. Co., No. 3:12-cv-07802, opinion (D.N.J., Jan. 30, 2014).