The New Jersey Employment Law Firm Blog

December 23, 2016

White House Calls on States to Limit the Scope of Non-Compete Agreements

The American economy is largely based on the principle that competition is beneficial to everyone. No system of laws is ever perfect, of course, and ours requires regular revisions to balance different interests, such as an employer’s interest in retaining its investment in an employee and an employee’s interest in choosing where—and in which field—to work. Non-compete agreements (NCAs) limit an individual’s ability, upon ceasing to work for an employer, to work in a similar job. This obviously protects the employer’s interest but can be quite damaging to the former employee. Several states have outlawed NCAs entirely, while most states, including New Jersey, have established strict criteria for their enforcement. The White House issued a call to state governments in October 2016 to restrict the enforceability of NCAs even further, in ways that benefit employees.

Laws governing the enforceability of NCAs differ considerably from state to state. Some states have enacted legislation, while others rely on court rulings based on statutory or common law. In a very general sense, NCAs prohibit an employee from working for a competitor or starting a competing business while working for the employer or after their employment ends. An open-ended NCA is almost universally unenforceable, but many states allow NCAs that are limited in time and geographic scope. For example, an NCA that bars a former employee from working for a competitor within 20 miles of the employer’s location, for a period of six months after the end of their employment, is likely to be enforceable in most jurisdictions.

At least four states, California, Hawaii, North Dakota, and Oklahoma, have banned the use of NCAs in employment contracts almost entirely. Under New Jersey law, NCAs are only enforceable if they meet a three-prong test called the Solari/Whitmyer test. The NCA must be “necessary to protect the employer’s legitimate interests,” it cannot create an “undue hardship” for the employee, and it cannot be “injurious to the public.” Community Hosp. Group, Inc. v. More, 869 A.2d 884, 897 (N.J. 2005); citing Solari Industry v. Malady, 264 A.2d 53, 56 (N.J. 1970); and Whitmyer Bros., Inc. v. Doyle, 274 A.2d 577 (N.J. 1971).

December 16, 2016

NLRB Rules in Favor of Employees Disciplined for In-Store Protest

by Resnick Law Group, P.C.

The National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., protects the rights of workers to engage in various activities related to labor organizing and collective bargaining. It prohibits employers from interfering in such activities and from retaliating against workers for engaging in protected activities. The National Labor Relations Board (NLRB) investigates alleged violations and adjudicates complaints. This summer, it considered whether an employer violated the NLRA by disciplining a group of employees who participated in a brief work stoppage. It found that the employees’ actions were protected and that the employer was in the wrong. Wal-Mart Stores, Inc., 364 NLRB No. 118 (Aug. 27, 2016).

Section 7 of the NLRA grants broad protection to “self-organization,” “bargain[ing] collectively through representatives of [employees’] own choosing,” and “concerted activities” related to those purposes. 29 U.S.C. § 157. Employers may not “interfere with, restrain, or coerce employees” who are exercising these rights, according to § 8(a)(1) of the statute. Id. at § 158(a)(1). Since the list of protected activities in § 7 is quite expansive, the NLRB and the courts have interpreted its extent in various situations through caselaw.

The “concerted activities” described in § 7 include “mutual aid and protection.” Id. at § 157. The NLRB has interpreted this to include work stoppages and other “activities engaged in for the purpose of applying economic pressure on employers.” Wal-Mart, slip op. at 3, citing Atlantic Scaffolding Co., 356 NLRB 835, 836–837 (2011). It developed a 10-part test for balancing employees’ and employers’ rights, with factors including the reason for the work stoppage, whether it was “peaceful,” whether it “interfered with production or deprived the employer access to its property,” the duration of the stoppage, employees’ “opportunity to present grievances to management,” and the reasons for disciplinary action. Quietflex Mfg. Co., 344 NLRB 1055, 1056–1057 (2005).

December 9, 2016

Employment Practices That Violate Antitrust Laws Can Have Both Civil and Criminal Penalties

by Resnick Law Group, P.C.

Our economic system depends on the competition of individuals and businesses in a free market, subject to reasonable regulations. When one or more “persons”—a legal term that includes individuals and various types of businesses—take actions that make their segment of the market less competitive, they may be in violation of federal or state antitrust laws. These statutes prohibit employment practices, such as “wage-fixing” agreements among competing companies, that unfairly harm employees’ interests. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued a guidance document, entitled “Antitrust Guidance for Human Resource Professionals,” addressing the enforcement of federal antitrust laws. In addition to civil penalties, the DOJ has the authority to pursue criminal charges for anticompetitive practices in some situations. The guidance document advises human resources (HR) professionals to enact policies aimed at avoiding civil and criminal liability for their employers.Congress passed the Sherman Antitrust Act, 15 U.S.C. §§ 1 through 11, in 1890 in order to combat the formation of monopolies that could take over control of entire markets or commodities, such as oil or steel. When a single company has control over a particular product or service within a market, consumers typically suffer because of factors like the lack of incentive to keep prices at a reasonable level. Employees can also suffer when there is no other employer who has need of their skills. Federal laws and many state laws allow state regulators to take steps to prevent actions, such as mergers of two or more formerly competing businesses, that could lead to a monopoly.

December 2, 2016

New Jersey Jury Awards $8.45 Million in Wrongful Termination Case

by Resnick Law Group, P.C.

A wrongful termination lawsuit in a New Jersey state court resulted in a jury verdict awarding the plaintiff $8.45 million in September 2016. This amount consisted of compensatory damages for emotional distress of $2.45 million, as well as $6 million in punitive damages. The plaintiff alleged that her employer, a government agency in Hudson County, New Jersey, terminated her after she sought treatment for depression, despite the fact that two mental health professionals had stated that she was fit to return to work. The New Jersey Civil Service Commission (CSC) ruled that the county had wrongfully terminated her and awarded her back pay. Matter of Malta-Roman, Hudson Cty. Dept. of Family Svcs., Docket No. 2013-2883, decision (N.J. Civil Svc. Comm., May 7, 2015). The plaintiff also filed a civil lawsuit, which resulted in the jury verdict. Malta-Roman v. Hudson Cty., No. L-001361-14, complaint (N.J. Super. Ct., Hudson Co., Mar. 24, 2014).

This case highlights two tracks that employment law claims can take. The plaintiff brought a claim before the New Jersey Office of Administrative Law (OAL) and the CSC. Filing an administrative claim is a prerequisite for many employment law claims. A person claiming employment discrimination, for example, must first file a complaint with the federal Equal Employment Opportunity Commission (EEOC) or a comparable state or local agency. The agency may decide to pursue the matter on the claimant’s behalf. If it does not, it may issue a “right to sue” letter, which allows the claimant to file a civil lawsuit. Since the plaintiff in Malta-Roman was a county employee, she had to use certain administrative procedures before going to court.

November 28, 2016

New Jersey Appellate Division Considers Employment Discrimination Claim Based on Non-Religious Flu Shot Refusal

by Resnick Law Group, P.C.

Controversies over vaccinations can intersect with employment law when employers require them for their employees. Anti-discrimination statutes like the New Jersey Law Against Discrimination (NJLAD) may offer some protection for employees who decline employer-mandated vaccinations for certain reasons. The New Jersey Appellate Division recently considered whether a plaintiff could claim religious discrimination under the NJLAD based on an employer policy that allowed medical and religious exemptions for the annual flu shot but not secular exemptions. Brown v. Our Lady of Lourdes Medical Ctr., No. A-4594-14T2, slip op. (N.J. App., Oct. 3, 2016). While the court did not accept the claim, it left the door open and offered useful guidance for how NJLAD religious discrimination claims might work in this type of situation.

Some people cannot get vaccinations for medical reasons, such as allergies or immune system disorders, while others decline vaccinations for religious reasons. Still others may have objections to a vaccination requirement that are neither religious nor medical. The NJLAD prohibits discrimination in employment on the basis of numerous factors, including “creed.” N.J. Rev. Stat. § 10:5-12(a). Religious discrimination claims under the NJLAD are possible for disparate treatment related to religious beliefs, but it remains unclear how this might apply to flu shot refusals.

In 2014, the Appellate Division found that an employment policy that only allowed religious exemptions to a flu shot requirement violated the First Amendment. Valent v. Bd. of Review, Dept. of Labor, 91 A.3d 644 (N.J. App. 2014). While the case dealt with an adverse employment action, the decision did not specifically cite the NJLAD. The plaintiff worked in a hospital that allowed religious exemptions to the flu shot requirement, provided the employee wore a surgical mask when interacting with patients. The plaintiff offered to do the same, but the hospital declined her request for an exemption because her objection to the flu shot was not based on a religious belief. It then fired her for violating the flu shot policy. The court found that the policy violated the plaintiff’s “freedom of expression” by “improperly endorsing the employer’s religion-based exemption…and rejecting the secular choice proffered by [the plaintiff].” Id.

November 18, 2016

New EEOC Rules on Employer Wellness Programs Lead to Lawsuit

by Resnick Law Group, P.C.

The Equal Employment Opportunity Commission (EEOC) recently issued two new Final Rules regarding employer wellness programs. 81 Fed. Reg. 31125, 81 Fed. Reg. 31143 (May 17, 2016). Federal law defines a “wellness program” as any program offered to employees that is “designed to promote health or prevent disease.” 42 U.S.C. § 300gg(j)(1)(A). The new rules address compliance under Title I of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.; and Title II of the Genetic Information Nondiscrimination Act (GINA), 42 U.S.C. § 2000ff et seq. In addition to prohibiting employment discrimination, both statutes include provisions for the protection of employees’ medical information. Concerns over the new rules led AARP, an advocacy group for older Americans, to file a lawsuit seeking an injunction against the EEOC. AARP v. EEOC, No. 1:16-cv-02113, complaint (D.D.C., Oct. 24, 2016).

The EEOC notes that some wellness programs offer incentives to employees to encourage participation, from discounts on health insurance premiums to cash or other prizes. Other programs offer similar incentives for specific outcomes like weight loss. The ADA prohibits employment discrimination based on disability, including in the availability of employment-related fringe benefits. The statute does not allow employers to require medical examinations or make inquiries about disabilities if they are not directly related to the employee’s job duties, but it allows an exception for “voluntary” medical examinations in connection with a wellness program. 42 U.S.C. § 12112(d)(4).

GINA prohibits discrimination based on genetic information and places strict limits on employers’ ability to collect medical history and genetic information from employees. Employers may collect employees’ genetic information in connection with a voluntary wellness program, with limits on who may access that information, how employers may use that information, and which incentives or inducements employers may offer to encourage participation in the program. 29 C.F.R. § 1635.8(b)(2).

November 11, 2016

New Laws, Regulations Regarding Employee Sick Leave Set to Take Effect in New Jersey

by Resnick Law Group, P.C.

For most workers in the U.S., paid sick leave is a benefit conferred by their employer, solely based on the employer’s determination that it is a worthwhile investment. If an employer were to stop offering paid sick leave to its employees, they would have no recourse other than finding another job. No federal law requires paid sick leave, and only a handful of states—not including New Jersey or New York—have enacted laws mandating a minimum amount of paid sick leave. The news is not all dire, though. Thirteen cities in New Jersey have enacted their own paid sick leave laws. Morristown, New Jersey is the latest town to do so, although the mayor has reportedly delayed its implementation until early 2017. Employees of certain government contractors will soon benefit from a new Department of Labor (DOL) Final Rule, which takes effect at the end of November 2016.

Allowing workers to stay home due to an illness, without losing several days’ pay, seems like a sensible policy, at least when looking at society at large. Employees who cannot afford to lose the income may go into work despite being sick. This can spread illnesses like the flu, ultimately causing even bigger problems. While the Family Medical Leave Act allows unpaid leave for certain purposes, federal law makes no provision for paid sick leave. Only five states have paid sick leave laws: California, Connecticut, Massachusetts, Oregon, and Vermont. In a nationwide sense, it is generally up to individual employers to decide whether or not to offer it to their employees. On a solely individual level, an employer might not see the value of giving paid sick leave to its workers. Businesses may not like regulations, but sometimes they serve a very important purpose.

Morristown became the 13th New Jersey municipality to enact a paid sick leave law in September 2016. Ordinance O-35-2016 describes the numerous societal benefits of allowing employees to earn paid sick leave, including “reduc[ing] recovery time” and “reduc[ing] the likelihood of people spreading illness to other members of the workforce and to the public.” Employees earn one hour of paid sick leave for every 30 hours that they work, up to a maximum of 24 hours (three work days) in a calendar year for employers with fewer than 10 employees, and 40 hours (five days) for employers with 10 or more employees. Additional exceptions apply, depending on various circumstances.

November 4, 2016

New Jersey Federal Court Certifies FLSA Overtime Lawsuit as Collective Action

by Resnick Law Group, P.C.

The Fair Labor Standards Act (FLSA), along with state laws like the New Jersey Wage and Hour Law (WHL), requires employers to pay overtime compensation to non-exempt employees after they have worked more than 40 hours in a week. 29 U.S.C. § 207(a), N.J. Rev. Stat. § 34:11-56a4. Overtime pay violations can deprive workers of substantial amounts of wages, but while these amounts are significant to these workers, they are often not enough to make individual legal actions worth the cost. State and federal laws allow people with relatively small claims to file a lawsuit as a class action on behalf of the massive number of similarly situated claimants, and the FLSA has a procedure for “collective actions.” A federal judge in New Jersey recently granted certification to a FLSA collective action, as well as several state-law class actions, in a suit for unpaid overtime. Rivet, et al. v. Office Depot, Inc., No. 2:12-cv-02992, opinion (D.N.J., Sep. 13, 2016).

In order to obtain certification as a class action under federal law, plaintiffs must establish four elements: numerosity of class members, commonality of legal or factual questions, representativeness of the plaintiffs’ claims, and ability of the plaintiffs to “fairly and adequately” represent the class. Fed. R. Civ. P. 23(a). The FLSA does not establish as many specific elements for a collective action, simply stating that the claimants must be “similarly situated.” 29 U.S.C. § 216(b).

The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey, has identified examples of facts and circumstances that can establish or refute that claimants are “similarly situated.” Claimants who work “in the same corporate department, division, and location,” who “advance similar claims” and “seek substantially the same form of relief,” and who “have similar salaries and circumstances of employment” could be considered “similarly situated” for the purposes of an FLSA collective action. Rivet, op. at 4, quoting Zavala v. Wal-Mart Stores, Inc., 691 F.3d 527, 536-37 (3d Cir. 2011).

October 28, 2016

More than 10,000 Workers Around the Country Join FLSA Collective Action Against Restaurant Chain

by Resnick Law Group, P.C.

Employers that are subject to the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., are obligated to pay their non-exempt employees minimum wage and overtime. The FLSA allows plaintiffs alleging wage and hour violations to file a lawsuit on behalf of all similarly situated employees and former employees, known as a “collective action.” This is similar to a class action under Rule 23 of the Federal Rules of Civil Procedure, but it differs in several important ways. A federal court granted conditional certification last year to a collective action filed against a national restaurant chain. Turner v. Chipotle Mexican Grill, Inc., No. 1:14-cv-02612, mem. order (D. Col., Aug. 21, 2015). By the end of the summer of 2016, more than 10,000 of the defendant’s employees had reportedly joined the lawsuit.

The FLSA requires employers to pay minimum wage, which is currently $7.25 per hour at the federal level. Many states, including New Jersey, have a higher minimum wage, but $7.25 per hour is the amount that workers can enforce under this particular statute. Overtime work, basically defined as work performed over 40 hours in a calendar week, is entitled to 1.5 times the employee’s usual rate of pay. For a worker earning minimum wage, this would be $10.88 per hour. A common FLSA wage and hour violation involves requiring employees to perform duties at times when they are not “on the clock.” This might include time spent changing into and out of uniforms or work clothes and performing other tasks before or after the employer requires employees to clock in or out.

Individual wage and hour claims might not seem particularly significant at first glance, in the sense that an employee might be losing a fraction of an hour’s worth of pay for one shift. These sorts of practices often recur on a daily basis, however, over long periods of time, and the numbers can add up very quickly and become a very significant amount for an individual worker. It still might not be enough to make an individual legal claim worth the cost of both time and money. This is where FLSA collective actions help workers in this sort of situation.

October 21, 2016

Servers at Famous New York City Restaurant Vote to Unionize

by Resnick Law Group, P.C.

Employees in the U.S. have the right to organize themselves as a union or to join an existing labor union in order to negotiate with their employers regarding working conditions and various other features of employment. At the federal level, the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., secures these rights and prohibits interference by employers. Laws vary from state to state, however, regarding whether union membership may be made mandatory. “Right-to-work” laws in many states allow employees to elect not to join the union, while other states allow employers and unions to enter into “union security agreements.” Neither New Jersey nor New York has right-to-work laws. A well-known restaurant in Manhattan’s Times Square offers a recent example of how labor organizing can work. Amid multiple complaints and allegations of poor working conditions, 50 restaurant employees recently announced that they had voted to form a union.

The NLRA protects workers’ rights “to self-organization,” to form their own labor organization or to join an existing one, to choose representatives to engage in collective bargaining with their employer, and to “engage in other concerted activities” directed toward these purposes. 29 U.S.C. § 157. Employers are prohibited from interfering with or restraining employees in the exercise of these rights. Id. at § 158(a)(1). The law also prohibits various coercive acts by employers and labor unions, and it protects the rights of workers engaged in strikes or other activities authorized by their union. It leaves certain matters, however, up to the states.

Right-to-work laws state that workers may not be required to join a union. The NLRA allows union security agreements between unions and employers, which may place certain obligations on employees. Federal law does not allow “closed shops,” in which the employer can only hire union members. “Union shops,” in which employees must join the union after being hired, are allowed under the NLRA but are prohibited by right-to-work laws.