The New Jersey Employment Law Firm Blog

September 30, 2014

U.S. Supreme Court Rules in Former Public Employee’s Favor in Whistleblower Retaliation Case

A community college violated a program director’s First Amendment rights, the U.S. Supreme Court ruled, when it fired him after he testified during an investigation of corruption in the program. Lane v. Franks, et al, 573 U.S. ___, No. 13-483, slip op. (Jun. 19, 2014). The court held that the plaintiff did not give up his rights under the First Amendment when he accepted public employment. It remanded the plaintiff’s case against the community college to the trial court for further proceedings, but it affirmed the lower courts’ findings that the college president, named as an individual defendant, had limited immunity for acts performed in an official capacity. Despite this, the case is an important victory for whistleblowers in the government.

The plaintiff, Edward Lane, was hired in 2006 as the Director of Community Intensive Training for Youth (CITY), a statewide program run through Central Alabama Community College (CACC) to assist underprivileged youth. CITY was facing serious financial problems at the time, according to the court’s opinion, which prompted Lane to audit the program’s expenses. He discovered about $177,000 paid to Democrat state representative Sue Schmitz between February 2003 and October 2006, with little record of any actual work done by her. When Schmitz reportedly refused Lane’s demand to show up for work at CITY’s office in Huntsville, Lane fired her. This allegedly drew threats of retaliation from Schmidt and the attention of the FBI.

In November 2006, Lane testified to a federal grand jury, which later indicted Schmidt on multiple counts of mail fraud and theft. Lane testified under subpoena at her trial in August 2008. When the jury failed to reach a verdict, prosecutors tried Schmidt again, and Lane testified again. Schmidt was convicted and sentenced to 30 months in prison. In January 2009, CACC President Steve Franks terminated 29 probationary CITY employees, including Lane, citing budget shortfalls. He then rescinded all but two of those terminations. Lane was one of the two who were not reinstated.
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September 24, 2014

EEOC Alleges in Religious Discrimination Lawsuit that Employer Required Employees to Participate in Religious Activities

by Resnick Law Group, P.C.

A Long Island company unlawfully discriminated against its employees on the basis of religion, according to a lawsuit filed by the Equal Employment Opportunity Commission (EEOC). EEOC v. United Health Programs of America, et al, No. 1:14-cv-03673, complaint (E.D.N.Y., Jun. 11, 2014). The employer allegedly required employees to participate in religious activities that were not related to their employment duties, and terminated those who refused to fully participate. The EEOC is claiming violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. The case raises important questions of what constitutes “religious practices” under Title VII.

A family member of the defendant’s owner created a “belief system” called “Onionhead.” United Health, complaint at 3. UHP employees are allegedly expected to participate in daily activities related to Onionhead, such as “praying, reading spiritual texts, [and] discussing personal matters with colleagues and management.” Id. The defendant’s owner’s aunt, identified in the EEOC’s complaint as “Denali,” led the Onionhead activities and made monthly visits to the workplace, at which time employees were allegedly required to meet with her individually and participate in group sessions.

Numerous employees did not want to participate in Onionhead activities and “experienced these practices as both religious and mandatory.” Id. at 4. Two employees identified in the EEOC’s complaint, both of whom worked as managers, objected to the Onionhead activities in 2010. They were both allegedly moved from offices to “the open area on the customer service floor,” id. at 5, and their responsibilities were changed from managerial duties to answering phones. The defendants terminated both employees within days.
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September 18, 2014

Court Rules that Restaurant Franchise Must Pay Employees in Money, Not Pizza

by Resnick Law Group, P.C.

A court has fined a pizza restaurant franchise in Australia, and its owner, a total of $334,000 in Australian dollars (AUD), which is approximately $310,653 in the United States (USD), after finding that the restaurant had underpaid its employees hundreds of thousands of dollars. This amount is in addition to unpaid wages, for a total judgment of about $600,000 AUD. The mostly-teenage workforce received free or discounted pizza, sometimes instead of actual pay. The Fair Work Commission (FWC) brought claims against the franchise owner for violations of the country’s wage and hour laws, resulting in the rulings from the Federal Circuit Court of Australia. Fair Work Ombudsman v. Bound for Glory Enterprises, et al, [2014] FCCA 432 (Jun. 6, 2014); Fair Work Ombudsman v. Zillion Zenith Int’l Pty Ltd, et al, [2014] FCCA 433 (Jun. 6, 2014).

The franchise owner, Ruby Chand, operates two La Porchetta franchises in Melbourne, in the state of Victoria, Australia. He operates the restaurants through two companies, Bound for Glory Enterprises (BFG) and Zillion Zenith International (ZZI). At least one employee filed a complaint about underpayment of wages. This resulted in an investigation by the FWC, which performs roles in the Australian federal government similar to those of the U.S. Department of Labor’s Wage and Hour Division, the Equal Employment Opportunity Commission, and the National Labor Relations Board.

The FWC’s investigation reportedly found that Chand and the two companies had underpaid 111 employees during a period from July 2009 to February 2012. Employees would often get free or “half-priced” food and beverages in exchange for a lower hourly rate, a finding that Chand apparently did not dispute. During this time, the FWC also found that Chand claimed government subsidies of about $45,000 AUD, ostensibly for hiring new employees.
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September 16, 2014

Hundreds of Cities Enact Ordinances Prohibiting Sexual Orientation Employment Discrimination When States Fail to Take Action

by Resnick Law Group, P.C.

About half of all U.S. states, including New Jersey, and the District of Columbia have enacted legislation prohibiting employers from discriminating based on sexual orientation. In many states, these laws also protect gender identity and expression. Federal law still does not provide explicit protection in these areas. City and county governments have stepped up in many of the states that lack statewide protection. Some city ordinances only apply to public employment, and some only cover sexual orientation. Many, however, apply to both public and private employment and cover gender identity as well as sexual orientation.

A rather dramatic fight over the issue occurred recently in Pocatello, Idaho, where voters narrowly defeated a proposal to repeal an ordinance that the voters passed last year. The ordinance went on to survive a court challenge and a recount.

At least eight cities in Idaho have enacted non-discrimination ordinances that include both sexual orientation and gender identity in both public and private employment. The Human Rights Campaign lists five: Boise, Coeur d’Alene, Ketchum, Moscow, and Sandpoint. Idaho Falls passed a non-discrimination ordinance in September 2013, and Victor, a small town near the Wyoming state line, enacted one in June 2014. Pocatello’s ordinance, described in more detail below, passed two public votes in the space of one year. At least two Idaho cities, Meridian and Nampa, prohibit discrimination based on sexual orientation and gender identity in public employment only. Lewiston and Twin Falls limit protection to discrimination based on sexual orientation in public employment.

Voters in Pocatello, a town of just over 50,000 in the southeast part of the state, passed the ordinance by a popular vote in June 2013. It amended the municipal code to include sexual orientation and gender identity in the list of protected classes, finding that “discrimination on the basis of sexual orientation and gender identity/expression must be addressed, and appropriate legislation enacted.” Pocatello City Code § 9.36.010(A).
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September 12, 2014

Former Sales Executive Obtains $11.6 Million Verdict in Wrongful Termination Lawsuit

by Resnick Law Group, P.C.

A former sales executive obtained a substantial verdict in May 2014 in a lawsuit against Microsoft, which accused the software company and a consultant of employment discrimination, sexual harassment, retaliation, and defamation. Mercieca v. Rummel, et al, No. D-1-GN-11-001030, third am. pet. (Tex. Dist. Ct., Travis Co., Apr. 12, 2013). He alleged a conspiracy to make false allegations of sexual harassment against him, which resulted in a hostile work environment and discriminatory treatment. The company then retaliated against him, eventually constructively terminating him, after he formally complained about the hostile work environment.

The plaintiff worked for Microsoft for 17 years in offices around the world. At the time of the events described in the lawsuit, he was a Senior Sales Executive in the company’s Austin, Texas office. He claimed that he had an excellent reputation within the company and had received multiple awards for sales performance, customer service, and service to the company.

In the fall of 2007, Lori Aulds was named Regional Sales Director, which made her the plaintiff’s direct supervisor. The two of them, according to the plaintiff, had a sexual relationship that ended several years prior to her promotion. She allegedly remarked about her current relationships to the plaintiff and tried to get him involved in disputes with her new significant other, despite his insistence that it made him uncomfortable.
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September 11, 2014

Workers in Wage-Theft Lawsuit Obtain $21 Million Settlement from Walmart Service Contractor

by Resnick Law Group, P.C.

A group of workers in several warehouses owned by Walmart recently settled a lawsuit against the company that operates the warehouses under a contract with the retailer. The settlement includes $21 million in back pay, interest, and penalties, and that amount will reportedly be the sole responsibility of the contractor. The plaintiffs initially sued the contractor and several affiliated companies for alleged violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and California labor statutes. The court granted their motion to amend their complaint to include Walmart itself under the theory that the contractors and it were joint employers of the plaintiffs. Carrillo, et al v. Schneider Logistics, Inc., et al, No. 2:11-cv-08557, third am. complaint (C.D. Cal., Jan. 11, 2013).

The plaintiffs worked in warehouses owned by Walmart in Eastvale, California at various times between approximately January 2003 and February 2012, according to their most recent complaint. Schneider Logistics, Inc. and several other businesses had contracts with Walmart to provide warehousing, trucking, and other services at the warehouses. The plaintiffs were employees of one or more of the contractors, in the sense that they received paychecks and other features of employment from one or more of those companies.

The allegations against the defendants included dangerous working conditions, minimum wage violations, and failure to pay overtime. The plaintiffs further alleged that the defendants failed to keep accurate payroll records, and even falsified records, in an effort to conceal wage violations and unlawfully withhold earnings from workers. In October 2011, the initial group of plaintiffs filed the lawsuit on behalf of themselves and more than 200 other workers who consented to suit under the FLSA. 29 U.S.C. § 216(b).
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September 10, 2014

City Ordinances Limit Employers’ Ability to Refuse to Hire Applicants Based on Criminal History

by Resnick Law Group, P.C.

As many as one in four Americans has a criminal record that could turn up during a job search. Lack of employment opportunities is a substantial factor in the difficulty people with criminal history face, including an estimated recidivism rate of 70 percent. We, as a society, are nowhere near consensus on whether the primary purpose of our criminal justice system is punishment or rehabilitation. What seems clear, however, is that barriers preventing people with criminal records from getting jobs, particularly when an applicant’s criminal record has no rational relationship to the job in question, make reentry into society all the more difficult. Cities and states around the country, including two New Jersey cities, have enacted laws limiting when employers may ask about or consider criminal history.

The “Ban the Box” campaign promotes laws that prohibit employers from asking about criminal history during the initial phase of the job application process. The campaign’s name refers to the checkbox for criminal history found on many job applications. Federal anti-discrimination law does not expressly prohibit discrimination based on criminal history, and consideration of prior convictions might be necessary for certain jobs. The Equal Employment Opportunity Commission (EEOC) has held, however, that use of criminal history in employment decisions may violate Title VII of the Civil Rights Act of 1964 in other ways, such as if it results in disparate treatment of employees or job applicants based on race or other protected categories.

The first statewide law prohibiting employment discrimination based on criminal history was adopted in Hawaii. An employer may ask about criminal history if it “bears a rational relationship to the duties and responsibilities of the position,” but only after extending a “conditional offer of employment.” HI Rev. Stat. § 378-2.5. As of May 2014, 11 more states have enacted similar laws. At least 66 local jurisdictions have also enacted ban-the-box ordinances, including New Jersey’s own Newark and Atlantic City.
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September 9, 2014

Department of Labor Data Identify Employers with Most Wage Law Violations, Demonstrate Difficulties of Enforcement in “Fissured Workplaces”

by Resnick Law Group, P.C.

Fast food franchises top the list of wage and hour violators for the past thirteen years, according to a CNN analysis of data obtained from the Wage and Hour Division (WHD) of the federal Department of Labor (DOL). CNN identified Subway, McDonald’s, and Dunkin’ Donuts as the franchises with the most investigations, violations, and fines from 2000 to 2013. All three of these companies are franchises with thousands of locations around the country, meaning that the parent companies are not responsible for employment matters at many individual restaurants. Franchisees, independent businesses that operate one or more restaurants under a franchise agreement with a parent company, are usually the ones held liable for wage violations. The system of allowing hundreds or thousands of small businesses to operate individual franchises is part of what is sometimes called the “fissured workplace,” which makes widespread enforcement of minimum wage and other employment laws difficult.

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., requires payment of a minimum wage, currently $7.25 per hour, to employees. States and cities may set the minimum wage at a higher rate. Employers must pay hourly workers time-and-a-half for overtime, generally defined as more than forty hours in a week. Common violations include requiring additional, unpaid work from employees, such as time spent changing into or out of work uniforms or equipment. When added to paid hours, this additional time may reduce an employee’s effective hourly rate below minimum wage. The WHD investigates alleged violations of these wage laws, and employees may bring lawsuits to recover back pay and other damages.

Subway has more than 26,000 locations in the U.S., the most of any fast food franchise. CNN’s analysis of the WHD data found more than 1,100 investigations of Subway franchisees from 2000 to 2013, which identified about 17,000 violations of the FLSA and resulted in employee reimbursements of over $3.8 million. Common violations included requiring deduction of a thirty-minute lunch break, regardless of whether the employee took a break, and refusing to pay employees for required closing procedures.
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September 9, 2014

Current and Former NFL Cheerleaders Sue Teams for Wage Violations

by Resnick Law Group, P.C.

Former cheerleaders for the National Football League (NFL) have filed multiple lawsuits in New Jersey, New York, California, Ohio, and Florida for alleged violations of state and federal wage laws. Allegations include unpaid work, misclassification as independent contractors, and minimum wage violations. A report by Amanda Hess in Slate notes that cheerleading for professional football began as a volunteer activity, at a time when no one made much money from the sport. While players and coaches have significantly increased their income, cheerleaders are still paid almost as though they were volunteers.

A former Oakland Raiders cheerleader, who goes by Lacy T. in her complaint, filed the first lawsuit, Lacy T. v. The Oakland Raiders, et al, No. RG14710815, complaint (Cal. Super. Ct., Alameda Co., Jan. 22, 2014). She worked as a “Raiderette” during the 2013-14 football season and allegedly received $125 per game no matter how many hours she worked. She also claimed that cheerleaders do not receive any pay until the end of the Raiders’ season in January. Her lawsuit identified a class of cheerleaders employed as Raiderettes from January 22, 2010 to the present, and asserted causes of action for violations of minimum wage, overtime, and other provisions of the California Labor Code.

The U.S. Department of Labor found in March that the team is a “seasonal” employer, and therefore is exempt from federal minimum wage laws. California labor law, however, does not have this exemption. A second lawsuit against the team, Caitlin Y., et al v. The National Football League, et al, No. RG14727746, complaint (Cal. Super. Ct., Alameda Co., Jun. 4, 2014), makes similar wage-related allegations, but also claims sexual harassment and other unlawful practices.
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July 22, 2014

Wrongful Termination May Expose Employers to Defamation Claims

by Resnick Law Group, P.C.

Federal, state, and local employment statutes prohibit employers from discriminating based on certain protected categories, such as race, sex, or religion. In some situations, an employer may want to fire an employee, but lacks a non-discriminatory basis for doing so. If that employer makes a false statement regarding the employee as a pretext or justification for termination, the employer could be liable for defamation if the statement was made to the public. Defamation law allows an individual to recover damages for false statements, made with knowledge of their falsity, that cause actual harm.

In both New Jersey and New York, the elements of a defamation claim are (1) a false statement, (2) unprivileged or unauthorized publication to a third party, (3) negligence with regard to the statement’s falsity, and (4) actual harm to the subject of the statement. Lee v. Bankers Trust Co., 166 F.3d 540, 546 (2d. Cir. 1999); Dillon v. City of New York, 261 A.2d 34, 38 (NY App. 1999). “Publication” may include written publication, known as libel, or a verbal statement to one or more people other than the subject, known as slander.

New Jersey, along with many other states, follows the “single publication” rule, meaning that a cause of action for defamation begins to accrue when the statement is first published. Barres v. Holt, Rinehart and Winston, Inc., 74 N.J. 461, 462-63 (1977). This rule generally applies to statements published on the internet. Churchill v. New Jersey, 876 A.2d 311, 319 (NJ App. 2005).
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