The New Jersey Employment Law Firm Blog

November 3, 2014

NLRB Allows McDonald’s Employees to File Complaints Against McDonald’s and Individual Franchisees as “Joint Employers”

Employees of numerous major fast-food restaurant chains have mounted campaigns to improve their working conditions, including higher wages and fewer unpaid hours. A major hurdle for these campaigns has been the franchise model used by many chain restaurants, in which one company, the “franchisor,” owns the restaurant’s brand, logo, menu, and other intellectual property, while other companies, “franchisees,” operate the actual restaurants. This has created what has been called the “fissured workplace,” since it often limits any legal claims employees can make to the franchisee that operates the restaurant where they work. The General Counsel of the National Labor Relations Board (NLRB), however, recently announced that it will treat McDonald’s USA, LLC, the franchisor of McDonald’s restaurants, and its franchisees as “joint employers.” This means that employees may file complaints against both the individual franchisee that employs them and the franchisor.

In a franchise system, a franchisor enters into agreements with franchisees to operate one or more business locations. The franchise agreement includes various requirements that the franchisees must follow related to branding, marketing, and business operations. Employment issues are often left to the individual franchisees, at least according to the written agreements. Since workers at individual business locations are employed by a franchisee, they cannot assert claims directly against the franchisor. A major criticism of this system is that the terms of franchise agreements have expanded in scope, to the point that they often have direct effects on employment matters. The franchisors, however, remain shielded from liability to the franchisees’ employees.

The NLRB’s Office of the General Counsel (OGC) decided in July 2014 to allow workers to file complaints against both their employer and the national franchisor. At the time of this announcement, the NLRB had received 181 complaints against McDonald’s franchisees since November 2012. While 64 complaints were still under investigation, it had already found 43 of them to have merit. If the NLRB is unable to settle the meritorious complaints, it may file lawsuits naming the individual franchisees and the franchisor as defendants.
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October 24, 2014

What Duty Does an Employer Have to Protect Employees from Infectious Diseases?

by Resnick Law Group, P.C.

Concern over infectious diseases has captured the imagination of much of the country in recent months, particularly with regard to Ebola virus disease (EVD). Only a handful of EVD cases have been reported in the U.S., and health officials and experts have repeatedly stated that the disease is unlikely to pose a serious threat to the country. Other diseases, such as influenza, pose a far greater threat in the U.S. but generally receive less media attention. Regardless, since a disease outbreak is on the nation’s mind, it raises the question of what legal duties employers owe to protect their employees from infectious diseases. The answer depends largely on the type of employer.

The first case of EVD in the U.S. was diagnosed at a hospital in Dallas, Texas in September 2014. That patient has since died, and two nurses who treated him were subsequently diagnosed with EVD. The Centers for Disease Control and Prevention (CDC) is investigating reports that health care workers treated the initial EVD patient for about three days, from September 28 to September 30, without wearing protective equipment. As many as 70 workers were exposed to the patient during that time, but only the two nurses have tested positive for the disease. EVD is not airborne and can only be transmitted through direct contact with an infected person’s blood or other bodily fluids.

The actions and preparedness of the Dallas hospital, including an alleged lack of safety protocols, drew a harsh rebuke from the hospital’s nurses. The incident has raised concerns about whether the hospital took adequate precautions to protect its workers from infection. Laws like the Occupational Safety and Health Act (OSHA), 29 U.S.C. § 651 et seq., require employers to provide reasonable protection against occupational diseases. This could apply to workers in health care and other fields where ordinary job duties make exposure to infectious diseases likely. See American Dental Ass’n v. Martin, 984 F.2d 823 (7th Cir. 1993).
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October 23, 2014

Court Rejects Proposed Settlement in Class Action Lawsuit Alleging Wage Fixing by Silicon Valley Employers

by Resnick Law Group, P.C.

A U.S. district judge in California rejected a proposed settlement in a class action lawsuit that accuses multiple technology companies of colluding to suppress wages, saying that “the total settlement amount falls below the range of reasonableness.” In re High-Tech Employee Antitrust Litigation, No. 5:11-cv-02509, order at 6 (N.D. Cal., Aug. 8, 2014). The proposed settlement agreement with the defendants Adobe, Apple, Google, and Intel included over $300 million in damages, far short of the $9 billion in damages estimated by the defendants earlier this year. The plaintiffs originally filed suit in California state court for alleged violations of state antitrust law. After the defendants removed the case to federal court, they amended the complaint to add a cause of action under the federal Sherman Act, 15 U.S.C. § 1 et seq.

The plaintiffs are employees of major technology companies, including the four parties to the proposed settlement as well as Intuit, Lucasfilm, and Pixar. The U.S. Department of Justice (DOJ) began investigating many of these companies in 2009, based on allegations that they had entered into agreements with each other not to recruit or hire each other’s employees. The purpose of these schemes was to avoid competition for employees and thereby keep salaries low. As the Wall Street Journal noted at the time, hiring a competitor’s employees, sometimes known as “poaching,” is common in the technology industry. In 2010, the DOJ settled its claims against many of the companies named in the current lawsuit, but the settlement did not include compensation or damages for employees affected by the schemes.

Five software engineers filed suit against the defendants in Alameda County Superior Court in May 2011. The defendants removed the case to federal court several weeks later, and in September 2011 the plaintiffs amended the complaint to include federal antitrust claims. The lawsuit alleged a class of salaried employees who worked for the defendants during the time period from 2005 through 2009, but not retail employees or corporate officers or directors.
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October 16, 2014

EEOC Targets Auto Supply Chain in Race and Disability Discrimination Claims

by Resnick Law Group, P.C.

A pair of lawsuits brought by the Equal Employment Opportunity Commission (EEOC) against a company that operates a nationwide chain of auto supply stores alleges race and disability discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and the Americans with Disabilities Act (ADA) of 1990, 42 U.S.C. § 12101 et seq. One case involves the transfer of an employee from one store to another as part of an alleged effort to reduce the number of black employees at the first store. The other case alleges failure to provide reasonable accommodations for two employees with disabilities, and the termination of one of them after making a complaint.

The complainant in the race discrimination case worked at a retail location in southwest Chicago. The employer “involuntarily transferred” him to a store location on the far south side of the city, allegedly “as part of an effort to eliminate or limit the number of black employees” at the southwest Chicago store. EEOC v. AutoZone, Inc. (“AutoZone I“), No. 1:14-cv-05579, complaint at 3 (N.D. Ill., Jul. 22, 2014). The company allegedly believed that the southwest Chicago store’s customers “preferred to be served by non-black, Hispanic employees.” Id. The complainant objected to the transfer to the south Chicago store and ultimately refused to agree to it. At that point, the defendant terminated his employment.

The EEOC alleges that the defendant’s actions “deprive or tend to deprive [the complainant] and other black individuals of employment opportunities because of their race.” Id. at 3-4. The lawsuit asserts a cause of action for race discrimination, 42 U.S.C. § 2000e-2(a)(2). It seeks a permanent injunction against further employment practices that discriminate based on race, new policies and training programs geared towards alleviating past and preventing future race discrimination, and monetary damages paid to the complainant.
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October 9, 2014

Adjunct Professors Face Challenges in Trying to Unionize

by Resnick Law Group, P.C.

Adjunct professors, generally defined as non-tenure-track and part-time, are becoming increasingly common at two- and four-year colleges and universities around the country. As their numbers grow, however, they are struggling with a lack of job security, low pay, and few benefits. Some of them are successfully demanding better treatment, and several unions are offering their support and assistance. They face some difficult legal obstacles, however, including Supreme Court precedent that limits the applicability of the National Labor Relations Act (NLRA) and claims by some schools that more recent Supreme Court decisions allow them to prevent their adjunct professors from holding union elections.

An article published by Al-Jazeera America in July 2014 describes the experiences of several adjunct professors and describes how faculty employment has changed in recent years. Approximately 30 percent of the 1.8 million faculty members employed by U.S. colleges and universities hold tenure-track positions, meaning that their position offers them the possibility of promotion to “full” professor with a very high degree of job security. Only 24 percent of faculty members actually have tenure, a decrease from about 45 percent in the 1970s.
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October 3, 2014

Question of Whether EEOC Must Make a Good Faith Effort to Conciliate Will Go to Supreme Court

by Resnick Law Group, P.C.

Title VII of the Civil Rights Act of 1964 requires employees to file a complaint with the Equal Employment Opportunity Commission (EEOC). The EEOC must make an effort to resolve the dispute with the employer before it may file suit on behalf of the complainant, or authorize the complainant to do so directly. 42 U.S.C. § 2000e-5(b), (f). Federal circuit courts of appeals have reached different decisions regarding whether a defendant may raise “failure to conciliate” as an affirmative defense. The Supreme Court granted certiorari to a case that rejected an employer’s attempt to assert this defense, and it will hear the matter during the October 2014 session. EEOC v. Mach Mining, LLC (Mach I), No. 11-cv-879, mem. order (S.D. Ill., Jan. 28, 2013); rev’d EEOC v. Mach Mining, LLC (Mach II), 738 F.3d 171 (7th Cir. 2013); cert. granted Mach Mining v. LLC (Mach III), No. 13-1019 (Sup. Ct., Jun. 30, 2014).

The EEOC filed suit for alleged sex discrimination against Mach Mining, on behalf of the complainant and a class of female job applicants. The lawsuit alleged that the company “had never hired a single female for a mining-related position” and “did not even have a women’s bathroom on its mining premises.” Mach I, mem. order at 1. It further claimed that the company’s policy of hiring new employees based on referrals from current employees caused a disparate impact on women in violation of Title VII. The EEOC filed a motion for summary judgment on the defendant’s affirmative defense, which claimed that the EEOC had failed to make a good-faith effort at conciliation before filing suit.

The district court noted that several federal circuit courts of appeal had ruled that Title VII allows appellate courts to review the EEOC’s efforts at conciliation. The usual remedy for failure to conciliate would be to stay the proceedings for further conciliation. The Seventh Circuit had not considered the issue at that time. New York courts are bound by cases like EEOC v. Sears, Roebuck & Co., 650 F.2d 14, 18-19 (2nd Cir. 1981). The Third Circuit Court of Appeals, which includes New Jersey, has not ruled on the issue.
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September 30, 2014

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

by Resnick Law Group, P.C.

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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