A recent gubernatorial task force has released a report addressing a major problem that many employees are facing across the state of New Jersey. According to the Report of Governor Murphy’s Task Force on Employee Misclassification, 12,315 employees were improperly classified as independent contractors, rather than employees, in 2018. This misclassification can cause major issues for workers by limiting their access to essential legal protections provided to New Jersey employees. There has been a growing trend of misclassification, with the number of employees misclassified as independent contractors increasing by 40% over the past decade. Unfortunately, this trend continues to create problems for workers across the State to this day, which is why Governor Murphy’s task force was so greatly needed.

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Generally, in order to determine whether a worker is properly classified as an employee or an independent contractor for wage payment law and wage and hour law purposes, New Jersey courts utilize what is known as the ‘ABC Test.’ The ABC Test starts off with a presumption that a worker is an employee. An employer can rebut this presumption only if they can establish the existence of each of the following three factors:

  • The worker is free from control or direction in the performance of their services, both under the contract and in fact;

The New Jersey Appellate Division issued an opinion last month that has provided additional clarity to what limitations a company may permissibly impose on its employees pursuant to non-competition clauses with restrictive covenant agreements. The court’s opinion (delivered in an action involving six consolidated appeals) reaffirmed the long-standing principle that employers can impose certain provisions commonly found in restrictive covenant agreements in the interest of fair competition; however, the court also held that certain other common provisions should be struck from restrictive covenant agreements as the court found them to be unduly harmful to employees.

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In ADP, LLC v. Kusins, the court reviewed the restrictive covenant agreements signed by six individual employees of the human resources management software company ADP. The agreements stipulated (in pertinent part) that upon leaving the company, the employees could not compete with ADP by soliciting the ADP clients or potential clients with whom those employees had a previous business relationship with, or whose information they became aware of during their tenure at ADP. This restriction was only applicable within the geographic area specified by the restrictive covenant agreement. This type of restriction, while seemingly onerous, has unfortunately become commonplace in our society. Despite employment attorneys making arguments to the contrary, courts have routinely upheld these types of restrictions on the basis that they do not cause undue harm to the employees. Through the recent opinion in Kusins, the Appellate Division has taken the opposite view and found that these restrictions are too great.

In their opinion, the Appellate Division identified two distinct restrictive covenant agreements signed by the six employees. The first contained traditional provisions, which the court found to be non-controversial and enforceable. In so holding, the court reaffirmed the general vitality of restrictive covenant agreements in New Jersey – coming as little surprise. The second restrictive covenant agreements signed by the employees was the main point of contention. These restrictive covenant agreements were signed via a “clickwrap” agreement by the employees and were provided only to those employees recognized as “top performers.” In exchange for signing these restrictive covenant agreements, the employees would be entitled to stock option rewards. The court acknowledged that ADP had a legitimate need to impose these additional restrictive covenant agreements on their top performers, because those employees had heightened ability to harm ADP through competition, due to their proven capacity in this industry. Nonetheless, the court soundly rejected the provisions as they were written and “blue-penciled” or edited the restrictive covenant agreements to lessen the restrictions, remove the undue harm to the employees, and render the restrictive covenant agreements enforceable.

After passing both chambers of the New Jersey legislature, yesterday Acting Governor Sheila Oliver signed S1790 into law amending the New Jersey Wage Payment law.  The amendments to the wage statute are long overdue and will provide employees with much needed legal protections against wage theft by employers. The new law strengthens existing wage law by providing steep penalties against employers that fail to timely pay their workers their earned wages and benefits.

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Wage theft occurs when employers fail to pay employees their earned wages and benefits in a timely manner. Wage theft violations can also include failure to pay minimum wage, failure to pay overtime, employee misclassification, asking employees to work off the clock, break violations, illegal deductions and other pay related violations. Wage theft is often rampant in industries with many workers in lower-wage jobs, making them particularly vulnerable to wage discrimination and retaliation. 

The amendments to the New Jersey wage statute are game-changing. They provide the much needed teeth for employees to fight back against employers who engage in wage theft.  Under the new law, an employee will now be able to seek liquidated damages in an amount up to two (2) times wages owed. The new law will also allow employees to recoup reasonable attorneys’ fees and costs incurred in litigating a wage theft claim against an employer or former employer.  The new provisions will assist aggrieved employees with access to competent wage theft employment lawyers to represent them and deter employers from committing future wage theft violations. The new law also changes the statute of limitations from 2 years to 6 years. The change to the statute of limitations is being interpreted by many employment lawyers to allow employees to bring a claim of wage violations for up to 6 years if the same violation occurs after its August 5, 2019 passage. 

A discriminatory trend has begun to become overlooked while many major companies review their anti-discrimination policies in the wake of the #metoo movement. Age discrimination remains very common in the United States, and particularly common in the technology industry. According to the EEOC, 70% of employees in the technology industry have witnessed or experienced age discrimination, while 40% of older tech workers report that they are worried about losing their jobs because of their advancing age. These statistics are highlighted by the recent influx of high-profile age discrimination suits filed against tech employers including Google and IBM. These cases have served to remind Americans that age discrimination is still rampant and must be kept in mind when pushing diversification agendas. 

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Google, or Alphabet, Inc., is one big technology corporation that has been hit hard with age discrimination suits over the last few years. The most recent of which, Robert Heath v. Google, Inc., finally reached a settlement on Friday, July 19th, in California. The current settlement offer would force Google to pay $11 million to job applicants who allege that they experienced age discrimination during their application processes. 

Mr. Robert Heath was a highly skilled engineer, with exceptional qualifications and over 30 years of experience in the field. Several years ago, Mr. Heath was recruited to submit an application for a job at Google and was subsequently offered a technical interview as a final step in the process. Mr. Heath’s interviewer was late to the interview and continuously interrupted Mr. Heath while he was answering questions. The interviewer refused to use Google’s own interface to transmit part of the technical portion of the interview, instead forcing Mr. Heath to recite lines of code over the phone. The interviewer did not engage in good faith with Mr. Heath, intentionally disrupting the interview and sabotaging Mr. Heath’s chances of being hired. Following the interview, Mr. Heath was denied the position at Google. 

An important bipartisan bill addressing pregnancy discrimination in the workplace was introduced to the United States House of Representatives on May 14, 2019, signaling a potential shift in Congressional attitudes on this issue. While this was not the first-time legislation of this type was introduced in the House of Representatives, there is reason for optimism that changing views on workplace discrimination could lead to a different result this time. Notably, the bill has attracted bipartisan support. The bill lays the groundwork for a new law that would provide further workplace protections to women who become pregnant, give birth, or suffer from related medical conditions.

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The Pregnant Workers Fairness Act (PWFA),H.R. 2694, was first introduced in the United States House of Representatives in 2012 and has been re-introduced in Congress in each subsequent session. A parallel bill (S. 1101) was also introduced in the Senate, by Senator Bob Casey, in 2017. The Pregnancy Workers Fairness Act aims to eradicate discriminatory behavior toward pregnant women by ensuring that workplace accommodations are provided to employees whose ability to perform job functions is limited by pregnancy, childbirth, or a related medical condition. The Pregnancy Workers Fairness Act is sponsored by Representative Jerry Nadler who, after introducing the Bill this year, stated, “No woman should have to choose between a healthy pregnancy and a paycheck, especially when often a simple fix – a bottle of water during a shift, an extra bathroom break, a chair – will allow women to stay on the job and support their families throughout their pregnancy.”

If the Pregnancy Workers Fairness Act is enacted, it would conform Federal anti-discrimination law in this area to the anti-discrimination laws and policies maintained by 25 states, including New Jersey. The PWFA would:

A new bill was signed into New Jersey law on July 25, 2019, that furthers a statewide effort to reduce inequality in pay for New Jersey employees.  Because Governor Murphy is out of the state on vacation, Lieutenant Governor Sheila Y. Oliver signed Assembly Bill 1094 into law yesterday after it was passed in the New Jersey Assembly on March 25, 2019 and the Senate on June 20, 2019. The new law will prohibit employers from asking or requiring job applicants to disclose their salary history during the application process. The new law is intended to address continued pay inequality and gender discrimination that has long existed in the employment environment.

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The newly enacted law prohibits employers from screening applicants based on their salary history, including prior benefits. Employers may not utilize any minimum or maximum criteria in relation to salary history to disqualify potential candidates, requiring that the application process be predicated entirely on experience and capabilities as opposed to prior salary and other irrelevant factors. Employers may only request the salary history of their applicants after they have provided them with an offer of employment that includes a compensation package. While employers may utilize an applicant’s prior salary in their compensation determinations if that information is volunteered by the applicant without coercion, an applicant’s denial to provide such information cannot be considered as a factor in any employment decisions.

The bill amends the New Jersey Law Against Discrimination, which prohibits discrimination, harassment and retaliation based on protected characteristics in employment. Specifically, it amends the New Jersey Law Against Discrimination by adding the following language:

The New Jersey Supreme Court recently provided further clarification on what an employee must ‘know’ to be able to sustain a claim against their employer under the New Jersey whistleblower protection law, the Conscientious Employee Protection Act (CEPA). In July 2019, the court issued its opinion in the case Chiofalo v. State, finding that an employee’s whistleblower retaliation claim should not necessarily be dismissed because the employee did not identify the specific law that the employee believed their employer to have been violating. The court held that, where an employee held a reasonable belief that complained of conduct was criminal or fraudulent, that is enough to come within the broad remedial scope of the CEPA whistleblower protection statute. 

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The plaintiff in that case, Frank Chiofalo, was a Sergeant with the State Police when he allegedly refused to participate in activity that he alleged be believed to be criminal or fraudulent. Specifically, Sgt. Chiofalo alleged that he was directed by a supervisor to destroy a record from a fellow officer’s personnel file. The record in question was a “letter of appreciation” that memorialized a police escort that was provided to a civilian. This record was potentially damaging, as the escort in question was not officially sanctioned, violated policy, and led to an internal review by the State Police. Sgt. Chiofalo alleged that because he refused to destroy this record to protect the other officer, he was subjected to discipline when he was demoted and denied a promotion. Sgt. Chiofalo then filed suit, claiming that his rights were violated under the CEPA whistleblower protection law. 

The Appellate Division found that Sgt. Chiofalo’s CEPA claim had to be dismissed because he had failed to specifically identify a statute, regulation, or public policy that the conduct he complained of was or would have been in violation of. The New Jersey Supreme Court disagreed and reversed that aspect of the decision. The Court agreed with the Appellate Division that the plaintiff must have had a reasonable belief that the complained of conduct violated the law, that reasonable belief did not have to be specific or particularized. The Court reiterated language from prior precedent “that [courts] do not expect whistleblower employees to be lawyers on the spot.” Rather, they can rely on their perception and later, with the assistance of counsel, identify the specific statute, regulation, or public policy that the conduct was in violation of.

The Second Circuit Court of Appeals issued a defeat to President Donald Trump and more importantly a victory for First Amendment Rights in July, finding that the President could not block individuals on the social media platform Twitter. In the matter, Knight First Amendment Institute at Columbia University v. Trump, — F.3d –, 2019 WL 2932440 (2d Cir. July 9, 2019), the Second Circuit upheld the Southern District of New York’s ruling that the President’s Twitter account was effectively a public forum.  Based on this finding, the Court held that President Trump could not restrict certain individuals’ access to his Twitter account because to do so would constitute “viewpoint discrimination” in violation of the First Amendment.

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In his opinion, Circuit Judge Barrington Parker highlighted that though the account was made in 2009, before President Trump was elected, the account has become at least temporarily a government-controlled account and qualifies as a public forum. The opinion noted that the account had been used for governmental purposes in the past. This was made evident when the account was used to announce meetings with foreign leaders, or when it was used to announce the nominations of high-ranking officials, like Christopher Wray as the new Director of the FBI. Because the account was used in an “official capacity” to make announcements regarding governmental activity, the Second Circuit found that the President was likewise acting “in the same capacity when he blocks those who disagree with him.”

On June 3, 2019, the United States Supreme Court released an important decision in the case Fort Bend County, Texas v. Davis (slip opinion available at: https://www.supremecourt.gov/opinions/18pdf/18-525_m6hn.pdf) regarding claims of employment discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”). This decision promises to have widespread impact for many cases of employment discrimination filed in federal court, as it reevaluates and clarifies the role and impact of filing a charge with the Equal Employment Opportunity Commission (“EEOC”). 

When an individual believes that they suffered employment discrimination in the workplace, federal law may provide a remedy. In such a case, when an individual seeks to vindicate their rights under federal employment discrimination law, Title VII requires that complainants first file what is known as a “charge” with the EEOC prior to pursuing a civil action in federal court. This procedure has been treated by many courts as a prerequisite to the federal court’s jurisdiction over the individual’s discrimination claim.

After the EEOC receives a charge of discrimination they notify the employer(s) named by the charging party and investigate the allegations. The EEOC’s goal is to evaluate the truth of the allegations, as well as to determine if the dispute can be resolved through informal means or, if that is not possible, whether the EEOC will bring a civil action on behalf of the charging party against the employer(s) in court. The EEOC has 180 days from the date the charge is filed to complete this process, after which (if neither of those courses is taken) they must provide a “right-to-sue” notice to the complainant. Once a complainant receives a right to sue notice, they may then pursue a civil action against their employer on their own behalf. 

In the recent case David F. Calabotta v. Phibro Animal Health Corp., et al., Smith Eibeler employment attorney Kathryn McClure, Esq., along with co-counsel, Mary Ann Sedey secured a substantial victory for employees, both inside and outside of New Jersey. Through its opinion, the Appellate Division reaffirmed New Jersey’s commitment to the eradication of workplace discrimination and the expansive reach of the New Jersey Law Against Discrimination.

The case provides clarification to federal and state courts that it is inappropriate to impose a “bright-line rule” that the Law Against Discrimination only applies where an individual was employed within the State of New Jersey. Rather, a case-by-case analysis must be performed, with attention paid to the particular facts and circumstances at issue in each given case. Further, the Appellate Division again approved of a claim for associational discrimination under the Law Against Discrimination, despite the absence of explicit legislative approval of such a claim.

David Calabotta, the plaintiff in the Calabotta case, was not a member of a protected class himself, but rather brought a claim for associational discrimination under the Law Against Discrimination. David’s claim was premised on his relationship with his wife, who was diagnosed with breast cancer and thus was disabled within the meaning of the Law Against Discrimination. David brought his claim after his employer refused to consider him for a promotion and then subsequently terminated his employment after his wife became disabled. David alleged that his employer took those actions against him because of his association with his disabled wife.