Employment Litigation In The Wake Of The COVID-19 Pandemic

The COVID-19 pandemic has triggered a drastic shift in the employment landscape that may result in a wave of litigation alleging employers violated existing labor laws and the recently enacted coronavirus leave law.

While employees in the greater New York and New Jersey area have legal protections under local, state, and federal law, employment-related disputes are not uncommon. Though the regional economy remains under lockdown more or less, the new normal may see an increase in certain types of employment litigation, such as:

A. Wage And Hour Claims During The COVID-19 Crisis

Regardless of the pandemic, non-salaried workers in New York and New Jersey are entitled to the state’s current minimum wage as well as overtime for all hours worked over 40 per week.

While traditional tracking mechanisms allow employers to determine when workers start, take lunch breaks, leave for the day, etc. are no longer in use, businesses that have not adapted to track clock worker hours offsite could face wage theft claims by workers alleging they worked through breaks. Despite the COVID-19 crisis, employers must be mindful of their obligations under the federal Fair Labor Standards Act (FLSA) and applicable state labor law.

If when businesses begin to re-open, employers may also face potential liability if they require workers to take certain precautionary measures before entering the premises (such as temperature checks) or donning personal protective equipment prior to starting a shift. These activities may be construed as off-the-clock work for which employees must be compensated.

B. Paid Sick Leave Disputes During The Coronavirus Outbreak

The Families First Coronavirus Response Act (FFCRA) requires employers with fewer than 500 employees to provide them with a certain amount of paid time off for COVID-19-related reasons, such as falling ill or caring for a child whose school has closed.

Employers in New York and New Jersey have a legal obligation to determine which employees are eligible and then provide them with the proper amount of paid leave time. Businesses can face lawsuits for: a) Unfairly denying paid leave; b) Miscalculating pay; and c) Retaliating against employees who request paid leave.

C. Safety (OSHA) Violations As A Result Of The Pandemic

Workers in hospitals, food processing facilities, grocery stores and others on the front lines who contract COVID-19 due to unsafe working conditions face an uphill battle. While the Occupational Health and Safety Act requires employers to ensure that the work environment is safe, the law does not allow workers to sue their employers over unsafe working conditions. Workers who fall ill due to the pandemic may be entitled to worker’s compensation, albeit that proving they contracted the novel coronavirus at work can be difficult.

If you have any questions regarding your employment or termination, please contact us at mschley@schleylaw.com or at 732-325-0318.

New York City Takes Stand Against Race and National Origin Discrimination Based on Coronavirus Fears

The novel coronavirus has had a devastating impact on New York City and surrounding areas. While the daily number of new cases in New York is decreasing, the virus shows no sign of slowing down in many other parts of the country, even as most states are in the process of “reopening” their economies.

The disease is bad enough by itself, but its supposed origins in China have also led to an unfortunate backlash against people perceived to be of Chinese heritage. Discrimination, harassment, and worse have occurred in workplaces and in public. The New York City Commission on Human Rights (CHR), which works to prevent discrimination on the basis of race, national origin, and other factors, created a response team to address discrimination and harassment related to the pandemic.

Laws Against Race and National Origin Discrimination in the Workplace

The New York City Human Rights Law (NYCHRL) prohibits workplace discrimination based on a person’s “actual or perceived…race…[or] national origin.” N.Y.C. Admin. Code § 8-107(1)(a). This includes terminating someone’s employment, demoting them, denying them shifts or assignments, and other adverse actions, when the sole or primary purpose is that they are a particular race or have a particular national origin.

The coronavirus pandemic involves multiple forms of employment discrimination. The CHR has adopted guidelines from the Equal Employment Opportunity Commission (EEOC) related to disability discrimination.

If you have any questions regarding your employment or termination, please contact us at mschley@schleylaw.com or at 732-325-0318.

Court Finds Emailed Arbitration Agreement Unenforceable

On January 16, 2019, the Superior Court of New Jersey, Appellate Division held in Skuse v. Pfizer, Inc., that Pfizer’s use of a computer training program emailed to employees was inadequate to obtain the employees’ agreement to arbitrate disputes.

Pfizer emailed its employees what it called a “training module,” “activity,” or “course,” describing the company’s mandatory arbitration policy in a series of slides on the employee’s computer screen, including a “Resource” link to the full text of the policy. In a different email, Pfizer sent a link to Frequently Asked Questions about the arbitration policy.

The module asked the employee to “acknowledge” it by clicking a button on the screen, and stated that if the employee did not click the acknowledgement, but continued to work for the company for 60 or more days, they would be “deemed” to be bound by the arbitration policy.

The court cut to the chase in the first sentence of its opinion, stating, “This case exemplifies an inadequate way for an employer to go about extracting its employees’ agreement to submit to binding arbitration for future claims and thereby waive their rights to sue the employer and seek a jury trial.”

The court held that the procedure used by Pfizer did not “yield the valid personal agreement of an employee to give up his or her statutorily protected rights to litigate claims against an employer in a public forum and seek a trial by jury,” because it fell short of the legal requirements set forth by the New Jersey Supreme Court that a valid waiver of an employee’s statutory rights “results only from an explicit, affirmative agreement that unmistakably reflects the employee’s assent,” and that the words of the arbitration agreement must be clear and unambiguous that the employee is choosing to arbitrate rather than have disputes resolved in court.

Because the plaintiff never expressed her “explicit and unmistakable voluntary agreement to forego the court system and submit her discrimination claims against her former employer and its officials to binding arbitration,” the court reversed the trial court’s order dismissing the case and compelling arbitration, and remanded for further proceedings.

Forced Arbitration is Unfair to Workers

Many companies require their workers to sign arbitration agreements—contracts that require workers to bring any claims related to their employment through arbitration, a private dispute resolution process outside the court system. Companies often require this of both employees and independent contractors, and arbitration agreements can cover all sorts of claims, including sexual harassment, discrimination, wage theft, and more.

Arbitration greatly favors employers over workers. Workers are less likely to win in arbitration, and if they do win, they are usually awarded less money. It is nearly impossible to appeal a decision in arbitration. Arbitration is private, so the worker loses the leverage that comes with the threat of negative media coverage from a public lawsuit against the employer. Further, because arbitration is private, other workers who may also be in a similar situation lose the ability to learn about their rights or join a class-action when they hear about the case. And many forced arbitration agreements ban class-actions outright, denying workers the ability to join together to bring claims for widespread wrongs like wage theft or discrimination.

A major problem with forced arbitration for workers is that it reduces the already small amount of power any worker has to stand up for their rights in the workplace. Employers often present these forced arbitration agreements as a take-it-or-leave-it proposition, requiring the worker to sign the agreement in order to earn a paycheck from the company—often even in low-wage hourly positions. This puts workers in a bind, because they must choose between agreeing to arbitration and paying this month’s rent or grocery bills.

Some employers are beginning to end their forced arbitration programs. For example, Microsoft ended forced arbitration for sexual harassment claims in December 2017. On November 8, 2018, one week after more than 20,000 employees walked out in protest, Google announced that it was ending its requirement that sexual harassment and assault claims be arbitrated. The next day, Facebook announced it was ending forced arbitration for sexual harassment claims.

Although it seems that the tide may be turning on arbitration for workplace sexual harassment and assault claims, forced arbitration is still pervasive for claims of wage theft, discrimination, and many other workplace wrongs. And because the Supreme Court recently held that companies may include class-action waivers in their arbitration agreements, workers face an even harder uphill battle to pursue their rights. However, not all arbitration agreements are enforceable, and courts in some states, such as New Jersey, have held that arbitration agreements must use very specific language to be valid.

If you believe you have a claim against your employer, but may be subject to an arbitration agreement, it is a good idea to contact a lawyer to determine whether you may be able to bring your claim in court.

Second Circuit Vacates Lower Court Decision Ruling Time Warner Territory Sales Representatives were Exempt from Overtime Pay

On October 4, 2018, the Second Circuit Court of Appeals vacated a decision by the U.S. District Court for the Northern District of New York which held that Territory Sales Representatives(TSRs) for a cable company were exempt from overtime pay because their primary duty was exempt outside sales.

Two TSRs, Jeffrey Sydney and Stephen Capousis, sued their former employer, Time Warner Entertainment-Advance/Newhouse Partnership (Time Warner), a subsidiary of Time Warner Cable, Inc., for unpaid overtime under the Fair Labor Standards Act(FLSA) and the New York Labor Law (NYLL). Time Warner moved for summary judgment, arguing that the TSRs were exempt from overtime pay under the FLSA and NYLL because they were “outside salesmen.” The District Court agreed with Time Warner and granted summary judgment. The plaintiffs appealed, arguing that the District Court was wrong to conclude that they were “outside salesmen.”

 Subject to certain exemptions,the FLSA and NYLL require that employers pay employees overtime pay for hoursmore than 40 worked in one workweek. One exemption from the FLSA and the NYLL is for “any employee employed . . . in the capacity of outside saleman.” To bean outside salesman, a worker’s primary duty must be either (1) making sales within the definition of the law, or (2) obtaining orders or contracts for services or for the use of facilities. In addition, the worker must be customarily and regularly engaged away from the employer’s place of business while performing their primary duty.

The Second Circuit held that the District Court was wrong to conclude that the TSRs’ primary duty was exempt sales of Time Warner’s products, as opposed to non-exempt installation of cable,telephone, and internet equipment.

According to the plaintiffs, TSRs spent most of their 50-70 hour workweeks installing cable, telephone, and internet equipment in apartment units, and spent a smaller portion of their time performing sales duties such as maintaining relationships with apartment managers and trying to persuade customers to purchase additional services and“bundles” of internet, telephone, and cable services.

The Second Circuit found that a reasonable factfinder could conclude that the TSRs spent most of their time performing non-exempt installation duties, and that, in this instance, their outside sales duties were not more important than their installation duties.Further, while TRSs were paid mainly on commissions, the majority of their “commissions” were in fact payment for installations rather than commissions for sales.

Because the Second Circuit did not find as a matter of law that the TSRs’ installation work was merely incidental to their outside sales work, it vacated the District Court’s decision and remanded the case for further proceedings.

New York City Supports #MeToo Movement with Sexual Harassment Legislation

On April 11, 2018 the New York City Council passed a package of bills called the “Stop Sexual Harassment in NYC Act” (the “Act”) (Int. No. 632-A), which were signed into law by Mayor Bill DeBlasio on May 9, 2018. The Act is intended to prevent and combat sexual harassment in the workplace.

The Act makes the following changes to New York City’s sexual harassment laws:

  • All employers regardless of size are now covered by the New York City Human Rights Law’s (“NYCHRL”) protections against gender-based harassment. Prior to the Act, these provisions of the NYCHRL only applied to employers with four or more employees.
  • The statute of limitations for filing claims of gender-based harassment under the NYCHRL is increased from one year to three years.
  • All employers must now display a poster with anti-sexual harassment information, and distribute to all new employees an information sheet about sexual harassment.
  • Certain New York City contractors are required to include their policies, practices, and procedures related to preventing and addressing sexual harassment in their employment report for certain city contracts.
  • The New York City Commission on Human Rights is required to post new resources regarding sexual harassment on its website.
  • The NYCHRL’s policy statement has been updated to include the following, “gender-based harassment threatens the terms, conditions, and privileges of employment.
  • Effective April 1, 2019, employers with 15 or more employees (including interns) will be required to give annual interactive anti-sexual harassment training to all their employees, including managers and supervisors. Employers must make and keep records of the trainings, including signed employee acknowledgements for at least three years. The trainings are required to include the following:
    • A description of what sexual harassment is, along with examples.
    • A description of what unlawful retaliation is, along with examples.
    • An explanation that sexual harassment is a form of unlawful discrimination under New York City Law, as well as federal and state law.
    • A description of the employer’s internal complaint procedures, as well as the complaint procedures available through the New York City Commission on Human Rights, the New York State Division of Human Rights, and the United States Equal Opportunity Commission, along with contact information.
    • Information about how bystanders can intervene.
    • A description of the responsibilities of managers and supervisors to prevent sexual harassment and retaliation, and what actions managers and supervisors can take to address complaints of sexual harassment and retaliation.

JPMorgan Settles Race Discrimination Suit with Financial Advisors for $24 Million

According to August 31, 2018, court filings, JPMorgan Chase & Co. reached a settlement with six current and former financial advisors who sued the company for racial discrimination. The settlement includes $19.5 million paid to the financial advisors, and a $4.5 million fund to implement an anti-bias program.

The six current and former employees—Kellie Farrish in California, Erika Williams in Illinois, Amanda Jason in Kentucky, Irvin Nash in New York, Jerome Senegal in Texas, and Brent Griffin in Wisconsin—filed a class action lawsuit alleging that JPMorgan treated them poorly because they are black. They alleged that black financial advisors throughout the company were assigned to less lucrative branches than their white counterparts, were understaffed, had few licensed bankers to support them, got paid less, and were not included in a program for wealthier clients. The lawsuit claims that the racial discrimination is “uniform and national in scope.”

The settlement comes as Wall Street banks, including JPMorgan, have been losing black workers over the past several years. JPMorgan’s own internal figures show that its percentage of black workers has decreased for six years in a row, from 16% in 2011 to 13.4% in 2017. At another Wall Street bank, Citigroup, Inc., black employees now account for only 10% of employees, down from about 16% in 2009. Both Wells Fargo and Merrill Lynch have settled race discrimination suits in recent years, for $35.5 million and $160 million, respectively.

“Our clients are proud of this outcome and acknowledge that JPMorgan had a choice to fight [rather than settle the case],” the plaintiffs’ lawyer Linda Friedman said in an email to Bloomberg. “Each case builds on the last. This is how progress is made.”

JPMorgan denies any wrongdoing, and released a statement saying that the settlement “eliminates the need for litigation, allowing us to continue our focus on the diverse and inclusive environment that is critical to our success.”

WeWork Settles with New York State Attorney General on Overly Broad Non-Competes

On September 18, 2018, WeWork, a shared-office company, agreed to end its practice of using overly broad non-compete agreements as part of a settlement with the attorneys general of New York and Illinois. The settlement eliminates or reduces the scope of non-compete agreements for nearly all of WeWork’s approximately 3,300 U.S. employees, with the exception of about 100 executive level employees.

Non-compete agreements prevent an employee of one company from working for a competitor, typically for a certain amount of time after the employee leaves the company and within a certain geographic area. Traditionally, non-competes were found in fields like technology or sales, where trade secrets are closely held and specialized skills are often required. But now, non-competes are so common that job-seekers might be required to sign one to work as a factory manager, camp counselor, yoga instructor, or even a summer intern.

The WeWork settlement fully releases more than 1,400 rank-and-file employees from their non-compete agreements, 800 of whom work in New York. These employees include executive assistants, baristas, mail associates, cleaners, and more, some making as little as $15 per hour.

The settlement also reduces the scope of non-competes for 1,800 employees who are managers or have specialized skills or knowledge, 1,400 of whom work in New York. For these employees, the non-compete period will be reduced to six months rather than one year, and the geographic scope will be reduced from any geographic area where WeWork operates to a 15-mile radius from the WeWork locations engaged in the business lines in which the employee worked. The scope of competition will be reduced from working for a competitor in any capacity to working for a competitor on the business lines in which the employee worked.

Just because an employer requires an employee to sign a con-compete agreement, it does not necessarily mean that it is valid and can be used against the employee. If the non-compete does not protect a legitimate business interest, like trade secrets or customer lists, for example, it is likely not enforceable. But, many employees don’t know whether their non-competes are enforceable, and the threat of a lawsuit often deters workers from accepting a new job with better pay—keeping wages and worker mobility low. In response to the problem of employers misusing non-compete agreements, New York State has published Non-Compete Agreements in New York State – Frequently Asked Questions, a guide to help answer New York workers’ questions about non-competes.

“Workers should be able to take a new job without living in fear of a lawsuit from their former employer,” said New York State Attorney General Barbara D. Underwood. “Yet too often, non-compete agreements are misused, especially when it comes to low-wage workers – limiting employees’ mobility and opportunity and preventing businesses from hiring the best person for the job. Today’s settlement is a key step forward for WeWork’s thousands of employees in New York and across the country, and should serve as an example for all businesses as we continue our efforts to end the use of these overly broad non-competes.”

Federal Government Sues Walmart for Pregnancy Discrimination

On September 20, 2018, the U.S. Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Walmart in the U.S. District Court for the Western District of Wisconsin for pregnancy discrimination.

The lawsuit alleges that Walmart unlawfully refused to provide Alyssa Gilliam and other pregnant employees at a distribution center in Wisconsin with the same light duty work that it provides to its non-pregnant workers with disabilities, such as lifting lighter loads, a chair, and additional breaks during the workday. The complaint alleges that Walmart’s failure to provide these accommodations resulted in Gilliam losing her benefits, having to reduce her hours from full-time to part-time, and being forced to take unpaid leave two months prior to the birth of her baby when she wanted to work up until the birth.

Employment discrimination based on pregnancy, childbirth, or related medical conditions is prohibited by the Pregnancy Discrimination Act (PDA), which amends Title VII of the Civil Rights Act of 1964. The law applies to employers with 15 or more employees, and requires them to provide the same reasonable accommodations to pregnant workers as they provide to disabled workers.

“Walmart deprived pregnant workers of the opportunity to participate in its light duty program. This amounted to pregnancy discrimination,” said EEOC District Director Julianne Bowman. The lawsuit seeks back pay, compensatory and punitive damages, and injunctive relief. Walmart denies the allegations. Two additional class action lawsuits alleging pregnancy discrimination in Walmart’s retail stores have been filed in New York and Illinois.

In addition to the protections provided under federal law by the PDA, both New Jersey and New York have state laws that protect pregnant employees from discrimination by their employers. The New Jersey Law Against Discrimination (NJLAD) and the New York Human Rights Law (NYHRL) both prohibit discrimination in employment based on pregnancy, childbirth, or related medical conditions. The NJLAD applies to all employers regardless of size, and the NYHRL applies to employers with four or more employees.

We will continue to monitor developments in this case.

Third Circuit Court of Appeals Rules Truckers’ Wage Deduction Class Action is Not Preempted by Federal Law

On September 27, 2018, a three-judge panel of the Third Circuit Court of Appeals affirmed the District Court for the District of New Jersey’s holding denying the defendant employer’s motion to dismiss the plaintiff truck drivers’ claims based on federal preemption, in Lupian v. Joseph Cory Holdings LLC.

Five truck drivers filed the lawsuit against their employer, Joseph Cory Holdings LLC, as a class action pursuant to the Class Action Fairness Act of 2005 (“CAFA”) alleging that the company deducted wages from drivers’ paychecks for items such as uniforms, insurance, and goods damaged in transit, without their contemporaneous consent, in violation of the Illinois Wage Payment and Collection Act (“IWPCA”).

While the drivers’ contracts with the company purported to create an independent contractor relationship, the drivers claimed the realities of their relationship with the company created an employer-employee relationship under the IWPCA. The IWPCA defines an employee as “a person who is permitted to work by an employer.” It should be noted that this is similar to the New Jersey Wage and Hour Law, which defines the term “employ” as “to suffer or permit to work.”

The company moved to dismiss the lawsuit, arguing that the truckers’ claims under the IWPCA were preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”). The FAAAA contains a preemption provision that applies to the trucking industry, which states, “a State, political division of a State, or a political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.”

The district court denied the motion, holding that the connection between the subject matter of IWPCA and that of the FAAAA was not strong enough to trigger preemption. The company appealed to the Third Circuit Court of Appeals.

The Third Circuit Court of Appeals affirmed, holding that, “the IWPCA does not have a significant impact on carrier rates, routes, or services of a motor carrier and does not frustrate the FAAAA’s deregulatory objectives, as the impact of the IWPCA is too tenuous, remote, and peripheral to fall within the scope of the FAAAA preemption clause.”

The court reasoned that wage laws like the IWPCA are a traditional area of state regulation, like zoning laws, that affect all types of businesses equally, and do not single out trucking companies. Because wage laws like the IWPCA regulate the relationship between companies and their employees, not between companies and customers, it demonstrates that the purpose and effect of the IWPCA are not sufficiently similar to the type of regulations the FAAAA sought to prohibit.

We will monitor future developments in this litigation.