UberBlack Drivers’ Classification Case Revived

The Third Circuit recently revived Philadelphia-based UberBlack drivers’ class action claims that Uber misclassified them as independent contractors to deny them proper minimum and overtime wages under the Fair Labor Standards Act and Pennsylvania law.

A three-judge panel vacated U.S. District Judge Michael Baylson’s April 2018 decision granting summary judgment to Uber, saying there is not yet a clear answer to the question of whether UberBlack drivers are employees or independent contractors, so the dispute should be allowed to go to trial.

A company’s control over a worker is a major factor in determining whether an employee or independent contractor relationship exists. While UberBlack drivers set their own schedules and have some ability to select passengers, a judge or jury must determine if Uber still maintains the right to control several aspects of their work and their opportunities for profit.

The decision only applies to UberBlack drivers in Pennsylvania and only has precedential value in the Third Circuit, which includes New Jersey and Delaware. But legal observers say the case could have broad impact, as it may test the fundamental framework of the rideshare company’s workforce model.

Uber has been hit with worker classification lawsuits for years, forcing it to defend its business model that leans on independent contractors. The model, adopted by other gig companies such as Lyft Inc., DoorDash Inc., and Grubhub Inc., allows workers freedoms outside a traditional work arrangement. But as independent contractors, they are not entitled to benefits guaranteed to employees, such as overtime, minimum wage, and workers’ compensation.

According to a Bloomberg study, Uber’s expenses per driver could spike by more than 20% if they have to reclassify them as employees.

While this isn’t a final ruling on the issue, the appellate court made clear that Uber still retains significant control over what the drivers are paid and where they drive to, which could show employee status. Uber determines the fare, the driver’s territory, which driver gets a trip request, whether to refund or cancel passenger fares, and company advertising. The company also can deactivate UberBlack drivers if their passenger-satisfaction rating falls below 4.7 stars and prevent them from accepting rides through other platforms, which weighs in favor of employment status.

Nevertheless, UberBlack drivers own and operate their own independent transportation companies, and can drive as much or as little as they want to, transport private clients, drive for competitors, and strategically use the Uber mobile application to obtain more lucrative trips. Those factors would weigh in favor of independent contractor status.

The forthcoming ruling on this case will impact a number UberBlack drivers in the Third Circuit states, as well as throughout the country.

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

Obesity, Alone, Is Not A Disability

The question of whether or not obesity is considered a disability has been partially answered. On April 4, 2019, Judge Haas delivered the opinion of the New Jersey Appellate Division in the case of Dickson v. Community Bus Lines, Inc. d/b/a Coach USA, A-3857-17T3 (App. Div. Apr. 4, 2019),—which effectively limited how and when obesity can form the basis of a perceived protected disability. Unequivocally, Judge Haas explained that obesity alone may not constitute the basis for a person to assert that he or she has a disability protected by the New Jersey Law Against Discrimination (LAD). Judge Haas wrote that “obesity alone is not protected under the LAD as a disability unless it has an underlying medical cause, a condition that plaintiff failed to meet in the present case.” Because the plaintiff did not establish that defendants viewed him as suffering from any condition other than obesity, he was denied LAD protection. If, instead, the plaintiff had shown that his obesity was a disability caused by a bodily injury, birth defect, or illness, the plaintiff may have been afforded LAD protection.

Still, the plaintiff would have needed to show that his coworkers or supervisors were treating him pervasively poorly because of his conditions. The LAD protects employees from discrimination for both disabilities and perceived disabilities—here, for example, the plaintiff was asserting that he was being treated poorly because others saw his body size, assumed that it made him less qualified for the job, and outwardly spoke or acted on this perception.

Importantly, Judge Haas also reemphasized what a proper “hostile work environment” case entails: a plaintiff must show “(1) that [he or she] is in a protected class; (2) that [he or she] was subjected to conduct that would not have occurred but for that protected status; and (3) that it was severe or pervasive enough to alter the conditions of employment.” Being a member of a protected class is, in fact, a prerequisite necessary to bring a hostile environment claim. Currently, while obesity alone is not a condition which constitutes a protected class, many other conditions and characteristics are. For instance, a disability based on a health condition (such as paraplegia, cancer, or Crohn’s Disease) can form the basis of a protected class. Additionally, New Jersey provides protections for certain characteristics (such as race, religion, sex, or sexual orientation), which can form the basis of a protective class. But the Appellate Division has drawn the line that today, obesity alone will not provide grounds for LAD protection.

If you think that you are being discriminated against for a perceived or actual disability, you should contact an employment attorney.

New Jersey Employees’ Sick Leave Rights Have Recently Expanded

Many sick employees are currently protected from adverse employment treatment under the federally-mandated Family and Medical Leave Act (“FMLA”). Under the FMLA, an employee working for a covered employer may take up to 12 workweeks of unpaid leave each year with no threat of job loss if that employee is suffering from a serious health condition which renders him unable to perform his job. All public agencies are covered employers. However, the FMLA only applies to private employers who employed 50 or more employees for at least 20 workweeks during either the current or previous year.

But on October 29, 2018, New Jersey enacted New Jersey Earned Sick Leave Law (“ESL”). Standing in stark contrast to the FMLA, the ESL covers all New Jersey employers regardless of the business’s size. Thus, before the ESL’s recent enactment, an employee who worked for a private employer employing less than 50 employees would be ineligible from employment protections afforded to employees working for an employer with more than 50 employees. With the ESL’s enactment, this disparity stopped.

In addition to effectively expanding the FMLA, the ESL essentially expands an already-existing New Jersey-specific Act. The New Jersey Family Leave Act (“FLA”) was put into place to protect employees requiring leave to care for a family member. The FLA initially provided for unpaid leave and was enacted to enable an employee to care for another only, and not his own self. Eventually the FLA was expanded to mandate paid leave for employees, but has never been expanded to cover caring for the employee’s own self. With the ESL, however, this gap has been filled.

The ESL mandates that employees, whether full- or part-time, may take up to 40 hours of fully-paid sick leave each year. Similar to the FMLA’s qualifying events, the ESL’s qualifying events include caring for their own, or a family member’s, physical or mental health or injury. Moreover, the ESL allows employees to take time off to address domestic or sexual violence against themselves or a family member, to attend a child’s school-related meeting, and to pick-up a child from an emergency school or daycare closing. Similar to other New Jersey legislature aimed at employee protection, the ESL broadly defines “family member.” And similar to the FMLA, an employer can require advance notice prior to the date leave is to begin if the employee’s leave is readily foreseeable.

Employees accrue one hour of ESL per every 30 hours worked. ESL for existing employees can be used beginning February 26, 2019. Employees hired after the ESL’s October 29, 2018 enactment date can begin using ESL hours 120 days after the employee begins employment.

Per diem health-care employees, construction employees already governed by a collective bargaining agreement, and public employees who already received sick leave with full pay pursuant to any other law (such as the FMLA) are ineligible from the ESL’s protections.

If you previously thought you were without legal protection afforded to employees in larger businesses, your rights have changed. Your employer is obligated to provide you with these protections, without any interference or retaliation.

New Jersey Governor Limits Employment Nondisclosure Agreements

This week, New Jersey enacted a law to further protect employee rights. Ordinarily, if a nondisclosure agreement’s terms are violated, the harmed party (whose contractually-protected private information was revealed) could sue the disclosing party for injunctive and monetary relief.

However, on Monday March 18, 2019, New Jersey Governor Phil Murphy signed a bill limiting the use of nondisclosure agreements in employment contracts and settlement agreements. The bill became immediately-effective law. Cases involving discrimination, retaliation, or harassment (including sexual assault and sexual harassment) fall under the new law’s restrictions.

Perhaps in response to the nation’s #MeToo movement, the new law forbids employment contracts from waiving potential victims’ rights: an employer can no longer permissibly create a contract requiring an employee to remain silent about discrimination, retaliation, or harassment claims.

As of March 18, 2019, a settlement agreement resolving such claims must include a “bold, prominently placed notice” explaining that “although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

Furthermore, an employer can no longer create a contract that waives an employee’s procedural due process rights. Arbitration agreements and jury trial waivers involving such claims have become essentially impermissible.

Employees should look for language in these agreements to the contrary, as New Jersey has taken a substantial step to protect its employees’ workplace rights.

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.”