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Employment Arbitration Agreements typically force employees to resolve legal disputes with their employer through an opaque process controlled by a privately retained arbitrator, rather than publicly through our relatively transparent jury-based court system. These privately retained arbitrators often favor the large corporation employers who provide them repeat business as opposed to the typical “one and done” worker. Further, arbitrators are not bound by the same rules, legal precedents, and public oversight that judges are when making their decisions. Usually the only issue of arbitration that can be resolved by our courts is the “gateway dispute about whether the parties are bound by a given arbitration clause” Howsam v. Dean Witter Reynold, 537 U.S. 79, 84 (2002), that is, whether the parties entered into a valid and binding arbitration agreement.

In a limited response to the unfairness forced arbitration agreements impose on employees, Congress included a provision in the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16 exempting certain employees from its authority. Section 1 of the FAA provides that “nothing herein shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign interstate commerce.Id. Our courts often hold that transportation workers fall into the “class of workers engaged in foreign interstate commerce” that are excluded from FAA coverage, and thus are not bound by arbitration agreements. However, recently, in Singh v Uber Techs. Inc., 2019 U.S. App. the Third Circuit was asked to determine the limits of this exemption.

In Singh, an Uber driver in New Jersey brought a class action lawsuit in District Court against Uber for misclassifying their drivers as independent contractors as opposed to employees claiming such a misclassification deprives the drivers from receiving overtime pay. Based on an arbitration agreement between the parties, Uber moved the District Court to dismiss the case under the FAA and have Singh resolve the matter by bringing it to an arbitrator. Singh argued that the District Court did not have the authority to compel arbitration under the FAA as he was a transportation worker excluded from FAA coverage as “any other class of worker engaged in interstate foreign commerce” under Section 1. Uber argued, and the District Court agreed, that only transportation workers that transport goods, not those who transport passengers, are excluded by the residual clause of Section 1 in the FAA. Id. at *13. (“a court must be satisfied that this clause does not apply before making an order that the parties proceed to arbitration”).

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Neither the language of an employment agreement, nor the label an employer places on an employee, determines eligibility for unemployment benefits; rather, it is the substance of the business relationship which does. Law Office of Gerard C. Vince v. Bd. of Review, 2019 N.J. Super. Unpub. LEXIS 1846, (decided on September 4, 2019). In Vince, a law firm agreed to hire a “consulting paralegal” on a temporary basis to integrate their files onto a web-based computer software system. Id. at *2. The law firm identified which files it wanted integrated but never instructed the paralegal on how to do so; nor did it precisely determine when or where she would do so. Id. at *2-3. The paralegal was paid according to her chosen hourly rate based on the invoices she presented. To confirm their relationship, the law firm had the paralegal sign a Consulting Paralegal Understanding (CPU), stating that she was hired as “an independent contractor and as such are not an employee…subject to receive unemployment or other employee related benefits.” Id. at *3. However, when those services ended, she decided to file an unemployment benefits claim with the Department of Labor and Workforce Development (“DOL”) and was approved.

Generally, under New Jersey’s Unemployment Compensation Law (UCL), N.J.S.A. 43:21-1 to 24.30, employers are obligated to provide compensation benefits to eligible employees who have been terminated.  However, if an employer can show the individual was not an employee, but rather a consultant providing specific services, and if the employer can meet the three-part “ABC test” as outlined in N.J.S.A. 43:21-19(i)(6), unemployment benefits may be denied.  The ABC test requires the employer to demonstrate: (A) the individual retained has been and will continue to be free from the employer’s control or direction over the performance of such service; (B) the service performed is outside the usual course of services the business provides, or performed outside of the places where such services are performed; and (C) the individual is customarily engaged in an independently established occupation. See Schomp v. Fuller Brush Co., 124 N.J.L. 487 (Sup. Ct.1940); and Hargrove v. Sleepy’s, LLC, 220 N.J. 289, 305 (2015).

Pointing to the CPU, the law firm in Vince contested the DOL’s determination that the consulting paralegal was eligible for benefits. Both the Appeal Tribunal (“Tribunal”) and the Board of Review (“Board”) upheld the Department’s decision, stating that the CPU’s language was “not determinative,” and the firm did not satisfy each part of the ABC test. Vince at *3. On appeal, however, the Appellate Division (“Division”) reversed the above rulings, not because of CPU’s terms, but because after analyzing the totality of the factual circumstances, it was clear both the Tribunal and Board “made certain findings that are not accurate,” and the law firm satisfied all three elements of the ABC test. Id. at *5.

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The exclusive remedy for a worker injured on the job is to pursue workers compensation benefits under New Jersey’s Workers Compensation Act (WCA) in the form of authorized medical treatment, temporary disability benefits and a partial permanency award to the extent applicable.[1]  Relatedly, New Jersey’s Law Against Discrimination (LAD) requires an employer to reasonably accommodate an employee’s disability.  N.J.A.C., 13:13-2.5; Potente v. County of Hudson, 187 N.J. 103, 110 (2006). Given this intersection of the WCA and the LAD, our New Jersey Supreme Court in Caraballo v.  Jersey City Police Dep’t, 237 N.J. 255 (2019) was called on in a case of first impression to determine whether an employee seeking to have his employer cover his double knee replacement surgery after suffering a serious work-related injury could pursue a failure to accommodate disability discrimination case under the LAD. The Court answered that the employee could not.

Looking to federal courts interpretation of the American with Disabilities Act (ADA) for guidance, the Court in Caraballo noted that that neither the text of the ADA nor its regulations “contemplate that an employer should be required to provide a disabled employee with medical treatment in order to restore her ability to perform essential job functions.”  Caraballo, 237 N.J. at 270 quoting Desmond v. Yale-New Haven Hosp., Inc., 738 F.Supp. 2d 331, 350 (D. Conn. 2010). Likewise, the Caraballo Court looked at the Equal Employment Opportunity Commission’s compliance manual, which states that “an employer has no responsibility to monitor an employee’s medical treatment or ensure that s/he is receiving appropriate treatment because such treatment does not involve modifying workplace barriers.” Caraballo, 237 N.J. at 269; Desmond, 738 F. Supp. 2d. at 350 quoting EEOC Enforcement Guidance: Reasonable Accommodation and Undue Hardship Under the Americans with Disabilities Act, EEOC Compliance Manual § 92, No. 915.002 (Oct. 17, 2002).  Accordingly, the Caraballo Court held that the double knee replacement surgery sought by Plaintiff Caraballo was neither a modification to the work environment nor a removal of workplace barriers. Rather, “it was a means to treat or mitigate the effects of his injuries, like the treatments at issue in Desmond. We therefore find it consistent with the LAD, the ADA, and their regulations that Caraballo’s total knee replacement surgery cannot qualify as a reasonable accommodation under the LAD.” 237 N.J. at 271.

In ruling against Caraballo, the Court took note of the fact that although Caraballo requested his employer to provide him with double knee replacement surgery, he never used the enforcement mechanism of filing a petition in the workers compensation court to seek entry of an order compelling the employer and its insurer to provide him the surgery. Specifically, he refused to comply with his employer’s requests to see doctors that could “determine unequivocally whether or not he could have surgery.” 237 N.J. at 260.  When the employer’s chosen doctor authorized Caraballo’s knee surgery and told him to schedule a surgery date, he never called. Id. at 261. Even though Caraballo contacted his employer’ “several times to obtain authorization for double knee replacement surgery [he] never sought to enforce his right to the surgery in the workers’ compensation court.” Id.  at 258. Each time he disagreed with what was offered by his employer or refused to comply with their requirements to receive treatment, he failed to file a complaint with the workers’ compensation court. Therefore, regardless of the Court’s ruling that an employer was under no obligation under the LAD to reasonably accommodate a worker by providing him or her with medical treatment, Caraballo’s failure under the WCA to compel the surgery was fatal to his LAD claim. 237 N.J. at 266.

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After two years of litigation in federal court, U.S. District Court Judge Peter Sheridan ordered Wawa, Inc. (Wawa) to pay $1.4 million in order to settle a class action lawsuit filed against it by assistant store managers called “Assistant General Managers” (AGMs) who alleged violations of the Fair Labor Standards Act (FLSA). In January 2018, Plaintiffs moved to conditionally certify a collective action based on allegations that Wawa misclassified them along with other similarly situated AGMs as being exempt under FLSA i.e., not eligible for overtime pay, and by doing so, failed to pay them overtime for hours worked in excess of 40 hours per week. Gervasio v. Wawa, Inc., 2018 U.S. Dist. LEXIS 4899 (D.N.J. January 11, 2018).

In filing their 2017 complaint against Wawa, plaintiffs alleged they were deliberately “mislabeled” as managers under the FLSA when their duties did not actually reflect managerial duties and their duties were more akin to the duties of other hourly wage employees working at the stores. Id. at *2. However, because they were labeled as managers by Wawa, they were classified as exempt employees and therefore not entitled to overtime wages they would have otherwise earned under the FLSA. Id. Although Wawa eventually re-classified its AGMs as nonexempt employees in December 2015, plaintiffs continued to seek recovery of backpay for the unpaid overtime hours they worked prior to this reclassification. Plaintiffs claimed they worked between 50-55 hours during weeks in which they worked five or more shifts but did not get paid for any time worked exceeding 40 hours. Id.

While nonexempt employees, i.e., employees eligible to receiver overtime pay, are covered by the overtime protections of the FLSA, exempt employees are not. Exempt versus nonexempt employee status depends on three factors: (1) how much the employee is paid, (2) how the employee is paid, and (3) the type of work that the employee performs for his or her employer. Generally, an employee is exempt if he or she is paid at least $23,600 per year, is paid on a salary basis, and (3) performs exempt job duties, namely executive, professional, or administrative duties for the employer. To fall within the “executive exemption,” an employee must meet the following criteria: “(1) the employee receives compensation on a salary basis, (2) [his or] her primary duty is management of a recognized department, (3) [he or] she customarily and regularly directs the work of two or more employees, and (4) [he or] she has authority to hire or fire employees.” Id. at *7 (quoting Essex v. Children’s Place, Inc., 2016 U.S. Dist. LEXIS 108853 at *9 (D.N.J. Aug. 16, 2016)).

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To ensure all New Jersey employees are fairly and timely compensated for their work, Acting New Jersey Governor Sheila Oliver signed S1790 into law this week which amends the existing New Jersey Wage Payment Law (NJWPL) to provide significantly more protections for employees who have been victims of wage theft. The new law makes it a disorderly persons offense for employers to fail to pay wages when due as required by law, or fail to pay compensation or benefits within 30 days when due.

An employer found to have violated the NJWPL as amended will now be required to pay the victimized employee his or her wages owed in addition to liquidated damages equal to 200% of the wages owed as well as reasonable costs of the action to the employee. The employer will also be fined $500 plus a penalty equal to 20% of any wages owed for the first offense, followed by $1,000 plus a penalty equal to 20% of any wages owed for each subsequent offense. Supporters of the new legislation hope that its stricter penalties for violations will hold employers accountable for unpaid wages more than the existing wage and hour legislation does. “Above all else, this law is about workers’ rights. Employers in New Jersey should be held to a high standard to treat their employees with the decency and legality they deserve. No one should be withheld one penny of the wages they are legally entitled to,” said Assemblyman Wayne DeAngelo, who sponsored the bill before it was signed into effect.

S1790 also prohibits employers’ retaliatory conduct by increasing the penalties against employers who retaliate against employees for filing wage complaints. Any such employer who does so commits a disorderly persons offense and upon conviction, is required to pay a fine between $100 to $1000. The employer is also liable to the employee for all wages lost as a result of the retaliation as well as damages equal to 200% of the wages lost as a result of the retaliation, and reasonable costs of the action to the employee. If the employee was retaliatorily discharged, the employer is required to offer reinstatement, unless the reinstatement is prohibited by law.

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Assembly Bill 1094, which prohibits employers from screening applicants based on the applicant’s salary history, was signed into law on July 25, 2019 after passing in the New Jersey Assembly and Senate earlier this year. Under this new legislation, it shall be an unlawful employment practice for any employer:

(1) To screen a job applicant based on the applicant’s salary history, including, but not limited to the applicant’s prior wages, salaries or benefits; or

(2) To require that the applicant’s salary history satisfy any minimum or maximum criteria

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Although the statute of limitations for filing a claim under New Jersey’s Law Against Discrimination (LAD) lapses after two years from the last act of discrimination, a plaintiff may still have a viable LAD claim under the continuing violation doctrine according to a recent Appellate Division decision in Mansour v. Brooklake Club Corp., 2019 N.J. Super. Unpub. LEXIS 1579 (N.J. App. Div. decided July 10, 2019).

Plaintiff Adel Mansour was employed as a cook for Defendant Brooklake Club (Brooklake) between 2003 and 2016. Id. at *2. He alleged that during the time he worked for Brooklake his supervisor harassed him because Mansour was Egyptian and Muslim. Mansour’s supervisor frequently made unwelcome comments to or around Mansour about former Egyptian President Hosni Mubarak and the Muslim Brotherhood and implied Mansour had ties to terrorist organizations and activities. Id. at *2-3. In March 2014, when Malaysia Airlines flight 370 disappeared, Mansour’s supervisor “joked” about the pilot being Egyptian and then hung a large world map in the kitchen on which he wrote “Adel, where is it?” in reference to the lost plane. Id. at *4. Mansour’s supervisor also continuously criticized Mansour for not eating pork and frequently referenced that Muslims do not eat pork for religious reasons, telling Mansour, “…you Muslims don’t know what you’re missing.” Id. at *5-6. Mansour felt singled out by this conduct and told his supervisor to stop on numerous occasions, but the comments continued. Id. at *4-5.

The trial court found Mansour’s hostile work environment claim untimely because most of the alleged discriminatory acts took place outside of the LAD’s two-year statute of limitations. Id. at *5. However, the Appellate Division agreed with Mansour that the trial court “misapplied the continuing violation doctrine and failed to recognize the cumulative pattern of ongoing harassment he suffered directly related to his religion and nationality.” Id. at *7.

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Although a Plaintiff may attempt to prove his discrimination claim by showing how he was treated differently than similarly situated workers not of his protected class, e.g., race, according to a recent decision of the federal District Court of New Jersey there must be little or no difference in the offered comparator evidence other than the protected class characteristic of the Plaintiff. Wilson v. M & M Mgmt. Co., 2019 U.S. Dist. LEXIS 107955 (D.N.J. decided June 27, 2019). For example, in the race discrimination claim brought in Wilson, the Court required an African American Plaintiff to show there was no discernable difference between his conduct and those of the Caucasian coworkers he was comparing himself to other than their race. Unfortunately, for Aaron Wilson he was not able to do so.

Plaintiff Aaron Wilson worked as a driver for Defendant M & M Management Company which housed a thrift store located in West Berlin, New Jersey. Id. at *1. Wilson was terminated in January 2016, after which he filed a lawsuit against his employer alleging hostile, work environment, retaliation and wrongful discharge based on his African American race under both Title VII and the New Jersey Law Against Discrimination (LAD) Id. at *6-7. Wilson alleged that M & M terminated him in retaliation for his complaints about a white coworker’s racially discriminatory behavior toward him. Id. However, M & M argued instead that the actual reason for Wilson’s termination was his excessive documented disciplinary infractions over a period of two years. Id.

In its decision the district court emphasized that even though M & M met its burden of articulating a legitimate nondiscriminatory reason for firing Wilson based on his extensive disciplinary record, Wilson would still have opportunity to prevail on his claims if he was able to show the reasons offered by the employer for firing him were pretextual, and in fact he was actually terminated in retaliation for the exercise of his protected right to complain of a racially biased hostile work environment. Id. (citing to McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) for the proposition that once a plaintiff makes prima facie showing of discrimination and a defendant successfully refutes it, the burden shifts to the plaintiff to show that defendant’s reasons were pretextual). To show pretext, the relevant standard requires a plaintiff to “demonstrate such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer’s proffered legitimate reasons for its actions that a reasonable factfinder could rationally find them ‘unworthy of credence.’” Wilson at *11 (quoting Keller v. Orix Credit Alliance, 130 F.3d 1101, 1109 (3d Cir. 1997).

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The Appellate Division recently held that in enacting the New Jersey Law Against Discrimination (NJLAD), the Legislature intended the Act to be construed as broad enough to extend to certain nonresidents who sought employment in the State. Calabotta v. Phibro Animal Health Corp., N.J. Super. LEXIS 100 (June 27, 2019).

Plaintiff David Calabotta, an Illinois employee, sued his New Jersey-based employer Phibro Animal Health Corporation under the NJLAD after his supervisors first failed to consider him for a promotion due to his wife’s battle with breast cancer. His employment was ultimately terminated. Defendant Phibro argued that Illinois law should apply because Calabotta resided in Illinois and worked out of the Illinois office. Id. at 6. However, Calabotta maintained that New Jersey law and the NJLAD should apply because the company headquarters were in Teaneck, the senior executives who made all employment decisions regarding Calabotta’s status were at the New Jersey headquarters, and the promotional position he sought was in New Jersey. Id at 6 and 11.

The court in Calabotta found that, after careful examination of the NJLAD’s text and legislative history that there was no legislative intent to limit LAD to job applications who live in New Jersey or to those who perform all of their employment functions in New Jersey. Generally, the best indicator of the legislative intent behind the enactment of a statute is the statute’s plain language. Calabotta, N.J. Super. at 25 (citing Lippman v. Ethicon, Inc., 222 N.J. 362, 380-81 (2015) and quoting Donelson v. DuPont Chambers Works, 206 N.J. 243, 256 (2011)). However, if a statute’s plain language is ambiguous, then courts look at extrinsic evidence for their analysis, such as legislative history. Parsons v. Mullica Twp. Bd. of Educ., 226 N.J. 297, 308 (2016). In this case, the confusion and ambiguity stemmed from the construction of the NJLAD’s preamble, which uses the word “inhabitant,” despite the fact that “inhabitant” is not used in the rest of the statute. Calabotta, N.J. Super. at 27-28.

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Recognizing the unique vulnerability of hotel housekeeping and room service employees who often work alone while cleaning guests’ rooms, New Jersey Governor Phil Murphy signed into law this month a requirement that ensures hotels with over 100 guest rooms provide its employees with panic button devices to protect them when confronted with sexual assault and harassment situations. This new law was proposed in the aftermath of the sexual assault of a 51-year old room cleaner in Bally’s Hotel and Casino in 2018, which sparked outrage among similarly situated workers throughout the state who feared for their safety. In enacting this law, which will take effect in January 2020, New Jersey becomes the first state to require such protection for its employees.

The new law additionally recognizes that hotel employees who are often recent immigrants who speak little English and therefore may feel intimidated to report inappropriate or criminal conduct for fear of retaliation from their employers. The public policy goals of this legislation are in line with existing pro-employee rights laws in effect in our state such as the New Jersey Law Against Discrimination (LAD).

The LAD provides a significant level of protection to New Jersey workers by prohibiting employers from retaliating against employees for complaining about harassment or discrimination. N.J.S.A., 10:5-12(d). Under the LAD, it is an unlawful practice “for any person to take reprisals against any person because that person has opposed any practices or acts forbidden under this act.” Id. The panic button legislation adds an additional layer of protection for hotel service employees underscoring the fact that hotel employers had been failing to adequately address these workers’ safety concerns.