EXTINGUISHING THE COMMON MISCONCEPTION THAT THE NLRA/NLRB ONLY ADDRESS UNIONIZATION AND COLLECTIVE BARGAINING ISSUES
By: Susan L. Swatski, Esq. (sswatski@hillwallack.com / link to bio) In 2012, the NLRB’s General Counsel’s office has been keeping employers with non-unionized workforces on their toes by expanding the reach of Section 7 of the National Labor Relations Act (“NLRA”) to non-unionized workers to address issues ranging from at-will agreements to social media policies to employer property rights and employee access. As a result of this infringement into the non-unionized workforce, we are seeing an increase in challenges to employer handbook policies under the NLRA. The first step for employers to protect themselves is to ensure that their policies are complaint with the recent rulings under the NLRA. The “unlawful” workplace policies addressed by the NLRB’s General Counsel’s office in 2012 include: 1. A policy addressing workplace confidentiality and the sharing of confidential information that does not expressly identify categories of non-NLRA protected confidential information. This ruling is particularly significant and troubling in the context of harassment investigations because it is inconsistent with an employer’s obligation under the Equal Employment Opportunity Commission’s enforcement guidance to maintain confidences during investigations; 2. A social media policy that addresses employees’ personal on-line posts and warns that posts must be “completely accurate and not misleading.” So far this year, the General Counsel’s office has issued three reports/rulings/advisory memos addressing employers’ social media policies, and in each has identified various employer policies that are allegedly overbroad under the NLRA. The NLRB has issued a model social media policy, which can be accessed at https://www.nlrb.gov/publications/policies; 3. An employee professional conduct policy that requires employees to communicate in a “professional tone” without making “objectionable or inflammatory comments;” 4. A restriction on an employee’s ability to communicate with the media; 5. A requirement that an employee enter into an arbitration agreement that includes class action waivers. The NLRB’s recent ruling against such agreements is inconsistent with numerous state and federal court decisions, including the U.S. Supreme Court’s pro-arbitration decision AT&T Mobility v. Concepcion; 6. A policy to limit employees’ off-duty access to working areas if that employer allows employees to access working areas when they are off- duty in certain circumstances such as attending a work function/party or picking up a check. Employers should ensure that any off-duty access policy is uniformly and non-discriminatorily enforced; and, 7. A handbook acknowledgement providing: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The NLRB successfully litigated that asking employees to agree that their at-will status cannot change violates their rights to try to change it through unionization. Each of these policies is ripe for attack by a union seeking to organize a non-union workforce. In the wake of these recent rulings and opinions, employers should review their employment policies with experienced labor counsel to ensure that their policies are up to date and in compliance with the recent more restrictive view of the NLRB. At a minimum, employers should be sure that none of their policies “explicitly restrict Section 7 protected activities.” If a workplace policy does not explicitly prohibit Section 7 activities, then, under the NLRA, employers should look to see if: “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has...
read moreTORRES v. GRISTEDE’S OPERATING CORP. –
By: Susan L. Swatski, Esq. (email / link to bio) On October 12, 2012, nine legal and workers’ rights organizations urged the Court of Appeals for the Second Circuit to label John Catsimatidis, the owner and CEO of New York City grocery chain Gristedes Foods Inc., an “employer” under the Fair Labor Standards Act (“FLSA”) which would make him personally, jointly and severally liable for a $3.5 million overtime class action settlement. The suit against Gristedes dates to 2004, when Carlos Torres filed a class action seeking damages on behalf of hundreds of former co-managers and department managers of Gristedes. The parties agreed to a settlement on the eve of trial and in December 2010, the court approved the settlement. Gristedes had trouble paying the settlement. In September 2011, the Southern District of New York ruled that Mr. Catsimatidis was individually responsible for the settlement payments. The District Court reasoned that Congress specifically created an expansive definition of “employer” in the FLSA that included both entities and individuals. The FLSA defines the word “employer” broadly to include “any person acting directly or indirectly in the interest of an employer in relation to any employee.” 29 U.S.C. § 203(d). “Person” includes individual, so that individuals may be held liable or responsible for violations of the law by a corporate employer. Id. at § 203(a). As a result, the traditional requirements for piercing the corporate veil are not required to establish individual liability under the FLSA. The District Court found that Gristede’s unlawfully “sought to treat workers as ‘hourly’ for some purposes (e.g, docking them for hours not worked during the workweek), but ‘salaried’ for other purposes (e.g., not paying them overtime for hours worked in excess of the workweek).” The Court also gave particular credence to the following undisputed facts reflecting Mr. Catsimatidis’ “absolute control” over the company: (1) he is the sole owner, President and CEO of Gristedes; (2) he owned the company for 20 years; (3) he has the authority to open and close stores; (4) he can set prices for goods offered for sale; (5) select the décor for the stores; (6) control any store’s signage and advertising; (7) he could declare bankruptcy; and, (8) he could provide the personal signature necessary for a bank letter of credit to be issued in favor of Gristedes. Mr. Catsimatidis appealed to the Circuit Court to overturn the decision arguing that his deputies handle the day-to-day operations of the company and that allowing the ruling to stand would lead to unwarranted individual liability for executives at corporations where middle management make the operational, day-to-day calls. In response, the workers’ rights organizations argued in their brief that Mr. Catsimatidis exercised “more than enough operational control over the chain to hold him personally liable for the company’s labor violations.” The Court is expected to issue its decision on the appeal in early spring. We will continue to follow the case and keep you posted. Although individual liability under the FLSA is not a new concept, this case stands out because if the CEO of such a large, high profile company is held liable for how his company classified low-level management for overtime purposes (i.e. “exempt” or “non-exempt”), then owners and business executives should re-evaluate the extent to which they solely rely on...
read moreBe Careful What You Post: Termination Of Employee For Facebook
By Kenneth A. Skroumbelos, Esq. (email / link to bio) On October 1, 2012, a decision issued by the National Labor Relations Board (NLRB), which is an agency of the United States Government charged with remedying unfair labor practices, upheld the termination of a BMW salesman for postings made to his Facebook page. In the case of Karl Knauz Motors, Inc., NLRB ALJ, No. 13-CA-46452, 9/28/11, administrative law judge Joel P. Biblowitz found that a BMW salesman engaged in unprotected activity when he posted disparaging comments and photographs regarding an accident which occurred at an employer owned neighboring Land Rover dealership on his Facebook page. The accident which was the subject of the Facebook posting occurred at the neighboring Land Rover Dealership when a sales person permitted a thirteen year old son of a customer to sit in the driver seat of a running vehicle. The thirteen year old apparently stepped on the gas pedal and, after driving over his father’s foot, drove the vehicle into an adjacent pond throwing the passenger salesperson into the water. The terminated BMW salesman who observed the accident at the Land Rover dealership posted to his Facebook page a photograph of the vehicle in the pond with the following comment: This is what happens when a sales Person sitting it the front passenger seat (Former Sales Person, actually) allows a 13 year old boy to get behind the wheel of a 6000 lb. truck built and designed to pretty much drive over anything. The kid drives over his father’s foot and into the pond in all about 4 seconds and destroys a $50,000 truck. OOOPS! Though there was also a concurrent sarcastic Facebook posting regarding the choice of refreshments served during an event surrounding the launch of the BMW 5 Series, which could arguably have been a protected activity since the choice of refreshments could have an effect on compensation, Judge Biblowitz found as fact that the Land Rover posting was the basis for termination. Section 7. of the National Labor Relations Act (NLRA) provides that “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection….” When employees act together to complain about their work place, including complaints about management, pay, and benefits, those actions are protected concerted activities under the NLRA. In upholding Judge Biblowitz’s decision, the NLRB found that the employee’s disparaging Facebook posting of the Land Rover accident was not a protected concerted activity under the NLRA because it was not a discussion involving the improvement of the terms and conditions of employment. Since the employee’s termination was the result of the disparaging Facebook posting regarding the accident at the Land Rover dealership and was unrelated to his position as a BMW salesman, the termination was not the result of interference with protected activity. In so holding, the NLRB found that the employer Karl Knauz Motors, Inc. did not violate federal labor law. The information provided in this blog entry is not intended to serve as legal advice, and is not a substitute for consultation with an experienced employment attorney. Most situations are highly fact specific. Employers should...
read moreEMPLOYER EMERGENCY PREPAREDNESS: IS YOUR BUSINESS PREPARED IF A HURRICANE HITS?
by Susan L. Swatski, Esquire (email / link to bio) Many employers learned the hard way from the fury of Hurricane Irene in 2011 that hurricanes can present unique challenges for employers. Prudent employers should update your emergency plans to ensure not only the continuity of your operations and employee safety, but also potential legal issues that could arise as the result of a natural disaster. This blog entry is intended to acquaint you with at least some of the Federal and State employment-related laws that may be implicated. Note that the issues discussed below apply to any natural disaster situation, such as flood, fire, blizzard snowfall, earthquake etc. Fair Labor Standards Act (“FLSA”) The FLSA does not require employers to pay non-exempt hourly employees who are excused from work as a result of a hurricane. An exception exists for employees who receive fixed salaries for fluctuating work weeks, in which the employee agreed to work an unspecified number of hours for a specified salary. In this situation, an employer must pay these employees their full weekly salary for any week in which any work was performed. An employer is required to continue to pay exempt employees for their time away from work if the workplace is closed for less than a full work week. However, an employer may require the employee to use accrued vacation time for the full days that he or she is unable to report to work during that time. If the employer is open for business, the Department of Labor considers an absence caused by transportation difficulties due to weather conditions an absence for “personal reasons.” In this situation, an employer may place an exempt employee on leave without pay or require the employee to use accrued vacation time. Volunteers: There is no such thing as a “volunteer” for a private for-profit business. Employers must compensate workers for their service. Employers should be extremely cautious about having employees “volunteer” to assist the employer during an emergency if the work performed benefits the company and, in the regular course, would be performed by employees. Leave Banks: The FLSA does not regulate the use of leave banks. Employers may offer employees paid leave for time spent volunteering to assist with disaster relief efforts. Closure or Layoffs Where the workplace closes for an extended period or layoffs are necessitated as a result of a natural disaster, if your business has more than 100 employees, then the WARN Act requires you to give your employees as much notice as is “practicable.” If an employer gives less than 60 days notice, the employer must prove that the conditions for the exception have been met. Employee Benefits If your business is unable to open for an extended period of time, your employee benefits may be affected. Because benefits are very fact specific, as a starting point, look to ERISA, the FMLA and COBRA as well as your benefits coordinator to be sure to assess your obligations. Advice from the IRS The IRS recently conducted a podcast to provide employers with information to prepare themselves for a natural disaster. Here’s a thumbnail of what that podcast addressed: Records Retention: Create a backup set of records electronically that is stored away from the original set. These records include bank statements, tax returns...
read moreTIPS FOR DRAFTING A RESTRICTIVE COVENANT IN AN EMPLOYMENT AGREEMENT
by Christina L. Saveriano, Esquire (email / link to bio) In order for an employer to protect their confidential business information, including client contacts, it is often advisable for an employer to require employees to enter into an employment agreement containing a restrictive covenant. Such an agreement should be presented to the employee by the employer at the beginning of the employment relationship. However, in order for the restrictive covenant to be enforceable the employer must be certain that the terms of the restrictive covenant are reasonable. That is, the employment agreement must be specifically drafted to be reasonable in accordance with established New Jersey law. First, There Must Be Adequate Consideration First, in order for a restrictive covenant to be enforceable there must be sufficient consideration for the employee to enter into the agreement. Simply, the employee must be getting something in return for entering into the employment agreement. New Jersey courts have held that continued employment is sufficient consideration for an employee to enter into an employment agreement with an employer. That means, that as long as the employer promises to employ the employee after the agreement is executed, for a reasonable time, the test for adequate consideration will be deemed satisfied and the Court will continue to the next step to determine the validity of the employment agreement. Second, the Covenant Must Be No More Restrictive Than Is Necessary Second, the covenant must be no more restrictive than is necessary to protect legitimate business interests. Simply, the employer’s interests must rise to the level of a proprietary interest deserving of judicial protection. That means that the restrictive covenant must do more that merely attempt to stifle competition. New Jersey law has determined that an employer has a protectable interest in its trade secrets and other knowledge that the employee gains exclusively through the contractual employment relationship. Thus, the agreement must seek to protect customer relationships, trade secrets and other confidential information. The agreement cannot simply seek to prevent an employee from competing with the employer after the employee’s employment terminates. Third, the Covenant Must Impose No Undue Hardship on the Restricted Party Third, the restrictive covenant must impose no undue hardship on the employee. Hardship is determined by a weighing of the burden placed on the employee by the restrictive covenant. Therefore the restrictive covenant cannot be for a period of time beyond that which an employer needs to protect its customer base. Further, the covenant should not extend beyond the territorial area needed to protect the interests of the employer. Fourth, the Covenant Must Not Be Injurious to the Public Interest Fourth, the restrictive covenant must not be injurious to the public interest. This requirement considers what if any injury the public would suffer if the restrictive covenant is enforced. Generally, restrictive covenants have been considered injurious to the public interest where the restrictive covenant is contained in a medical practice agreement. In such matters the injury to the public results from the public’s lack of ability to continue to obtain medical services from their physician in a reasonable manner or where the restriction would create a shortage of physicians in the area. Conclusion In sum, when drafting an employment agreement, the employer must consider the following requirements: 1. There must be sufficient consideration for...
read moreEmployment Agreements Will Need to Be Reviewed Upon Passage of New Trade Secrets Act
by Christina L. Saveriano, Esquire (email / link to bio) Your most important business asset is that which sets you apart from your competitors. If that asset is protectable, confidential information and/or a “trade secret,” reviewing and analyzing recently-passed NJ legislation is required reading. The State Assembly has given final legislative approval to the New Jersey Trade Secrets Act leaving only final approval by Gov. Chris Christie before enactment. If passed, there may be significant implications for employers who possess information protected under the Trade Secrets Act. This warrants review of any current employment agreements or restrictive covenants currently in place for revision. Likewise, employers should consider entering into such agreements with employees if no such agreements are in place. As a starting point, employers need to review any existing agreements which define the term “trade secret” to confirm that it is consistent with the definition under the Trade Secrets Act. In addition, employers should consider alerting employees to the consequences of misappropriation of the employer’s trade secret which under the Trade Secrets Act include the entry of injunctive relief, imposition of punitive damages and an award of costs and attorney’s fees. Furthermore, employers need to be aware that an action for misappropriation of a trade secret against an employee, under the Trade Secrets Act, must be brought within three years after the misappropriation is discovered. Passage of the New Jersey Trade Secrets Act will create a statutory right for employers where only case law has existed to date. We at Hill Wallack stand ready to assist with any questions and assistance needed in view of this new...
read moreSilencing Employees During An Ongoing Investigation May Violate Title VII of the 1964 Civil Rights Act.
by Rashmee Sinha, Esquire (email / link to bio) The standard protocol among most employers when investigating a complaint of discrimination or harassment in the workplace is to instruct employees not to discuss the matter for obvious reasons, i.e. limit exposure to liability, and prevent attempts to taint the investigation process by putting a lid on the gossip mill so that employees are not led to modify or recant their statements. However, based on a recent letter from the United States Equal Employment Opportunity Commission, policies that warn employees that they could be subject to discipline or discharge for discussing an ongoing internal investigation may be unlawful. The EEOC claimed that the policy is illegal under Title VII, which prohibits workplace harassment and discrimination on the basis of, inter alia race, sex, and religious belief. The letter from the EEOC field office in Buffalo, which is dated August 3, 2012, is written to an unidentified employer and states: “You have admitted to having a written policy which warns all employees who participate in one of your internal investigations of harassment that they could be subject to discipline or discharge for discussing “the matter,” apparently with anyone. EEOC guidance states that complaining to anyone, including high management, union officials, other employees, newspapers, etc. about discrimination is protected opposition. It also states that the most flagrant infringement of the rights that are conferred on an individual by Title VII’s retaliation provisions is the denial of the right to oppose discrimination. So, discussing one’s complaints of sexual harassment with others is protected opposition. An employer who tries to stop an employee from talking with others about alleged discrimination is violating Title VII rights, and the violation is “flagrant” not trivial. In this case, telling the ___ women who complained of harassment that they were not to tell others about the alleged harassment is enough to constitute a harm under Title VII. There does not have to be a separate adverse action. In addition, your written policy is so broad that a reasonable employee could conclude from reading it that she could face discipline or charge for making inquiries to the EEOC about harassment if that harassment is being or has been investigated internally by your organization.” Employers may find some comfort in the fact that this letter is not yet EEOC law, and the analysis above may be limited to the specific charge of sexual harassment discussed therein. However, this rule does coincide with a similar decision by the National Labor Relations Board and seems to be going in the direction of becoming a legal standard. For now, it is still okay to ask employees not to discuss the specific facts of any interviews that take place during an ongoing internal investigation. But, the above letter should serve as a cautionary reminder to employers that they risk running afoul of the protections afforded to employees under Title VII if they impose a blanket prohibition against any form of discussion whatsoever regarding an ongoing internal investigation of harassment or discrimination. Thus, until further guidance is provided by the EEOC, a well-planned and documented investigation wherein employees are interviewed quickly (without an opportunity to coordinate their stories) has become even more critical. Employers who establish, disseminate and enforce policies and complaint procedures, conduct prompt,...
read moreEEOC Issues Enforcement Guidance And Best Practices For Employer
by Susan L. Swatski, Esquire (email / link to bio) For the first time in 25 years, on April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) refined its Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (the “Guidance”). The Guidance advises that the mere existence of a criminal record without more should not support the wholesale exclusion of otherwise qualified people from the workforce. Under the Guidance, an employer’s use of arrest and conviction information from background checks has to be “narrowly tailored” to the specific job. According to the National Employment Law Project in 2011, about 65 million people, or 1 in 4 Americans, have an arrest or conviction record and more than 60 percent of people in prison are people of color. As a result, the consideration of an applicant’s arrest or conviction record potentially has Title VII implications. Although the Guidance notes that having a criminal record does not create a protected status under Title VII, whether an employer’s reliance on a criminal record to deny employment violates Title VII depends on whether it is part of a claim of employment discrimination based on a protected class such as race, color, national origin etc. A claimant must prove that consideration of his/her criminal record resulted in either disparate treatment or disparate impact because of his/her protected status. Even if the employer believes that the applicant did engage in the conduct for which s/he was arrested, that information should prevent the applicant from employment only to the extent that it is evident that the applicant cannot be trusted to perform the duties of the position considering: (1) the nature of the job, (2) the nature and seriousness of the offense and (3) the length of time since the offense occurred. The Guidance recommends the following “best practices” for employers: (1) do not ask about convictions on job applications, and if and when an employer makes such an inquiry, the inquiry should be limited to convictions for which exclusion would be job related for the position in question and consistent with business necessity, (2) eliminate policies or practices that exclude people from employment based on any criminal record and (3) develop a narrowly-tailored written policy and procedure for screening applicants and employees for criminal conduct. The Guidance is just that “guidance” and not law. Currently, there is no Federal law that clearly prohibits an employer from asking about arrest and conviction records. Some states and localities impose restrictions on the use of inquiring about criminal conduct. As a result, employers should consider the state and local laws where they operate in addition to Federal law and EEOC Guidance. Employers may also want to seek legal counsel to develop a tailored policy to screen individuals for criminal conduct in consideration of how such conduct may be job related and consistent with business...
read moreConsequences of Giving an Employee the Hobson’s Choice of Resigning or Being Fired
by Susan L. Swatski, Esquire (email / link to bio) New Jersey employers should be aware of the recent Appellate Division decision in Lord v. Board of Review addressing the not uncommon scenario in which an employer gives an employee the Hobson’s Choice of either resigning or being fired. The Appellate Division in Lord clarified that for purposes of collecting unemployment benefits, the foregoing “choice” is moot; a resignation is the same as a firing leaving the former employee eligible for unemployment benefits. In Lord v. Board of Review, Lord, the petitioner/employee, told his employer that he had car trouble which would keep him from being able to do his job. His supervisor responded by telling Lord that he “had to resign” from his job “effective immediately.” Lord testified that he felt he “had no choice” but to leave his job, and he considered his job to have been terminated. Shortly thereafter, Lord applied for unemployment benefits. The Division of Unemployment Compensation denied his claim citing that Lord left his employment voluntarily. Under N.J.S.A. § 43:21-5(a), an employee who “has left work voluntarily without good cause attributable to such work” is ineligible for unemployment compensation benefits. The Appellate Division (NJ’s second-highest court) reversed the Division, finding that “[t]he undisputed facts show that the decision that appellant ‘had to resign’ was [the supervisor’s] alone, and therefore, there was nothing ‘voluntary’ about appellant’s separation from his employment.” In so finding, the Appellate Division relied in part on the New Jersey Supreme Court’s reasoning in Campbell Soup v. Board of Review, 13 N.J. 431 (1953) in which the Court found that leaving a job is voluntary only if “the decision whether to go or to stay lay at the time with the worker alone.” The Appellate Division further reasoned that there is no difference between telling an employee s/he is fired or has to resign. Employers should take from this decision that it is important to be sure that “resignations” are not disguised terminations. This decision highlights the importance of setting and following proper termination procedures in order to avoid costly lawsuits. Employers should consult employment counsel for assistance in establishing proper termination procedures. Employees should remember that cases such as Lord are highly fact sensitive; thus, they should not rely that if they opt to “resign” in order to avoid the stigma of being fired, that unemployment benefits will be...
read moreAFFORDABLE CARE ACT 101 FOR EMPLOYERS
by Susan L. Swatski, Esquire (email / link to bio) Now that the Affordable Care Act (“ACA”) has been upheld by the Supreme Court, the time has come for employers to start figuring out what the new law means to your business. Keeping in mind that feature length articles and undoubtedly books are being written on this topic, my goal here is to provide you with some quick and easy guidance to set you on the path to compliance. Question 1: Does the law mandate that employers provide insurance to their employees? Answer: No. The ACA does not require businesses to provide insurance. For businesses with fewer than 50 full-time and full-time equivalent employees, there are no consequences for not providing health insurance. When calculating how many full-time equivalent employees you have, part-time workers are considered. Question 2: How does the ACA help employers provide coverage to employees? Answer: You may be eligible for tax credits to help you pay for your employees’ insurance. The credits are as large as 35% today and rise to 50% in 2014. You might qualify if you: 1) have low-wage workers, 2) pay at least 50% of the premium cost, and 3) have up to 25 full-time equivalent employees. Be careful here, every worker you have may not be an “employee.” If you are unsure about a worker’s classification, seeking outside assistance is a good idea. Also, you can get more information on this at the IRS website: www.irs.gov/sbhtc. (Beginning in 2014, you will need to buy your company’s coverage through the Affordable Insurance Exchange in your State to get the tax credit.) Question 3: Can my business be hit with an extra tax because of the ACA? Answer: Technically, there are no new taxes on small employers in the ACA. However, starting in 2014, a large employer may have to pay an assessment if it does not offer affordable insurance. The assessment does not apply to businesses with less than 50 employees. Large employers that do not offer health benefits coverage at all may be required to pay an assessment of $2,000 per year for each full-time employee, excluding the first 30 full-time employees. Larger employers that do offer health benefits coverage that is “unaffordable” or lacks minimum value may be assessed a payment of $3,000 per year for each full-time employee receiving federal financial assistance. Employers with fewer than 50 employees are exempt from new employer responsibility policies. They don’t have to pay an assessment if their employees get tax credits through an Exchange. Question 4: Does the ACA affect employer-based plans for retirees? Answer: Yes. Employer-based plans that provide health insurance to retirees ages 55-64 can get financial help through the Early Retiree Reinsurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs. Question 5: Will my business be able to take advantage of the Affordable Insurance Exchange? Answer: In 2014, small businesses with fewer than 100 employees can shop in an Affordable Insurance Exchange, which is intended to give small business owners better choices and lower prices. An Exchange is a new marketplace where individuals and small businesses can buy affordable health benefit plans that must meet certain benefits and cost standards. Here are some milestone dates to be...
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