Currently, there is no New Jersey state law requiring private sector employers to provide employees with paid or unpaid sick leave. However, the New Jersey State Senate has fast tracked legislation, Bill 799, to impose a mandatory sick leave requirement on private employers.  S-799 stipulates that all companies, regardless of size, would have to provide at least five, and as many as nine, sick days per year to all of their employees – even part-time workers.   More specifically, the Senate bill would require employers to grant workers an hour of paid sick leave for every 30 hours worked.  Workers at businesses with fewer than 10 employees would be able to accrue up to 40 hours of sick time that could be carried over from one year to the next.  Employers with 10 or more workers would be required to allow them to accrue and carry over up to 72 hours of sick leave.

At least nine municipalities in New Jersey already require some form of mandatory sick leave. For example, private employers within the city limits of Jersey City with 10 or more employees are required to provide up to 40 hours of paid sick leave per calendar year to eligible employees.

This debate in New Jersey is taking place amid a growing interest nationwide for paid sick leave, exemplified by an executive order issued by President Obama on Labor Day that requires federal contractors to provide employees with paid sick leave.

Employers should stay abreast of developments on this bill which, if passed, would require employers to rewrite their existing sick leave policies and perhaps rethink their vacation and other leave policies. Employers who operate in multiple states should also follow changes in local and state laws, as other jurisdictions and cities, Philadelphia, for example, have enacted paid sick leave laws which may affect out- of-state employers operating within their jurisdictional limits.  Hill Wallack employment law attorneys are available to help navigate paid sick leave laws and how they may affect clients in New Jersey, New York, and Pennsylvania.

By: Susan Swatski, Esq. (sswatski@hillwallack.com) and Jessica Seiden, Summer Associate

As workplaces take on organizational restructuring, many employees become misclassified as independent contractors. This misclassification has significant impact on workers, particularly in low wage industries. When employees are wrongly characterized as independent contractors, they do not receive labor protection rights, such as minimum wage, overtime, unemployment, and worker’s compensation. The U.S. Department of Labor’s Wage and Hour Division recently provided additional guidance to aid employers in determining how to classify their workers.

An agreement between an employer and a worker designating the worker as an independent contractor is not indicative of the relationship and is not relevant to the status. The Fair Labor Standards Act (“FLSA”) applies a multi-factor “economic realities test” to determine whether a worker is an employee or an independent contractor. A worker who is dependent upon finding employment in the business of others is considered an “employee,” whereas a worker in business for him or herself is considered an “independent contractor.” The Administrator’s application of the “economic realities” test considers six independent factors, and no factor alone is sufficient to determine if a worker is “economically dependent” on the employer; all of the factors must be considered in each case.

The first factor to be considered is whether the work done is an “integral part of the employer’s business.” If the work performed is integral to the employer’s business, it is more likely the worker is economically dependent. Work can be integral even if it is performed away from the employer’s premises. The second factor is whether the “worker’s managerial skill affects the worker’s opportunity for profit or loss.” A worker in business for his or herself will typically have such an opportunity for profit. The focus is whether the worker exercises managerial skills and whether those skills affect the worker’s opportunity for both profit and loss. The third factor to be considered is “how the worker’s relative investment compares to the employer’s investment.” An independent contractor makes investments that support a business beyond one particular job. These investments must be significant to indicate the worker’s independence. Investing in tools and equipment is not necessarily a business investment or capital expenditure that indicates the worker is an independent contractor, because they may simply be required to perform the necessary work for the employer.

The fourth factor is whether “the work performed requires special skill and initiative.” Business skills, judgment, and initiative are more indicative of independent contractor status than technical skills that are used to perform the work. Even specialized skills do not indicate that workers are in the business for themselves. The fifth factor employers should consider is whether the “relationship between the worker and employer is permanent or indefinite.” Permanency suggests employment status, while working on a single project that is not continuous or repeating is more akin to an independent contractor. A lack of permanence with an employer is indicative of independent contractor status if it results from the worker’s own independent business initiative, rather than the operational characteristics of the industry. The sixth and final factor to be considered is the “nature and degree of the employer’s control.” A worker must maintain and exercise meaningful control of his or her work to be considered an independent contractor.

Under the FLSA’s broad definition of employ as “to suffer or permit to work,” most workers fall into the employee category. This expansive definition must be taken into account while applying the “economic realities” test to determine if a worker is truly an independent contractor. Taking into account the ultimate issue of whether the worker is in business for him or herself or economically dependent in the application of the “economic realities” test will prevent the detrimental outcomes of misclassification.

If your company hires independent contractors, you should consider having skilled employment counsel review those workers’ relationship with the company to ensure compliance with the FLSA.

By: Susan L. Swatski, Esq. (sswatski@hillwallack.com) and Bryan A. Coe, Summer Associate (bcoe@hillwallack.com)

Employees seeking to support their employment discrimination litigation by removing confidential documents from their place of work should think again. That conduct, commonly referred to as “self-help” was recently dealt a blow in State v. Saavedra. Previously, in Quinlan v. Curtiss–Wright Corp., the New Jersey Supreme Court established a “totality of the circumstances” test for balancing an employee’s right to access and use documents during workplace discrimination litigation against an employer’s interest in protecting confidential documents. The New Jersey Supreme Court recently revisited the issue in State v. Saavedra, in which the court addressed whether an employee could face criminal charges for engaging in self-help to obtain confidential documents during civil litigation.

In State v. Saavedra, the employee removed documents from her employer, the North Bergen Board of Education, to assist in her employment discrimination claim. In response to a request from the employer to produce all confidential documents in her possession, the employee produced the documents which she removed from her employer. Upon learning of this, the employer notified the County Prosecutor, and the employee was indicted for third-degree theft by unlawful taking of public documents.

The employee argued that taking documents was allowed under the Quinlan “totality of the circumstances” test. In deciding the Saavedra case, the New Jersey Supreme Court, in a 6-1 decision, found that “nothing in Quinlan states or implies that the anti-discrimination policy of the Law Against Discrimination immunizes from prosecution an employee who takes his or her employer’s documents in use in a discrimination case.” However, the employee would be able to assert, during her criminal prosecution, that her intent was to use the documents in her discrimination litigation. The Supreme Court then articulated the following five factors for a jury to use when determining if an employee has a “claim of right” to use employer documents: (1) the contents of the documents; (2) the presence or absence of a confidentiality policy; (3) the privacy interest at stake; (4) the extent to which the employee disclosed the documents; and, (5) the employee’s reason for taking the documents instead of seeking them through discovery. This “claim of right” providesa defense to criminal charges, and the jury would weigh these factors to determine whether it was appropriate to remove the documents.

In the wake of the Saavedra decision, employers should make sure employees who handle confidential information sign a confidentiality or non-disclosure agreement. Having this signed agreement will weigh in an employer’s favor if an employee attempts to establish a “claim of right” during a civil proceeding. Additionally, the employee handbook should list how confidential documents should be handled and what the consequences of mishandling those documents are, including potential criminal prosecution.

If you are an employer, who regularly deals with confidential information, you should seek legal advice to determine whether your employment policies accurately protect you from an employee taking those documents from your possession to use in employment litigation.

By: Susan L. Swatski, Esq. (sswatski@hillwallack.com) and Bryan A. Coe, Summer Associate (bcoe@hillwallack.com)

An unpaid internship can be beneficial to both interns and employers. Interns can gain valuable experience in their field while employers can help educate people who one day may work for their companies. However, confusion exists as to what type of experience must be provided to an intern for the experience to replace a paycheck. By providing an unpaid internship instead of a paid position, employers put themselves at risk of legal action, which can result in fines and back pay to the intern. A recent decision from the United States Court of Appeals for the Second Circuit provides employers with much needed guidance to craft their internship programs.

In most states, employers must conform to the United States Department of Labor’s Intern Fact Sheet when deciding if an internship qualifies to be unpaid. The DOL’s requirements are: (1) the internship should be similar to training that would be provided in school; (2) the experience should be for the student’s benefit; (3) the intern should not be a replacement for a regular employee, but instead, should be under the supervision of a regular employee; (4) the employer must provide training and not derive an immediate advantage from the intern’s activities; (5) the intern is not entitled to a job at the end of the internship; and (6) both the employer and the intern have an agreement that the intern will not receive payment for work performed. According to the Department of Labor, all six items must be present for an internship to qualify as unpaid.

In Glatt v. Fox Searchlight Pictures, Inc., the United States Court of Appeals for the Second Circuit determined that the proper question to ask is whether the intern or the employer is the “primary beneficiary” from the relationship. The Court of Appeals replaced the Department of Labor’s six factor Intern Fact Sheet with the following seven non-exhaustive factors to aid in answering whether an internship can be unpaid: (1) the extent to which the intern and the employer understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa; (2) the extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions; (3) the extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit; (4) the extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar; (5) the extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning; (6) the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and, (7) the extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. When deciding if a person should be classified as an employee, employers should balance these factors. No one factor is dispositive to conclude the intern should be not considered an employee.

A second important point to be taken away from the Glatt ruling is that interns will find it much harder to certify a class to bring their claims, because although the primary beneficiary test may be partially answered using generalized proof, the more substantial questions require individualized proofs to very fact specific inquiries.

Employers should be aware of the Second Circuit’s break from the DOL’s Intern Fact Sheet and account for the distinctions between the “primary beneficiary test” and the Fact Sheet when creating an internship program. As a general matter, when creating an internship program, employers should focus on the educational component. Programs such as guest speakers and information sessions can help tip the scale towards the internship being more beneficial to the employee. The greater the amount of educational opportunities that are present, the more likely a court will find an intern to be the “primary beneficiary” of the relationship.

Currently, only employers who are located in New York, Connecticut and Vermont are affected by this ruling. However, employers in other states should be aware of this ruling because it shows a change in thinking regarding unpaid internships. If your company offers an unpaid internship, you should have it reviewed by skilled employment law counsel to ensure the program complies with the law in your jurisdiction.

By: Susan L. Swatski, Esq. (sswatski@hillwallack.com) and Bryan A. Coe, Summer Associate (bcoe@hillwallack.com)

The legal landscape surrounding marijuana laws has drastically changed over the last decade. Currently, 23 states, including New Jersey and New York, allow the use of medical marijuana despite the federal government’s classification of marijuana as a schedule 1 illegal drug. Pennsylvania currently has legislation pending to legalize the use of medical marijuana. The conflict between state and federal law leaves employers in states that protect against retaliation for an employee’s lawful activities guessing whether they can test for, and prohibit, the use of medical marijuana. A recent Colorado Supreme Court unanimous decision may help to alleviate some of this guesswork.

In Coats v. Dish Network, the court considered whether medical marijuana use was a “lawful activity” under Colorado’s Lawful Activities statute. This statute made it illegal for an employer to terminate an employee for engaging in a lawful activity, off the premises, during non-working hours. The plaintiff in the case, is a registered medical marijuana patient, who brought suit against his former employer for wrongful termination after he was fired for using medical marijuana outside of work hours. In determining the meaning of a “lawful activity”, the court rejected the argument that the Colorado State Assembly intended “lawful” to mean lawful under Colorado law. The court found that a “lawful activity” is an activity which complies with state and federal law. As a result, the court found that because the plaintiff’s medical marijuana use was illegal under federal law, the use was not protected by Colorado’s Lawful Activities statute.

New Jersey’s medical marijuana law has a provision where employers are not required to “accommodate the medical use of marijuana in any workplace.” New York’s medical marijuana law classifies patients as “disabled” making it illegal for employers to discriminate against medical marijuana users. New York’s law precludes an employer from taking disciplinary action against certified medical marijuana users for failing a drug test. Further, employers may need to make a reasonable accommodation for an employee who uses medical marijuana, although this second point is still contentious and unsettled. Pennsylvania’s pending legislation is similar to New York’s in that an employer could not consider a positive drug test for marijuana when making an employment decision unless that employee was impaired by or possessed marijuana while on the employers premises or during working hours.

The Dish Network decision follows decisions from courts in California, Oregon, and Washington – each of these states permit the use of medical marijuana – that employers can fire an employee for medical marijuana use. The legal landscape surrounding the medical use of marijuana remains dynamic, particularly as support grows for the federal government lightening its stance on medical marijuana’s drug classification. All businesses that have drug testing policies should be aware of this changing legal landscape.

Employers should seek legal counsel to accurately assess their drug testing policies to confirm compliance with all applicable laws. If you feel this is an area of concern for your business, seek legal counsel from one of our skilled employment law attorneys. We are ready to help.

By: Susan L. Swatski, Esq. (sswatski@hillwallack.com)

On September 30, 2014, the Colorado Supreme Court is set to hear argument in Coats v. Dish Network, L.L.C., about an employee’s right to use medical marijuana during non-work hours, and the employer’s right to test for the drug and discipline users. At issue is the right of an employee to use medically prescribed marijuana to help with painful spasms when he/she is not at work. Dish Network contends that it should not have to retain employees whose marijuana use violates federal law and whose performance as a result of their marijuana use could be an issue.

By: Deniz S. Uzel, Summer Associate (duzel@hillwallack.com and Susan L. Swatski, Esq. (sswatski@hillwallack.com

On June 14, 2013, the Fourth Circuit Court struck down the National Labor Relations Board’s rule that would have required six million private employers to hang posters about workers’ right to unionize or to face penalties for anti-union bias for refusing. The court noted that even the National Mobilization Against Sweatshops, a worker-advocacy group, admitted that very few workers learn about their rights through postings. The NLRB has rarely engaged in rulemaking in its seventy-seven years of existence, but the Fourth Circuit’s ruling makes clear that when it does, it may be acting outside of its legal authority. The Court explained that the part of the National Labor Relations Act that gives the Board power to issue rules, Section 6, does not allow the issuance of this type of rule because the NLRB is supposed to be a reactive agency. Accordingly, the court found that the posting rule is outside of the bounds of the law.