Mandatory Arbitration Provision in Employee Handbook Held Unenforceable

We are pleased to report that the Appellate Division, in Morgan v. Raymours Furniture Company, Inc., rejected Defendant’s motion to compel mandatory arbitration.  In this case, the employer, Raymour, sought to compel arbitration based upon an arbitration policy contained in its employee handbook that was circulated electronically.  The handbook contained several disclaimers advising that nothing in the handbook could be enforced as a contract, and that none of the terms of the handbook could be enforced against the employer.

The Court emphatically rejected the Defendants’ claim that there was an enforceable arbitration agreement, and held that the same disclaimers that prevent a contract from forming against the Defendant also prevent a contract from forming against the Plaintiff.  Even more important, the Appellant Division ruled that a motion to compel arbitration is actually akin to a motion for an injunction, and that therefore the motion could be denied on purely equitable grounds.  This will permit Plaintiff employees to argue that motions to compel mandatory arbitration can be rejected based on grounds of fundamental unfairness.

Hopefully this decision will be upheld on appeal and Plaintiff employees will not be denied access to courts and juries on account of obscure arbitration clauses.

WAGE & HOUR – Compensable time for security screenings?

The recent U.S. Supreme Court decision in Integrity Staffing Solutions v. Busk is a blow to hourly employees nationwide.

The employees at issue in Integrity Staffing were employed to retrieve products and package them for delivery to Amazon customers.  These employees claimed that they were entitled to be paid for the time spent undergoing security screenings before leaving the warehouse each day.  They estimated that these screenings took about 25 minutes each day, or about 2 + hours per week.

The Court analyzed this case under the Portal-to-Portal Act, which exempts employers from paying employees for activities that are preliminary and postliminary to the “principal activity or activities.”  It found that the screenings were not the employees’ “principal activities” because Integrity Staffing had not hired them to undergo security screenings.  Moreover, it found that the screenings were not “integral and indispensable” to the employees’ work as warehouse workers because they could perform their jobs, retrieving packages, without the screenings.  The Court rejected the test used by the Ninth Circuit – whether an employer “required” a particular activity – in determining whether such activity was compensable under the federal wage and hour laws. The Court stated that that standard would be too broad and would run contrary to the intent of the Portal-to-Portal Act.

This decision is clearly a significant victory for employers, who now have clear guidance that in the vast majority of cases, the time an employee spends undergoing security screening is not compensable under federal law.  But employers should still proceed carefully – particularly if their screenings result in employees waiting significant amounts of time.  The Court alluded to the fact that requiring employees to wait a significant amount of time for security screening could trigger union demands to be paid for such time.

Dunkin’ Donuts Sued for Failure to Pay Overtime to its “Assistant Managers”

A class action lawsuit has been commenced in Pennsylvania against Dunkin’ Donuts based on its failure to pay overtime to its “assistant manager” employees. According to the lawsuit, the assistant managers, who work more than 50 hours per week, perform such “non-exempt” duties such as baking, serving, cashiering, and cleaning. Thus, according to the lawsuit, these employees are entitled to overtime pay. Further, the employees allege that Dunkin’ Donut falsified their time records so that they would only reflect a 50 hour work week, although they frequently worked up to 60 hours per week. Considering the number of hours worked by these assistant managers, they made less money per hour than their staff.

These types of business practices are not only illegal but unfair to competing businesses who adhere to the minimum wage and overtime laws. Moreover, these types of practices hurt the economy overall by reducing the spending power of working class employee-consumers who contribute greatly to the economic activity of our country.

If your employer calls you an “assistant manager” but requires you to cook, clean, serve and cashier as part of your duties, without any overtime compensation, you should seek legal advice on whether you may be entitled to overtime. As the “lead plaintiff” in a class action lawsuit, you are entitled to extra monies if the lawsuit is successfully resolved.

NJ Minimum Wage Set to Increase in January 2015

New Jersey’s minimum wage will increase by 13 cents in January 2015, from $8.25 to $8.38. The minimum wage in our State is indexed to keep pace with inflation, thanks to a constitutional amendment which passed overwhelmingly in November of 2013. While many consumer and labor advocates maintain that the minimum wage still cannot support a working family, they are thankful that the wage is set to rise each year. Business advocates, on the other hand, predict that indexing the minimum wage will cost 31,000 jobs over ten years, and disproportionately affect small business owners.

We support efforts to increase the minimum wage to a level that can support working families. The dire predictions of some in the business community have not come true in the past, nor are they likely to come true in the future.

Paid Sick Leave Gains Steam in New Jersey

Four more New Jersey’s cities, Paterson, East Orange, Passaic, and Irvington, have adopted paid sick leave ordinances similar to the one which was passed in Jersey City late last year. These laws make it mandatory for employers with more than 10 employees to pay employees for up to five sick days per year. The state legislature is currently considering a bill which would extend paid sick leave to employers state-wide.

Proponents of the bill point to the fact that there are 1.2 million New Jerseyans who currently do not get paid if they take a sick day, which results in a big hit to our economy. At the same time, studies have shown there is no significant downside to employers, a large majority of whom have reported no negative consequences to their profits.

This kind of common-sense legislation will benefit New Jersey’s working families and employers and we wholeheartedly support it.

NJ Legislature Introduces Bill to Limit Non-Compete Agreements

New Jersey State Assemblymen Peter J. Barnes, III, Joseph V. Egan and Wayne P. Deangelo recently introduced a bill in the New Jersey State Assembly which limits the enforceability of certain post-employment restrictive provisions in employment contracts if the individual who is subject to these restrictions is eligible for unemployment compensation in the state. The bill provides that if an unemployed individual is found to be eligible to receive unemployment compensation benefits, that individual shall not be held bound by any covenant, contract or agreement not to compete, not to disclose or not to solicit.

The rationale behind the bill is to make it easier for a terminated employee to become re-employed. Although it is unclear if the Governor will ultimately sign the bill into law, there appears to be support within the state Assembly and Senate.

The bill, as written, only applies to agreements entered into after the date of the law’s enactment. Therefore, we expect to see more employers requiring that their employees sign these restrictive covenants in the near term in order to avoid potential coverage under the law. Employers may also design these contracts to provide for severance in the form of salary continuation pay so that the former employee may not be deemed eligible for unemployment during the term of the non- compete/non-solicitation.

The issues surrounding most post-termination agreements are complicated. We suggest that both the executives required to sign these agreements, as well as the companies who would like to enforce these agreements, consult a reputable employment law attorney to determine if the contract is reasonable and enforceable.

NJ Court Issues Good Decision for the Unemployed

The New Jersey Appellate Division, in the case of Silver v. Board of Review, has ruled that in order for the Department of Labor to reach a finding of “severe misconduct,” which effectively disqualifies a claimant from eligibility for unemployment compensation benefits, it must find intentional, deliberate misconduct. Practitioners who represent workers in unemployment appeals have been anxiously awaiting this bright line standard. Prior to this, the Appeal Tribunal had been randomly and unjustifiably disqualifying workers from unemployment compensation benefits under this “severe misconduct” provision.

The severe misconduct category was added to New Jersey’s unemployment compensation law in 2010 and was intended to be an intermediate form of misconduct, requiring greater culpability than simple misconduct, but less than gross misconduct. The statute provides some examples of “severe misconduct” but does not define this term. Needless to say, this ambiguity has led to inconsistent and unfair denials of benefits to employees whose conduct could not reasonably be deemed to be severe. The misinterpretation of this new standard by the Department of Labor has had devastating effects. So many claimants were disqualified from benefits that the waiting time for an appeal before the Appeal Tribunal increased from three weeks to six months. Workers were completely denied due process when their benefits were denied without good cause, since they were not afforded a fair hearing for more than six months. This destroyed the entire purpose of having unemployment as a safety net. Some workers have had no choice but to declare bankruptcy while waiting to find out if they would be eligible for unemployment benefits.

In the Silver case, the claimant was a full-time teacher at the Middlesex County Youth Facility. The Facility had a rule limiting and accounting for the distribution of pens to students in order to avoid their use as a weapon. Over Ms. Silver’s nine years of employment at the Facility, she had been written up for six previous incidents of student theft. On the last day of her employment, she had handed pens out to each student and thought she had accounted for all of the pens at the end of class. Shortly after dismissing the students she realized that one pen was missing and she immediately reported the potential security breach. The Facility then terminated Ms. Silver for this “infraction.”

Ms. Silver applied for unemployment benefits, and was denied all benefits due to a finding of severe misconduct.

In its decision, the court emphasized that in order to be “severe misconduct”, an employee’s actions must at least rise to the established definition of “misconduct” under the statute. “Misconduct” requires an employee’s actions to be “intentional, deliberate, and malicious.” Therefore, simple negligence or absenteeism beyond the employee’s control can never be “severe misconduct” because it does not satisfy the definition of the lower tier “misconduct.”

There is currently before the New Jersey Senate a bill that I have written about in a previous blog post, which more clearly and fairly defines the tiers of disqualification for unemployment compensation benefits. Until this bill becomes law, the Appellate Division has provided a clear set of guidelines for future unemployment claims.

Top Ten Ways to Maximize Your Unemployment Insurance Benefits

Traub Law, LLC has recently published a white paper entitled “Top Ten Ways to Maximize Your Unemployment Insurance Benefits.” Readers of this blog and visitors to our website can download this white paper for free.

The paper describes several ways that employees can improve their chances of being awarded unemployment insurance benefits. Some are obvious, such as “do not resign voluntarily.” Some are not so obvious, including what to say and what not to say to the Department of Labor at the initial fact-finding teleconference.

If you are recently laid off or terminated from your job, or considering whether or not to resign, take a few minutes to read up on this important subject.

Employees Told Not To Gamble on Job Security at New Casino

Revel Casino, soon opening in Atlantic City, has announced an unusual policy of setting term limits on certain employees. The Casino will be setting term limits of four to six years on front line employees, which includes employees who would have face time and/or interact with guests in any way such as dealers, waiters, or bellhops. The Casino comments that the policy will ensure that highly professional staff will be attracted to work for them.

The term limit policy has been met with some criticism. One employment lawyer from Philadelphia points out that the policy may be a way for the Casino to age discriminate in a low profile manner as the policy allows the casino to regularly clear out older employees.

This is yet another example of employers taking advantage of a tough job market. Atlantic City casinos have recently let go many employees who will not be deterred from applying to Revel despite the term limits. They reason that a job with term limits is better than no job at all. The Casino is expecting to bring in 2.4 billion in revenue and provide 5,000 full time jobs. Many hope that the Casino helps revive Atlantic City which has been struggling to maintain jobs.