National Retailers Cease Using On-Call Shift Scheduling

In a positive development for workers, the New York Attorney General, Eric Schneiderman, announced that six major retailers have agreed to stop using on-call shift scheduling after an inquiry by a multistate coalition of attorneys general. On-call shifts involve employees required to call their employers a few hours before they are supposed to work, to see if they will be scheduled for work.

We have found that this arrangement is designed to provide the employer flexibility in case it’s labor needs increase or decrease. The problem for the worker is that he or she would presumably need to keep the day open, arrange for childcare, and forsake other opportunities without being compensated for their time. We are pleased that the companies, Aeropostale, Carter’s David’s Tea, Disney, PacSun and Zumiez, have voluntarily agreed to stop this unfair method of scheduling and eliminate a potential hardship for their employees.

Employer May be Held Liable for Retaliatory Intent of Low Level Employee

The Second Circuit in Vasquez v. Empress Ambulance Service, Inc., recently adopted the “cat’s paw” theory of liability under Title VII and found that the retaliatory intent of a low-level, non-supervisory employee may be ascribed to an employer where “the employer’s own negligence gives effect to the employee’s retaliatory animus and causes the victim to suffer an adverse employment decision.”

The Plaintiff in this case was an emergency medical technician. She reported to her supervisors that a fellow EMT had sexually harassed her. The harasser suspected that the Plaintiff had complained about his behavior and, in retaliation, manipulated a series of text messages and photos to make it appear as if it was in fact Plaintiff who was soliciting a sexual relationship with him, and presented the altered evidence to the Employer during its investigation.

The Employer then concluded that Plaintiff was having an inappropriate sexual relationship with the co-worker and terminated her. Plaintiff informed the Employer that the co-worker was lying to cover up his own indiscretions and offered to show the Employer her unaltered cell phone messages. The Employer declined to review Plaintiff’s cell phone and further refused to show her the “racy self-taken photo” that the co-worker claimed Plaintiff had sent him. Apparently, this photo was obscured and Plaintiff’s face could not be identified.

Plaintiff brought suit against the employer under Title VII of the Civil Rights Act and the New York State Human Rights Law, claiming that the Employer wrongfully terminated her in retaliation for her complaint of sexual harassment. The district court granted the Employer’s motion to dismiss the complaint on the theory that the co-worker’s retaliatory intent could not be attributed to the Employer and therefore the Employer could not have engaged in retaliation against Plaintiff.

The Second Circuit reversed on agency principles. As a result of the Employer’s negligent investigation of Plaintiff’s claims, the retaliatory intent of the low-level co-worker could be imputed to the Employer. The court adopted the “cat’s paw” theory in holding that even “absent evidence of illegitimate bias on the part of the ultimate decision maker, so long as the individual shown to have the impermissible bias played a meaningful role in the decision-making process.”

The court noted that the decision “should not be construed as holding an employer liable simply because it acts on information provided by a biased co-worker,” where such action is taken “non-negligently and in good faith.” Moreover, “an employer who negligently relies on a low-level employee’s false accusations in making an employment decision will not be liable under Title VII unless those false accusations themselves were the product of discriminatory or retaliatory intent.” The court seemed to be swayed by the egregious facts in this case – the Employer’s refusal to consider all evidence while conducting its investigation. The Employer had accorded the co-worker an “outsize role” in its own employment decision, which prompted the court to impute the employee’s animus to the Employer under a cat’s paw theory.

The theory of liability here could also be applied in a discrimination case. Employers are obligated to conduct a thorough investigation of an employee’s claims of harassment, discrimination and retaliation. It must take into account the potential biases and motivations of decision-makers and witnesses. Employers should document all aspects of an investigation and keep a clear record showing that all facts and potential motivations were considered when making a decision to discipline or discharge.

EEOC Releases New Guidance on What is a Reasonable Accommodation under the ADA

On May 9, 2016, the Equal Employment Opportunity Commission (“EEOC”) released new guidance on what is a reasonable accommodation under the Americans with Disabilities Act (“ADA”). The guidance makes clear that employers must not only provide employees with disabilities access to leave as an accommodation on the same basis as similarly situated employees without disabilities, but may be required to modify its policies to provide leave for a disability even where the employer does not offer leave to other employees. The guidance also addresses common issues for employers including analyzing undue hardship, requests for “indefinite” leave, maximum leave policies, and return to work issues. The guidance is a welcome relief for both employees and employers since it clears up some previous ambiguities in the law’s application.

The guidance states that if an employee requests leave related to a disability and the leave falls within the employer’s existing leave policy, the employer should treat the employee making the request the same as an employee who requests leave for reasons unrelated to a disability. For example, if an employer provides sick leave as well as annual leave that may be used for any purpose, an employer may not require an employee to designate leave as sick time simply because it is being used for a purpose related to a disability, because doing so would deny the employee use of annual leave due to his or her disability.

Further, the guidance provides that an employer must consider unpaid leave as a possible reasonable accommodation even when:

  • the employer does not offer leave as an employee benefit;
  • the employee is not eligible for leave under the employer’s policy; or
  • the employee has exhausted the leave provided under the employer’s benefit policy (including leave under the FMLA or similar state or local laws or under a workers’ compensation program).

However, the guidance states that ADA does not require an employer to provide paid leave beyond what it provides as part of its paid leave policy. Further, and as is the case with all other requests for accommodation, an employer can deny a request for leave if it can show that providing the accommodation would impose an undue hardship.

The guidance provides a number of factors that an employer should consider to determine whether providing leave would result in an undue hardship, including:

  • the amount and/or length of leave required;
  • the frequency of the leave;
  • if there is any flexibility with respect to the days on which leave is taken;
  • if the need for intermittent leave on specific dates is predictable or unpredictable;
  • the impact of the employee’s absence on coworkers and on whether specific job duties are being performed in an appropriate and timely manner; and
  • the impact on the employer’s operations and its ability to serve customers/clients appropriately and in a timely manner, this factor takes into account the size of the employer);

The guidance also states that “leave as a reasonable accommodation includes the right to return to the employee’s original position,” and “if an employer determines that holding open the job will cause an undue hardship, then it must consider whether there are alternatives that permit the employee to complete the leave and return to work.”

The guidance reiterates the EEOC’s longstanding position that requests for “indefinite” leave—that is, where an employee cannot say whether or when he or she will be able to return to work at all, as opposed to where a definitive or approximate date or range of dates can be provided—constitutes a per se undue hardship under the ADA and does not need to be provided as a reasonable accommodation.  However, employers are cautioned to carefully consider any state and local laws regarding reasonable accommodation that may apply before rejecting a request for an “indefinite” leave.

The guidance states that while employers “are allowed to have leave policies that establish the maximum amount of leave an employer will provide or permit,” the ADA requires that employers may nevertheless be required to “grant leave beyond this amount as a reasonable accommodation to employees who require it because of a disability, unless the employer can show that doing so will cause an undue hardship.” Employers who utilize “form letters” or standardized communications for employees who are nearing the end of a designated leave period are advised to “modify them to let employees know that if an employee needs additional unpaid leave as a reasonable accommodation for a disability, the employee should ask for it as soon as possible so that the employer may consider whether it can grant an extension without causing undue hardship.” The guidance also emphasizes that employers should ensure that any third party providers with whom the employer contracts to manage its leave policies (including short- and long-term disability leave programs) are instructed to notify the employer of any requests for leave beyond the maximum periods under the programs, and to refrain from terminating the employee until there has been an opportunity to engage in the interactive process.

The guidance also addresses return to work issues, including “100% healed policies” and reassignment. “100 healed policies” are policies requiring employees to return to work only if they can demonstrate that they have no medical restrictions. The EEOC’s new guidance states that an employer will violate the ADA if it prohibits an employee with a disability from returning to work unless he/she has no medical restrictions if the employee can perform his or her job with or without reasonable accommodation (unless the employer can show that providing the accommodation would cause an undue hardship).

The EEOC provides that if reassignment is required as a reasonable accommodation because the disability prevents the employee from performing one or more essential functions of the current job (even with a reasonable accommodation) or because any accommodation in the current job would result in undue hardship to the employer, an employer “must place the employee in a vacant position for which he is qualified, without requiring the employee to compete with other applicants for open positions.” However, the guidance notes that “reassignment does not include promotion, and generally an employer does not have to place someone in a vacant position as a reasonable accommodation when another employee is entitled to the position under a uniformly-applied seniority system.”

We are pleased to see that this newly issued guidance clarifies the rights and responsibilities of employers and employees regarding providing reasonable accommodations under the ADA. Of course, as always, employers may provide more accommodations to its employees than the law requires.

Employer Loses Contractual Right to Arbitrate Due to Delay

A recent case from the United States Court of Appeals for the Eighth Circuit makes clear that an employer will lose its contractual right to arbitration if it proceeds in litigation for eight months.  In Messing v. North Central Distributing Inc., the plaintiff, a former Vice President, brought a breach of contract and wrongful termination claim against his former employer.  The company actively engaged in defending the case in the litigation, including filing an answer with 24 affirmative defenses, removing the case to federal court, attending discovery conferences and setting discovery schedules, filing a venue transfer motion, and agreeing to a trial date.  Eight months into the litigation, the employer sought to compel arbitration under the Vice President’s employment contract.  The District Court denied the employer’s motion to compel arbitration, reasoning that the company had waived its right to arbitrate since 1) it knew of the existing right to arbitration, and 2) it had prejudiced the employee by acting inconsistently with that right.
On appeal, the Eighth Circuit upheld the lower court’s ruling, stating that the employer had failed to do “all it could reasonably have been expected to do” to assert its right to arbitration earlier.  Indeed, the employer’s answer did not plead the arbitration clause in its affirmative defenses, nor mention it at the pretrial scheduling conference, nor raise the issue in its motion to transfer venue.  Moreover, the Court credited the lower court’s finding that the employer’s actions had caused the employee prejudice, in that he had been forced to expend considerable time and money litigating the matter in federal court.
While there is a long line of cases which favor arbitration as an alternative way to resolve disputes between parties, employers and employees alike should be aware that a contractual right to arbitrate claims must be asserted in a timely way by the party seeking arbitration.  This “use it or lose it” principle is sometimes an effective way to defeat an otherwise unassailable arbitration provision.

Gov. Christie Vetoes Equal Pay Bill

As reported by NJ.com, Governor Chris Christie has vetoed SB 992, a bill which sought to bar gender-based pay discrimination.  A full text of the proposed legislation may be read here.  The bill would have amended the New Jersey Law Against Discrimination by adding language prohibiting an employer from paying one gender less than the other for “substantially similar” work.  Employers would be permitted to pay workers of different sexes doing similar jobs in an unequal manner only if they could demonstrate that the unequal treatment was justified based on factors such as training, education, experience, or job performance.  The bill also contained a triple damages provision for employees who won cases brought under the law, and a transparency provision mandating that businesses who contract with the State file equal pay information to ensure compliance with the statute.

Governor Christie, in his veto message, criticized the law as “depart[ing] significantly from well-established law” and stated that the law would make New Jersey “very business unfriendly.”  The bill’s main sponsor, Sen. Loretta Weinberg (D-Bergen), has signaled that she may attempt a veto override, in that the bill passed by decisive margins in both houses — 28-4 in the Senate and 54-14-6 in the Assembly.

Pay equity is an important issue to New Jersey’s professional workforce.  There is no question that women and men should be paid the same for the same or similar work.  There is also no question that this bill would have helped New Jersey to achieve its goal of eradicating discrimination from the workplace.

United Airline CEO Gets Hefty Severance Package After Federal Investigation

As reported today by CNN, United Airlines CEO Jeff Smisek received a severance package of over $36 million upon resigning from the company last September, amid a federal investigation into corruption involving the Port Authority of New York and New Jersey.  The severance package included a $4.9 million dollar payout, a $1.7 million bonus, $29 million in equity-based awards, lifetime flight and airport parking privileges, and life insurance and health benefits until he qualifies for Medicare.

Executive severance packages like the one described above have come under scrutiny by federal and state regulators, shareholders, labor unions, and consumers.  Not only do such excessive severance packages have the potential to be challenged in the courts, and cause public outcry, they are often ineffective in obtaining the highest-quality executives.  Indeed, as one corporate researcher noted, when a company guarantees its executives large severance packages even when they perform poorly (or, as in the case of Mr. Smisek, subject the company to a federal corruption probe), it may undermine the executives’ desire to build long-term value for shareholders.  “They don’t care if they are fired or not.”

In an era of high airline tickets prices, rising baggage and other fees, and smaller airplane seat sizes, United’s decision to honor this severance package is unsettling.  United’s Board of Directors has the right to force Mr. Smisek to repay roughly $10.1 million of his severance pay.  Doing so may alleviate some of the negative press regarding this issue going forward.

NEW YORK RAISES MINIMUM WAGE TO $15/HOUR

New York lawmakers announced on March 31, 2016 that they reached a budget agreement to raise New York City’s minimum wage to $15 an hour by the end of 2018 for employers with at least eleven employees. The minimum wage will also rise in the rest of New York State but at a slower pace.

For workers in New York City employed by business with at least 11 employees, the minimum wage would rise to $11 at the end of 2016, $13 at the end of 2017, and $15 on December 31, 2018. For workers in New York City employed by businesses with 10 or less employees, the minimum wage would rise to $10.50 at the end of 2016, $12 at the end of 2017, $13.50 at the end of 2018, and $15 on December 31, 2019.

The minimum wage increases are expected to affect approximately 2.3 million workers statewide. We are hopeful that this legislation will be a win-win for both workers and businesses – more money in workers’ pockets and ultimately more money flowing into the economy!

NY Court Rejects FLSA Settlement That Contains a “No Rehire” Provision

We have negotiated many settlement agreements for claims brought under the New Jersey Law Against Discrimination (“LAD”), the Conscientious Employee Protection Act (“CEPA”), and various other New Jersey laws that have included a provision barring the settling employee from seeking future employment with the defendant employer.  Employers argue in favor of including these clauses in order to prevent future claims of retaliation in the event the employer does not agree to re-hire the employee.  Truth be told, most employees have no desire to work again for the offending employer, but these no re-hire provisions can become complicated when companies are sold and/or merged and the employee seeks future employment with the re-constituted employer.

A federal court in New York (see, Reyes v. Hip at Murray Street) recently refused to approve a proposed settlement for a lawsuit brought under the Fair Labor Standards Act because it contained such a no re-hire provision.  It will be interesting to see if there is more push back on these clauses in settlement agreements for a wider range of employment law claims.  Stay tuned!

Disability Discrimination Study Yields Sad but Unsurprising Results

The New York Times reported today about a study recently undertaken by Rutgers and Syracuse universities.  Researchers sent resumes and cover letters on behalf of fictitious applicants for thousands of accounting jobs.  Disappointingly, they found that employers expressed interest in candidates who disclosed a disability about 26 percent less frequently than in candidates who did not.  This could explain the low national employment rate for persons with disabilities.

The researchers created two separate resumes: one for a highly qualified candidate with six years of experience, and one for a novice candidate about one year out of college.  For each resume, they composed three different cover letters: one for a candidate with no disability, one for a candidate who disclosed a spinal cord injury in the letter, and one for a candidate who disclosed having Asperger’s syndrome, a disorder that can make social interactions difficult.

Interestingly, employers had less interest in interviewing the experienced candidate that was disabled than the disabled candidate just out of school. Employers were about 34 percent less likely to show interest in an experienced disabled candidate, but only about 15 percent less likely to express interest in a disabled novice candidate.  The researchers speculated that the steeper drop-off in interested for experienced disabled candidates arose because more experienced workers represent a larger investment for employers, who must typically pay such workers higher salaries and assume the employment relationship will last longer.  Also, experienced workers are also more likely to interact with clients on a regular basis so employers may believe that hiring these workers are riskier.

Also surprising to me, the researchers found that the decline in interest in disabled workers was roughly the same whether the disability was a spinal cord injury or Asperger’s.  This points to a general bias against people with disabilities.

I found it encouraging that the study showed that the enactment of the American’s with Disabilities Act (the 1990 federal law banning discrimination against persons with disabilities) appeared to reduce bias.  Businesses covered by the act, those with 15 or more workers, were not as likely to reject the disabled candidates out of hand as smaller businesses. Although this shows progress, our work does not appear to be done. Should you experience discrimination in the workplace on account of a disability or even a perceived disability, please consult a qualified employment attorney.

NJ DOJ Files Suit Against Employer for Failing to Re-employ Army Sergeant Following Military Deployment

According to a press release issued today, the N.J. Department of Justice has filed suit against an employer for failing to re-employ an Army National Guard sergeant following her military deployment.  The lawsuit, filed in the U.S. District Court in Camden, alleged that Healthcare Commons Inc., of Carneys Point, New Jersey, violated the Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA).  This statute protects the rights of uniformed service members who are absent from their jobs due to military service obligations.  In this case, the employee was a sergeant with the U.S. Army National Guard, who returned from military deployment in May 2014.  When she returned, the lawsuit alleges, her employer failed to re-employ her or offer her a comparable job position.

Said Acting Associate General Stuary F. Delery:  “No person should lose their job for serving our country, but according to our complaint that’s exactly what happened to a National Guard member here.”  U.S. Attorney Paul Fishman added, “[t]he men and women who serve in our armed forces here and abroad do so at great personal sacrifice. . . . because of that sacrifice, federal law guarantees that they have the opportunity to resume their careers when they’ve completed their service.  When companies seek to skirt their obligations to re-employ our returning veterans, we will hold them accountable.”

If you are an active member of the military who has lost his or her job due to military obligations, you have rights protected by statute.  Contact a knowledgeable employment attorney to discuss your options.