Severe Misconduct Disqualification Eliminated from NJ Unemployment

Severe Misconduct Disqualification Eliminated from NJ Unemployment

I am pleased to report that the New Jersey legislature has finally repealed the extraordinarily unfair and misapplied severe misconduct disqualification standard in the State’s unemployment statute. Governor Christie and his lieutenants had concocted, in 2008, this additional mode of disqualifying applicants as a revenue raising, budget balancing tactic.

Governor Murphy signed this bill on August 24, 2018 and it takes effect immediately.  The new law corrects many unworkable and unfair provisions of the unemployment statute, such as:

  • There are no longer three tiers of misconduct disqualification (“simple”, “severe” and “gross”);
  • There will now be only two tiers of misconduct (“misconduct” and “gross misconduct”);
  • The misconduct disqualification will be shortened from 8 weeks to 6 weeks;
  • The only total disqualification will be for “gross misconduct,” which requires the commission of an act that rises to the level of a crime;
  • It includes a more cogent definition of “misconduct.” The bill provides that “Misconduct” means conduct which is improper, intentional, connected with the individual’s work, within the individual’s control, not a good faith error of judgment or discretion, and is either a deliberate refusal, without good cause, to comply with the employer’s lawful and reasonable rules made known to the employee or a deliberate disregard of standards of behavior the employer has a reasonable right to expect, including reasonable safety standards and reasonable standards for a workplace free of drug and substance abuse.” and
  • The employer has the burden of proof to demonstrate “misconduct.” Prior to a determination by the Department of misconduct, the employer must provide written documentation demonstrating that the employee’s actions constitute misconduct or gross misconduct.

I am particularly pleased to see the revisions regarding the burden of proof necessary to establish misconduct.  I have represented many employees who were wrongfully denied the receipt of critical unemployment benefits based on their own testimony when the employer failed to appear.  Moreover, the Department will not be able to rule against the claimant employee without adequate written documentation from the employer.

Should you have any questions regarding the above changes in the NJ State Unemployment statute, please contact a knowledgeable New Jersey employment lawyer.

NJ Bill Prohibits Restraints on Litigating Discrimination Claims

NJ Bill Prohibits Restraints on Litigating Discrimination Claims

The NJ Senate recently introduced legislation, no doubt intending to improve the rights of employees who have discrimination claims, by requiring more transparency in litigating these claims. This bill, S3581, provides that provisions in an employment contract that waive “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” are contrary to public policy and would be unenforceable. Furthermore, this bill would prohibit any “prospective waiver of rights or remedies” such as a jury trial or mandatory arbitration of discrimination claims under the New Jersey Law Against Discrimination (“LAD”).

This bill also contains a provision designed to eliminate non-disclosure provisions in agreements resolving claims under the LAD. It deems these clauses as against public policy and therefore unenforceable.

Moreover, the bill prohibits an employer from taking retaliatory action (e.g., refusal to hire, discharge, suspension, or demotion) on the grounds that an individual refuses to enter into an agreement with terms contrary to the above.

Lastly, to the extent an employer seeks to enforce an agreement contrary to the bill, the employee may collect costs and reasonable attorney’s fees for defending against any such suit.

The bill would affect settlement agreements prospectively (not those entered into prior to the effective date specified). It also does not apply to the terms of collective bargaining agreements.

If passed, this bill would likely dramatically affect litigation and strategy of claims brought under the LAD. The inability of an employer to utilize arbitration procedures or insist upon confidentiality in settlement agreements may result in fewer out-of-court resolutions and more protracted and costly litigation. This is a double-edged sword for both employers and employees. That is, many employees would prefer to have their claims resolved privately without having to endure a long and public court battle.

Executive Pension Plans: Bargaining Power Not Top Hat Plan Element

Executive Pension Plans: Bargaining Power Not Top Hat Plan Element
December 2017

The 3rd Circuit in Skiora v. UPMC et al, revisited the substantive requirements of a “top hat” plan in deciding whether Plaintiff, Paul Skiora, was entitled to recover pension benefits from his former employer’s supplemental benefit plan.

Skiora, was a Vice President of the University of Pittsburgh Medical Center (“UPMC”) from 2005-2011.  Upon his voluntary termination of employment, Skiora applied for benefits under UPMC’s Non-Qualified Supplemental Benefit Plan (the “Plan”).  UPMC argued that the Plan was a “top-hat” plan exempt from many of the substantive provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).  Because three of Sikora’s claims relied on ERISA provisions inapplicable to top-hat plans, UPMC argued that his claims should be dismissed.  The District Court concluded that the Plan was a top-hat plan and granted summary judgment to UPMC.  Skiora appealed to the 3rd Circuit.

This case is noteworthy for its thorough discussion of the definition of top hat plans, including a review of the regulatory and case law involving this issue.

ERISA defines top-hat plans as those that are “unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.”  29 U.S.C. §§1101(a)(1), 1051(2), 1081(a)(3).  Skiora did not dispute that the Plan was unfunded and maintained by UPMC for the purpose of providing deferred compensation.  Rather, Skiora claimed that the Plan did not meet the requirements of a top-hat plan (and therefore should be subject to ERISA’s substantive provisions) because it was not maintained for a “select group.”  The 3rd Circuit previously described this “select group” element as having “both quantitative and qualitative restrictions.  In number, the plan must cover relatively few employees.  In character, the plan must cover only high-level employees.  Since only .1% of UPMC’s entire workforce participated in the Plan during the relevant time period, the Court found that the Plan met the quantitative restriction of “select group.”

As to the qualitative restriction, the statute requires participants to be members of a select group of management or highly compensated employees. The Court found that the Plan covered high-level employees who were both a select group of management and highly compensated employees (most Plan participants earned at least 4 times the average annual salary of all UPMC employees).

Skiora argued that, notwithstanding the fact that the quantitative and qualitative restrictions of the “select group” element were satisfied, the Plan doesn’t cover a “select group” because there is no evidence regarding the “bargaining power” of the Plan participants. Skiora was effectively arguing for a third component to the “select group” element.  Skiora relied on a 1990 Department of Labor (“DOL”) opinion letter to support this argument. The 3rd Circuit in Skiora disagreed.  Rather, the Court found that the DOL opinion letter does not require that participants in a top-hat plan possess bargaining power to design or negotiate their deferred compensation plan.  The Court stated that the opinion letter explains Congress’s intent for creating top-hat plans:  a select group of high level employees do not need all of the protections ERISA affords because they presumably possess bargaining power by virtue of their position or compensation level.  Therefore, the Court held, in Skiora, that plan participants’ bargaining power is not a substantive element of a top-hat plan and affirmed the judgment of the District Court.

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Coming Forward with Sexual Harassment Claims

Weinstein, Ailes, Uber: Coming Forward with Sexual Harassment Claims

Weinstein, Ailes, Uber: Encouraging Women To Report Harassment             Recent headlines are rife with salacious stories of powerful men sexually harassing female subordinates in the workplace.  But what is even more troubling to me than the details of the predatory behavior, is the complicity of co-workers, supervisors, senior executives and even outside Board members in keeping the allegations private so that business can continue as usual.  This culture of sweeping things under the rug and prioritizing the status quo greatly inhibits the ability to make positive, real change in this area.

Women will only have the courage to come forward with their claims of sexual harassment if they are confident that they won’t be retaliated against for reporting the incident.  How can a woman be so sure of this?  It is only when they can see that other women who have reported harassment in the past suffered no adverse employment consequences, such as demotion or termination.  This type of transparency is impossible when a company forces its employees to sign a mandatory arbitration clause or agreement that prohibits the employee from disclosing the fact of and details of the case.

With an arbitration agreement, the employee who brings a sexual harassment claim is prevented from bringing the case to a court of law, often in front of a jury of her peers. Arbitration agreements are very popular with employers who hope that they will resolve employment disputes more quickly and less expensively than litigation. Yet, as Gretchen Carlson explains in her recent NYTimes op ed piece these arbitration clauses overwhelmingly benefit employers since, studies show that many arbitrators find in favor of the employer and not the employee.  Moreover, even if an employee does prevail in arbitration they are bound by confidentiality provisions not to reveal their claims. This will also benefit the employer since it can continue to protect the harasser. Conversely, when an employee prevails in a judicial setting, the decision is part of a public record.  Public disclosure would likely prompt a company to take appropriate remedial measures to address the harassment and the harasser.  Women can then more confidently rely on Company assurances that no retaliation will occur upon a report of sexual harassment.

Confidentiality provisions are appropriate in the pre-litigation settlement context where neither the victim or the alleged harasser have had a chance to call witnesses and the claims adjudicated in accordance with the applicable legal standard of review.

 

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Worker Who Quits for a Better Job May Still Get Unemployment Benefits

Worker Who Quits for a Better Job May Still Get Unemployment Benefits

September 2017

Unemployment benefits
I was pleased to read that the NJ Appellate Division gave a fair reading to a recent amendment to the NJ unemployment compensation statute in order to award benefits to a displaced worker.

In McClain v. Board of Review, the Appellate Division overturned the New Jersey Board of Review’s denial of unemployment benefits to Patricia McClain who left her job as a teacher at one private school to take a job at another – but then found herself unemployed after the second school rescinded its offer of employment.

McClain applied for unemployment benefits after she learned that her new job offer had been rescinded.  Her claim was denied and she appealed.  The Appeal Tribunal affirmed the denial of benefits, holding that she was disqualified from receiving unemployment compensation benefits because she left her first job “voluntarily without good cause attributable to such work.”  The Appeal Tribunal also noted that there is a recently enacted exemption from the disqualification for an individual who voluntarily leaves work with one employer to accept from another employer employment which commences not more than seven days after the individual leaves employment with the first employer, if the employment with the second employer has weekly hours or pay not less than the hours or pay of the employment of the first employer [and the employee is terminated from the second job.]  The Appeal Tribunal determined McClain was not covered by the exemption because she did not actually commence employment with the second employer within seven days of her last day of employment at the first employer.  She was scheduled to start with the second employer within the seven days, but that offer was rescinded before she could start.  The Appeal Tribunal determined McClain was not covered by the exemption because she did not actually commence employment with the second employer within seven days of her last day of employment with the first employer.

The Board of Review, on appeal, also denied McClain’s application for unemployment benefits on the same grounds.

The three-judge Appellate Division panel, disagreed, and held that “a claimant need not actually start the new employment to be exempt from disqualification.”  The Court said the issue was a question of interpretation, and added that the statute should be interpreted liberally so as not to penalize workers who leave one job for another that pays better.  They also noted that 26 other states have adopted similar statutes and interpreted them similarly.  Finally, the Court noted that there was nothing in the legislative record to support the imposition of a condition that a claimant begin working the new job within seven days in order to be eligible for benefits.

 

 

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New Jersey Pregnancy Discrimination Case Can Be Heard By Jury

New Jersey Pregnancy Discrimination Case Can Be Heard By Jury, August 2017

Wrongful Termination Case

The New Jersey Appellate Division has ruled, in Roopchand vs. Complete Care, et al, that a pregnant medical technician presented a prima facie case of pregnancy discrimination in her wrongful termination lawsuit when her former employer fired her for refusing to climb a ladder because her pregnancy was “high-risk.”

The Appellate Division reinstated Roopchand’s suit on August 3, 2017, after the Superior Court dismissed the case, holding that the employer articulated a legitimate, nondiscriminatory reason for Roopchand’s firing, her insubordination.

Sandra Roopchand worked at the medical office in 2013 and 2014.  Her duties included both patient care and administrative duties.  Her normal duties did not include cleaning windows.  During her employment, plaintiff was never disciplined. In July 2014, she told Dr. Schaller, one of the two owners of the medical practice, that she was pregnant and that her pregnancy was high-risk, requiring her to see her obstetrician weekly.  Later in the month, the Defendants reduced Roopchand’s work hours to a part-time schedule.  The next day, she overheard Dr. Schaller telling the other owner, Dr. Fallon, “I don’t care, she’s a liability.”  When Roopchand was busy working with a new patient who needed bloodwork and X-rays, Dr. Fallon came up to her and asked her to wash the windows on the second floor office.  She told him, “I don’t do windows.”  Roopchand testified that she did not think the doctor was serious about her washing the windows since it was not part of her job description nor was it something she had seen anyone working in the office do before.  Moreover, she would have had to get up on a ladder to clean the floor to ceiling windows.  Dr. Fallon asked her two more times, and she refused again, so he fired her.

The lower court had dismissed this case, finding that Roopchand’s refusal to follow Dr. Fallon’s directive to wash the windows constituted insubordination, and was a legitimate, nondiscriminatory reason for her firing.  The court rejected Plaintiff’s claim that this was just a “pretext,” or an excuse to cover up the real, discriminatory reason for the termination.  The court also noted that Ms. Roopchand’s doctor had not placed her on any work restrictions when she refused to wash the windows.

On appeal, the three judge, all female, panel looked to the Pregnant Workers Fairness Act (PWFA), which modified the New Jersey Law Against Discrimination to incorporate “pregnancy” as a protected characteristic, for guidance.  The Court held that Roopchand made out a prima facie case for disparate treatment under the PWFA because she was part of a protected class of pregnant workers and her employer knew of her pregnancy; she was performing her work duties; she suffered the adverse employment action of being demoted to part-time status, ordered to wash windows, and then fired; and she was required to perform an act outside the scope of her job description, that other non-pregnant employees were not required to perform, thereby raising an inference of unlawful discrimination.

The Court held that, regardless of whether Roopchand’s request to visit her doctor weekly is viewed as a pregnancy accommodation, she demonstrated sufficient evidence of pregnancy discrimination to survive summary judgment.

This case noteworthy because reversals on appeal of summary judgment are rare.  The case will go back to the Law Division for a trial in the fall.

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Practice Tips for a Successful Workplace Investigation

Practice Tips for a Successful Workplace Investigation
Former Uber engineer Susan Fowler Rigetti’s story of sexual harassment and the company’s inadequate response to her multiple complaints, highlight how important it is for a company to have an effective action plan in dealing with these sensitive issues.

The following is some practice pointers on what a company should do (and not do) when it receives an employee complaint of discrimination/harassment or other misconduct by another employee:

  1. Understand the complaint

Before taking action, it’s important to understand what the employee is complaining about. The company must know who is involved, what is alleged to have happened, as well as when, where and, if possible, why it occurred. The company should try to understand what the complainant is seeking without making any promises or assurances regarding how it will resolve the complaint.

  1. Should the company investigate?

Investigations can involve a significant allocation of time and financial resources so before a company conducts an internal or private outside investigation into a complaint, it should consider whether it is appropriate for an investigation to be undertaken or whether there is a better option for resolving the complaint – such as mediation of an interpersonal disagreement between colleagues.

  1. Review policies and procedures

Many employers have policies and procedures enacted that provide guidance or structure about how a workplace complaint should be handled or an investigation conducted. Therefore, once a complaint is received, the company should review its policies and procedures to ensure it is in compliance.

  1. Appointing an investigator

 The decision of whether to appoint an investigator or not should be made on a case-by-case basis. Although, it is less expensive to designate an internal investigator, there are times when a company should hire an outside investigator. The outside investigator is perceived as more neutral and may have greater expertise in conducting investigations and drafting investigation reports. Many companies hire an experienced attorney to serve as an outside investigator since the attorney is skilled at interviewing witnesses, making credibility assessments and writing effective reports.

  1. Keep the lines of communication open

If the employer undertakes an investigation into the complaint, it should take care to keep the lines of communication open with all of the involved parties. By actively managing expectations, the company can minimize some of the stress that is often associated with an investigation.

  1. Weighing and Assessing the Evidence

 Assessing conflicting evidence provided by investigation participants is a daunting task for many investigators. In addition to interviewing witnesses, the interviewer should review emails, file notes and other relevant documents or recordings. To the extent there is conflicting testimony given by witnesses, the investigator should make a credibility assessment in weighing the evidence. Sometimes a finding cannot be made and the investigation should properly be labeled as “inconclusive.”

  1. Take action

Once an investigation is concluded, a company should ensure that it promptly communicates the finding of the investigation to the parties involved. Where the investigation findings are likely to result in disciplinary action for an employee, the company will need to ensure that the employee is afforded procedural fairness throughout the disciplinary process. Even when an investigation has been inconclusive, there are still steps that could be taken, such as trainings on appropriate workplace behavior.

  1. Reassess

After the investigation is concluded, the company should review its policies, procedures, practices and on-going employee trainings to see whether its overall process in handling these sensitive employee complaints can be improved upon and whether an outside professional can assist with this process.

Rina Traub, of Traub Law in Princeton & East Brunswick, NJ,  is an experienced counselor and advocate for New Jersey’s executives, professionals and business owners.
Ms. Traub also counsels businesses on employment matters, including legal compliance, handbooks, and employer/employee relations.  For Workplace Investigations, Contact her at (609) 951-2204.

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Third Circuit Rules Workers Age 50+ Can Be Considered Subgroup in Testing for Discrimination

Third Circuit Rules Workers Age 50+ Can Be Considered Subgroup in Testing for DiscriminationThird Circuit Rules Workers Age 50+ Can Be Considered Subgroup in Testing for Discrimination

New Jersey’s Third Circuit recently held in Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435, 2017 WL 83385 (3d Cir. Jan. 10, 2017), that workers in their 50s may be recognized as a “subgroup” of employees protected by the Age Discrimination in Employment Act (“ADEA”) if an employer’s policies inadvertently disfavor them relative to their co-workers who are over age 40 and, therefore also protected employees under this law.

The plaintiffs in Karlo were all over age 50 and had worked in defendant’s Manufacturing Technology division until they were terminated in 2009 as part of a reduction in force. Plaintiffs then brought a collective action under the ADEA, asserting disparate treatment, disparate impact, and retaliation as to two of the plaintiffs. The district court granted the employer’s motion for summary judgment on the disparate impact claim, holding that a disparate impact claim for the “fifty-and-older” subgroup relative to their younger yet age-protected co-workers was not permitted under the ADEA because the law does not permit subgroup claims. The court also found that plaintiffs lacked evidence to support their claim.

The Third Circuit reversed the district court’s ruling on summary judgment and held that the plaintiffs could pursue their claims. According to the court in Karlo, plaintiffs are permitted to use subgroup comparisons and similar evidence to demonstrate the significantly disproportionate adverse impact necessary for a disparate impact claim under the ADEA. The appeals court emphasized that the ADEA prohibits age discrimination as a whole, not just discrimination against employees ages 40-and-over. Thus, the court found that the plaintiffs are permitted to bring claims alleging that they were treated less favorably than their younger counterparts, even where their younger co-workers included employees within the ADEA’s protected class.

This decision represents a departure on this issue from several other circuit courts that have previously not allowed such “subgroup” claims. The United States Supreme Court may need to resolve this split. As always, we will update this blog should the Court consider this issue in the future.

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New Jersey Court Enforces Non Compete Clauses Contained in a “Clickwrap” Agreement

New Jersey Court Enforces Non Compete Clauses Contained in a “Clickwrap” AgreementNew Jersey Court Enforces Non Compete Clauses Contained in a “Clickwrap” Agreement

In a recent New Jersey federal case, ADP LLC v. Lynch, 3d Cir. (Ambro, U.S.C.J.), the Third Circuit declined to lift an injunction prohibiting two former employees of ADP from soliciting its clients on behalf of a competitor. The injunction partially enforced non-compete agreements that Jordan Lynch and John Halpin agreed to online in what is commonly referred to as a “clickwrap” agreement. A clickwrap agreement is a type of contract in which a user must agree to terms and conditions prior to using the product or service. These are commonly used in the software or technology industry. It is interesting to see a court confirm its enforceability in the employment context.

Messrs. Lynch and Halpin each participated in ADP’s stock award plan for five consecutive years. To participate, they had to click on an electronic box to acknowledge that they had read related documents. Those documents included restrictive covenants which state that the employee cannot (1) solicit certain clients and prospective clients of ADP for one year after they stopped working for the company; (2) disclose any of ADP’s confidential information; or (3) use ADP’s confidential information regarding the identity of the company’s current, past or prospective clients. Mr. Lynch also signed a separate agreement, containing similar restrictions.

The employees resigned their sales positions at ADP and joined its direct competitor, Ultimate Software Group (“USG”). ADP sued Mr. Halpin and Mr. Lynch, asserting that they had violated their restrictive covenants. It also sought a preliminary injunction to prohibit them from working for USG and from soliciting ADP’s clients. Mr. Halpin and Mr. Lynch claimed that they never actually read or agreed to the restrictive covenants and therefore, the court should decline to enforce them as written.

The District Court, on June 30, 2016, granted a partial injunction, ruling that the employees had clicked on the box indicating that they read the documents related to the stock award plan and therefore they could not claim they did not actually read those documents. The Court further ruled that even though the two employees merely acknowledged that they had read the documents (and did not indicate specifically that they agreed to the terms), they were bound by the restrictions since the documents themselves make it clear that they were agreeing to them.

The Court issued a partial injunction ordering the employees not to solicit any of ADP’s current customers or any of its prospective customers who they learned about while they were working for ADP. Moreover, it enjoined them from using any of ADP’s confidential or proprietary information.

It is important to note that the Court did not prohibit Mr. Lynch or Halpin from working for USG at this preliminary injunction stage, stating that this would be too “severe” a restriction at this early phase of litigation. The Third Circuit panel affirmed the issuance of the preliminary injunction.

New Jersey Employees:  Contact Traub Law (609) 951-2204 for representation in employment related claims and disputes.

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Ambiguous Jury Waiver in Employment Agreement Unenforceable in Whistleblower Case

Ambiguous Jury Waiver in Employment Agreement Unenforceable in Whistleblower Case

Ambiguous Jury Waiver in Employment Agreement Unenforceable in Whistleblower CaseIn Noren v. Heartland Payment Systems, Inc., Docket No. A-2651-13T3, __N.J. Super. __ (Feb. 6, 2017), the New Jersey Appellate Division held that a provision in an employment agreement which provided that the employee “irrevocably waive[s] any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this Agreement” was unenforceable as to a former employee’s statutory employment claims.

Following his termination of employment, Noren sued his former employer alleging a violation of the Conscientious Employee Protection Act (“CEPA”), New Jersey’s employment whistleblower law. The lower court denied Noren’s demand for a jury trial based on the jury-waiver provision in his employment agreement and dismissed Plaintiff’s complaint after a lengthy bench trial. Plaintiff appealed, challenging the application of the jury waiver provision to his CEPA claim.

On appeal, the court focused upon the fact that CEPA and the New Jersey Law Against Discrimination (“NJLAD”) expressly guarantee a right to a jury trial. Given the statutorily guaranteed right, the Appellate Court determined that in order for the waiver to be effective it must “clearly explain (1) what right is being surrendered and (2) the nature of the claims covered by the waiver.” The court found that the jury waiver at issue was unenforceable because it did not make any “reference to statutory claims and did not define the scope of the claims as including all claims relating to Noren’s employment.”

The court noted that while it is preferable for a waiver of rights provision to explicitly provide that the employee is waiving his or her statutorily guaranteed rights, it is possible that a waiver provision would be enforceable without such a specific reference so long as the language is clear, unambiguous and sufficiently broad. The court relied upon its earlier decision in Martindale v. Sandvik, Inc., 173 N.J. 76 (2002), which upheld a mandatory arbitration provision which provided for a waiver of any action or proceeding relating to an individual’s employment, or the termination thereof.

In light of the Noren decision, any jury waiver provision should be reviewed by an attorney to determine whether its language is unambiguous and therefore enforceable.