NJ Supreme Court holds State Police Did not Waive Immunity in ADA Case

The NJ Supreme Court recently ruled that the New Jersey State Police’s failure to assert a sovereign immunity defense during its trial on an Americans with Disabilities Act claim does not constitute a waiver of sovereign immunity.

This case was brought by Brian Royster, a state trooper who suffered from ulcerative colitis. His condition required that he have immediate access to a bathroom while on the job. After returning from medical leave for treatment of his condition, his department assigned him to conduct surveillance from a car. He repeatedly asked to be moved to an assignment that offered access to a restroom, but he remained on the surveillance assignment for seven months.

Royster filed suit against the state police, asserting, among other claims, that it failed to make reasonable accommodation for his medical condition in violation of the ADA and the NJLAD, and for retaliation under the ADA, NJLAD, and the New Jersey Conscientious Employee Protection Act (“CEPA”). The state trial court dismissed several claims, leaving only the CEPA retaliation and the ADA failure-to-accommodate claim for trial. The jury awarded the employee $500,000 in damages on the ADA claim.

The state then moved for judgment notwithstanding the verdict (“JNOV”), asserting for the first time that the trial court lacked subject matter jurisdiction over the ADA claim because the police, as a state actor, had sovereign immunity. The employee countered that it was unfair to allow the police to raise a sovereign immunity defense after the jury’s verdict, and asked the trial court to retroactively convert the remaining ADA claim to an NJLAD claim since the claims and arguments under both statutes were identical. The trial court denied the employee’s request, and also denied the state police’s motion for JNOV, holding that the state police were estopped from asserting lack of jurisdiction after waiting over seven years and the completion of trial. The state police appealed and the Appellate Division reversed, holding that because the state’s sovereign immunity extended to the state police, the sovereign immunity defense could be raised at any time, and the police had not waived sovereign immunity through its litigation conduct. The Supreme Court then granted the employee’s petition for certification, and considered whether the state police were entitled to sovereign immunity on Royster’s ADA claim, and whether it had waived that immunity.

The Supreme Court held that it could not nullify sovereign immunity for federal claims under the ADA, regardless of the state’s delay in raising the defense. The state police were an arm of the state, and because the state legislature had not consented to be sued under the ADA, the police enjoyed sovereign immunity from the ADA claim. Nor did the state police waive sovereign immunity through its litigation conduct. Although a state that is involuntarily brought into litigation in state court can waive its immunity by removing the case to federal court, New Jersey courts have never declared that the state may waive its immunity from suit in state court through litigation conduct. The Court also found that the state police could not be estopped from raising its sovereign immunity defense, because it never misrepresented its status as a state actor, nor affirmatively represented that it planned to waive immunity simply by defending the claims against it.

The Court found that the employee’s NJLAD claim for failure to accommodate, under which the state police did not have sovereign immunity, was improperly dismissed. The trial court had found that a prima facie case under the two statutes were identical, yet separated the two claims when the state police moved for a directed verdict. The trial court then applied CEPA’s waiver provision to both the NJLAD retaliation and failure to accommodate claims. However, the CEPA waiver provision applied only to those causes of action requiring a finding of retaliatory conduct that would be actionable under CEPA. The CEPA waiver did not apply to the NJLAD claim, which was premised on different facts.

The NJLAD failure-to-accommodate claim was identical to the ADA claim. Because there was sufficient evidence to support Royster’s ADA claim, the Court found that the NJLAD claim should have survived the directed verdict motion. Although the employee had acquiesced to dismissal of the NJLAD claim, which was not precluded by sovereign immunity, the court could not ignore that the dismissal was mistaken. The state police’s belated assertion of sovereign immunity was not made in bad faith, but the interests of justice required reinstatement of the NJLAD failure to accommodate claim. Because the jury awarded $500,000 for the ADA failure to accommodate claim, the court found that it would have given the same award for the parallel NJLAD claim had it not been dismissed, and so it remanded to the trial court to mold the jury’s ADA award into an NJLAD award.

This case is surprising in that the court allowed a defendant to assert a sovereign immunity defense after the jury returned a verdict. We are pleased that that the Court found a way to uphold the jury’s verdict by fairly molding the verdict. Justice appears to have been served!

Court Upholds Firing of Muslim Prison Guard Who Wore Muslim Headscarf

Despite the finding of a prima facie case of race discrimination, a New Jersey appeals court has upheld the firing of a Muslim corrections officer who refused to remove her headscarf on the job.

Linda Tisby began working at the Camden County Correctional Facility in 2002 but became a Muslim in 2015 and one day reported to work wearing the khimar, or headscarf. She refused to remove it, was sent home and recommended for disciplinary charges. After continuing to report to work wearing the khimar, the Correctional Facility dismissed Tisby on May 11, 2015.

Tisby filed two separate suits against Camden County and the Camden County Correctional Facility. The first, filed on June 12, 2015, sought damages under the NJ Law Against Discrimination (“NJLAD”) and alleged that the jail had permitted other women to work with head coverings, including Muslim women and those undergoing chemotherapy. A month later, she filed a second suit, seeking reinstatement and back pay and asserting violations of the NJLAD.

The trial court dismissed the second complaint on August 7, 2015, finding that the jail would face an undue hardship if it accommodated Tisby’s request to wear the headscarf. That is, the scarf could be used to choke someone or to smuggle contraband into the jail. Additionally, the scarf undermined the facility’s goal of presenting a unified, neutral and unbiased force to the public and inmates. A different judge dismissed the first complaint was on August 21, 2015, based on the entire-controversy doctrine (all related claims to a particular controversy should be presented in one forum).

On appeal, the court applied the burden-shifting methodology from the 1973 U.S. Supreme Court ruling in McDonnell Douglas v. Green. The panel found that the plaintiff established a prima facie case of discrimination and the defendant articulated a legitimate, nondiscriminatory reason for its action. The court did not find that the employer’s reasons were pretextural. Ultimately, the appeals court found that the right of Ms. Tisby to wear Muslim headgear at work in a correctional facility was outweighed by safety concerns and any accommodation to Ms. Tisby in this context would impose a hardship on defendants.

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.

NY Court of Appeals Holds that Yoga Instructors Can Be Independent Contractors

I usually blog about New Jersey unemployment cases and determinations but there is an interesting case that was just decided in New York that is worth noting. Although the legal standard for entitlement to unemployment benefits differs between the states, both New Jersey and New York ultimately look to see how much “control” the business exercises over the worker in making its determination on how the relationship should be classified. The more control a business has over the worker in the nature and manner of the work performed, the more likely it is that he or she will be considered an employee who is entitled to unemployment benefits.

In the New York case, Yoga Vida NYC, Inc. v. Commissioner of Labor, No. 130 (N.Y. Oct. 25, 2016), the New York State Court of Appeals issued a rare decision, concluding that the employer yoga studio did not exercise sufficient control over certain of its instructors to create an employment relationship, thereby disqualifying the workers for unemployment compensation benefits.

Yoga Vida, a Manhattan-based yoga studio, offers classes taught by both staff instructors, classified as employees, and non-staff instructors, classified as independent contractors. The NYS Unemployment Insurance Appeal Board held that the non-staff instructors were misclassified as independent contractors and that Yoga Vida was therefore responsible for paying additional unemployment contributions. Yoga Vida appealed to the Appellate Division, which affirmed the determination of the Appeal Board. The NYS Court of Appeals reversed, finding that the non-staff instructors were not employees because Yoga Vida did not exercise sufficient control “over the results produced and the means used to achieve the results.”

The Court relied on the following in support of its decision:

  • The instructors made their own schedules and chose how they were paid – either hourly or on a percentage basis;
  • The non-staff instructors were only paid if a certain number of students attended their classes (the staff instructors were paid regardless of whether anyone attended a class);
  • Yoga Vida did not restrict the non-staff instructors from teaching at other studios;
  • The instructors were not required to attend staff meetings or receive training.

The Court found that the “incidental control” the studio exercised over the non-staff workers, such as determining if the instructors had the proper licenses; publishing a master schedule on its web site; providing space for the classes; and providing a substitute instructor, if necessary – did not warrant a finding of employee status. The Court did not view as dispositive that the studio generally determined the fee it charged to students and collected it directly from the students. Finally the Court held that students providing feedback on the non-staff instructors did not render the instructors employees.

Employers and workers need to understand that all employment classifications determinations are fact-dependent. I recommend that businesses conduct a self-assessment of their independent contractor models, with the supervision of counsel, to determine the risk of a classification challenge from their independent contractors or government agencies.

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.

NJ Court Refuses to Require Arbitration of Employment Dispute

The NJ Appellate Division has ruled, once again that it will not require enforcement of an arbitration clause absent a showing that the clause constituted a clear waiver by the plaintiff of his or her right to a jury trial.

In Anthony v. Eleison Pharmaceuticals LLC, Docket No. A-932-15T4 (App. Div. July 18, 2016), a former executive filed a lawsuit against his former employer under the New Jersey Wage Payment Act, alleging that the company failed to pay him wages that were due to him following the termination of his employment. The lawsuit also included breach of contract claims. The employer filed a motion to dismiss the lawsuit and order arbitration pursuant to a clause in the employment agreement which stated, among other things, that “[t]he parties agree that should any dispute arise out of this Agreement, a phased dispute resolution process shall resolve the dispute,” ending in binding arbitration. The trial court granted the employer’s motion, stating that the arbitration clause constituted a valid waiver by the employee of his right to pursue his claims in a judicial forum.

The lower court’s ruling in Anthony was clearly in error. The New Jersey Supreme Court ruled in Atalese v. U.S. Legal Services Group LP, 219 N.J. 430 (2014), that NJ courts will not enforce arbitration clauses unless they contain explicit language informing the employee that he or she was giving up the right to go to court and have a jury trial. The arbitration clause at issue in Anthony clearly did not contain such language. Accordingly, the Appellate Division reversed the lower court and the case will proceed to trial.

Both employers and employees considering arbitration as an alternative dispute resolution forum, should consult legal counsel to confirm that that any agreement signed has the necessary waiver language.

Uber faces another class action suit in New Jersey over failing to pay its drivers overtime

Uber Technologies Inc., no stranger to litigation brought by its drivers across the country, is now facing a possible class action in federal court in New Jersey. The suit accuses Uber of violating New Jersey wage and hour laws by failing to pay its drivers overtime for working more than 40 hours per week and failing to reimburse them for vehicle costs.

Jaswinder Singh, the named plaintiff in the complaint, a New Jersey resident, drove for Uber for more than one year and regularly exceeded 60 hours of work per week, yet, the lawsuit claims, was not paid an overtime premium of one and a half times his regular rate for the hours that exceeded 40 in a week. Moreover, the suit states that Singh was also required to bear expenses for his vehicle, gas, tolls, mobile phone and other expenses related to his employment, which is unlawful under the New Jersey Wage and Hour Law and the New Jersey Wage Payment Law.

Mr. Singh seeks to represent a class of individuals who worked as drivers for Uber as well as Uber X, a related company. The complaint filed in this lawsuit claims that, in accordance with the New Jersey wage statutes, Mr. Singh and the other drivers would be classified as “nonexempt” workers who would be entitled to be paid a premium rate for hours work beyond the normal 40-hour work week. Nonexempt workers are generally those who do not have the authority to hire and fire other employees, do not have the authority to schedule other employees, and do not perform work directly related to the management operations that involved the exercise of discretion or independent judgment over matters of significance.

Uber has faced attack across the United States for many of its employment policies, in particular for its classification of its drivers as independent contractors instead of employees. Uber recently settled one such suit for $100 million. With that kind of settlement, we should expect more suits from Uber’s drivers.

If you believe you have been wrongfully denied overtime or benefits, you should contact an experienced employment attorney.

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.

New Jersey District Court Certifies Class in Gender Discrimination Lawsuit

The U.S. District Court in New Jersey, in Smith et al. v. Merck & Co., Inc., 3:13-cv-02970 (D.N.J.), recently issued a ruling that paves the way for thousands of women across the United States to join a lawsuit alleging gender discrimination against Merck & Co., a large pharmaceutical company.

Judge Shipp conditionally certified a class of current and former female sales representatives. He ruled that “[t]he information submitted by Plaintiffs shows that the sales representatives had similar responsibilities; that named plaintiffs were paid less than some allegedly similarly situated males; and that compensation decisions, although based in part on input from some direct managers, were finalized by a central, common office.” The Judge also based his decision to allow the lawsuit to go forward as a collective action on statistical evidence submitted by Plaintiffs that demonstrated that female sales representatives earned on average 1.4% less per year than male sales representatives in the same roles.

In addition to challenging unequal, centralized pay decisions in their lawsuit against the pharmaceutical giant, the Plaintiffs also allege that Merck systematically discriminates against female sales representatives, and pregnant women in particular, in promotions and other terms and conditions of employment.

We look forward to reporting on the progress of this important case and Plaintiff’s fight for equal pay and equal treatment.