Labor & Employment Insights

On January 10, 2023, Governor Murphy signed legislation implementing amendments to the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN Act”) that were placed on hold during the COVID-19 pandemic. The amendments, which go into effect on April 10, 2023, impose new requirements on employers of 100 or more who implement mass layoffs or plant closures.

Background

Governor Murphy initially signed an amended NJ WARN Act on January 21, 2020, which was scheduled to take effect on July 20, 2020. However, in April 2020, the Governor signed Executive Order 103 declaring COVID-19 a public health emergency and postponing the effective date of NJ WARN Act amendments until 90 days after the conclusion of the state of emergency. Although the COVID-19 state of emergency remains in effect, the Legislature “unlinked” the amended NJ WARN Act from the state of emergency, thus permitting the implementation of the amendments to take effect on April 10, 2023.

Following a unanimous vote in the Senate, on November 16, 2022, the House of Representatives passed the Speak Out Act (the “Act”) which now heads to President Biden’s desk for signature.  The Act is just the latest effort by legislators at the federal and state levels to shine the light on instances of sexual assault and harassment in the workplace. This new legislation renders unenforceable certain non-disclosure and non-disparagement provisions that prevent individuals from disclosing the details of sexual harassment or assault claims that may occur in the future.

In practice, this Act will have a limited impact because its prohibitions only apply to employment or other agreements signed prior to a claim of harassment arising. Thus, the Act will not bar the inclusion of non-disparagement/nondisclosure provisions in separation agreements or settlements of sexual harassment or assault claims. In addition, the Act does not prohibit non-disclosure agreements that bar disclosure of other forms of discrimination (e.g., age, race religion) or workplace misconduct. Finally, the Act explicitly states that nothing in the new law limits employers’ prevalent use of non-disclosure and confidentiality agreements designed to protect trade secrets or critical propriety information.

Impact On New Jersey Employers:

As previously advised New York City’s Pay Transparency Law (the “Transparency Law”) requiring most New York City employers to disclose salary ranges in their job postings, takes effect on November 1, 2022.  Guidance recently issued by the New York City Commission on Civil Rights (the “Commission”) gives further insight into the employer requirements of this new law.

Under the Transparency Law, employers with four or more employees or one or more domestic workers, must include a good faith minimum and maximum salary range in all job advertisements, promotions, and transfer opportunities for work to be performed in New York City.

Job advertisements for temporary employment at a temporary help firm, such as a staffing agency, are specifically exempted from these disclosure requirements.

On September 6, 2022, the National Labor Relations Board (NLRB) released a Notice of Proposed Rulemaking (NPRM) addressing the standard for determining joint-employer status under the National Labor Relations Act. Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” If finalized, the rule would explicitly rescind the NLRB’s most recent overhaul of the joint employer standard that raised the bar to attain joint employer status and will undoubtedly result in many more joint employer situations.

The Joint Employer Standard’s Seesaw History

Over the past decade, joint employer status has been gone back and forth dramatically as the composition and political control of the Board has shifted.

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In an example of how informal management can come back to haunt employers, a U.S. District Court judge recently ruled that a former Starbucks regional manager had sufficiently demonstrated that a jury could determine that the justification Starbucks provided in terminating her was pretext for unlawful discrimination.

Plaintiff Shannon Phillips, who is Caucasian, claims that Starbucks discriminated against her and other white employees to repair its public image after drawing negative media attention for the 2018 arrest of two Black men at a Starbucks in Philadelphia, alleging reverse discrimination under Title VII of the Civil Rights, and the New Jersey Law Against Discrimination. Starbucks denies engaging in discrimination, alleging that Plaintiff was terminated for failing to lead and perform her role as a regional manager and, more specifically, was aloof, overwhelmed by the position, and failed to perform the essential functions of her job.

On Starbucks’ motion for summary judgment, the judge determined that Plaintiff had presented sufficient evidence allowing a reasonable jury to conclude that the company discriminated against her and other white employees. The judge further found, however, that Starbucks presented a legitimate, non-discriminatory reason for Plaintiff’s termination. As part of the burden-shifting analysis conducted in discrimination claims, when an employer produces sufficient evidence of legitimate, non-discriminatory reasons for the employee’s termination, the employee must then provide evidence that the employer’s reasons were pretext for discrimination. As it applied to Plaintiff’s claim of discrimination, the judge found that she had presented sufficient evidence creating a genuine dispute of material fact that Starbucks’ stated rationale for terminating her constituted pretext.

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The New Jersey Division on Civil Rights (DCR) recently adopted new and amended regulations concerning the “Display of Official Posters of the Division on Civil Rights.” Under these regulations, covered employers must display revised posters advising employees of their rights under the New Jersey Law Against Discrimination (“LAD”) and the New Jersey Family Leave Act (“FLA”). Both the LAD and FLA posters must be printed on 8 ½” by 11″ paper (or larger) and contain text that is fully legible. The official posters can be found on the DCR’s website located here and here. Employers should immediately replace their now outdated LAD and FLA posters with the updated ones.

New electronic posting option: The new regulations now expressly allow employers to satisfy the posting requirement by displaying posters electronically on an internet or intranet site accessible to all employees. Additionally, the new regulations require employers to distribute the updated posters annually on or before December 31st and upon an employee’s first request.

Additional posting requirements: As a reminder, the New Jersey Department of Labor and Workforce Development also requires employers to display posters regarding child labor, workers’ compensation, wage and hour rules, payment of wages, unemployment insurance, temporary disability benefits, the Conscientious Employee Protection Act (CEPA), family leave insurance, records, the SAFE Act (if you have 20 or more employees), gender equity (if you have 50 or more employees), paid sick leave, and worker misclassification.

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Early in the onset of the COVID-19 pandemic the Equal Employment Opportunity Commission (EEOC) issued guidance clearing the way for all employers to mandate COVID-19 viral testing for all employees without the need for any individualized justification or assessment. The health risks posed by the virus at that time prompted the agency to conclude that the health emergency trumped the Americans with Disabilities Act’s prohibition against medical testing that was not “job related and consistent with business necessity.”

The Heightened “job Related and Consistent with Business Necessity” Requirement.   In a hopeful sign that the COVID-19 pandemic may be waning, on July 12, 2022, the EEOC revised its mandatory testing guidance to now require employers to assess whether current pandemic circumstances and individual workplace circumstances justify COVID 19 testing of employees to prevent workplace transmission. The EEOC cautioned that the reinstitution of the “job related and consistent with business necessity” standard “is not meant to suggest that such testing is or is not warranted; rather, the revised [guidance] acknowledges that evolving pandemic circumstances will require an individualized assessment by employers to determine whether such testing is warranted.”

The updated guidance lists the following possible factors that an employer may want to consider during the assessment to satisfy the heightened standard:

New Jersey has one of the most comprehensive statutes protecting employees against discrimination in the workplace. On October 5, 2021, Governor Murphy signed legislation expanding these protections even further by amending New Jersey’s Law Against Discrimination (“NJLAD”) to prohibit private-sector employers from discriminating against employees over the age of 70. Specifically, the legislation eliminates a provision of the NJLAD that previously permitted employers to refuse to hire or promote workers over the age of 70. It further expands the remedies available to an employee who is forced to retire due to age.

History of the NJLAD

The NJLAD, originally enacted in 1945, prohibits an employer from refusing to hire or employ, fire, or otherwise discriminate against an individual in compensation or other terms, conditions or privileges of employment based on the individual’s protected status. While not included in the original list of protected classes, in 1962 the NJLAD was amended to recognize age as a protected status. In 1985, the NJLAD was amended again to clarify that while employers were prohibited from terminating or demoting employees based on their age, they were nonetheless allowed to “refus[e] to accept employment or to promote any person over 70 years of age.” The 1985 amendment also limited the remedies available to employees forced to retire as a result of age to back pay only. While New Jersey continued to broaden the NJLAD and expand protections to a number of groups over the following years, the limited protections against age discrimination were never modified, thereby placing it on separate, inferior footing to the State’s other protected categories.

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Since early 2020, New Jersey has passed a series of legislation aimed at identifying and penalizing businesses for misclassification of employees as independent contractors. On July 8, 2021, New Jersey enacted A5890, which empowers the Commissioner of the Department of Labor and Workforce Development (“DOL”) to issue broad stop-work orders to employers in violation of wage and hour laws that extend across “all of the employer’s worksites and places of business.” As set forth more fully below, we are beginning to see the DOL invoking this extraordinary power to effectively shut down an employer’s business in its entirety.

A5890 Stop-Work Orders and Injunctions

Prior to the passage of this bill, the Commissioner’s shut-down orders could only extend to the specific location where the wage and hour violation occurred. Under A5890, however, the Commissioner may now issue stop-work orders that extend across “all of the employer’s worksites and places of business.” Moreover, these stop-work orders can remain in effect until the Commissioner determines that the employer is compliant and has paid any penalties due. Employers must pay workers affected by a stop-work order for the first ten days of work lost due to the order, and the DOL can impose up to $5,000 in civil penalties for each day the employer continues to operate the business in violation of the stop-work order.

On Monday, Jan. 24, 2022, in the case Hughes vs. Northwestern, the U.S. Supreme Court ruled that a fiduciary’s duty to monitor investments in defined contribution retirement plans means the plan cannot include non-prudent investments. In reaching this conclusion, the Court recognized that fiduciaries have an ongoing obligation to monitor plan investments. Simply offering participants a diverse menu of investment options is not sufficient to insulate fiduciaries from potential liability.

The Holding in Hughes v. Northwestern.

In Hughes, employees of Northwestern University participated in two defined contribution 401(k) plans offered by the University. The employees alleged that the trustees of the plans breached their fiduciary duty to the participants by “(1) failing to monitor and control recordkeeping fees, resulting in unreasonably high costs to plan participants; (2) offering mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged for otherwise identical share classes (institutional share class) of the same investments; and (3) offering investment options that were likely to confuse investors.” Both the trial court and the Seventh Circuit Court of Appeals accepted Northwestern’s argument that even if some options were not prudent, there was no violation of ERISA’s prudence standard because the plans offered a diverse menu of investment options that the plaintiffs agreed were prudent.

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