Labor & Employment Insights

In a recent published decision, the New Jersey Appellate Division clarified the circumstances under which an employer’s directive that an employee submit to a psychological for fitness-for-duty examination serves a “legitimate, job-related business purpose” as required under the Americans With Disabilities Act (ADA) and the EEOC’s Enforcement. The case, In re Paul Williams, Township of Lakewood, involved a Township of Lakewood truck driver who was sent for a psychological fitness-for-duty examination eight months after the Township received an anonymous letter from an alleged co-worker complaining that the employee was mentally unstable and a threat to other co-workers. Without the employee’s consent, the Township scheduled the psychological examination and a follow-up meeting, and threatened the employee that if he failed to attend both appointments he would be disciplined. The employee refused to comply, claiming that the examination was not job-related or a business necessity and thus was in violation of his rights under the ADA. Following a hearing, the Township terminated the employee.

The employee appealed to the Office of Administrative Law (“OAL”), which reinstated the employee to his former position because the evidence showed that: (1) the employee’s work performance was satisfactory; (2) the truth of the allegations in the anonymous letter could not be verified; and (3) the Township’s demand for a psychological fitness-for-duty exam was not related to his work performance or to any specific allegation of psychologically disruptive behavior. Following an additional appeal, the matter ultimately ended up before the New Jersey Appellate Division, which affirmed the OAL and held that, under the ADA, an employer cannot require an employee to undergo medical tests unless they are job-related and consistent with legitimate business necessity. Here, the Appellate Court faulted the Township for ordering the employee to undergo a psychiatric examination based solely upon information contained in an anonymous letter, precisely the kind of “innuendo and rumor that the EEOC has advised employers is insufficient to support a mandatory evaluation.” The Williams holding makes clear that employers must be careful and judicious in demanding that employees submit to fitness-for-duty examinations. Such examinations may only be required when the employer has a reasonable belief, either through direct observation or reliable information from credible sources, that the employee’s mental state or physical condition will either affect his or her ability to perform essential job functions or pose a direct threat to others. Employers must engage in a complete and objective assessment, untainted by general assumptions about the employee’s medical condition, prior to requiring the psychological examination.

In an era of increasing workplace violence, this decision places employers in a difficult position. However, employers who receive anonymous tips or other information suggesting that an employee is not mentally stable must resist knee-jerk reactions and secure the necessary observations and information that will justify requiring the employee to undergo an medical examination. Moreover, employers are encouraged to consult legal counsel for guidance on whether the examination will pass muster under the ADA.

To escape the economic and administrative burdens of the employer-employee relationship, employers increasingly turn to “shared employee” arrangements with Professional Employee Organizations (PEOs), staffing agencies, independent contractors and other third party vendors to supply temporary workers. In doing so, employers typically assume that the third-party provider is the “employer” of the temporary worker, and therefore the obligations arising under wage and hour, family/medical leave, discrimination and other employment laws will be borne solely by the third-party provider. Such assumptions may prove costly, as courts and administrative agencies often look past efforts to alienate the employer-employee relationship to find both businesses are the employer with joint responsibility for compliance with employment laws.

In two prior posts we discussed the respective tests adopted by the NLRB and the Third Circuit for determining when two or more entities can be deemed “joint employers” equally liable for violations of employment laws. You can read about the Third Circuit’s Darden Test here and the NLRB’s “joint employer” standard here. Now the United States Department of Labor (DOL) has issued new guidance on when a joint employer relationship – with attendant joint responsibilities – exists under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). These recent pronouncements are the latest efforts by governmental agencies and the courts to grapple with the shared worker trend in the modern workplace.

THE DOL’s INTERPRETIVE GUIDANCE ON JOINT EMPLOYER STATUS UNDER THE FLSA

With the advance of mobile technologies, employers are faced with the growing probability that employees are utilizing these devices to record conversations or other conditions in the workplace. Currently, approximately 38 states, including New York and New Jersey, have laws which permit a party to surreptitiously record a conversation if one party to the conversation has given permission to be recorded while other states including Pennsylvania, Connecticut, and Florida, require all parties involved in the recording to consent. These laws do not, however, touch upon an employer’s ability to regulate recordings in the workplace, and employers have generally assumed they were free to enact policies prohibiting or limiting recordings by employees. However, in a recent decision the National Labor Relations Board (the “NLRB” or “Board”) held that it is a violation of Section 7 of the National Labor Relations Act (the “Act”) for an employer to maintain a policy that restricts or prohibits employees from recording conversations with management without prior management approval. Section 7 gives employees the right to freely discuss terms and conditions of employment and to act in concert with one another for their mutual aid and protection.

The decision, Whole Foods Market, Inc. and United Food and Commercial Workers, Local 919, et al, arose out of a policy in Whole Foods Market’s General Information Guide prohibiting employees from recording “phone calls, images, and company meetings with any recording device…” unless prior approval was received from management, or unless all parties to the conversation consented to the recording.  Whole Foods’ no-recording policy was aimed at eliminating the “chilling effect” on the free expression of views that would otherwise arise if employees believed or suspected that they were being recorded on a device.

The NLRB took the opposite view, concluding that policies prohibiting employees from recording in the workplace without prior approval by management violate the Act because that policy has a “chilling effect” on the employee’s rights to engage in protected concerted activity under the NLRA.  According to the NLRB, protected conduct that might be negatively affected by prohibitions on recording include, for example, recording of images of protected picketing, documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment (such as a meeting to discuss potential discipline), documenting inconsistent application of employer rules, or documenting evidence for later use in judicial or administrative actions.  The NLRB determined that photography and recording in the workplace is an “essential element” in preserving and vindicating labor rights under the Act. Whole Foods was thus ordered to withdraw its policy and post notice of its violation.

Recent changes to OSHA’s posting requirements have narrowed the list of employers required to report the occurrence of significant injuries in the workplace.  Among the list of newly covered industries that were once previously exempt from posting requirements are tire stores and service centers; automobile dealers; bakeries; beer, wine, and liquor stores; specialty food stores; lessors of real estate and activities related to real estate;, certain professional, scientific, and technical services; ambulatory health care services; performing arts companies; certain event promotors; amusement and recreational industries; and specialty food services, among other industries.

OSHA’s posting requirements mandate that covered employers post summaries of serious workplace injuries and illnesses using OSHA’s Form 3300A between February 1, 2016 and April 30, 2016.  Form 3300A informs employees and others of the number of fatalities, injuries, poisoning, skin, and respiratory disorders and conditions, hearing loss instances, and other illnesses and conditions experienced by the employees at the workplace.  The form must be posted in a common, visible area where notices are generally posted each year.

Under OSHA’s reporting requirements, covered employers must report to OSHA all work-related fatalities within eight hours and all work-related inpatient hospitalizations, amputations, and all losses of an eye within 24 hours. Covered employers must post Form 3300A annually, even when no work-related injuries or illnesses occurred during that year.

When employees are required to remain on premises or otherwise be available to the employer during an unpaid meal break, the issue arises whether the meal time is compensable time under the Fair Labor Standards Act (FLSA).   Two tests have been developed by the courts of appeal in other jurisdictions, one focusing on whether the employee was relieved from all duties during the meal break, and the other more common view focusing on whether the employer or the employee received the “predominant benefit” of the meal break.   In Babcock v. Butler County, No. 14-1467 (3d Cir. 2015) the Third Circuit finally weighed in, adopting the “predominant benefit” test to determine whether the time is compensable.

The Facts: Pursuant to a collective bargaining agreement, Butler County Prison correction officers received a one hour meal period each shift, of which 45 minutes were paid and 15 minutes were unpaid.   During the meal period corrections officers were not permitted to leave the prison without permission, were required to stay in uniform and in close proximity to emergency response equipment, and remain on call to respond to emergencies.    The corrections officers claimed they were entitled to pay for the full hour (e.g., the unpaid 15 minutes) under the FLSA because these restrictions prevented them from leaving the facility, smoking or engaging in other personal errands during the meal period.  The County claimed that the lunch hours was a non-compensable “bona fide meal period” under the FLSA because the corrections officers received the “predominant benefit” of the break period.

The Holding:  The Third Circuit agreed with the District Court’s ruling that under the facts presented, the corrections officers were the predominant beneficiaries of the meal break, and thus the time was not compensable time under the FLSA.   The court rejected the minority “relieved from all duties” test that would result in the time being compensable if the employee was not free to leave the premises, was on call or was otherwise restricted in any way from engaging in personal activities during the break.  Under the more flexible “predominant benefit” test adopted by the court, such restrictions would not necessarily negate the “bona fide meal period” status if on balance the restrictions did not predominantly benefit the employer. In ruling against the corrections officers, the court observed that the officers could request permission to leave the prison to eat their lunch and could eat away from their desks.   The court also relied upon the fact that the officers were protected by a CBA that provided them with a partially-compensated meal period and assured them payment for overtime payments.  Under the totality of the circumstances, the court reasoned that despite the restrictions, the meal break was predominantly for the benefit of the corrections officers.

In a prior post we discussed the new test adopted by the National Labor Relations Board for determining when two entities can be deemed “joint employers” equally liable for unfair employment practices in violation of the National Labor Relations Act.  Now, the Third Circuit Court of Appeals (with jurisdiction over federal courts in NJ, DE and Eastern PA), has announced the test for determining when two entities can be deemed “joint employers” equally liable for violations of federal anti-discrimination laws.

The bad news is that the Third Circuit’s decision in Faush v. Tuesday Morning, Inc., D.C. Civ. No. 2-12-cv-07137 (Nov. 18, 2015) may significantly impact companies who secure workers through staffing agencies or other third party providers. The good news is that the Tuesday Morning court rejected a broad test that would have made it easier for employees to establish “joint employer” status in favor of a narrower test that may make it easier for an employer to resist “joint employer” status.

The Facts: Matthew Faush, African American, was employed by Labor Ready, a staffing agency providing temporary workers to retailer Tuesday Morning, Inc.  Following his termination, Rauch filed suit against Tuesday Morning claiming race discrimination in violation of Title VII and the Pennsylvania Human Relations Act (PHRA). Tuesday Morning moved for summary judgment, claiming that Faush was not its “employee” and thus it could not be liable for employment discrimination under Title VII or the PHRA.  The court below agreed and dismissed the case.   Rauch appealed.

On March 1, 2015 most New Jersey employers with 15 or more employees became subject to the requirements of the “The Opportunity To Compete Act” (the “Act”), more commonly known as the “Ban the Box” law that places significant restrictions upon employer inquiries into an applicant or employee’s criminal history. As explained more fully in our prior article on New Jersey’s Ban the Box law, with certain exceptions the law precludes an employer from i) placing an advertisement indicating that applicants for employment with criminal record will not be considered; ii) require an applicant to complete an employment application that makes inquiry into the applicant’s criminal record  prior to the completion of an initial interview; or iii) asking any questions about the applicant’s criminal record during the initial interview.

Following the Act’s passage, many employers had residual questions about how the Act was to be implemented, including questions  about  whether there needed to be a time interval between the first interview (where the inquiry about a criminal record is prohibited) and the second interview (where the inquiry about a criminal record is permitted); whether an “interview” would include an email exchange or written questionnaire; the extent to which employers, including multi-state employers, could make references to criminal background checks in employment applications; etc.

The Final Rules and Agency Guidance: On December 7, 2015 the New Jersey Department of Labor and Workforce Development issued its Final Rules for implementing the requirements of the Act. In addition, the Department published specific “Responses” to comments submitted by employers  seeking clarification of the Act’s requirements and the proposed regulations.   The Department’s clarifications include (but are not limited to) the following: