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2023 Year in Review

Explore a diverse range of topics in Porzio’s Employment Law 2023 Year in Review, covering areas such as Artificial Intelligence, accommodations, employee lawsuits, wage and hour considerations, layoffs, terminations, and workplace safety and security. We recommend employers review their policies to ensure compliance with all federal, state, and local laws. If you have questions or need further support, our Employment Law Team is here for you.

Kerri Wright Editor-In-Chief (973) 889-4237 KAWright@pbnlaw.com

2023

TABLE OF CONTENTS Artificial Intelligence Recruiting with Artificial Intelligence: What’s the True Cost?

New York and New Jersey Introduce Bills to Regulate Artificial Intelligence in the Hiring Process

Accommodations To Commute or Not to Commute: That is the Question

Supreme Court Raises the Bar for Religious Accommodations in the Workplace: A New Standard of ‘Undue Hardship’ under Title VII

Employment Laws & Their Enforcement Two New Laws Change Landscape for New Jersey Employers

NJDOL’s New And Powerful Enforcement Mechanism Marks More Aggressive Approach To Enforcing New Jersey’s Labor Laws

Non-Compete Agreements and Changes in New Jersey’s Business Climate

Employee Lawsuits Whistleblowing Past The Graveyard: Making Sense of Two Recent, and Seemingly Contradictory, Appellate Division CEPA Cases

Class Action Lawsuit Goes Up In Smoke: District Court Decides CREAMMA Does Not Create A Private Right Of Action For Employees

Wage & Hour Employers, Have You Reviewed Your Compensation Structure Lately?

New Jersey Pay Transparency Legislation Passes First Committee Hurdle

Layoffs & Termination Update to the Mini-WARN ACT Provides Additional Worker Protections in New Jersey

Employers Beware: Severance Agreements Containing Broad “Gag Clauses” Are Unlawful

Workplace Safety & Security Create a Culture of Security to Prevent Workplace Violence

Recruiting with Artificial Intelligence: What’s the True Cost? Employment Law Monthly | November 2023 By Rachel Fairley Diversity, Equity, and Inclusion (DE&I) has become an increasingly important consideration in hiring practices across the country. As employers look to diversify their workforce and minimize recruiting costs, exploration of recruiting platforms that are powered by Artificial Intelligence (AI) have become more appealing to employers for several reasons. The strength of the use of AI in recruitment is the ability to sort through large volumes of resumes with lightning speed. AI undoubtedly analyzes information faster than any human can, which allows employees to focus their time on other pertinent tasks. So, what’s the catch? AI often is credited with removing bias in the screening and hiring process because it uses algorithms to combine multiple data points to search for the best candidate for the role for which it is charged with recruiting. However, even with the use of AI, both conscious and unconscious biases often creep into the process of selecting candidates, eliminating qualified candidates from the selection process. Even worse, AI actually may promote biased hiring practices due to its reliance on unconsciously prejudiced selection patterns such as demography, gender, and language. Rather than eliminating bias, as frequently advertised, AI is likely to perpetuate the status quo, as it is typically modeled on inadequate and biased data. Due to these risks of bias and discrimination, legislators and state and federal agencies are proposing and enacting laws to restrain the use of AI in employment decisions. •

Equal Employment Opportunity Commission (EEOC): In January 2023, the EEOC issued a draft strategic enforcement plan that brought AI employment discrimination to the top of its priority list. However, this is not the first we have heard from the EEOC on this topic. The EEOC previously issued guidance in May 2022, regarding the use of AI technology in recruiting and employment decisions and the application of the Americans with Disabilities Act and subsequently filed its first AI-related discrimination lawsuit. See EEOC v. iTutorGroup, Inc., No. 1:22cv-02565 (E.D.N.Y. May 5, 2022).

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New York City: In July 2023, New York City’s Department of Consumer and Worker Protection began enforcement of Local Law 144, which regulates the use of AI in “employment decisions.” Prior to using AI-enhanced recruiting methods, Local Law 144 requires that employers: (1) conduct a bias audit; (2) notify candidates or employees residing in New York City about the use of such tools; and (3) notify affected persons that they may request an accommodation or alternative process. Violations are subject to civil penalties.

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Illinois (820 ILCS 42) and Maryland (H.B. 1202): Both states have enacted AI-related legislation that requires employers to obtain consent from candidates prior to the use of facial

recognition technology during an interview (Maryland), and the use of AI in making assessments based on tone, word choice, facial expressions, and other forms of analyses of candidates during video interviews (Illinois). Currently pending in the New Jersey Legislature is Bill A4909, which would regulate the sale and use of “automated employment decision tools.” A4909 defines these ”automated employment decision tools” as “any system the function of which is governed by statistical theory, or systems the parameters of which are defined by systems, including inferential methodologies, linear regression, neural networks, decision trees, random forests, and other learning algorithms, which automatically filters candidates or prospective candidates for hire or for any term, condition or privilege of employment in a way that establishes a preferred candidate or candidates.” If enacted, A4909 would make unlawful the sale of automatic employment decision tools unless the following three requirements are met: •

The tool is the subject of a bias audit conducted in the past year prior to selling or offering the tool for sale.

•

The sale of the tool includes, at no additional cost, an annual bias audit service that provides the results of the audit to the purchaser.

•

The tool is sold or offered for sale with a notice stating that the tool is subject to the provisions of [A4909].

“even with the use of AI, both conscious and unconscious biases often creep into the process of selecting candidates, eliminating qualified candidates from the selection process”

A4909 defines “bias audit” as “an impartial evaluation, including but not limited to testing, of an automated employment decision tool to assess its predicted compliance with the provisions of the [NJ Law Against Discrimination], and any other applicable law relating to discrimination in employment.” If this bill is enacted into law, it will be important for employers to thoroughly research the tools they will be using (including any tools that may be used by search firms or online recruiting companies) but it also will require specific action by employers during the recruiting process. The bill contains a notification requirement to candidates that, within 30 days of using the tool to screen candidates for employment decisions, employers must notify each candidate that the tool was “used in connection with the candidate’s application for employment” and that it “assessed the job qualifications or characteristics of the candidate.” Neither A4909 nor its Senate counterpart S1926 have progressed through the New Jersey Legislature at this time. While A4909 almost unanimously passed the Assembly Labor Committee and was thereafter referred to the Assembly Science, Innovation, and Technology Committee earlier in 2023, the bill remains in the Science, Innovation, and Technology Committee, with no movement. Similarly, S1926 was referred to the Senate Labor Committee in March of this year, where it remains. While these bills have not made much progress and may not be passed in their current form, employers in New Jersey (and elsewhere) should anticipate that AI recruiting legislation will be passed in the near future. With this in mind, employers should utilize the framework set forth in these bills to remain cognizant of the risks associated with AI in recruiting, and as a foreshadowing of legislation that may be forthcoming. AI technology will continue to evolve, while legislation likely will continue to lag significantly behind. While the benefits of AI are incremental when used conservatively, those charged with making employment decisions should stay informed about the latest regulations, take stock of their current hiring practices, including whether and to what extent AI plays a role in those practices, confirm company policies are clear and up-to-date, consult with legal counsel to ensure compliance, and implement safeguards when necessary to protect their company from increased liability. The Porzio Employment Team is available to help employers navigate evolving regulations, develop new policies, and mitigate the risk of liability.

2023 Year in Review

New York and New Jersey Introduce Bills to Regulate Artificial Intelligence in the Hiring Process Employment Law Monthly | January 2023 By Thomas Reilly Most employers strive to create a diverse and inclusive workforce. To achieve that, some employers are looking to advanced automated decision tools such as artificial intelligence, data analytics, and statistical modeling in an attempt to eliminate bias in the hiring and retention process once and for all. Presumably, automated computational processes would use hard data and other objective measures, rather than the implicit biases of the human mind, to make decisions about potential and current employees. But the opposite may be true: automated decision tools may unwittingly reaffirm certain biases, indelibly reproducing them through an artificial process, designed and marketed as bias-free. Potential Problems With Automated Decision Tools Researchers and academics have for years expressed concern that “automated tools might introduce bias or entrench existing inequality – especially if they are being inserted into an already discriminatory social system.” See Rachel Courtland, The Bias Detectives, 558 Nature 357 (June 21, 2018). In one real-world example, judges in Broward County Florida used commercial software to determine whether a person charged with a crime should be held in jail or released before trial. The software generated scores for each defendant designed to measure the chance of recidivism. A later journalistic report determined that a disproportionate number of black defendants were “false positives,” meaning the software classified them as high risk, but they never committed another crime. The software developer denied this claim. Id. Automated decision tools have also caught the EEOC’s attention. In an October 2021 press release, EEOC Chair Charlotte A. Burrows stated that “these tools may mask and perpetuate bias or create new discriminatory barriers to jobs. We must work to ensure that these new technologies do not become a high-tech pathway to discrimination.” Recent Legislative Action in New York and New Jersey In response to these noted concerns, New York City passed a law set to take effect in April 2023 that will regulate automated decision tools, in part through requiring these tools to be independently audited for bias. These “bias audits” will assess whether the tool in question causes a disparate impact on applicants based on their race, gender, disability, and any other category protected by law. The law also requires that candidates or employees who reside in the city be notified about such tools in their assessment or evaluation for hire or promotion, as well as the job qualifications and characteristics used by the automated employment decision tool. Violators will be subject to a civil penalty. At the state level, New York and New Jersey have introduced similar bills. New Jersey’s bill, introduced in the General Assembly as A4909 and in the Senate as S1926, requires “automated employment decision tools” sold within the state to be subject to a bias audit within one year before public sale, to include at no additional charge an annual bias audit service, and to provide a notice stating

that the tool is subject to statutory requirements. The employer also must notify candidates within 30 days that they have been screened using such tools; the tools are subject to an audit for bias; and the tools assessed the candidate’s “job qualifications or characteristics.” Similar to New York City’s law, the bill includes a civil penalty for violators. It is unclear, at this time, whether the bill will pass. New York State’s bill provides similar terms to New York City’s law, but calls the bias audit a “disparate impact analysis.” Most interesting of all is what these bills and laws do not include. They do not expressly prohibit employers from using automated decision tools with a suspicious record, or ones that show evidence of discriminatory effect through a bias audit. New York City’s bill requires employers to publish a summary of the most recent bias audit on their website, and to advise employees on how to request an alternative selection process or accommodation, but it does not prohibit tools that show a troubling record. New Jersey’s bill does even less, and requires neither publication nor an alternative process. Instead, the bill implies that it is up to individual employees and state agencies to take necessary action, stating that it does not limit or otherwise curtail rights provided to a candidate or employee by law, i.e., the right to sue, and does not limit the right of state agencies to investigate and “enforce rights relating to bias and discrimination in employment.” New York State’s bill goes the farthest, requiring that the audit be submitted annually to the State, and permitting the attorney general to investigate violations of New York’s Labor Law based on the provided data. Takeaways •

New York and New Jersey are attempting to address potential implicit biases inherent in automated decision tools, primarily through using independent “bias audits,” which assess whether the tools cause a disparate impact on a protected class.

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New York City’s law is scheduled to take effect in April 2023. New York State and New Jersey each have bills pending in their respective legislatures.

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These laws do not expressly prohibit tools shown to have a discriminatory effect.

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Employers, nevertheless, must be wary when using such tools. To the extent an employer is, or becomes, subject to the laws and bills described above, it should pay careful attention to the annual bias audit, which will give candidates, employees, and state agencies information to fuel a lawsuit or other adverse action.

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Employers should consult with their attorneys when using such tools and when interpreting the data from an annual bias audit, where available. This is particularly true for multi-state employers, who are likely to face varying requirements from each state in which they engage in business.

To Commute or Not to Commute: That is the Question Employment Law Monthly | September 2023 By Rahool Patel The Seventh Circuit focused on whether Kimmons had the right to a modified schedule because of his difficulties commuting home from work during nighttime hours. The court of appeals noted the ADA provided a non-exclusive list of potential accommodations, including “part-time or modified work schedules.” 42 U.S.C. § 12111(9)(B). It further referenced the legislative history of the ADA, in which a report of a House of Representatives committee found that: “Other persons who may require modified work schedules are persons who depend on a public transportation system that is not currently fully accessible.” H.R. Rep. No. 101-485, pt. 2, at 62-63 (1990). Where and when does an employer’s duty to provide reasonable accommodations for an employee’s disability begin under federal and state law? According to a recent decision from a federal appeals court in a case brought by the Equal Employment Opportunity Commission, the duty begins before the employee steps inside the workplace or begins working. Employers in New Jersey and nationwide should take note of the EEOC’s stance and the appeals court’s decision and evaluate all requests for commuting-related accommodations on a case-by-case basis. In Equal Employment Opportunity Commission v. Charter Communications, LLC (Kimmons), the Seventh Circuit recently considered an employee’s request for a modified work schedule under the Americans with Disabilities Act (ADA). No 22-131, ___ F.3d ___ (Jul. 28, 2023). The claim involved James Kimmons, who lived in Racine, Wisconsin and worked at a call center operated by Charter Communications in Milwaukee. He had cataracts in both eyes leading to blurred vision and difficulty seeing in the dark, which rendered nighttime driving unsafe. Kimmons worked the 12 p.m. to 9 p.m. shift and had a one-hour commute by car in each direction. To minimize the danger of driving in the dark, he asked for his workday to start and end earlier. Charter granted his request and permitted him to start at 10 a.m. and leave at 7 p.m., but only for 30 days. When Kimmons sought an extension of this modified work schedule to allow him time to try and move closer to the call center, Charter denied the request. It informed Kimmons that assistance with his commute was not required under the ADA and recommended he use public transportation or carpool. However, the local bus system did not operate after 9 p.m., and Charter declined his request for the names of other employees who lived near him asserting this information was confidential. Kimmons filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). Conciliation efforts failed, and the EEOC sued Charter for a failure to accommodate under the ADA and sought damages as well as injunctive relief. The United States District Court for the Eastern District of Wisconsin granted Charter’s motion for summary judgment. Relying on prior Seventh Circuit precedent, the district court concluded that the ADA did not apply because Kimmons did not require an accommodation to perform the essential functions of his job once he arrived at the workplace. The EEOC appealed.

2023 Year in Review

The Seventh Circuit also considered precedent from other circuits, including Colwell v. Rite Aid. Corp., 602 F.3d 495, 505 (3d Cir. 2013), a matter decided by the Third Circuit whose jurisdiction includes New Jersey. The facts in Colwell were strikingly similar to Kimmons. There, the plaintiff, a retail clerk who worked both day and evening shifts, lost her vision in one eye, making it unsafe for her to drive at night. Because no public transportation was available, she requested to be assigned daytime shifts only but her employer refused. The lower court ruled in her employer’s favor, but that decision was set aside on appeal. The Third Circuit held that “the ADA can obligate an employer to accommodate an employee’s disabilityrelated difficulties in getting to work, if reasonable” in certain circumstances, such as “when the requested accommodation is a change to a workplace condition that is entirely within an employer’s control and that would allow the employee to get to work and perform her job.” The Colwell court rejected drawing a sharp line between on-site accommodations and transportationrelated accommodations and reasoned Colwell, as a cashier, was required to be at her workplace to perform her job responsibilities, and any change in shifts was clearly a change in a workplace condition entirely under her employer’s control. Further, the Third Circuit noted that Colwell was not seeking help “in the method or means of her commute, but only a change in schedule” that was solely within her employer’s control. The Seventh Circuit found Colwell and other jurisprudence from around the country persuasive. The court made two general observations. First, “where a disability makes it difficult for an employee to travel to and from work safely, the employee usually controls some key variables, most important where the employee lives, but the employer controls another key variable, the work schedule.” Second, “in most cases, an employer had no duty to help an employee with a disability with the method and means of his commute to and from work, assuming the employer does not offer such help to employees without disabilities.” The Seventh Circuit held that an employee may preliminarily show he has the right to a commuting-related accommodation from his employer based on a fact-sensitive analysis of “the benefits of the [requested] accommodation, alternatives to the accommodation, the cost to the employer, and consequences for others.” Even then, the employer can show that the requested accommodation would cause undue hardship.

Applying these principles, the Seventh Circuit held that Charter had not shown that Kimmons’ requested accommodation was an undue hardship as a matter of law and failed to show that the accommodation would have unduly burdened other employees or would have been too expensive. It also held that Kimmons was not seeking “an unaccountable, work-when-able schedule or a permanent accommodation.” Because he asked only “for a temporary work schedule that would start and end two hours earlier while he found time to move closer[,]” the court of appeals held that “[a] jury could have [found] his requested accommodation to be reasonable.” Consequently, the Seventh Circuit reversed the district court’s grant of summary judgment to Charter and remanded the matter for further consideration of the EEOC’s claim. Recommended Actions for Employers The Seventh Circuit’s recent decision in Kimmons and the Third Circuit’s earlier decision in Colwell should serve as a reminder for employers that their obligations to provide disability-related accommodations under the ADA or its state counterparts, such as the New Jersey Law Against Discrimination, may – in some circumstances – extend beyond the limits of the physical workplace. Depending on the particular situation, an employer may have to provide a modified work schedule or another commutingrelated accommodation when an employee’s disability interferes with their ability to travel to or from work. Employers should consider the following: •

Providing additional training and guidance to human resources personnel about the need to consider requests for commutingrelated accommodations, including modified work schedules, on a case-by-case basis.

•

Properly documenting the reasons for granting, denying, or proposing an alternative commuting-based accommodation in response to a request from an employee.

•

Recognizing that employees may rely on public transportation options (instead of private car transport), which often operate on more limited schedules outside of traditional business hours and have differing levels of accessibility.

Employers should also consult with experienced employment counsel as needed. The Porzio Employment Team is available to assist in all aspects of the implementation of these new requirements, including policy development, training, and guidance. Are you interested in staying up-to-date with the latest developments in Employment Law? Be sure to keep an eye out for our Employment Law Monthly article providing valuable insights and analysis on the ever-evolving landscape of employment regulations in New Jersey. For more information and resources, visit our Employment and Labor practice page.

Supreme Court Raises the Bar for Religious Accommodations in the Workplace: A New Standard of ‘Undue Hardship’ under Title VII Employment Law Monthly | September 2023 By Rahool Patel Supreme Court’s “clarification” significantly raises the bar for employers to deny religious accommodations in the workplace under Title VII: A more than de minimis cost is no longer sufficient to qualify as undue hardship – instead, an employer must establish that granting the accommodation would require substantially increased costs in the context of its business. Toward the end of June, the Supreme Court of the United States issued opinions on some of the most consequential, and occasionally controversial, legal issues of the day. While most of the public’s attention this year was focused on cases involving affirmative action in college admissions, the role of state courts in the election process, and the interplay between state anti-discrimination laws and the First Amendment, the Supreme Court’s unanimous decision in Groff v. DeJoy, which “clarified” the meaning of Title VII’s “undue hardship” standard for religious accommodations in the workplace, is also one on which employers should focus their attention. Gerald Groff worked for the United States Postal Service (USPS) as a rural mail carrier in Pennsylvania. When the USPS started limited package deliveries for Amazon, Groff’s supervisors informed him that he would be required to work on Sundays. As an evangelical Christian, Groff refused because he believed that Sundays were a day for rest, not labor. When Groff failed to show up for his Sunday shifts, the USPS progressively disciplined him, and Groff eventually resigned from his job. Several months later, Groff sued the USPS for allegedly violating Title VII, a federal law which makes it unlawful for employers “to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s . . . religion[.]” 42 U.S.C. § 2000e–2(a)(1). Under Title VII, employers are required to respect “all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that [it] is unable to reasonably accommodate an employee’s . . . religious observance or practice without undue hardship on the conduct of the employer’s business.” 42 U.S.C. § 2000e(j). Groff argued that the USPS could have accommodated his request not to work on Sundays without experiencing “undue hardship” to its operations. The federal district court ruled in favor of the USPS. Relying on the Supreme Court’s decision in Trans World Airlines v. Hardison, 432 U.S. 633 (1977), the United States Court of Appeals for the Third Circuit upheld the district court’s decision because “requiring an employer to bear more than a de minimis cost to provide a religious accommodation is an undue hardship.” In particular, the court of appeals found that Groff’s request “imposed on his coworkers, disrupted the workplace and workflow, and diminished employee morale.” In a unanimous opinion authored by Justice Alito, the Supreme Court explained that Hardison had been misinterpreted by the lower courts for decades and vacated the judgment of the court

2023 Year in Review

of appeals. The Court held that “showing more than a de minimis cost . . . does not suffice to establish undue hardship under Title VII.” Instead, an employer has to show that “the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.” The Supreme Court instructed lower courts to take into account “all relevant factors” including “the particular accommodations at issue and their practical impact in light of the nature, size and operating cost of an employer.” It also noted that “a hardship that is attributable to employee animosity to a particular religion, or religion in general, or to the very notion of accommodating religious practice” was antithetical to the purpose of Title VII. In light of these principles, the Supreme Court remanded the case to the lower courts for reconsideration of whether the USPS failed to consider other possible accommodations for Groff. Recommended Actions for Employers The Groff decision may lead to a significant increase in workplace religious accommodation requests, which employers will need to consider carefully under the heightened standard articulated by the Supreme Court. Moreover, the courts of New Jersey and many other states follow federal precedent when interpreting their respective state laws governing religious accommodations. Accordingly, the Groff decision may cause state courts to modify their analysis of state law religious accommodation claims going forward. Employers should consider the following: •

Reviewing and, where necessary, accommodation policies and forms

revising

religious

•

Training supervisors, human resources personnel, and all other individuals involved in reviewing and deciding religious accommodation requests

•

Developing a range of potential accommodation options most suitable for their operations, which may be offered in lieu of an employee’s preferred accommodation when appropriate

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When denying religious accommodation requests, meticulously documenting the “substantial increased costs” that the request would have had on business operations

Employers should also consult with experienced employment counsel as needed. Are you interested in staying up-to-date with the latest developments in Employment Law? Be sure to keep an eye out for our Employment Law Monthly article providing valuable insights and analysis on the ever-evolving landscape of employment regulations in New Jersey. For more information and resources, click here to view our Employment and Labor practice page.

Two New Laws Change Landscape for New Jersey Employers Employment Law Monthly | August 2023 By David Disler, Melanie Lipomanis Two new laws impacting New Jersey employers are highlighted for review in this August Employment Law Monthly article. The first deals with amendments to New Jersey’s unemployment compensation law, which modified existing law to impose strict reporting requirements on employers and harsh penalties for those who fail to comply. The second is a new law, titled the “Temporary Worker’s Bill of Rights,” that is aimed at protecting the rights of New Jersey’s 130,000 temporary workers. The law broadly covers all “temporary help service firms” that are located, operate or transact business in New Jersey and applies to temporary workers employed in a broad array of occupations. Unemployment Compensation Law The first of the important legal changes involves New Jersey’s Unemployment Compensation Law. The changes created two new reporting requirements, modified timelines related to the unemployment process, and provided increased penalties for noncompliance. New Reporting Requirements The first of the two new reporting requirements mandates employers submit post-termination notification. Employers meet this requirement by completing the New Jersey Department of Labor & Workforce Development’s (Department) form titled “Instructions for Claiming Unemployment Benefits” (Form BC10) and submitting it to the employee and the Department. The law requires employers submit this form “immediately and simultaneously” by electronic means. The second requirement mandates employers submit information to the Department regarding the separated employee to assist with the unemployment insurance eligibility determination. The Department has not yet published a corresponding form for this requirement, but the form will require employers to submit sufficient information for the Department to make a benefit determination. This form will be required to be submitted regardless of whether the employee applies for unemployment compensation. Modifications to Unemployment Timelines The amendments further modified the timelines in the unemployment process. These include: 1.

Employers will be notified by the Department of missing information within seven days of an employee’s unemployment insurance claim or the employer’s submission of the required information. Electronic notifications will be sent by the Department to the employer at the time of filing of an unemployment insurance claim.

The Department will make an initial benefits determination within three weeks of receiving a claim.

Employees seeking benefits will have 21 days to appeal the Department’s determinations, and seven days to appeal a subsequent determination.

Employers will have seven days to appeal subsequent benefit determinations after receiving a written explanation from the Department.

Increased Penalties The amended law also established increased penalties for noncompliant employers. While previously, employers only were subjected to a $25 fine for every 10 days the employer failed to provide information to the Department, the amendments now provide that an employer who “willfully fails or refuses to furnish any reports or information” is subject to a fine of $500 or 25% of any amount “fraudulently withheld.” The amendments further provide that employers who fail to provide timely information may lose the ability to challenge the Department’s determination. Recommendations The above changes to the law are now in effect. Employers should immediately update their policies and procedures to ensure they are providing the appropriate notices and meeting the timing requirements as outlined above. Furthermore, human resource personnel and staff should receive training on these new requirements to ensure compliance. Temporary Workers’ Bill of Rights New Jersey has approximately 130,000 temporary workers, who before August 5, 2023, had no specific laws that governed their employment. This recently changed as Governor Murphy signed into law the “Temporary Worker’s Bill of Rights.” The new law is said to be one of the farthest reaching laws of its kind in the county. It is aimed at protecting the rights of New Jersey’s temporary workers by broadly applying to all “temporary help service firms” that are located, operate or transact business in the State, and applying to all temporary workers in the following occupations: 1.

Protective services, such investigation, and security.

animal

control,

private

Food preparation, such as cooking, bartending, dishwashing, and serving.

Building and grounds cleaning and maintenance, including pest control and landscaping.

Personal care and services, such as hairdressers, attendants, bellhops, and childcare.

Construction and related fields, such as carpentry, painting, electrical, and roofing.

Installation, maintenance, and repair.

Production, including manufacturing, fabricating, processing, chemical processing, and plant operation.

Transportation and logistics.

food

The law defines “temporary help service firm” as “any person or entity who operates a business that consists of employing individuals directly or indirectly for the purpose of assigning the employed individuals to assist the firm’s customers in the handling of the customers’ temporary, excess or special workloads, and who, in addition to the payment of wages and salaries to the employed individuals, pays federal social security taxes and state and federal unemployment insurance; carries workers’ compensation insurance as required by state law; and sustains responsibility for the actions of the employed individuals while they render services to the firm’s customers.”

paper check, direct deposit, or in cash. The temporary workers also must be provided an itemized pay statement which details the following:

The Temporary Workers’ Bill of Rights requires that any temporary laborer covered under the law must be paid an hourly wage rate equal to what is provided to the third-party client’s employees (including an hourly cost of benefits in this calculation) performing substantially similar work on jobs that require similar effort, skill and responsibility. The law is enforced by both the New Jersey Division of Consumer Affairs and the New Jersey Department of Labor & Workforce Development. As of the publication of this article, the Department has issued proposed rules, which clarify implementation of the law, that will remain open for public comment until October 20, 2023. The proposed rules clarify that temporary service firms in New Jersey must comply with the requirements of the new Temporary Workers’ Bill of Rights law even when assigning temporary workers to a third-party client outside of New Jersey. To implement provisions of the law, the Department issued the “Temporary Laborer Assignment Notification” form that all temporary help service firms must now complete and provide to each covered temporary laborer upon assignment to a temporary position. The notice requirement provides each temporary worker with specific information about their assignment, including the name, address and contact information of the temporary staffing agency and the third-party employer; the applicable workers’ compensation carrier; information regarding paid sick leave; the worker’s assigned worksite; the nature of the work and description of the position assigned; schedule; wages; and length of the assignment. The form further advises whether meals will be provided, whether licenses, equipment or special clothing will be needed, and whether training will be required or provided. The law also provides that no temporary workers may be sent to fill in for employees on strike, lockout, or other labor dispute without first providing them a written statement informing them of the dispute and their right to refuse the assignment without fear of retaliation. For any change in scheduling or job location for a multiday assignment, the “temporary help service firm” must provide notice to the worker at least 48 hours in advance of the change where feasible. Finally, a temporary help service firm will be required to provide notice to temporary workers of their right to request the firm withhold their daily wages and be paid on a bi-weekly basis by

2023 Year in Review

The name, address and telephone number of each third-party client at which the temporary worker worked.

The number of hours worked by the temporary worker at each third-party client each day during the pay period.

The rate of pay for each hour worked, including any premium rate or bonus.

The total pay period earnings.

The amount of each deduction from the temporary worker’s compensation by the temporary help service firm, and the reason for each deduction.

The law prohibits a covered temporary help service firm from deducting from a worker’s pay for supplies and food if that would result in the worker receiving less than minimum wage, and prohibits any deduction from the worker’s pay for transportation to and from the worksite, or for any background or drug testing. Failure to provide the requisite notices may result in a civil penalty for the temporary help service firm of between $500 and $1,000 for each violation. In addition, the law provides a private right of action. This means that the temporary worker may file a civil lawsuit in the New Jersey Superior Court against both the temporary help service firm and the company utilizing the temporary worker’s services. Companies using temporary workers, as well as the staffing agencies, are jointly and severally liable for any violations of the law – meaning that either company could be responsible for paying the full damage amount awarded in the lawsuit. Recommendations Temporary service agencies doing business in New Jersey, as well as the companies that use their services, should review their policies and procedures to ensure they are complying with the law’s requirements. Companies that utilize temporary workers should further ensure their contractual agreements with the temporary service agencies are updated to mandate that these companies are complying with the law. In addition, relevant personnel should be trained accordingly to avoid non-compliance. The Porzio Employment Team is available to assist in all aspects of the implementation of these new requirements, including policy development, training, and guidance. Are you interested in staying up-to-date with the latest developments in Employment Law? Be sure to keep an eye out for our Employment Law Monthly article providing valuable insights and analysis on the ever-evolving landscape of employment regulations in New Jersey. For more information and resources, visit our Employment and Labor practice page.

NJDOL’s New And Powerful Enforcement Mechanism Marks More Aggressive Approach August 10, 2023 By Thomas Reilly The New Jersey Department of Labor and Workforce Development (NJDOL) has commenced the first part of a new and aggressive approach to address employer violations of state wage, benefit, and tax laws. Under this initial phase, the NJDOL has been sending final notices to employers who have failed to satisfy their outstanding liabilities to the State for labor law violations, offering them a last opportunity to resolve those liabilities before they are placed on the Workplace Accountability in Labor List (WALL). The WALL was established by statute as part of a series of statutory measures to prevent and rectify worker misclassification and improper treatment. For example, employers who fail to pay overtime because they have misclassified a worker as exempt, or who fail to pay minimum wage because they have misclassified an employee as an independent contractor, have violated the labor law. The recent statutory measures provide the NJDOL with unprecedented and broad powers to enforce compliance, and the WALL is one of the most powerful tools in its new arsenal. The NJDOL’s enforcement measures and ability to punish violators are now both increasingly serious and public. A business whose name appears on the WALL is prohibited from contracting with public entities until it resolves its outstanding liabilities. The first WALL, set for publication next month, will be publicly available, and updated monthly. Although the first notices were sent to businesses with existing violations, future offenses are equally punishable by placement on the WALL. Employers who have been issued a final notice by the NJDOL should consult with counsel immediately and do everything possible to resolve their outstanding liabilities to avoid the business and reputational harms associated with a listing on the WALL. Employers who have no current outstanding liability should remain scrupulous to avoid the public shaming and restricted access to public funds that follows from placement on the WALL. In all cases, we are here to provide guidance to help employers through this process and to ensure that businesses are not unwittingly ensnared by the NJDOL’s new and aggressive enforcement mechanism.

Non-Compete Agreements and Changes in New Jersey’s Business Climate Employment Law Monthly | February 2023 By Brian Giardina Savvy employers see the changing macro and micro-economic trends and are considering how those trends will alter the business environment. Changes in law and public policy, particularly the expansion of employee rights in some key areas, look to be significant factors in the near future. In addition, there currently are State and Federal proposals that, if implemented, will significantly impact how businesses use one of their most important tools: the covenant not to compete. This change is the proverbial “canary in the coal mine” for how things were done and is a signal to adopt new and forward-thinking policies and practices.

Savvy employers see the changing macro and micro-economic trends and are considering how those trends will alter the business environment. Changes in law and public policy, particularly the expansion of employee rights in some key areas, look to be significant factors in the near future. In addition, there currently are State and Federal proposals that, if implemented, will significantly impact how businesses use one of their most important tools: the covenant not to compete. This change is the proverbial “canary in the coal mine” for how things were done and is a signal to adopt new and forward-thinking policies and practices.

At the state level, the New Jersey legislature has moved to restrict employer use of non-compete agreements. Currently pending, Assembly Bill A3715 would restrict the use of non-compete agreements to certain types of employees. Under the proposal, nine categories of workers would be excluded from non-compete agreements. Those categories are: 1.

An employee who is classified as nonexempt under the federal Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et sec.).

Undergraduate or graduate student interns, whether paid or unpaid.

An apprentice participating in an apprenticeship program registered by the Office of Apprenticeship.

A seasonal or temporary employee.

An employee who has been terminated without a determination of misconduct or laid off by the action of the employer.

An independent contractor.

An employee under 18.

A low-wage employee.

An employee whose period of service is less than one year.

The above categories cover so many types of workers across so many industries that employers may have difficulty tracking if a non-compete is permissible or not. In addition to the above restrictions on the application of noncompetes, employers will be required to notify an employee no later than 10 days after termination of the employment relationship of the intent to enforce the non-compete agreement. Failure to properly notify would invalidate the agreement. For those employees who still would be subject to non-compete agreements, this proposed law substantially limits the breadth and length of a possible non-compete agreement. Employers may find themselves particularly vulnerable to job-hopping employees, leaving before their one-year anniversary and invalidating an otherwise valid non-compete agreement. Even when employers can enforce agreements, it will only be for up to one year after the employee’s termination, only within the specific geographic areas of the employee’s work, and only within the State of New Jersey. Employers should review their non-compete agreements and, if necessary, begin discussing other tools to protect their business interests.

2023 Year in Review

Irrespective of potential state action limiting the use of noncompete agreements, the Federal Trade Commission also has taken steps to ban the use of non-compete agreements nationwide. The proposed rule, put forward last month, would define noncompete agreements as an unfair method of competition. This action would not only ban non-competes moving forward but likely would require any agreement in effect to be rescinded. Currently, by the FTC’s own estimates, one in five workers is covered by a non-compete. This has the potential to invalidate close to 30 million non-compete agreements. Congressional leaders have requested additional information about the FTC’s ability to make such a broad rule, likening this proposal to a “power grab.” In other words, there is concern over whether the FTC has the authority to impose such a nationwide ban on non-compete agreements. While neither the New Jersey bill nor the FTC rule change has become law, it is clear that the pendulum appears to be swinging away from employers. To date, 10 states have passed some restriction on the use of non-compete agreements, mostly focused on low-wage workers. Whether non-competes are permitted and which employees they apply to varies depending on the jurisdiction. Some jurisdictions rely on wage levels to determine if a noncompete is appropriate. For example, in Maryland, an employee can earn $31,200.00 per year and still be subject to a non-compete agreement, while in Oregon, the bar is set at $100,533.00. Other recent non-compete laws, like the 2018 revision to the noncompete law in Massachusetts, include tools to make non-competes more expensive for the employer in addition to restricting noncompetes to fewer types of workers. Non-compete agreements in Massachusetts are required to have either a “garden-leave” clause, or some other mutually-agreed upon provision which benefits the employee. A “garden-leave” clause requires the employer to pay the employee at least 50% of their salary during the restricted period, thus leaving the employee time for their hobbies, like gardening. Employees who breach a fiduciary duty or otherwise breach the non-compete, forgo their garden-leave payment. While garden-leave is not included in the New Jersey law, New Jersey employers should review their non-compete agreements. This includes not just a review of the specific language in your non-compete agreement but which types of employees you plan to require to sign non-compete agreements. Employers will find it beneficial to review their existing agreements for problematic language and to draft new non-compete agreements that are likely to be enforceable within the confines of the proposed law. Moving full-speed ahead with contracts that may not be enforceable likely will lead to more litigation and expense in the future. Looking even further ahead, employers will want to assess the value of a noncompete carefully on each type of worker and whether other tools will be better able to protect the business interests without the additional exposure brought on by these new regulations.

Whistleblowing Past The Graveyard: Making Sense of Two Recent, and Seemingly Contradictory, Appellate Division CEPA Cases Employment Law Monthly | October 2023 By Thomas Reilly Most New Jersey employers are familiar with the Conscientious Employee Protection Act (CEPA), which protects employees who engage in “whistleblowing” from retaliatory action by their employers. As a brief refresher, there are four elements to a CEPA claim: (1) the employee believed that his or her employer violated the law or public policy; (2) the employee engaged in a “whistleblowing” activity, i.e., informed the employer or an outside entity of the conduct; (3) the employee suffered an adverse employment action, such as being fired; and (4) there was a causal connection between the whistleblowing activity and the adverse employment action. Once the employee establishes these four elements, it is up to the employer to show that there was a “legitimate, non-discriminatory” reason for the adverse employment action. Even if the employer shows such a reason, the employee can prevail if he or she is able to show that the proffered reason is a mere “pretext,” and not the real reason for the adverse action. Any of the four elements of a CEPA claim can offer vexing fact patterns. In two recent and very similar cases from the Appellate Division, it was the fourth element which sowed confusion, and produced two seemingly contradictory rulings. Smith v. Konica Minolta Business Solutions U.S.A., Inc. In Smith, the plaintiff employee believed that several other employees were engaging in business fraud. She informed her supervisors several times beginning in 2018, and later made two calls to her employer’s anonymous whistleblower hotline. Two months after her second call, her supervisor discovered that she had received an unsolicited email with information regarding additional potential fraudulent activity by her co-employees. Her supervisor asked her to turn over her personal laptop pursuant to the employer’s Bring Your Own Device (BYOD) policy. She refused and was terminated. After she filed suit under CEPA and several other causes of action, her employer moved for summary judgment to have the matter dismissed, arguing that she could not establish the fourth element of a CEPA claim because she had been terminated for violating the BYOD policy and for no other reason. Adikibe-Ejioqu v. Partners Pharmacy Similarly, in Adikibe-Ejioqu, the plaintiff employee informed a number of colleagues and superiors that he believed his employer was not complying with Board of Pharmacy cleaning and garbing guidelines. These complaints began in earnest in early 2019 and continued until July 2019. The plaintiff’s employer terminated his employment after conducting an internal video audit and discovering that the plaintiff routinely failed to abide by internal and Board of Pharmacy patient safety guidelines. He was terminated soon after. Just as in Smith, the plaintiff filed a CEPA claim and his employer moved for summary judgment, arguing that he could not establish

the fourth element of a CEPA claim because he was terminated for violating internal rules and Board of Pharmacy regulations. The Appellate Division Decisions In decisions dated days apart, the Appellate Division reached opposing conclusions in the two cases. In Smith, the appellate panel reversed the trial court’s decision granting summary judgment to the employer. The panel concluded that there was sufficient evidence in the record to support a causal connection between the plaintiff’s complaints and her termination. In particular, the panel noted that a jury could find that her supervisor knew or suspected that she had called the anonymous hotline, and terminated her because of it. In Adikibe-Ejioqu, on the other hand, the Appellate Division affirmed summary judgment in the employer’s favor, concluding that the plaintiff could not show a causal connection between his complaints and termination, nor establish that his employer’s proffered reason for terminating him was pretextual. On their face, the two cases seem to reach contradictory conclusions. But a few subtle, yet important, factual distinctions may explain the difference. In Smith, there were facts in the record establishing that the plaintiff had been frozen out by her supervisor after she made the initial complaint. For example, her supervisor began excluding her from important meetings. This conduct intensified after the plaintiff called the whistleblower hotline. Moreover, the incident which led to her termination was directly related to her whistleblowing activity; she refused to turn over a laptop containing potential evidence of fraud by other employees. Taken together, the Appellate Division believed there was enough evidence for a jury to conclude that the plaintiff’s supervisor was hostile towards her, had pieced together that she had called the whistleblower hotline, and terminated her at the first opportunity after she failed to comply with the BYOD policy. The facts underlying Adikibe-Ejioqu contain several important differences. The plaintiff’s employer took no adverse action against him before viewing the video footage which led to his termination. Even after he made his first complaint in February 2019, he received a more favorable performance review than he had the year prior. He was terminated upon review of the video footage because his employer believed his conduct endangered patient safety. Finally, there was no evidence that the supervisor who terminated the plaintiff knew of the complaints the plaintiff made in July 2019, just prior to his termination. Rather, the supervisor knew only of the plaintiff’s original February 2019 complaint. Given that the plaintiff later received a favorable performance review, and was terminated roughly five months later and only after the discovery of egregious misconduct, the Appellate Division concluded that the plaintiff could not establish a causal connection between his whistleblowing and termination.

Takeaways For Employers Employers can take away several lessons from the divergent outcomes in these two cases. First, freezing out employees who complain of potential misconduct is a grave mistake, and can create factual issues regarding retaliation even where the employee is terminated for a legitimate reason. The employers’ handling of their respective employees in the months leading up to the employees’ termination is the most important distinction between the two cases. Second, an anonymous hotline is only as good as its ability actually to protect anonymity. If an anonymous caller’s identity is discovered, or if management is able to deduce the person’s identity, then a whistleblowing hotline might be more trouble than it is worth. Taking common sense steps to protect anonymity and to guard against retaliation in such circumstances is a key. Finally, employers can terminate whistleblowing employees who engage in misconduct, so long as they take the appropriate safeguards. In addition to the precautions above, employers who investigate misconduct by a whistleblowing employee should, where possible, ensure that no other employee related to the whistleblowing activity participates in the investigation, and should treat and discipline misconduct by whistleblowing employees in the same way they would misconduct by any other employee. The Porzio Employment Team is available to help employers with policy development, training, and guidance to mitigate the risk of CEPA claims. Are you interested in staying up-to-date with the latest developments in Employment Law? Be sure to keep an eye out for our Employment Law Monthly article providing valuable insights and analysis on the ever-evolving landscape of employment regulations in New Jersey. For more information and resources, visit our Employment and Labor practice page.

2023 Year in Review

Class Action Lawsuit Goes Up In Smoke: District Court Decides CREAMMA Does Not Create A Private Right Of Action For Employees Employment Law Monthly | June 2023 By Weston Kulick In a matter of first impression, New Jersey’s Federal District Court determined that CREAMMA does not provide an explicit or implied private right for employees to seek enforcement of its employment protections for cannabis users. It also clarified that current jurisprudence does not recognize a failure to hire claim under New Jersey common law. A recent decision by New Jersey’s Federal District Court dealt a blow to aggrieved workers seeking to enforce the employment discrimination protections for cannabis users established in the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA). Pursuant to N.J.S.A. §24:6I-52a(1), an employer cannot take adverse employment action against an employee based solely upon a drug test returning a positive cannabis result. In Zanetich v. Walmart, the District Court considered a class action lawsuit brought by a group of plaintiffs alleging that Walmart and its subsidiary Sam’s Club violated this provision of CREAMMA by refusing to hire applicants who tested positive for marijuana. Lead plaintiff Erick Zanetich claimed that he was set to have a job in Walmart’s Asset Protection Department before the company revoked his offer of employment after his drug test came back positive for marijuana. The lawsuit sought to represent all New Jersey residents who were either fired, or whose job offers were revoked, by the companies due to positive marijuana drug test results since February 2021 (when CREAMMA’s employment protections became law). Walmart and Sam’s Club removed the matter from Gloucester County Court to Federal District Court where they then filed a motion to dismiss the lawsuit, arguing that CREAMMA’s statutory framework does not contain an explicit, private right of action by which citizens can bring civil lawsuits to enforce its employment provisions. The companies further argued that the statutory language of CREAMMA did not evince any clear legislative intent to create an implied private cause of action to do so, because the statute actually provides for the Cannabis Regulatory Commission, instead of private individual lawsuits, to enforce it.

The District Court agreed with the companies, granted their motion, and dismissed the lawsuit, opining that CREAMMA contained neither an express nor implied private right of action for enforcement by way of individuals’ lawsuits. In a particularly scathing decision, the District Court appeared to characterize CREAMMA as “incomplete legislation” and stated that it could not “re-write” CREAMMA to “create remedies for a statutory violation where the Legislature did not.” Acknowledging that its decision leaves employees “without a remedy and essentially renders the language of the employment provision meaningless” the District Court tasked the Legislature, Cannabis Regulatory Commission, or New Jersey Supreme Court with taking action to ensure that CREAMMA’s protections from adverse employment action against recreational cannabis users not be rendered “illusory.” In addition to the alleged statutory violation of CREAMMA, the lawsuit alleged that the companies violated New Jersey common law with a claim stylized as “failure to hire/wrongful discharge.” The District Court seized on the fact that Zanetich himself received only a conditional offer of employment which was later rescinded in reasoning that, because he never actually was employed by Walmart, he could only have a failure to hire claim, not a wrongful discharge claim. As the District Court further explained, New Jersey’s courts have long declined to recognize a common law cause of action for failure to hire under the precedent established by Pierce v. Ortho Pharmaceutical Corporation, 84 N.J. 58 (1980), which established a common law claim for wrongful termination. Importantly, however, this does not mean that an employee or prospective employee cannot bring a failure to hire claim based on another legal theory, such as discrimination, or that employees cannot bring claims based on other types of adverse employment action, such as wrongful termination. The District Court’s decision has been appealed to the Third Circuit. The New Jersey Supreme Court accepts certified questions of state law from the Third Circuit, meaning that either or both of these aspects of the Zanetich decision could change as the matter works its way up through the appellate courts.

Takeaways In declaring that there is no private right of action to be found either expressly or impliedly within CREAMMA, and that individuals cannot sustain a failure to hire claim under New Jersey common law, the Zanetich decision presents a clear call to action for New Jersey’s Legislature and state courts to address CREAMMA’s intended employment protections. At present no New Jersey state court has expanded Pierce to include failure to hire claims, and the Legislature has yet to amend CREAMMA to create a private enforcement mechanism for individuals. As a result, unless and until the Third Circuit (and perhaps eventually New Jersey Supreme Court) overturns this decision, employees are left without remedy (under CREAMMA, specifically) to pursue any adverse employment action-based lawsuits, including failure to hire claims. But again, that does not foreclose the possibility that a current or prospective employee can bring a claim based on some other legal theory or different type of adverse employment action. As such, New Jersey employers who have a drug and alcohol-free workplace policy, or wish to establish a drug and alcohol-free workplace, should consider taking the following measures to ensure they are protected to the fullest extent possible in light of the current state of the law: •

Assess whether they wish to continue or begin to have a drugfree workplace and either implement new or modify existing drug testing practices.

•

Determine whether their current policy regarding preemployment drug testing, if any, should be amended in any way.

•

Review and update drug and alcohol policies.

•

Monitor the Legislature’s and courts’ response to the District Court’s decision.

•

Recognize that employees and/or prospective employees may still be able to bring failure to hire claims based on other legal theories, or bring claims based on other types of adverse employment action, such as wrongful termination.

•

Consult with experienced employment counsel if faced with a lawsuit by a similarly-situated employee who alleges an adverse employment action violation of CREAMMA, or claims that there was a violation of New Jersey common law in failing to hire the employee.

It remains to be seen whether the New Jersey Legislature opens up CREAMMA up for amendment in response to the District Court’s blunt criticisms of CREAMMA’s perceived shortcomings to clarify that it indeed intended for a private right of action to enforce the statutory employment protections through private lawsuits. Given the pending appeal before the Third Circuit, the District Court’s decision in Zanetich assuredly is not the last word on the matter of failure to hire claims post-CREAMMA. As such, New Jersey employers should work with experienced employment counsel to determine how best to proceed while the contours of these types of claims continue to develop as they work their way through the courts. Are you interested in staying up-to-date with the latest developments in Employment Law? Be sure to keep an eye out for our Employment Law Monthly article providing valuable insights and analysis on the ever-evolving landscape of employment regulations in New Jersey. For more information and resources, click here to view our Employment and Labor practice page.

2023 Year in Review

Employers, Have You Reviewed Your Compensation Structure Lately? Employment Law Monthly | April 2023 By Garcia Samuylov Employers have long operated under the premise that “highly compensated” employees are exempt from the overtime pay guarantee of the federal Fair Labor Standards Act (FLSA). Under the FLSA, employers must pay their employees 50% more than the employee’s regular rate of pay for any time worked above 40 hours per week. However, regulations implemented by the U.S. Department of Labor exempt certain employees, such as “highly paid” employees and “bona-fide executives,” from this overtime pay requirement. See 29 C.F.R. 541.602(a) and 604(b). As a result, the current pay schemes used by most employers are structured to apply this exemption to their highly-paid and salaried employees, which under labor regulations, include employees who are paid at least $107,432 annually. Over the years, employees have challenged this overtime exemption with mixed results. Federal circuit courts across the nation vary in their interpretation of the FLSA and apply different tests to decide the issue of whether a highly compensated employee is entitled to overtime compensation. Until recently, the legal community waited with bated breath for the Supreme Court of the United States to resolve the conflict between the federal circuit courts and address the issue of whether the FLSA permits the payment of overtime for highly compensated employees. To resolve this circuit split, the Supreme Court granted certiorari in the matter of Helix Energy Solutions Group, Inc., et al. v. Hewitt. In a 6-3 ruling, the Supreme Court altered the employment compensation landscape by holding that a supervisor who was paid by the day and earned $200,000 in annual salary is entitled to overtime compensation despite his sizeable income. See Helix Energy Solutions Group, Inc., et al. v. Hewitt, 598 U.S. _____, No. 21-984, slip opinion (2023). In Helix, oil rig worker Michael Hewitt was a daily rate employee, earning more than $200,000 annually. He worked for Helix for about three years, from 2014 to 2017. Hewitt typically worked over 80 hours per week but was paid on a daily rate basis – his daily rate times the number of days worked – with no overtime pay. In other words, his compensation did not change regardless of the number of hours he worked. Hewitt received a paycheck bimonthly showing a sizeable daily rate of $963. Hewitt’s employment was terminated in 2017, and he later filed a suit challenging Helix’s compensation structure. Because of Helix’s daily-rate pay structure, and the number of hours he worked, Hewitt contended that he was entitled to receive overtime compensation because his daily rate was not a salary. Conversely, Helix argued that Hewitt is exempt from overtime compensation because he received a daily rate that met the weekly wage requirement of Section 604(b) under the FLSA. Helix pointed out that because Hewitt’s daily rate far exceeded the statutory minimum of $455, he would be exempt from overtime compensation even if he worked as little as one day per week. Helix further argued that Hewitt was a “highly compensated” employee and thus exempt. The question before the Supreme Court was whether Helix’s pay structure satisfied the “highly-compensated” salary-basis component of the FLSA and its implementing regulations. After analyzing the regulations, the Supreme Court ruled in Hewitt’s favor, holding that Hewitt was not paid on a salary basis. In reaching

its decision, the Court relied on the “salary basis test” provided in the regulations, which states that “an employee is paid on a salary basis if he or she regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount which is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. 541.602(a). In applying the plain meaning of this provision to Hewitt, the Court concluded that as a day-rate employee, Hewitt did not receive a “predetermined amount” on a weekly or less frequent basis and did not receive a “steady and predictable stream of pay” (e.g., weekly payments) for his pay to be considered a salary. Helix, (Slip Op. at p. 12). Further, the Court reasoned that since day-rate employees are not compensated for the number of hours they do not work, their pay changes depending on the number of hours or days worked. Id. That change does not equate to a predetermined amount or a steady and predictable pay stream. Therefore, although Hewitt received his paychecks bimonthly, the Court found that he was not exempt from overtime compensation because his pay was determined daily. The Court also considered Hewitt’s compensation in light of the “reasonable relationship” test provided under the regulations, which permits an exempt employee’s compensation to be “computed on an hourly, daily or shift basis, without losing the [overtime] exemption or violating the salary basis requirement.” 29 C.F.R. 541.604(b). The Court held that the test does not apply to day-rate employees because it requires a guarantee that the employee receives a minimum weekly amount bearing a “reasonable relationship” to the employee’s usual weekly earnings. Helix, (Slip op. at p. 15). Here the Court found, based on its analysis of Section 541.602(a), that Helix’s pay structure did not satisfy this requirement because a day-rate pay structure does not provide a weekly guarantee related to typical weekly earnings. Id. Notably, in response to Helix’s argument that extending overtime compensation to any highly paid employee violates the purpose of the FLSA and could severely impact the labor industry, the Court stated that employees are not to be deprived of the benefits of the FLSA simply because they are well paid. Helix, (Slip op. at p. 17). The Supreme Court proposed that employers may readily achieve compliance with the FLSA by “adding a weekly guarantee onto a day rate or by using a minimum salary guarantee – converting day pay into a straight weekly salary for time worked.” Id. Takeaways For Employers The Helix decision has broad implications. First, the decision impacts any employer who compensates its employees on a dayrate schedule. Second, it brought a new class of employees under the protective umbrella of the FLSA’s overtime guarantee and increased employers’ exposure to retroactive liability for failure to pay overtime compensation. Third, it could exponentially increase labor and operation costs by extending overtime pay to employees who are already highly compensated. Although the full impact of this ruling has not yet materialized, employers are encouraged to review their policies and pay structures before a lawsuit or claim is filed. The key here for employers is to, where possible, move away from day-rate pay structures. Otherwise, employers risk paying forced overtime compensation to highly compensated employees.

New Jersey Pay Transparency Legislation Passes First Committee Hurdle December 22, 2023 By Rahool Patel Joining the expanding roster of states advocating for salary transparency in job postings, New Jersey took a significant step on December 11, 2023. The Assembly Consumer Affairs Committee voted 4-0 (with one member not voting) to favorably report Assembly Bill A3937 with amendments to the full General Assembly. If it becomes law, A3937 would require all New Jersey employers, with more than 10 employees, to “disclose in each posting for promotions, new jobs, and transfer opportunities that are advertised by the employer either externally or internally the hourly wage or salary, or a range of the hourly wage or salary[.]” Employers also would be required to provide “a listing of benefits and other compensation programs for which the employee would be eligible within the employee’s first 12 months of employment.” A3937 would affect promotions as well. Under the proposed bill, employers would be required to make “reasonable efforts to announce, post, or otherwise make known opportunities for promotion that are advertised internally within the employer or externally on internetbased advertisements, postings, printed flyers, or other similar advertisements to all current employees in the affected department or departments of the employer’s business prior to making a promotion decision.” Promotions made on an “emergent basis” because of “an unforeseen event” would not be subject to this notification requirement. The Department of Labor and Workforce Development would be responsible for enforcing A3937 and employers would be liable for fines of up to $10,000. Notably, the amendments adopted by the Consumer Affairs Committee removed any private right of action by an employee. The bill now goes to the Assembly Appropriations Committee for further consideration. Employers should carefully review their compensation policies to ensure that existing employees are properly paid because, if adopted, A3937 will provide them substantial insight into the pay range and any other benefits and compensation associated with their position. And, while there may not be a private right of action under A3937, as presently drafted, the Diane B. Allen Equal Pay Act already requires equal pay for substantially equal work. Porzio’s employment and labor attorneys are actively tracking the legislation and are ready to assist employers in navigating compliance if a new pay transparency law is enacted.

2023 Year in Review

Update to the Mini-WARN ACT Provides Additional Worker Protections in New Jersey Employment Law Monthly | May 2023 By Brian Giardina We are at the end of May and Spring has sprung in New Jersey. Employers awaking from a long winter’s nap will find that the employment landscape in New Jersey has changed once again. One of the biggest changes is the long-delayed implementation of the Mini-WARN Act, which became effective on April 10, 2023. In 1988, Congress passed the Worker Adjustment and Retraining Notification Act (WARN) to provide workers with time to retrain or seek new employment prior to losing their jobs. Under WARN, employers were required to provide 60 days advance notice to workers who were going to be laid-off or terminated in certain circumstances. The original federal act has been replicated at the state level in many states across the country, in many cases adding more protections for workers. These state-level WARN acts commonly are referred to as a mini-WARN acts. New Jersey’s miniWARN act always has gone further than federal law. New Jersey originally passed its mini-WARN, the Millville-Dallas Airmotive Plant Job Loss Notification Act, in 2007 (Act). The most recent expansion to this mini-WARN Act was signed into law in January 2020. The amendments to the Act originally were slated to come into effect in July 2020. However, as a result of the Coronavirus Pandemic, the State delayed implementation of the new requirements, which further expand employer responsibility and financial obligation in workforce reductions. Provisions covering notice timelines, severance obligations, and payments for failure to provide notice all have been amended. Employers may now be held to the provisions of the Act if total workforce reduction across the state triggers the provisions of the Act, rather than at an individual location. For companies that operate in multiple locations statewide, this provision needs special attention. To explore some of the differences between the previous version of the Act, and the recently-enacted amendments, we can look to the actions and experiences of Bed Bath & Beyond. Recently, Bed Bath & Beyond announced layoffs of 1,300 workers to take effect in April 2023. Under the previously active provisions,

WARN protections may not have applied to all 1,300 employees. Rather, each individual location would have been subject to the 50-employee requirement for the protections under the law to “kick in.” Meaning that, Bed Bath & Beyond only would have been required to provide the required notice to employees when it was laying off more than 50 employees at a single location (or single contiguous properties). However, under the newly amended Act, Bed Bath & Beyond became responsible to provide the required notice (and now severance payments) for all 1,300 employees, regardless of how many were set to be laid off at each individual location. This is because the Act now provides for layoffs or terminations across multiple locations to counting the aggregate if they occur within 90 days of each other. The most surprising change for many companies is the newlyexpanded definition of “establishment” which appears to require employers to consider all of their locations when determining if the Act applies. Previously, employers needed only consider the layoff, termination, or transfer at a “single location or group of contiguous locations, including groups of facilities which form an office or industrial park or separate facilities just across the street from each other.” N.J.S.A. 34:21-1. Now, state-wide layoffs, transfers, or terminations that impact 50 or more workers will come under the Act, even if those locations are spread throughout the state. Employers who have locations statewide will need to take extra care when planning employment actions. In addition to expanding the definition of what triggers the requirements of the Act, another new provision is the imposition of mandatory severance pay. Under the newly implemented version of the Act, employers are mandated to provide severance pay to affected employees equal to one week of pay for each full year of employment. This payment is required whether an employer complies with the new, and expanded, notice obligation or not. This provision alone makes larger layoffs, terminations, or transfers significantly more expensive. Moreover, the changes to the Act can cause an impact in other unexpected ways.

The expansion of the establishment provision also altered the transfer provision of the Act. Under the Act, if employees are transferred to a location more than 50 miles from their original place of employment, they are considered “terminated.” N.J.S.A. 34:21-1. It is not difficult to imagine a scenario where a company, like Bed Bath & Beyond, might consolidate locations, moving only a few employees from several stores to one central location. However, if the total number of employees being moved more than 50 miles is equal to or greater than 50, the provisions of the Act apply. For example, the Act’s notice and severance requirements would apply if a company with two locations more than 50 miles apart makes a determination to close one location and significantly expand the second location, even if it is not laying off any employees and simply is transferring the employees from one location to the newly-expanded location. The care required of employers is further increased by the aggregation of employment actions within a 90-day window. If employers structure layoffs, terminations, or transfers too close together, or follow up with additional layoffs, terminations, or transfers for any reason within the 90-day window, those actions will be aggregated. This can trigger the Act, and with it, significant financial consequences. Given that Bed Bath & Beyond took its action only one month ago, it still has nearly 60 days where any layoff would be covered by the original action. In this way, even a layoff of only 20 additional workers would be subject to the provisions of the Act because of its proximity to the original layoffs. Strict compliance with the above provisions is critical. Failure to follow the specifics of the Act could result in penalties, including the payment of additional severance to employees. This expansion of the mini-WARN Act is another example of where many states, including New Jersey, provide greater protection to workers (and more significant obligations for employers) than federal law. Therefore, it is important that employers understand and comply with both federal and state law in these circumstances. Employers with locations and employees in multiple states should confer with New Jersey-specific counsel before taking employment action to ensure compliance.

“Failure to follow the specifics of the Act could result in penalties, including the payment of additional severance to employees.”

2023 Year in Review

Employers Beware: Severance Agreements Containing Broad “Gag Clauses” Are Unlawful March 2, 2023 By Vito Gagliardi, Jr., Garcia Samuylov Last week, in a 4-1 vote, the National Labor Relations Board ruled that agreements containing broad confidentiality and nondisparagement provisions are unlawful. Remarkably, this decision overruled three years of precedent upholding non-disclosure and non-disparagement provisions in severance agreements. The Board’s decision not only reverted to the old standard -- pre-Baylor University Medical Center1 and IGT d/b/a International Game Technology2 – but once again highlights the significance of the Board’s political composition and the resultant indifference to stare decisis. Historically, the Board upheld its long-standing precedent that severance agreements proscribing non-disparagement and confidentiality clauses are unlawful when they restrict the exercise of statutory rights, such as requiring employees to waive certain Section 7 rights to engage in concerted activities. Before 2020, the Board focused on the plain language of the severance agreement when determining whether such provisions were lawful. However, after over eight decades of precedent, the Board reversed itself in a case involving the presentment of a severance agreement containing a confidentiality provision and a “no participation in claims” clause to several employees. See Baylor Univ. Med. Ctr., 369 NLRB No. 43, slip op. at 2 (2020). The Baylor Board, consisting of mostly Republicans, shifted focus from the specific language of the agreement to the coercive nature of the circumstances under which the agreement was presented. It reasoned that there was no statutory violation because the proffered severance agreement was not mandatory, did not affect the employee’s pay or benefits, and was not offered coercively. Baylor, slip op. at 1; see also, IGT d/b/a Int’l Game Tech., 370 NLRB No. 50, slip op. at 2 (2020) (a similar case involving a severance agreement proffered to departing employees). Thus, under the Baylor logic, an employer may offer unlawful provisions to an employee provided there are no coercive circumstances surrounding the presentation. In the time after the Baylor decision, employers were free to insert arguably objective provisions, such as broad confidentiality, non-disclosure and nondisparagement clauses, regardless of their legality. Now, only three years later, with a Democratic majority, the Board has overruled Baylor and IGT, and reverted back to the old standard, which held for years that an employer’s mere presentment of a severance agreement containing broad proscription clauses is unlawful. See McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, Intern’l Union, 372 NLRB No. 58 (2023). In the Macomb matter, Michigan hospital McLaren Macomb furloughed 11 of its bargaining unit employees and presented them with severance agreements containing non-disparagement and non-disclosure provisions. Seeking to protect employee interests and public rights, the mostly Democratic Board ruled that Macomb violated Section 7 of the National Labor Relations Act (NLRA) when it presented the furloughed employees with agreements that contained unlawful provisions. The Board

asserted that the relevant inquiry is whether the language of the severance agreement has coerced, interfered with, or restrained an employee’s Section 7 rights. See Macomb, slip op. at 7. After applying that inquiry and analyzing the Baylor and IGT cases, the Board ruled that confidentiality and non-disparagement clauses that restrict employees’ statutory rights are unlawful and, therefore, the presentment of such provisions in an agreement renders the agreement unlawful. The Macomb analysis found the confidentiality and non-disparagement provisions to be overly broad because they interfered with an employee’s right to critique the employer, discuss labor disputes or terms of the agreement, engage co-worker assistance and support, or make statements to other employees, the union or the general public at large about such things as the employer’s statutory violation. Macomb, at 8-9. The Macomb decision implies that carefully crafted confidentiality and non-disparagement provisions would be permissible, provided they are not overly broad as to create a chilling effect on the employee’s exercise of Section 7 rights. It suggested that employers consider more narrowly tailored restrictions, such as limiting proscription to matters regarding past employment with the employer, or defining the types of impermissible disparaging statements, e.g., attacks unrelated to the employer’s labor practices. Macomb, at 9; see also, N.L.R.B. v. Local Union No. 1229, Intern. Broth. of Elec. Workers, 346 U.S. 464, at 477 (1953). With the old standard revived, employers are forced to reconsider and possibly revert to pre-Baylor provisions used in the past. One wonders whether this back-and-forth will persist with each change in the political composition of the Board. Regardless, the immediate ramifications of the Board’s decision are clear: broad non-disclosure and non-disparagement provisions in separation agreements are unlawful. Thus, employers are encouraged to review past severance agreements, including those drafted merely a week ago, to ensure compliance with the new precedent and narrowly tailor restrictions to respect the range of an employee’s statutory rights. Relying on the language in Macomb, for example, a broad non-disparagement clause should be replaced with language prohibiting an employee from making any statement about the company so “disloyal, reckless or maliciously untrue” as to lose the protections provided by law. Similarly, a broad confidentiality provision will not survive NLRB scrutiny; at the very least, an exception should be included to exempt restrictions on cooperation with any NLRB investigation or proceeding. Further clarification as to this remarkable change in the law is anticipated. All employers and their counsel should remain wary. Baylor Univ. Med. Ctr., 369 NLRB No. 43 IGT d/b/a Int’l Game Tech., 370 NLRB No. 50 (2020).

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Create a Culture of Security to Prevent Workplace Violence Employment Law Monthly | March 2023 By Kevin M. Craig, MAS, CPP, CPM, Assistant Vice President, Safety, Security and Investigations, Porzio Compliance Services

“Organizations have an obligation to provide a safe working environment for all employees.” In January 2023, the United States Secret Service National Threat Assessment Center (USSS NTAC) released a study entitled “Mass Attacks in Public Spaces: 2016-2020.” This comprehensive study examined 173 mass attacks, in which three or more people other than the assailant were harmed. The study provided an overview of the timing, locations, targets, motives, weapons, and other factors in an effort to identify patterns for preventing future attacks. While many commonalities were identified, the reality is that acts of targeted violence impact communities of all sizes. While the mass attacks occurred at schools, houses of worship, public events, and open spaces, the most common location identified was businesses (51%). This fact begs the question “How do we protect our businesses against acts of violence?” Due to the variety of threats that exist, the answer is multifaceted. The first step is understanding how businesses are targeted. How Businesses are Targeted Businesses frequently are the subject of targeted violence. Therefore, understanding the ways they are targeted is an important factor in creating strategies to protect them. Violence in the workplace generally falls into four categories each with varying or overlapping mitigation strategies. Type 1: Violence by strangers An unfortunate reality is that many acts of violence that impact businesses are perpetrated by individuals with no connection to the organization. Of the 173 incidents studied by the USSS NTAC, 53% of the attackers had no known affiliation with the location of the attack. Type 2: Violence by customers or clients In some cases, violent attacks are made by unsatisfied or aggrieved customers or clients. These accounted for 9% of the incidents in the study. Violence in these cases often involves the first accessible targets in the organizations. These “gatekeepers” may be administrative assistants, reception staff, building security, or others tasked with greeting visitors. Type 3: Violence by co-workers Employee conflict, disciplinary actions, or terminations may also be catalysts for violence. 13% of the incidents studied involved current or former employees with actual or perceived grievances. Many incidents involve(d) employees who were recently disciplined or terminated and managers or supervisors were targeted. Type 4: Violence by personal relations Other cases involve indirect connections to the targeted location. Perpetrators may be unaffiliated with a business themselves but target an employee who is a family member or someone who they

2023 Year in Review

wish to seek revenge against. These cases often involve domestic violence or family discord. Identifying Prevention and Mitigation Strategies So how can businesses protect against threats that have both internal and external origins? The answer is a holistic approach. The threat landscape for any organization can be fluid and change significantly over time. Workplace violence can be the result of internal conflict or random selection. For this reason, both internal and external protection and prevention strategies must be part of a comprehensive prevention plan. Management Commitment and Employee Involvement The cornerstones of successful workplace violence prevention plans are management commitment and employee involvement. Management must visibly support efforts to provide a safe work environment and include employees in the planning process to address specific employee concerns. This collaboration creates a culture of security and an environment free of violence that benefits both management and employees. To ensure the understanding and commitment of the entire organization, organizations should adopt clear policies and prevention plans to codify the commitment to a violence free workplace. Once adopted, policies must be strictly enforced, and employees must be held accountable for organizational expectations related to violence in the workplace. Worksite Analysis/Risk and Vulnerability Assessment To effectively prevent or mitigate threats, organizations must know the threats they face. This can be accomplished through an analysis of the work environment which includes a risk and vulnerability assessment. Because of the myriad of threats that exist, the analysis should include both internal and external threat analyses. Once the risks and vulnerabilities are identified, mitigation strategies can be developed to address each vulnerability. External threats are often mitigated by target-hardening measures such as access control, fences, bollards, and physical security measures designed to protect employees from targeted violence originating from outside of the organization. Mitigating internal threats can be accomplished through established mechanisms for employees to report the concerning behavior of others in the workplace. Investigating all reports and establishing a threat assessment process allow organizations to promptly address employee concerns by identifying concerning behavior and implementing appropriate supports or interventions for employees who may be on a pathway to violence or experiencing personal or professional crises.

Planning, Training, and Security Awareness Cultural change is not quick or easy. To create a culture of safety, an enduring message of security awareness must be ever present. Organizations, however, must carefully balance prioritizing security against the risk of creating fear and anxiety among employees. The best way to achieve this balance is to provide training for employees on safety related policies and responses. Incidents that require a specific physical response such as lockdowns or evacuations should be practiced periodically to ensure understanding and reduce anxiety. Collaborative planning, comprehensive policies, and frequent training will greatly enhance organizational preparedness and foster a culture of security in any organization. Key Takeaways for Proactive Prevention Organizations have unique environments and resources. There is no one-size-fits-all solution to workplace violence. While organizationspecific planning requires customized consideration, general strategies exist to begin formulating a successful violence prevention plan, which include: •

Collaborating with community partners to identify external threats.

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Adopting clear workplace violence policies and prevention plans.

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Encouraging employees to report concerning behavior and investigate all reports.

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Assessing the physical environment to identify risks and vulnerabilities.

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Making training in violence prevention, threat detection, threat assessment, and threat management a regular part of organization’s assessment and planning.

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Supporting, protecting, and providing resources when domestic violence, personal conflicts, or other risk factors impact an employee in the workplace.

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Creating a culture of security through planning, training, and security awareness.

Organizations have an obligation to provide a safe working environment for all employees. Implementing comprehensive workplace violence prevention strategies will illustrate organizational commitment to safety and security while protecting the organization’s most valuable assets, its employees.