Porzio - Employment Law Monthly - A Year in Review 2021

Employment Law

A Year In Review - 2021 Edition

Porzio’s 2021 Year in Review contains ongoing coverage of COVID-19 vaccination and testing mandates, as well as an extensive compilation of articles on discrimination, employee benefits, independent contractors, reductions in force, and the impact of cannabis in the workforce. We recommend employers follow us at @PorzioLaw for the latest changes and review their policies and practices to ensure compliance with all federal, state, and local laws. If you have any questions or if we can otherwise help in any way, please feel free to reach out to a member of the Employment Law Team.

Contents Vaccines and Testing • • • • • • • • • • • •

NYC Issues Vaccine Mandate for All Private Employers OSHA’s Emergency Employee Vaccine Mandate, Frozen By Fifth Circuit, Seeks To Thaw Out In Sixth Circuit Federal Vaccine Mandate for Large Employers Employees Mandated to Provide Proof of Vaccination – Now What?

Executive Order No. 271 – Vaccination or Testing Requirement for Employees of State Contractors Federal And State Governments Expand Vaccine And Testing Mandates For Employees President Biden Takes a Tough Stand On Employer-Mandated Vaccination And Testing State of New Jersey Mandates Vaccinations/Testing for Certain Workplaces Compulsory COVID-19 Vaccination Policies in the Employment Context What Employers Need To Know About Mandatory Vaccine Policies And What To Do With Employees Who Refuse To Be Vaccinated CDC Guidance Update For Vaccinated Individuals/Employees Updates in Federal Agency COVID-19 Guidance for Employers: Where We Are in February 2021

Independent Contractors & Joint Employers • • •

Misclassification of Employees As Independent Contractors Recently Became More Costly The Joint Employer Merry-Go-Round Comes Full Circle: The USDOL Proposes to Change the FLSA Joint Employer Rules Yet Again U.S. Department of Labor Issues New Final Rule Setting Forth Test For Classifying Workers As Independent Contractors Based Upon “Economic Realities”

Employment Contracts •

Employers Will Soon Face Increased Scrutiny Of Restrictive Covenants With Employees

4 4 7 8 10 11 13 14 16 20 23 24 30 32 35 38

Discrimination •

There Are Zero Reasons Not To Enforce Zero-Tolerance Policies Prohibiting Discriminatory Workplace Language

Government Funding •

The Employer’s Life Vest for the American Rescue Plan

40 43

Employee Benefits •

The U.S. Equal Employment Opportunity Commission Proposes New Rules Governing Workplace Wellness Incentives

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Cannabis • • •

“No Credible Threat” of Federal Liability: NJ Supreme Court Orders That Employer Reimburse Injured Employee’s Costs for Medical Cannabis Adult-Use Cannabis and Employee Protections: The Difficulties of Enforcing New Jersey’s Proposed Recreational Cannabis Law Impact of the Legalization of Marijuana on Public Employers

Reductions in Force •

Reductions in Force: Recent Developments and Statutory Guidance Impacting Public Employers

Damages •

Giallombardo v. Kyriak: A Clarification Of The Punitive Damages Standard

48 49 52 54 57

Authors 58

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NYC Issues Vaccine Mandate For All Private Employers Client Alert – December 6, 2021 Authored by Nicole T. Little Today, Mayor Bill De Blasio announced a vaccine mandate for all private employers in New York City, effective December 27, 2021.

Vaccine mandates were already in place for city workers, indoor dining, entertainment and gyms. According to Mayor De Blasio, this “first-in-the-nation” step would apply to about 184,000 businesses. The City is expected to publish guidelines on December 15, 2021, to provide more information on implementation and enforcement. A call center will also be set up to answer questions and provide support to businesses. The mayor stated that he is imposing the mandate as a pre-emptive measure to fight a surge of COVID-19 cases going into the winter months. If you have a business located in New York City, you should reach out to legal counsel to prepare for this mandate.

OSHA’s Emergency Employee Vaccine Mandate, Frozen By Fifth Circuit, Seeks To Thaw Out In Sixth Circuit Porzio Employment Law Monthly - November 2021 Authored by Weston J. Kulick Myriad legal challenges abounded since the Emergency Temporary Standard—requiring workers to be fully vaccinated or face weekly testing and masking—was published earlier this month, and so plenty of questions remain unanswered ahead of the intended deadline for mandatory employee vaccination.

In an effort to combat the ongoing COVID-19 pandemic, earlier this year President Joe Biden issued a directive that medium and large private employers require their employees be fully vaccinated against COVID-19 or face weekly testing. In response, the United States Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued what is known as an “Emergency Temporary Standard”—a regulation taking immediate effect when workers face grave danger—implementing that directive by way of a vaccine mandate. Since then, a host of private businesses and states have petitioned federal courts around the nation to strike down the new OSHA vaccine mandate, resulting in yet-unresolved litigation pending before the Sixth Circuit while the initial deadlines for employee vaccination draw nearer.

The Mandate Published on Friday November 4, 2021, OSHA’s ETS directs businesses with over 100 employees to mandate worker vaccinations (or require, at minimum, weekly testing for unvaccinated workers). Part-time workers do count toward this 100-employee threshold.

Independent contractors do not.

Employers are further tasked with making sure that unvaccinated workers wear masks while on site. If an employee cannot produce a negative test, or does produce a positive test, that employee must be removed from the workplace. Employers do not have to cover the costs for unvaccinated employees’ tests or masks (although, as a practical matter, collectively bargained agreements between employers and unions may require otherwise). Workers seeking to avoid testing and masking requirements must be fully vaccinated

by January 4, 2022. Employers must be in compliance with the ETS’s masking and paid time off requirements by December 5, 2021.

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Myriad legal challenges abounded since the Emergency Temporary Standard—requiring workers to be fully vaccinated or face weekly testing and masking—was published earlier this month, and so plenty of questions remain unanswered ahead of the intended deadline for mandatory employee vaccination.

6 According to the federal government, the ETS will apply to roughly 84 million workers. This figure does not count workplaces already covered by a prior White House directive requiring a vaccination requirement for federal contractors. Employers to which the ETS applies should take note that these requirements preempt any contradictory state or local laws restricting the imposition of vaccination, testing, and masking requirements, which the federal government made clear by way of a fact sheet outlining the new regulations.

Legal Challenges and the Fifth Circuit Freeze Rather unsurprisingly, the ETS caused immediate backlash in the form of a tidal wave of legal challenges which swept through the nation’s federal courts. In less than a week from the ETS’s publication, petitions seeking to strike down the ETS already had rushed in from the Fifth Circuit (BST Holdings v. OSHA), the Sixth Circuit (The Southern Baptist Theological Seminary v. OSHA, Answers in Genesis Inc. v. OSHA, Kentucky v. OSHA, Phillips Manufacturing & Tower Company v. DOL, Bentkey Services LLC v. OSHA), the Seventh Circuit (Tankcraft Corp. v. OSHA, Indiana v. OSHA), the Eighth Circuit (Missouri v. Joseph R. Biden, The Job Creators Network v. DOL), and the Eleventh Circuit (Florida v. OSHA). Challengers included religious schools and institutions, trade groups, wholesale bakeries, manufacturing companies, free market advocates, media outlets, and other businesses all across the nation. Numerous states also sought to strike down the ETS, including Texas, Louisiana, Mississippi, South Carolina, Utah, Kentucky, Indiana, Missouri, Florida, Alabama, Georgia, Alaska, Arizona, Nebraska, Arkansas, Oklahoma, Kansas, Montana, Ohio, South Carolina, Tennessee, Idaho, and West Virginia.

Most notably, just a day after the ETS was published, a three-judge panel of the Fifth Circuit issued an Order temporarily freezing the imposition of the vaccination-or-testing provision set to go into effect. In BST Holdings v. OSHA, the Fifth Circuit essentially consolidated a number of challenges to the ETS brought by a variety of businesses and a group of states, including the Christian television network Daystar, the Gulf Coast Restaurant Group, a set of 15 Louisiana supermarkets, and Texas, Mississippi, and Utah. The Fifth Circuit stayed the vaccine mandate pending further action by the court due to asserted statutory and constitutional issues with the ETS’s mandates. Ultimately, the Fifth Circuit affirmed its freeze despite the federal government’s contention that the freeze could cost dozens to hundreds of lives per day by allowing COVID-19 to continue to spread in workplaces across the country.

Sixth Circuit Review Challenges to the ETS continued to pour in following the Fifth Circuit’s freeze.

As a result, the U.S. Judicial Panel on Multidistrict Litigation decided to appoint one federal appeals court to oversee the dozens of petitions for review that found themselves pending in the D.C., First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuit Courts of Appeals.

After random selection, the Sixth Circuit was tapped to oversee the challenge to the ETS. Typical procedure would select a random panel of Sixth Circuit judges who would make an initial determination regarding the challenges to the ETS. That decision could then be reviewed “en banc” by all the Sixth Circuit judges. But, the ETS’s challengers requested that the full slate of Sixth Circuit judges hear the issue all at once. In the meantime, the federal government requested in a recent filing that the Sixth Circuit at least modify the Fifth Circuit’s freeze order to permit testing and masking requirements to remain in effect while the litigation proceeds.

Takeaways At present, the litigation revolving around the ETS remains ongoing, and OSHA has suspended activities related to the ETS’s implementation and enforcement pending its future developments. It is unclear what the Sixth Circuit will do, how it will do it, and whether it will modify the Fifth Circuit’s freeze in the meantime. Therefore, in the meantime, employers should keep in mind that the Fifth Circuit freeze only applies to those who would be newly covered by the ETS. If other authorities -- such as state or local laws -- already require mandatory employee vaccination, those requirements are unaffected. Similarly, prior federal directives, such as those requiring vaccination for federal contractors, also remain in place. But, prohibitions on vaccine mandates for businesses in states which have precluded employer mandates also remain, since OSHA has suspended implementation and enforcement of the ETS pending the outcome of litigation. If the freeze eventually is lifted, the ETS’s vaccine mandate will preempt any such states’ mandate prohibition, though. Clearly this saga is far from over, and employers should keep a close eye on this very fluid situation as it continues to evolve.

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Federal Vaccine Mandate For Large Employers Client Alert - November 2021 Authored by Nicole T. Little In a White House Fact Sheet released today, the Biden Administration has announced the details of two major vaccination policies.

First, The Department of Labor’s Occupational Safety and Health Administration (OSHA) is issuing a COVID-19 Vaccination and Testing Emergency Temporary Standard (ETS) to require employers with 100 or more employees to ensure each of their workers is fully vaccinated or tests for COVID-19 on at least a weekly basis. To meet the 100 employees threshold, part-time workers will be counted but independent contractors will not.

Under the OSHA rule, employers will be required to provide paid time off for employees to receive the vaccination or recover from any negative side effects. However, employers will not be required to cover the costs of COVID-19 tests for employees who choose the testing option. If employees test positive for COVID-19 or cannot produce a negative test, the employer must remove them from the workplace.

The testing requirement for unvaccinated workers will begin after January 4, 2022. However, as of December 5, 2021, employers must ensure all unvaccinated employees are masked while in the workplace and comply with requirement to give paid time off for employees to obtain the vaccination.

Second, the Centers for Medicare & Medicaid Services (CMS) at the Department of Health and Human Services will require that health care workers at facilities participating in Medicare and Medicaid are fully vaccinated by January 4, 2022. The rule applies to employees regardless of whether their positions are clinical or non-clinical and includes employees, students, trainees, and volunteers who work at a covered facility that receives federal funding from Medicare or Medicaid. The CMS rule does not include the weekly testing option that the OSHA rule provides.

Both OSHA and CMS emphasize that their new rules preempt any contradictory state or local laws, including laws that ban or limit an employer’s authority to require vaccination, masks, or testing requirements.

Click here to view the White House Fact Sheet.

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Employees Mandated To Provide Proof Of Vaccination – Now What?

Employment Law Monthly - October 2021 Authored by James G. Mottola, Nicole T. Little and Kerri A. Wright Both the federal government and a growing number of state governments have mandated vaccination and testing for employees. These mandates have left employers with the task of developing protocols for the collection, verification and storage of employees’ proof of vaccination documentation. Employers must ensure that they are in compliance with U.S. Equal Employment Opportunity Commission (“EEOC”) guidelines, which require that vaccination cards or any other confirmation of vaccination be treated as confidential. They also need to develop protocols for verifying those vaccination records and, in certain circumstances, considering disciplinary action in the event the verification process reveals that the employee presented a fraudulent vaccination record.

Confidentiality and Vaccination Cards The EEOC has established that employers may request proof of vaccination from employees. In its latest guidance, released May 28, 2021, the EEOC addresses several topics including how employers should handle employees’ vaccination records. Employers must limit access to vaccination records, like all medical information, by maintaining them confidentially in a file separate from an employee’s regular personnel file. Medical information related to COVID-19 may also be stored in employee’s existing medical file. According to the EEOC, an employee’s statement that he/she has the disease, the employer’s notes, or other documentation for questioning the employee about symptoms, and logs of daily temperature check results should be stored in the medical file.

Since a vaccination card is considered a medical record, it triggers retention obligations. Therefore, employers may consider having the employees present their card rather than submit it for collection. The employee would simply present the card or digital vaccination record to a manager who would then record the employee’s vaccination status.

The EEOC guidance also explains that the employer must takes steps to ensure that employees’ medical information is kept confidential even while working remotely. If a supervisor receives medical information regarding COVID-19 electronically, the supervisor must safeguard that information. Laptops and other devices are not to be left where others can access the protected information.

Some employers may be reluctant to share vaccination records that they have collected with other entities. The EEOC does not provide specific guidance about whether the vaccination record itself may be shared but does allow, for example, a staffing agency to share an employee’s disease status with an employer. Since disease status is considered confidential information, and allowed to be disclosed, by extension it may be permissible to disclose vaccination information in this scenario. However, employers must ensure that they are not in violation of the Health Insurance Portability and Accounting Act (“HIPAA”). HIPAA is a federal law created to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge. In the employment context, it is a best practice to keep an individual’s health information private. If the employer is a covered entity, the HIPAA privacy rules prohibit the release of protected health information by others without consent. Therefore, to be in compliance with both EEOC guidelines and HIPAA, employers should have a policy that includes obtaining written consent from employees about releasing their vaccination documentation.

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Verification of Vaccination Records With the recent increase in the number of employers that are mandating their employees be vaccinated and provide proof of vaccination, this presents an incentive for individuals to create or doctor vaccination records. Employers have begun seeing an increase in suspicious or fraudulent vaccination records. This raises an important question. Is there a method employers can use to validate employee proof of COVID-19 Vaccination?

At a very fundamental level, determining the authenticity of a paper document, with no embedded security features, such as those which exist in currency, can be difficult. The CDC – COVID-19 Vaccination Record Card, is a such document, and just like drivers’ licenses, and other identification documents, for those looking to misrepresent their date of birth or vaccination status, a black market exists to purchase these cards. Recent seizures by law enforcement authorities of counterfeit CDC cards, and the illegal sale of genuine cards comes as no surprise to seasoned fraud investigators. In one case, a state data base of records were falsified to support a counterfeit card scheme. That being said, various methodologies do exist as best practices to determine the authenticity of the CDC-COVID-19 Vaccination card.

The first method is to compare the CDC-COVID-19 Vaccination card against a card known to be genuine, looking for inconsistencies in the symbols, dates, or language/terms used. Also, when examining the card, attention should be given to the manufacturer and timeline of doses. As we know, Moderna and Pfizer are double-dose vaccines administered several weeks apart, while J&J is a single dose vaccine. Other possible indicators may come to light if a novice is producing the fake or altered document, such as a combination of similar handwriting for both doses of a two-dose vaccine, same color pen, same dates for multiple shots, strikethroughs, smudges or scratch-outs. Typically, it is a combination of errors, rather than one deviation which may raise suspicion.

When the initial review of a card leads an employer to be suspicious, especially in the circumstance of less sophisticated fraudsters, there are additional steps the employer should take. In New Jersey and other states, a person’s official vaccine status can be validated by the use of State-supported application on a mobile device. This typically is a much more reliable method for verification. We are recommending that employers request the vaccination card, and then validate the card through the corresponding application, in New Jersey the application is called Docket. It can be easily downloaded from the App Store, or Google Play Store.

This method is preferable because the employee can use a company device, assigned to HR for example, downloaded on a tablet or mobile phone. The employee will need to provide the mobile phone number and email address, which was provided at vaccination, to locate the record. In the case of New Jersey’s Docket, a digital record will appear, and a letter from the state in .pdf is available for review and download. The .pdf, contains the employee’s date of birth, although personally identifiable information (PII), typically information already known by an employer. At the end of the session or periodically, an employer can delete the account, and the record, as a best practice to address any perceived data privacy concerns, and simply reload the application once more.

This approach relieves the employer of hard document examination, especially when more sophisticated methods are employed to falsify a document, while minimizing data privacy concerns.

Takeaway Employers are required to keep COVID-19 vaccination records confidential by creating a medical file into which the COVID-19 related medical information should be stored. This should be kept separate from the employee’s personnel file. Alternatively, create a single file to store COVID-19 related documentation for all employees. Electronically submitted documentation should not be stored on a system where others have access. A manager may use initials or another code to ensure confidentiality of the name of an employee. Consider requiring employees to submit vaccination records to a designated email address where access is restricted. Rather than collecting vaccination cards, an employer may opt to inspect the cards so as not to trigger retention obligations.

If employers have any concern over the authenticity of an employee’s vaccination record, they can employ a number of tactics to validate, including careful review, follow up conversation with the employee to verify certain details (such as dates and location of administration), and finally requesting access to Docket or other State-administered vaccination database.

When an employer has done this and has determined that an employee has submitted a fraudulent card, the employer is permitted to discipline the employee up to and including termination. This discipline may be subject to compliance with specific state statutes or collective bargaining agreements or employment contracts, so it is advisable to seek legal guidance if an employee is suspected of presenting a fraudulent card.

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Executive Order No. 271 – Vaccination Or Testing Requirement For Employees Of State Contractors Client Alert – October 2021 Authored by Nicole T. Little Governor Phil Murphy signed Executive Order No. 271 (the “Order”) on October 20, 2021, which requires new and potential state contractors to demonstrate that all of their employees (whether full-time or part-time) who enter, work at, or provide services in any state agency location are fully vaccinated or otherwise undergo weekly testing. Pursuant to the Order, each executive department and agency must ensure that the contracts or agreements that it enters into include a clause that the contractor or any subcontractors, at any tier, that is party to the contract, must maintain a COVID-19 vaccination/testing policy.

The Order will apply to any new contract, new solicitation for a contract, extension or renewal of an existing contract, and exercise of an option on an existing contract, if the contract price is to be paid in whole or in part with state agency funds. Bidders for contracts are required to certify at the time of bid or proposal or prior to executing a contract, that if awarded the contract, the bidder will have the required policies and practices in place and will collect all data necessary for compliance with the Order.

Employees are considered fully vaccinated for COVID-19 two weeks or more after they have received the second dose in a two-dose series or two weeks or more after they have received a single-dose vaccine. Proof of full vaccination status includes: • The CDC COVID-19 Vaccination Card issued to the vaccine recipient by the vaccination site, or an electronic or physical copy of the same; • Official record from the New Jersey Immunization Information System (NJIIS) or other State immunization registry; • A record from a health care provider’s portal/medical record system on official letterhead signed by a licensed physician, nurse practitioner, physician’s assistant, registered nurse or pharmacist; • A military immunization or health record from the United States Armed Forces; or • Docket mobile phone application record or any state specific application that produces a digital health record.

The Order mandates that unvaccinated workers must undergo screening testing at minimum one to two times weekly.

Note, if the worker is not working on-site during a week where testing would otherwise be required, the contractor need not require the worker to submit to testing for that week. The contractor must have a policy for tracking test results and must report results to local public health departments.

A copy of Executive Order No. 271 can be found at https://nj.gov/infobank/eo/056murphy/pdf/EO-271.pdf.

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Federal And State Governments Expand Vaccine And Testing Mandates For Employees Employment Law Monthly - September 2021 Authored by Thomas J. Reilly In recent weeks, both the federal government and several state governments have announced some of the most far-reaching action to date designed to fight the spread of COVID-19 in the workplace. These actions are part of a larger trend shifting the strategy for containing COVID-19 away from the isolation and remote work that characterized the early days of the pandemic, and towards a widespread vaccination/testing approach designed to enhance the safety of social interaction as workers return to work and patrons return to businesses.

The Federal Response On September 9, 2021, in one of the most far-reaching executive actions of the COVID-19 pandemic, the Biden administration announced that the Occupational Safety and Health Administration (“OSHA”) will issue a rule that will require all employers with 100 or more employees to either ensure their workers are vaccinated or require unvaccinated employees to produce a weekly negative test result before attending work. Employers will also be required to provide paid time off to allow their employees to receive vaccinations and to recover from any vaccine side effects. OSHA has intimated that existing paid time off will likely be sufficient to meet this requirement.

These new requirements will be part of a forthcoming Emergency Temporary Standard (“ETS”) promulgated by OSHA. The ETS allows OSHA to enact regulations it can enforce immediately if a “grave danger” to worker safety is present. Covered employers who ignore the standard could face OSHA citations and monetary penalties of up to $14,000 per violation. The ETS applies to all employers covered by the OSH Act, which includes most office-based employers such as financial institutions and various other professional work environments.

Labor Department officials have stated that the ETS will be issued within the next several weeks, but did not provide a definitive timeline. Once it is issued, OSHA will likely provide a grace period of 75 days before it begins enforcing the ETS. The ETS can remain in place for six months before it must be replaced with a more formal final rule from OSHA.

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States Follow Suit New Jersey has followed suit with the federal standard. Even before President Biden’s vaccination and testing pronouncement on September 9, Governor Murphy issued Executive Orders 252 and 253, which require all preschool to Grade 12 school personnel, including those working in private schools; workers at state agencies, authorities, and colleges; and workers in certain covered facilities such as long-term care facilities and licensed community residences to be fully vaccinated against COVID-19 by October 18, 2021 or be subject to COVID-19 testing at a minimum of one to two times per week. The State will also enforce the ETS mandate from OSHA. Additionally, the State has stressed that “State and federal requirements do not impact an employer’s ability to impose more stringent vaccination or testing requirements on workers, including any requirement for more frequent testing, for testing of both vaccinated and unvaccinated staff, and for mandatory vaccinations without a testing alternative.”

Both New York and Massachusetts have instituted similar requirements for healthcare workers. New York will require healthcare workers in hospitals, treatment centers, home health agencies, adult care centers, and other such facilities to receive their first vaccine dose no later than October 7, 2021. All employees at Massachusetts’ rest homes, assisted living residences, and hospice programs, as well as workers who provide in-home direct care services, are required to be fully vaccinated by October 31, 2021.

Takeaway Both the federal government and state governments are beginning to take a more proactive approach to vaccination and testing requirements, including by incentivizing vaccinations through onerous testing mandates. Employers covered by the OSHA ETS mandate will be required to abide by its terms or face stiff penalties. Beyond the requirements imposed by state and federal authorities, employers would do well to create their own vaccine and testing protocols to protect their workforce and protect themselves from potential liability. In doing so, employers should keep in mind that these protocols can be even more stringent than the federal and state mandates outlined above.

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President Biden Takes A Tough Stand On Employer-Mandated Vaccination And Testing Client Alert - September 2021 Authored by Melanie D. Lipomanis

On Thursday, September 9, 2021, President Joseph Biden announced sweeping new requirements for vaccination and testing of U.S. workers. In his public address, the President said the Department of Labor’s Occupational Safety and Health Administration (OSHA) is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result at a minimum of a weekly basis prior to appearing for work. OSHA’s rule will require employers with more than 100 employees to provide paid time off for employees to be vaccinated and to recover if they experience side effects from vaccination. The White House said the new regulation will impact over 80 million workers in private sector businesses with 100+ employees.

The President also signed Executive Orders that require all federal executive branch workers to be vaccinated with no opt-out for testing and extended the requirement to employees of contractors that do business with the federal government.

The Centers for Medicare & Medicaid Services (CMS) will require COVID-19 vaccinations for workers in most health care settings that receive Medicare or Medicaid reimbursement, including but not limited to hospitals, dialysis facilities, ambulatory surgical settings, and home health agencies, and will apply to nursing home staff as well as staff in hospitals and other CMS-regulated settings, including clinical staff, individuals providing services under arrangements, volunteers, and staff who are not involved in direct patient, resident, or client care. These requirements will apply to the majority of health care workers across the country.

The President also called on entertainment venues such as sports arenas, concert halls, and other venues where large groups of people gather to require that their patrons be vaccinated or show a negative test for entry.

Employers with 100 or more employees should be ready to implement vaccination and testing policies to comply with the new federal requirements for their workforce.

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State of New Jersey Mandates Vaccinations/Testing For Certain Workplaces Client Alert – August 2021 Authored by Kerri A. Wright and Melanie D. Lipomanis Governor Murphy issued a press release announcing a state-wide mandate requiring all employees in certain private and public settings to be vaccinated or be subject to COVID-19 testing at minimum one to two times per week.

This mandate applies to certain state and private health care facilities and high-risk congregate settings, including but not limited to the following private settings: • Long-term care and assisted-living facilities • County jails • Acute-care hospitals and specialty hospitals • Short-term and post-acute in-patient rehabs • Licensed behavioral health facilities • Home health agencies Covered facilities will have until September 7, 2021 for all employees to come into full compliance with the vaccine mandate.

The Governor “strongly encouraged” private settings “to consider instituting requirements above and beyond the baseline that will be required by the State.”

You can review the announcement and full listing of covered facilities here:

Office of the Governor | Governor Murphy Announces Vaccine Requirement for Workers in Health Care Facilities and High-Risk Congregate Settings (nj.gov) While the Governor did not offer much specific guidance in his Press Release, it is expected that the State will issue more details in the coming days or weeks. In the meantime, this directive raises a number of employment and labor-related issues that your organization may need to address.

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The Governor “strongly encouraged” private settings “to consider instituting requirements above and beyond the baseline that will be required by the State.”

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Compulsory COVID-19 Vaccination Policies In The Employment Context American Bar Association Tort Trial and Insurance Practice Section Corporate Counsel Law Newsletter - Spring 2021 Authored by Kerri A. Wright and Melanie D. Lipomanis Once our population has been inoculated against COVID-19, experts predict we will soon recover from the devastating social and economic effects of the pandemic and employers will be permitted to operate at full capacity. They caution, however, that the efficacy of vaccines currently available will require the majority of us to be inoculated before we see the rates of infection diminish. This condition also applies to an employer’s workforce. Surprisingly, quite a few people eligible for the vaccine are opting not to receive it. For this reason, many public and private employers, including school districts, colleges and universities are asking counsel whether they can require their employees to be vaccinated.

While COVID-19 may be novel, mandatory inoculations are not. In a case dating back to 1905, the United States Supreme Court addressed mandatory vaccinations in regard to a smallpox outbreak in Massachusetts. In Jacobson v Massachusetts, 197 US 11, 88 (1905), Jacobson objected to a regulation requiring compulsory vaccinations, arguing it was in “derogation of the rights secured to the defendant by the 14th Amendment of the Constitution of the United States . . . providing that no state shall make or enforce any law abridging the privileges or immunities of citizens of the United States, nor deprive any person of life, liberty, or property without due process of law . . . .” Rejecting this argument, the Court ruled that a State law requiring compulsory vaccination of citizens to eradicate disease was a proper exercise of the legislative prerogative to protect the public health, finding “the police power of a state must be held to embrace, at least, such reasonable regulations established directly by legislative enactment as will protect the public health and the public safety.” Drawing on the logic from then existing school immunization mandates, the Court held that such regulations do not violate the 14th Amendment right to liberty because they fall within the type of restraints to which every person necessarily is subjected for the common good, and that real liberty for all could not exist if each individual is allowed to act without regard to the injury that his or her actions might cause others. The holding in Jacobson has been a staple of public health law and compulsory vaccinations remain a valid exercise of State power.

State-mandated vaccination laws have been on the books for the past century and although we generally think of them applying to children attending day care facilities and schools, many states have enacted laws requiring immunization of certain groups of people such as healthcare workers, patients, and residents of long-term care facilities.

Generally, employers also may lawfully require employees to be inoculated with a vaccine approved or authorized by the Food and Drug Administration (FDA). The Equal Employment Opportunity Commission (EEOC) cautions, however, that employers contemplating inhouse vaccination programs must be aware that prescreening questions for the vaccine may illicit information regarding the individual’s disability or genetic information which would violate employee-protections under the ADA and the Genetic Information Nondiscrimination Act (GINA). Accordingly, it is better practice to recommend employers require their employees to receive the vaccination from a third party that does not have a contract with the employer, since the ADA “job-related and consistent with business necessity” restrictions on vaccination screening questions would not apply.

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Employers may request documentation from employees verifying they have been inoculated by a third-party since the EEOC advises that requesting proof of COVID-19 vaccination, in and of itself, is not a disability or medical related inquiry. If an employer requires employees to provide documentation verifying that they have received a COVID-19 vaccination from a pharmacy or their own health care provider, the employer should advise the employee not to provide any medical information as part of the proof in order to avoid implicating the ADA or GINA. As long as this warning is provided, any genetic information the employer receives in response to its request for proof of inoculation will be considered inadvertent and therefore not unlawful under EEO laws.

Navigating Potential Accommodations in the Employment Context According to the National Conference of State Legislators (NCSL), all states allow exemptions for medical reasons, 45 states and the District of Columbia have a religious exemption law, and 17 of those states have philosophical exemption laws allowing individuals and/or parents to claim an exemption based on their personal, moral or other beliefs.

Perhaps the most controversial exemptions to compulsory vaccination laws are those for religious and philosophical reasons. Title VII of the 1964 Civil Rights Act prohibits religious discrimination in the workplace, however, employers are not required to accommodate the religious beliefs and practices held by employees if doing so involves more than a de minimis cost. Now, in the greatest public health and financial crisis in our lifetimes, a strong argument can be made that an employer permitting any part of its workforce to go unimmunized would pose more than a de minimis cost. Add to that rubric the fact that Congress has yet to pass any legislation limiting legal liability for employers over COVID-19 infections that occur in the workplace. This lack of action provides further justification for employers to take every conceivable precaution to keep potential COVID-19 transmission out of their workforce and facilities.

Notably, there has seen a sea-change in public attitude toward vaccination exemptions following the catastrophic effects of COVID-19, which may result in the federal or state governments preemptively taking up the gauntlet for employers. By way of example, on May 13, 2020, the New York State Bar Association’s Health Law Section Task Force on COVID-19 issued an 83-page report and recommendations on dealing with various aspects of the pandemic. The report states that although “some Americans may push back on the COVID-19 vaccination for religious, philosophical or personal reasons,” “for the sake of public health, mandatory vaccinations for COVID-19 should be required in the United States as soon as it is available.” In support of its position, the Bar notes “Constitutional challenges … have failed, when the individual interests are not strong enough to outweigh the public benefit,” and concludes that the “gravity of COVID-19 presents compelling justification for State legislatures and Congress to mandate a COVID-19 vaccination.”

With this backdrop, it is conceivable that compulsory vaccinations may be on the horizon at the state or even federal level. At a minimum, we would expect to see legislation regarding certain sectors with high risk populations such as healthcare workers, employees and residents of elder-care facilities, school districts, universities, and perhaps even employees in the retail and food service sectors. State lawmakers are already proposing to introduce legislation to include COVID-19 vaccination to the immunization list required to enroll children in the public schools systems.

18 While a fully inoculated workforce is ideal, absent federal or state laws mandating inoculation, whether for all citizens or specific sectors and employee groups, employers only can go so far in implementing compulsory vaccination policies. Employers need to be mindful of existing federal and state laws that may be implicated when implementing mandatory employment policies.

The Equal Employment Opportunity Commission (EEOC) issued guidance regarding the flu vaccine on March 21, 2020, in which the agency stated that employers covered by the Americans With Disabilities Act (ADA) and Title VII may require employees to be inoculated for the influenza virus. The agency cautioned, however, that employees may be entitled to an exemption from the employer’s mandatory vaccination policy under the ADA, based on a disability, or under Title VII, for the employee’s sincerely held religious beliefs.

Accordingly, employers may not terminate an employee who cannot be vaccinated due to a medical contradiction related to his or her disability or a sincerely held religious belief, unless the employer can show that there are no reasonable accommodations available (such as remote work) and the unvaccinated employee would pose a “direct threat” to the health or safety of individuals in the workplace. Employers are required to conduct an individualized assessment of the following four factors in determining whether a direct threat exists: (1) the duration of the risk; (2) the nature and severity of the potential harm; (3) the likelihood that the potential harm will occur; and (4) the imminence of the potential harm. Only then -- upon a determination that an unvaccinated individual will expose others to the virus in the workplace -- may the employer exclude an employee from the workplace.

While the U.S. Occupational Safety and Health Administration (OSHA) does not mandate employee vaccinations, it encourages employers to make COVID-19 vaccines available at no cost to eligible employees. In 2009 the agency took a position during the H1N1 pandemic that employers may require employees to submit to influenza vaccines, providing that employees are informed properly of the benefits of vaccinations. OSHA cautioned, however, that “an employee who refuses vaccination because of a reasonable belief that he or she has a medical condition that creates a real danger of serious illness or death (such as a serious reaction to the vaccine) may be protected under Section 11(c) of the Occupational Safety and Health Act of 1970 pertaining to whistleblower rights.”

Takeaway While it is important to check your state laws on the issue, generally an employer may implement a policy mandating its workforce be inoculated with one of the FDA approved vaccines currently available. Although the policy should be applied uniformly, the employer will need to consider exceptions to the mandate, on a case-by-case basis, for an employee’s medical condition or his or her sincerely held religious beliefs.

The employers’ front-line supervisors and managers should be trained to recognize when an employee is making an accommodation request due to his or her disability or sincerely held religious belief and know to whom that request should be communicated for consideration. All supervisors and managers need to be reminded that it is unlawful to retaliate against an employee for requesting an accommodation from a mandatory vaccination policy or to disclose that an employee has been granted such an accommodation.

Employers also should revisit their anti-discrimination training on EEO laws for supervisors and employees and consider an updated training module for pandemic-specific types of discrimination. For example, derogatory remarks about “China Flu,” or individuals with national origins from various global locations where variants of COVID-19 are reportedly originating (South America, South Africa, United Kingdom), and individuals belonging to populations currently eligible to receive COVID-19 vaccinations such as the elderly and disabled are all members of protected classes under EEO laws. Discrimination based upon an employee or coworker’s membership in a protected class can lead to hostile work environment, and discrimination claims.

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The employers’ front-line supervisors and managers should be trained to recognize when an employee is making an accommodation request due to his or her disability or sincerely held religious belief and know to whom that request should be communicated for consideration.

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What Employers Need To Know About Mandato With Employees Who Refuse To Be Vaccinated Employment Law Monthly - May 2021 Authored by Thomas J. Reilly What The State Has Said Two months ago, in March 2021, the State of New Jersey adopted Equal Employment Opportunity Commission guidance providing that employers can require their employees to receive a COVID-19 vaccination before they are permitted to return to work. Now, as more Americans receive vaccinations and employees begin to trickle back into offices throughout the summer, employers need to start thinking about best practices for implementing this guidance, as well as some of the exceptions that came with it.

What Employers Need To Know The short of it is that employers can require employees to receive a COVID-19 vaccine before physically returning to work, subject to three exceptions: (1) if the employee has a disability; (2) if their doctor has advised them not to receive the vaccine while they are pregnant or breastfeeding; or (3) if the employee has a sincerely held religious belief that prevents them from receiving a vaccine.

Needless to say, the devil is in the details. Employers are permitted to request medical documentation to confirm a disability or to confirm that an employee’s medical provider instructed them not to take a COVID-19 vaccine for a legitimate medical reason. However, employers must ensure that all information about an employee’s disability is kept confidential and must maintain all information about employee illness as a confidential medical record.

As for religious exemptions, an employer may not question the validity of the belief unless the employer has an objective basis for doing so. Even then, the guidance in most, if not all states that permit a religious exemption, is clear that this inquiry must be limited into the facts and circumstances supporting the employee’s request. States clearly have been discouraging employers from questioning such beliefs, and employers should generally think twice before doing so.

What To Do With An Employee Who Meets One Of The Three Exemptions What happens if an employee meets one of the three exemptions? In such cases, the employer must provide a reasonable accommodation from any mandatory vaccine policy, “unless doing so would impose an undue burden on their operations.” What constitutes a reasonable accommodation? For employees who can work remotely, a reasonable accommodation can be as simple as allowing the employee to continue remote work. For employees who are required to be present on the job site, the issue is more complicated, and may require providing the employee with personal protective equipment that sufficiently mitigates the employee’s risk of COVID-19 transmission and exposure, and maintaining appropriate distance between the unvaccinated employee and other employees.

The guidance makes clear that reasonable accommodations must be based on “safety,” and designed to limit the risk of transmission to other employees and to the public as much as possible. Such decisions must be based on “objective, scientific evidence,” and “not on unfounded assumptions or stereotypes.” Generally, an employer’s best practice is to follow CDC guidance regarding proper precautions for decreasing the risk of transmission.

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ory Vaccine Policies And What To Do

Collective Bargaining Agreements Collective bargaining agreements add a further wrinkle to the equation. The terms of an existing collective bargaining agreement may permit the employer to develop and implement mandatory vaccine protocols unilaterally, or it may require the employer to bargain with a union before implementing any such protocols. Furthermore, most employers will be obliged to engage in bargaining regarding the effects of instituting mandatory vaccination rules. Employers are strongly encouraged to review the terms of their collective bargaining agreement before instituting any such protocols.

What If An Employer Cannot Provide A Reasonable Accommodation Due To The Nature Of The Employee’s Work?

If the employer cannot provide a reasonable accommodation that would mitigate the risk of COVID-19 transmission to its employees and customers, then it can enforce its policy of excluding unvaccinated employees from the physical workplace, even if they meet one of the three exceptions above. Two points of caution, however. First, it is very difficult for employers to meet the “undue burden” test that would exempt them from providing a reasonable accommodation. In New Jersey, for example, the standard is governed by the State’s Law Against Discrimination, which can be quite complicated and generally gives employees the benefit of the doubt. This is similar in most states with an anti-discrimination statute that prohibits discrimination on the basis of disability or religion. In the context of COVID-19, an employer probably can meet this burden by demonstrating that there is no safe way for the employee to perform the employee’s duties that sufficiently mitigates the risk of transmission and exposure. Second, an employer cannot automatically discipline an employee who cannot get vaccinated. There is a complex tapestry of federal and state laws, including the Americans with Disabilities Act, that may protect employees in such instances. An employer may be liable in a civil suit if it pursues improper disciplinary measures.

Employers Beware: Courts Are Tending To Side With Employees Across the country, courts have tended to take an exceedingly liberal approach in classifying COVID-19 as a “disability,” and have generally sided with employees who either seek accommodations or claim that they were improperly terminated with regard to COVID-19.

In one eye-opening case out of the Federal Court for the Southern District of New York, Velez v.

Girraphic LLC, the plaintiff employee became sick with a “respiratory illness” in the winter of 2020, before the State and City of New York had declared states of emergency. The plaintiff took time off from work, warned his co-workers about the seriousness of COVID-19, and was later terminated from his employment. Although he never explicitly requested a reasonable accommodation, he later argued that his request for medical leave should be considered as such. The plaintiff sued his employer on several state law causes of action, as well as the New York City Human Rights Law. The employer moved for dismissal, arguing that COVID-19 should not be considered a disability, that the plaintiff’s accommodation claims should fail because the virus was not a concern in New York City at that time, and that the employee was terminated for performance-related reasons.

22 The court denied the employer’s motion for dismissal, holding that COVID-19 falls within the definition of “disability” as defined by the New York City Human Rights Law. Also, the court clearly did not believe that the issue of whether there was a state of emergency in effect at the time should have any bearing on the plaintiff’s claims.

There are several points of which employers should take stock. First, COVID-19 will almost certainly be treated as a “disability” under various state and federal disability laws. Second, courts will take a liberal, employee-friendly view of what amounts to a request for reasonable accommodation with regard to COVID-19. Finally, even as states begin to end the continued state of emergency that has persisted since March of 2020, this does not mean that COVID-19 will begin to be treated as an ordinary illness.

On the contrary, if courts follow the Southern District of New York’s approach -- one of the most influential District Courts in the country -- then the issue of whether a state of emergency persists will have no influence on an employee’s COVID-19-related accommodation claims.

Takeaway As employees begin to return to work this summer, and life returns to something close to normal, employers will be forced to reckon with instituting appropriate vaccination policies. In doing so, private sector employers should know that they are generally free to mandate that their employees be vaccinated before returning to work. Even so, employers who craft such policies should be sure to consult any applicable collective bargaining agreements, provide language in their vaccination policies regarding appropriate documentation and document retention for employees who claim a medical exemption, and work to create policies tailored to the nature of their workforce. It is inevitable that certain employees will refuse to be vaccinated based on one of the three exemptions noted above. In such cases, employers should request appropriate documentation, if applicable, maintain the confidentiality of those records, and engage in a process to create a reasonable accommodation for such employees. If such an accommodation is completely unfeasible because there is no way for an unvaccinated employee to safely perform his or her job duties, the employer can exclude the employee from the workplace, but should remain wary of disciplining any such employees, which may expose the employer to liability. Finally, employers should not fall into the trap of becoming less vigilant with regard to their policies if and when their state ends its declared state of emergency. COVID-19, and the complex workplace it has created, will be with all of us for a little while longer.

COVID-19, and the complex workplace it has created, will be with all of us for a little while longer.

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CDC Guidance Update For Vaccinated Individuals/Employees Client Alert - March 2021 Authored by Melanie D. Lipomanis

The Centers for Disease Control and Prevention (“CDC”) released updated guidance today applicable to individuals recently vaccinated against COVID-19 with one of the vaccines currently authorized for emergency use by the Food and Drug Administration (“FDA”). Notable, the update recommends that “fully vaccinated” people (defined as two or more weeks after they have received the second dose in a two-dose series or two weeks after they have received a single-dose vaccine), with no COVID-19 symptoms, who have had closecontact exposure to someone with suspected or confirmed COVID-19, do not need to quarantine. This guidance also applies to employees of non-healthcare and low-density workplaces.

Employees in non-healthcare congregate settings and other high-density workplaces, e.g., meat and poultry processing and manufacturing plants, with no COVID-19 symptoms, also do not need to quarantine following exposure; however, the CDC recommends the employee be tested following exposure (likely prior to returning to the workplace), and adhere to thorough routine workplace health screenings.

The CDC’s new guidance for recently vaccinated individuals provides further incentive for employers to encourage or require employees to be inoculated against COVID-19 once they are eligible to receive an FDA approved vaccine.

Porzio’s previous articles discussing employer-mandated COVID-19 vaccination policies can be found here and here.

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Updates in Federal Agency COVID-19 Guidance for Employers: Where We Are In February 2021 Employment Law Monthly - February 2021 Authored by Melanie D. Lipomanis Our October 2020 Employment Law Monthly article discussed our employment team’s consensus on how the Equal Employment Opportunity Commission (EEOC) ultimately would interpret employer mandated vaccination policies against the backdrop of statutory protections and prohibitions under the Americans with Disabilities Act (ADA), and Title VII. On December 19, 2020 the EEOC updated its guidance affirming our prediction and offering additional guidance to assist employers in navigating the pandemic while staying on the right side of employment laws. On January 20, 2021, the Occupational Safety and Health Administration (OSHA) updated its guidance to inform employers how to identify the risk of exposure and transmission in the workplace and determine appropriate control measures to implement. This article provides a recap on where we stand on lawful pandemicrelated employment practices in February 2021.

EEOC Updates Now that there is a light at the end of the tunnel and many businesses are in the process of or anticipating a full reopening, employers are requesting legal guidance on how to bring their employees back to work and what policies and practices can or should be implemented.

Health Screenings As part of an employer’s Written Pandemic Preparedness Plan (see OSHA guidance below), employers should implement and maintain some form of health screening of employees who are entering the workplace. At a minimum this should include temperature checks and health and travel inquiries. Employees refusing to cooperate in health screenings may lawfully be excluded from the workplace. Knowing which employees have been vaccinated against COVID-19 may become part of the health screening process and requiring documentation from employees is permissible as discussed below.

Testing Employees for COVID-19 As COVID-19 viral and antibody testing kits are becoming more accessible, many employers are seeking to implement policies requiring employees to be tested before entering or returning to the workplace. Critical infrastructure employers are implementing in-house periodic or even daily testing of employees to reduce potential disruptions to their operations. In November 2020, the Centers for Disease Control and Prevention (CDC) issued guidance to employers to include COVID testing on non-symptomatic employees, particularly in geographic areas experiencing high transmission rates. Even where transmission rates are moderate, the CDC recommends periodic or daily testing of the workforce in the following settings:

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Employees working in close quarters; Workplaces where continuity of operations is a high priority (such as critical infrastructure sectors); Workplaces in remote areas where medical treatment may be delayed; and Work settings where congregate sleeping or housing is provided. (such as firefighters, farming operations, fishing vessels, oil rigs).

The ADA limits an employer’s ability to make disability-related inquiries and to conduct medical examinations or testing for all applicants and employees, including those who are not disabled. Such inquiries or examinations may only be conducted when the employer can demonstrate that the inquiry or examination is “job related and consistent with business necessity.” The EEOC update advises that testing employees for COVID-19 does not run afoul of the ADA because an employee entering the workplace with an active (detectable) infection of COVID-19 would pose a “direct threat.” A direct threat is defined as a significant risk of substantial harm to the health or safety of the individual or to others that cannot be eliminated or reduced by a reasonable accommodation.

The “direct threat” defense is a narrow exception to the general rule that employers may not take adverse action against an employee, including excluding them from the workplace, based on his or her disability.

This defense is intended to shield employers who must take an employee’s disability into account in their decision-making process in order to protect the individual or other employees from significant danger that cannot reasonably be mitigated. An employer’s determination that an employee poses a direct threat cannot be based on fears, misconceptions, or stereotypes about the employee’s disability. Instead, the employer must make (1) an individual assessment, (2) based on reasonable medical judgment, (3) relying on the most current medical knowledge and the best available objective evidence.

In deciding whether a direct threat exists, an employer should consider: 1. The duration of the risk; 2. The nature and severity of the potential harm; 3. How likely it is that the potential harm will occur; and 4. How imminent the potential harm is -- that is, the probability of infection transmission, which we know with COVID-19, is very high.

Generally, the above factors must be weighed against each other to decide whether a direct threat is present. For example, if an employee’s disability could threaten the lives of many employees and others, the employee might pose a direct threat even if such an incident was not very likely. On the other hand, if it is very likely that an employee’s disability will cause imminent harm, the severity of such an incident might not have to be as high to prove a direct threat. With the known likelihood of transmission of COVID-19, and the potentially lethal consequences of infection, proving the direct threat for employers will be a relatively easy burden to meet.

Employers will want to ensure they are using the right type of test. Because the CDC guidelines advise against using antibody testing (i.e., past infection) in making decisions about returning employees to work, the EEOC’s position is that antibody testing fails to meet the ADA’s “job related and consistent with a business necessity” standard at this time. Testing employees for viral infection of COVID-19, however, is permissible as employees with an active infection pose an unequivocal and immediate direct threat to others. Under these circumstances, the ADA permits an employer to bar an employee from physical presence in the workplace if he or she refuses to be tested.

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The EEOC reminds employers that records involving employee testing, illness, and medical treatments (including vaccinations), must be maintained as confidential and apart from their employees’ personnel files.

Mandatory Employee Vaccination Policies Employers lawfully may require employees to be inoculated with a vaccine approved or authorized by the Food and Drug Administration (FDA). The EEOC cautions, however, that employers contemplating inhouse vaccination programs must be aware that prescreening questions for the vaccine may illicit information regarding the individual’s disability or genetic information which would violate employee-protections under the ADA and the Genetic Information Nondiscrimination Act (GINA). For this reason, it is better for employees to receive an employer-mandated vaccination from a third party that does not have a contract with the employer, since the ADA “job-related and consistent with business necessity” restrictions on vaccination screening questions would not apply.

Employers may request documentation from employees verifying they have been inoculated by a third-party since the EEOC advises that requesting proof of COVID-19 vaccination, in and of itself, is not a disability or medical related inquiry. If an employer requires employees to provide documentation verifying that they have received a COVID-19 vaccination from a pharmacy or their own health care provider, the employer should advise the employee not to provide any medical information as part of the proof in order to avoid implicating the ADA or GINA. As long as this warning is provided, any genetic information the employer receives in response to its request for proof of inoculation will be considered inadvertent and therefore not unlawful under EEO laws.

Employers still must attempt reasonably to accommodate an employee’s disability or sincerely held religious belief upon request if the disability or religious belief prevents the employee from receiving the vaccination.

Employers may not terminate an employee who cannot be vaccinated due to a medical contradiction related to his or her disability or a sincerely held religious belief, unless the employer can show that there are no reasonable accommodations available (such as remote work) and the unvaccinated employee would pose a direct threat as explained above.

Front-line supervisors and managers should be trained to recognize when an employee is making an accommodation request due to his or her disability or sincerely held religious belief and know to whom that request should be communicated for consideration. All supervisors and managers need to be reminded that it is unlawful to retaliate against an employee for requesting an accommodation from a mandatory vaccination policy or to disclose that an employee has been granted such an accommodation.

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Pandemic Specific Anti-Discrimination Training Employers should revisit their anti-discrimination training on EEO laws for supervisors and employees and consider an updated training module for pandemic-specific types of discrimination -- and there are surprisingly quite a few scenarios in which pandemic-discrimination may occur. For example, derogatory remarks about “China Flu,” or individuals with national origins from various global locations where frightening variants of COVID-19 are reportedly originating (South America, South Africa, United Kingdom), and individuals belonging to populations currently eligible to receive COVID-19 vaccinations such as the elderly and disabled are all members of protected classes under EEO laws. Discrimination based upon an employee or coworker’s membership in a protected class can lead to hostile work environment, and discrimination claims.

Although derogatory COVID-19 remarks made to Asian employees obviously are discriminatory, other seemingly innocuous comments to a coworker such as “you only got the vaccine because you are old,” or “don’t sit next to me, I don’t want to catch one of those deadly variant strains” also are potential grounds for discrimination claims.

Another example of discrimination of which the EEOC warns employers to be cognizant in training their supervisors and employees is disclosure of, or discrimination based on, the vaccinated status of employees as that also could implicate the employee’s protected status including medical condition, disability or sincerely held religious belief.

All employees must be reminded that EEO laws make it unlawful to harass or otherwise discriminate against coworkers based on race, national origin, religion, age, disability, or genetic information -- any of which may be implicated in COVID-19 cases. Supervisors and managers need to be trained to watch for, stop, and report any COVID-19 related harassment or other discrimination.

Employers also should have an updated written and published policy that advises employees how to report COVID-19 related harassment or discrimination and states the employer will review immediately any allegations of harassment or discrimination and take appropriate action.

The EEOC reminds employers that records involving employee testing, illness, and medical treatments (including vaccinations), must be maintained as confidential and apart from their employees’ personnel files.

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OSHA Updates Under the General Duty clause of the Occupational Safety and Health Act, employers are obligated to provide a safe and healthy workplace free from recognized hazards likely to cause death or serious physical harm. Recent OSHA guidance, which closely tracks that from the CDC, advises employers to implement a COVID-19 Written Pandemic Preparedness Plan that includes the following essential elements: 1. Conduct a Hazard Assessment; 2. Identify control measures to reduce transmission of the virus; 3. Implement absentee policies that permit and encourage potentially infected workers to stay home; 4. Effectively communicate COVID-19 related policies and procedures in a language workers understand (i.e., required effective communication with non-English speaking employees); and 5. Implement reporting procedure and protections from retaliation for workers who report workplace COVID-19 safety concerns.

Additionally, OSHA’s updated guidance includes advice encouraging employers to make COVID-19 vaccinations available to employees, ensuring there is no discrimination against vaccinated employees from non-vaccinated workers, and recording and reporting COVID-19 infections and deaths. Employers can review our previous article regarding their obligations in recording and reporting COVID-19 cases in the workplace here. OSHA also reminds employers that employees wearing a face covering is in addition to and not a replacement for physical distancing in the workplace -- both safety practices should be required.

Takeaway Employers may require testing of their workforce and implement mandatory vaccination policies to prevent the transmission of COVID-19 infection, providing they consider requests for exemption from the policy if a reasonable accommodation exists. The pandemic has created new, uncharted areas in which discrimination claims can arise and employers need to update their policies to educate employees and affirmatively address unlawful conduct before it occurs.

The employment team at Porzio is highly informed on the latest federal and state guidance on pandemic employment practices and can assist employers in drafting and implementing compliant pandemic preparedness plans, screening procedures, vaccination policies, and anti-discrimination training for supervisors and employees tailored to meet the specific needs of their unique workforce.

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OSHA also reminds employers that employees wearing a face covering is in addition to and not a replacement for physical distancing in the workplace—both safety practices should be required.

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Misclassification Of Employees As Independent Contractors Recently Became More Costly Employment Law Monthly - August 2021 Authored by Vito A. Gagliardi, Jr. and Melanie D. Lipomanis On July 8, 2021, Governor Phil Murphy signed into law legislation that will enable regulators to pursue worker misclassification in New Jersey aggressively, increasing penalties and enforcement against businesses that misclassify employees as independent contractors. Part of that legislation, Assembly Bill No. 5892, which pertains to penalties and fines and becomes effective on January 1, 2022, is going to make misclassification a very expensive mistake.

Misclassification is when employers, purposefully or inadvertently, label workers as contractors instead of employees, often to pay them off the books, or to avoid paying the employer’s share of employment taxes, insurance contributions, and other legal obligations. Employers who routinely use independent contractors in any part of their business models, should closely watch new regulatory developments governing these relationships and adjust their employment practices if necessary.

In addition to increased penalties and fines, the new law creates additional liability for employers’ “purposeful or knowing” misclassification of workers “for the purpose of evading payment of insurance premiums” as a violation of the New Jersey Insurance Fraud Prevention Act, subjecting them to harsh penalties and criminal investigation by the New Jersey Department of Banking and Insurance.

Under the new law, the state will create and fund the Office of Strategic Enforcement and Compliance (“OSEC”) within the Department of Labor and Workforce Development, for oversight and coordination of the law with other state agencies. The OSEC is tasked to implement a more robust process of identifying employers who misclassify employees, issue stop-work orders at worksites, impose much stricter penalties and fines, and create a database to track employer payrolls.

Worker misclassification is more common than you may think. New Jersey uses the “ABC” test for determining whether independent contractors are properly classified. Codified in the state’s Unemployment Compensation Law, the ABC test deems a worker an employee unless the employer can prove all three of the following: (A) The worker has been and will continue to be free from control or direction over performance of the service, both under a contract of service and in fact; and (B) The service is either outside the usual course of the business for which such service is performed, or the service is performed outside of all the places of business of the enterprise for which such service is performed; and (C) The worker is customarily engaged in an independently established trade, occupation, profession or business.

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Misclassification is when employers, purposefully or inadvertently, label workers as contractors instead of employees, often to pay them off the books, or to avoid paying the employer’s share of employment taxes, insurance contributions, and other legal obligations.

Although all three prongs of this test place a high burden of proof on the employer, the ramifications of the last prong of the test are frequently overlooked. Under this provision, if the worker does not perform substantially similar work for any other business, entity, or individual, the worker is automatically deemed an employee under state law. In other words, there is no such thing as a full-time independent contractor in New Jersey. Even if the independent contractor performs work for a business only part-time, or works sporadic, irregular hours, if they do not perform substantially similar work for anyone else, they are still deemed an employee for classification purposes.

Takeaway It is imperative that employers not only review the work actually being performed for them by independent contractors, but also the extent of similar work the contractor performs elsewhere. Properly classifying workers is a technical, fact-specific task that requires a thorough analysis of the worker’s terms and conditions of engagement, the nature of the service performed for the business, as well as the scope of the worker’s engagement and performance under contracts with other businesses, entities, or individuals.

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The Joint Employer Merry-Go-Round Comes Fu Change The FLSA Joint Employer Rules Yet Aga Employment Law Monthly - March 2021 Authored by Richard H. Bauch Increasing business consolidation and joint ventures present more complex challenges for counsel attempting to advise clients accurately as to how to structure these complex relationships to their clients’ advantage. These challenges have been exacerbated by the whipsaw changes wrought on the United States Department of Labor’s (DOL) already complex Joint Employer rules under the Fair Labor Standards Act (FLSA), creating uncertainty and placing counsel in a nearly untenable situation. Recent employer-friendly changes, made during the latter part of the Trump Administration, are now under complete reconsideration as the Biden Administration’s reconstituted DOL proposes to roll back the Trump Administration’s revision and likely reinstitute the rules as they previously existed. This article will review the substance and background of the Joint Employer rules, describe what the Trump Administration was attempting to achieve in its issuance of its final rule in January 2020, and discuss the impact of the proposed rescission of the January 16, 2020 final rule.

Under the FLSA, which strictly regulates the payment of compensation by employers to the vast numbers of their employees, persons or entities are liable for paying minimum wages and overtime only if it is determined that they are “employers” under the FLSA’s rules. Employers are defined in pertinent part under the FLSA to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.”1 Employees are defined as “any individual employed by an employer.”2 The FLSA also defines the term “employ” broadly, as “to suffer or permit to work.”3 Employees can have two or more employers who would be jointly and severally liable for the employees’ wages, thus being considered “joint employers.” Although the FLSA does not specifically refer to joint employment, for a considerable time, the DOL has recognized that employees may have multiple employers. Joint employment may occur in two contexts, “vertical” employment, where companies contract out their own employees to another unrelated entity, such as in the case of a staffing company, and “horizontal” employment, where a worker is employed jointly by two related companies, such as a parent and subsidiary or related businesses with common ownership. The Trump Administration’s final rule focused only on altering the legal standards for determining whether two or more entities in a “vertical” employment relationship were considered joint employers and therefore, jointly and severally liable for employee wages, leaving “horizontal” relationships essentially untouched.

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ull Circle: The USDOL Proposes To ain Prior to the issuance of the Trump Administration’s final rule, the DOL’s approach had been guided by the many court decisions handed down over decades. Although differing in meaningful ways from circuit to circuit and depending on the particular industry involved, many courts generally followed an “economic realities” test in determining whether a joint employment relationship should be found. In its decision in Enterprise Rent-A-Car Wage & Hour Emp. Pracs. Litig.,4 the Third Circuit held in 2012 that “Joint employers” are employers who exert “significant control” over an employee by sharing or co-determining the “essential terms and conditions of employment,” even if they do not have “ultimate” control. The Third Circuit set forth the following factors in Enterprise to determine whether an alleged employer is a joint employer: 1. the alleged employer’s authority to hire and fire the relevant employees; 2. the alleged employer’s authority to promulgate work rules and assignments and to set the employees’ conditions of employment: compensation, benefits, and work schedules, including the rate and method of payment; 3. the alleged employer’s involvement in day-to-day employee supervision, including employee discipline; and 4. the alleged employer’s actual control of employee records, such as payroll, insurance, or taxes.5 The court noted that “[t]hese factors are not exhaustive, and whether an alleged employer is a joint employer depends on the “total employment situation and the economic realities of the work relationship.”6 The court further indicated that an alleged employer could be found to be a joint employer even if not all the Enterprise factors are present.7 In 2016, without going through the notice and comment period required by the Administrative Procedures Act for establishing a final administrative regulation, the DOL issued an informal Administrator’s Interpretation,8 urging its investigators to look beyond employers’ control over their employees and instead, focus upon the “economic realities” of their employment relationship. The Administrator instructed that the DOL’s investigators should draw upon the following seven economic reality factors when engaging in their analysis:9 • Directing, Controlling, or Supervising the Work Performed • Controlling Employment Conditions • Permanency and Duration of Relationship • Repetitive and Rote Nature of Work • Integral to Business • Work Performed on Premises • Performing Administrative Functions Commonly Performed by Employers Within months after President Trump was inaugurated, however, the DOL rescinded this Administrator’s Interpretation and proposed the first formal update to the joint employment relationship in decades.10 In its final rule issued January 16, 2020,11 the DOL, in a dramatic departure from decades of prior law, adopted a new four-factor balancing test to guide the determination of joint employment status. This substantially revised test considers whether the potential joint employer: • Hires or fires the employee • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree • The employee’s rate and method of payment • Maintains the employee’s employment records The final rule, which sought to refocus the joint employer analysis upon the degree of control exerted over the employee, a far more employer-controllable variable, mandates that no single factor is dispositive in determining joint employer status, and that additional factors may be considered “if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee’s work.”

This new-found oasis of analysis for employers came under almost immediate attack, however, resulting in 17 states and the District of Columbia filing a federal lawsuit in New York seeking to have the final rule vacated for allegedly violating the federal Administrative Procedures Act (APA). On June 1, 2020, the Hon. Gregory H. Woods, U.S.D.J., struck down the more significant portions of the Trump Administration’s final rule pertaining to vertical employment relationships.12 Judge Woods found that final rule violated the APA, and conflicted “with the FLSA because it ignores the statute’s broad definitions.”13 Judge Woods also based

34 his ruling on the basis that “the [DOL] failed to justify its departure from its prior interpretations and to account for some of the final rule’s important costs.” As a result, on March 11, 2021, the Biden Administration’s newly reconstituted DOL issued a Notice of Proposed Rulemaking proposing to rescind the January 16, 2020 final rule on joint employer relationships. The DOL’s proposal to withdraw the January 16, 2020 final rule is open for public comment until April 12, 2021. It is not known precisely when the DOL will make a final decision and issue a new final rule, but, based upon the political fervor present, it is more than likely that this process will result in the withdrawal of the DOL’s January 16, 2020 final rule and possibly signal a return to the state of the law prior to 2017.

Based upon current circumstances, we believe that counsel’s safest course of action would be to advise clients situated within the Third Circuit’s jurisdiction who are contemplating the rollout of joint business relationships involving more than a few employees, either to ensure that those arrangements comply with the Third Circuit’s Enterprise factors to the greatest extent possible or to defer the rollout until the DOL takes action with respect to its March 11, 2021 Notice of Proposed Rulemaking on or after April 12, 2021. At that time, hopefully, the DOL will clarify the standards to which it intends to hold employers in making its joint employer determinations.

29 U.S.C. § 203(d).

1

29 U.S.C. § 203(e)(1).

2

29 U.S.C. § 203(g).

3

683 F.3d 462, 468 (3d Cir. 2012).

4

Id. at 469.

5

Id. at 469 (quoting Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983)) (quotation marks omitted).

6

Id. at 470.

7

See USDOL Administrator’s Interpretation No. 2016-1. https://www.hallrender.com/wp-content/uploads/2016/01/DOL_Joint_Employment_1_20_16.pdf

8

The Administrator actually borrowed these factors from Migrant and Seasonal Agricultural Worker Protection Act (MSPA), 29 U.S.C. § 1801, et seq.

9

As noted on the DOL’s website, “[t]he Department of Labor›s . . . 2016 informal guidance on joint employment . . . [was] withdrawn effective June 7, 2017.” The DOL noted, however, that [r]emoval of the . . . administrator interpretation[] does not change the legal responsibilities of employers under the Fair Labor Standards Act . . ., as reflected in the Department’s long-standing regulations and case law. The Department will continue to fully and fairly enforce all laws within its jurisdiction including the Fair Labor Standards Act . . . .” https://www.dol.gov/agencies/whd/opinion-letters/administrator-interpretation/flsa.

10

https://www.federalregister.gov/documents/2020/01/16/2019-28343/joint-employer-status-under-the-fair-labor-standards-act

11

State of New York, et al. v. Eugene Scalia, et al., CA No. 1:20-cv-01689 (S.D.N.Y. 6/1/2020), https://cases.justia.com/federal/district-courts/new-york/nysdce/1:2020cv01689/533016/135/0. pdf?ts=1599643603

12

Id. at 2.

13

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U.S. Department of Labor Issues New Final Rule Setting Forth Test For Classifying Workers As Independent Contractors Based Upon “Economic Realities” Client Alert - January 2021 Authored by Kathryn K. Forman On January 6, 2021, the United States Department of Labor released a Final Rule setting forth the factors to be considered in applying the “Economic Realities Test” to determine whether a worker properly can be classified as an independent contractor and thereby can be exempt from the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act, 29 U.S.C. § 203, et seq. (FLSA).

The Department has articulated that the “ultimate inquiry” in applying this test is whether the worker is dependent on the entity in question for work, and therefore is an employee, or is in business for him- or herself, and therefore is an independent contractor. The factors to be considered in making such a determination are identified as “Core Factors” and “Other Factors.”

The Core Factors are given more weight in the analysis and include (i) the nature and degree of control that the potential employer exercises over the work, and (ii) whether the worker has the opportunity to earn profits or incur losses.

An analysis of the nature and degree of the worker’s control over the work requires consideration of whether the worker exercises “substantial control” over the “key aspects of the performance of the work,” such as setting the worker’s own schedule, or whether the worker is permitted to work for others, possibly including the potential employer’s competitors. The Department expressly excludes from this analysis any mandates that a worker comply with legal obligations or health and safety standards, carry insurance, meet contractual deadlines or quality control obligations, or adhere to similar requirements typically included in independent contractor agreements. The ability to earn profits or incur losses would suggest that the worker is an independent contractor; a worker’s inability to affect his or her own earnings outside of meeting or exceeding the benchmarks of the potential employer’s compensation scheme favors an employee/employer relationship.

The three Other Factors identified by the Department include (i) the amount of skill required to complete the work; (ii) the degree of performance (which generally means whether the relationship is ongoing or for a limited purpose or period); (iii) and whether the work is part of an integrated unit of production. Circumstances suggestive of an independent contractor relationship include work that requires specialized training or skill that the employer does not provide, limited as opposed to indefinite engagements, and work that is segregable from, as opposed to integrated with, the potential employer’s production process. The Department has cautioned that the last factor is distinct from the question of the centrality or importance of the work to the potential employer’s business.

36 Consideration of other factors relating to economic realities is permitted, provided the additional factors address the actual practices taking place in the relationship between the worker and potential employer, as opposed to theoretical possibilities or abstract formalities of the relationship. For example, a contractual term that is not enforced cannot support a finding that a worker is an independent contractor.

Notably, the contours of the Final Rule suggest that under the federal regulation, a potential employer’s decision to offer benefits to an independent contractor would not be a dispositive factor in determining whether an employment relationship exists. Potential employers who wish to offer benefits to independent contractors should consult with legal counsel to evaluate the implications of modifying their existing agreements.

Notwithstanding the foregoing, many states’ laws, including New Jersey’s, establish different, and in some cases, more restrictive tests to evaluate whether a worker can be classified as an independent contractor. Potential employers intending an independent contractor relationship should consider both federal and state laws, and should be aware that state laws may require further action to ensure that their independent contractor classifications can be upheld if challenged.

Informative examples to guide application of the Final Rule are set forth at 29 C.F.R. § 795.115.

The Final Rule will be published in the Federal Register on January 7, 2021, and will be set forth at 29 C.F.R. §§ 780, 788, and 795.

Please contact a Porzio attorney for additional guidance on this topic.

Potential employers who wish to offer benefits to independent contractors should consult with legal counsel to evaluate the implications of modifying their existing agreements.

37

The Department has articulated that the “ultimate inquiry” in applying this test is whether the worker is dependent on the entity in question for work, and therefore is an employee, or is in business for him- or herself, and therefore is an independent contractor.

38

Employers Will Soon Face Increased Scrutiny Of Restrictive Covenants With Employees Employment Law Monthly - July 2021 Authored by Vito A. Gagliardi, Jr. and Melanie D. Lipomanis With every new administration comes a new choreography to which an employer’s policies and practices must adapt. The key to managing a productive workforce without missteps is to stay informed about the changes on the horizon, review and rework existing workplace policies to ensure they will pass any new regulatory scrutiny. This article discusses reasonably anticipated changes in the employment context that will have a significant impact on many employers in the Garden State. Employers that rely on non-compete agreements to protect their business interests should closely watch these developments and prepare for necessary adjustments to their employment practices.

Restrictive Covenants/Non-competes On July 9, 2021, President Biden issued an Executive Order that seeks to advance aggressive legislative reforms to curtail employers from widespread use of restrictive covenants, i.e., non-compete clauses and other agreements that limit employees’ ability to change jobs, including their ability to accept work with the employer’s direct competitors. Although recent reporting speculates on the potential impact on the enforceability of non-compete agreements, the actual text of the Executive Order reaches further as it applies to non-compete provisions “and other clauses or agreements that may unfairly limit worker mobility.” This language arguably may preclude other restrictive covenants that currently are permissible in most states, such as customer non-solicitation provisions, employee non-poaching clauses, no-hire agreements with competitors, and non-servicing provisions. All such agreements that restrict workforce mobility may be subject to scrutiny if the employer is unable to articulate a legitimate protected business interest that the agreement purports to preserve -- other than a mere competitive advantage.

The Order established a White House Competition Council within the Executive Office of the President which consists of the heads of most of the major federal agencies, including the Secretary of Labor, which tasks the agencies to work with the Federal Trade Commission in promulgating regulations consistent with the Executive Order and to investigate, curtail and penalize such proscribed agreements.

Employers who routinely require all employees to sign restrictive covenants as a condition of employment need to rethink the purpose of this practice. If the primary goal is to stifle competition, the agreement itself would not likely be enforceable and may subject the employer to investigations and/or penalties in the coming months. This is particularly true where most of the workforce subject to a restrictive covenant are entry- or low-level employees with little access to trade secret-level information, which effectively undermines the employer’s justification that the agreements are effective in preventing the disclosure of trade secrets or proprietary information.

Legislative disfavor of non-compete agreements has been increasing in recent years in a number of jurisdictions. Several states, currently California, North Dakota, Montana, and Oklahoma, have enacted outright prohibitions on employee non-compete agreements in all or nearly all circumstances. Early in 2021, Washington, D.C. enacted its own ban on non-competes. Other jurisdictions prohibit or limit enforcement for certain types of employees, such as low-wage or entry-level workers, while others, such as Massachusetts, require payment to the employee during the restricted period. Where employers present existing employees with non-compete agreements, quite a few state courts have found that mere continued employment was not sufficient consideration to enforce a non-compete agreement after employment already has started.

39

Employers are not without protections from employees’ disclosure of legitimate proprietary information. Many states have laws prohibiting trade secret misappropriation and disclosure and provide effective legal redress for such disclosures. For example, the New Jersey Trade Secrets Act provides comprehensive protections and remedies available to employers seeking to protect their business interests. The Act not only prohibits actual misappropriation of an employer’s trade secrets, but also permits an aggrieved employer to seek court redress with the misappropriation that is being threatened. The damages and equitable relief available to employers under the Act is very broad, including injunctive relief for a necessary period of time in order to eliminate any economic advantage caused by the misappropriation; actual damages caused by the unlawful misappropriation; and an award of reasonable attorneys’ fees and punitive damages in an amount not to exceed twice of the total award for actual damages, including unjust enrichment if the court finds the liable party to have “acted willfully and maliciously.”

Further, under New Jersey’s statute, “trade secret” is broadly defined as “information . . . without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process,” that has economic value, “actual or potential,” that is not known to others, and who might derive economic value from its use, and that is subject to an employer’s reasonable efforts to maintain its secrecy. N.J.S.A. 56:15-2.

Takeaway No longer will one-size-fit-all in restrictive covenant agreements with employees. Employers should be informed about, and prepared to quickly act upon, the statutory protections available to them instead of relying solely on private agreements to protect legitimate business interests. Restrictive covenant agreements should be used sparingly and only for high-level employees that pose an actual threat of misappropriation of the employer’s trade secrets and proprietary information. The agreements should be tailored narrowly to the specific employee and delineate the employee’s job title, duties, specify the confidential or proprietary information to which they have access, and the nature and extent of that access, to establish irrefutably the level of risk for his or her potential misappropriation. Agreements that contain any provision not clearly applicable to the employee in question will face higher scrutiny and likely be found to be unenforceable by a court of law.

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There Are Zero Reasons Not To Enforce Zero-Tolerance Policies Prohibiting Discriminatory Workplace Language Employment Law Monthly - June 2021 Authored by Kathryn K. Forman Quoting the seminal case of Lehmann v. Toys R Us, Inc., the New Jersey Supreme Court recently reminded employers, “‘As community standards evolve, the standard of what a reasonable [person] would consider harassment will also evolve.’ That holds true today as well.” Rios v. Meda Pharmaceuticals, Inc., (June 16, 2021) (quoting Lehmann v. Toys R Us, Inc., 132 N.J. 587, 612 (1993)).

In the Rios decision, the Court applied its 1998 holding in Taylor v. Metzger to reverse an Appellate Court decision upholding a trial court’s grant of summary judgment against a plaintiff who alleged his supervisor had made two remarks to him wherein she used a slur to describe people of Hispanic origin. In so holding, the Court clarified its standard for evaluating whether and when single utterances of racial epithets create a hostile work environment violative of the New Jersey Law Against Discrimination (NJLAD), N.J.S.A. 10:5-12, et seq. Employers evaluating their anti-harassment and anti-discrimination policies following the Rios decision should ensure that they are implementing, maintaining, and training employees and supervisors on zero-tolerance policies that expressly prohibit harassing and discriminatory workplace language.

Evolution of the Law on Single Utterances, from Lehmann to Rios For nearly three decades, New Jersey Courts analyzing whether an employee has suffered harassment violative of the New Jersey Law Against Discrimination have been guided by three words: “severe or pervasive.” See Lehmann v. Toys R Us, Inc., 132 N.J. 587, 606-607 (1993). The standard for measuring whether conduct is sufficiently “severe or pervasive” to violate the law depends on whether a reasonable member of a plaintiff’s protected class (i.e., race, gender, religion, national origin, etc.) would believe “the conditions of employment are altered and the working environment is hostile or abusive.” Lehmann, 132 N.J. at 603-604. In articulating this standard, the New Jersey Supreme Court anticipated that “it will be a rare and extreme case in which a single incident will be so severe that it would, from the perspective of a reasonable [person] make the working environment hostile.” Id. at 606-607. The Court recognized, however, that “such a case is certainly possible” and that “[n] o purpose is served by allowing that harm to go unremedied merely because it was brought about by a single, severe incident of harassment rather than by multiple incidents of harassment.” Id. at 607.

41

Five years later, the Supreme Court had occasion to address the single-incident scenario, and held that although “[u]sually repeated racial slurs must form the basis for finding that a hostile work environment has been created[,]” a remark setting forth an “unambiguously demeaning racial message” could be “sufficiently severe to contribute materially to the creation of a hostile work environment.” Taylor v. Metzger, 152 N.J. 490, 500-502 (1998). There, the plaintiff’s highest level supervisor had uttered a term1 on the basis of plaintiff’s African American race that that court described as “patently a racist slur, and . . . ugly, stark and raw in its opprobrious connotation.” Taylor, 152 N.J. at 502.

Although lower courts have been free to interpret the applicability of the 1998 Taylor decision to various circumstances, the Supreme Court did not opine again until June 2021 as to any other scenario in which a single utterance of a racial epithet might be sufficiently severe or pervasive to create a hostile work environment. In the recent case of Rios v. Meda Pharmaceuticals, Inc., an employee alleged that his supervisor directed to him, on two occasions, a racial slur relating to his Hispanic origin. Rios v. Meda Pharmaceuticals, Inc., (June 16, 2021). Specifically, the employee alleged that his supervisor said, in the context of the employee’s plan to buy a new house, “it must be hard for a [redacted] to have to get FHA loans.” Rios,. at 2. The employee further alleged that his supervisor commented, on a separate occasion, that an actress being considered for casting in a company commercial, “would work if she didn’t look too [redacted]-y.” Despite recognizing that the utterances contained “a national origin epithet that even if uttered only twice, could have met the severity requirement and sustained a hostile work environment claim” the Appellate Division affirmed the trial court’s dismissal of the case based on the “absence of evidence that Rios faced adverse employment consequences because of his complaints about Cheng-Avery’s comments, and on the lack of corroboration for his testimony.” Id. at 6. Chief Justice Rabner, writing for a unanimous Court, held that the two slurs were, in fact, sufficiently severe or pervasive to create a hostile work environment in violation of NJLAD, and reversed and remanded the case for trial. Id. at 3.

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Following the Rios decision, it remains a best practice to maintain “zero-tolerance” policies expressly prohibiting all employees and supervisors from using any harassing or discriminatory language in the workplace, and to ensure that all employees are trained on such policies.

Significance of the Rios Decision The Rios decision is significant for several reasons. First, the decision clarifies that the Supreme Court’s reasoning in Taylor applies to racial epithets outside of the most egregious slurs directed to African-American persons, as well as slurs that are uttered in the context of comments or remarks that do not constitute direct incidents of name calling. This suggests that lower courts may be more likely, going forward, to take a more liberal approach to evaluating whether a single utterance meets the “severe or pervasive” standard. Also notable, the remarks alleged both in Taylor and the instant case were attributed to a supervisor, and the Court opined, “Cheng-Avery’s position as a supervisor compounded the severity of the alleged remarks. Taylor emphasized the overarching responsibilities of a supervisor to prevent and put an end to racial harassment in the workplace.” Id. at 17 (citing Taylor, 152 N.J. at 503-05.) This suggests that lowers courts may apply a higher standard to remarks made by supervisors, as opposed to those made by non-supervisory co-workers, in deciding whether such remarks create a hostile work environment. Finally, the Court recognized the alleged failure to act on the part of individuals to whom Plaintiff claims he complained, and noted that this also contributed to the possibility that a reasonable person of Hispanic origin in the plaintiff’s position would have felt the work environment was hostile. This suggests that lower courts may reach varying outcomes in cases where an employer’s reporting and remediation mechanisms function effectively.

Best Practices Following Rios Following the Rios decision, it remains a best practice to maintain “zero-tolerance” policies expressly prohibiting all employees and supervisors from using any harassing or discriminatory language in the workplace, and to ensure that all employees are trained on such policies. Employers should offer separate training for supervisors, not only regarding these policies, but regarding how to respond properly to reports of harassment and discrimination, and should appoint qualified persons to investigate and address all complaints promptly, even if an employee alleges only a single, indirect utterance of a slur connected with a legally protected status, and even if the allegation is made by a co-worker, rather than a supervisor. Employers are encouraged to outline this process in their employee handbooks, and to instruct employees to document each step taken in furtherance thereof.

1

Out of respect for our readers, we do not share in this article the precise epithets used and have redacted them from cited quotations. Readers who believe this information to be useful are free to reference the cited case law or to contact a Porzio attorney for assistance in locating a copy of the Court’s original language.

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The Employer’s Life Vest For The American Rescue Plan Employment Law Monthly - April 2021 Authored by Janelle Edwards-Stewart What you may have heard.

The American Rescue Plan Act (ARPA), which was signed into law on March 11, 2021, cost $1.9 Trillion. It will deliver payments of $1,400 to individuals, $2,800 to married couples, and $1,400 for each dependent.

What you need to know.

Besides offering aid to individuals and families, the ARPA brings aid and obligations to public and private employers. Building on previously enacted aid measures from 2020 (i.e., the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Families First Coronavirus Response Act (FFCRA); and the Consolidated Appropriations Act (CAA)), the ARPA contains key provisions that benefit businesses and employees by, among other things, expanding leave availability, incentivizing and enabling employee retention, and providing direct aid for business operations.

(1) PAID LEAVE Employers may provide additional paid sick and family leave for illness, quarantine, and caregiving.

Following the December 31, 2020 expiration of the FFCRA’s paid sick and family leave mandate, employers could voluntarily provide such leave, and receive refundable tax credits, through March 31, 2021. The ARPA expands these voluntary FFCRA offerings and makes corresponding tax credits available through September 30, 2021.

44 (a) Sick leave Employers can offer, and receive tax credit, for up to 10 days of paid sick leave, beginning April 1, 2021.

These days are separate from, and in addition to, the paid sick leave provided for a covered reason prior to April 1, 2021. In other words, if an employee previously took 10 paid sick days due to a COVID-related quarantine, the employee can take another 10 paid days for a covered reason.

The list of six reasons for paid sick leave covered under the FFCRA has been expanded to nine.

The newest three reasons include the following: (1) obtaining a COVID-19 immunization shot; (2) recovering from an injury, disability, illness or condition related to the immunization; and (3) seeking or awaiting the result of a COVID-19 test or diagnosis when the employee has either been exposed to COVID-19 or the employer has requested the test or diagnosis.

Previously, employers that provided voluntary paid sick leave would receive a tax credit, of up to $511 a day, at the employee’s regular rate of pay if the employee was on leave due to coronavirus quarantine, self-quarantine, or had symptoms. The ARPA now includes three additional covered reasons for receiving tax credits at the employee’s regular rate of pay. For any other paid sick leave reason, the amount of tax credit available to an employer is calculated at two-thirds the employee’s regular rate of pay and capped at $200 a day. (b) Family leave Employers can offer, and receive tax credit, for up to 12 weeks of paid family leave, beginning April 1, 2021.

The list of qualifying reasons for emergency family leave under the FFCRA has been expanded.

Previously, tax credits were available to employers who provided family leave if an employee was unable to work or telework due to the need to care for a child whose school or place of care was closed or unavailable because of a public health emergency. Presently, employers can claim tax credits for providing family leave for any of the nine qualifying reasons for paid sick leave (i.e., the six qualifying reasons under the FFCRA and the three reasons added under the ARPA).

Formerly, employers that provided paid family leave received a tax credit, of up to $200 a day, at two-thirds the employee’s regular rate of pay for family leave due to a covered reason. The ARPA removes the FFCRA’s unpaid, two-week waiting period for taking paid emergency family leave. The ARPA also increases the cap on the aggregate paid leave from $10,000 to $12,000 per employee.

Employers may not discriminate in administering either form of paid leave.

A new rule bars tax credit for any employer that discriminates in favor of highly compensated employees, full-time employees, or on the basis of the employment tenure in providing paid leave.

(2) EMPLOYEE RETENTION CREDIT The employee retention credit (ERC) introduced under the CARES Act helped incentivize employers to keep their employees on payroll by offering refundable tax credit based on the amount of qualified wages paid to certain employees.

45 Under the CARES Act, eligible employers could claim credit against 50% of qualified wages paid between March 13 and December 31, 2020, up to $10,000 per employee annually.

Subsequently, the CAA permitted eligible employers to claim credit against 70% of qualified wages paid up to $10,000 per employee per quarter for the first two quarters of 2021.

The ARPA extends the availability of the ERC from June 30, 2021 to December 31, 2021.

It also permits eligible employers to claim credit against 70% of qualified wages up to $10,000 per quarter, such that up to $28,000 could be claimed for 2021. In addition, the ARPA expands employer eligibility to include (1) a recovery startup business (a company that began carrying on a trade or business after February 15, 2020, has average annual gross receipts of up to $1 million, and is otherwise ineligible under the eligibility test); and (2) severely financially distressed employers (businesses with gross receipt reductions of more than 90% as compared to the same quarter in 2019).

(3) COBRA Subsidy The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees to continue coverage under their employer’s health insurance for up to 18 months after coverage is lost because of a reduction in work hours or the employee’s involuntary termination.

Employees were fully responsible for premium payment.

Beginning April 1, 2021, the ARPA provides up to six months of 100% subsidized COBRA coverage to eligible COBRA recipients. The premium subsidy extends through September 30, 2021, and employers will receive reimbursements for the subsidy through a payroll tax credit. The subsidy does not extend an employee’s maximum period of COBRA coverage, but it does allow for qualified employees to retain COBRA coverage at no cost during the subsidy period. Employers have an obligation to notify impacted employees of the ARPA’s COBRA provisions.

(4) RESTAURANT REVITALIZATION GRANTS The ARPA establishes $28.6 billion in a Restaurant Revitalization Fund for 2021 to be administered by the Small Business Administration (SBA). An eligible entity can receive a grant that is equal to the amount of the pandemic-related revenue loss of the entity, which is defined as the gross receipts of the eligible entity during 2020 subtracted from the gross receipts of the eligible entity in 2019. There is a cap of $5 million per location and an aggregate cap of $10 million.

Eligible entities include an expansive list, including restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, certain breweries, wineries, distilleries or other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink. Five billion dollars of the fund will be allocated to restaurants whose gross receipts in 2019 were less than $500,000, and the first 21 days of the program prioritizes small businesses owned by women, veterans, or socially and economically disadvantaged individuals.

Grant amounts may be used to cover payroll costs, mortgage payments, rent, utilities, food and beverage expenses, covered supplier costs, maintenance expenses, operational expenses, paid sick leave, and supplies. Grant amounts received from the restaurant revitalization fund will not be treated as taxable income, and expenditures paid with such grant amounts will still be deductible.

46

(5) SHORT-TIME COMPENSATION Short-time compensation (STC) programs allow employers to avoid employee layoffs by implementing a reduction in hours.

Those workers whose hours are reduced may receive prorated unemployment benefits.

The CARES Act permitted states to receive 100% reimbursement from the federal government for unemployment benefits paid under STC programs, until July 1, 2021. The ARPA extends the reimbursement to September 6, 2021. Presently, 27 states have qualifying STC programs, including New Jersey, Massachusetts, New York, and Pennsylvania.

(6) PAYCHECK PROTECTION PROGRAM (PPP) The ARPA modifies the PPP to clarify that the Small Business Administration affiliation rules will not apply to certain applicants.

Specifically, 501(c)(3) organizations that employ not more than 500 employees per physical location of the organization are eligible for the program. The law also provides an additional $7.25 billion for the program. The PPP’s current application deadline of March 31, 2021, was not extended.

What you know now.

The ARPA is a robust piece of legislation that seems to have something for everyone. It is our intention to ensure that businesses have a clear understanding of what the new law has for them: additional time, additional funds, and additional ways to support and maintain the employees that will keep business going strong throughout the pandemic.

Building on previously enacted aid measures from 2020 (i.e., the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Families First Coronavirus Response Act (FFCRA); and the Consolidated Appropriations Act (CAA)), the ARPA contains key provisions that benefit businesses and employees by, among other things, expanding leave availability, incentivizing and enabling employee retention, and providing direct aid for business operations.

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The U.S. Equal Employment Opportunity Commission Proposes New Rules Governing Workplace Wellness Incentives Client Alert – February 2021 Authored by Kathryn K. Forman On January 7, 2021, the EEOC proposed a new rule to ensure that workplace wellness programs, which must be voluntary in order to comply with the Americans with Disabilities Act (ADA), truly are voluntary in their implementation. For purposes of the proposed rule, a wellness program is a “program of health promotion or disease prevention that includes disability-related inquiries or medical examinations.” Wellness programs that do not require employees to provide information in response to “disability-related inquiries” such as health risk assessments and biometric screenings, or to undergo medical examinations in order to participate, are not governed by the proposed Rule.

The proposed rule would amend two sections of the ADA regulations: 29 CFR 1630.14(d), medical examinations and inquiries specifically permitted, and 1630.16(f), health insurance. Pursuant to the amendments, the incentive for participating in a wellness program must be de minimis. This reflects a departure from the EEOC’s 2016 Rule, which permitted incentives as significant as a 30% discount on self-only health insurance premiums. The EEOC rescinded the incentive portion of its 2016 Rule after losing a federal court challenge on the basis that plans with incentives that are too valuable are not voluntary in practice because they do not give employees a “meaningful choice” as to whether to participate. The EEOC does not define de minimis incentive in the proposed rule, but offers two examples, «a water bottle or a gift card of modest value,» and invites comment as to other examples, apparently in anticipation of adopting a more robust final rule.

Group health plans, or entities that qualify as group health plans, are not subject to the limitation on incentives set forth in the proposed rule, as a “safe harbor” provision recognizes that other federal laws govern such plans’ award of incentives or imposition of penalties on the basis of a participant’s satisfaction of certain health-related standards. Notwithstanding, these plans still must meet a four-factor test set forth in the proposed rule, or risk losing the protection of the safe harbor.

The EEOC also has proposed a companion rule that would amend 29 CFR 1635.8, of the regulations of the Genetic Information Nondiscrimination Act (GINA). Currently, GINA prohibits offering any incentives. This proposed rule sets forth exceptions to the prohibition on offering an incentive for wellness program participants to provide genetic information, permitting a de minimis incentive to an employee «whose family member provides information about the family member’s manifestation of disease or disorder to a wellness program” as well as “to encourage individuals who have provided genetic information . . . that indicates that they are at increased risk of acquiring a health condition in the future” to participate in certain programs, provided the same programs also are offered “to individuals with current health conditions and/or to individuals whose lifestyle choices put them at increased risk of developing a condition.” The proposed amendment to the GINA regulations also requires that covered employers obtain proper authorizations from wellness program participants and observe certain non-disclosure requirements. It is noted that a wellness program that offers an incentive may comply with GINA where it is made clear to participants that they will not be disqualified from any incentive on the basis of their refusal to provide requested genetic information.

The EEOC has forwarded the proposed rules for publication in the Federal Register, at which time the 60-day comment period will open. Until such time as a final rule is announced, employers should ensure that their wellness programs comply with existing rules and other applicable laws, including those relating to confidentiality, as well as all other applicable federal or state-level anti-discrimination laws. Employers also may wish to evaluate any incentives they offer as part of their wellness programs in order to ensure that the value of the incentives does not undermine the intended voluntary nature of such programs.

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“No Credible Threat” Of Federal Liability: NJ Supreme Court Orders That Employer Reimburse Injured Employee’s Costs For Medical Cannabis Client Alert - April 2021 Authored by Matthew J. Donohue On April 13, 2021, the New Jersey Supreme Court, in a unanimous decision, found an employee was entitled to costs for prescribed medical marijuana under the Workers’ Compensation Act (“WCA”). The decision – Hager v. M&K Construction – centered on an M&K Construction employee who injured his back in a work-related incident. The employee treated with prescribed opioids, but the treatment was ineffective, so he enrolled in New Jersey’s medical marijuana program. Shortly thereafter, a workers’ compensation court ordered the employer to reimburse the employee for his ongoing medical marijuana costs due to the employee exhibiting permanent disability. The Appellate Division affirmed the workers’ compensation court’s decision, and the matter was appealed to the New Jersey Supreme Court.

The most interesting aspect of the Supreme Court’s decision was the analysis related to the interplay between federal and state laws. The employer argued because cannabis remains illegal under the Controlled Substances Act (“CSA”), the federal government could potentially issue federal charges against the employer if forced to pay for an employee’s possession of cannabis, even if medically prescribed. The Supreme Court noted that while a “tectonic shift” has occurred in New Jersey regarding the use of both medical and recreational cannabis, the CSA must be considered to determine whether the United States Constitution Supremacy Clause pre-empted New Jersey’s laws. The Supreme Court of the United States has interpreted this Clause to mean “that if there is any conflict between federal and state law, federal law shall prevail.” See Gonzales v. Raich, 545 U.S. 1, 29 (2005).

The New Jersey Supreme Court found that state medical cannabis laws are not pre-empted by the CSA due, in part, to the United States Congress, through annual appropriations riders, prohibiting the Department of Justice from using federal funds to interfere with those acting in compliance with state medical cannabis laws. Citing a previous United States Supreme Court decision (i.e. Wyeth v. Levine, 555 U.S. 555 (2009)), the New Jersey Supreme Court determined the CSA was effectively “suspended” in relation to medical cannabis, and joined the New Hampshire Supreme Court as one of only two highest state courts to find medical cannabis laws not pre-empted by the CSA. Id. at 575 (SCOTUS concludes federal pre-emption argument is “particularly weak where Congress has indicated its awareness of the operation of state law in a field of federal interest, and has nonetheless decided to . . . tolerate whatever tension there [is] between them.”)

Other states’ highest courts have reached the opposite conclusion. See, e.g., Wright’s Case, 156 N.E. 3d 161, 175 (Mass. 2020) (concluding that the plain language of the state reimbursement limitation provision prohibited compelling workers’ compensation insurers to reimburse the cost of medical marijuana); Bourgoin v. Twin Rivers Paper Co., 187 A.3d 10 (Me. 2018).

These dueling interpretations eventually may set the stage for the Supreme Court of the United States to take up the federal pre-emption issue regarding medical and/or recreational cannabis. For now, the New Jersey Supreme Court has clarified that employers will have to reimburse employee’s medical cannabis costs in certain fact-specific scenarios.

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Adult-Use Cannabis and Employee Protections: The Difficulties Of Enforcing New Jersey’s Proposed Recreational Cannabis Law Employment Law Monthly – January 2021 Authored by Matthew J. Donohue On December 17, 2020, the New Jersey Legislature passed the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“NJ CREAMMA”), i.e. the enabling legislation for New Jersey’s adult-use cannabis program. To date, Governor Murphy has refused to sign the bill due to a dispute over penalties for underage possession of cannabis, placing adult-use cannabis in limbo — legal under the November 3, 2020 ballot initiative, but without any legal, regulated framework or commercial marketplace to speak of.

The Governor’s Office and Legislature are expected to iron out these issues via an amendment and enact the bill into law in the near future, permitting “personal” or adult-use (recreational) consumption of cannabis and cannabis products by individuals twenty-one (21) years of age or older. NJ CREAMMA also contains new employment protections – akin to those currently afforded to New Jersey medical cannabis patients – prohibiting an employer from taking adverse action against an employee for legal personal use of cannabis during off-hours.

As a practical matter, these new employment protections likely will have no effect until there is state-legal cannabis to be purchased and consumed by New Jersey residents; NJ CREAMMA must first be signed into law, regulations issued by the Cannabis Regulatory Commission (“Commission”) (a new entity not yet fully formed), and adult-use licenses awarded to existing alternative treatment centers (i.e. medical cannabis businesses) and/or new adult-use licensees.

For comparison, it took Massachusetts approximately two (2) years after legalizing adult-use cannabis before a legal cannabis product was available for purchase. Therefore, New Jersey employees currently using cannabis absent a medical marijuana card likely would lack employment protection despite the November 3 ballot initiative.

50 However, even after New Jersey’s adult-use cannabis program is established, NJ CREAMMA’s employment protections will be exceptionally difficult for employers to enforce due to the challenges inherent to cannabis drug-testing generally. States that legalized recreational cannabis in 2016, such as Massachusetts, Maine, and California, continue to struggle with the interplay between employee protections and legalized recreational cannabis. This article provides an in-depth breakdown of the proposed New Jersey employment protections, a comparison of similar laws in other states, and potential employer concerns.

Upon passage of New Jersey’s proposed law, employers can no longer refuse to hire, terminate or take any other adverse action against an employee solely because of legal cannabis consumption while away from the workplace. These employment protections likely only extend to individuals consuming state-regulated adult-use cannabis, which currently does not exist. When adultuse cannabis is made legally available, employers will be required to follow the aforementioned rule with some exceptions. For example, employers retain the right to maintain a drug-free workplace, and employees cannot engage in personal use cannabis activities on work premises. Employers are also permitted to conduct random drug tests upon reasonable suspicion of cannabis usage while the employee is engaged in the performance of work responsibilities.

Although these provisions might seem needlessly complicated, New Jersey is attempting to avoid employment issues other states with adultuse markets continue to experience. For example, in 2016, California residents approved a voter referendum, Proposition 64, which permitted adults twenty-one (21) years of age and over to possess and grow specified amounts of cannabis for recreational use. Similarly, Massachusetts and Maine became the first East Coast states to tax and regulate adult-use cannabis. Yet despite the four (4) year head start, the state legislatures for California and Massachusetts have not enacted protections for employees consuming adult-use cannabis during nonwork hours. In 2019, a Massachusetts cook tested positive for cannabis metabolites, and was subsequently fired despite being a model employee and only using legal, adult-use cannabis. The Massachusetts Legislature is still considering a bill, which would mirror the language contained in New Jersey’s provision.

California employees have even less protections. California employers may discipline or terminate an employee for either medicinal or recreational cannabis use. In March 2020, California Assemblyman Rob Bonta introduced AB 2355 to prohibit employers from refusing to hire, discipline or terminate employees for utilizing medicinal cannabis. The bill did not receive the requisite support in the California Legislature. The only states to enact employee protections for adult-use cannabis are Nevada and Maine. Maine became the first state to enact these employment protections in 2018, but it took another two (2) years before adult-use cannabis dispensaries were permitted to sell products.

Even if New Jersey is able to learn from the mistakes of other states, myriad issues make it practically impossible for employers to test employees for suspected illicit cannabis use. The bill states that an employer may test upon reasonable suspicion, and a “drug test may also be done randomly by the employer, or as part of a pre-employment screening, or regular screening of current employees to determine use during an employee’s prescribed work hours.” But testing for cannabis impairment/intoxication is notoriously unreliable. Accordingly, the New Jersey bill requires that all employers utilize “scientifically objective testing methods and procedures” (e.g., blood, urine or saliva test) in addition to a physical evaluation performed by a certified “Workplace Impairment Recognition Expert.” Currently, though, there is no “Workplace Impairment Recognition Expert” certification program. NJ CREAMMA requires the Commission to create regulations to effectuate the legislation, but this process may not be completed until July 2021, as the Commission must create these regulations either within one hundred eighty (180) days of the Governor signing the bill into law, or within forty-five (45) days of the Commission begin fully appointed, whichever is later.

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Upon passage of New Jersey’s proposed law, employers can no longer refuse to hire, terminate or take any other adverse action against an employee solely because of legal cannabis consumption while away from the workplace.

The lack of an affordable, reliable method to determine whether an employee is currently under the influence of cannabis remains extremely problematic. Unlike blood alcohol content, the presence of cannabinoid metabolites in an individual’s bodily fluids does not generally indicate intoxication. The bill does not provide a threshold level of cannabinoid metabolites that would constitute legal impairment, which will need to be determined by the Commission. One final wrinkle contained in the legislation: although the general rule prohibits employers from taking adverse action against an employee “solely” for utilizing cannabis during non-work hours in accordance with the bill, the employer can penalize the employee if the employer would be in violation of a federal contract or lose federal funding.

Although there is currently no legal, regulated adult-use cannabis market, New Jersey employers should review and revise their workplace policies now. Policies should balance the need to ensure employees are not penalized solely for cannabis usage while off-duty, but also remind employees that cannabis usage in the workplace is prohibited.

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Impact Of The Legalization Of Marijuana On Public Employers Client Alert – March 2021 Authored by David L. Disler and Kevin Craig After months of anticipation, Governor Murphy signed into law three bills making New Jersey the 14th state to legalize the recreational use of marijuana. While the impact of these new laws is widespread, the actual sale of legal marijuana remains months away as the yet-to-be created Cannabis Regulatory Commission still must issue regulations that govern the sale and distribution of a legalized cannabis product. However, effective immediately, it no longer is a crime for adults 21 years of age or older to possess or use up to 6 ounces of marijuana. Similar to alcohol, marijuana usage remains unlawful for minors. However, to further the Governor’s goal to reduce the number of minors involved in the criminal justice system, the law narrows the guidelines to arrest a minor who uses marijuana and only provides for minimal penalties for minors who are convicted. The new law will make marijuana usage far more commonplace in New Jersey. This impacts public entities as an employer and as institutions responsible for the health and safety of those inside their buildings. Public entities should review their policies from an employment perspective to account for the new law. They further should contact their local police departments to discuss the best course of action when addressing underage use and how to best navigate any changes in the way law enforcement may respond to these incidents when reported by employees or observed by police on public property

Employment Protections The new law contains employment protections that prohibit an employer from taking adverse action or otherwise discriminating against an employee or potential employee for the legal, personal use of marijuana during non-working hours. This includes during both the hiring process and once the employee is hired. The law applies to public and private employers, including school districts. However, these employment protections only extend to individuals using legalized marijuana.

As a result, these provisions will not become effective until the yet-to-be created Cannabis Regulatory Commission creates regulations that govern the sale and distribution of a legalized cannabis product. The law requires the Commission create the regulations within 180 days of the Governor signing the bill.

However, should the Commission take months to be fully operational, the bill does allow this deadline to be extended to 45 days after the Commission is fully appointed. As a result, finalization of the regulations is not anticipated until late 2021. At that point, the distribution and sale process will need to be fully operational for individuals to lawfully purchase cannabis. Based on the present circumstances, it remains unclear when this process will be up and running. For comparison, it took Massachusetts approximately two years after legalizing recreational marijuana before a legal product was available for purchase. It only is at that point -- when individuals in New Jersey can legally purchase cannabis -- that the employment protections will apply

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Recommendations Once legalized cannabis products are made available, public entities will be required to comply with the employment protections.

However, public entities will continue to retain the right to maintain a drug-free workplace and can prevent employees from engaging in personal use cannabis activities on public property, during working hours, or during extracurricular activities. Public entities also may conduct random drug tests upon reasonable suspicion of cannabis usage while the employee is engaged in the performance of work responsibilities and may conduct pre-employment drug screenings (although the law prohibits candidates from being denied employment based solely on a positive test).

When an employee is suspected of being under the influence while at work, the law provides a process that must be used before the district can discipline the employee. Unlike alcohol, there is no affordable, reliable scientific method to determine whether an employee is currently under the influence of marijuana. In order to discipline an employee suspected of being under the influence, the district will have to perform a physical evaluation completed by a certified “Workplace Impairment Recognition Expert,” to be followed by a drug test (e.g., blood, urine, or saliva test) to confirm that marijuana was in the employee’s system. At the present time, it is unclear what will be required to become a certified “Workplace Impairment Recognition Expert” beyond that this individual will need to be certified by the Commission.

Unlike alcohol, there is no affordable, reliable scientific method to determine whether an employee is currently under the influence of marijuana.

Action Steps We recommend public entities take the following steps: • Review and revise their policies to ensure the policies comply with the law’s new requirements.

• Set clear expectations to all employees that the public entity maintains a drug-free workplace and that all employees are prohibited from: (1) using marijuana on school grounds, during working hours, or during extracurricular activities (this would include while working virtually, even if doing so in their own home); and (2) being under the influence of marijuana during working hours and during extracurricular activities.

• Consider having one or more administrators or nurses become a certified “Workplace Impairment Recognition Experts.”

Conclusion Public employers should anticipate treating the use of cannabis the same way they treat the use of alcohol. For employees, districts should review their drug and alcohol policies to determine whether the present policies need to be revised.

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Reductions In Force: Recent Developments And Statutory Guidance Impacting Public Employers NJSBA School Leader – Fall 2021 Authored by David Disler A board of education is vested with the statutory authority to enact layoffs, or a reduction in force, under certain circumstances.

Boards can reduce staff, including teaching staff members, “for reasons of economy or because of reduction in the number of pupils or of change in the administrative or supervisory organization of the district or for other good cause…” However, there are a number of statutory requirements and new developments that boards must be aware of prior to implementing a RIF. Traditionally, boards have had substantial discretion in making employment decisions concerning non-certificated employees.

While secretaries can acquire tenure, there is no statutory seniority for secretaries (although there may be contractual seniority rights for secretaries). Janitors may earn tenure in certain circumstances, and would be subject to a RIF in preference to any other tenured janitor having a longer term of service. The dismissed janitors are placed on a preferred eligibility list in the order of years of service. However, for the most part, boards of education have had almost unfettered ability to terminate a nontenured, noncertificated staff member, either by way of a reduction-in-force, nonrenewal, or disciplinary action, so long as its decision was not arbitrary, capricious, or unreasonable.

This principle has drastically changed as the Legislature recently provided significant protections to non-certificated staff members.

In particular, two newly enacted laws allow non-certificated staff members the right to: (1) challenge before an arbitrator decisions that negatively impact their employment; and (2) make it far more difficult for the board to outsource these jobs. The practical impact of these laws is significant. Outsourcing has long been a means for boards that are struggling with immense economic constraints to achieve financial relief. This will result in boards having to resort to other means to meet their monetary obligations.

Boards also will be spending substantially more resources to defend its decisions to take disciplinary action, including non-renewals and terminations, related to its non-certificated staff members.

Non-Certificated Staffs’ Right to Arbitration (P.L. 2020, c. 66) Signed into law by Gov. Murphy, P.L. 2020, c. 66 (“Chapter 66”), allows all nonteaching staff members in public schools to arbitrate any “disciplinary action.” The law is exceedingly broad in its application. It applies to all board employees who are “not a teaching staff member,” which the law defines as all non-certificated employees. As the bill’s sponsors noted, the purpose of the bill was to provide such employees as “drivers, custodians, cafeteria workers and many other staff members [who] make critical contributions to school functionality,” protections similar to those provided to teachers.

Chapter 66’s definition of “discipline” also is broad. It includes, without limitation, all “reprimands, withholding of increments, termination or nonrenewal of an employment contract, expiration or lapse of an employment contract or term, or lack of continuation of employment.” As a result, this definition includes actions that courts previously held to be non-disciplinary in nature, such as the nonrenewal of an employment contract.

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The protections afforded to non-certificated staff are substantial. All non-certificated employees now have the right to submit to binding arbitration any of the aforementioned actions by the board. In the arbitration, the board has the burden to prove it had “just cause” in taking the disciplinary action. As the law’s sponsors noted, Chapter 66 allows these employees to challenge “whether any disciplinary action taken against them is fair and necessary” before an arbitrator.

The law is a substantial change to the longstanding legal principles and statutes that permitted school districts to effectively manage their workforce. For example, previously boards only were required to notify paraprofessionals whether or not they would be renewed for the upcoming academic year by May 15. The only ability to challenge this decision was for the employee to file a petition before the education commissioner. The employee had the burden to show the board’s decision was arbitrary, capricious, or unreasonable.

In sum, Chapter 66 allows all non-certificated board employees to submit all disciplinary actions to binding arbitration. The reason provided by the board — even if it is purely budgetary or economical (such as during a reduction in force) — will not prevent the matter from proceeding to arbitration and having an arbitrator decide whether the board had “just cause” in making its decision.

Practically speaking, boards will be forced to exert considerable financial and administrative resources to defend decisions. This includes having administrators take time away from their educational responsibilities to prepare for the arbitration and testify on behalf of the board during the arbitration. The result is that many boards no longer will take actions they believe are in the best interest of their students as they will conclude it is not worth the time, cost and resources to defend the decision.

56 Restrictions on Outsourcing (P.L. 2020, c. 79) Traditionally, outsourcing certain noninstructional programs and services has been an avenue boards of education have chosen when necessary to meet budgetary restraints. Boards were provided substantial latitude in entering into subcontracting agreements with private companies in such areas as paraprofessional and custodial services. As these decisions almost always were financial (providing substantial cost savings to the board) or educational, courts determined that boards had the managerial prerogative to implement a reduction-in-force and outsource certain positions.

Prior to the newly-enacted legislation, there were limited requirements boards had to meet in to privatize a position. This included notifying its employees of the decision and allowing the impacted employees to revise their terms and conditions of employment in an attempt to convince the board not to outsource the position. This typically meant that boards would meet with union representatives and the union would submit a proposal that provided the board with cost savings or other benefits, such as by amending their salary, benefits, or working hours. The board had complete discretion to accept or reject this proposal. If the board followed these simple statutory requirements, the employees’ only recourse was to challenge the decision before the commissioner as arbitrary and capricious (typically claiming anti-union animus).

P.L. 2020, c. 79 drastically changed the flexibility provided to boards of education when outsourcing or subcontracting services. Traditionally, boards had the ability to outsource services at any time. This meant that if the board ran into a budgetary shortfall due to an unexpected issue during the middle of a school year, it reserved the right to privatize certain services to meet its financial needs. The new law drastically restricts when outsourcing can take place. The law prohibits boards from entering into a subcontracting agreement while an existing collective negotiations agreement is in effect. Most boards of education enter into agreements with their unions that last between three and five years. As a result, most boards would be prohibited from subcontracting for years at a time.

The law also creates a number of procedural hurdles boards must overcome prior to subcontracting. Most critically, boards must provide the union with three-month advance written notice before it can seek bids for the services. This requirement, when coupled with the limitation that subcontracting can only occur upon expiration of a collective negotiations agreement, greatly restricts the timing of when boards can subcontract for services. It further requires substantial preparation by the board.

Similar to the prior law, the new law requires that the board meet with the union to discuss the decision to subcontract and provide the union the opportunity to convince the board not to subcontract. However, the new law also adds the additional requirement that the board must “engage in negotiations over the impact of subcontracting.” This likely includes negotiations over whether severance will be paid by the board. Employees who are dismissed as a result of their services being subcontracted retain previously acquired seniority and are provided “recall rights” should the subcontracting agreement terminate.

Finally, the law makes a number of areas a mandatory subject of negotiations. This includes “all aspects or actions relating to or resulting from [the board’s] decision to subcontract.” Explicitly included in the law is that severance pay has become a mandatory subject of negotiations.

Boards that fail to follow these rigid procedures will face severe repercussions. Boards will be “deemed to have committed an unfair practice.” Employees impacted by improper subcontracting will be reinstated and provided with back pay and back benefits. The board will also be responsible for the employees’ attorney fees.

As always, it is recommended that you consult with your board attorney for questions on specific situations.

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Giallombardo v. Kyriak: A Clarification Of The Punitive Damages Standard In “Case” You Missed It: Porzio’s Mediation & Arbitration Quarterly Newsletter Authored by Thomas J. Reilly In a recent decision, Giallombardo v. Kyriak, No. A-2295-19 (App. Div. May 10, 2021), the Appellate Division clarified the punitive damages standard and explained that a trial court cannot deny punitive damages on the basis of “conclusory findings” without discussion of the underlying facts, but rather must make a finding on the record with regard to each element of a punitive damages claim.

The case concerned a contract in which plaintiff agreed to loan defendant $600,000. In exchange, defendant agreed repay plaintiff within 45 days, and allowed plaintiff to hold as collateral certain real property that defendant owned. The property would be transferred to plaintiff if defendant did not repay the loan within 45 days.

Defendant never repaid the loan. After plaintiff requested that the property be transferred pursuant to the contract, defendant informed plaintiff that he did not actually own the property and had no power to transfer it.

Plaintiff then filed suit for breach of contract. After extensive motion practice and a plenary hearing regarding damages, the trial court awarded plaintiff $600,000 in damages, plus interest, but denied his application for punitive damages and attorneys’ fees.

Plaintiff appealed on those issues.

The Appellate Division reversed and remanded for further proceedings as to both attorney’s fees and punitive damages. With regard to attorney’s fees, the panel simply held that the parties’ contract required payment of legal costs and fees in the case of a default. On the issue of punitive damages, however, the panel provided a fairly expansive discussion of the requirements for an award of punitive damages.

To begin, the panel declined to adopt plaintiff’s argument that the trial court’s finding that defendant committed fraud automatically entitled plaintiff to punitive damages. Although it noted that fraud cases are particularly strong vehicles for an award of punitive damages, the panel explained, with support from prior case law, that fraud per se is not sufficient to meet the “special circumstances’ warranting punitive damages, and that there must be some additional “aggravating element” to sustain such damages. Nevertheless, the panel remanded the issue because the trial court did not “state the factual findings supporting its conclusion.” The panel explained that the trial court should have explained its conclusions and addressed each of the four statutory considerations for awarding punitive damages.

Takeaway There are thus two clear takeaways: (1) fraud is not sufficient, standing alone, to support punitive damages; and (2) a trial court must explicitly state its findings regarding punitive damages on the record, and must address each of the four statutory criteria relating to punitive damages.

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The Authors

Kerri A. Wright Principal and Editor-In-Chief (973) 889-4327 KAWright@pbnlaw.com

Richard H. Bauch Of Counsel (973) 889-4045 RHBauch@pbnlaw.com

Kevin M. Craig Assistant Vice President / Porzio Compliance Services (973) 889-4266 KCraig@porziocs.com

Vito A. Gagliardi, Jr. Principal (973) 889-4151 VAGagliardi@pbnlaw.com

Weston J. Kulick Associate (973) 889-4129 WJKulick@pbnlaw.com

Melanie D. Lipomanis Associate (973) 889-4287 MDLipomanis@pbnlaw.com

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David L. Disler Associate (973) 889-4133 DLDisler@pbnlaw.com

Janelle Edwards-Stewart Counsel (973) 889-4092 JEdwardsstewart@pbnlaw.com

Kathryn K. Forman Associate (973) 889-4046 KKForman@pbnlaw.com

Nicole T. Little Associate (973) 889-4127 NTLittle@pbnlaw.com

James G. Mottola Vice President / Porzio Compliance Services (973) 889-4277 JMottola@porziocs.com

Thomas J. Reilly Associate (973) 889-4283 TJReilly@pbnlaw.com

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