In the wake of the #MeToo movement, a number of states are considering legislation that would limit an employer’s ability to use non-disclosure agreements (“NDAs”) when settling sexual harassment claims. New York was the first state to enact such legislation, which was passed as part of a wide-ranging budget bill that takes effect July 11, 2018. New York’s law bans non-disclosure provisions in settlements of claims involving sexual harassment allegations, unless confidentiality is the “complainant’s preference,” provided some onerous procedures are complied with. Washington State passed a similar law. Arizona, California, and Pennsylvania are also considering legislation to restrict the use of NDAs.
This Ordinance, which was passed in September 2016, requires employers in Morristown, New Jersey to provide a certain amount of paid sick time per year depending on the size of the employer. Generally, employees who work more than 80 hours a year in Morristown will be covered under this Ordinance. The Morristown Ordinance is the 13th local paid sick leave ordinance enacted within New Jersey, following similar ordinances in the towns and cities of Bloomfield, East Orange, Elizabeth, Irvington, Jersey City, Montclair, Newark, New Brunswick, Passaic, Paterson, Plainfield, and Trenton.
Referred to by some courts as an “awkward theory” of liability, employers and supervisors should be aware that courts in New Jersey continue to recognize the viability of individual liability claims under the “aiding and abetting” provision of the New Jersey Law Against Discrimination, N.J.S.A. §10:5-12(e).
Personal Liability for Supervisors: Title VII vs. NJLAD
Unlike Title VII of the federal Civil Rights Act, which does not provide for individual employee liability, New Jersey courts have held that in addition to “employers” being liable under NJLAD, supervisors can be personally liable for their illegal conduct under an “aiding and abetting” theory. The New Jersey Supreme Court recently clarified the expansive definition of “supervisor” for purposes of the NJLAD as an employee who is (1) authorized to undertake tangible employment decisions affecting the plaintiff, or (2) authorized by the employer to direct the plaintiff’s day-to-day work activities. Aguas v. New Jersey, 220 N.J. 494, 529 (2015).
To hold a supervisor liable as an “aider and abetter” under the NJLAD, a plaintiff must show that the individual (1) performed a wrongful act that caused an injury; (2) was generally aware of his or her role as part of an overall illegal activity at the time that he or she provided the assistance; and (3) knowingly and substantially assisted in the principal violation. Tarr v. Ciasulli, 181 N.J. 70, 83084 (2004). Aiding and abetting requires “active and purposeful conduct.” Cicchetti v. Morris County Sheriff’s Office, 194 N.J. 563, 595 (2008).
What Makes this Aiding and Abetting Theory so “Awkward”?
Courts applying New Jersey law have yet to follow a uniform rule in situations where the plaintiff alleges that a supervisor aided and abetted the “employer” in violating the NJLAD based on the supervisor’s own conduct (i.e., as the sole actor engaged in the wrongful conduct). In other words, what happens when the supervisor is the only person alleged to have engaged in the wrongful conduct? Two distinct lines of cases have developed in this area of the law – one finding supervisory employees can be personally liable for aiding and abetting their own/the employer’s wrongful conduct (e.g., Hurley v. Atlantic City Police Dep’t, 174 F.3d 95 (3d Cir. 1999), and another refusing to impose individual liability (e.g., Newsome v. Admin. Office of the Courts of N.J., 103 F. Supp. 2d 807 (D.N.J. 2000). See Aiding and Abetting Your Own Conduct, New Jersey Law Journal, Volume 209 (July 16, 2012), Employment Counselor, Number 241 (Sept. 2010).
A string of recent decisions by New Jersey state and federal courts suggest that this “awkward” theory is here to stay. For example, in Yobe v. Renaissance Electric, Inc., 2016 WL 614425 (D.N.J. Feb. 16, 2016), the court denied a motion to dismiss the plaintiff’s NJLAD disability retaliation claims against his former supervisor, who was the only person alleged to have engaged in the retaliatory conduct. The defendant argued that the plaintiff’s claim failed as a matter of law because a supervisor cannot “aid and abet” his own conduct. Citing to the Third Circuit’s “prediction” in Hurley that the New Jersey Supreme Court would hold a supervisor personally liable under NJLAD, and an unpublished, non-precedential decision by the New Jersey Appellate Division in Rowan v. Hartford Plaza Ltd., 2013 WL 1350095 (App. Div. April. 5, 2013), the court in Yobe concluded that “[w]hile it is concededly an ‘awkward theory’ to hold an individual liable for aiding and abetting his own conduct, it would thwart the NJLAD’s broad and remedial purpose, and make little sense, to construe it as permitting ‘individual liability for a supervisor who encourages or facilitates another employee’s harassing conduct, while precluding individual liability for the supervisor based on his or her own discriminatory or harassing conduct.’”
Impact on Employers and Individual Supervisors
In discrimination, hostile work environment and retaliation cases brought under the NJLAD, it is common for a plaintiff to name his or her former supervisor as an individual defendant, particularly if the supervisor is the person who made the decision to take an adverse employment action against the plaintiff. Naming the supervisor, particularly a high-level manager, might be viewed by the plaintiff as a tactical move to encourage an early settlement by driving a wedge between the employer’s interest in defending its business decision and the supervisor’s reputational or financial impact concerns. Absent a showing of fraudulent joinder, a plaintiff’s naming of his or her supervisor as a defendant might prevent the employer from removing the action to federal court based on complete diversity of citizenship. In addition, legal fees could increase if separate legal representation for the employer and the supervisor is required. These important issues should be considered and discussed with counsel at the outset of the case. Because the NJLAD does not provide for individual liability for aiding and abetting if the employer is not found liable, the best defense is a unified one between the employer and the individual supervisor.
On August 11, 2014, New Jersey Governor Chris Cristie signed into law “The Opportunity to Compete Act”, commonly referred to as New Jersey’s “ban-the-box” law, which prohibits employers from asking about the applicant’s criminal history prior to the completion of the first interview. New Jersey is the 6th state, in a growing trend, to pass some form of the “ban-the box” law which is intended to remove obstacles to employment for people with criminal records. New Jersey will join Hawaii, Illinois, Massachusetts, Minnesota, and Rhode Island, all of which have similar laws covering private employers.
New Jersey’s law will become effective on March 1, 2015 and covers both public and private employers operating in New Jersey who employ 15 or more employees. After the first interview, New Jersey employers are free to inquire into the applicant’s criminal background and may ultimately refuse to hire the applicant based on his or her background, so long as the refusal is not based on expunged of pardoned records. In addition to the restrictions on inquiries pre-first interview, the law prohibits employers from publishing job postings or ads stating that it automatically excludes applicants with arrest or conviction records.
The Usual Exemptions
Not unlike other laws, New Jersey’s law provides for several exceptions. The law does not apply to those positions that require criminal background checks by law or regulation, including positions in law enforcement, corrections, the judiciary, homeland security, and emergency management. Also excluded are positions where certain convictions would, by law, either automatically disqualify the applicant or restrict the employer from engaging in certain business activities based on its employees’ criminal records.
Penalties and Preemption of Local Ordinances
A positive for employers is that the law will not spur more employment litigation, because it does not create a private right of action for alleged violations. However, employers who violate the law will be met with increasing fines –$1,000 for the first violation, $5,000 for second violations, and $10,000 for each subsequent violation.
Finally, the law will preempt existing or future local laws – including Newark’s local “ban-the-box” law – that regulate private employers’ use of criminal background checks.
Next Steps for New Jersey Employers
Employers operating in New Jersey should begin working with their Labor & Employment counsel now to review their employment applications, job postings, policies, and employee handbooks to ensure compliance prior to March 1, 2015. Employers should also ensure that training is provided to those individuals involved in hiring and interviewing of potential job applicants. Additionally, employers who operate in jurisdictions within and outside of New Jersey should continue to closely monitor the “ban-the-box” legislations in other jurisdictions as these laws remain a growing trend.
Finally, employers should keep in mind that under guidance issued by the EEOC and a number of state laws, an employer may be required to demonstrate the relevance of a given conviction as a basis for excluding an applicant from employment.
New Jersey’s Appellate Division has rejected two Atlantic City nightclub workers’ attempts to artfully plead their way around preemption under the National Labor Relations Act (NLRA) and the Labor Management Relations Act (LMRA) by alleging a whistleblower claim under New Jersey’s Conscientious Employee Protection Act (CEPA). The case was brought by two “Tipped Floor Euros,” i.e., alcoholic beverage servers, who alleged retaliation and constructive discharge following their complaints regarding tip-pooling, wage payments and being forced to perform duties prohibited by the collective bargaining agreement (CBA). The case is O’Donnell v. Nightlife, et al. (April 17, 2014).
In rejecting the plaintiffs’ CEPA claims, the Appellate Division took a narrow view of the whistleblower statute, citing the standard that the conduct complained of must “pose a threat of public harm, not merely private harm or harm only to the aggrieved employee.” [Opinion, p. 11, available here, citing Mehlman v. Mobil Oil Corp., 153 N.J. 163, 188 (1988)] The Appellate Court agreed with the trial court that most of the plaintiffs’ complaints alleged violations of the CBA, not violations of law, and accordingly, not violations of CEPA.
The Appellate Division also took a broad view of preemption under the NLRA and LMRA. The Court gave credit to plaintiffs’ attempts to “artfully phrase” the language in the complaint – alleging that failure to pay the share of the nightly tip pool constituted “fraud” and failure to pay full minimum wage for non-tipped work constituted a “violation of [New Jersey] wage and hour laws.” However, the Appellate Division ultimately ruled that such state causes of action are presumptively preempted under NLRA and LMRA and were appropriately dismissed as preempted because they each ultimately asserted violations of the CBA or claims that required interpretation of the CBA.
Accordingly, based on this precedent, a unionized employee’s remedy lies not under CEPA but through the union grievance procedure and the relief available under Sections 7 and 8 of the NLRA.
As cleanup from the Nor’easter that pummeled the East Coast last week continues, and the prospect of more snow looms, we hope that you and your families, as well as your businesses and employees, are safe and warm and that the lights are on. As this has been one of the more problematic winters in recent memory, we wanted to remind employers of some of their obligations before, during and after a storm.
Unless your agreements or policies provide otherwise, you are generally not required to pay non-exempt employees when they are not working. Therefore, if your business is closed and your employees do not report to work, you are not obligated to pay non-exempt employees. However, make sure that these employees are not checking work e-mails, communicating with supervisors about work-related issues or otherwise working from home, because non-exempt employees are entitled to receive pay for these activities even if they do not physically report to work.
Note that some states require an employer to pay employees for reporting to work, even if the business closes and the employer sends them home. For example, a New Jersey employer must pay employees who report to work at least one hour of pay. A New York employer must pay employees who report to work at least four hours of pay (or the number of hours in the scheduled shift if it is less than four hours). With regard to exempt employees, they are generally entitled to receive their full salaries, even if the business is closed – at least if the shutdown lasts for less than a week. If a business is closed for an entire week and an exempt employee performs absolutely no work during that time, the employer is generally not required to pay the employee for the week.
When a business is temporarily closed, the employer can require exempt employees to use accrued vacation time for the time off, but this requirement should be set forth clearly in the Employee Handbook and any employment contracts.
After a storm passes, employees whose homes remain without power, who are repairing damage to their property or whose children’s schools remain closed, may seek additional time off from work. While an employer that can afford to do so may allow additional flexibility to these employees in order to give them peace of mind and boost their loyalty and morale, these requests may otherwise be handled pursuant to the employer’s contracts and policies.
In addition to the above general points, employers should also be aware of state laws that affect certain employees and certain industries. For instance, in New York and New Jersey, the prohibition against mandatory overtime for health care personnel includes an exception for a declared state of emergency. New Jersey also provides protections for employees who miss work because of their responsibilities as volunteer first responders.
Extreme weather and natural disasters that disrupt business create big headaches for employers and employees. We recommend clear and consistent communication with your employees to avoid confusion about your expectations. Also, maintaining sound employment policies and consulting with counsel when issues arise is critical for avoiding additional headaches resulting from ensuing workplace legal liability.