Accounting Firm Partner Cannot be a Whistleblower Under New Jersey’s Conscientious Employee Protection Act

Editor’s Note – The below appeared in Legal Briefs, Drinker Biddle’s periodic summary of judicial decisions affecting accounting and financial services professionals.  To view the entire issue click here.

Accounting Firm Partner Cannot be a Whistleblower Under New Jersey’s Conscientious Employee Protection Act

The district court for the District of New Jersey recently ruled that an accounting firm partner may not claim he was a whistleblower who was improperly fired by his firm.  In Largie v. TCBA Watson Rice, Civil Action No. 10-cv-0553 (D.N.J. Aug. 20, 2013), the court considered the plaintiff Largie’s claim that he had been wrongfully terminated in retaliation for his attempted disclosures about alleged fraudulent practices at his accounting firm.  The firm contended that it had fired Largie for his chronic absences and for attributing fees from the firm’s clients to another accounting firm.  Largie was the director of the firm’s taxation department and an equity partner, holding a 10.5 percent interest in the firm. He also set his own schedule and did not report to anyone else.  Without reaching his claims of fraudulent practices, the court found that Largie was not an employee who was entitled to protection under the CEPA statute.  Largie’s ability to influence the operations and activities of the accounting firm meant that he had the power to save himself from the kind of unlawful retaliatory actions the CEPA statute was intended to prevent.

New Jersey Expands Protections Against Pregnancy-Based Discrimination By Employers And Other Entities

Update 1/23/14 – On Wednesday, January 22, 2014, Governor Christie signed  S2995 into law.  LaborSphere’s original post on the legislation appears below. 

By: Meredith R. Murphy

New Jersey is on the precipice of expanding anti-discrimination protections to both pregnant women and new mothers and those recovering from childbirth.  The State Senate and now the State Assembly have passed identical measures with only one dissenting vote in either legislative body.  The expansive legislation now awaits the signature of Governor Chris Christie in order to become law. 

Amendments to New Jersey Law Against Discrimination

In order to address the perceived vulnerability of pregnant women in the workplace as well as to foster the goal of healthier pregnancies and recovery from childbirth, the legislation passed by New Jersey’s legislature expands the anti-discrimination and anti-retaliation protections of New Jersey’s Law Against Discrimination (“NJLAD”).  Should it pass, both pregnant women but also those who have recently given birth or have medical conditions related to pregnancy will be statutorily protected against disparate treatment and retaliation by employers, labor organizations, landlords, lending institutions as well as an array of other entities that offer public accommodations.

Further, not only does the pending legislation add “pregnancy” to the array of protected categories covered by the NJLAD.  It also specifically requires employers to provide “reasonable accommodations,” such as bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, job restructuring, modified work schedules and temporary transfers to less strenuous or hazardous work.

The legislation implied but does not specifically state that any such requested accommodations will likely need to be based on the advice of a physician.  As such, it appears that pregnant women and those who have recently given birth cannot merely demand that an accommodation is “reasonable” and necessary absent some input from her physician.

Further, employers are not obligated to agree to any requested accommodation, even if it is supported by a physician’s recommendation, if such an accommodation would impose an “undue burden” as defined by the statute.  The proposed legislation provides specific factors to be utilized in determining whether an accommodation would impose undue hardship on the operation of an employer’s business.  These include:

  • overall size of the employer’ business with respect to the number of employees;
  • number and type of facilities;
  • size of budget;
  • the type of the employer’s operations, including the composition and structure of the employer’s workforce;
  • the nature and cost of the accommodation needed, taking into consideration the availability of tax credits, tax deductions and outside funding; and
  • the extent to which the accommodation would involve waiver of an essential requirement of a job as opposed to a tangential or non-business necessity requirement.

New Protection To Employees Seeking Information About Claims

Perhaps the start of a new trend, among the proposed amendments to the NJLAD is also a provision that protects any employee against reprisals by employers for asking coworkers or former coworkers for information that is part of an investigation or in furtherance of a possible claim under the NJLAD.  Such information may include requests for data regarding pay, compensation, bonuses or benefits.  Significantly, this new protection extends beyond pregnant women and those who have recently given birth. 

Impact of Amendments

If enacted, the amendments to the NJLAD would override the New Jersey Supreme Court’s 2005 ruling in Gerety v. Atlantic City Hilton Casino Resort, 184 N.J. 391 (2005).  In that case, New Jersey’s highest court held that the NJLAD does not protect against the firing of a female worker who exceeded the leave available under state and federal as well as the defendant-employer’s policy.  Under the proposed amendments, it is likely that the accommodations requested in the Gerety case, by a plaintiff who had a difficult pregnancy with twins, would be considered reasonable and covered under the NJLAD.

More broadly, while the federal Family Medical Leave Act and New Jersey Family Leave Act each allow for a maximum of twelve weeks of pregnancy-related leave, under the proposed amendments, the amount of leave available to a woman who is pregnant or recovering from childbirth is not as clearly defined.  To the extent a women seeks an accommodation – including additional leave or a reduced work schedule – because of pregnancy and childbirth-related conditions, an employer has, at the very least, an obligation to review and consider such requests.

Should the proposed amendments to the NJLAD be passed, we recommend a review of leave policies as well as training for managers to identify requests for accommodations.  Each request for accommodation must be considered carefully and should it appear to impose an undue burden, then the statutorily defined factors must be taken into account.

New Jersey Raises State Minimum Wage

By:  Meredith R. Murphy

This past November the voters of New Jersey approved a ballot question both raising the state minimum wage and amending the State Constitution to tie future increases to inflation.  Here is what employers need to know:

1.  Effective January 1 the state minimum wage for almost all employees has increased  from $7.25 per hour to $8.25. 

2.  Going forward, the state minimum wage will be increased every January 1 in accordance with an increase in the federal government’s consumer price index for all urban wage earners and clerical workers (commonly referred to as the CPI-W) as of the preceding September 30.

Employers should also be aware that if at any time the federal minimum wage should surpass that which is provided by the State Constitution’s formula, the state minimum wage will be automatically increased to match the federal wage rate.  Employers with employees in New Jersey should replace their New Jersey State Wage and Hour Law Abstract poster with the new poster [click here to download] that reflects the change.

New Jersey Gender Equity in Pay – Notice and Posting Requirements Effective January 6, 2014

By: Marion B. Cooper

Governor Chris Christie signed Assembly Bill 2647 (the “Gender Equity Notice and Posting Law,” N.J.S.A. 34:11-56.12) into law, effective November 21, 2012 requiring New Jersey employers with 50 or more employees to conspicuously post a notice, where it would be accessible to all workers in each of the employer’s workplaces, informing employees of their “right to be free of gender inequity or bias in pay, compensation, benefits, or other terms or conditions of employment” under the New Jersey Law Against Discrimination, other New Jersey State law, Title VII of the Civil Rights Act of 1964 and the federal Equal Pay Act of 1963.  (http://www.njleg.state.nj.us/2012/Bills/PL12/57_.PDF)

Under the Gender Equity Notice and Posting Law, employers have 30 days from December 9, 2013, the date the New Jersey Division of Labor and Workforce Development (“NJDLWD”) issued the “notice” to comply.  The gender equity notice is now available for download from the NJDLWD at: http://lwd.state.nj.us/labor/forms_pdfs/EmployerPosterPacket/genderequityposter.pdf

Here is what “covered” employers (those employers with 50 or more employees, whether they work inside or outside of New Jersey) must do:

  1. Beginning January 6, 2014, conspicuously post the gender equity notice where it is accessible to all employees in each of the employer’s workplaces.  If the covered employer has an internet or intranet site for its employees’ exclusive use to which all employees have access, posting of the notice on such a site will satisfy the conspicuous posting requirement.
  2. By February 5, 2014, provide each employee hired on or before January 6, 2014 with a written copy of the gender equity notice.
  3. After January 6, 2014, provide each employee with a written copy of the gender equity notice at the time of the employee’s hiring.
  4. Beginning January 6, 2014, and on or before December 31 of each subsequent year, provide each employee a written copy of the gender equity notice.
  5. At any time, upon the first request of the worker, provide each employee a written copy of the gender equity notice.

Covered employers may distribute the gender equity notice as follows:

  1. By email;
  2. Via printed materials, including, but not limited to, a paycheck insert, brochure or similar informational packet provided to new hires, an attachment to an employee manual or policy book, or flyer distributed at an employee meeting; or
  3. By way of an internet or intranet site, so long as it is accessible by all employees, for employees’ exclusive use and the employer provides notice to workers of its posting.

Covered employers must ensure that the gender equity notice contains an acknowledgment, indicating that the worker has received the notification and has read and understands its terms.  The acknowledgment must be signed by the employee, in writing or electronically verified form, and returned to the employer within 30 days of receipt.  The notice must be posted in English, Spanish, and any other language the employer reasonably believes is the first language of a significant number of workers in the covered employer’s workforce, provided that the NJDLWD has issued a form notice in that language.

New Jersey employers (with 10 employees or more) are reminded of the similar, annual posting and distribution requirements of the New Jersey Conscientious Employee Protection Act (“CEPA”) and of the new posting requirement of the New Jersey SAFE Act, which provides unpaid leave for victims of domestic violence.  As the end of 2013 rapidly approaches, New Jersey employers are encouraged to take time out to make sure that all postings are current for the new year, that all distribution requirements are or will be satisfied, and that handbooks are updated to reflect these new laws.

Jersey City Passes Paid Sick Leave Law

By: Meredith R. Murphy

Following the lead of its neighbor across the Hudson River [see our earlier coverage of New York’s paid sick leave law here], New Jersey’s second most populated city, Jersey City, has passed an ordinance to require employers with ten or more employees to offer as many as five paid sick days a year.  The bill is sweeping in its application, impacting all businesses employing workers who work at least 80 hours a calendar year in Jersey City.  However, employee headcount is critical to determining employers’ obligations under the law:

10 Or More Employees In Jersey City:  5 Paid Sick Days
Fewer Than 10 Employees In Jersey City:  5 Unpaid Sick Days

Counting Employees:  Full-time, part-time and temporary workers all count toward the total number of employees for purposes of this new law.  Further, if an employer’s workforce fluctuates, the number of employees will be calculated based on the average number of employees who worked for compensation during the calendar year.

Accrual and Carry Over:  Accrual of paid sick leave is not automatic.  Rather, workers earn one hour of sick time, paid or unpaid, for each 30 hours worked, accruing a maximum of 40 hours per year.  New workers can only begin to use sick time on the 90th calendar day of employment.  Employees may carry over up to 40 hours of sick time into a new calendar year but may not use more than 40 hours of paid sick time in any year.  Further, if an employee is separated from employment but later re-hired within six months, the previously accrued but unused sick time must be reinstated.  However, the law makes clear that employers need not pay out accrued but unused sick time at separation.

Using Sick Time:  Likely inconsistent with many employers’ policies, employees can use sick time in hourly increments or the smallest unit of time the employer uses to account for absences or other time off.  Like FMLA leave, Jersey City sick time covers more than an employee’s own illness.  It can be used to care for the mental or physical illness, injury or health condition, treatment, medical diagnosis, or preventative care of the employee’s family members.  It can also be used due to an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health.  The Jersey City leave law is more broad than federal or New Jersey family leave laws, covered family members include a wide range of relations, including, but not limited to, biological, adopted, foster or step child, legal ward, domestic partner, civil union partner, grandparents and spouses.

Requesting Sick Time:  Employees need only make a verbal request and must only provide notice “as soon as practicable.”  Employers may ask for reasonable documentation if the employee requests more than three consecutive days of sick time.  However, employers may not, as a condition of an employee’s taking sick time, require that an employee search for or find a replacement worked to cover the hours during which the employee is absent.

Notices  Covered employers must provide employees with written notice of the law at the commencement of their employment.  Additionally, notice of the law must be posted in an accessible place.  Violation of the notice and posting requirements carries a civil fine of up to $100 per employee and $500 per establishment.

Record-Keeping:  Employers must retain records showing the hours worked and paid sick leave taken by all employees for a period of three years.  Records must be made available to the Department of Health and Human Services.  Under the law, a failure to maintain adequate records creates a rebuttable presumption that the employer has violated the ordinance.

Enforcement and Audits:  The Jersey City Department of Health and Human Services is vested with the power to enforce the ordinance, adjudicate complaints, provide information about paid sick leave, create posters and notices and conduct audits.  Audits and investigations may include private interviews of employees and former employees.  Violations carry fines up to $1,250 and/or a period of community service not to exceed 90 days.

Anti-Retaliation and Private Right of Action:  The ordinance also creates a private right of civil action without the need to first file a complaint to the Jersey City Department of Health and Human Services.  Further, employers may not retaliate against employees for exercising their rights under the law, including any employee’s request for using sick time or filing a complaint about a violation.  The ordinance specifically creates a rebuttable presumption of unlawful retaliation if the employer takes adverse action against an employee within 90 days of filing a complaint, informing any person about an alleged violation, cooperating in the investigation or prosecution of any alleged violation, opposing any policy or practice made unlawful by the law or informing any person of their rights available under the ordinance.

No Duplication of Leave:  If an employer already provides a paid leave policy (i.e., paid time off or “PTO”) which provides leave equal to or in excess of what is required under the law, then there is no need to provide additional leave because of this law.

A link to a copy of City Ordinance 13.097 may be found by clicking here: Jersey City Paid Leave Law.

New Jersey Legislative Update: Pay Equity Protection, Social Media and Employer Responses to Unemployment Insurance Requests for Information

By: Marion B. Cooper

August was a busy month for New Jersey lawmakers with Governor Christie signing two bills, one regarding pay equity and one concerning personal social media accounts that he had conditionally vetoed earlier, and a bill regarding the impact of an employer’s failure to respond to a request for information for purposes of unemployment insurance benefits.  As described below, each bill will impact an employer’s compliance obligations and should be appropriately integrated into management practices.

  • Assembly Bill No. 2648 (A-2648), signed by the Governor on August 29, 2013, is a pay equity protection measure amending the New Jersey Law Against Discrimination (NJLAD) to bar employers from retaliating against employees who share information about the job title, occupational category or rate of compensation and other employment matters, or the gender, race or other protected characteristic of current or former co-workers when the inquiries are made to assist in investigating the possibility of unlawful discriminatory treatment in pay, compensation, bonuses, or benefits. It took effect upon enactment.

While the previously vetoed version of A-2468 would have protected those discussions under the State Conscientious Employee Protection Act, Governor Christie suggested that the amendment was more consistent with the underlying goals of the NJLAD, because that is the statute under which workplace discrimination claims are brought.  Governor Christie noted that “[t]oo often in our past, women have seen their incalculable contributions to the workplace insufficiently compensated.  We cannot allow that progress to succumb to ignorance.”

  • Assembly Bill No. 2878 (A-2878), also signed by the Governor on August 29, 2013, prohibits employers from requiring or requesting any employee or prospective employee to provide or disclose the user name or password or in any way provide the employer access to a personal account through the use of an electronic communications device.  A-2878 further prohibits employers from retaliating or discriminating an individual who has, or was about to:
    • Refuse to provide access to a personal social media account;
    • Participate in any complaint, investigation, proceeding or action concerning a violation of the act; or
    • Otherwise oppose a violation of the act.

Violations under the act are enforced through the Department of Labor and Workforce Development and violating employers could be subject to civil penalties up to a maximum of $1,000 for the first violation and $2,500 for each additional violation.  Governor Christie’s veto of the original version of the bill was based on a determination that it was overbroad and needed to provide for specific employer rights.

A key employer protection in A-2878 allows employers to investigate compliance with applicable laws, regulations or “prohibitions against work-related employee misconduct” when the employer receives specific information regarding an employee’s personal social media account, and also to investigate an employee’s actions related to the “unauthorized transfer of an employer’s proprietary information, confidential information or financial data to a personal account.”   The bill further clarifies that the employer is not prohibited from “viewing, accessing, or utilizing information about a current or prospective employee” that is available in the public domain.

New Jersey thus became the ninth State this year, and the twelfth State overall to enact legislation prohibiting employers from seeking or accessing current or prospective employees’ personal social media account information.  Federal legislation similar to these state social media account password protection laws has been introduced, including: the Social Networking Online Protection Act (HR-537) and the Password Protection Act of 2013 (HR-2077).

  • Senate Bill No. 2739 (S-2739), signed by the Governor on August 19, 2013, amends the New Jersey Unemployment Compensation Law to ensure that employers promptly respond to Division of Unemployment and Temporary Disability Insurance (Division) requests for information about claims for unemployment benefits.  In accordance with this Bill, if the Division erroneously pays a benefit because the employer failed to respond in a “timely or adequate manner” to a Division request for information related to the claim and the employer has an established pattern of failing to respond to these requests, the Division is prohibited from relieving the employer’s account for the charged benefit payments.  A benefit payment is “erroneous” when it would not have been made but for the employer’s failure to make a “timely and adequate” response.   The “pattern of failing” is established when the employer repeatedly fails to respond to Division requests for information related to a claim for benefits, unless the number of failures is less than three or less than two percent of the number of Division requests, whichever is greater. 

The act does not specify what is considered “timely or adequate,” but pre-existing statutory language provides an employer with ten days after the Division request to respond before the Division relies entirely on other sources to make a determination of wages and time worked.  Employers who previously may have failed to respond because it might result in a denial of benefits to the claimant now have more of an incentive to comply.