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cell phoneRidesharing companies like Uber are relative newcomers to the marketplace, but they have already had an enormous economic and legal impact. In numerous employment law claims, drivers are alleging that they are misclassified as independent contractors rather than employees. The last year has seen several important court decisions and settlements that offer good news for ridesharing drivers. Courts have ruled in plaintiffs’ favor in cases from California to Massachusetts, and putative class actions are currently pending in New Jersey and New York

Many of the lawsuits against Uber, generally considered the leading ridesharing company, assert claims under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., which governs minimum wage and overtime pay for many employers. Employees are entitled to payment of a minimum wage of $7.25 per hour, and non-exempt employees must be paid time-and-a-half for hours worked in excess of 40 per calendar week. Employers might violate the FLSA simply by failing to pay overtime, or they may do so less obviously, such as by imposing obligations on employees outside the time that they are “clocked in.” This can result in uncompensated overtime, or an hourly rate of pay that, when calculated for the amount of time actually worked, is less than minimum wage.

Drivers for Uber are challenging their status as independent contractors in lawsuits and administrative complaints around the country. A key distinction between an employee, who is entitled to the protection of statutes like FLSA, and an independent contractor is the degree of control the employer has over the person’s work. Just over one year ago, the California Labor Commissioner ruled that an Uber driver is an employee in Berwick v. Uber Technologies, Inc., No. 11-46739, order (Cal. Lab. Comm, Jun. 3, 2015).

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policeThe U.S. Supreme Court recently ruled in favor of a New Jersey police officer who claimed that his employer violated his First Amendment rights. Heffernan v. City of Paterson, 578 U.S. ___ (2016). This case is particularly notable because the underlying action by the plaintiff’s employer was based on a mistake. The employer thought the plaintiff was engaging in a “constitutionally protected political activity,” Heffernan, slip op. at 1, by supporting a political candidate opposed by the police chief. The district court and the Third Circuit Court of Appeals ruled against the plaintiff on the grounds that, since he was not actually engaging in constitutionally protected speech, his employer could not have deprived him of any constitutional right. The Supreme Court reversed this ruling based on a 1994 case, which held that an employer’s subjective belief is the controlling factor.

The First Amendment’s guarantee of “freedom of speech” means, in part, that the government cannot punish a person for the content of their speech. In an employment law context, this protects public employees like the plaintiff, a police officer. Government employers are generally prohibited from taking adverse action against an employee for acts that are protected by the Bill of Rights. This restriction does not necessarily apply to private employers, since the First Amendment only restrains government actions. Congress enacted a statute in the 19th century giving individuals the right to file suit against a government official for the “deprivation of any rights, privileges, or immunities secured by the Constitution and laws” while acting in an official capacity. 42 U.S.C. § 1983.

The plaintiff in Heffernan was a 20-year veteran of the police department in Paterson, New Jersey. He was assigned to work in the police chief’s office in 2005, according to the court’s opinion. The mayor, who had appointed both the chief and the plaintiff’s direct supervisor, was running for reelection at the time. The plaintiff was reportedly “a good friend” of the mayor’s challenger. Heffernan, slip op. at 2.

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unions mapLaws in New Jersey and many other states protect workers’ right and ability to organize for the purpose of collective bargaining with employers. Some states, however, have passed laws aimed at significantly reducing workers’ ability to unionize, ironically named “right to work” laws. These laws prohibit requiring workers who choose not to join a union to pay any sort of fee to the union, even if they benefit from working conditions only made possible by union efforts. In a bit of good news, a Wisconsin court has ruled that its state’s “right to work” law constitutes a taking of union property by the government without just compensation, in violation of the state constitution. Int’l Assoc. Of Machinists Dist. 10, et al. v. State of Wisconsin, et al., No. 2015CV000628, order (Wis. Cir. Ct., Dane Co., Apr. 8, 2016).

Unions represent employees in collective bargaining negotiations with their employers. These types of negotiations, backed by strikes and other actions, helped make possible many of the features of employment taken for granted today. Workers who do not join a union generally still benefit from the union’s activities, so unions have, in the past, sought contractual terms with employers to address this imbalance. A “closed shop” refers to an employer that, under the terms of a union contract, may only hire union members. A “union shop” is an employer that must require all employees to join the union.

Federal law has banned closed-shop clauses in union-employer contracts. States can prohibit union-shop clauses, but federal law allows unions to require the payment of an “agency fee” by non-union workers. See Communications Workers of America v. Beck, 487 U.S. 735 (1988). “Right to work” laws prohibit union-shop clauses, particularly agency fees. The Wisconsin Legislature passed a “right to work” law in 2015. See WI Stat. §§ 111.04(3)(a)(4), 111.06(1)(c).

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clockA controversial proposed ordinance, Ordinance 16.081, in Jersey City, New Jersey would mandate a minimum workweek of 30 hours for certain employees engaged in “business services.” The ordinance’s stated purpose is “to prevent full-time building service jobs from being unnecessarily broken into part-time jobs.” Employers have rather wide discretion under state and federal laws to define “full-time” and “part-time” for their own employees. Federal law has recently begun to define “full-time” in certain contexts, however, allegedly resulting in employers cutting hours. The Jersey City ordinance has met with substantial opposition from business leaders, resulting in the postponement of a final vote in mid-May 2016.

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., does not distinctly define “full-time” and “part-time” employment. A 40-hour workweek is traditionally considered “full-time,” at least in part because of overtime provisions in the FLSA and many state laws. These laws require payment of time-and-a-half to non-exempt workers for hours worked in excess of 40 hours. The principal regulation placed on employers with regard to full-time and part-time employment is consistency. If their employment policies define full-time and part-time employment, provide benefits for full-time or part-time employees, or provide certain rights to full- or -part-time employees, they must apply those policies consistently.

The Affordable Care Act (ACA), also known as “Obamacare,” defines “full-time” employment in the context of providing health insurance as an employment benefit. It states that a “large employer,” defined as one having 50 or more employees, must offer “the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan” to all employees working at least 30 hours per week. 29 U.S.C. § 4980H. This has allegedly resulted in some employers reducing hours from 40 or more hours per week to 29 or fewer, in order to avoid the health insurance mandate. In the absence of any other means to deliver access to health care, Jersey City is attempting to prevent certain employers from cutting hours.

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A challenge to a state law mandating the payment of union fees by certain public employees met with an unusual, if not unexpected, end in March. The U.S. Supreme Court heard oral arguments in January 2016 in Friedrichs v. Cal. Teachers Assoc., and observers at the time suggested that the court seemed to be leaning toward striking down the law in question. The death of Supreme Court Justice Antonin Scalia in February, however, left the court evenly divided, politically speaking. The court tied 4-4 and therefore had to allow the lower court ruling to stand. Friedrichs, 578 U.S. ___ (2016).

railway strikeThe plaintiffs alleged that a law requiring them to pay union fees even if they were not union members violated their First Amendment rights. This type of arrangement is often known as a “fair share provision,” since employees who are not union members still benefit from a union’s collective bargaining activities. Employers with fair share provisions are known as “agency shops.” When an employer enters into a contract with a union that requires all employees to join the union if they are not already members, and to remain members for the duration of their employment, this is known as a “union shop.”

Some states have enacted laws that prohibit union shops and agency shops. Supporters of these laws call them “right to work” laws, while critics often call them “right to work for less” laws. One argument in favor of requiring union membership or the payment of a fee is that it reduces the problem of “free riders,” an economic term referring to people who benefit from something, such as collective bargaining agreements, without paying for them.

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Statue of LibertyPeople who are not United States citizens or lawful permanent residents, and who lack official authorization to be in the U.S., are often referred to as undocumented immigrants—as well as a variety of less polite terms. Although undocumented immigrants are not officially allowed to live or work in the U.S., they may still be able to avail themselves of the protections of certain federal, state, and local laws. New Jersey courts have held that undocumented immigrants have standing to sue an employer under some laws, but not others. A recent federal appellate court ruling could affect these precedents. A court ruled that the Equal Employment Opportunity Commission (EEOC) has the authority to subpoena employment records in connection with an undocumented immigrant’s discrimination complaint under Title VII of the Civil Rights Act of 1964. EEOC v. Maritime Autowash, Inc., No. 15-1947, slip op. (4th Cir., Apr. 25, 2016).

The Constitution gives the federal government exclusive authority over immigration law and policy, including official determinations of an immigrant’s status and work authorization for immigrants. Employers are prohibited from recruiting, hiring, or employing anyone who lacks work authorization. 8 U.S.C. § 1324a. They must verify every employee’s work eligibility by collecting documentary proof that they are a U.S. citizen, a lawful permanent resident, or an authorized visa holder.

Federal immigration law includes employment discrimination provisions, but they specifically exclude people who lack work authorization. 8 U.S.C. § 1324b(a)(3). In determining whether a particular employment statute applies to undocumented immigrants, courts often look at whether the statute expressly limits its coverage to individuals with work authorization, or otherwise excludes undocumented immigrants.

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confidential documentIn order to remain competitive in the marketplace, most businesses rely on keeping certain types of information confidential. These might include client lists, sales leads, or computer algorithms, to name but a few. Employees often have access to information that an employer considers proprietary or otherwise secret. State laws protecting trade secrets may affect employees during and after their employment relationship. New federal legislation, the Defend Trade Secrets Act (DTSA) of 2016, Pub. L. 114-153 (May 11, 2016), expands federal courts’ jurisdiction over trade secret matters, and it could have an impact on employees in New Jersey and around the country.

Until the DTSA came along, no uniform standard for trade secret protection applied across the country. New Jersey law defines a “trade secret” as information that has value specifically because it is secret and that has been “the subject of efforts…to maintain its secrecy.” N.J. Rev. Stat. § 56:15-2. This definition is consistent with most state statutes and existing federal law. See 18 U.S.C. § 1839(3).

New Jersey’s trade secrets law prohibits the “misappropriation” of a trade secret, defined to include the acquisition of secret information by a party who knows of its confidential nature, and the disclosure of such information without permission and with knowledge of its secrecy. N.J. Rev. Stat. § 56:15-2. It allows state courts to grant injunctions to prevent “actual or threatened misappropriation.” Id. at § 56:15-3. It also allows the recovery of damages for actual losses and unjust enrichment resulting from misappropriation. Id. at § 56:15-4.

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Young_digital_nativeAge discrimination in the technology industry has received considerable media coverage in recent years, as several high-profile technology executives have made quite blatant statements of bias against older workers. Employment discrimination takes many forms, however, and frequently involves subtle actions, or patterns of action, rather than anything overtly and unmistakably discriminatory. The use of certain terms or phrases in job postings may serve as evidence of bias against certain protected groups. Claims against tech companies have alleged age discrimination based on employment advertisements stating preferences like “new grads.” Over the past year, the term “digital native” has emerged as the latest in a long line of possible indicators of age bias by technology companies and other employers around the country.

The Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., prohibits discrimination on the basis of age against workers who are at least 40 years old. Exceptions include a “bona fide occupational qualification” involving age, or “reasonable factors other than age.” 29 U.S.C. § 623(f)(1), 29 C.F.R. §§ 1625.6, 1625.7. The statute does not prevent an employer from favoring someone age 40 or older over someone younger than 40, based solely on age. It is only intended to protect older workers from discriminatory practices favoring younger workers. The number of age discrimination complaints received annually by the Equal Opportunity Commission (EEOC) has increased from 15,785 in 1997 to 20,144 in 2015

Statements indicating bias against older workers seem to be common in the tech industry, if the news media are any indication. In 2007, Facebook CEO Mark Zuckerberg, who was 22 years old at the time, stood on stage at a conference and declared that “young people are just smarter.” His company settled an age discrimination claim with state regulators six years later, after the company advertised a job opening with the caveat that it preferred applicants from the “Class of 2007 or 2008.” It is not entirely clear why so many in the tech industry seem to favor younger workers. Youth is by no means an indicator of superior aptitude with computer technology, but that is apparently the perception of many. This is where the term “digital native” comes into play.

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tire-treads_640The Equal Employment Opportunity Commission (EEOC), the federal agency charged with investigating and prosecuting employment discrimination claims under Title VII of the Civil Rights Act of 1964, recently settled a lawsuit against a company that operates a chain of retail stores in the New York metropolitan area. The lawsuit, filed as a class action, alleged a pattern or practice of sex discrimination in which the company refused to hire women for various positions. EEOC v. Mavis Discount Tire, Inc., et al., No. 1:12-cv-00741, complaint (S.D.N.Y., Jan. 31, 2012). The parties reached a settlement agreement in early 2016, in which the defendant agreed to pay $2.1 million and take various remedial actions.

Laws at the federal and state levels in New Jersey, New York, and elsewhere prohibit employment discrimination on the basis of sex or gender. This includes overt acts of discrimination against an individual employee or job applicant, and it may also include less obvious forms of discrimination. Systemic discrimination, commonly known as “pattern or practice” discrimination, occurs when an employer enacts policies or engages in practices that have a disparate impact on certain people based on a protected category, such as sex, race, or religion.

An employer may undertake a pattern or practice with the intent of discriminating against a protected group, but intent to discriminate is not a required element for a claim under Title VII. Even if a pattern or practice is “neutral on its face,” it is unlawful if it “operate[s] to ‘freeze’ the status quo of prior discriminatory employment practices.” Griggs v. Duke Power Co., 401 U.S. 424, 430 (1971). A plaintiff in a Title VII claim must establish that a pattern or practice has a disparate impact, and then the burden shifts to the employer to demonstrate its “business necessity,” which must be specifically “related to job performance.” Id. at 431. Congress codified the prohibition on systemic discrimination with the Civil Rights Act of 1991. See 42 U.S.C. § 2000e-2(k).

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Kuha455405 (Own work (本人撮影)) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia CommonsA lawsuit recently filed against the owner of several convenience stores in the Princeton, New Jersey area claims violations of state and federal minimum wage and overtime laws. Lopez et al. v. 7-Eleven Inc. et al., No. L-000418-16, complaint (N.J. Super. Ct., Mercer Co., Feb. 26, 2016). The three plaintiffs, who are suing on behalf of a putative class of employees and former employees, allege that their now-former employer required them to work exceedingly long hours and unlawfully withheld their pay, which was less than both the state and federal minimum wage. The former employer is a franchisee of a national chain of convenience stores. The lawsuit names both the owners and operators of the franchisee and the national franchise owner as defendants.

This lawsuit demonstrates a common problem in employment law claims when the employer is part of a franchise. Many well-known businesses with multiple locations, such as McDonald’s restaurants, do not actually share common ownership or management. The owner of the brand—which includes the logo, menu, business model, and so forth—enters into franchise agreements as the franchisor with other companies, the franchisees, to operate one or more facilities. A typical franchise agreement contains numerous requirements regarding the operation of the worksite, in the interest of maintaining consistency among all franchised locations. This is where the tricky part for employment claims comes in.

An employee or former employee can only assert a claim for violations of minimum wage and overtime laws, anti-discrimination laws, and other employment statutes against their employer. It is often relatively easy to determine who is a person’s employer, based on an employment contract or the issuance of paychecks. In the case of a person who works at a franchised location, the franchisee is probably their employer, at least on paper. The franchisee is not, however, in full control of their own business, since they have to run their operation in accordance with the franchise agreement. How much control must a franchisor exercise over a franchisee before the franchisor begins, in a legal sense, to look like the actual employer?

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