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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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ClkerFreeVectorImages [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayA lawsuit pending in a New Jersey Superior Court seeks review of a township’s decision to dock the plaintiff’s pay by 60 hours, resulting in a loss of about $3,500. O’Hare v. Township of Morris, et al., No. L-000710-16, complaint (N.J. Super. Ct., Morris Co., Mar. 24, 2016). The plaintiff, a police officer, made negative comments about a township official in an email sent to members of the police officers’ union, and he was brought up on disciplinary charges as a result. The plaintiff’s lawsuit alleges that his comments are protected by the First Amendment and laws protecting union activities.

Federal laws and laws in many states protect the rights of workers to form and join organizations, commonly known as unions, for the purpose of collective bargaining with their employers. New Jersey law guarantees the right of most public employees “to form, join and assist any employee organization.” N.J. Rev. Stat. § 34:13A-5.3. The federal National Labor Relations Act (NLRA) extends these rights to many private-sector employees, along with the right to engage in “concerted activities” related to labor organizing. 29 U.S.C. § 157.

The rights protected by the NLRA and similar statutes generally include discussions and other communications among employees regarding negotiations with employers. The First Amendment to the U.S. Constitution extends much broader protections against restriction or retribution by the government based on the content of speech. See, e.g. Sable Commc’ns of Cal. v. Fed. Commc’n Comm’n, 492 U.S. 115, 131 (1989).

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Matt Boulton (Carli Lloyd vs Japan) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsFive members of the U.S. women’s national soccer team (USWNT) have filed a complaint with the Equal Employment Opportunity Commission (EEOC), alleging unlawful wage discrimination by the U.S. Soccer Federation (USSF). They allege that they are paid substantially less than members of the U.S. men’s national soccer team (USMNT), despite generating significantly more revenue in recent years than the men’s team. They are asserting their claim on behalf of all members of the USWNT. The EEOC will investigate the claim, and it may decide to pursue the claim on the players’ behalf. Otherwise, it will issue a “right to sue” letter, allowing the players to file a private cause of action.

Under the Equal Pay Act (EPA), employers are generally prohibited from paying employees of one gender less than employees of another gender for the same work. The statute allows exceptions to this rule if the difference in wages is based on a system of seniority, merit, or “quantity or quality of production,” or on the vaguely worded “any other factor other than sex.” 29 U.S.C. § 206(d)(1). The USWNT players’ complaint essentially argues that they have produced a superior “quality of production” yet are paid significantly less than their male colleagues.

The USWNT, which was formed in 1985, is one of the world’s most successful soccer teams. It has won three World Cup titles, most recently in Canada in 2015, and four Olympic gold medals, most recently in London in 2012. The final game of the 2015 World Cup, in which the USWNT beat the Japanese team 5-2, drew more than 53,000 spectators and around 23 million television viewers.

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OpenClipartVectors [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayA former daycare center worker in New Jersey has filed suit against her former employer, alleging violations of the state’s whistleblower protection and anti-discrimination statutes. Pierce v. Woodbury Child Dev. Ctr., Inc., No. L-000216-16, complaint (N.J. Super. Ct., Gloucester Co., Feb. 19, 2016). According to media coverage of the case, the plaintiff claims that she was wrongfully terminated from her job after reporting alleged misappropriation of state funds. The Conscientious Employee Protection Act (CEPA), N.J. Rev. Stat. § 34:19-1 et seq., prohibits retaliation against employees who report suspected illegal acts by their employers. The New Jersey Law Against Discrimination (NJLAD), N.J. Rev. Stat. § 10:5-1 et seq., prohibits retaliation in situations in which an employee complains of workplace discrimination and other unlawful acts.

New Jersey enacted CEPA in 1986 in order to protect employees from various types of “retaliatory action” by employers, defined to include “discharge, suspension or demotion…or other adverse employment action.” N.J. Rev. Stat. § 34:19-2(d). Employers may not retaliate against employees who engage in certain types of activity commonly known as “whistleblowing,” such as reporting, or threatening to report, activities, practices, or policies that the employee reasonably believes violate the law.

Based on the language of the statute, CEPA’s focus seems to be on illegal and fraudulent acts that adversely affect the government, shareholders, investors, customers, employees, and others to whom an employer might owe a duty of care. See N.J. Rev. Stat. § 34:19-3. The report may be internal, such as to a supervisor, or external, such as to a law enforcement agency or other public organization. A whistleblower may also be an employee who participates in an investigation of an employer, or who refuses to participate in an action that they reasonably believe is illegal or fraudulent.

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wilhei [Public domain, CC0 1.0 (https://creativecommons.org/publicdomain/zero/1.0/deed.en)], via PixabayIn order for a worker to assert their rights under many employment statutes, they must establish that an employment relationship exists. This is often not as simple as it might seem. Multiple separate business entities are often present on a worksite, with a complicated web of legal and contractual relationships. Under a “joint employment” (JE) theory, a worker might have multiple employers for the purposes of certain legal claims. The U.S. Department of Labor’s Wage and Hour Division (WHD) recently issued guidance regarding joint employment under two federal statutes: the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq.; and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), 29 U.S.C. § 1801 et seq. Administrator’s Interpretation No. 2016-1 (“AI”) (WHD, Jan. 20, 2016).

What Is Joint Employment?

The WHD defines JE very broadly. A worker might be the employee of a business entity that has contracted to provide services to another business. The AI uses the example of a hotel that subcontracts functions like housekeeping or catering to another business. Housekeeping and catering workers, in this scenario, might wear hotel uniforms. To the public, they would appear to be hotel employees. The hotel has authority over them at its worksite, including hours worked. Applying a standard model of employment, a worker could only bring a claim under a wage and hour statute like the FLSA against the staffing agency. If the hotel is a joint employer, however, it and the staffing agency might be jointly and severally liable for the worker’s damages.

The AI begins by describing a wide range of “evolving employment scenarios” that have made JE much more common around the country. AI at 1. It states that JE plays a role in hundreds of WHD investigations every year. The purpose of the AI is to offer “additional guidance” because of the increase in JE. Id. It identifies two types of JE: horizontal joint employment (HJE) and vertical joint employment (VJE).
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The Blue Diamond Gallery [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0/)]New Jersey courts encourage parties to a dispute to make every reasonable effort to resolve their disagreements without resorting to litigation. Various forms of alternative dispute resolution (ADR) are available to assist litigants and would-be litigants. One type of ADR, known as arbitration, is somewhat similar to a trial, in that the parties present their cases to one or more arbitrators. Many employment contracts include clauses stating that any disputes must be submitted to arbitration, and that the arbitrator’s decision is binding on the parties. The New Jersey Appellate Division recently ruled that an arbitration clause in an employee handbook was not a mandatory arbitration clause, because the handbook also stated that it was not to be construed as a contract. Morgan v. Raymours Furniture Co., Inc., No. A-2830-14T2, slip op. (N.J. App., Jan. 7, 2016).

The New Jersey Arbitration Act, N.J. Rev. Stat. § 2A:23B-1 et seq., applies to arbitration agreements between employers and individual employees. An agreement to arbitrate must be part of an enforceable employment contract, or else it must be a separate contract between an employer and an employee.

A party to a dispute can ask a court to compel arbitration if another party is refusing to cooperate with a valid arbitration agreement. N.J. Rev. § 2A:23B-7. A court is required to enter an order confirming a binding arbitration award, N.J. Rev. § 2A:23B-22; unless it vacates the order due to fraud, partiality by an arbitrator, or certain other grounds, N.J. Rev. § 2A:23B-23; or it modifies the award due to an error by the arbitrator, N.J. Rev. § 2A:23B-20, 24.
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Chris Potter [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/)], via FlickrTwo new employment laws took effect in New York City in late 2015 that limit the uses employers may make of job applicants’ credit and criminal histories. Individuals who, for whatever reason, have credit problems, or who have a record of one or more arrests, criminal charges, or convictions, may have difficulty finding a job because of this information, whether it is directly relevant to the job or not. The “Stop Credit Discrimination in Employment Act” (SCDEA) prohibits employers from requesting or using the consumer credit history of a job applicant or employee, except in specific, narrow circumstances. The “Fair Chance Act” (FCA) restricts when employers may ask about criminal history, and how they may use that information. New Jersey state law addresses criminal history in employment on a more limited basis, but it does not protect credit information.

The SCDEA, which took effect in September 2015, amends the New York City Human Rights Law (NYCHRL) to add a provision regarding employers’ use of consumer credit history. It defines “consumer credit history” as a person’s “credit worthiness, credit standing, credit capacity, or payment history,” based on certain types of information. N.Y.C. Admin. Code § 8-102(29). Credit information typically comes from credit reports and credit scores issued by the major consumer credit bureaus, but the NYCHRL states that it can also come directly from the job applicant or employee if it relates to “details about credit accounts,…bankruptcies, judgments or liens.” Id.

An employer, under the SCDEA, may not request or use consumer credit information in hiring decisions, nor may it discriminate based on an employee’s credit history. N.Y.C. Admin. Code § 8-107(24). The law allows exceptions if state or federal law requires a review of credit history. Other exceptions include jobs as a police officer or certain other law enforcement positions, any job that requires the employer to obtain a bond, jobs requiring security clearance under state or federal law, and jobs that involve high levels of financial responsibility or digital security. A bill with similar provisions, S. 1130, passed the New Jersey Senate in June 2015, but its companion bill in the Assembly died in committee.

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