Articles Posted in New Jersey Labor Law

Workers at major airports in New Jersey and New York City will see their minimum wage increased over the next few years to $19, the highest in the country, after a unanimous vote by the Board of Commissioners of the Port Authority of New York and New Jersey (PANYNJ). The federal minimum wage has remained at $7.25 per hour for almost a decade, while New Jersey and New York have enacted higher state-level minimum wages. Despite these laws, New Jersey wage and hour law claims routinely allege failure by employers to pay their workers at or above the minimum rate. The PANYNJ’s wage increase, while only binding on employers at certain airport facilities, will hopefully lead to increases elsewhere.

Congress last amended the minimum wage provisions of the Fair Labor Standard Act (FLSA) in 2007. The minimum wage increased to $5.85 per hour on July 24, 2007; to $6.55 an hour on July 24, 2008; and to $7.25 an hour on July 24, 2010. 29 U.S.C. § 206(a)(1). New Jersey’s minimum wage has been set at $8.60 per hour since the beginning of 2018. N.J. Rev. Stat. § 34:11-56a4, N.J.A.C. § 12:56-3.1. The minimum wage in New York varies by location. As of December 31, 2017, employers in New York City with eleven or more employees must pay at least $13.00 per hour, while employers with ten or fewer employees must pay $12.00 per hour. N.Y. Lab. L. § 652(1)(a).

The PANYNJ is a government organization created by a compact between the states of New Jersey and New York, with the approval of Congress. It was formally established in 1921, although the two states first agreed to work together in 1834 to manage the port area, which now covers an area of about 1,500 square miles. The governors of the two states appoint the members of the Board of Commissioners. The PANYNJ manages multiple seaports, the PATH train system and numerous bus lines, multiple bridges and tunnels, and six airports. Its authority includes the ability to set a minimum wage for workers employed at its sites.
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New Jersey employment laws, as well as laws around the country, must balance the rights and interests of employees with those of employers. Employees’ protected rights include fair wages, reasonable hours, and a workplace that is reasonably safe and free of harassment and discrimination. Employers need to be able to pursue their business activities, to the extent that they do not violate the rights of their employees and others. Sometimes, businesses may determine that they need to lay off a significant portion of their workforce. This is within an employer’s rights, but laws at the federal level and in many states, including New Jersey, set strict limits. A recently-filed lawsuit alleges that a video game company violated the federal Worker Adjustment and Retraining Notification (WARN) Act of 1988 when it laid off all but twenty-five employees several months ago. Roberts, et al v. Telltale Games, Inc., No. 3:18-cv-05850, complaint (N.D. Cal., Sep. 24, 2018).

The federal WARN Act generally applies to employers with at least one hundred full-time employees. The statute’s requirements are triggered by two events: a “plant closing” or a “mass layoff.” The former refers to any closure of a facility that results in fifty or more employees at a single site losing their jobs within a period of thirty days; while the latter refers to any other incident that, in a thirty-day period, results in layoffs of (1) at least five hundred employees, or (2) at least fifty employees when that number accounts for one-third of all employees. 29 U.S.C. §§ 2101(a)(2), (3). New Jersey’s equivalent law is formally known as the Millville Dallas Airmotive Plant Job Loss Notification Act of 2007, and informally known as the NJ WARN Act. It uses the same definition of “mass layoff,” and uses the term “termination of operations” to refer to the same type of incident as a “plant closing.” N.J. Rev. Stat. § 34:21-1.

Both the federal and NJ WARN Acts require covered employers to provide written notice to employees or their representatives at least sixty days prior to a plant closing or mass layoff. 29 U.S.C. § 2102(a)(1), N.J. Rev. Stat. § 34:21-2(a). If an employer fails to provide the required notice under either statute, aggrieved employees may bring a civil action for damages. Federal law allows back pay, along with benefits subject to the Employee Retirement Income Security Act of 1974 (ERISA), for up to sixty days. 29 U.S.C. § 2104(a). The NJ WARN Act allows courts to award “lost wages, benefits and other remuneration” in an amount up to “one week of pay for each full year of employment.” N.J. Rev. Stat. §§ 34:21-2(b), 34:21-6.
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A new law protecting New Jersey public sector unions, which was signed into law by Governor Phil Murphy in May 2018, faces a legal challenge based on a U.S. Supreme Court decision one month later. The law, entitled the Workplace Democracy Enhancement Act (WDEA), establishes standards for interactions between public-sector unions and government employers, and addresses several controversial issues. The Supreme Court’s ruling in Janus v. AFSCME, 585 U.S. ___ (2018), however, could represent a significant reduction in the power of public-sector unions. A lawsuit filed by several union members against their union and various state government officials argues that Janus invalidates certain provisions of the WDEA. Thulen, et al v. AFSCME, et al, No. 1:18-cv-14584, complaint (D.N.J., Oct. 3, 2018). The lawsuit is among the first to test how Janus will impact New Jersey employees’ rights.

Federal and state laws protect workers’ rights to organize for the purpose of collective bargaining, and either to form a union or to join an existing union that can negotiate with management on their behalf. The WDEA declares that any public sector union chosen as “the exclusive representatives of employees in a collective negotiations unit” must “hav[e] access to and be[] able to communicate with the employees it represents.” P.L. 2018, c. 15 § 2 (N.J. Rev. Stat. § 34:13A-5.12). The law requires public employers to allow union representatives to have reasonable access to employees, and to provide certain employee information to the union within a specified time frame.

Public-sector union members may authorize their employer to deduct union membership dues from their paychecks. The WDEA provision at issue in Thulen involves a restriction on employees’ ability to withdraw authorization for this payroll deduction. An employee may only withdraw authorization by giving written notice to the employer “during the 10 days following each anniversary date of their employment.” Id. at § 6, amending N.J. Rev. Stat. § 52:14-15.9e.

The role of labor unions in the modern economy is often a controversial issue. It is exceedingly difficult to deny, however, that they have improved working conditions for employees in New Jersey and around the country. Today’s unions are arguably victims of their own success, as many people no longer see them as necessary. Workers nevertheless still benefit from the ability to bargain collectively with their employers. Federal and state laws protect workers’ ability to organize for purposes of collective bargaining, but many states have enacted laws that limit unions in important ways. A recent decision by the U.S. Supreme Court, Janus v. AFSCME, 585 U.S. ___ (2018), specifically impacts public sector unions and their ability to collect fees to support their collective bargaining activities. If you have a question about your union, contact a New Jersey labor law attorney.

The National Labor Relations Act (NLRA) of 1935 allows workers to organize in order to engage in collective bargaining with their employer regarding pay, working conditions, and other features of employment. See 29 U.S.C. § 157. Union members support these activities by paying membership fees. Workers who do not become dues-paying members often still benefit from the union’s efforts. This is commonly known as the “free rider problem.” Some unions dealt with this by negotiating “closed shop” agreements, by which the employer could only hire union members; or “union shop” agreements, which required all employees to join the union or pay an “agency fee” once they had been hired.

The Taft-Hartley Act of 1947 banned closed shop agreements, and only allowed union shop agreements or agency fees to the extent that they do not conflict with state law. Id. at § 164(b). Many states have enacted “right to work” laws, which prohibit unions from charging agency fees to non-members.
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The term “gig economy” has entered common usage in recent years. It broadly refers to alternatives, of sorts, to having a single 9-to-5 employer. This includes rideshare or delivery services, and services ranging from childcare to odd jobs through online platforms. It also includes selling goods through online marketplaces, and most kinds of freelance work. One supposed advantage of the gig economy is that it provides greater flexibility for workers than the traditional workplace. It also comes with certain disadvantages, including a lack of legal protections when compared to the traditional definition of “employment.” This summer, the New York Times reported on several studies examining the gig economy. While most of the workforce still holds traditional jobs, the gig economy is growing. The studies provide nationwide information, not figures on employment in New Jersey or any other specific state. As this type of work arrangement becomes more common, our system of employment laws may have to catch up. Speak to a New Jersey employment lawyer to discuss any questions you might have.

Minimum wage and overtime laws are among workers’ most important legal protections, but state and federal laws only apply to people who meet a specific definition of an “employee.” The federal Fair Labor Standards Act (FLSA) establishes a national minimum wage, overtime requirements, and limits on child labor. Its definition of an “employee” is simply “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). Gig economy workers are often considered to be independent contractors instead of employees, for FLSA purposes. The extent to which the FLSA’s minimum wage and overtime requirements apply to gig economy workers is a matter of ongoing dispute, with courts deciding cases in both directions and the U.S. Department of Labor (DOL) recently changing its position on the issue.

New Jersey’s Wage Payment Law expressly states that it only applies to “employees,” which it defines as “any person suffered or permitted to work by an employer.” N.J. Rev. Stat. § 34:11-4.1. The statute specifically excludes independent contractors from that definition. The state’s Wage and Hour Law has a similar definition of “employee,” but without the specific exclusion of independent contractors. Id. at § 34:11-56a1(h). State regulations establish a test for determining whether an employee has been misclassified as an independent contractor. N.J.A.C. § 12:56-16.1. See also Hargrove v. Sleepy’s, LLC, 106 A.3d 449 (N.J. 2015).
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Organized labor, usually in the form of labor unions, is responsible for countless improvements in working conditions in New Jersey and throughout the country. The first half of the twentieth century saw the most improvements, as unions and their members fought—often literally—for reasonable hours, workplace safety, and better pay and benefits. Union membership has declined significantly in the past fifty years, however. One reason is a well-organized campaign that advocates for laws limiting the influence of unions in the workplace. These laws often go by the rather Orwellian name “right-to-work.” Voters in Missouri recently rejected a right-to-work law enacted by the state legislature and signed by the governor. Still, at least twenty-seven states have enacted right-to-work laws. New Jersey remains very favorable towards unions, with both laws and court decisions that affirm unions’ importance to the modern workplace.

Unions are able to negotiate on behalf of workers through collective bargaining agreements (CBAs) between a union and an employer. In order to understand how right-to-work laws affect unions’ ability to negotiate effectively, it is important to understand how unions have sought to ensure that they are able to speak for as many workers as possible. Some CBAs have, in the past, created “closed shops,” which means that employers could only hire union members. A “union shop” refers to an employer that, under the terms of a CBA, must require employees to join the union as a condition of employment.

One of the main objections to these types of arrangements involves the obligation of workers to join a union and pay dues, even if they do not agree with the union’s positions on various issues. The counter-argument to this is that all employees of a particular employer are likely to benefit from a union’s work, including those who are not members of the union. This is known as the “free rider problem.” Some union-shop CBAs, rather than requiring all employees to join the union, require workers who do not want to join to pay an “agency fee.”
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Paid sick leave is a controversial subject throughout the country. Only a handful of states require it in some form. Federal law only mandates unpaid leave. Employers tend to oppose paid sick leave laws, since these laws require them to pay their employees for time they are not at work. Advocates of paid sick leave laws point out the reality that people get sick, that they need to be able to take time to rest and recover, and that many people will come to work sick if they know that the alternative is losing needed income. Sick people who come to work instead of staying home are rarely as effective at their jobs during that time, and they risk making even more people sick. New Jersey joined the small number of states that mandate paid sick leave earlier this year, when the Legislature passed the New Jersey Paid Sick Leave Act (NJPSLA). When it takes effect on October 29, 2018, this law will apply to all employers in the state, regardless of number of employees.According to the National Conference of State Legislatures (NCSL), only 10 states, including New Jersey, and the District of Columbia had mandatory paid sick leave as of May 2018. Federal law contains no provisions for mandatory paid leave for any purpose, including sick leave and parental leave. Internationally, the United States is an outlier among developed nations. A 2009 study by the Center for Economic and Policy Research (CEPR) compared paid sick leave policies in 22 countries. With the exceptions of Japan, Australia, and New Zealand, all of the countries are located in Europe or North America. The CEPR found that the U.S. is one of only three countries, along with Canada and Japan, with no paid sick leave whatsoever at the national level. At the opposite end of the spectrum, Luxembourg and Norway provide paid sick leave for up to 50 days for serious medical conditions like cancer.

The NJPSLA differs from most state paid sick leave laws in the breadth of its coverage. It defines an “employer” as “any…entity that employs employees in the State,” with no exception for small businesses. By contrast, the federal Family and Medical Leave Act (FMLA) only applies to employers with 50 or more employees, and to employees who have worked a minimum of 1,250 hours for their employer in the last 12 months. The FMLA also differs in the sense that it only requires unpaid leave.

Workers claiming sick leave under the NJPSLA are entitled to their regular rate of pay. For every 30 hours worked, workers accrue one hour of paid sick leave. Workers can carry a maximum of 40 unused hours of earned sick leave to subsequent years. The NJPSLA identifies five acceptable reasons for use of accrued sick leave:

Business laws in New Jersey and around the country protect corporate directors and officers from personal liability for most actions undertaken by the business. Courts will only “pierce the corporate veil” and allow suits against individual directors or officers in limited situations, such as illegal conduct by those individuals. In the context of employment, some statutes allow claims against individuals, while others do not. A putative class action alleging violations of a New Jersey wage law sought to hold individual directors liable along with the employers. A federal court, while allowing the lawsuit to proceed against the business entity defendants, ruled that New Jersey’s Prevailing Wage Act (PWA) “does not impute personal liability.” Palmisano, et al v. Crowdergulf, LLC, et al, No. 3:17-cv-09371, mem. order at 1 (D.N.J., May 29, 2018).

The PWA “establish[es] a prevailing wage level for workmen engaged in public works.” N.J. Rev. Stat. § 34:11-56.25. “Public works,” as defined by the statute, includes most construction and maintenance work performed under government contract, or performed on government-owned property. Id. at § 34:11-56.26(5). The “prevailing wage” is the rate paid in accordance with collective bargaining agreements in force in the geographic area of the public work. Id. at § 34:11-56.26(9). Workers must be paid, at minimum, the current prevailing wage, which may vary based on location, type of work, and other factors. If an employer pays a worker less than the prevailing wage rate, the worker may file a private cause of action to recover amounts owed to them. Id. at § 34:11-56.40.

The defendants in the Palmisano case include corporations and limited liability companies that entered into contracts with the State of New Jersey for cleanup work after Hurricane Sandy. The hurricane caused extensive damage to the mid-Atlantic region in late October 2012. It made landfall in New Jersey on October 29, killing thirty-seven people, damaging or destroying nearly 350,000 homes, and causing an estimated $30 billion in damage. The state entered into contracts with companies from all over the country to repair the damage.

Class actions and collective actions allow numerous individuals with similar claims to bring a single lawsuit against a common defendant, rather than hundreds or thousands of individual lawsuits. A New Jersey employee, for example, could file a collective action on behalf of themselves “or other employees similarly situated” for violations of state minimum wage law. See N.J. Rev. Stat. § 34:11-56a25. This offers many benefits for plaintiffs, particularly in situations where the cost of filing suit individually, when compared to the potential recovery, would make it too expensive to assert one’s legal rights. One could also argue that class actions help defendants by consolidating all claims against them into a single lawsuit, rather than hundreds or thousands of lawsuits. That is not how employers and other defendants usually see class actions, however, and they frequently argue against allowing employees to pool their claims in a single lawsuit. The U.S. Supreme Court recently sided with employers regarding collective arbitration, similar to collective or class actions. Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018).

The ruling in Epic Systems arose from a conflict between two federal statutes: the Federal Arbitration Act (FAA) of 1925, 9 U.S.C. § 1 et seq.; and the National Labor Relations Act (NLRA) of 1935, 29 U.S.C. § 151 et seq. The FAA generally states that arbitration clauses in written contracts “involving commerce” are “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. Courts have authority to order parties to such a contract to participate in arbitration, and to enforce the recommendations of the arbitrators. A court may only vacate or modify an arbitration award on grounds specified by the statute. See id. at §§ 10, 11. The Supreme Court held that the FAA applies to contracts executed under both state and federal law in Southland Corp. v. Keating, 465 U.S. 1 (1984).

The NLRA protects the rights of workers to organize for the purpose of collective bargaining—i.e. to form or join labor unions—and “to engage in other concerted activities for” those purposes. 29 U.S.C. § 157. It is an “unfair labor practice” for employers to “interfere with” or “restrain” employers engaged in these protected activities. Id. at § 158(a)(1). Courts have given rather broad interpretation to the meaning of “concerted activities.” The question in Epic Systems concerned whether collective arbitration was a “concerted activity” protected by the NLRA, or whether the FAA required enforcement of arbitration clauses in individual employment contracts.
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A group of baggage handlers employed by a major airline at Newark Liberty International Airport enjoyed a victory in their wage lawsuit recently, when a federal judge granted their request for class certification. Ferreras, et al. v. American Airlines, Inc., No. 2:16-cv-02427, opinion (D.N.J., Mar. 5, 2018). The plaintiffs allege that the defendant violated the New Jersey Wage and Hour Law (NJWHL) by requiring them to work during times when they were “off the clock.” The lawsuit originally asserted causes of action under both the NJWHL and the federal Fair Labor Standards Act (FLSA). Airline employees are specifically exempted from the FLSA’s minimum wage provisions, but they are covered by the NJWHL.

Both federal and state laws require employers to pay overtime compensation to non-exempt employees for work performed in excess of 40 hours in a week, at one-and-a-half times the regular hourly rate. See 29 U.S.C. § 207(a)(1), N.J. Rev. Stat. § 34:11-56a4. Ideally, employees submit time sheets showing the total amount of time worked, and for any time worked over 40 hours per week, the employer pays them time-and-a-half. In reality, however, some employers require “off the clock” work, meaning employees must perform job-related services during time that is not included on their time sheets. If the total compensation received does not reflect the total amount of time actually worked, the employer could be liable under the FLSA or the NJWHL.

A wide range of jobs are exempt from the FLSA’s minimum wage and overtime provisions. Perhaps the best-known of these exemptions is for those who work “in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). Some jobs are only exempt from the overtime requirement. This includes “any employee of a carrier by air subject to” federal legislation. Id. at § 213(b)(3). The NJWHL only exempts “employee[s] of a common carrier of passengers by motor bus.” N.J. Rev. Stat. § 34:11-56a4. While the statute does not define “motor bus,” it has been construed not to include airplanes.

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