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The court system encourages litigants to attempt alternative dispute resolution (ADR) before taking their cases to court. Many employment contracts in New Jersey and nationwide include clauses requiring arbitration before (or instead of) going to court. The Federal Arbitration Act (FAA) strongly favors these clauses, but it exempts certain groups of workers. The Third Circuit Court of Appeals recently vacated an arbitration order in a New Jersey employment class action. It found that the plaintiff, a driver for a major rideshare company, could be part of an exempt group under the FAA.

The Third Circuit case deals with alleged misclassification of employees as independent contractors, a common issue with rideshare companies and other “gig economy” employers. Employees are protected by multiple local, state, and federal statutes governing wages, hours of work, working conditions, paid and unpaid leave, discrimination and harassment, and more. Independent contractors do not enjoy most of these legal protections. Under New Jersey law, a worker is considered an employee unless they meet the “ABC test,” which looks at the degree of control the employer may exercise over the worker, and the extent to which the worker has their own established trade or business. See N.J. Rev. Stat. §§ 43:21-19(i)(6)(A), (B), (C).

ADR offers some advantages over litigation, but for employees seeking relief under New Jersey’s employment statutes, it can also have disadvantages. The parties must pay all of the costs associated with ADR, including the fees charged by arbitrators, mediators, or other ADR specialists. This can give employers with deep pockets an advantage. The FAA sets a very high bar for challenging, modifying, or vacating an arbitration award. In order for a court to compel arbitration in an employment lawsuit, however, an employer must first demonstrate that the FAA applies to its employees.

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Workplace harassment on the basis of a protected category is considered unlawful employment discrimination under New Jersey law and throughout the country. Most people are familiar with how sexual harassment violates New Jersey employment discrimination laws, but it also applies to harassment based on race, religion, and other factors. The New Jersey Law Against Discrimination (NJLAD), N.J. Rev. Stat. § 10:5-1 et seq., prohibits discrimination and harassment on numerous bases, as well as retaliation for opposing or reporting alleged unlawful practices. The Conscientious Employee Protection Act (CEPA), id. at § 34:19-1 et seq., protects the rights of whistleblowers who report suspected unlawful activity by their employers. A state employee filed suit in 2013 for race harassment and retaliation under the NJLAD and CEPA. In April 2019, a jury in Mercer County, New Jersey awarded him over $987,000 in damages.

The NJLAD prohibits employment discrimination on the basis of race and multiple other factors. See id. at § 10:5-12(a). This includes a wide range of adverse employment actions. Firing or refusing to hire a person because of their race is perhaps the most obvious sort of discriminatory act in violation of the NJLAD, but workplace discrimination takes far more forms than that. Pervasive and unwelcome actions that create a hostile work environment based on race also support an NJLAD claim.

Employers who “take reprisals against any person” who either opposes or reports alleged violations of the NJLAD commit a separate violation of the NJLAD, commonly known as retaliation. Id. at § 10:5-12(d). CEPA provides similar protections for employees who “[d]isclose[], or threaten[] to disclose” alleged legal violations by an employer, either to a supervisor or a government body. Id. at § 34:19-3(a). This may include reporting NJLAD violations.

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Employers often include restrictive covenants (RCs) in employment contracts. As the name suggests, these are contractual provisions that restrict employees from taking certain actions, both during and after employment. In order for provisions like these to be enforceable, they must balance the employer’s interests with the employee’s rights. The New Jersey Superior Court, Appellate Division ruled this summer in a consolidated group of cases in which an employer alleged RC violations by former employees. It addressed the “inconsistent” handling of the lawsuit by lower courts, and sought “to bring some clarity and uniformity” to how courts deal with RCs in New Jersey employment contracts.

Two common RCs are:
– Non-competition or non-compete agreements, which restrict employees from working for another company that competes with their employer; and
– Non-solicitation agreements, which restrict employees from soliciting clients or customers of their employer to do business with someone else.

In 1970, the New Jersey Supreme Court established three principles for non-competition agreements. In order to be enforceable, the court held that a non-competition agreement (1) must protect no more than an employer’s “legitimate interests”, (2) must “impose[] no undue hardship on the employee”, and (3) must not be “injurious to the public.” The court further ruled that New Jersey non-competition agreements must have reasonable limits on both duration and geographic scope. The court later held that the employer has the burden of demonstrating enforceability. A non-competition agreement that restricts a former employee’s ability to work indefinitely, or which prohibits working for a competitor anywhere in the United States would likely be deemed unreasonable and unenforceable in New Jersey.

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New Jersey employment statutes protect workers against a variety of acts by employers, but in order for these protections to apply, an employment relationship must exist. Independent contractors generally do not fall within the scope of these laws. Employers therefore sometimes attempt to classify workers as independent contractors when they should be employees. This is known as “misclassification.” In May 2018, the Governor of New Jersey established a task force to make recommendations on how the state can address employee misclassification. The task force released a report in July 2019 that provides 10 recommendations for identifying misclassification, enforcing state law, and deterring employers from misclassifying their employees.

Employee Misclassification

The task force defines misclassification as “the practice of illegally and improperly classifying workers as independent contractors, rather than employees.” It states in its report that the practice has increased over the past decade by about 40 percent. It attributes this, in large part, to the “fissured workplace,” in which companies use an extensive network of outsourced contractors and subcontractors.

In a 2015 ruling, the New Jersey Supreme Court adopted the “ABC test” for determining whether an individual is an employee or an independent contractor, based on a definition of “employment” codified at N.J. Rev. Stat. §§ 43:21-19(i)(6)(A) – (C). The test presumes that a person is an employee unless their working conditions meet three criteria. The individual’s work must be generally free from control by the employer, the services performed by the individual must be either not part of the employer’s usual business or performed somewhere other than the employer’s usual place of business, and the individual must have their own “independently established trade, occupation, profession or business.”

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In addition to prohibiting discrimination on the basis of factors like race, sex, and religion, most anti-discrimination statutes also prohibit employers from retaliating against employees who report alleged discrimination, who participate in an investigation of alleged unlawful acts, or who engage in other legally protected activities. In 2016, a jury in Bergen County, New Jersey found in favor of a former bank vice president who alleged that she was fired for reporting her concerns about gender discrimination. It found that the bank had retaliated against the plaintiff in violation of the New Jersey Law Against Discrimination (NJLAD) and awarded her $935,000 in damages. In June 2019, the New Jersey Superior Court, Appellate Division affirmed the verdict and award.

Discrimination “on the basis of” a protected category generally refers to discrimination that is motivated by an individual’s membership, or perceived membership, in a protected group. Statutes like the NJLAD also protect employees against discriminatory or retaliatory actions based on their good-faith efforts to enforce these rights. A prohibition on discrimination is not much help if an employer can still fire someone because they made an allegation of discrimination. The NJLAD therefore prohibits employers from “tak[ing] reprisals” against employees who “oppose[] any practices or acts forbidden under this act.” N.J. Rev. Stat. § 10:5-12(d).

The Equal Employment Opportunity Commission (EEOC) reports that retaliation is the most common complaint it receives. In fiscal year 2018, the agency received 39,469 complaints alleging retaliation under at least one of the statutes it enforces. This accounted for 51.6 percent of all complaints received that year. More than 30,000 complaints, or 40 percent, were specifically for retaliation under Title VII of the Civil Rights Act of 1964.

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The New Jersey Law Against Discrimination (NJLAD) prohibits employers from discriminating on the basis of disability. It also requires employers to make “reasonable accommodations” for employees with disabilities, in order to enable them to perform their job duties. A New Jersey disability discrimination lawsuit originally filed in the Superior Court of Bergen County alleged failure to accommodate against a grocery store. The employee was bitten on the arm by a venomous spider while at work, resulting in hospitalization. He alleged in the lawsuit that the employer failed to accommodate the “anxiety and panic attacks” that arose because of the experience, and that he was fired in violation of the NJLAD. The parties settled the suit shortly after its removal to federal court.

The term “disability,” as defined by the NJLAD, includes “any mental [or] psychological…disability…which prevents the normal exercise of any bodily or mental functions.” N.J. Rev. Stat. § 10:5-5(q). Anxiety and panic disorders can be extremely debilitating for some individuals.

The Equal Employment Opportunity Commission (EEOC) issued a guidance document in 1997 that addressed whether anxiety may qualify as a disability under federal law. Its conclusions do not control New Jersey state courts applying the NJLAD, but they may still offer some useful guidance. The EEOC offered an example of an employee whose anxiety disorder affected their “ability to concentrate.” Legal antidiscrimination protections would be available, the EEOC concluded, if the impact of the anxiety disorder is “long-term or potentially long-term, as opposed to temporary.”

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While Title VII of the Civil Rights Act of 1964 is considered to be the primary federal antidiscrimination law, the Age Discrimination in Employment Act (ADEA) of 1967 also provides important protections for workers nationwide. Both the ADEA and New Jersey’s antidiscrimination statute prohibit employers from advertising job openings in ways that restrict eligibility on the basis of age. A pending federal class action against several major companies addresses a relatively new method of advertising. The lawsuit alleges that the defendants restricted the visibility of job advertisements on social media to users in certain age ranges. Several recent decisions by the Equal Employment Opportunity Commission (EEOC) support the plaintiffs’ position that this violates the ADEA’s advertising restrictions.

The ADEA’s protections against age discrimination apply to workers who are at least forty years old. 29 U.S.C. § 631(a). The New Jersey Law Against Discrimination (NJLAD), on the other hand, does not set a minimum age but states that employers may “refus[e] to accept for employment or to promote” a person who is more than seventy years old. N.J. Rev. Stat. § 10-5:12(a). Both statutes prohibit the publication of job advertisements that demonstrate “any limitation, specification or discrimination” based on age. 29 U.S.C. § 623(e), N.J. Rev. Stat. § 10:5-12(c). Job listings that only purport to limit the eligibility of minors typically do not violate these statutes, since minors are subject to separate work restrictions. A job advertisement stating that a job is only open to applicants between the ages of eighteen and forty would violate both the ADE and the NJLAD.

In July 2019, the EEOC issued determination letters to seven companies based on charges filed under the ADEA. All of the charges alleged unlawful posting of job advertisements on the social media platform Facebook, which allows companies to target advertisements to certain audiences. The EEOC reported that it found evidence that the companies “used language to limit the age of individuals who were able to view the advertisement.” It notified the companies that it had found “reasonable cause to believe that [they] violated the ADEA.”

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New Jersey employment lawsuits can take months or years before getting to trial. Alternative dispute resolution (ADR) offers other ways for litigants to deal with their disputes. Many employment contracts now include clauses stating that employees agree to submit employment-related disputes to arbitration, a type of ADR that resembles a trial, before going to court. The Federal Arbitration Act (FAA) sets standards for arbitration agreements, and establishes limited guidelines for when courts have the authority to vacate or modify “binding” arbitration awards. The U.S. Supreme Court recently ruled on whether an arbitration agreement in an employment contract can require an employer to engage in arbitration with a class of employees, rather than separate proceedings with each employee asserting a claim. The ruling in Lamps Plus, Inc. v. Varela, 587 U.S. (2019), holds that an arbitration agreement must explicitly allow for class arbitration. Courts cannot infer consent to class arbitration from an ambiguous agreement.

In an arbitration, the parties to a dispute choose a neutral third-party arbitrator who acts in a role similar to that of a judge. This process offers the advantage of moving faster than a lawsuit. Its disadvantages often weigh heavier on employees, such as the confidentiality of arbitration proceedings and, in the case of binding arbitration, a lack of further recourse if the arbitrator rules against them. The FAA presumes that any agreement to arbitrate is “valid, irrevocable, and enforceable” as long as it complies with all requirements for an enforceable contract. 9 U.S.C. § 2.

Federal and state civil procedure rules allow large groups of plaintiffs with similar claims against a defendant to join their claims into a single lawsuit, known as a class action. Class arbitration operates on a similar principle, allowing a group of claimants to present their cases together in one proceeding. The alternative is to have each claimant bring their claims individually, with each individual bearing the full cost of doing so. While a well-established set of procedural rules govern class actions, however, class arbitration derives from contractual agreements, such as those between employees and their employer. The Supreme Court ruled that courts cannot compel class arbitration when the arbitration agreement is “silent” on whether the parties have consented to it.

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The Americans with Disabilities Act (ADA) of 1990 is a groundbreaking law that protects the rights of people with disabilities in the workplace and in many public businesses. Employers may not discriminate against employees or job applicants on the basis of a covered disability, and they may be required to provide “reasonable accommodations” to allow employees to perform their job duties. The statute also bars employers in many circumstances from requiring medical examinations, or making other inquiries regarding medical conditions. The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey, recently ruled on a disability discrimination claim that included alleged violations of the ADA provisions regarding reasonable accommodations and medical inquiries. The court reversed a lower court order dismissing those claims, allowing them to move forward. If you feel your employer is not providing reasonable accommodations in light of your medical condition, it may be to your advantage to contact a New Jersey disability discrimination attorney.

In order for a person to establish that they have a “disability” under the ADA, they must show that their impairment “substantially limits one or more major life activities,” or that they are “regarded as having such an impairment.” 42 U.S.C. §§ 12102(1)(A), (C). A “reasonable accommodation” might include physically modifying the work environment or making adjustments to work schedules. See id. at § 12111(9). An employer commits unlawful disability discrimination when, without establishing that doing so would “impose an undue hardship,” they fail to provide a reasonable accommodation to a qualified employee. Id. at § 12112(b)(5)(A).

Employers may not require employees to undergo medical examinations, nor may they inquire about employees’ medical history or medical conditions, except as specifically authorized by the statutes. The ADA specifically prohibits medical examinations or inquiries intended to determine whether an employee has a disability, or to ascertain “the nature or severity of the disability,” except when an employer can show that it is “job-related and consistent with business necessity.” Id. at § 12112(d)(4)(A).

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The Family and Medical Leave Act (FMLA) requires covered employers to provide eligible employees with up to twelve weeks of unpaid leave. It is the only federal statute that provides medical leave nationwide, and it only provides unpaid leave. New Jersey is one of five U.S. states, plus the District of Columbia, to provide paid leave for new parents and for certain other purposes. The U.S. Department of Labor (DOL) revised its guidance on the accrual of FMLA leave by employees in an opinion letter released in March 2019. This guidance bars employers from delaying the designation of accrued leave as FMLA leave. It might also affect how and when employees can take leave under the FMLA or another program. If you need to take paid leave and wonder if doing so is permissible under state law, you should reach out to a New Jersey employment law attorney at your earliest convenience.

Employers with at least fifty employees must provide FMLA leave. 29 U.S.C. § 2611(4)(A). In order to be eligible, employees must have worked for the employer for at least one year, and they must have actually worked at least 1,250 hours during that time. Id. at § 2611(2). Unpaid leave is available for up to twelve weeks per twelve-month period, for reasons like the birth or adoption of a child, serious illness or injury, or caring for an ill or injured family member. Id. at § 2612(a)(1).

If an employer provides paid leave to its own employees, but the total amount of leave available under the program is less than twelve weeks, the FMLA only requires that employer to provide enough unpaid leave to bring the total amount of leave to twelve weeks. Id. at § 2612(d). For example, if an employer provides six weeks of paid family leave, the FMLA would only require it to provide an additional six weeks of unpaid leave.

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