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COVID-19 RESOURCE CENTER FOR NJ EMPLOYEES

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) became law. This bill is not as comprehensive as other bills that Congress has passed in response to the global COVID-19 pandemic, but it has some of the most important provisions affecting employment law. New Jersey employment law provides paid sick leave for workers and is one of few states to do so. The FFCRA establishes a temporary nationwide system of paid sick leave. It also temporarily expands the unpaid leave that is available under the federal Family and Medical Leave Act (FMLA). These provisions have several important limitations, including the total exclusion of employers with five hundred or more employees. A new temporary rule from the Department of Labor’s Wage and Hour Division (WHD) limits some workers’ ability to enforce their rights under the system of expanded FMLA leave.

FMLA Enforcement at Normal Times

The FMLA applies to employers with fifty or more employees, and employees who have worked at least 1,250 hours during the previous twelve months. In any twelve-month period, an eligible worker may take up to twelve weeks of unpaid leave for certain purposes, including a “serious health condition” and the need to care for a family member with such a condition.

Employers may not interfere with an eligible employee’s use of authorized leave, nor may they retaliate against an employee for taking leave. The employee’s job is protected during their leave. Employees may file a civil lawsuit against an employer who violates these provisions, and may recover damages including lost wages and benefits.

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Medical marijuana use is legal to varying degrees in more than half of the states in the U.S., including New Jersey. The Compassionate Use Medical Marijuana Act (CUMMA), which was first enacted in 2009, allows individuals to purchase, possess, and use marijuana products under the direction of a physician. Prior to 2019, the text of the statute was rather ambiguous about how it impacted employees’ rights in the workplace. The New Jersey Supreme Court recently ruled on a case that began in 2017, in which the plaintiff alleged that the defendant fired him because of his lawful medical marijuana use, in violation of the New Jersey Law Against Discrimination (LAD). The court affirmed a decision from the Appellate Division that allowed the case to go forward.

Two provisions of CUMMA appear to implicate employees’ rights. Section 8 of the statute states in part that the law does not allow an individual to operate any sort of vehicle or heavy machinery “while under the influence of marijuana.” Section 16 provides that the law does not require “an employer to accommodate the medical use of marijuana in any workplace.”

The LAD prohibits employers from firing an employee or subjecting them to other adverse or disparate treatment because of a disability. The statute defines “disability” to include “physical…mental, psychological or developmental disabilit[ies]” that are “demonstrable, medically or psychologically, by accepted clinical or laboratory diagnostic techniques.” The definition of “debilitating medical condition” provided by CUMMA overlaps with the LAD’s definition of “disability” in numerous areas.

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The coronavirus and the illness that it causes, COVID-19, have made vast changes to workplaces in New Jersey, the U.S., and worldwide over the course of less than a month. Public health experts have recommended “social distancing” as a way to slow the spread of the virus while the healthcare system rushes to get ready. The governor of New Jersey has issued a series of executive orders (EOs) closing many “non-essential” businesses and instructing others to allow remote working whenever possible. The EOs direct businesses to follow public health guidelines in order to protect workers who must report to their workplaces. This raises important legal questions that have no clear answers yet.

In this environment of social distancing, what are employees’ rights if their employer requires them to come to work when their business is not “essential”? What if their employer will not allow them to work remotely, even though doing so would be feasible? What if an employer endangers employees’ health by failing to follow public health officials’ recommendations?

Executive Orders and the Effect on New Jersey Businesses

EO 104, signed on March 16, ordered certain businesses to close their facilities to the public, including gyms, movie theaters, and nightclubs. Restaurants could only remain open for take-out orders and food delivery. “Non-essential” retail businesses were ordered to cut their hours. Retail operations deemed “essential” include:
– Grocery stores;
– Pharmacies;
– Healthcare facilities; and
– Gas stations.
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American society often takes an odd view of sick leave. A common way for someone to demonstrate their dedication to their job is to say that they have “never taken a sick day.” The implication behind this claim is not necessarily that they never got sick, but rather that they continued showing up to work even if they were sick. Everyone gets sick at some point, though, whether it is a minor cold, a major flu, or something even worse. Some people might never take sick leave because they feel like they should not, while other people might not have the option of missing work. From an employee’s point of view, New Jersey employment laws are more generous than those of many states in this regard.

Showing up to work regardless of illness might seem like an admirable display of determination, but it could put one’s co-workers at risk of getting sick. This is especially true in early 2020, when COVID-19, also commonly known as the coronavirus, has led public health officials to advise people displaying certain symptoms to stay home or seek immediate medical attention. Unfortunately, not everyone can do this.

Many workers in the U.S. have little to no available sick leave, paid or unpaid. Even if they have the means to see a doctor, they might believe that they have no choice but to go to work. Workers in New Jersey need to know their rights under state and federal sick and medical leave laws, so that they can better understand their options if they need to isolate themselves.

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Federal and New Jersey wage and hour laws require employers to pay overtime rates to their non-exempt employees for any time they spend working over forty hours in a week. The amount of overtime pay is based on the employee’s “regular rate” of pay. Under federal law, some payments and perks are not included in employees’ regular rate for the purpose of calculating overtime pay. The U.S. Department of Labor (DOL) issued updated rules clarifying what is included in and excluded from an employee’s regular rate. They took effect in January 2020. The purpose of these updates, according to the DOL, is to “encourage employers to provide additional and innovative benefits” to their employees while complying with federal overtime law. 84 Fed. Reg. 68736 (Dec. 16, 2019). Employees should also be aware of what is counted in their regular rate of pay.

Overtime Rate of Pay

The federal Fair Labor Standards Act (FLSA) states that employers must pay overtime to non-exempt workers for time spent working in excess of forty hours in a week. 29 U.S.C. § 207(a). The statute sets the overtime rate at one-and-a-half times an employee’s “regular rate.” An employee with a regular hourly rate of $15 per hour would therefore be entitled to $22.50 per hour for overtime work.

Exclusions from “Regular Rate”

An employee’s regular rate, according to the FLSA, is anything paid to the employee that is not specifically excluded by the statute. Exclusions include various payments and other things of value provided to employees. Some exclusions do not provide any credits to offset an employer’s responsibility to pay overtime:
– Bonuses for special occasions, such as Christmas bonuses, that are not tied to performance in any way;
– Payments for periods when the employee is not working, such as vacation or sick time;
– Additional payments made in the employer’s sole discretion, not as part of an employment contract, “in recognition of services performed during a given period”;
– Employer contributions to a retirement plan, health insurance policy, or other benefit; or
– The value or income from a stock option or stock appreciation plan.
Id. at §§ 207(e)(1) – (4), (8).

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New Jersey passed significant legislation in 2019 taking on wage theft by employers. The new law provides not only civil and administrative penalties, but also criminal consequences for employers that fail to pay their employees what they are owed. A series of bills passed in early 2020 addresses New Jersey employee misclassification, a related issue that deprives employees of their legal rights. Misclassification can also cause underfunding of important state programs, including the unemployment and disability insurance funds. One of these bills amends the wage theft law to add new means of holding employers liable for violations of state employment tax laws due to misclassification. This new law does not provide employees with a cause of action, but it benefits them by allowing state regulators to ensure employers are paying their share of employment taxes.

Employee Misclassification

Employee misclassification effectively strips workers of legal protections. Multiple statutes at the federal, state, and local levels protect employees by, to name only a few, guaranteeing a minimum wage and overtime compensation, regulating workplace safety, and prohibiting workplace discrimination and harassment. Legal protections for independent contractors are limited to the rights enumerated in their contracts and the general principles of contract law. Some employers see an incentive to classify workers as independent contractors when they are actually employees, since they owe fewer legal duties to independent contractors.

Employers contribute to multiple programs that benefit employees through the payment of employment taxes. At the federal level, this includes a share of payroll taxes that go to the Social Security and Medicare programs. State employment taxes fund unemployment insurance, disability insurance, and workers’ compensation. Misclassification results in employers not contributing to these programs, potentially leaving them without adequate funding. Since independent contractors are considered “self-employed,” it can also result in misclassified workers having to shoulder their employers’ share of those taxes themselves.

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New Jersey labor laws protect workers’ rights to a minimum wage, overtime pay, unemployment insurance, a workplace free of discrimination and harassment, and other matters. These laws regulate the relationship between employers and employees. Unfortunately, some employers try to evade their responsibilities by classifying employees as independent contractors. Employee misclassification is a violation of state law. New Jersey employment law places most of the burden of proof on employers to establish that an individual is not an employee. Legislation signed by the Governor in January 2020 assesses penalties for misclassification and requires employers to post notices of workers’ rights. In late 2019, the New Jersey Department of Labor and Workforce Development (LWD) demanded almost $650 million in unpaid employment taxes and interest from a rideshare company that has frequently been the subject of misclassification complaints.

Employees in New Jersey are covered by a rather vast array of federal, state, and local employment laws. They cover issues ranging from wages and hours to workplace safety. Some statutes only apply to employers with a minimum number of employees, while others apply to all employers. Independent contractors are not covered by these laws. Their legal protections are largely limited to the terms of their contracts and contract law. Many statutes do not provide a particularly helpful definition of an “employee.” The federal Fair Labor Standards Act, for example, defines an employee as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1).

State law fills in gaps left by federal statutes. In 2015, the New Jersey Supreme Court adopted a definition of “employee” known as the “ABC test,” based on §§ 43:21-19(i)(6)(A) through (C) of the New Jersey Revised Statutes. An individual is presumed to be an employee unless the employer can establish three elements:

1. The employer does not exercise control over how the individual performs their job, both in the text of the contract and in actual practice;
2. The individual’s job is outside the scope of the employer’s regular business, or the individual performs their job away from the employer’s business premises; and
3. The individual works in their own separate business or trade.

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New Jersey joined several other states in prohibiting hairstyle discrimination in late 2019 when the Legislature passed the “Create a Respectful and Open Workspace for Natural Hair Act,” also known as the CROWN Act. The new law adds a definition of “race” to the New Jersey Law Against Discrimination (NJLAD) that specifically includes hairstyles historically or traditionally associated with particular racial groups. Many workplaces maintain dress codes or grooming policies that, whether intentional or not, discriminate against Black workers, such as by placing an extra burden on them in terms of how they maintain their hair. New York City issued guidance about race discrimination based on hairstyles in early 2019, and versions of the CROWN Act became law in New York State and California in July. New Jersey race discrimination law thus served as a model for other states to follow.

The NJLAD bars employers from discriminating on the basis of race and multiple other factors. N.J. Rev. Stat. § 10:5-12(a). The statute identifies certain actions as discriminatory, including refusing to hire someone, firing someone or requiring them to retire, or barring them from consideration for employment based on a protected category. Discrimination in the “terms, conditions or privileges of employment” also violates the NJLAD. Id. This may include employment policies or practices that favor or disfavor one group over another, or that impose additional burdens on a group of employees without a reasonable business-related justification. These types of practices can violate laws like the NJLAD even in the absence of discriminatory intent.

New York City’s guidance on hairstyle discrimination, issued in February 2019, offers a useful overview of how it can violate antidiscrimination laws. The document describes various “hair textures [that] are common among people of African descent,” and discusses how people may choose particular hairstyles for “cultural,…personal, financial, medical, religious, or spiritual reasons.” It also describes “protective style[s], intended to maintain hair health.” Discriminatory workplace policies that prohibit many of these hairstyles are often based on “a widespread and fundamentally racist belief that [they] are not suited for formal settings.” Such policies usually derive from “white and European beauty standards.”

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Employers in New Jersey may no longer ask job applicants how much they made at their last job, thanks to a new law passed by the Legislature in June 2019 and signed by the Governor in July. The bill amends several provisions of New Jersey employment discrimination laws to prohibit employers from “screen[ing] a job applicant based on the applicant’s salary history.” Inquiries about salary history can offer employers a way around laws against pay discrimination, such as the federal Equal Pay Act (EPA). When an employer bases hiring or salary decisions on how much an applicant made at their previous job, it tends to perpetuate existing wage imbalances. As of December 2019, sixteen states, the District of Columbia, Puerto Rico, and multiple local governments have enacted laws prohibiting salary history inquiries to various degrees.

The EPA prohibits discrimination in pay on the basis of gender, meaning that employers must pay male and female employees the same for work that “requires equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d)(1). It makes exceptions for different rates of pay based on seniority, merit, “quantity or quality of production,” or “a differential based on any other factor other than sex.” Id. Bans on salary history inquiries are partly motivated by concerns that past salary could fit into that last category. The status quo in the United States in late 2019 is that multiple wage gaps exist. People can argue over what causes these gaps, but their existence is difficult to dispute. Employment decisions based on salary history, regardless of an employer’s intent, can serve to entrench the disparities.

State laws governing salary history inquiries vary widely in what they prohibit and allow. Alabama, for example, passed a law around the same time as New Jersey that bars employers from making an adverse employment decision based solely on an applicant’s refusal to provide information on their salary history. It does not expressly prohibit employers from asking for such information. California’s law, enacted in 2017, bars employers from asking, and goes much further. Employers in California may not “rely on the salary history information of an applicant for employment” in either hiring or salary decisions, unless the applicant voluntarily discloses the information.

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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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