Labor & Employment Insights

Following through on Governor Hokhul’s promise in her 2022 State of the State address, New York lawmakers passed a blanket ban on all non-compete agreements, thus joining the growing federal and state efforts to curb their use.   However, the bill imposes greater restrictions than those implemented in other jurisdictions, including California, North Dakota, Oklahoma, Colorado, Illinois and Maryland.  The bill will take effect 30 days after it is signed by the Governor.

The Broad Scope of the Ban: 

The bill prohibits all employers, regardless of industry, from seeking, requiring, demanding or accepting a non-compete agreement from any “covered individual,” defined as any person who performs services on such terms that the individual is economically dependent on the other.  Thus, unlike other laws that include a carve out for highly compensated employees, the ban extends to all workers across the board, including workers hired as independent contractors.

On June 13, 2023, the National Labor Relations Board (“NLRB” or “Board”) reverted to its prior employee friendly independent contractor test to find that makeup artists, wig artists, and hairstylists (“the stylists”) working for the Atlanta Opera were employees rather than independent contractors.  This revived independent contractor test will significantly impact employers who will now face a higher bar when seeking to classify workers as independent contractors excluded from the protections of federal labor laws.

The Discarded SuperShuttle Standard:  Since 2014 the NLRB applied the following non-exhaustive list of factors to determine independent contractor status:

  • The extent of control the employer exercises over the work

On May 30, 2023, the Department of Labor (“DOL”) issued an opinion letter clarifying how to calculate leave taken under the Family and Medical Leave Act (“FMLA”) during a week containing a holiday. It is important for employers to properly calculate employee FMLA leave time because a miscalculation could be considered an interference with an employee’s FMLA rights.

The FMLA requires covered employers to provide eligible employees up to twelve workweeks of unpaid leave within a twelve-month period for qualifying family or medical reasons or twenty-six workweeks of unpaid leave within a twelve-month period for caretaking of qualifying service members.  Employees may take FMLA leave intermittently by taking leave in separate blocks of time or by working shortened weeks or days. The amount of FMLA leave taken by employees is calculated as a fraction of the employee’s actual workweek. For example, an employee who normally works forty hours a week but takes off eight hours for FMLA reasons, would use 1/5 of a week of his or her FMLA leave entitlement.

Full Workweek of FMLA Leave

On May 30, 2023 Jennifer Abruzzo, General Counsel for the National Labor Relations Board , sent a memorandum to all Regional Directors expressing her view that except in limited circumstances, non-compete provisions in employment and severance agreements constitute unfair labor practices under Section 7 of the National Labor Relations Act (“NLRA”) because they “tend to chill employees in the exercise of Section 7 rights” which protect employees’ rights to take collective action to improve working conditions.  While many mistakenly believe the NLRA’s reach only extends to unionized workplaces, both unionized and nonunionized employers are liable for unfair labor practices that violate employee Section 7 rights.

More specifically, the memorandum claims that non-competes interfere with employees’ ability to:

  • Concertedly threaten to resign to secure better working conditions;

BACKGROUND

Title VII prohibits employers from using neutral selection procedures that disproportionately exclude individuals on the basis of race, color, religion, sex or national origin unless the employer can show the procedures are “job related for the position in question and consistent with business necessity.”   In 1978, the U.S. Equal Opportunity Commission (EEOC) adopted Uniform Guidelines on Employee Selection Procedures providing guidance for employers to determine whether selection procedures commonly used in making employment decisions ran afoul of Title VII’s protections.

In response to the increased use of algorithmic decision-making tools (commonly referred to as artificial intelligence or “AI”) to assist in making a wide array of employment decisions, in May 2023, the EEOC issued new guidance entitled “Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964.”  While the EEOC’s guidance does not have the force of law and is not binding upon employers, it serves as a warning that the EEOC will be monitoring AI use to ensure that these decision-making tools do not adversely impact protected groups in violation of Title VII.

A recent decision from the New Jersey District Court illustrates the extraordinary job protections for recreational marijuana users under the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”).

THE LEGAL BACKDROP

The job protection provisions of CREAMMA prohibit employers from disciplining employees “solely due to the presence of cannabinoid metabolites in the employee’s body fluid.”  Although CREAMMA expressly permits workplace reasonable suspicion, post-accident and random testing for marijuana, it also mandates a physical evaluation be conducted “by an individual with the necessary certification” to determine the employee’s current state of impairment before discipline can be imposed.  The physical evaluation requirement was included because current tests can only determine recent marijuana use, not current impairment.  However, the physical evaluation requirement was temporarily waived by regulation until such time that the NJ Regulatory Cannabis Commission (the “Cannabis Commission”) develops standards for a Workplace Impairment Recognition Expert (“WIRE”) certification. Thus, for the time being a physical evaluation is not a prerequisite for taking action against an employee who tests positive for cannabis.

On March 16, 2022, the New Jersey Appellate Division concluded in Davis v. Disability Rights of New Jersey that a plaintiff-employee’s privacy interests in her social medial posts and personal cell phone bills did not restrict her employer’s right to the production of these records when defending against claims that the plaintiff’s termination violated New Jersey’s Law Against Discrimination (the “NJLAD”) and caused her to suffer emotional distress.  This decision is the first in New Jersey to detail the scope of discovery regarding a litigant’s private social media posts.

The Background

In Davis, the plaintiff filed a NJLAD complaint against her former employer alleging wrongful termination and emotional distress. In its discovery requests, the employer demanded that the plaintiff produce copies of all her social media content “concerning any emotion, sentiment or feeling of [p]laintiff, as well as events that could reasonably be expected to evoke an emotion, sentiment, or feeling.” The employer also sought the production of the plaintiff’s personal cell phone bills on the grounds that she had used her personal cell phone to perform work duties remotely.

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On February 22, 2023, the United States Supreme Court in Helix Energy Solutions Group, Inc. v. Hewitt  held that a highly compensated executive employee paid a guaranteed daily rate is not paid on a ‘salary basis’ and therefore, is a nonexempt employee entitled to overtime pay under the Fair Labor Standards Act (FLSA). The decision should alert employers to review their classification of employees as exempt versus nonexempt to ensure compliance with applicable federal and state requirements.

The Fair Labor Standards Act

While the FLSA requires that most employees be paid overtime for work time in excess of 40 hours, it exempts several categories of positions from that requirement. The most common exemptions from overtime are referred to as the “white-collar exemptions,” which include executive, administrative, professional, outside sales, IT professionals, and highly compensated executive positions.

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On February 6, 2023, Governor Murphy signed new legislation into law significantly expanding the rights of temporary workers. The law, known as the “Temporary Workers’ Bill of Rights” (A1474/S511), is aimed at advancing pay equity, increasing government oversight of temporary staffing agencies, and prohibiting retaliatory conduct against temporary workers. A1475/S511 applies to workers in designated classifications, including protective services, food preparation, construction labor and trade, personal care services, and building, grounds cleaning, and maintenance occupations. The range of protections afforded by the new law, as outlined below, are expansive and will have significant implications on staffing agencies as well as third-party clients who utilize these agencies to place temporary workers.

New Protections

Equal Pay and Benefits

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On January 10, 2023, Governor Murphy signed legislation implementing amendments to the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN Act”) that were placed on hold during the COVID-19 pandemic. The amendments, which go into effect on April 10, 2023, impose new requirements on employers of 100 or more who implement mass layoffs or plant closures.

Background

Governor Murphy initially signed an amended NJ WARN Act on January 21, 2020, which was scheduled to take effect on July 20, 2020. However, in April 2020, the Governor signed Executive Order 103 declaring COVID-19 a public health emergency and postponing the effective date of NJ WARN Act amendments until 90 days after the conclusion of the state of emergency. Although the COVID-19 state of emergency remains in effect, the Legislature “unlinked” the amended NJ WARN Act from the state of emergency, thus permitting the implementation of the amendments to take effect on April 10, 2023.

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