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Labor & Employment Insights

U.S. Supreme Court Issues Opinion on ERISA Breach of Fiduciary Duty

Published on: February 15, 2022 | by James K. Estabrook and Elizabeth Engert Manzo

On Monday, Jan. 24, 2022, in the case Hughes vs. Northwestern, the U.S. Supreme Court ruled that a fiduciary’s duty to monitor investments in defined contribution retirement plans means the plan cannot include non-prudent investments. In reaching this conclusion, the Court recognized that fiduciaries have an ongoing obligation to monitor plan investments. Simply offering participants a diverse menu of investment options is not sufficient to insulate fiduciaries from potential liability.

The Holding in Hughes v. Northwestern.

In Hughes, employees of Northwestern University participated in two defined contribution 401(k) plans offered by the University. The employees alleged that the trustees of the plans breached their fiduciary duty to the participants by “(1) failing to monitor and control recordkeeping fees, resulting in unreasonably high costs to plan participants; (2) offering mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged for otherwise identical share classes (institutional share class) of the same investments; and (3) offering investment options that were likely to confuse investors.” Both the trial court and the Seventh Circuit Court of Appeals accepted Northwestern’s argument that even if some options were not prudent, there was no violation of ERISA’s prudence standard because the plans offered a diverse menu of investment options that the plaintiffs agreed were prudent.

Alert: National Ban on Mandatory Arbitration for Sexual Assault and Harassment Claims to be Signed into Law

Published on: February 14, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

President Biden is expected to sign a bill amending the Federal Arbitration Act by banning pre-dispute employment arbitration agreements for sexual harassment and sexual assault disputes. The proposed law, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” is the latest in a series of workplace changes initiated by the #MeToo movement.

Sexual assault and harassment claims no longer subject to mandatory arbitration. The amendment prohibits the enforcement of mandatory pre-dispute arbitration agreements, as well as agreements prohibiting participation in a joint, class or collective action in any forum “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct.” The Act also provides that any dispute as to whether or not a claim falls within the scope of the Act’s prohibitions will be decided by a court, not an arbitrator, irrespective of the designation set forth in the arbitration agreement. Although the bill bans pre-dispute agreements to arbitrate sexual harassment and sexual assault claims, employees can still voluntarily elect for arbitration after the claim arises. This carve-out was intended to allow victims of sexual assault or sexual harassment to voluntarily avoid going through the often-public process of the court system.

Under the legislation, the term “sexual assault dispute” retains the same definition as used in 18 U.S. Code §2246 as one “involving non-consensual sexual act or sexual conduct.” The term “sexual harassment dispute” is defined as one “relating to conduct that is alleged to constitute sexual harassment.” Sexual harassment is narrowly redefined under the Act to only include the following behaviors: a) unwelcome sexual advances, b) unwanted physical contact that is sexual in nature, including assault, c) unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity, d) conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity, and e) retaliation for rejecting unwanted sexual attention. Notably, this definition does not include other forms of harassment that are not sexual in nature but may nonetheless constitute gender-based discrimination (e.g., disparate pay between similarly situated male and female employees).

NYC To Require Salary Ranges In Job Postings

Published on: January 31, 2022 | by Kathleen M. Connelly

A recent amendment to the New York City Human Rights Law aimed at promoting wage equity for women and minority groups historically receiving less compensation than other groups will have a large impact on recruiting practices for City employers. By doing so, New York City joins a national trend of legislative initiatives promoting transparency and equity in compensation practices.

Beginning on May 15, 2022, employers with four or more employees (which includes independent contractors and employed family members) must include a minimum and maximum salary range in all job listings. This includes advertised jobs, promotions, and transfer opportunities. The range of the minimum and maximum salary may extend from the lowest to the highest salary the employer “in good faith believes at the time of the posting” it would pay for the advertised position.

While the term “salary” is not defined in the law, employers should comply with the minimum and maximum rage requirements regardless of whether the position is paid on a salary or hourly basis. It is not clear whether these requirements only apply to jobs that will be located in New York City, or if it extends to any job postings in New York City regardless of where the job will be physically located. The New York City Commission on Civil Rights is expected to issue regulations clarifying these issues.

Workers’ Compensation Presumption Reactivated with New Jersey’s Issuance of New Public Health Emergency

Published on: January 25, 2022 | by James K. Estabrook

UPDATE: On March 7, 2022, Governor Murphy once again lifted the COVID-19 public health emergency, and consequently the presumption created by SB2380.

In an effort to combat the rapidly spreading COVID-19 Omicron variant, on January 13, 2022, Governor Murphy reactivated a presumption that essential workers’ contraction of the virus is work-related for purposes of workers’ compensation claims.

The Rise and Fall of The Workplace Presumption for Essential Workers. To establish a compensable COVID-19 claim under New Jersey’s Workers’ Compensation Act, the employee must show that he/she contracted the virus directly from the workplace. The difficulty in establishing where an individual contracts a communicable disease explains the scarcity of compensable seasonal influenza workplace claims. However, on September 14, 2020, Governor Murphy signed SB2380, retroactive to March 9th, removing this requirement in COVID-19 cases for essential workers during a public health emergency declared by the Governor, by creating a presumption that the employee contracted the virus in the workplace. Under the bill, the presumption of workplace contraction can only be refuted by a preponderance of the evidence showing the essential worker was not exposed to COVID-19 in the workplace.

SCOTUS Blocks OSHA Vaccination Mandate for Small Employers but Upholds CMS Mandate for Healthcare Facilities

Published on: January 14, 2022 | by James K. Estabrook, Elizabeth Engert Manzo and Kathleen M. Connelly

On November 4, 2021, the Occupational Safety and Health Administration (OSHA) issued an Emergency Temporary Standard (ETS) requiring employers of 100 or more to adopt COVID-19 policies, maintain rosters of vaccinated employees, and provide paid time off to employees to vaccinate or recover from its effect. These mandates were to go into effect on January 10, 2022. By February 9, 2022, employers were to require employees to show proof of COVID-19 vaccination or undergo weekly testing.

On that same date the Centers for Medicare & Medicaid Services (CMS) issued an interim rule mandating COVID-19 vaccination and other requirements for workers in most healthcare settings participating in Medicare and Medicaid programs by January 22, 2022.

Legal challenges quickly wound their way through the federal courts, leaving businesses in limbo about their obligations to implement these vaccination and testing mandates. On January 13, 2022 the Supreme Court of the United States (SCOTUS) issued decisions on both mandates, imposing a stay on the OSHA ETS vaccination and testing mandates, but upholding the vaccination mandate and other aspects of the CMS for healthcare facilities.

The Five-Day Rule: CDC Updates on COVID-19 Guidelines

Published on: December 30, 2021 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

As COVID-19 infection numbers continue to surge, the CDC released updated guidelines addressing the changing understanding of the Omicron variant. In a media statement issued on December 27, 2021, the CDC noted that the majority of COVID-19 transmissions happen earlier in the illness, typically prior to symptoms and two to three days after. The CDC addressed changes for both individuals exposed to COVID-19 (quarantine guidelines) and for individuals who contracted COVID-19 (isolation guidelines.) Vaccination is relevant only for quarantine requirements.

Quarantine guidelines: These guidelines differ by vaccination status. Those vaccinated with Pfizer or Moderna within the last six months, or with Johnson & Johnson in the last two months, or those “boosted” no longer have any seclusion requirement. Instead, if no symptoms emerge, individuals should wear a mask for ten days around others and test on day five.

For those not vaccinated, or not meeting the requirements of the above paragraph, the CDC recommends quarantine for five days. After five days of seclusion, individuals should continue to wear a mask around others for ten days and obtain a test on day five. Once again, if any symptoms develop, the CDC recommends seclusion and testing.

OSHA’s Vaccination or Testing Mandate for Large Employers is Back On… For Now

Published on: December 20, 2021 | by Kathleen M. Connelly

Shortly after OSHA issued its Emergency Temporary Standard (ETS) mandating vaccination or weekly testing for employers of 100 or more, legal challenges in the federal district courts stalled the implementation of the deadlines for compliance. On December 17, 2021, the Sixth Circuit Court of Appeals – the court designated to hear the consolidated challenges filed in multiple districts – lifted the stay, clearing the way for the implementation of the ETS mandates.

The New ETS Deadlines: Initially, employers were expected to comply with the ETS’s vaccination verification and masking requirements by December 6, 2021, and implement periodic testing for unvaccinated workers by January 4, 2022. In response to the Sixth Circuit ruling lifting the stay, OSHA has announced that it will not enforce any of the ETS standards until January 10, 2022, and will not issue citations for non-compliance with the ETS testing requirements until February 9, 2022, so long as employers are exercising “reasonable, good faith efforts to come into compliance with the standard.”

What Now? An emergency appeal of the Sixth Circuit ruling has already been filed with the United States Supreme Court, which will ultimately decide if the ETS will stand. Nevertheless, employers must prepare now for compliance with the ETS mandate because if sanctioned by the Supreme Court, employers will face a very narrow timeframe to come into compliance with the ETS requirements. Many employers have opted to adopt the ETS mandates despite the ongoing legal challenges because OSHA standards only establish minimum workplace standards and employers are free to implement more stringent requirements.

Is My Employee Arbitration Agreement Enforceable?

Published on: November 23, 2021 | by Kathleen M. Connelly

Yet again, New Jersey’s appellate court has demonstrated its reluctance to enforce agreements to arbitrate signed as part of a new employee’s orientation. In a previous post we discussed a ruling from the Appellate Division demonstrating the risk of having employees execute arbitration agreements during an orientation process. The court in that case refused to enforce the agreement because the employee maintained that pressure was exerted upon her to immediately execute the document, thus depriving her of the opportunity to bring the document home and seek out legal advice.

Another opinion issued by the Appellate Division on November 10, 2021, provides the latest insight on the missteps an employer can make when seeking to enter into a binding arbitration agreement with an employees.

The Facts: In Cordero v. Fitness International LLC, a former employee of LA Fitness filed a complaint in the New Jersey Superior Court alleging sexually harassment by her former manager. LA Fitness moved to compel arbitration pursuant to an agreement executed by the employee during onboarding her first day on the job. According to the employee, a general manager with LA Fitness placed her at a desk and told her to “sign a few things electronically” before she could start work. He then sat next to her and instructed her to sign an electronic signature pad as he clicked through various documents. The employee claimed she never actually saw the documents that she electronically signed. When the employee later filed her sexual harassment complaint, LA fitness moved to compel arbitration based on the following language contained in a document she signed during onboarding:

New York Significantly Expands Protections for Workplace Whistleblowers

Published on: November 23, 2021 | by Kathleen M. Connelly

New York has long lagged behind New Jersey in according protection to employees who blow the whistle on unlawful or unsafe conditions in the workplace. Unlike its sister state, New York employees had a higher bar for achieving protected whistleblower status under section 740 of the New York Labor Law (NYLL), and employers had viable defenses that could undermine an employee’s claim.

On October 29, 2021 Gov. Hochul signed into law amendments to NYLL Section 740 that significantly expand the rights of employees in ways that bring it line with the expansive protections accorded New Jersey employees. These amendments go into effect January 26, 2022.

Expanded definition of “employee”: The definition of “employee” was amended to include not only current employees, but former employees as well as independent contractors providing services to an employer.

The 5th Circuit and OSHA Put the Brakes on OSHA’s Emergency Temporary Standard

Published on: November 15, 2021 | by Kathleen M. Connelly

No sooner did OSHA issue its Emergency Temporary Standard (ETS) on November 4, 2021, to implement mandatory vaccination or testing programs for large employers, it was challenged in 11 of the 12 United States Courts of Appeals as an unconstitutional overreach by the agency. Last Friday the 5th Circuit Court of Appeals (covering most of Louisiana, Mississippi and Texas) confirmed its November 6th temporary stay of the ETS, stating that the rule “grossly exceeds OSHA’s” statutory authority.” The Court also held that the COVID-19 virus was not a proper subject of emergency administrative action by OSHA. Under the court’s ruling, the stay will remain in place until a further order that will come from the appeals court assigned by the U S. Judicial Panel on Multidistrict Litigation to hear the consolidated Circuit Court petitions.

In the face of these legal challenges, OSHA suspended the implementation and enforcement of the ETS pending the ongoing litigation. However, OSHA stated that it remains confident that the ETS will ultimately be withheld.

What should large employers covered by the ETS do? In light of the 5th Circuit ruling, employers of 100 or more no longer need meet the looming December 6th and January 4th deadlines imposed by OSHA to implement vaccination verification, weekly testing, and other requirements of the ETS.