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Ignorance of Employee Rights Proves Costly – Jury Awards Hundreds of Millions in Pregnancy Discrimination Suit

Published on: November 26, 2014 | by Kathleen M. Connelly

The Los Angeles Times and other news outlets have reported that following eight years of protracted litigation, a San Diego jury awarded nearly $186 million dollars to a former AutoZone manager who claimed she was demoted by AutoZone after she announced her pregnancy and was terminated after she filed a lawsuit challenging her demotion. The reported testimony of trial witnesses serves as a perfect illustration how an employer’s ignorance of basic employee rights can lead to obscenely high jury verdicts.

Rosario Juarez claimed that when she announced her pregnancy to her district manager in 2005 he responded “Congratulations . . . I guess” adding “I feel sorry for you.” Thereafter, Juarez’s performance was increasingly criticized and she was demoted. After Juarez filed suit to challenge her demotion, she was terminated for allegedly misplacing $400 of company funds. However, AutoZone’s defense of the case was crippled by the testimony of its loss prevention officer who investigated the missing funds that she never suspected wrongdoing by Juarez and thought she was being targeted by the company. To make matters worse, a former district manager testified that he was scolded by an AutoZone vice president for hiring too many women. Such testimony undoubtedly provoked the jury to award $185 million dollars in punitive damages as a punishment to AutoZone, in addition to the $872,000 awarded to Juarez for lost wages.

The Perils of Not Using a Prenup

Published on: November 13, 2014 | by James McGlew, II

By: James McGlew

The perils of getting married without a prenuptial agreement were made clear this week with the news of the divorce of billionaire Harold Hamm. Mr. Hamm, Chief Executive Officer of Continental Resources, was ordered to pay nearly $1 billion to his now ex-wife in one of the largest US divorce judgments ever. The order requires Mr. Hamm to pay his ex-wife one-third of the settlement, about $320 million, by the end of 2014 and the remainder to be paid in monthly installments of at least $7 million. This award will help to make the former Ms. Hamm one of the 100 wealthiest women in the United States.

As I'm sure you can tell by now, Mr. and Mrs. Hamm had no prenuptial agreement.

BIG MAC ATTACK: The NLRB’s General Counsel Uproots McDonald’s Franchisor-Franchisee Relationship

Published on: October 23, 2014 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

By: Sergio Simoes, Esq.

In July 2014, the General Counsel of the National Labor Relations Board (“NLRB”) shook the foundations of the franchisor-franchisee relationship when he determined that McDonald’s Corporation could be prosecuted as a “joint employer” with its franchisees in forty-three cases, charging unfair labor practices at its franchised restaurants. Consequently, whenever a McDonald’s franchisee fails to pay overtime, bars employees from taking mandated breaks, or commits another unfair labor practice, the McDonald’s parent organization may be held jointly responsible for the franchisee’s transgressions.

The General Counsel’s decision is particularly significant because approximately 80% of McDonald’s 3,000 U.S. restaurants are privately owned by franchisees. The NLRB and the labor organizers supporting the determination reasoned that because McDonald’s exerts significant operational control over how its franchised restaurants are run, including menu selections, uniforms, décor and other day-to-day operations, it should also be held responsible for violations of workers’ rights under the National Labor Relations Act.

Appellate Division Extends New Jersey Law Against Discrimination to Divorcing Employees

Published on: October 23, 2014 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

The New Jersey Law Against Discrimination (“LAD”) has long prohibited discrimination against individuals on the basis of their “marital status,” barring employers from considering an individual’s status as married or unmarried in making any employment decisions. In the recent case of a New Jersey appeals court recently examined the scope of the marital status protections of LAD and determined that they also extend to engaged, separated and divorced individuals.

The Facts: Robert Smith, Director of Operations for the Millville Rescue Squad (“Millville”), supervised over one hundred employees, including his wife. In February 2005, Smith had an affair with a subordinate who later resigned, and shortly thereafter, Smith and his wife separated. Mr. Smith’s supervisor became aware of Smith’s affair and subsequent separation and told him he could not promise these developments would not affect Smith’s job, that it “all depends on how it shakes down.” Several months later, Smith’s employment was terminated for poor work performance. Smith’s supervisor purportedly told Smith that he had to present the situation to Millville’s board of directors because he believed there was no chance of reconciliation between Smith and his wife and “it’s going to be an ugly divorce.” Smith filed suit alleging marital status discrimination in violation of the LAD.

The Ruling: In the proceedings below, the trial court dismissed Smith’s marital discrimination claim because Smith failed to present evidence that Millville fired him because he was either married or unmarried. The Court reasoned that Millville had the right to terminate Smith because it was concerned about the potential impact his divorce proceedings might have on his work. Smith appealed that ruling.

Pregnant Employees To Get Expanded Workplace Accommodations Under LAD and EEOC Guidance

Published on: October 23, 2014 | by Kathleen M. Connelly

In January 2014, Governor Christie signed the Pregnant Worker’s Fairness Act (PWFA), amending the New Jersey Law Against Discrimination (LAD) to expressly prohibit workplace discrimination on the basis of pregnancy. On the federal side, the United States Equal Employment Opportunity Commission (EEOC) issued an Enforcement Guidance on Pregnancy Discrimination and Related Issues (“the Guidance”) on July 14, 2014, that reiterated i) the federal Pregnancy Discrimination Acts’ prohibition against treating pregnant employees less favorably than non-pregnant individuals with respect to the terms and conditions of employment; and ii) the Americans With Disabilities Act’s mandate that employers provide reasonable accommodation to women with pregnancy-related disabilities. While aspects of these pronouncements simply confirm the right to non-discrimination and reasonable workplace accommodations for pregnancy-related disabilities, there can be no doubt that these developments break new ground by extending the reasonable accommodation obligation to employee experiencing a normal pregnancy who is “affected” by her condition.

THE PRIOR LEGAL LANDSCAPE: Prior to the PWFA and the EEOC Guidance, pregnant employees in the workplace were accorded protections under the following laws:

Pregnancy Discrimination Act (“PDA”): Title VII amended to add pregnancy as form of gender discrimination. Employers of 15 or more employees are required to treat pregnant workers the same as non-pregnant workers who are similar in their abilities to work with respect to all terms and conditions of employment.

Is It Time to Limit Your Exposure to Employment Lawsuits?

Published on: October 23, 2014 | by Kathleen M. Connelly

The New Jersey Judiciary reported that approximately 40% of lawsuits filed with the courts involve claims by employees against their current or former employers. In this current litigious landscape, are there actions employers can take to protect against potential employment lawsuits? As a result of a recent decision from a New Jersey appellate court, the answer is a resounding “Yes.” Under that decision, employers and employees are permitted to enter into agreements that significantly shorten the statutory time period in which employees can file suit against the employer. Employees who fail to file suit within the agreed-upon time period will be barred from pursuing their claims, notwithstanding the fact that the statutory limitations period has not run.

Statutes of limitation are time periods established by law in which lawsuits must be initiated. The statutes of limitation vary depending upon the causes of action being asserted. For example, breach of contract claims can be filed up to six years after the alleged breach; suits alleging violations of the New Jersey Law Against Discrimination (“LAD”) and the New Jersey Wage & Hour Law must generally be filed within two years of the accrual of the claim; and whistleblower lawsuits under the Conscientious Employee Protection Act must be filed within one year of the accrual of the claim.

In its recently rendered decision in (“Raymours”), the Appellate Division of the Superior Court of New Jersey affirmed that an employer can require its employees to enter into agreements to shorten the statutory time period in which lawsuits can be filed against the employer, provided that the agreed-upon time period is reasonable.

New Jersey Supreme Court Raises the Bar for Health Care Whistleblowers under CEPA

Published on: October 23, 2014 | by Kathleen M. Connelly

Clarifying the burden placed upon health care workers alleging New Jersey Conscientious Employee Protection Act (CEPA) violations, the New Jersey Supreme Court’s recent decision in 218 N.J. 8 (2014) illustrates the barriers facing employees who point to alleged violations of codes of ethics or employer policies to support whistleblowing claims.

The Facts: Registered Nurse James Hitesman served as shift supervisor for a nursing home operated by Bridgeway, Inc. (“Bridgeway”). In 2008, Hitesman e-mailed Bridgeway management expressing concerns that seasonal respiratory and GI symptoms were rising at an alarming rate at the nursing home. Unsatisfied with Bridgeway’s response to his concerns, Hitesman reported the increase in infections to governmental agencies and the media. In his communications with the media, however, Hitesman provided partially redacted copies of Bridgeway administrative logs that nevertheless disclosed information that could lead to the identification of patients. Bridgeway ultimately terminated Hitesman for his disclosure of patient information to the media in violation of the facility’s confidentiality policy and the Health Insurance Portability and Accountability Act (HIPAA).

Hitesman filed suit alleging that his discharge violated CEPA’s prohibition of retaliatory action against a health care employee who reports on, or objects to, employer activity that the employee reasonably believes constitutes “improper quality of patient care” or is “incompatible with a clear mandate of public policy concerning the public health.” Hitesman pointed out that “improper quality of patient care” is defined by statute as a violation of “any law, or any rule, regulation or declaratory ruling adopted pursuant to law or professional code of ethics.” To support his claim of a reasonable belief that Bridgeway’s infectious disease practices constituted improper quality of patient care, Hitesman relied upon the American Nursing Association’s Code of Ethics that obligated him to improve patient care, as well as Bridgeway’s Internal Code of Conduct and its Statement of Resident Rights as the governing standard for assessing Bridgeway’s misconduct.

Third Circuit Slams Employer for Inability to Prove FMLA Notices to Employee Were Received

Published on: October 23, 2014 | by Eric B. Levine

By: Eric Levine, Esq.

In its recent decision in the Third Circuit Court of Appeals (which includes New Jersey) issued a ruling that signals heightened obligations for employers communicating with employees about their rights under the Family Medical Leave Act (“FMLA”). Prior to that ruling, employers typically relied upon the “Mailbox Rule” (which presumes receipt of a letter properly deposited into the U. S. Mail) as evidence that mandated FMLA notices were received by employees. After , however, the Mailbox Rule’s viability in the FMLA context is questionable, and prudent employers should institute procedures to insure that FMLA notices are served by certified mail or other method of traceable transmission so that actual receipt by the employee can be established.

The Facts: Lisa Lupyan was an instructor for Corinthian Colleges, Inc. (“CCI”). In 2007, Ms. Lupyan requested a personal leave of absence to recover from depression, and thereafter provided CCI with a physician’s certification of a mental health condition. As a result, CCI determined that Ms. Lupyan was eligible for FMLA leave as opposed to using her personal leave allotment.

Governor Christie Signs Major Alimony Reform Bill Into Law

Published on: September 22, 2014 | by James McGlew, II

By: James McGlew

On September 10, 2014, Governor Christie signed into law A845 which makes significant changes to New Jersey alimony law. The reformed alimony statute will dramatically impact the way spousal support is calculated going forward.

Important changes to New Jersey alimony include:

Employers Take Notice – New Jersey has “Banned the Box”

Published on: August 14, 2014 | by Kathleen M. Connelly and John H. Schmidt, Jr.

On August 11, 2014, Governor Christie signed into law “The Opportunity To Compete Act” (the “Act”)[1]. In adopting that law, the legislature specifically found that “removing obstacles to employment for people with criminal records provides economic and social opportunities to a large group of people living in New Jersey, increasing the productivity, health and safety of New Jersey communities.” The new law is applicable to employers within the State with fifteen or more employees over 20 calendar weeks, but excludes persons employed in domestic service in a person’s home.

Criminal Record Inquiries Prohibited During the Initial Employment Application Process: The new law provides that an employer shall not place any advertisement soliciting applicants for employment that explicitly states the employer will not consider an applicant who has a criminal record unless a criminal background check is required by law or regulation, or a law or regulation would restrict an employer’s ability to engage in specified business activities based on the employees’ criminal records. The new law also provides that during the initial employment application process an employer (1) shall not require an applicant for employment to complete an employment application that make inquiries regarding the applicant’s criminal record and (2) shall not ask any questions regarding the applicant’s criminal record. The initial employment application process begins when the applicant first makes an inquiry about a prospective position and ends when the employer has conducted a first interview of the applicant.

Following the initial employment application process, an employer may require an applicant for employment to complete an employment application that makes inquiries about the applicant’s criminal record, and may ask questions regarding the applicant’s criminal record. An employer may refuse to hire an applicant for employment based upon the applicant’s criminal record, unless the applicant’s criminal record was expunged or erased by executive pardon. It should also be noted that if an applicant voluntarily discloses information about his/her criminal record during the initial employment application process, the employer may ask additional questions about the applicant’s criminal record during that process.