New Jersey Employment Lawyer Blog
Published on:

The question of whether you are an employee or an independent contractor can be very important. It can determine many issues, including how you will be taxed, whether you are entitled to health insurance and other employee benefits, and whether you are protected by various employment laws. However, the issue whether you have been misclassified as an independent contractor can be confusing because there are different tests under different laws.

Earlier this month, in Hargrove v. Sleepy’s, LLC, the New Jersey Supreme Court clarified which test applies under two important state laws: The New Jersey Wage and Hour Law (“NJWHL”) and the New Jersey Wage Payment Law (“NJWPL”). The NJWHL is a law that, among other things, entitles covered employees to be paid at least the minimum wage, and overtime at time-and-a-half when they work more than 40 hours in a week. Similarly, the NJWPL requires most employers to pay employees at least twice per month.

Group of industrial workers. Isolated on white background.The case was filed in federal court. The Unites States District Court for the District of New Jersey applied a relatively narrow definition of “employee.” It concluded the plaintiffs were independent contractors, and therefore were not protected by the NJWHL or the NJWPL. Accordingly, it dismissed their case.

The plaintiffs appealed to the Third Circuit Court of Appeals. The Third Circuit then asked the New Jersey Supreme Court to answer the question because it involves an interpretation of state law.

In Hargrove the New Jersey Supreme Court answered the Third Circuit’s question by adopting something called the “ABC test.” This is the same test the New Jersey Department of Labor uses to determine if someone is covered by the New Jersey Unemployment Compensation Act.

Under the ABC test, an individual is presumed to be an employee. The employer can prove the worker is not an employee if it can establish three things:

  1. The company did not exercise control over regarding any aspect of the person’s work, and did not have the ability to exercise any such control.
  2. In determining whether the employer has the right to exercise control over an individual, a court can consider the contract between the employer and the worker, but it cannot rely on the contract alone. Rather, it has to look at all of the circumstances relating to the actual performance of the work;
  3.  The services provided by the person are either “outside the usual course of the business for which such service is performed” or are “performed outside of all the places of business of the enterprise for which such service is performed;” and
  4.  The individual normally works in an independently established trade, occupation, profession or business, and is likely to continue to do so after this relationship ends. A company cannot meet this factor if the worker is likely to join “the ranks of the unemployed” after the relationship is over.

This definition of “employee” is significantly broader than the definition under the Fair Labor Standards Act, a federal law that provides similar protections to the NJWHL. In fact, it is even more expansive than the broad definition under the New Jersey Law Against Discrimination and the Conscientious Employee Protection Act (“CEPA”). This is likely to significantly expand the number of workers in New Jersey who are entitled to be paid minimum wage and receive overtime pay.

For more information about the relevant definition of an “employee” under CEPA, please read my previous article: Independent Contractors Protected by Conscientious Employee Protection Act.

Published on:

Beginning this month, East Orange, Irvington, Passaic and Paterson will join Newark and Jersey City in requiring employers to provide their workforce with paid sick leave. Montclair and Trenton will begin requiring covered employers to provide paid sick leave in March. The ordinances governing sick pay in these municipalities largely mirror Newark’s law that went into effect last year.

The ordinances governing sick leave are nearly identical. Eligible employees include those who work for at least 80 hours per year for an employer of 10 or more employees. Covered employers are required to provide employees with 40 hours of paid sick leave each calendar year. If an employer has fewer than 10 employees, it is required to provide 24 hours of paid sick time each calendar year. Employers of child care, home health care and food service workers, however, are required to provide 40 hours of paid sick leave even if such employers have less than 10 employees. Government employees, employees of New Jersey schools and members of construction unions are not covered by the various ordinances.

a mother and sick child in bed. flu. childhood diseases.In determining the number of employees for coverage, full time, part-time and temporary employees must be counted. Paid sick time is accrued one hour of sick time for every 30 hours actually worked, and employees can begin to use the paid sick time once they reach 90 days of employment. Unused paid sick leave that is not otherwise paid out to employees can be carried over to the following calendar year, but employees may only use 40 hours of paid sick time per year. Also, employees are not entitled to reimbursement of unused paid sick time upon the termination of employment.

Paid sick time can be used for an employee for his or her own or the employee’s care of family members involving:

  • Mental or physical illness, injury or health condition;
  • Medical diagnosis, care or treatment; or
  • Preventative care.

The following are included in the definition of a family member: children, parents, civil union partners, grandparents (or spouses, civil union partners or domestic partners of grandparents), spouses, domestic partners, grandchildren and siblings.

Paid sick time also can be used if the employers’ place of business is closed due to a public health emergency, or if an employee needs to care for a child whose school or day care is closed because of a public health emergency.

Employers may not interfere with or retaliate against employees for the exercise of their right to take paid sick leave. Additionally, employers can be fined for failures to comply with the paid sick leave ordinance.

There also is a notice requirement for employers. Employers are required to provide all employees and new employees upon hire with written notice of the paid sick leave policy, and are to display a poster outlining the paid sick leave policy as well. Also, the sick leave policy must be in English and any other primary language spoken by at least 10% of the employer’s workforce. The municipalities have not yet issued such notices and posters. As a result, in the meantime employers will need to draft a notice and poster to distribute to their employees.

In preparing such notices, employers will have to include the following information:

  • The employee’s right to paid sick time;
  • The accrual and the amount of paid sick time available to employees;
  • The terms of use under the paid sick leave ordinances;
  • The employee’s right to be free from retaliation; and
  • The employee’s right to file a complaint if sick leave is denied or if the employee is retaliated against.

As a result of these ordinances, employees who may not otherwise have been eligible for paid time off will now have some time available to address their own and their family member’s medical issues.

Published on:

Last week, I discussed a case dealing with the defense to Family & Medical Leave Act (“FMLA”) claims based on the employee’s inability to perform the essential functions of her job. The same case also addresses the employee’s claim that her employer retaliated against her for taking an FMLA leave. Specifically, Vanessa Budhun claims her employer, Reading Hospital and Medical Center, replaced her before her FMLA-protected leave ended.

The District Court dismissed Ms. Budun’s retaliation claim on the basis that (1) she was unable to return to work before her 12 weeks of FMLA leave expired, (2) she was neither fired nor experienced another adverse employment action, and (3) there was not enough evidence to prove she was fired because she requested an FMLA leave.

Office Employee Collected Items After Fired in Violation of Family & Medical Leave ActOn appeal, the Third Circuit rejected all three of those arguments. First, it rejected the argument that Ms. Budhun was unable to return to work before her FMLA leave expired. It did so for the same reasons it found Reading Hospital could have interfered with her FMLA rights, as discussed in last week’s article: FMLA Requires Medical Support for Employer Denying Reinstatement Based on Employee’s Inability to Perform Essential Job Functions.

Second, the court rejected the argument that Ms. Budhun did not experience an adverse employment action. As explained in the opinion, an adverse employment action is something that “alters the employee’s compensation, terms, conditions, or privileges of employment, deprives him or her of employment opportunities, or adversely affects his or her status as an employee.” Examples include being fired, suspended or demoted.

The District Court concluded Ms. Budhun voluntarily resigned because the company never told her she was fired and she failed to return to work before her 12 weeks of FMLA-protected leave expired. The Third Circuit disagreed. It recognized that a reasonable jury could find Ms. Budhun experienced an adverse employment action when Reading permanently replaced her and told her to pick up her personal belonging and to return her company badge and keys. Reading did not offer Ms. Budhum another job, and instead told her she was ineligible to transfer to another position within the hospital. According, the Third Circuit held that even though Ms. Budhum was not expressly fired, she had experienced an adverse employment action.

Finally, the Third Circuit found that a jury could find Ms. Budhun established a link between her FMLA leave and her termination.  Reading Hospital argued there was more than a two month gap between Ms. Budhun’s request for an FMLA leave in August 2010 and the company’s decision to replace her in November 2010. However, the Third Circuit recognized a jury could conclude Reading decided to replace her as early as September 15, which was before her protected FMLA leave had expired, and only about a month after she requested this leave. It found this relatively short time between her request for an FMLA leave and the company’s decision to replace her is “unusually suggestive” of retaliation, and therefore sufficient to support a retaliation claim. Accordingly, in Budhun v. Reading Hospital and Medical Center the Court ruled that a jury must decide whether the company retaliated against Ms. Budhun, and reversed the District Court’s order dismissing that claim.

Published on:

Earlier this year, the Third Circuit ruled that Reading Hospital and Medical Center may have violated the Family & Medical Leave Act (“FMLA”) by failing to reinstate one of its employees after her physician cleared her to return to work.

Vanessa Budhun broke a bone in her right hand on July 30, 2010 and subsequently began an FMLA leave. On August 12, 2010, she submitted a doctor’s note clearing her to return to work on August 16. The doctor’s note also stated: “No restrictions in splint.”

In response, Reading informed Ms. Budhun that because her doctor’s note said “no restrictions” she had to return to work “full duty (full speed).” The hospital also indicated that if she could not work at full speed she had to submit another doctor’s note extending her medical leave. In a subsequent email, Reading clarified that Ms. Budhun could not return to work until she had use of all 10 fingers.

FMLA claim Employee typing with broken handMs. Budhun’s doctor then submitted FMLA forms to Reading indicating her leave would end on August 16. Her physician also included a note asking to excuse her from work until September 8, apparently in reaction to the hospital indicating she could not return until she was able to work at full speed. Gradually, Ms. Budhun’s doctor extended her medical leave until September 23. Since Ms. Budhun already had used approximately 4 weeks of FMLA leave earlier in the year, this exceeded her annual entitlement of 12 weeks of FMLA-protected leave.

By September 25, Ms. Budhun still was unable to return to work without limitations. As a result, Reading gave her job to another employee. On October 6, 2010, the company told her to pick up her personal belongings and return her identification badge and keys. By November 9, 2010, Reading deemed Ms. Budun to have abandoned her job.

Ms. Budhun filed a lawsuit alleging Reading had interfered with her rights under the FMLA. The District Court dismissed her case, ruling the FMLA allows employers to refuse to permit employees to return to work until their doctors clear them to work without restrictions. Ms. Budhun appealed.

In Budhun v. Reading Hospital and Medical Center, the Third Circuit reversed the trial court’s order dismissing Ms. Budhun’s claim. It found enough evidence to support her claim that Reading violated the FMLA by refusing to permit her to return to work on August 16.

The Third Circuit recognized the FMLA permits an employer to refuse to reinstate an employee returning from a leave if she cannot perform the essential functions of her job. However, it held that it is up to the employee’s health care provider, not the employer, to determine if the employee can perform those functions.

The court further ruled that an employer cannot require an employee’s physician to determine if she can perform the essential functions of her job unless the employer provides a list of those job functions. Reading did not do so, and Ms. Budhun’s doctor cleared her to return to work with “no restrictions.” As a result, the hospital was obligated to permit her to return to work.

Instead, without any medical support, Reading required Ms. Budhun to have full use of all of her fingers before she could return to work. It did so even though she was able to type, and there was nothing in her job description requiring her to type at any particular speed. Accordingly, the Third Circuit ruled a jury could find Reading interfered with Ms. Budhun’s rights under the FMLA by failing to reinstate her, and reversed the order dismissing her claim.

Published on:

The United States Supreme Court recently ruled that an employer is not required to pay its employees for the time they have to wait to go through security screening even though the employer requires the screening.

The employer, Integrity Staffing Solutions, Inc., provides warehouse employees to throughout the country.  Its employees package products and ship them on behalf of Amazon.  Integrity required the warehouse workers to pass through metal detectors at the end of each day before they could leave the warehouse.

Two employees, Jesse Busk and Laurie Castro, filed a class action wage and hour lawsuit against Integrity.   They claimed Integrity violated the Fair Labor Standards Act (“FLSA”), a federal law, because it did not pay them for the time they had to wait to pass through metal detectors at the end of every day.  The employees estimated they had to wait an average of 25 minutes per day, or nearly to 2 1/2 hours per week.

Employee Security ScreeningOvertime The trial court dismissed their case, ruling the employees were not entitled to be paid for this waiting time because it occurred after their work shifts were over and was not an “integral and indispensable” part of their jobs.  The employees appealed, and the United States Court of Appeals for the Ninth Circuit reversed.  It found this waiting time was compensable because it was, in fact, integral and indispensable to the employees’ job duties since it was necessary to prevent employee theft.

The United States Supreme Court agreed to take the case.  In Integrity Staffing Solutions, Inc. v. Busk, it explained that courts initially interpreted the FLSA to cover all of the time employees were “required to be on the employer’s premises, on duty or at a prescribed workplace.”  However, in 1947 Congress decided this definition was too broad.  As a result, it passed a new law, the Portal-to-Portal Act, which makes it clear that the FLSA does not require employers to pay employees for (1) their time traveling to and from work, or (2) activities that occur before or after the employee finishes performing his or her principal activity or activities for the employer.

The Supreme Court noted that it previously has ruled that an employee’s principal activities include duties that are “integral and indispensable” to the employee’s principal activities.  For example, it has held that showering and changing clothes can be integral and indispensable for employees who work with toxic chemicals because they cannot safely perform their jobs without doing so.  Likewise, sharpening knives can be integral and indispensable to meatpackers because dull knives slow production, have a negative impact on the appearance of the meat and can lead to accidents.  However, it also has ruled that waiting to put on protective gear is not compensable time for workers at a poultry plan because it is “two steps removed” from their jobs working on an assembly line.

Applying these principles, the Court ruled that the warehouse workers were not entitled to be paid for waiting to undergo the security screenings.  It explained that since the employees were hired to package and ship products rather than for the purpose of undergoing security screenings, the screenings are not one of their principal activities.  It further indicated that the screenings are not integral or indispensable to their principal activities because it is possible to package and ship products without undergoing security screenings.

The Court indicated that it does not matter that Integrity required the security screenings since the employees could have completed their work even if Integrity had did not require any screening.  Similarly, it found it irrelevant that the company could have reduced the time the employees had to wait before they were screened since this waiting time is not necessary to accomplish the work the employees were hired to perform.  Accordingly, it reversed the Ninth Circuit and dismissed the case.

Published on:

A recent age discrimination case from the United States District Court for the District of New Jersey is a helpful reminder that just because your employer has a good excuse for its decision to fire you, it does not necessarily mean the company did not violate the law.

Carol Natale began working for East Coast Salon Services, Inc., in November 2006. At the time she was 59 years old.   A little over five years later, the salon’s owner, Stan Klet, called the store. Ms. Natale answered the telephone by saying “East Coast Salon, how can I help you?” Ms. Klet claimed Ms. Natale violated company policy by failing to give her name when she answered the phone. He also claimed Ms. Natale challenged him when he told her she had violated this policy. In contrast, Ms. Natale says she told Mr. Klet that nobody ever told her to provide her name when she answers the telephone. She also claims she apologized to Mr. Klet during the call and that she did not argue with him.

Beauty Supply Discrimination LawsuitAfter checking with its Human Resources Department, the company fired Ms. Natale. It claims it fired her because she was insubordinate, argumentative and disrespectful during the call with Mr. Klet.

Ms. Natale, who was 66 years old at the time, filed a lawsuit against the salon and Mr. Klet. She alleges they fired her in violation of the Age Discrimination in Employment Act (“ADEA”). The defendants eventually filed a motion for summary judgment, asking the judge to dismiss the case against them.

In Natale v. East Coast Salon Services, Inc., the trial judge denied that motion. He recognized that employers have the right to fire employees because they engage in rude or disrespectful behavior. However, he found enough evidence that a reasonable jury could conclude Ms. Natale’s age was a factor in the salon’s decision to fire her.

In essence, the judge concluded that a jury could find Ms. Natale’s immediate supervisor, Faith Fritz, actually made the decision to fire her before Mr. Klet’s telephone call with her. The evidence to support this includes the fact that Ms. Fritz apparently made discriminatory comments about Ms. Natale’s age. For instance, Ms. Natale claims Ms. Fritz told her she was wearing “old lady pull up pants”; indicated she would “look younger if [her] nails were squared off”; sent Ms. Natale home for wearing “old lady shoes”; described her sneakers as making her look like a “retarded old nurse”; and claimed Ms. Natale was “old enough to be her grandmother.”

The judge explained that even though Ms. Fritz may not have made the ultimate decision to fire Ms. Natale, discriminatory comments by someone who did not make the decision can “be used to build a circumstantial case of discrimination.” He ruled it is up to a jury to determine whether Ms. Fritz’s discriminatory comments support the conclusion that the salon fired Ms. Natale because of her age, or merely were stray remarks.

The judge also identified other evidence that could support an inference of discrimination. For example, he noted Ms. Natale testified that in October 2011 Ms. Fritz took away her Tuesday shifts and instead assigned them to an employee who was 15 years younger than her. He also recognized that Ms. Natale has evidence indicating Ms. Fritz recommended firing her and the salon had hired her replacement before she even received the telephone call from Mr. Klet. In other words, the judge found evidence that the salon’s justification for firing Ms. Natale was a pretext (excuse to cover up) age discrimination. Accordingly, he denied the company’s motion for summary judgment to allow a jury to decide whether the salon discriminated against Ms. Natale in violation of the ADEA.

Published on:

A recent unpublished decision from the New Jersey Appellate Division demonstrates that employees can prove their employers retaliated against them for objecting to discrimination without proving the discrimination actually was unlawful.

Debra Lemeshow worked for PSEG Services Corporation. In 2000, the company made her its Manager, Business Management Support, with a salary of $95,000 and a potential 15 percent annual bonus.

In 2001, PSEG hired a company to compare its compensation packages to similar jobs at other companies. It determined the appropriate salary for Ms. Lemeshow’s position was between $65,000 and $70,000 per year.

When Ms. Lemeshow learned about this, she complained that the company had improperly compared her job with entry-level positions that were not comparable to hers. PSEG eventually agreed to set her salary at $100,800, but reduced her yearly bonus potential to 10 percent.

Ms. Lemeshow told her supervisor she still was dissatisfied with her new compensation. She claims her supervisor responded by saying, she made a lot of money for a single woman,” and the company needs to “take care of the men with families.” In response, Ms. Lemeshow told her supervisor she was treating her differently than her male counterparts, indicated she does not make too much money for a woman, and again asked her to increase her compensation.

Older woman fired brings lawsuit under New Jersey Law Against DiscriminationIn 2005 and 2006, Ms. Lemeshow received the highest possible performance rating, “exceptional.” Nonetheless, in 2006 she only received a 4 percent raise. Accordingly, she again complained she was being treated unfairly compared to her male peers.

In 2007, PSEG substantially increased Ms. Lemeshow’s job duties. She complained because the company did not follow its policy that whenever an employee’s responsibilities are increased by 20 percent it has to evaluate whether to rewrite the job description. She also claimed “the only increased jobs are for promoting younger women and hiring men!” and noted that “none of us ‘older women’ are permitted to re-write job descriptions to reflect the new organizational responsibilities.” After this, Ms. Lemeshow’s supervisor gave her a performance rating for 2007 that was two levels below the “exceptional” ratings she received during the two previous years.

Later that year, PSEG claimed Ms. Lemeshow did not have prior approval to spend a total of $3,500 over the previous three years to attend a gala. Ms. Lemeshow claims she had approval to use money from her Department’s budget for the gala tickets, and the company did not discipline a man in her department who did the same thing for years. PSEG subsequently claimed Ms. Lemeshow had been improperly reimbursed for her personal cell phone and home Internet service for four years, at a total cost of $1,859. PSEG then fired her.

Ms. Lemeshow filed a lawsuit alleging PSEG fired her in retaliation for her complaints about gender and age discrimination, in violation of the New Jersey Law Against Discrimination (“LAD”). The trial court dismissed her case, finding insufficient evidence for a jury to find retaliation.

In Lemeshow v. PSEG Services Corp., the Appellate Division reversed. It noted that although Ms. Lemeshow might not have enough evidence to prove PSEG actually discriminated against her based on her gender or age, that is not required to prove retaliation. Rather, Ms. Lemeshow’s complaints that she was underpaid compared to the men in her department, and only men and younger women receive additional responsibility, are enough to show she had a good faith belief she was the victim of unlawful discrimination. As a result, the Court concluded she was protected from retaliation.

The Appellate Division further recognized there is evidence that the company did not discipline other employees who engaged in similar use (or misuse) of company funds. It concluded a jury should determine whether PSEG really fired Ms. Lemeshow because of this, or because she complained about gender and age discrimination. Accordingly, it remanded her case to the lower court for a trial.

Published on:

A recent disability discrimination opinion from the District of New Jersey reflects the relatively low burden an employee has to meet to have his case decided by a jury.

Damian Melton, a Type I diabetic, worked as a doorperson for Resorts Casino Hotel in Atlantic City for approximately six years.  Due to his medical condition, Resorts granted Mr. Melton an intermittent leave under the Family & Medical Leave Act (FMLA), and did not require him to work the graveyard shift as a reasonable accommodation for his disability.

Hotel Doorman Disability DiscriminationIn August 2010, Mr. Melton injured his shoulder, necessitating surgery.  When he returned to work a few months later the hotel assigned him to a light duty job as a valet cashier.

Around the same time, the company that owned Resorts went into foreclosure.  Another company, DGMB Casino, LLC, agreed to purchase the hotel.  All of the hotel’s employees received notices from Resorts informing them their employment was being terminated as of December 1, 2010.  They also received notices from DGMB inviting them to apply for jobs with it.

Mr. Melton applied for numerous jobs, including doorperson, but DGMB did not hire him.  Instead, it hired six doorpersons, five of whom previously worked for Resorts and a sixth who had not.

Mr. Melton sued, claiming DGMB failed to hire him in violation of both the FMLA and the New Jersey Law Against Discrimination (“LAD”).  The employer filed a motion for summary judgment, asking the trial judge to dismiss his LAD claim.  It argued Mr. Melton could not prove he was objectively qualified to perform his job, which is a requirement to prove a discrimination claim.  Specifically, it claimed he did not have the physical ability to work as a doorperson.

In analyzing this issue, the judge explained it is necessary to determine the essential job functions of a doorperson.  This has to be decided on a case-by-case basis, considering factors including which job duties the employer considers essential, what is stated in the written job description, how much time employees spend performing each function and the consequences if an employee is unable to perform the function.

Mr. Melton argued he is objectively qualified to perform his job because he was worked for Resorts as a doorperson for six years and received positive reviews from his supervisors and customers.  The Court noted that due to his shoulder injury, Mr. Melton was unable to work as a doorperson when he last worked for Resorts and needed a light duty position.  However, it recognized this was a temporary accommodation while his shoulder healed, and found he presented sufficient evidence to establish he was qualified for the job.

DGMB also argued Mr. Melton was not qualified for the job because he did not have enough flexibility with his work schedule since he cannot work the graveyard shift.  It claimed this was important since there are only six doorpersons who have to cover the job 24 hours per day, seven days per week.  However, Mr. Melton presented evidence that most of the other doorpersons work regular set schedules.  Based on this, the judge ruled there is enough evidence for a jury to find Mr. Melton is qualified for the job.

Finally, the judge found there is enough evidence for a jury to find DGMB did not hire Mr. Melton because of his disability.  The company claimed it did not hire him because he had poor job performance and a negative attitude in the past, and offered some evidence to support these claims.  Nonetheless, the Court relied on the positive reviews Mr. Melton received from his employer and customers.  It found this was enough to allow a jury to question the company’s explanation and to conclude his disability was the real reason DGMB chose not to hire him.  Accordingly, in Melton v. Resorts International Hotel, Inc., the Court denied the company’s motion for summary judgment.

Published on:

In recent years, employers have been increasingly requiring their employees to sign arbitration agreements. An arbitration agreement is when you agree to have a private arbitrator, rather than a judge or jury, decide your legal disputes. Arbitration generally is considered less fair to individual employees and more favorable to big businesses. Nonetheless, courts generally enforce arbitration agreements as long as they are clear and unambiguous.

However, a recent ruling by the New Jersey Supreme Court recognizes that to be valid, an arbitration agreement has to make it clear you are waiving your right to pursue your case in court. The case, Atalese v. U.S. Legal Services Group, L.P., was decided in the context of a consumer contract dispute. However, it seems likely the same principle would apply to employment law arbitration agreements.

The arbitration provision in the Atalese case states that “any claim or dispute . . . shall be submitted to binding arbitration upon the request of either party.” It also indicates that an arbitrator will “resolve the dispute” and the “decision of the arbitrator shall be final.”

Arbitration Agreements GavelThe New Jersey Supreme Court explained that arbitration agreements, like other contracts that waive an individual’s constitutional or statutory rights, have to be clear to the average person. The Court concluded that although the provision in question makes it clear the parties agreed to resolve their disputes in arbitration it does not say anything about waiving their right to go to court. It also does not explain what arbitration is or how it is different from a proceeding in court.

Ultimately, the Supreme Court ruled the arbitration provision was unenforceable because it does not contain anything making it clear that the individual was waiving his or her right to pursue a claim in a court of law. The court explained that no “magic words” are necessary to make this clear. However, to be enforceable an arbitration agreement in a consumer contract has to make it clear, one way or another, that the individual is agreeing arbitration will be the exclusive remedy and is giving up the time-honored right to sue.

Applying that principle, the Court found the language in the arbitration agreement did not make it “sufficiently clear to a reasonable consumer” that he/she is waiving his/her right to sue. Accordingly, it found the agreement is not enforceable and the case can proceed in court.

The Supreme Court did not directly address whether the same principle apply to employment law cases. However, it relied on numerous previous employment law cases in support of its ruling. In fact, one of the cases the Court cited, Leodori v. CIGNA Corp., holds that arbitration provisions in employment contracts must “reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim.” This makes it seem likely a similar provision in an employment contract would not be enforceable. Accordingly, it is likely courts will not enforce employment arbitration agreements unless they make it clear the employee is waiving his or her right to sue in court.

Published on:

In a recent case, a federal judge in the District of New Jersey denied an employer’s motion for summary judgment because the employer failed to meet its very limited burden to provide a legitimate non-discriminatory reason why it failed to promote her.

The employee, Employee Sues Sears for DiscriminationVirginia Forchion, claims Sears Outlet Stores, LLC, failed to promote her to the position of lead sales associate because of her age, gender, and race. She filed a lawsuit under the New Jersey Law Against Discrimination (“LAD”). Sears asked a trial judge to dismiss her case on a motion for summary judgment. The judge denied the motion, finding Sears failed to provide any explanation why it hired Bradley Stonehouse, a younger white male, for the position instead of promoting Ms. Forchion.

To understand why the judge denied Sears’ motion, it is necessary to understand how judges analyze employment discrimination claims. Since proving discrimination case can be difficult, judges apply something called the McDonnell Douglas test. Under that test, the burden shifts back and forth between the employer and the employee.

First, the employee has to establish a basic (or “prima facie”) case of discrimination. This relatively limited requirement is intended to weed out cases that are not consistent with the possibility that the employer discriminated against the employee.

Once the employee establishes a prima facie case of discrimination, the employer has to state a non-discriminatory reason for its action. The employer does not have to prove this reason is true. It merely has to present some evidence that, if true, would support a non-discriminatory reason for its decision. As a result, it is rare that an employer cannot meet this burden.

If the employer presents a legitimate non-discriminatory reason for its decision then the burden shifts back to the employee to prove it is more likely than not that the employer’s decision was discriminatory. Most cases are won or lost at this final stage. But that is not what happened in Ms. Forchion’s case.

Rather, on its motion Sears asked the judge to dismiss Ms. Forchion’s case because she never applied for the promotion. It argued she had to prove she applied for the position as part of her prima facie case.

The judge disagreed. He found Ms. Forchion instead could rely on the fact that Sears hired Mr. Stonehouse for the position without informing anyone in the department about the job opening. The judge also noted that since there was no job description for the position, only a jury can decide whether Ms. Forchion was at least as qualified as Mr. Stonehouse for the job.

The judge also recognized that Ms. Forcion’s age, gender and race are legally protected categories under the LAD. He indicated that she testified she had the most seniority in her department, was familiar with the duties of lead sales associate, and was at least as qualified as anyone else for the job. Based on this evidence he concluded that Ms. Forchion had met her initial burden.

However, the judge concluded that Sears failed to meet its burden to demonstrate a non-discriminatory reason for failing to promote Ms. Forchion. It argued that Ms. Forchion never applied for the job, but never explained why it chose to hire Mr. Stonehouse without even considering promoting Ms. Forchion. Accordingly, in Forchion v. Sears Outlet Stores, LLC, the judge ruled that Sears failed to provide a legitimate non-discriminatory reason for failing to promote Ms. Forchion. It therefore denied Sears’ motion for summary judgment.

Contact Information