New Jersey Employment Lawyer Blog

The Third Circuit Holds Parent Company Not Responsible For Wholly-Owned Subsidiary’s Overtime Violations

August 1, 2012 | by Jonathan I. Nirenberg

The Court of Appeals for the Third Circuit was recently asked if a parent company is responsible for overtime violations committed by its subsidiary. The lawsuit, In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, was brought by a group of assistant branch managers who worked for various locations of Enterprise-Rent-a-Car, which are wholly owned subsidiaries of Enterprise Holdings. The employees claimed Enterprise Holdings was liable for their overtime pay under the Fair Labor Standards Act (FLSA) as a “joint employer.” The FLSA is a federal law that requires companies to pay time-and-a-half overtime pay to most “non-exempt” employees.

Joint employment is when two or more employers share control of an employee. Although joint employment is a well-recognized concept, the Third Circuit was addressing this issue for the first time in the context of an FLSA claim. The court created a new four-part test for “joint employment,” which it named the Enterprise test.

Under the Enterprise test, in deciding if a party is a “joint employer,” courts must consider whether the company has:

(1) Authority to hire and fire employees;
(2) Authority to issue work rules and job assignments, and set conditions of employment like compensation, benefits, and hours;
(3) Authority to supervise and discipline employees on a day-to-day basis; and
(4) Control of employee records such as payroll, insurance, and tax records.

When the court applied this test, it determined Enterprise Holdings was not a joint employer even though there are many indications of joint management. For example, Enterprise Holdings is very involved in running its subsidiaries. It also provides them with administrative services and Human Resources support, including employee compensation guides indicating which employees should be paid salaries, and which employees should be paid by the hour. In addition, both companies are managed by the same Board of Directors. But the Court found that was not enough to make them joint employers.

The court reached this decision because it found Enterprise Holdings did not directly control assistant branch managers working for its subsidiaries, and the guidelines it provided to its subsidiaries were recommendations rather than requirements. Although the court suggested that other factors can also be taken into consideration, in Enterprise it gave those factors very little weight.

New Jersey Judge Enforces Employee’s Agreement to Shorten Deadline to File Discrimination Lawsuit

July 27, 2012 | by Jonathan I. Nirenberg

A federal judge in New Jersey recently dismissed an employee’s disability discrimination claim because she had signed an agreement shortening the statute of limitations to bring employment law claims against her employer. A statute of limitations is the deadline to file a lawsuit. Different legal claims have different statutes of limitations. For example, the New Jersey Law Against Discrimination (“LAD”) has a two year statute of limitations, meaning employees working in New Jersey ordinarily have two years to file discrimination lawsuits against their employers under the LAD.

The Facts of the Case

Ann M. Gavin worked for AT&T Services, Inc. She had several problems and pain in her feet and legs that made it difficult for her to walk, including a stress fracture in her right knee, psoriatic arthritis, and pustular psoriasis on her heel. She asked AT&T for permission to telecommute as a reasonable accommodation for her disability. She eventually resigned because the company would not let her work from home five days per week. She then filed a disability discrimination lawsuit under the LAD.

Court Upholds Employee’s Retaliatory Termination Claim Based on Supervisor’s Unfriendliness

July 16, 2012 | by Jonathan I. Nirenberg

In a noteworthy unpublished employment law decision, earlier this month New Jersey’s Appellate Division upheld a jury award to an employee on a retaliation claim where the primary evidence of retaliation was the fact that the employee’s supervisors were unfriendly to him after he complained about discrimination.

Anthony Onuoha, who is African American, worked for Roche Molecular Systems. In 2006, he complained to Roche’s management because he believed the company discriminated against him by giving him unfair performance reviews and raises. The company’s human resources department investigated his claim, but concluded that his performance reviews and salary were fair.

After Mr. Onuoha complained about discrimination, his supervisors became unfriendly toward him. For example, one supervisor stopped speaking to him. Mr. Onuoha also received an even worse performance review in 2007. Further, the company denied Mr. Onuoha’s request to take a two-week vacation after he took a 6-week medical leave, claiming there was too much work.

A few years later, in 2009, Roche chose to include Mr. Onuoha in a reduction-in-force and terminated his employment. He then sued, claiming the company discriminated against him because he is an African American, and fired him in retaliation for his complaint about race discrimination, in violation of the New Jersey Law Against Discrimination (LAD).

After a trial, a jury found that Roche had not discriminated against Mr. Onuoha based on his race. However, it found the company fired Mr. Onuoha in retaliation for the complaint he made about discrimination in 2006. He was awarded $512,000 in economic damages, $250,000 in emotional distress damages, plus $305,653.07 for his attorney’s fees and legal costs, for a total judgment of more than a million dollars.

On appeal, Roche argued it was improper for the jury to find Roche retaliated against Mr. Onuoha because of his complaint about discrimination since the jury found the company did not discriminate against him. In Onuoha v. Roche Molecular Systems, the Appellate Division rejected that argument since an employee does not have to win his discrimination claim to prove his employer fired him in retaliation for complaining about discrimination. Rather, an employee only has to prove he reasonably believed in his discrimination complaint, and the employer retaliated against him because he made the complaint.

The appellate court also found there was enough evidence of retaliation to support the jury’s verdict, despite the fact that there was a two year gap between his discrimination complaint and the company’s decision to fire Mr. Onuoha. It primarily focused on the evidence that Mr. Onuoha’s supervisors became unfriendly toward him after he complained about discrimination. The Court also relied on the fact that, although the company could have considered a broader group of employees for potential layoff, it insisted on firing someone from Mr. Onuoha’s group. Accordingly, the court affirmed the jury’s verdict in favor of Mr. Onuoha.

Discrimination Case Dismissed Because Employee Filed Claim with New Jersey Division on Civil Rights

July 6, 2012 | by Jonathan I. Nirenberg

Last month, New Jersey’s Appellate Division dismissed an employee’s discrimination lawsuit because the New Jersey Division on Civil Rights (DCR) had already dismissed the employee’s case. That employee, Francis Cornacchiulo, was a senior vice president for Alternative Investment Solutions. Mr. Cornacchiulo has multiple sclerosis. Alternative fired him after he apparently started experiencing symptoms of his disability at work. He then filed a disability discrimination claim with the United States Employment Opportunity Commission (EEOC). When Mr. Cornacchiulo submitted additional information to the EEOC, he marked a box agreeing to jointly file his claim with the DCR.

The EEOC eventually told Mr. Cornacchiulo it was “unable to conclude that the information establishes a violation of federal law.” The DCR then wrote a letter to Mr. Cornacchiulo indicating that since the EEOC had closed its file, “a determination has been made” and the DCR was closing its file on the same basis. It did so even though there are important differences between federal and state employment laws, and the DCR had previously informed Mr. Cornacchiulo that, on request, it will review whether the EEOC’s conclusions are consistent with New Jersey law.

After Mr. Cornacchiulo received the letter from the DCR, he filed a lawsuit in a New Jersey state court, claiming Alternative fired him because of his disability in violation of the New Jersey Law Against Discrimination (LAD). Several weeks later, the DCR sent a letter to Alternative’s lawyer stating it was adopting the EEOC’s conclusion and closing Mr. Cornacchiulo’s case. However, the agency never told Mr. Cornacchiulo it had adopted the EEOC’s conclusion.

Alternative then asked the court to dismiss Mr. Cornacchiulo’s lawsuit based on the DCR’s finding. In the meantime, Mr. Cornacchiulo’s lawyer attempted to withdraw his claim from the DCR.

On June 19, 2012, in Cornacchiulo v. Alternative Investment Solutions, L.L.C., the Appellate Division ruled that Mr. Cornacchiulo could not pursue his state law disability discrimination claim in court. The appellate court explained that under the LAD an employee has the option of pursuing a discrimination claim either through the DCR or in court. It also noted that when someone files a case with the DCR, he or she has the option of withdrawing it and filing a private lawsuit. However, he or she has to do so before the DCR reaches its final determination. This is different from determinations by the EEOC, which are not considered final and do not bar a subsequent discrimination lawsuit.

Based on its analysis, the Appellate Division found that the lower court properly dismissed Mr. Cornacchiulo’s lawsuit. It rejected Mr. Cornacchiulo’s arguments based on the fact that he did not realize he had marked the box to file his claim in the DCR, and the EEOC’s form did not warn him of the potential consequences of jointly filing with the DCR. The court ruled that once the DCR reached its final determination, Mr. Cornacchiulo lost his right to bring a separate lawsuit claiming Alternative fired him because he is disabled. However, he still has the option to appeal the DCR’s decision.

The Lesson of the Case

Perhaps the biggest lesson of the Cornacchiulo case is how important it is to speak to an employment lawyer before pursuing your legal rights. For example, although there are some circumstances where it might make sense to pursue a claim through the EEOC or the DCR rather than filing a lawsuit, you should discuss your options with an attorney before you decide which option is best for you.

Supreme Court Rules Pharmaceutical Sales Representatives Not Entitled to Overtime Pay

July 1, 2012 | by Jonathan I. Nirenberg

Last month, the United States Supreme Court ruled that sales representatives working for pharmaceutical companies are not entitled to receive overtime pay under the Fair Labor Standards Act (FLSA). The FLSA is a federal law that requires companies to pay employees most of their employees overtime at the rate of one-and-a-half times their normal hourly rate in each week in which they work more than 40 hours.
Pharmaceutical sales representatives do not directly sell products. Rather, they attempt to convince doctors to prescribe their company’s products to their patients when appropriate. This process is called “detailing.”

At GlaxoSmithKline, sales representatives are paid a base salary plus a commission. Their commissions are based on the total sales of the drugs assigned to them, or the market share in their sales territories. Glaxo does not pay time-and-a-half to its sales representatives when they work overtime. As a result, several salespeople filed a lawsuit claiming they were denied overtime pay in violation of the FLSA.

The issue in the case was whether pharmaceutical sales representatives fall within an exception to FLSA’s overtime requirement under which employers do not have to pay overtime to their outside salespeople. In Christopher v. Beecham Corporation DBA GlaxoSmithKline, the Supreme Court ruled that pharmaceutical sales representatives fall within that exception for a variety of reasons. For example, it recognized that the FLSA uses a very broad definition of the term “sales,” which includes “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” It also concluded that since pharmaceutical sales representatives are not allowed to make direct sales to patients, detailing is the equivalent of sales. Accordingly, it ruled that pharmaceutical sales representatives are not entitled to overtime pay under the FLSA.

Employees Forced to Resign May Be Eligible For Unemployment Benefits

June 26, 2012 | by Jonathan I. Nirenberg

In Lord v. Board of Review, New Jersey’s Appellate Division recently held that an employee who resigned because his employer told him he “had to resign” was not disqualified from receiving unemployment benefits. Specifically, Talmage Lord had a job with Crossmark that involved driving to various retail stores in New Jersey and Pennsylvania to arrange merchandize on shelves. When Mr. Lord notified his manager that he was unsure he would be able to report to work on Monday because his car had broken down, his manager told him he had to “resign effective immediately.” Mr. Lord had no intention of quitting his job, and had already taken efforts to find another way to travel for work.

When Mr. Lord applied for unemployment compensation benefits from the state of New Jersey, his claim was denied on the ground that he left his employment “voluntarily without good cause attributable to the work.” That determination was affirmed by the Appeal Tribunal, which reasoned that Mr. Lord resigned voluntarily because he was the one who initiated the action “which eventually lead[] to the separation.” The Board of Review also affirmed the decision denying unemployment benefits to Mr. Lord. In effect, the New Jersey Department of Labor adopted a rule that employees who are told to resign are ineligible for unemployment benefits, even when an employee who was fired under the same circumstance would have been eligible.

Mr. Lord appealed that decision once again, to the Appellate Division of the New Jersey Superior Court. The Appellate Division is the highest level of appeal for unemployment benefits disputes. The Appellate Division reversed the decision of the Board of Review and awarded the unemployment compensation benefits to Mr. Lord. The court explained that even though Mr. Lord’s manager characterized his termination as a “resignation,” it was not any different from termination from employment. In other words, the court made it clear that employers may not prevent employees they wish to fire from collecting unemployment benefits by forcing them to resign.

Frequently Asked Questions About the FMLA Part IV: Reinstatement and Remedies

June 15, 2012 | by Jonathan I. Nirenberg

Q. What are my rights when I am ready to return to work from an FMLA leave?

A. Generally, if you seek to return to work at the end of your Family & Medical Leave Act (“FMLA”) leave, your employer must reinstate you to your job, or an equivalent job in terms of duties, compensation, benefits, and other terms and conditions of employment.
It is important to note that normally an employee loses this protection if he or she takes more than 12 weeks off. However, as discussed in a recent article, under certain limited circumstances the FMLA Can Protect an Employee Who Took a Medical Leave for More Than 12 Weeks.

Q. Does my company always have to return me to my job after my FMLA leave?

A. Although employers usually have to reinstate you to your job or an equivalent one at the end of your FMLA leave, there are several exceptions. First, a company does not have to reinstate you if it had a mass layoff or reduction in force while you were on your FMLA leave, and it can prove it would have laid you off even if you had not taken an FMLA leave.

Second, if you are a “key employee,” then your employer might be able to refuse to reinstate you if it can show it will experience a “substantial” and “grievous” economic injury to its business if it did so. The FMLA defines key employees to be employees whose salaries are in the highest 10% of the company’s employees within 75 miles of your worksite.

Q. What damages can I recover in a case under the FMLA?

A. An employee who wins a lawsuit under the FMLA can recover his or her lost wages and benefits. In some circumstances, you also can recover double damages (called liquidated damages) equal to your lost wages and benefits. In addition, you can recover your attorney’s fees and legal costs.

However, the FMLA does not allow you to recover damages for emotional distress or pain and suffering you have experienced. It also does not permit you to recover punitive damages.

Q. My company is violating my right under the FMLA. What can I do?

It is illegal for your employer to refuse to permit you to take time off that you are entitled to under the FMLA. Likewise, it is usually illegal for a company to fire you instead of letting you return to work after your FMLA leave, or to retaliate against you because you requested or took an FMLA leave.

For more information about the FMLA, please refer to our previous Frequently Asked Questions about FMLA Basics, Types of FMLA Leaves, and Requesting an FMLA Leave.

Frequently Asked Questions About the FMLA Part III: Requesting an FMLA Leave

June 7, 2012 | by Jonathan I. Nirenberg

Q. How do I request an FMLA leave?

A. Under the Family & Medical Leave Act (“FMLA”), you have to provide your employer at least enough information that it is aware you need time off for a reason that is covered by the FMLA. You also need to indicate when you expect to need the time off, and how much time off you expect you will need.

Your employer can require you to follow a specific procedure after you request an FMLA leave, such as having you or your doctor fill out a particular form.

Q. How much advance notice do I need to give my employer before I start my FMLA leave?

A. When practical, you are required to give your employer at least 30 day notice before you take an FMLA leave. For example, you ordinarily must give your employer at least 30 days’ notice if you expect to take time off for childbirth, the placement of a child for adoption or foster care, or for a scheduled medical treatment.

However, sometimes it is impossible or impractical to give 30 days’ notice before you need to take an FMLA leave. When that is the case, you only have to give as much notice as is reasonable under the circumstances. For example, if you have an unexpected medical emergency, such as a heart attack or stroke, then you might not be required to give your employer any notice before you begin your FMLA leave. However, you still have to tell your employer that you need time off as soon as it is feasible for you to do so.

Q. Do I need a doctor’s note or a medical certification to take an FMLA leave?

A. Only if your employer requests it. Your employer has the right to request a medical certification supporting your request for time off under the FMLA. If your employer makes such a request, then you have to provide the certification within 15 calendar days, unless it is not practical to do so under the circumstances.

Q. Can my employer request a second medical opinion?

A. Yes. If your employer has reason to doubt your doctor’s medical certification, it can send you for a second opinion. Your employer has to pay for this second opinion.

Last month, we answered Frequently Asked Questions about FMLA Basics, and How to Request an FMLA Leave. Next week, we will answer Frequently Asked Questions about Reinstatement and Remedies under the FMLA.

New Jersey Whistleblower Law Protects Employee Who Objected to Violation of School District’s Affirmative Action Policy

June 1, 2012 | by Jonathan I. Nirenberg

New Jersey has a very broad whistleblower law, the Conscientious Employee Protection Act (CEPA). CEPA protects employees from retaliation when they object to, disclose, or refuse to participate in an activity they reasonably believe (1) is in violation of a law, or a rule or regulation written pursuant to law, (2) is fraudulent or criminal, or (3) is incompatible with a clear mandate of public policy concerning public health, safety, or welfare or protection of the environment. Last month, in Hallanan v. Township of Fairfield Board of Education, New Jersey’s Appellate Division ruled that CEPA protects an employee of a local school district who objected to an apparent violation of her school district’s affirmative action policy since the policy was written to comply with a New Jersey Board of Education regulation.

Lynne C. Hallanan worked for the Township of Fairfield Board of Education as a Supervisor of Curriculum and Instruction. She was also the school district’s Affirmative Action Officer. One of her job duties was to prepare an annual Comprehensive Equity Plan (CEP). The CEP documented the school district’s compliance with its Affirmative Action Guidelines. The district established those guidelines to comply with a New Jersey Board of Education regulation, N.J.A.C. § 6A:7-1.4(c)(2). That regulation requires school districts to identify and correct all unfair educational and hiring policies to ensure “all persons regardless of race, creed, color, national origin, ancestry, age, marital status, affectional or sexual orientation, gender, religion, disability, or socioeconomic status shall have equal and bias free access to all categories of employment in the public educational system of New Jersey.”

In preparing the CEP, Ms. Hallanan became concerned the Fairfield Board of Education had not posted certain job openings before filling the positions, as required under its Affirmative Action Guidelines. She asked the teacher’s union and the superintendent for documents showing that certain positions (including the superintendent’s position) had been posted before they were filled. She never received any such documents.

Ms. Hallanan then submitted a draft CEP to the superintendent in which she stated that the district was unable to find paperwork proving it had followed all of its affirmative action policies. According to her, the superintendent indicated he was unhappy she included that in her report, and told her to remove it from the final version. Ms. Hallanan testified that the superintendent then warned her that she was “calling a strike on yourself with this.” She also said she felt the superintendent started harassing her after she submitted her draft report. Approximately one month later, the superintendent told Ms. Hallanan that her position was going to be eliminated as a cost-saving measure.

The trial court dismissed Ms. Hallanan’s case. It found she did not fall within CEPA’s protection because she did not reasonably believe her employer violated a law or regulation, but only believed it had violated its own internal Affirmative Action policy. However, the Appellate Division saw it differently. It found Ms. Hallanan had objected to something she reasonably believed violated N.J.A.C. § 6A:7-1.4(c)(2), a Board of Education regulation that seeks to prohibit employment discrimination. It also found evidence that Ms. Hallanan reasonably believed the district had bypassed its own Affirmative Action Guidelines when it hired several employees, including the superintendent. Finally, it concluded that there was enough evidence for a jury to find that the decision to fire Ms. Hallanan was retaliatory. As a result, it reversed the lower court’s decision to dismiss Ms. Hallanan’s case, paving the way for her to have her day in court.

Frequently Asked Questions (FAQ) About the FMLA Part II: Types of FMLA Leaves

May 24, 2012 | by Jonathan I. Nirenberg

Q. What types of medical leaves are protected under the FMLA?

A. Covered employees can take medical leaves for a “serious health condition.” The definition of a serious health condition is complicated, but it includes most conditions that either:

Require an overnight hospital stay, or
Last more than three days, and (a) require more than one doctor’s visit, (b) require at least one doctor’s visit and continuing treatment such as physical therapy or prescription medication, or (c) are chronic, and involve extended periods of incapacity or treatment.

Q. What types of family leaves are protected under the FMLA?

A. The Family & Medical Leave Act (“FMLA”) allows eligible employees to take time off to care for an immediate family member who has a serious health condition. Depending on the circumstances, this can include helping take an immediate family member to a doctor’s appointment, helping care for them at home, or providing them comfort and support needed because of their serious health condition.

Q. Who is considered an “immediate family member” under the FMLA?

A. An immediate family member means your spouse, parent, or child.

Q. Does the FMLA give me the right to take time off while I am pregnant?

A. Expecting mothers can take time off if they have a pregnancy-related condition or complication that meets the FMLA’s definition of a serious health condition.

Q. What types of maternity and paternity leave are available under the FMLA?

A. New parents can take a maternity or paternity leave to bond with their new child during the first 12 months after birth or adoption of a child, or for the placement of a foster child.

Q. Do I have to take all of my FMLA leave at the same time?

A. Not necessarily. Under certain circumstances you can take an FMLA leave “intermittently” or on a “reduced leave schedule.” An intermittent FMLA leave is when you take off blocks of time. A reduced leave schedule is when you use the FMLA to reduce the number of hours you work per week or per day, such as taking time off for doctors’ appointments or physical therapy.

Last week, we answered Frequently Asked Questions about FMLA Basics. Next month, we will discuss Frequently Asked Questions about Requesting an FMLA Leave, and Reinstatement and Remedies under the FMLA.