Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

Lauren Bercik, Esq., a NJ Employment Law Attorney

On-call employees are turning into a growing liability risk for employers, as some are claiming that companies are restricting their freedom too much, and not paying them for it.

Employment lawyers say that such claims are popping up in larger wage-and-hour class actions, with on-call employees suing for unpaid overtime, alleging that their freedom has gotten so limited that they may as well be hourly employees.

In Gomez v. Lincare Inc., a California appellate court recently revived an overtime class action brought by on-call workers of an in-home respiratory services provider. The employees allege that they deserve compensation for the time spent on call dealing with customer questions by phone, as well as for time spent on call but not handling customer inquiries.

In Sweat v. Battelle Memorial Institute, a group of lab technicians in Utah is suing Battelle Memorial Institute, a science and technology development company, alleging that the company required them to be on call during their lunch break, mandating they be on company premises, in company provided clothing and available for work. The plaintiffs claim they should be compensated for that time.

In Walsh v. Apple Inc., a former network engineer for Apple claims that the computer giant failed to pay network support staff members for on-call time.

“It’s definitely triggering litigation,” employment attorneys agree. “What employers need to do is take a look at what restrictions they place on on-call time.”

The key for employers is to make sure they’re not overly restricting on-call employees’ freedom. The less freedom an employee has while on call, the higher the risk that the on-call time qualifies as paid time. “With the way wage-and-hour class actions are filed over issues everyday, if you’re not looking at this, a plaintiffs’ attorney will be.”

Employers need to revisit their on-call policies and consider relevant factors, including geographic restrictions — whether employees are required to be near the office, at home or near a land line; how quickly employees should respond to calls; and how many calls an employee actually receives while on call.

The trick is to make sure on-call employees have the flexibility to do what they want to do. “If you’re on call, and you’re free to go to a restaurant or go to a movie, or go play golf or tennis, that’s fine.” “But if you’re told, ‘you have to sit in your house and can’t leave,’ then you have to be paid for that time.”

For further information and advice in any employment law matter, do not hesitate to contact me at 732-863-9900, or lbercik@hnlawfirm.com.

There’s Hope in Immunity

Fredrick P. Niemann, Esq., Business Litigation Attorney

Whether an employer-employee relationship ends on good terms or with acrimony, a common final act - the employee’s request for a reference for a new job - is increasingly leading to litigation.

From the former employer’s standpoint, it can be a case of damned if you do and damned if you don’t. A candid, negative response to the request can invite a suit by the former employee. A glowing recommendation that omits some serious shortcomings in the employee’s performance, or that declines to say anything about the employee except perhaps dates of employment, could result in litigation brought by the new employer, who would have preferred to be warned about a subpar employee. The prevalence of such disputes only figures to increase in the current economic downturn.

The growing dilemma is such that some employers are telling their employees from the outset that they will get no job reference - good, bad, or indifferent - when they leave. Under such a policy, inquiring prospective employers would get only the employment equivalent of “name, rank, and serial number.” Other employers are willing to give a reference, but only after they have in their files documents in which an employee consents to having prospective employers find out all there is to know, and waiving their right to sue over anything that is said in the reference.

The good news for businesses is that their exposure to liability to disgruntled former employees who requested references is constrained in most states by statute. These laws gen¬erally provide immunity to the givers of references, so long as their actions were not motivated by malice. Of course, former employees, perhaps hurting while in between jobs and inclined to blame former employers for their predicament, are quick to argue that a negative response to a reference request was malicious.

In one such case, a nurse sued her former supervisor for defamation when the supervisor responded to a request for a job reference by stating on a form, without elaboration, that the nurse had “unacceptable work practice habits.” A court ruled that the statement came within a statutory privilege or immunity for former employers’ communications to prospective employers concerning former employees, because it was information provided about a former employee’s work performance at the request of both the former employee and a placement agency.

Although the nurse made the general argument that the immunity was lost because the statement about her was made with malice, she was unable to back up that contention with factual evidence of ill will or spitefulness directed toward her. She argued, to no avail, that if the former employer considered her work habits to be acceptable enough not to fire her, then it was reasonable to infer that the later negative inference must have been motivated by malice.

For further information and advice in any business matter, do not hesitate to contact me at 732-863-9900 Ext. 101 or 105, or fniemann@hnlawfirm.com.

Employers in service industries are well advised to pay close attention to their practices and policies affecting customers’ tips for their employees.  There are a variety of ways in which missteps can run afoul of federal or state laws, including the federal Fair Labor Standards Act (FLSA).

Employees might contend, for example, that the employer is effectively reducing their tip income by imposing various fees or other charges on customers.  Or, contrary to a requirement in the FLSA, employees who are paid less than the minimum wage might not be getting enough in tip income to make up the difference between their hourly rate and the minimum wage.

Recent cases in the news involved yet another alleged violation, sometimes taking place on a very large scale, where employees are made to share tip income with fellow employees who supervise them.

In one of the tip-sharing cases, a state court ruled in favor of a class of plaintiffs consisting of baristas, or coffee counter servers, whose tips were required to be shared with their shift supervisors, in violation of state law.

Change left for tips apparently adds up, as the judgment for the tens of thousands of servers, for about an eight-year period, topped $100 million, including interest.

The case was not cut-and-dried, as the supervisors were themselves hourly workers who had customer service duties in addition to the responsibility of scheduling workers and giving directions to the baristas. It was not a case of highly paid bosses dipping into the tip jars filled by customers they never saw in person.

When a shift supervisor hands a customer his latte and muffin, and the customer responds with a tip, the customer may assume that the money, or at least part of it, goes to the supervisor.  Instead, under the ruling, the supervisors must now keep their hands off the tips, and the employers must ensure such an outcome.

In the wake of this case, similar lawsuits have been filed against the same employer, a national chain, and against other employers in other states.

Companies in the restaurant, hotel, gaming, transportation, and delivery businesses face the largest risks for mishandling the treatment of tips.  There is another pending case in which casino dealers have complained that an employer’s new policy illegally requires them to share tips with floor supervisors.

The legal issues surrounding the treatment of tips are murky enough in any one state, but further complicating the matter is the fact that there are variations among the states and between the statutes for a state and for the federal government. This makes it especially risky for national employers to assume that a one-size-fits-all policy on tips will be sufficient for all of their locations.

“Back-room” personnel, shift supervisors, hostesses, greeters, drink servers, and other similar positions could be treated differently depending on what state you are in. Employers should regularly assess their job descriptions and tip-sharing policies against applicable state and federal laws. This kind of audit is useful not only for detecting or avoiding possible violations, but for laying the groundwork for a potential “good-faith” defense under the FLSA if litigation ensues.

When an Internet executive held a meeting with the chairman of a tele-communications company, the agenda was a new business idea that the Internet executive had. The discussion was transformed into a recruitment when the telecommunications executive suggested that the idea should be pursued within the company he headed.

Much of the case focused on whether the handwritten agreement that started everything was a valid, binding contract.

For two men in the upper echelons of high-tech businesses, they then chose a decidedly low-tech way to memorialize their agreement. The end result, however, shows how substance can sometimes triumph over form in the law of contracts formation.

At the end of their meeting, the telecommunications executive simply wrote out the agreement by hand on two notebook pages, and both men signed it. The writing included specifics as to how the newly hired executive would be compensated, the terms on which he could quit if he became unhappy, and what would happen if intellectual property involved in the deal could not be transferred to the telecommunications firm. It also included the statement that “ [t]he parties will complete formal contracts as soon as possible but this is binding.” This would turn out to be pivotal language in the litigation that followed.

Unfortunately, the new arrangement quickly went downhill, and after about six months the new employee was fired. The relationship ended with the “formal contracts” never having been drafted and executed. When the former employee sued for breach of contract and other wrongs, more than six years of litigation ensued, with two trials and two appeals.

Much of the case focused on whether the handwritten agreement that started everything was a valid, binding contract. The telecommunications company argued that it was merely an “agreement to agree.”

However, a jury eventually ruled that the agreement was valid, and that the telecommunications firm had breached the terms of the contract represented by the two notebook pages.

Four factors are usually considered in determining whether a “preliminary agreement” is binding. In this case, the first two clearly favored the fired executive:  There was no explicit reservation of a right not to be bound (in fact, the handwritten agreement said the opposite) and the executive had partially performed the contract. The third factor is whether all of the terms of the alleged contract were agreed upon. On that point, the agreement, although it may have lacked some details, addressed all of the essentials for a binding contract.

The final factor is whether the agreement was a type of contract that is usually committed to writing in a formal manner. When millions are at stake, as was the case here, it may be unusual to seal the deal with a handwritten document, in outline form, and drafted on the spot by one of the principals without benefit of legal counsel.  The agreement was not much to look at, barely surpassing in formality the proverbial agreement scribbled on a cocktail napkin. Still, that it was unorthodox did not mean that the method was unprecedented. In the end, this factor, balanced against the other three, was not enough to discard the agreement and deprive the departed executive of the benefits of his bargain.

There are numerous federal and state laws that protect “whistleblowers” who report the unfair or illegal practices of their employers, of which New Jersey’s CEPA law is just one.  CEPA provides that employers may not retaliate against workers who disclose (or threaten to disclose) practices of the employer that they believe are violations of the law.  CEPA also protects employees who refuse to participate in unlawful or fraudulent activities or those that may harm the health, safety or welfare of the public.  Employees must be careful in asserting their rights under CEPA, as certain steps are necessary to ensure protection under the law.  If your employer asks you to do an act you feel is illegal or against public policy, it is important to contact an attorney as soon as possible.

You may contact Ms. Lauren Bercik at Hanlon Niemann if you would like to discuss this topic further.

Justices place burden of proof on employers

The Supreme Court enhanced the ability of older workers to bring job discrimination claims, in a decision that comes as the nation’s workforce is aging and many companies are downsizing and lying off workers.

By a 7-1 vote, the court ruled that when a company asserts layoffs of older workers that were based on factors other than the worker’s age, the company has the burden of proving those factors are valid.

The U.S. Equal Employment Opportunity (EEOC), which handles age complaints, reports that age claims have increased steadily over the past decade.  About 19,000 are filed annually.

Lawyers who represent employees cheered the decision, as business groups termed it a disappointment.  “Any other result would have made it virtually impossible for employees to successfully challenge (seemingly) neutral corporate policies… such as reductions-in-force… that some employers have used to target older workers”, said Fredrick P. Niemann, Esq., an elder law attorney in Freehold, NJ.

Employers can defend themselves by showing that the lopsided impact was based on “reasonable factors” other than age, such as performance criteria or needed skills.  The question was whether the employer bears the burden of proving that a policy was based on such non-age factors, or whether it is up to the worker to prove the factors were illegitimate.

Who wins or loses often hangs on who has the burden of proof.

Thursday’s dispute traced to the mid-1990s and the end of the Cold War.  Knolls Atomic Power Laboratory in Upstate New York, which had helped maintain nuclear-powered warships, was forced to scale back.  About 100 workers took a buyout offer, and 31 others were laid off.  Thirty of those laid off were at least 40 years old.  Clifford Meacham was among those who alleged that the layoffs were aimed at older employees.

Knolls had said they were based on objective factors such as performance, flexibility and critical skills.  Meacham won a jury verdict, but the U.S. Court of Appeals for the 2nd Circuit eventually ruled Meacham had not proven that Knolls’ justification was invalid.

In an opinion by Justice David Souter, the high court reversed based on the standard of proof used.  He said the act’s text and structure put the burden of proof on employers.

“There is no denying that putting employers to the work of persuading (judges) that their choices are reasonable makes it harder and costlier to defend” various policies, Souter wrote.  He added, however, that Congress “set the balance where it is” and that those who object to that interpretation should take it up with Congress.

The court adopted the position of the EEOC, which had sided with Meacham.  Justice Clarence Thomas was the lone dissenter.  Thomas, who was chairman of the EEOC during the Reagan administration, said he did not think the law extends to coverage for policies that do not directly discriminate.

Justice Stephen Breyer took no part in the ruling.

Many employees do not realize that employers in New Jersey may have the right to regulate and prohibit personal lifestyle choices after work and during their private time unless the conduct falls within a clear cut constitutional privacy protection or meets a clear mandate of public policy protecting private lifestyle choices.  Generally, the prohibited conduct relates to extramarital affairs, romantic relationships among co-workers, free speech, smoking bans and other private lifestyle choices.    All employers and employees are cautioned that the scope of the prohibited conduct will be closely reviewed by the Courts in New Jersey.   New Jersey seems to follow (as customary) its own thoughts on permissible versus unpermissible conduct. 

In a leading case, the Court has indicated that while an employer is free to discharge an employee at will, the general rule must yield when an employer Aacts contrary to public policy in accordance with the leading New Jersey case of Pierce vs. Ortho@.  

Questions about what may or may not be permissible versus dischargable private behavior by an employer?  Lauren Bercik, Esq. handles the firm’s employment related issues.  She can be contacted at lbercik@hnlawfirm.com.

The Federal FMLA provides that employees may take 12 weeks of unpaid leave from their jobs when they have a serious medical condition or must care for a family member with a serious medical condition.  The FMLA only applies to employers with 50 or more employees and employees must meet certain conditions to be eligible for leave.  An employer must not retaliate against an employee for exercising his or her rights under the FMLA.  New Jersey also has a similar statute, the New Jersey Family Leave Act, which provides different but related rights to employees.  New Jersey law does not require an employer to have a minimum number of employees to be subject to the law and is also more pro employee than its federal counterpart.  To learn more about employee rights and employer requirements under the FMLA, contact Lauren Bercik at 732-863-9900 or LBercik@hnlawfirm.com.

The FLSA requires that employers pay employees a certain minimum wage and pay certain “non-exempt” employees overtime at the rate of one-and-one-half-times their regular rate of pay.  Employers regularly violate this rule by classifying employees who should be non-exempt as exempt to avoid paying them overtime wages.  Other employers violate the FLSA when they offer employees “comp time” instead of paying the required overtime. 

To learn more about employee rights and employer obligations under the FLSA, visit the Department of Labor’s page on the topic here.  Also keep in mind that many states have minimum wages laws higher than the federal minimum.  For instance, while the federal minimum wage is currently $5.15 per hour, New Jersey and New York require employers to pay $7.15 per hour.  If you are not being paid the minimum wage or work more than 40 hours per week without receiving overtime pay, you should contact Lauren Bercik at 732-863-9900 or LBercik@hnlawfirm.com to discuss your rights. 

There are numerous federal and state laws that protect “whistleblowers” who report the unfair or illegal practices of their employers, of which New Jersey’s CEPA law is just one.  CEPA provides that employers may not retaliate against workers who disclose (or threaten to disclose) practices of the employer that they believe are violations of the law.  CEPA also protects employees who refuse to participate in unlawful or fraudulent activities or those that may harm the health, safety or welfare of the public.  Employees must be careful in asserting their rights under CEPA, as certain steps are necessary to ensure protection under the law.  If your employer asks you to do an act you feel is illegal or against public policy, it is important to contact an attorney as soon as possible.

You may contact Ms. Lauren Bercik at Hanlon Niemann if you would like to discuss this topic further.