Cases such as these tend to catch our attention either because of the large amounts of money sought and/or because of the celebrity involved, but often their significance to more typical employment relationships goes unnoticed. 

Regardless of the ultimate merits (or lack thereof) or outcome of the lawsuit, the case illustrates two wage and hour issues that employers should be cognizant of: (1) the administrative exemption to overtime; and (2) the ways in which non-exempt, on-call employees should be compensated and/or treated.

Administrative Exemption to Overtime
Under the U.S. Department of Labor (“DOL”) regulations, an administrative assistant who is paid on a salaried basis and exercises significant independent discretion and judgment is exempt under the "administrative exemption." 29 CFR § 541.203(d). This exemption also applies to employees who exercise significant independent discretion and judgment in performing "office or non-manual" work. Challenges to the applicability of the exemption to executive or personal assistants are not uncommon.  Although some courts have expressed reluctance to rule that well-compensated individuals providing such assistance do not exercise "discretion and independent judgment,” case law remains unclear.

Non-Exempt, On-Call Employment
This case also serves as a reminder that on-call employment must not unduly restrict a non-exempt employee’s ability to spend his or her time away from the job.  The amount of restrictions imposed on a non-exempt, on-call employee’s time not at work will be considered in determining whether or not an employee should be compensated for on-call hours.  For example, if required to remain on an employer’s premises or within such a close distance that prevents the employee from using his or her time effectively or freely, the employee may be eligible to receive overtime pay under wage and hour laws. 

The Take Away
Compliance with wage and hour laws requires an understanding of what it means to be exempt or non-exempt from overtime obligations.  Further, employers of non-exempt employees are often unaware that some requirements of the positions may trigger payment/overtime obligations.  For example, if a non-exempt employee of a marketing group is required to attend networking events outside of normal working hours, such time must be paid.  Similarly, a building superintendent who lives at the building and is required to be “on-call” at all times may have to be compensated for all such “on-call” time if he is not permitted to leave the building (or travel beyond a limited distance) while off-duty but on-call.

Relevant to this personal assistant’s case, employers and individuals who retain personal or executive assistants should be aware of the employment risks associated with such employment and the need to pay such employees on a salaried basis and ensure that the assistants utilize independent discretion and judgment in performing their job duties in order to qualify for the protections afforded by the administrative exemption to overtime payment obligations.

For more information on this decision and how it might apply to your organization or employment, contact Amy Beth Dambeck, member of Stark & Stark’s Employment Group, via email: adambeck@stark-stark.com

Both the Americans with Disabilities Act (“ADA”) and Title VII of the Civil Rights Act of 1964 contain exemptions that entitle religious institutions to discriminate on the basis of religion – but they do not permit such institutions to discriminate on other legally protected basis, such as race, sex, or disability. The federal courts of appeals, however, have long recognized a broader, ministerial exception: a First Amendment doctrine that bars most employment-related lawsuits brought against religious organizations (“religious employers”) by employees performing religious functions. The circuits have been in agreement about the core applications of the doctrine to pastors, priests and rabbis, but have been divided over the boundaries of the ministerial exception when applied to other employees, particularly those whose duties are more secular in nature.

The question presented to the U.S. Supreme Court in the Hosanna-Tabor case was whether the ministerial exception applied to a teacher at a religious elementary school who taught a full secular curriculum and predominately engaged in secular duties, was a designated “called teacher,” taught religion classes, and regularly lead students in prayer.

Put a bit more simply: the Court was asked whether or not Cheryl Perich could sue her former church-school employer, the Hosanna-Tabor Evangelical Lutheran Church (“Hosanna-Tabor”), for discrimination under the ADA.

In this case, the EEOC filed suit on Ms. Perich’s behalf and against Hosanna-Tabor, claiming that the religious employer had unlawfully terminated her employment in violation of the ADA and, specifically, that it wrongfully fired her in retaliation for her threat to sue the church-run elementary school under the ADA.

In defense of the termination, Hosanna-Tabor claimed that Ms. Perich was a minister, and that, therefore, it had a First Amendment right to fire her for threatening to sue, which was contrary to their belief that Lutherans should resolve their disputes internally, and not within the courts.

In response, Ms. Perich argued that she was not a minister, just a teacher, and argued that Hosanna-Tabor had violated her federal statutory rights to protection against disability discrimination. Although most of Ms. Perich’s duties and teaching subjects were secular, she was a “called” teacher with some religious responsibilities, and the “called” designation was one conferred by the church. The U.S. Court of Appeals for the Sixth Circuit held that because, functionally, Ms. Perich was a secular teacher with few religious obligations, she was not a minister. As such, the Sixth Circuit concluded that Hosanna-Tabor did not have a First Amendment defense, and that Ms. Perich could pursue her ADA claims.  

In the Hosanna-Tabor decision, the Supreme Court rejected the Sixth Circuit’s analysis and concluded that Perich was a minister and, therefore, barred from pursuing her ADA claims.

The Supreme Court’s Decision
By the Hosanna-Tabor decision, the Court held that the Establishment and Free Exercise Clauses of the First Amendment serve as an absolute bar to employment discrimination suits brought on behalf of ministers against their religious employers; upheld the principle that it is impermissible for the government to contradict a church's determination of who can act as its ministers; and provided a fairly broad definition of “minister,” making clear that the designation is not limited to ordained clergy or their counterparts. 

The Court did not address whether or not the bar may also apply to other types of suits brought by ministers against their religious employers – such as breach of contract or tortious interference claims. 

Further, the Court did not articulate a rigid formula for deciding when an employee qualifies as a minister, choosing instead to apply a case-by-case approach which looks at the totality of the circumstances surrounding both the employee and the employment. 

In a Nutshell…

• The Court's decision confirms that the ministerial exception bars ministers from bringing employment discrimination suits against their religious employers.
• However, this bar only applies to employment discrimination suits brought by ministers, not employment discrimination suits brought by other lay employees.
• Further, the Court did not address whether or not the bar may also apply to other types of suits brought by ministers against their religious employers – such as breach of contract or tortious interference claims. 
• The decision establishes the ministerial exception as an affirmative defense, rather than a jurisdictional bar – meaning that unless the employer timely pleads the defense, it will be waived.

The Significance To Religious Employers and Employees
In light of this decision, religious employers must analyze whether an employee in question qualifies as a minister when making any employment decisions that could give rise to potential employment discrimination claims.  Such required analysis must keep in mind that the definition of a “minister” may be broader than one might expect. 

Further, because it is unclear whether or not the bar applies to other types of suits brought by ministers against their religious employers, such employers will still need to carefully evaluate all employment decisions for potential legal exposure – even for those employees who qualify as ministers.

Similarly, employees of religious institutions should be aware that, should the ministerial exception apply to them, they will be precluded from bringing employment discrimination claims against their employers and may be precluded from bringing other types of suits against their religious employers.  In addition, employees that may not consider themselves “ministers,” may, in fact, qualify for the designation, thereby being subject to the bar against bringing employment discrimination, and, potentially, other claims against their religious employers.

For more information on this decision and how it might apply to your organization or employment, contact Amy Beth Dambeck, member of Stark & Stark’s Employment Group, via email: adambeck@stark-stark.com

Mr. Lewis states, “There’s a strong argument that the gravy-train days of Wall Street may never replicate themselves again. It’s going to be very hard to make an embarrassingly large amount of money at a bank that’s a publicly traded company compared to a private-equity fund or a hedge fund.

The Act provides an arsenal of remedies, including compensatory and punitive damages, injunctive relief and attorneys’ fees. The legislation defines a trade secret as information such as a formula, pattern, business data compilation, technique, invention and/or process. New Jersey now joins 46 other states who have enacted a trade secrets statute.

The article discusses the Financial Industry Regulatory Authority’s recent disciplinary actions against Brandon Tompson and Patricia Collantes, former Citigroup managers in California, after they failed to supervise a sales assistant who stole $750,000 from client’s accounts. Mr. Lewis states that becoming a branch managers comes with great risk and by electing o become a branch manager, brokers are effectively signing up to be responsible for every action of every employee, all day long.

You can read the full article online here.

Under this new mandate, employers are required, by December 7, 2011, to: (1) post the newly published notice conspicuously in the workplace and (2) provide each employee hired prior to November 7, 2011 with a copy of the notice.  Further, any new employee hired after November 7, 2011 must be provided with a written copy of the notice at the time of hire.

The conspicuous posting requirement will be satisfied if: (1) the notice is placed on an employer’s Intranet or Internet site and (2) all employees have access to the electronic posting of the notice.  Otherwise, the notice must be conspicuously posted in areas commonly used for similar postings.

An employer may also choose to satisfy the distribution requirement by providing each employee with a written copy of the notice via e-mail.   If e-mail is not available, then a hard copy must be delivered to each employee and, in such circumstances, it is recommended that employers obtain a signed acknowledgment from each employee to evidence receipt.

Failure to comply with these notice and posting requirements could result in a fine of up to $1,000, as well as criminal penalties. 

New Jersey employers need to ensure that the notice is posted in the workplace and distributed to each employee no later than December 7, 2011.  In addition, employers should distribute copies of the notice to anyone hired on or after November 7, 2011 and must provide a copy of the notice to any new employees upon hire to ensure compliance with these new requirements.

A copy of the 6-page notice can be obtained through the following link to the New Jersey Department of Labor and Workforce Development’s website. For additional information, please feel free to contact me at 609.219.7452 or via email: adambeck@stark-stark.com.

Under Section 7 of the National Labor Relations Act (“NLRA”) employees, both unionized and non-unionized, have the right to engage in "concerted activities for the purpose of collective bargaining or other mutual aid or protection." These “activities” protect employees engaging in communication regarding wages and working conditions. Section 7 protects traditional face-to-face communication, as well as communication over the Internet and social media sites. In contrast to traditional means of communication however, when employees use social media they reach a much larger audience almost instantaneously, thereby making it more difficult for employers determine the limits of acceptable employee communication and to limit potentially damaging and inappropriate information from being widely disseminated.

Recently, in Hispanics United of Buffalo, Inc. v. Carlos Ortiz, the National Labor Relations Board (“NLRB”) held that off-hours complaints by employees about their working conditions on Facebook were protected by Section 7 of the NLRA. The holding in Ortiz is important because for the first time, employers have a general understanding of what is, and what is not, acceptable social media communication. See Hispanics United of Buffalo, Inc. v. Carlos Ortiz, Case 3-CA-27872.

The Ortiz decision can assist employers drafting social media policies. Employers must recognize the practical, economic, and legal implications of an insufficient or overly restrictive social media policy. Because employers must be aware the protections afforded to employees through the NLRA, careful determination of the contents of their social media policy is essential. Once an employer has decided to draft a social media policy, or update an existing policy, the following issues should be addressed:

1. policies should be specific, not overly broad, and cannot prevent employees from exercising their Section 7 rights under the NLRA;
2. policies should include language that carves out discussions in social media forums protected under the NLRA;
3. employers should implement or update the policy in a manner consistent with prevailing employee policies within the company so that Section 7 rights are preserved;
4. employers should review the content and context of postings, tweets or blogs made by employees (whenever possible) to determine if the content of the posting concerns terms or conditions of employment, relates to other issues, or seeks to involve other employees in discussions regarding conditions of employment;
5. employers should determine if the post is merely a personal grievance and/or whether the responses posted are "emotional support" or a statement about employment conditions; and
6. employers should remain current on NLRB rulings to ensure compliance with the NLRB's current position on social media policies.

A properly drafted social media policy may assist in safeguarding an employers’ business and limit its exposure to potential litigation. However, when drafting and/or updating a social media policy employers would be wise to insure that their efforts are in harmony with protecting the Section 7 rights of their employees.

The article discusses the continiuing legal battle AllianceBernstein is engaged in with financial advisors who recently left their firm and took clients with them. The firm filed suit against eight former brokers, claiming that they violated their non-solicitation agreements after they left without giving sufficient notice and taking their client lists and other confidential information with them.

Mr. Lewis comments on AllianceBernstein’s choice not to partake in the Protocol for Broker recruiting. He states, “The reason they have not joined is because they are concerned that it will make it easier for people to leave AllianceBernstein. They don’t want to join the protocol right now because there’s a great concern that there might more people who would want to leave than join, and in that situation, the protocol would not be a good mechanism for them to use.”

 

Mr. Lewis states that, “lawyers for the former Lehman brokers may try to argue ‘impossibility’ as a defense against the firm's note claims.  It's impossible to do your job if it's no longer there." 

You can read the full article online here.

 

The MPPAA was therefore enacted and was “designed ‘(1) to protect the interests of participants and beneficiaries in financially distressed multiemployer plans, and (2) to encourage the growth and maintenance of multiemployer plans in order to ensure benefit security to plan participants.’ ”
 

To accomplish these goals, the MPPAA “requires that a withdrawing employer pay its share of the plan's unfunded liability,” which “insures that the financial burden will not be shifted to the remaining employers” in the fund. 
 

The pension fund determines whether withdrawal liability has occurred and in what amount.  A “complete withdrawal ... occurs when an employer-(1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan.” The amount of an employer's withdrawal liability is the employer's proportionate share of the unfunded vested benefits existing at the end of the plan year preceding the plan year in which the employer withdraws.
 

A trustee is empowered to sue a withdrawing employer for its share of the unfunded liability of the plan. If, however, the trustee does not sue, a beneficiary may sue the trustee as well as the party or parties the trustee failed to sue. Consequently, should we discover that the trustees of the merged pension plan at issue failed to sue a withdrawing employer, we would have a cause of action against the trustees and the withdrawing party. 

The article reviews the history of the garden leave and its advantages and disadvantages to New Jersey employers in determining whether a garden leave provision should be used in employment contracts. Historically, New Jersey courts have had scant experience interpreting garden leave provisions in employment contracts. A garden leave provision requires an employee to give advance notice of a defined length of time before terminating the employee’s employment.

You can read the full article online here.
 

Treasury regulations implementing the anti-cutback rule make the point explicitly: a pension plan may not deny a protected benefit “directly or indirectly, through the exercise of discretion ....”  Moreover, plan participants are entitled to notice whenever a plan amendment is seriously considered or enacted. 
 

Sometimes a violation of the anti-cutback provision will give rise to a breach of fiduciary duty claim.  According to the Second Circuit, amendments to multi-employer plans which “affect the allocation of a finite asset pool to which each participating employer has contributed” could properly be treated as fiduciary functions.  However, the Third Circuit does not agree and does not make a distinction between single-employer or multi-employer pension plans.
 

Thus, the Third Circuit has adopted the view that ERISA's fiduciary duty provision does not apply to amendment of multiemployer plans. Therefore, absent some other culpable conduct, a violation of ERISA’s anti-cutback provision will not, by itself, support a breach of fiduciary claim in New Jersey.

All costs, liabilities, rates of interest, and other factors under the plan must be determined on the basis of actuarial assumptions and methods that must be reasonable in the aggregate and in combination offer the actuary's best estimate of anticipated experience under the plan. A plan meets the minimum-funding requirements only if, at the end of each plan year, the account does not have an accumulated funding deficiency.

Supplementing these fundamental standards prohibits specific transactions. A plan fiduciary may not cause the plan to engage in a transaction that constitutes a loan, sale, or other transfer of assets to a party in interest, or the improper acquisition of employer security or real property. The statute also forbids a fiduciary from dealing with assets of the plan in his own interest or receiving consideration from any party dealing with the plan in a transaction involving plan assets; nor may a fiduciary participate in any transaction involving the plan on behalf of a party whose interests are adverse to the plan. Trustees who violate their fiduciary duty may be held personally liable and the courts are free to fashion equitable relief appropriate to the circumstances, including removal of the trustee. 

Fiduciary duty under ERISA has three components:

1. a duty of loyalty pursuant to which all decisions regarding an ERISA plan must be made with an eye single to the interest of the plan participants and beneficiaries;
2. the prudent-person obligation imposes an unwavering duty to act both as a prudent person would act in a similar situation and with single-minded devotion to those same plan participants and beneficiaries; and
3. an ERISA fiduciary must act for the exclusive purpose of providing benefits to plan beneficiaries.

Of these, the duty to act solely in the interest of plan participants and beneficiaries has been called the main fiduciary duty.
 

A participant, beneficiary, or other fiduciary may bring a civil action against any plan fiduciary who breaches any responsibilities, obligations, or duties under ERISA. However, the statutory provisions recognizing a right of action against an administrator for breach of trust obligations are limited to claims on behalf of the plan for misconduct regarding the trust itself, not the payment of benefits to participants. Recovery from a fiduciary for breach of fiduciary duty inures to the benefit of the plan as a whole. 
 

Therefore, ERISA actions for breach of fiduciary duty should be brought in representative capacity on behalf of the plan as whole. The trick seems to be proving that the plan assets themselves have been improperly depleted, rather than just the anticipated benefits of the individual plaintiffs being extinguished. 
 

Moreover, there is usually a question or disagreement regarding whether the alleged wrongdoer, is actually a fiduciary or trustee of the pension plan. To determine whether a person is a fiduciary under ERISA with respect to the particular function at issue, discretionary authority or responsibility of such person with respect to that function must be examined and the actions of the person to be charged as a fiduciary for the function must be considered. However, the ERISA provisions, creating a duty of care by requiring the administrator to use the care, skill, prudence, and diligence, under the circumstances then prevailing, that a prudent person acting in a like capacity and familiar with such matters would use in conduct of like enterprise does not create a standard of absolute liability. For an ERISA fiduciary to be liable for a breach of duty, there must be a showing of some causal link between the alleged breach and the loss the plaintiff seeks to recover. To show that a fiduciary is excused from liability for any loss which results from a participant's or beneficiary's exercise of control over an investment under an ERISA provision, the causal nexus between the participant's or beneficiary's exercise of control and claimed loss is established with proof that the participant's or beneficiary's control is the cause-in-fact, as well as a substantial contributing factor in bringing about the loss incurred.  Notably, the fiduciary duties owed participants and beneficiaries under ERISA apply only to the administration of the plan, not to its formation, amendment, or modification.
 

However, vested pension rights may not be altered without the consent of the retirees. Vesting of pension rights occurs when all the eligibility requirements of a voluntary noncontributory pension plan have been met, and the retiree may not therefore be divested of his rights. 
 

Nonetheless, in the past, courts have upheld the district court's conclusion that an employer was not acting in an ERISA fiduciary capacity in amending its pension and welfare plans to allocate assets and liabilities between itself and a newly created subsidiary, even though it allegedly "rigged" the allocation procedures so that the subsidiary might not have enough money to provide the benefits by the time it became responsible for the retirement benefits of the former employees of the parent corporation.  The district court had rejected arguments that the employer, although not a fiduciary in making the decision to restructure, became a fiduciary when it "invaded" its ERISA plan trust corpus to allocate the trust assets and thereby exercised management and control over the assets.  In upholding this decision, the court noted that changing the design of a trust does not involve the kind of discretionary administration that typically triggers fiduciary responsibilities.  The court concluded that the conduct complained of—that the employer had allocated the assets of its plans in a manner allegedly benefiting the employer to employees' detriment—might violate ERISA provisions regarding transfer of plan asset, but that the allocation did not implicate ERISA's fiduciary provisions. 
   

The 1980 amendments provided that a plan sponsor (the trustees) may cause a multiemployer plan to merge with another only if it complies with regulations of the Pension Benefit Guaranty Corporation, the benefits of participants are not adversely affected, and other statutory conditions are observed.

While social media can provide new ways to interact and respond to customers, social media activities by employees can create numerous problems for employers.   For example, a company can work for years to craft a positive image of itself to the public and its client base, only to have that image instantly tarnished by negative postings from employees. Other risks concern the disclosure of employers’ confidential, proprietary and/or trade secret information. Whether it may concern marketing plans, identity of customers or current projects, inadvertent distribution of such information by employees via social networking may significantly undercut a company’s business plans and strategies – even if the information is only unwittingly disclosed.
 

But it is not just the employee’s use of social media that warrants concern.  These sites often hold a wealth of information that may be useful in screening job applicants. In fact, many employers now use social networking sites to screen potential hires. However, in so doing, an employer may also learn about information that may later become the basis of a discrimination lawsuit. For example, what if photos or comments posted on a rejected applicant’s Facebook page revealed her membership in a class protected under federal or state laws - such as her race, age, health condition, political or religious affiliation, or pregnancy status?  Whether or not the information putting her in the protected class was a determining factor in a decision not to hire her, the fact that the employer checked the applicant’s Facebook page and was aware of that fact may give rise to an allegation of discrimination.
 

Recognizing these risks, many employers are wisely implementing policies to directly address the use of social-networking sites so that employees know exactly what is expected of them.  There is not a one-size-fits-all policy for employers.  Some businesses – such as those that focus on sales and marketing, may, in fact, depend on social media and networking sites and may even mandate their employees’ use of the sites as an essential part of their job duties.  Other businesses may wish to ban the use of social networking and media sites at work altogether.
 

Although there are inherent risks in the use of social media, employers can minimize such risks by evaluating the issues involved and adopting and implementing policies appropriate to their particular business and circumstances with a minimal investment of time and resources.  Development of a social media policy requires an understanding of the specific employer’s needs; the potential rewards and liabilities arising out of the use of social media for that employer; employees’ rights and liability issues; and the realistic social media use of its employees.  Once this analysis – whether formal or informal – is undertaken, an employer can establish appropriate policies for the use of social media to make decisions about job applicants and employees, to address employees’ use of social media – both at and away from work (when the activities directly affect the employer) and to ensure that the policies are consistently implemented.  With such policies and procedures in place, employers can maximize the benefits and opportunities presented by social media and networking, while limiting the potential pitfalls that accompany use of the Internet sites.

In general, ERISA prohibits reductions in accrued, vested benefits.  These ERISA provisions are commonly called “anti-cutback” rules.  The PPA changes the ERISA anti-cutback rules so that plans in critical status are permitted to reduce or eliminate early retirement subsidies and other “adjustable benefits” to help improve their funding status if this is agreed to by the bargaining parties.  Benefits payable at normal retirement age cannot be reduced, and plans are not permitted to cut any benefits of participants who retired before they were notified that the plan is in critical status.  Adjustable benefits include certain optional forms of benefit payment, disability benefits, early retirement benefits, joint and survivor annuities (if the survivor benefit exceeds 50%), and benefit increases adopted or effective less than five years before the plan entered critical status.
 

A multiemployer plan is considered to be in critical status if: (1) it is less than 65% funded and has a projected funding deficiency within five years or will be unable to pay benefits within seven years; (2) it has a projected funding deficiency within four years or will be unable to pay benefits within five years (regardless of its funded percentage); or (3) its liabilities for inactive participants are greater than its liabilities for active participants, its contributions are less than carrying costs, and a funding deficiency is projected within five years.  A plan in critical status has one year to develop a rehabilitation plan designed to reduce the amount of underfunding.  Pursuant to such a rehabilitation plan, the plan is permitted to reduce or eliminate early retirement subsidies to help improve their funding status.  In addition to giving plans the right to eliminate or reduce some benefit payment options and early retirement benefits for plan participants who have not yet retired, the law also establishes new disclosure requirements for multiemployer plans.
 

The plan must notify all affected parties within 30 days after a determination is made that the plan is in critical status.  Beginning 30 days after this notification, a 5% employer surcharge will apply to keep plan funding from deteriorating while the rehabilitation plan is being developed.  This surcharge increases to 10% in the second year and stays in effect until the rehabilitation plan has been approved.  During this period, increases in benefits and reductions in contributions are prohibited.  The surcharge is no longer required beginning on the effective date of a collective bargaining agreement that includes a rehabilitation plan.  A plan has 10 years to move out of critical status from the earlier of (1) two years after adoption of the rehabilitation plan or (2) the first plan year after the beginning of collective bargaining agreements covering 75% of active participants.  If the parties to the collective bargaining agreements fail to agree on a funding improvement plan, a default schedule will apply that assumes no increases in contributions — unless necessary to exit critical status — after benefit accruals and adjustable benefits have been reduced to the extent permitted by law.  A plan exits critical status if it no longer projects a funding deficiency within 10 years.