New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

In an interesting new development, the Appellate Division of New Jersey, in the matter of Cerdeira v. Martindale Hubbell, Appellate Division A-5855-06T1 (September 18, 2008) has expanded liability for discrimination in situations where: (a) an employee is subjected to discrimination/harassment by a co-worker (as opposed to a supervisor); and (b) the employer does not have an effective policy for employees to use in reporting harassment. Relying on a form of negligent liability which has previously only been recognized in federal court, the Appellate Division has now established that in New Jersey state courts, under the circumstances set forth above, there can be liability for a company. This new form of liability only underscores the need for employers in New Jersey to have a clear written policy on how employees are to report incidents of discrimination and harassment to their company.

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Last Summer, the New Jersey Legislature added  “affectional orientation” to the list of protected classes of people under the New Jersey Law Against Discrimination (NJLAD). Now New Jersey employers are faced with another tricky issue on a very practical level which may have not been considered by the Legislature.  How does an employer respond to a trans gender employee who wishes to use the bathroom of the opposite “biological” sex? For example, a biologically male employee who dresses as a woman wants to use the “ladies room.”  Should the employer allow this?  What about the other employees?  The courts in New Jersey have done almost nothing to answer these questions to date.  In a recent unpublished decision Opilla v. Parker, the Appellate Division sidestepped these issues in a case which would have otherwise provided employers with real guidance on this issue.  In Opilla, a trans gendered biologically male employee entered the women’s locker room of the corporate gym and allegedly stared at a semi-dressed female co-worker. The coworker was uncomfortable enough to complain about the incident to her employer and eventually filed a lawsuit. 


The court determined that one single incident of alleged discrimination would not rise to the severe and pervasive level required under NJLAD, thereby neatly avoiding the rather obvious issues presented in the case.  Other jurisdictions have taken on this issue and provide some guidance. For example, a Federal Court in Minnesota dealt with the trans gender bathroom question and made the following, seemingly reasonable determination:  If an employee presents “as a male,” the employee should use the mens bathroom – likewise if the employee presents “as a female,” the employee should use the womens bathroom.  While this is obviously not a perfect solution, and does not really address the issues other employees may have with sharing lavatories or locker room with transgendered coworkers, it is probable that this “middle of the road” solution will eventually become the law in New Jersey.  Only time will tell if New Jersey employers will take on the additional economic impact of creating a third “gender neutral” bathroom in their place of business.  

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In a previous blog post I discussed House Bill 790 in Vermont which would have had a substantial negative impact upon franchising in Vermont.  It would essentially void non-compete provisions in franchise agreements. 

The Bill apparently languished in committee through the end of the May session, which effectively kills it for the time being.  The danger of such bills is that they tend to leach into “sister” states.  The demise of the Vermont Bill is a positive development for franchisors and helps strengthen the franchise community in general because it protects the general integrity of franchise systems.

 

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Earlier today (May 21, 2008) President Bush signed into law a bill that prohibits employers from using genetic information about prospective employees to make decisions on hiring. The Bill had received almost unanimous support in both the House and Senate. The Bill contains, among other things, the following two Congressional findings (as stated in the bill):

(4) Congress has been informed of examples of genetic discrimination in the workplace. These include the use of pre-employment genetic screening at Lawrence Berkeley Laboratory, which led to a court decision in favor of the employees in that case Norman-Bloodsaw v. Lawrence Berkeley Laboratory (135 F.3d 1260, 1269 (9th Cir. 1998)). Congress clearly has a compelling public interest in relieving the fear of discrimination and in prohibiting its actual practice in employment and health insurance.
(5) Federal law addressing genetic discrimination in health insurance and employment is incomplete in both the scope and depth of its protections. Moreover, while many States have enacted some type of genetic non-discrimination law, these laws vary widely with respect to their approach, application, and level of protection. Congress has collected substantial evidence that the American public and the medical community find the existing patchwork of State and Federal laws to be confusing and inadequate to protect them from discrimination. Therefore Federal legislation establishing a national and uniform basic standard is necessary to fully protect the public from discrimination and allay their concerns about the potential for discrimination, thereby allowing individuals to take advantage of genetic testing, technologies, research, and new therapies.

This Bill contains the following prohibition:


SEC. 202. EMPLOYER PRACTICES.


(a) Discrimination Based on Genetic Information- It shall be an unlawful employment practice for an employer--

(1) to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee; or
(2) to limit, segregate, or classify the employees of the employer in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect the status of the employee as an employee, because of genetic information with respect to the employee.

(b) Acquisition of Genetic Information- It shall be an unlawful employment practice for an employer to request, require, or purchase genetic information with respect to an employee or a family member of the employee except--

(1) where an employer inadvertently requests or requires family medical history of the employee or family member of the employee;
(2) where--

(A) health or genetic services are offered by the employer, including such services offered as part of a wellness program;
(B) the employee provides prior, knowing, voluntary, and written authorization;
(C) only the employee (or family member if the family member is receiving genetic services) and the licensed health care professional or board certified genetic counselor involved in providing such services receive individually identifiable information concerning the results of such services; and
(D) any individually identifiable genetic information provided under subparagraph (C) in connection with the services provided under subparagraph (A) is only available for purposes of such services and shall not be disclosed to the employer except in aggregate terms that do not disclose the identity of specific employees;

(3) where an employer requests or requires family medical history from the employee to comply with the certification provisions of section 103 of the Family and Medical Leave Act of 1993 (29 U.S.C. 2613) or such requirements under State family and medical leave laws;
(4) where an employer purchases documents that are commercially and publicly available (including newspapers, magazines, periodicals, and books, but not including medical databases or court records) that include family medical history;
(5) where the information involved is to be used for genetic monitoring of the biological effects of toxic substances in the workplace, but only if--

(A) the employer provides written notice of the genetic monitoring to the employee;
(B)(i) the employee provides prior, knowing, voluntary, and written authorization; or
(ii) the genetic monitoring is required by Federal or State law;
(C) the employee is informed of individual monitoring results;
(D) the monitoring is in compliance with--

(i) any Federal genetic monitoring regulations, including any such regulations that may be promulgated by the Secretary of Labor pursuant to the Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et seq.), the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 801 et seq.), or the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.); or
(ii) State genetic monitoring regulations, in the case of a State that is implementing genetic monitoring regulations under the authority of the Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et seq.); and

(E) the employer, excluding any licensed health care professional or board certified genetic counselor that is involved in the genetic monitoring program, receives the results of the monitoring only in aggregate terms that do not disclose the identity of specific employees; or

(6) where the employer conducts DNA analysis for law enforcement purposes as a forensic laboratory or for purposes of human remains identification, and requests or requires genetic information of such employer's employees, but only to the extent that such genetic information is used for analysis of DNA identification markers for quality control to detect sample contamination.

(c) Preservation of Protections- In the case of information to which any of paragraphs (1) through (6) of subsection (b) applies, such information may not be used in violation of paragraph (1) or (2) of subsection (a) or treated or disclosed in a manner that violates section 206.


Employers should note this prohibition, and immediately stop any hiring practices that would run afoul of the Act.

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House Bill 2491 and Senate Bill 1539 of the New Jersey Legislature seek to expand the type of franchises, which are subject to the New Jersey Franchise Practices Act. In general, the New Jersey Franchise Practices Act currently applies to franchises where: 1) the franchisor has granted the franchisee a license, mark, trade name, etc.; 2) there is a “community of interest” in the marketing of goods and services; 3) where the franchisee has established or maintains a “place of business” in New Jersey; 4) where the gross sales between franchisor and franchisee are more than $35,000 in the prior year; and 5) more than 20% of the franchisee’s sales are derived from the franchise. The proposed change in the statute would apply the provisions of the Franchise Practices Act to “mobile” franchises, in other words, franchises that do not have a brick and mortar location. Under the proposed Bill, a “place of business” would include a location where the franchisee “displays for sale or at which or from which the franchisee sells the franchisor goods.” This would include an office or warehouse from which franchisee personnel visit or call upon customers or, perhaps more importantly from which the franchisor’s goods are delivered to customers.


Potentially more significant than the proposed changes to the definition of “place of business” is the additional language that the Bill would tack on to the “general purpose” section of the Franchise Practices Act. The proposed Bill would add the following language:

“…and to protect franchisees from unreasonable termination by franchisors that may result from a disparity of bargaining power between national and regional franchisors and small franchisees. The legislature finds that these protections are necessary to protect not only retail businesses, but also wholesale distribution franchisees that “through their efforts” enhance the reputation and goodwill of franchisors in this State. Further, the legislature declares that the courts have in some cases more narrowly construed the Franchise Practices Act then was intended by the legislature”.

This additional language should concern franchisors doing business in New Jersey, since it is unnecessary to achieve the expansion to the “place of business” definition that is the focus of the Bill. This tougher language may indicate that there are further changes to the statute being considered. Certainly, the inclusion of the proposed language would be used as a justification by judges to give much broader application to the Act than has been the case in years past.


The two Bills are currently in the initial stage of the legislative process, and will probably not be acted upon until May or June of this year. The current sponsors of the two Bills are Assemblyman Joseph Cryan – District 20 (Union County) and Senator Bob Smith – District 17 (Middlesex and Somerset Counties). The legislation was introduced in the House on March 10, 2008, and in the Senate of March 17, 2008.

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The Vermont legislature introduced House Bill No. 790 on February 1, 2008.  The Bill would render non-compete provisions of franchise agreements void unless the franchisor can prove to the Court’s satisfaction that the franchise agreement is:  (1) consistent with public policy; (2) necessary to protect the franchisor; (3) not a contract of adhesion; and (4) reasonable considering the subject matter and conditions.  Clearly the third requirement is problematic. 


A “contract of adhesion” is legal-speak for “non-negotiable” and is “take-it-or-leave-it” in nature.  Most franchise agreements are non-negotiable because it is important for the system to maintain uniform and consistent standards.  However, various courts have deemed franchise agreements to be contracts of adhesion because of the superior bargaining power of the franchisor.  Since most franchise agreements are contracts of adhesion, and if this Bill passes, it will be extraordinarily difficult for franchisors to enforce non-competition agreements among franchisees in Vermont. 


One can only hope that this idea does not spread beyond the borders of the Green Mountain State.    Vermont’s legislature appears intent of following this strange course of action, which is out of step with the other states.  Watch this log for more updates.

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A Bill has now passed in the Senate, 38 – 0 (S-2488/A-3451) on December 19, 2007 that will make it unlawful for an employer to discriminate against employees because of “religious practices.” 

The importance of this bill is that it goes beyond protecting an employee from being discriminated against because of their religion, and specifically protects them from discrimination based on “religious practice.”  Given the lack of opposition to this Bill, it is likely that the Governor will sign it into law shortly. 

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In somewhat of a surprise move, on December 14, 2007, Congress amended the Family Medical Leave Act (FMLA) to add two additional reasons for applying for FMLA leave.  One provision adds that FMLA can be taken for a “qualifying exigency” arising from active duty in the armed services. 

Additionally, time off can be taken under the FMLA to care for a wounded service member for up to 26 weeks paid leave (which must be taken within a single 12-month period).  It is anticipated that President Bush will sign the Bill into law within the next few weeks.  Once the Bill is signed, employers will need to notify their employees of this change in their FMLA rights.

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On appeal, the Third Circuit reversed this holding with the Court stating that the Plaintiff’s “verbal” notice was sufficient to entitle him to a claim under benefits through the Family Medical Leave Act (FMLA), even if he had not followed the Company’s policies.  This is a somewhat disturbing development for employers, because it raises many issues about the type of “verbal” notice an employee can give, and “muddies the waters” as to a company’s ability to require its employees to follow its written policies regarding disability benefits. 

For example, if an employee leaves a voice mail message on the Human Resource's voice mail requesting FMLA leave, is that sufficient to put the company on notice?  This question will need to be answered in subsequent cases.

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In a recent unpublished decision by the New Jersey Appellate Division, known as Ashwall and Winograd v. Prestige Management Services, Inc., et als. (Decided October 16, 2007), the Court dealt with a claim by employees of a New Jersey automobile dealership franchise who claimed religious discrimination and “promissory estoppel” against their former employer.  The Plaintiffs, a manager and top-salesman, claimed discrimination based on their religious faith (Judaism) under the New Jersey Law Against Discrimination.  One of them had also claimed that, since he had been given the task of turning a non-profitable dealership “around,” that he was entitled to employment for at least a reasonable period of time. 


His argument was that he had been a very successful manager of another dealership, and by asking him to take on the management of a non-profitable dealership, the franchisee in effect “owed” him employment for a certain period of time.  This claim had been dismissed by the trial judge prior to the trial of the case, and was never heard by a jury.  While there appears to have been some factual merit to the Plaintiffs’ argument, the Appellate Division relied on traditional notions of “at-will” employment and determined that the Court had been correct in dismissing the claim for Promissory Estoppel as they did not find that there was enough evidence that the parties had intended to enter a long-term commitment.  Specifically, the Court was looking for “assurances of employment” that were “clear, specific and definite.”  The franchisee in this case avoided any liability on the “promissory estoppel” claim (though there was a jury verdict against it for discrimination). 


This case highlights the potential for confusion between the franchisee who owns several locations and employees who are “specially assigned” to trouble-shoot certain kinds of jobs.  To avoid this confusion, a franchisee should notify an employee clearly and in writing that their “at-will” employment relationship continues despite the new assignment and that there is no guarantee of continued employment.  Such a written assurance would have most likely avoided litigation in this case and would have saved the franchisee from having to defend such a claim.

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