Recently, the National Labor Relations Board (NLRB) issued a Notice of Proposed Rulemaking which is intended to roll back a controversial 2015 decision that loosened the board’s test for determining whether businesses like franchisors and franchisees are joint employers under the National Labor Relations Act.
The U.S. House of Representatives lawmakers announced last week that they have prepared a bill that would establish that a business simply licensing a trademark, such as in the case of a license from a franchisor to a franchisee, would not create a so-called “joint employer” relationship.
Joint employment is the sharing of control and supervision of an employee’s activity among two or more businesses. This new bill, called the Trademark Licensing Protection Act of 2018, declares that if a company is licensed to use a trademark, this should not be enough to establish “an employment or principal agent relationship” between the two licensing entities.
Eight national restaurant chains have agreed to drop provisions in their franchise agreements that prohibit franchisees from hiring fellow franchisees’ employees. The removal of the “no-poach” hiring stipulation will be effective at all of their locations nationwide.
This move comes at the heels of announcements from Attorneys General from 10 states and the District of Columbia to investigate these “no-poaching” agreements. In addition to criminal and civil enforcement by both the state and federal governments, several franchisors are also facing federal class action lawsuits from employees alleging they were adversely affected by “no-poach” agreements.
With the recent news out of Washington that the Department of Labor has withdrawn Administrator’s Interpretation 2016-1 (its previous informal guidance on joint employment under the Fair Labor Standards Act (“FLSA”)), and with the National Labor Relations Board pulling back the broad joint employer standard set in the 2015 Browning-Ferris Industries of California, Inc. case, many are under the impression that the joint employer storm has passed.
While these are certainly welcome developments, franchisors should be careful not to dismiss the threat of joint employer liability too quickly. This is particularly true if you have outlets located in Maryland, Virginia, North Carolina, South Carolina, and/or West Virginia.
It has been a little over a month since the Opportunity to Compete Act (the “Act”) went into effect in New Jersey. The Act, which is New Jersey’s version of Ban the Box, was originally signed into law on August 11, 2014, giving employers roughly 6 months to review and revise their employment forms and practices to conform to the new mandates.
The enactment of the law solidifies New Jersey’s position regarding the use of criminal background checks during the initial employment application process. Although this movement has been in effect on a local level in many locations for some time, the Act specifically declares that any attempts to regulate this conduct on a local level are pre-empted by the Act, unless done so to regulate municipal operations.
The insurance industry is reacting to the recent realities that the Ebola virus has the potential to have an impact on U.S. based businesses. NAS Insurance Services recently announced that it will offer Ebola Business Interruption Coverage in conjunction with Prospect Insurance Brokers Ltd and the Ark Syndicate at Lloyd’s of London. This coverage is intended to fill a gap that exists in current Commercial Business Owner policies. Continue Reading New Insurance Offering: Ebola Business Interruption Coverage
Countless people have been affected by the harsh economic times of the past several years. Many were unable to meet their financial obligations and stopped paying their bills which ultimately resulted in diminished credit ratings. In turn, job prospects also diminished. Pre-employment credit screenings are often standard practice and an unacceptable credit rating can be a bar to potential employment opportunities.
The New Jersey Legislature is currently reviewing this situation to determine whether reform is appropriate. There has been some recent movement towards banning and/or restricting an employer’s ability to use credit checks to screen potential applicants. The rational is that these checks often deprive people of the ability to get back on their feet. Some see the checks as patently unfair, especially if there is no correlation between the job functions to be performed and strength of the employee’s credit rating. Further, some studies have shown that credit checks are often unreliable and produce incorrect data, with 20% of credit reports containing errors.
A new bill to ban employment credit checks (S455) passed the New Jersey Senate last year and was approved by the Assembly Labor Committee in December. It has now made its way to the full Assembly. The bill bans credit checks unless required by law or in certain circumstances where an employer reasonably believes that an employee has engaged in financial activity that violates the law. The checks would also still be permissible if they constitute a bona fide occupational qualification for a particular position (i.e. a job in the financial industry, a position that gives the employee authority to issue payments, transfer money or have an expense account).
The exceptions appear to be an attempt to balance employers’ legitimate concerns for their business interests against the need for access to employment. Many employers may feel that the protections are still not adequate and that they are being deprived of the ability to obtain important information about potential candidates. At the current time, there is no clear answer as to how the balancing will play out in New Jersey.
However, even if the bill is not passed in New Jersey, there is similar federal legislation pending called the Equal Employment for All Act. It is prudent for employers to monitor both of these bills carefully, as they could impact the way they screen applicants. At the current time, employers are still permitted to rely upon credit checks, but human resource departments are advised to keep abreast of the potential changes. If either of these bills does ultimately pass, in addition to updating their screening procedures, employers should also not forget to update their employee handbooks to conform to the law. A qualified employment attorney can assist you in drafting a provision that keeps your business in compliance.
Employee manuals are a very useful tool for both employers and employees. The manuals are meant to provide guidance to employees about how the company runs, what the employer’s expectations are and how certain situations should be handled. They can quickly and effectively provide employees with answers to many commonly asked questions. This creates a certain level of clarity for both parties and aids in the avoidance of misunderstandings regarding the company’s policies.
However, while employee manuals are essential for distributing information about company procedure, most employers do not want their manuals to be construed as contracts of employment. Therefore, it is common practice for employers to put a disclaimer in their employee manuals articulating that the manual is NOT a contract of employment and does not create any terms or conditions of employment. This language helps to insulate the employer. But what happens when an employer actually wants to enforce a provision outlined in the manual, to the exclusion of the others? The District Court of New Jersey recently answered this question in the case of Raymours Furniture Company, Inc. v. Rossi, Civ. No. 13-4440 (D.N.J. Jan. 2, 2014), which dealt with the enforceability of an arbitration provision in an employee manual.
Employers often want any employee disputes to be resolved via mandatory binding arbitration as opposed to full blown litigation. To that end, many employers seek to have their employees agree to arbitration as a condition of employment. However, the form and content of the agreement to arbitrate are important. Under New Jersey law an employee must “clearly and unambiguously” confirm their agreement to arbitrate. General rules of contract construction govern when investigating whether this, in fact, occurred and New Jersey courts usually look to the four corners of the document in question to ascertain the intent of the parties. In the case of an employee manual, avoiding conflicts among provisions or contradictory statements is key.
An employer cannot state that its employee manual is not a contract and then seek to invoke an arbitration provision within that manual without including language which expressly excludes the arbitration provision from the disclaimer. Otherwise, there is a conflict in the document which renders it ambiguous. However, the conflict can be resolved by adding the necessary exclusionary language throughout the manual wherever any statement is made pertaining to the manual’s status as non-binding. Additionally, the arbitration provision itself should include language to this effect. Finally, the acknowledgment page of the manual should contain a separate paragraph pertaining to arbitration whereby the employee expressly acknowledges that the manual contains an arbitration provision and that the employee agrees to arbitrate any employment related claims. A separate acknowledgment form relating to arbitration can also be executed in lieu of including arbitration language in the manual’s acknowledgement form.
In addition to this, an employer who wishes to enforce an arbitration provision in an employee manual cannot make a blanket statement indicating that it reserves the right to change the contents of the manual at any time and without any notice. This acts to make the arbitration provision illusory and unenforceable. To cure this, the employer should make clear that the arbitration provision is exempt from this and expressly state that any change pertaining to the arbitration provision will be put in writing, provided to all employees and that employees will be asked to sign an acknowledgement accepting the new provision as a condition of continued employment.
Any employer who wishes to include an arbitration provision in an employee manual should consult with an employment attorney to make sure that the provision and the terms of the manual do not conflict or create an ambiguity. Similarly, any employer who currently has an employee manual with an arbitration provision should have counsel review the manual to ensure that it complies with the terms and conditions outlined in the Raymours decision.
Social Media use is prevalent and will undoubtedly continue to remain a staple in our society for years to come. Improvements in technology have made access easier which has helped to create a culture where people are engaging in the use of social media anytime and from almost anywhere. But what does this mean for employers? Is an employer permitted to access employee social media accounts? Can the content of employee social media conversations be restricted? Can the use of social media be banned or limited in the workplace?
This is a developing area of law and the proper balance between employer rights and employee privacy is still being defined. The landscape is vast and employers wishing to create policies with respect to social media (which is highly recommended) need to look to both federal and state laws to ensure that they are in compliance.
On December 1, 2013 New Jersey joined a growing number of states that have enacted a social media password protection law. Under the new law, employers are not permitted to request usernames or passwords for personal employee or prospective employee social media accounts. Retaliation against an individual who refuses to provide this information or who discloses that a violation of the law has occurred is strictly prohibited. Violators are subject to fines. However, that is only one piece of the puzzle. Penalties for similar conduct may be much greater under other laws such as the Conscientious Employee Protection Act (“CEPA”), N.J.S.A. 34:19-1, et seq. Employers should seek to avoid engaging in this type of conduct at all costs.
It should be noted that employers do not always need passwords to access employee social media accounts. If an employee’s privacy protections are set to allow for public viewing of his or her account, an employer is not prohibited from viewing the content (but the employer should be mindful of potential claims that it used information it obtained in this manner to violate anti-discrimination laws). Using alternate means to gain access to an otherwise private account is not permissible. However, this does not prevent an employer from seeing the content of a private account that is offered to it by an “intended viewer” of the account with lawful access (i.e. another employee who is an online “friend” of the employee in question). The District Court of New Jersey recently held that viewing private employee social media postings that are provided to an employer by someone with authorized access to the information does not violate the Stored Communications Act (“SCA”) 18 U.S.C. § 2701, et seq., which bars the unauthorized disclosure of electronic communications. Ehling v. Monmouth-Ocean Hospital Service Corp.WL 4436539 (D.N.J. Aug. 20. 2013). However, an employer should not solicit this information from the “intended viewer” or have a policy which requires or encourages such behavior.
Also of concern is how much input an employer has over the content of employee social media postings. The National Labor Relations Board (the “NLRB”) has taken a very broad interpretation of Section 7 of the National Labor Relations Act (the “Act”), 29 U.S.C. § 151, et seq., when it comes to social media restrictions. Section 7 prohibits any policy that restricts employees from discussing the “terms and conditions” of their employment. The NLRB has taken the position that policies that prohibit employees from posting anything “offensive” or from posting “confidential information,” without further clarification, are too broad and ambiguous. To avoid being found in violation of the Act, employers are advised to ensure that any social media policy is crafted utilizing very descriptive terminology that makes clear that the conduct being prohibited does not include any of the conduct protected under Section 7. It is also prudent for an employer to include a very specific “savings clause” in any social media policy which makes clear that the policy is not intended to violate any protections granted under Section 7. The savings clause should make specific reference to the protected conduct and should provide definitions of ambiguous terminology.
So what can employers prohibit? At the current time, an employer social media policy can prohibit the use of social media in the workplace during work hours and can prohibit the use of employer supplied equipment to access social media. An employer can also prohibit an employee from posting anything on social media in the name of, or on behalf of, the employer. Content that constitutes discrimination or harassment of a co-worker can also be restricted. The NLRB has published guidelines on the permissible scope of social media policies. These guidelines should be reviewed and incorporated into any employer’s policy.
Having a social media policy is becoming more and more important for all employers as a means of protecting themselves. However, given the complexity of the laws surrounding social media it is strongly advised that you have an employment attorney assist you with the drafting of a social media policy. With all of the recent changes in the law, it is also strongly recommended that existing policies be reviewed by counsel and that a periodic review is scheduled to ensure continued compliance.
The national movement towards “Banning the Box” has made its way to New Jersey and it could mean additional red tape for employers who want to perform criminal background checks on prospective employees. The New Jersey Assembly Labor Committee recently voted to send the “Opportunity to Compete Act” to the full assembly for approval. The Act essentially bars employers with fifteen or more employees from inquiring whether a prospective employee has been convicted of a crime. Employers who still wish to obtain information about an applicant’s criminal history can do so, but only after a conditional offer of employment is made and the applicant consents to the background check.
The bill, as proposed, provides that an employer can withdraw an offer of employment in the event that a consensual background check is conducted and reveals criminal activities which the employer deems unsatisfactory. However, the applicant then has ten days to explain the relevant circumstances. If the employer still wishes to withdraw the offer of employment it would have forty-five days to provide an explanation to the candidate and would be required to provide a Criminal Record Consideration Form indicating how it arrived at its decision.
The Criminal Record Consideration Form would be required of any employer wishing to undertake a background check that results in it rescinding an offer of employment. Employers would have to document that certain factors were weighed in arriving at the decision, including the relevance of the conviction to the type of employment being sought. Additionally, different types of convictions would be handled differently in the consideration process. A conviction for murder, attempted murder, arson, sex offenses that result in jail time, robbery, kidnapping, human trafficking, possession of weapons, burglary, aggravated assault and terrorism could be considered regardless of how long ago they occurred. However, convictions for other crimes in the 1st-4th degree could only be considered if they happened within the past 10 years. Disorderly persons convictions could only be considered if they happened within the past 5 years. Arrests that did not lead to convictions and any expunged or sealed records would likely be prohibited from consideration altogether.
Although the bill would produce additional work for employers, there are several employer-friendly provisions which soften the blow. One such provision would ban any private cause of action against an employer for violating the Act. The only recourse for aggrieved individuals would be to file a complaint with the New Jersey Division of Civil Rights. The Division could then levy a fine against the employer but only if it finds an employer’s conduct met the high standard of “gross negligence.”
The purpose behind the Act is to eliminate barriers to employment by removing the initial stigma attached to applicants having a criminal record. Studies have shown that many such applicants are never even considered once that information is provided. A 2011 National Employment Law Project study found that 65 million Americans have been convicted of a crime that could show up on a background check. Therefore, it is easy to see why there is so much support for this legislation. Two New Jersey cities, Atlantic City and Newark have already passed ordinances “banning the box” in certain situations. Additionally, some of NJ largest employers have chosen to voluntarily remove criminal history inquiries on their employment applications. It certainly appears that the tides are turning in favor of a ban.
However, it is important to note that the Opportunity to Compete Act is not yet law in New Jersey so employers are not yet required to abide by its terms. It is very possible that the procedures and restrictions outlined above could be changed if and when the bill actually becomes law. However, it is always good for employers to be aware of potential legal changes that could eventually impact them so that they can prepare accordingly. Should the bill become law, employers are urged to contact a qualified employment attorney for advice on how to properly navigate the changing legal climate. Further, employers who wish to voluntarily change their procedures in advance should do so with the assistance of counsel to ensure that their new policy is crafted in accordance with all state, local and federal laws and regulations.