Law and the Workplace

New Jersey Enacts Law Limiting Non-Disclosure Obligations in Settlement Agreements

On March 18, 2019, New Jersey Governor Phil Murphy signed into law Senate Bill 121, which prohibits nondisclosure clauses in settlement agreements relating to workplace discrimination, retaliation or harassment.

Effective immediately, the law renders unenforceable any provision in an employment contract that waives “any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment.” The law also does not permit prospective waivers of any right or remedy under the New Jersey Law Against Discrimination, or any other state statute or case law. These provisions, however, do not apply to collective bargaining agreements.

The new law states that any provision in an employment contract or settlement agreement “which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment . . . shall be deemed against public policy and unenforceable against a current or former employee who is a party to the contract or settlement.”  The law also provides that a non-disclosure provision as described above will be unenforceable against the employer if the employee publicly reveals “sufficient details” of the claim so that the employer is “reasonably identifiable.” Going forward, every settlement agreement that resolves discrimination, harassment or retaliation claims must also include a “bold, prominently placed notice” indicating that although the parties agree to maintain the confidentiality of the settlement and underlying facts, such a provision would be unenforceable as against an employer if the “employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.” The law makes clear that these provisions should not be construed as prohibiting employers and employees from entering into non-compete agreements and confidentiality agreements relating to proprietary information, such as non-public trade secrets, business plan and customer information.

Finally, under the recently amended law, employees are protected from retaliation if they refuse to enter into an agreement or contract that contains a provision deemed unenforceable and against public policy. The law provides a private right of action for individuals claiming a violation of the statute and available remedies include all those available in common law tort actions, as well as attorneys’ fees and costs.

EEOC To Provide EEO-1 Pay Data Guidance By April 3

According to published reports, the federal judge who ordered the EEOC to reinstitute the stayed compensation portion of the EEO-1 report (referred to as “Component-2 data”) has given the EEOC until April 3 to provide guidance about if, when and how it will collect Component-2 data from employers.

Employers have been in a state of limbo since the judge issued her ruling earlier this month. With the EEO-1 portal now open, and a May 31 deadline by which employers must submit their EEO-1 submissions, employers do not know whether they will have to undertake the significant task of adding compensation data to their submissions with little advance notice. At this point, it appears this uncertainty may continue until at least April 3.

We will continue to monitor this developing story and provide updates.

EEOC Opens EEO-1 Portal and Issues Statement On EEO-1

As we previously reported, a federal judge has lifted the stay issued by the Office of Management and Budget (“OMB”) that halted implementation of the EEOC’s revised EEO-1 form that would have added compensation data to the annual EEO-1 survey submission (the “Revised EEO-1”). In so ruling, the judge ordered “that the previous approval of the revised EEO-1 form shall be in effect.”

On March 18, 2019, the EEOC opened its EEO-1 portal. The portal is only receiving “Component-1 data” – the race/ethnicity and sex data traditionally included in EEO-1 submissions. With respect to the “Component-2 data” that the federal judge ordered now must be collected, the EEOC issued the following statement :

The EEOC is working diligently on next steps in the wake of the court’s order in National Women’s Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (TSC), which vacated the OMB stay on collection of Component 2 EEO-1 pay data. The EEOC will provide further information as soon as possible.

We will continue to monitor this developing story and provide updates as warranted.

The Regulation of Employers’ Workplace Violence Prevention Programs Under OSHA’s General Duty Clause

Last week, Gillian had the distinct pleasure of attending the ABA Occupational Safety and Health Law Meeting in sunny and beautiful San Juan, Puerto Rico.  The meeting included more than a dozen presentations and panels on workplace safety put on by management and union lawyers, OSHRC Commissioners, the Solicitor of Labor’s office, safety professionals, administrative law judges, and others. The three days of discussions provided a wealth of important information on compliance with government safety regulations, including valuable insight into where the DOL is focusing its initiatives in the coming year.  Workplace violence prevention is near the top of that list, with a particular focus on employers in the healthcare industry, and remarks by the Commissioners discussing a new opinion on the subject helped to illuminate what DOL enforcement efforts in that arena may look like.

First, some background on the Occupational Safety and Health Act (“OSHA”) enforcement.  Under OSHA, the DOL issues detailed regulations for workplace safety using its rulemaking authority, and is empowered to conduct investigations and issue citations for an employer’s failure to comply with those regulations.  In instances involving a workplace hazard that is not covered by a specific regulation, the Secretary of Labor can issue a citation under Section 5(a)(1) of OSHA, referred to as the “general duty clause” (29 U.S.C. § 654(a)(1)).  The general duty clause is a gap-filler provision of OSHA that requires employers to keep their workplaces “free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.”  Although this clause gives the Secretary some leeway to regulate workplace safety even in the absence of specific regulations, enforcement power under Section 5(a)(1) is limited by the constitutional concept of fair notice.

Understanding this background makes it clear why the Secretary’s recent focus on workplace violence prevention is particularly interesting –no specific OSHA standard on workplace violence prevention exists, but employers are still expected to abate workplace violence hazards.  The DOL announced in January 2017 that it would begin the rulemaking process on a workplace violence prevention standard, although it has not yet taken steps to do so.  Congress has proposed numerous bills that would require the DOL to promulgate a specific workplace violence prevention standard under OSHA in recent years, including the Workplace Violence Prevention for Health Care and Social Service Workers Act, H.R. 1309, introduced in the House just last month.  However, as yet, no standard exists.  Unless and until the DOL issues regulations, it is left to enforce employer’s obligations to prevent workplace violence under the general duty clause, leaving employers in the awkward position of understanding that the agency is focused on workplace violence prevention, but can offer no specifics about employers’ obligations in that area.

For this reason, the recent decision issued by the Occupational Safety and Health Review Commission (“OSHRC”) is a key case of first impression on the Secretary’s power to issue citations for Section 5(a)(1) violations involving workplace violence.  Secretary of Labor v. Integra Health Management Inc, OSHRC Docket No. 13-1124, 2019 WL 1142920 (Mar. 4, 2019).  Integra Health involved an employer providing in-home services to clients with mental health and other issues.  In December 2012, an Integra employee was stabbed to death by a schizophrenic client during a home visit.  After conducting an investigation, the DOL issued a citation alleging that Integra “violated the general duty clause of [OSHA] because its employees were exposed to the hazard of being physically assaulted by members with a history of violent behavior.” Id. at *4.  Integra unsuccessfully contested the citation, which was affirmed by the OSHRC Administrative Law Judge.  Integra then appealed to the panel of OSHRC Commissioners, arguing that (1) the hazard was not “recognized” by Integra or the industry generally; (2) there were no feasible abatement measures that would have materially reduced the hazard; and (3) OSHA does not cover the “risk of criminal assaults upon employees by third parties.”  Id.  On appeal, the three Commissioners unanimously affirmed the citation (although not for unanimous reasons, with each issuing his or her own opinion).

The decision came out the day before the ABA Conference in San Juan, and the Commissioners each addressed their take on the case during a panel discussion.  Commissioner Attwood, who wrote the majority opinion, rejected Integra’s argument that violence done by a third party was “inherently resistant to prediction” and therefore could not be classified as “recognizable” under the law.  Commissioner Attwood remarked that Integra had work rules and training materials that addressed the possibility of violence by clients, and encouraged employees to gather critical history on their clients from clergy, family, and community members in order to screen clients for potential violent behavior.  Integra’s Vice President testified that it was necessary for Integra to instruct employees on how to identify dangerous clients, given they worked with a mentally ill population.  In the face of this evidence, Commissioner Attwood remarked Integra could not claim that the hazard of workplace violence was not a “recognized hazard” in this field.  (This reasoning begs the question as to whether she would have had the same opinion if Integra had made no attempts whatsoever to address workplace violence).

Commissioner Sullivan, who joined in Commissioner Attwood’s opinion and also wrote his own concurrence, remarked that he agreed that Section 5(a)(1) had been violated in this instance, but that he limited the ruling to the very specific facts present here.  In his remarks, Sullivan pointed out that the general duty clause was being “parsed extensively” in the majority opinion, illustrating the major problem with the general duty clause – that it is too vague and open to interpretation, and therefore that it does not provide clear notice of employers’ obligations.  Chairman MacDougall, who also issued her own concurrence, worried that Integra Health was a case where “bad facts create bad law.”  Chairman MacDougal was particularly concerned about extending the general duty clause to situations where the employer cannot exercise control over the hazard, noting that the Secretary has been attempting to expand the reach of the general duty clause for years.

While the defense bar must continue to watch the Secretary’s use of the general duty clause in the workplace violence context, employers should not be overly alarmed by the Integra Health opinion.  The Commission made clear, in the written opinions and in their conference panel remarks, that Integra Health is a narrow and fact sensitive ruling, and the general duty clause is still subject to constitutional limitations.  However, employers in the healthcare and social work industries may want to consider checking the Secretary’s suggestions for abating workplace violence hazards, which include (i) creating a written workplace violence prevention program with mandatory reporting requirements; (ii) identifying clients with violent behavior/histories (including via criminal background checks); (ii) clearly communicating behavioral histories/recent violent incidents to any employee who could potentially be exposed; (iii) creating and implementing double coverage (buddy system) when necessary to deal with a potentially violent client; and (iv) providing all staff with a reliable way to summon assistance when needed, including while on a home visit.  The Secretary has now successfully argued that at least some of these are reasonable and feasible measures to create a material reduction in the hazard of workplace violence, and therefore these measures can provide guidance to what employers’ obligations are under Section 5(a)(1) until further regulations on workplace violence prevention are issued.

If your business or organization has any questions or concerns regarding this decision, or how you can work to prevent workplace violence, please reach out to the authors or to any member of Proskauer’s Labor and Employment department for assistance.

The Third Circuit Finds No Age Discrimination Related to Virgin Islands Law That Encouraged Long-Tenured Employees to Retire

The Third Circuit recently issued a significant opinion in Bryan v. Government of the Virgin Islands, Case No. 18-1941, 2019 WL 661822 (3rd Cir. February 19, 2019) holding that the Virgin Islands did not violate the Age Discrimination in Employment Act (ADEA) when, in an effort to keep the retirement system solvent, it required employees with 30 years of service or more to contribute an additional 3 percent of their pay to the pension system.

In 2011, the Virgin Islands enacted the Virgin Islands Economic Stability Act (VIESA), a law that sought to reduce government spending by reducing payroll in the face of a severe budget crisis. The Act encouraged employees with over 30 years of service, who were some of the Government’s most expensive for payroll purposes, to retire by offering them $10,000. Those who declined to retire had to contribute an additional 3% of their salary to the pension plan. The plaintiffs, two employees with over 30 years of service who chose not to retire, brought disparate treatment and disparate impact claims against the Government based on the additional contribution requirement.

The plaintiffs claimed that because only workers over 40 had the 30 years of service that triggered the extra contribution, the government must have targeted older workers. However, the Court was not persuaded by the plaintiffs’ disparate treatment argument, noting that not every government worker in the protected class had achieved 30 years of service and that plaintiffs had not presented any evidence in the record to “suggest that the Government used thirty years of credited service as a proxy for age.” Id. at 7.

The plaintiffs also pursued a disparate impact claim, arguing that even if the VIESA was not motivated by discriminatory intent, it violated the ADEA because it disproportionately impacted older workers. However, the Court found the Government had a legitimate reasonable-factor-other-than-age that explained its decision to implement the requirement for the extra contribution from individuals who had 30 years of service or more. The Court found that the law reasonably sought to reduce payroll costs and increase the pension plan’s solvency, and thus, the Government was not motivated by the affected employees’ age. The Court found that even though the additional 3% contribution disproportionately affected older workers, “the action reasonably targets long-tenured employees with higher salaries—not all older workers—to encourage them to retire from the Government payroll and to pay more into the pension system.” Id. at 10. Accordingly, the Government was not liable under a disparate impact theory.

The Court’s holding is a reminder that seniority, rank, and years of service may serve as valid factors to justify an employer’s business decisions in the context of disparate treatment and disparate impact claims under the ADEA.

Unboxing The Proposed New Federal Overtime Rule

It’s here.  The U.S. Department of Labor’s Wage and Hour Division unveiled its proposed new overtime rule today.  We skipped the 200-plus pages of preamble and jumped right to the proposed regulatory amendments themselves (we’ll digest the prefatory materials in another post).  Here’s the deal:

  • The salary minimum for exemption as an executive, administrative, or professional employee would jump from $455 per week ($23,660 per year) to $679 per week ($35,308 per year). That’s not quite the boost the Obama Administration tried to roll out in 2016 (to $913 per week, or $47,476 per year), but it’s on the higher end of the low-to-mid 30s that many businesses expected.
  • Up to 10% of the salary minimum can be satisfied through nondiscretionary bonuses, incentives, and/or commissions that are paid annually or more frequently. And employers can make a “catch up” payment at the end of the year to bring an employee up to the $35,308 minimum.  This effectively brings the weekly salary minimum down to $611.10 (provided there’s a later true-up payment), but it’s unclear what happens if an employee is terminated mid-year without having received the full $679 per week.  Ostensibly, the employer could make a supplementary payment in a amount such that, when the total compensation paid to the employee for the year is divided by the total number of weeks worked in the year, the outcome is at least $679, and thereby preserve the exemption.
  • The threshold for exemption as a “highly compensated employee” would jump from $100,000 to $147,414 in total annual compensation. That’s higher than the $134,004 level in the dead-on-arrival 2016 rule (a federal judge declared it invalid prior to its effective date), but it might not matter to employers in states that don’t recognize this particular exemption for state law wage claims.

What’s not in the proposed new rule?  Automatic increases in the salary thresholds.  That was a hallmark of the 2016 rulemaking, and not particularly well-received by the business community.  Assuming no such auto-increases are built into the final rule (the proposed rule seeks public comment on how best to implement future increases), they would ostensibly have to go through a notice-and-rulemaking process prior to being implemented.

So, all in all, a fairly straightforward proposed new rule that won’t make a difference to employers in states with already-higher salary minimums for exemption (consider New York’s $58,500 annual minimum for most exempt executive and administrative employees in New York City, or California’s annual salary requirement of $49,920 for exempt employees of large employers).

Once the proposed new rule is published in the Federal Register (that hasn’t happened yet), the public will have 60 days to submit comments, after which the DOL will issue a final rule with an effective date to be determined.  We’re targeting the late fall of 2019 as the earliest realistic effective date for a new rule, and that assumes the government is in a rush.

More to follow in the days ahead.  Subscribe to Proskauer’s Wage and Hour blog for our take on the latest developments.