US Update: A Midsummer Night’s Reflection…

As an employment attorney for more than 30 years, I have seen a lot of change. Changes in the legal system, changes in the law and changes in the types of claims that employees can assert against their employers (or even their joint employer). That being said, it is hard to imagine a more difficult time for employers in terms of simply trying to stay ahead of the changing law than what is occurring now. While employment law has always been somewhat challenging, 2021 has proved to be much different.

Take for example, a recent opinion that determined that an adverse employment action is not necessary to prove a disability discrimination claim based on failure to accommodate by the employer. The New Jersey Supreme Court declared that workers don’t have to show their job conditions worsened to pursue discrimination claims that employers did not accommodate their disabilities, thus, handing a victory to a diabetic teacher in her suit against school officials over a fainting episode that left her with “life-altering” injuries.

Instead, the “wrongful act” underlying such a claim is, “the employer’s failure to perform its duty, not a further adverse employment action that the employee must suffer.” According to the unanimous opinion: “The persevering employee trying to make do without a reasonable accommodation is not remediless, and a callous employer may not escape the New Jersey Law Against Discrimination (LAD) liability for failing to perform its required duty to provide accommodation simply by declining to fire, demote or take another form of adverse action against the employee.”

While the ruling relates to accommodation, it would seemingly appear that employees can now point to a “duty” owed under the LAD. We fully expect that this trend will continue in other states as well.

On the wage and hour front, it seems like states (and cities alike) have new wage and hour laws every month. One area in this rapidly growing landscape concerns claims against employers that “wrongfully” characterize independent contractors as employees. Of course, these actions are often not wrongful until, in many cases, a state (or its courts) change the nature of the employment “test” used for this analysis. For example, there is little question that states that use the “ABC test,” (now more than 30 states), will generally find that independent contractors are employees. But states like New Jersey are going even further as described in a recent press release from Trenton:

Misclassification by definition is the practice of illegally and improperly classifying employees as independent contractors. This practice deprives workers of the right to earn minimum wage and overtime, workers’ compensation, unemployment, earned sick leave, job-protected family leave, temporary disability, and equal pay, and leaves them unprotected against discrimination. It also hurts the vast majority of employers who play by the rules, by putting them at a competitive disadvantage against those who flout the law.

Through today’s action, a new Office of Strategic Enforcement and Compliance within the Department of Labor (DOL) will be created and the DOL will create a database to track payroll projects, which are critical steps to tracking and eliminating misclassification. The others bills in the package will simplify the process for identifying misclassified workers and implement stop-work orders at worksites where misclassification is identified.

Tackling worker misclassification has been a priority of the Murphy Administration since day one, and these efforts build on the significant progress that already has been made. In 2018, a DOL audit found more than 12,300 cases of workers being misclassified, resulting in more than $460 million in underreported gross wages and $14 million in lost state unemployment and temporary disability contributions. The audit covered just 1 percent of businesses, suggesting that the real cost of misclassification is much, much higher.

Also, many states have recently enacted or modified the wage disparity laws. For example, Colorado just held that employers must follow its new law (which is representative of where things are going in this area). More specifically, on January 1, 2021, the Colorado’s Equal Pay for Equal Work Act went into effect. The Act is aimed at closing the pay gap among employees and requires employers, with operations or employees working in the state, to issue compensation ranges for all job positions, including internal promotions. Employers failing to follow the requirements are subject to civil fines up to $10,000.

In December 2020, the Rocky Mountain Association of Recruiters filed a lawsuit claiming that the law’s pay transparency requirements were unconstitutional and unduly burdened employers. The Association also argued the pay transparency regulations conflicted with the laws of other states and therefore burdened interstate commerce. The judge disagreed and determined that the plaintiff failed to show any undue burden on employers and determined that the law if “reasonably related to the state’s public interest in reducing the gender-based wage gap.”

Also, pay equity will be a focus for the Biden Administration in the coming year and beyond.

On top of this growing complexity, is the fact that many employers have a lot of employees who are now working all over the country as a result of the Pandemic and subject to many different types of employment laws throughout their extended “footprint.” Most employers are still determining how to deal with such new locations, particularly with respect to modifying employee handbooks to “fit” these new office locations.

On the federal front, even non-compete agreements are being scrutinized by the Federal Trade Commission as (FTC) in a recent Whitehouse press release:

At a press briefing on July 7, 2021, the White House announced that President Joe Biden plans to issue an executive order aimed at restricting the use of  non-compete agreements by private employers. The order will call on the FTC to adopt new rules to curtail  non-compete agreements in the private business sector. Casting the order as a fulfilment of Biden’s campaign promise to promote competition in labor markets, the administration claimed that roughly half of private sector businesses require at least some employees to enter  non-compete agreements, ultimately affecting more than 30 million employees in a variety of industries. The stated goal of the order is to raise employee wages and make it easier for workers to change jobs and move between states.

So, what is the point? It is simple. It is now time perform employment audits, update employee handbooks and conduct wage disparity reviews. This is particularly true in 2021 as the number one challenge to employers is simply just staying on top of these new and seemingly ever-changing employment laws.

We strongly suggest that now is the time to review your employment policies and pay practices as the number of wage claims filed last year were in the billions of dollars and increasing each year. This is critical since under most state laws owners can be held personally liable for the payment of such wages.

By Jim Anelli, White and Williams, US, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact uslabor@transatlanticlaw.com

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