The Brach Eichler LLC Employment Group is pleased to provide our clients and contacts with this month s Employment Law Update. HR TIP OF THE MONTH

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1 Subscribe to our list July 2012 Matthew M. Collins, Esq Anthony M. Rainone, Esq The Brach Eichler LLC Employment Group is pleased to provide our clients and contacts with this month s Employment Law Update. HR TIP OF THE MONTH Ensure You Have an Effective Anti-Harassment Policy in Place Employers of all sizes should have a written anti-harassment policy in place to handle employee claims of unlawful harassment (whether based upon sex, race, religion, sexual orientation or other protected characteristics). As the Cajamarca case demonstrates (See summary below), the failure to have a policy in place can result in significant liability against the company for harassment. At a minimum, the policy should state what behavior is prohibited (including examples), establish a reporting line and complaint procedure with multiple persons to whom the employee can complain, obtain the employee s written confirmation at the outset of employment that she has reviewed the policy, and advise the employee that no adverse action will be taken against her as a result of any good faith complaints of harassment. The company should also train its supervisory level employees annually on responding to employee harassment complaints and other prohibited workplace behavior. Finally, the company must put the policy into practice when a complaint is filed. If a company takes these reasonable steps, it will be in a much better position to defend hostile work environment claims. Having such a policy in place and making it a reality can result in the dismissal of a case without the need for a company to be subjected to a costly jury trial or be threatened with a jury s punitive damages award under the anti-discrimination laws. REGULATORY UPDATE The Impact of Obamacare on Employers Although most of the discussion on the U.S. Supreme Court s decision upholding the Patient Protection and Affordable Care Act has focused on the individual mandate and Medicaid expansion, there are several provisions of this new law that will directly impact employers in the United States. For example, the Act will: impose an annual penalty on certain large employers that fail to provide certain minimum health insurance coverage requirements; prohibit extended waiting periods for enrollment in employer health plans; and require automatic enrollment in health benefits plans for employers with 200+ employees. Also, by the end of 2012, employee handbooks and health benefits explanation documents must be revised to disclose to employees a new $2,500 cap on employee contributions to flexible spending accounts. NLRB Approves of a Social Media Policy in its Third Report on Social Media Cases The National Labor Relations Board (NLRB) issued its third report in less than one year on the issue of social media in the workplace. A copy of the report, which focuses exclusively on social media policies in the workplace, can be obtained here. In an apparent effort to offer more definite guidance to employers, the NLRB attached to the report a sample policy that it finds lawful under the National Labor Relations Act (NLRA). NLRB Launches a Website Describing the Rights of Employees Who Act Together for Mutual Aid and Protection

2 The NLRB s new concerted activity webpage is the agency s new attempt to advise employees on the protections afforded to them under Section 7 of the NLRA, which applies to most private sector employees in the United States, whether unionized or not. Section 7 of the NLRA provides that employees have the right to... engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.... The NLRB claims this right of all employees is one of the best kept secrets of the NLRA and, through this website, is overtly encouraging employees to exercise their rights under Section 7. Employers whether unionized or not must ensure that their human resources, management and supervisory level employees are trained to identify collective employee action that may be protected by Section 7 in order to avoid an unfair labor practice charge under the NLRA. Pending Legislation in New Jersey Employers should be aware that the New Jersey legislature is considering numerous bills that will have a significant impact on management of your workforce. If you would like more information on any of these bills contact Anthony M. Rainone, a member of the firm s Employment Law Group. The bills being considered would: Increase in the New Jersey minimum wage from $7.25/hr to $8.50/hr, effective July 12, with an increase each year based upon the Consumer Price Index. Restrict the use of credit checks by employers in New Jersey in connection with hiring and employment decisions. Prohibit employers from requiring employees to provide access to their social media accounts such as Facebook and Twitter. Require additional posting requirements for employers relating to employees equal pay rights. Broaden the scope of the Conscientious Employee Protection Act (CEPA) to prohibit retaliation against employees for discussing their compensation and benefits. Increase the workforce reporting requirements to the Department of Labor of companies engaged in public works contracts. Require employers to allow employees leave who are victims of domestic violence. Disqualify employees who receive severance pay from recovering unemployment benefits. CASE LAW UPDATE FLSA -- Outside Sales Employee Exemption Upheld by U.S. Supreme Court in the Pharmaceutical Sales Industry Christopher v. SmithKline Beecham Corporation -- S. Ct (Jun. 18, 2012) In a much awaited decision under the Fair Labor Standard Act (FLSA), the U.S. Supreme Court resolved a split between the Second and Ninth Circuits. The Court held that, in the context of the heavily regulated pharmaceutical industry, sale representatives whose primary duty was to obtain non-binding commitments from physicians to prescribe a particular medication qualify as outside sales persons who are exempt from FLSA s minimum wage and maximum hour requirements. In arriving at its decision, the Court took issue with the U.S. Department of Labor s (DOL) interpretation and lack of historical enforcement of this provision in the pharmaceutical sales industry for several decades. The Court ruled that the DOL s interpretation of its regulations was not entitled to deference because the interpretation appeared to be nothing more than a convenient litigation position that would unfairly surprise companies subject to the regulations. FLSA Third Circuit Adopts a Modified Economic Realities Test for Joint Employers In re Enterprise Rent-A-Car Wage & Hour Employment Practice Litigation -- F.3d ---- (3d Cir. Jun. 28, 2012) Where two or more entities are joint employers, they may all be held liable for the substantial liabilities that can be imposed under FLSA. Granting summary judgment dismissing a class action that alleged wage and hour violations under FLSA, the Third Circuit melded a Ninth Circuit decision and a Third Circuit decision to determine if two or more entities are joint employers. Now, courts within the Third Circuit will look at whether: (1) the entities had the authority to hire and fire the relevant employees; (2) the entities had the authority to issue works rules and set the

3 terms and conditions of employment such as compensation, benefits and work schedules, including the rate and method of payment; (3) the entities involvement in the day-to-day supervision of employees, including discipline; and (4) the entities actual control of employee records, including payroll, insurance and taxes. The Third Circuit made clear, however, that the list is not exhaustive and courts are free to consider other factors relevant to the issue of significant control. Title VII Participation Clause Does Not Protect Activities Unrelated to a Formal Charge Townsend v. Benjamin Enterprises, Inc. -- F.3d ---- (2d Cir. May 9, 2012) The Second Circuit held that the participation clause of Title VII s anti-retaliation provision does not protect participation in an internal employer investigation not associated with any formal Equal Employment Opportunity Commission charge. The court concluded that plaintiff, who was defendant s former director of human resources, had no Title VII retaliation claim where she was terminated for discussing the defendant s internal sexual harassment investigation with an outside management consultant. The Second Circuit also determined that the Faragher/Ellerth affirmative defense to an employer s vicarious liability under Title VII for the conduct of a supervisor is unavailable when the supervisor in question is the employer s proxy or alter ego. Title VII Employer Not Liable for Harassment Because it Took Appropriate Remedial Action Pursuant to a Written Anti-Harassment Policy Cajamarca v. Regal Entertainment Group -- F. Supp.2d ---- (E.D.N.Y. May 31, 2012) The Eastern District of New York, relying on the Faragher/Ellerth affirmative defense, dismissed a sexually hostile work environment claim against an employer even though there was no dispute that the plaintiff was sexually harassed by her supervisor. The court dismissed the claims because: the employer had a written anti-harassment policy with complaint reporting procedures; the plaintiff acknowledged in writing that she had read the policy; the harassing supervisor completed the company s anti-harassment, discrimination, and retaliation training; when another supervisor learned of the harassment she encouraged plaintiff to report it; plaintiff reported the harassment and the employer conducted a prompt investigation leading to the suspension of the alleged harasser pending the investigation; and the company, although it could not substantiate the bulk of the alleged harassment, put a disciplinary violation in the alleged harasser s file for one admitted violation of company policy and altered the work schedules so plaintiff and the alleged harasser did not work together. The court properly focused its inquiry on the reasonable steps the employer took to prevent harassment. This case is a good reminder to employers to implement an anti-harassment policy and put it into practice. Absent this policy and putting it into practice, the employer likely would have incurred significant liability under Title VII for the actions of a supervisor. Hostile Work Environment Liability for Harassment is Not a Dischargeable Debt Under the U.S. Bankruptcy Code Basile v. Spagnola -- B.R (Bkrtcy S.D.N.Y. Jun. 18, 2012) Potential harassers in the workplace are reminded by this case that if a judgment is entered against you for harassing an employee and various state or federal laws, the debt likely will not be dischargeable in a personal bankruptcy proceeding. The debtor owed $200,000 on a judgment for sexually harassing a woman in the workplace. When the debtor filed for bankruptcy after the woman obtained the judgment, the bankruptcy court ruled that under Section 523(a)(6) of the Bankruptcy Code, the debt could not be discharged because it constituted a willful and malicious injury caused by the debtor. FLSA Substantial Continuity Standard Applied to Successor Employer Issue Battino v. Cornelia Fifth Ave., LLC -- F.Supp.2d ---- (S.D.N.Y. May 24, 2012) In this matter involving a collective action for unpaid wages under FLSA, the Southern District of New York parted with the Eastern District, which had held that the traditional common law successor liability test should apply in FLSA cases. The court instead applied the substantial continuity standard, which looks to whether the new company has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor s business operations.

4 Title VII Harassment by the Same Sex Supervisor is Actionable Redd v. New York Div. of Parole -- F.3d ---- (2d Cir. May 4, 2012) In this action involving allegations that a female supervisor sexually harassed a female employee by brushing against employee s breasts and making sexual advances, the Second Circuit held that sex discrimination consisting of same-sex sexual harassment is actionable under Title VII. The court further found that the supervisor brushing against employee s breasts was not a relatively minor incidental contact and could constitute a basis for a hostile work environment claim. Labor Law Whistleblower Provision Does Not Protect Objection to Financial Dealings Susman v. Commerzbank Capital Markets -- N.Y.S.2d ---- (1st Dept. May 10, 2012) The First Department held that plaintiff s claim brought under New York s whistleblower statute, Labor Law 740, was properly dismissed. The First Department concluded that the alleged refusal to take part in financial dealings with a foreign bank did not create a substantial and specific danger to the public health or safety within the meaning of Labor Law 740. HRL Several Actions Held Not Materially Adverse in a Discrimination Case Mejia v. Roosevelt Island Medical Associates -- N.Y.S.2d ---- (1st Dept. May 10, 2012) In this case involving plaintiff physician s claims for age discrimination, retaliation and hostile work environment under the New York State Human Rights Law, the First Department held that: (1) plaintiff being involuntarily transferred to unit with more difficult patients and assignments did not constitute a materially adverse employment action because those actions were not accompanied by a reduction in pay or rank; (2) vacation postponement of two weeks did not constitute a materially adverse employment action; (3) mortality and peer reviews that were not accompanied by a reduction in pay or rank did not constitute adverse employment action; and (4) plaintiff could not claim age discrimination for a promotion for which he never applied. Brach Eichler s Employment Group attorneys represent employers of all sizes in New Jersey and New York in connection with their labor and employment needs. Our services range from compliance and counseling advice to defending employers in court against claims of wage and hour violations, unlawful employment practices, discrimination and retaliation. We encourage you to contact Brach Eichler s Employment Group for all of your company s labor and employment law issues. Matthew M. Collins, Esq. Chair of the Employment Group mcollins@bracheichler.com Anthony M. Rainone, Esq. Member of the Employment Group arainone@bracheichler.com You are receiving this communication because we believe you have an existing business relationship with Brach Eichler, L.L.C. or have previously indicated your desire to receive such communications. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein. Attorney Advertising: This publication is designed to provide Brach Eichler, L.L.C. clients and contacts with information they can use to more effectively manage their businesses. The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who authored it are rendering legal or other professional advice or opinions on specific facts or matters. Brach Eichler, L.L.C. assumes no liability in connection with the use of this publication. We hereby advise you that prior results do not guarantee a similar outcome Brach Eichler, L.L.C., 101 Eisenhower Parkway, Roseland, NJ 07068, (973) and 100 Park Avenue, Suite 1600, New York, New York 10017, (212) Brach Eichler LLC 101 Eisenhower Parkway Roseland, NJ 07068

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