NEW JERSEY EMPLOYMENT LAW Day Pitney LLP Gregory C. Parliman

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1 Last Updated: January 2012 NEW JERSEY EMPLOYMENT LAW Day Pitney LLP Gregory C. Parliman Table of Contents 1. Overview 2. General Issues 3. Employment Policies and Employee Handbooks 4. Hiring Process 5. Compensation and Benefits 6. Termination of Employment 7. Immigration 8. Federal Law 9. Other State Specific Considerations 10. Employment Law Resources 1. Overview It is critical that social sector organizations familiarize themselves with relevant employment laws that affect their employees and their organization. Often social sector organizations begin with like-minded persons informally coming together for the purpose of addressing a challenging social problem. However, regardless of the ties that bind those who work together on a social mission, the social sector organization must comply with applicable employment laws and implement relevant policies and procedures. The following provides an overview of federal and New Jersey employment laws that could apply to social sector organizations and their employees located in New Jersey. This overview does not provide a complete and comprehensive analysis of all potentially applicable employment laws in New Jersey and the U.S. and it should not be acted upon without specific legal advice based on particular situation. Employment laws can differ greatly by state; if your organization and employees are located in another state, you should consult the employment law pages of LawForChange for that state.

2 2. General Issues a. At Will Employment The conventional relationship between an employer and an employee hired for an indefinite period of time is called employment at will. Under this arrangement and setting aside the potential applicability of a number of special laws, either the employer or the employee may terminate the employment relationship at any time, with or without cause, and with or without advance notice. In the absence of a written contract or other evidence indicating that an employee may be terminated only for cause, employment is generally presumed to be at will. It is important to remember, however, that there are a number of special laws, both federal and state, that limit an employer s unfettered right to terminate traditional at will employees. These laws, many of which are identified and discussed below, prevent employers from firing any employee, whether at will or not, for illegal reasons (e.g., discriminatory reasons, whistleblowing, or engaging in certain activities protected by law). b. Temporary Employment and Consulting Relationships In addition to traditional at will employees or contract employees, many employers may use the services of temporary employees, independent contractors, or consultants (and employees of independent contractors or consultants). When an employer hires an employee for a temporary period or for a season, the temporary employee is still an at will employee of the employer, and the relationship is governed by the same laws as those applicable to at will employees. As with permanent employees, legally mandated benefits, such as workers compensation insurance and unemployment insurance, must be offered to temporary employees. Optional benefits, such as 401(k) plan and medical plan coverages, may not need to be offered to temporary employees (but in all cases such determination must be based on the governing plan documents, as well as other factual scenarios (including the hours worked and length of the temporary employment relationship)). An independent contractor or consultant is not considered an employee of the employer. Instead, an individual independent contractor is self-employed, and payments made to the independent contractor are considered contract payments rather than wages. The U.S. Internal Revenue Service ( IRS ) and other governmental agencies have a variety of tests for determining whether a worker is an employee or an independent contractor, which, despite variations among the tests, tend to share the same primary factors. Essentially, workers who are performing the same job and performing under the same supervision as

3 regular employees are usually deemed to be employees. Additional factors shared by the various tests include: the degree of control the employer exercises over the worker s hours and manner of performance; whether the employer provides the worker s tools and/or employee benefits (e.g., medical insurance, vacation pay); the length of service; and the method of payment (e.g., is the worker paid hourly or on a project basis); and whether the worker is in the business of performing such services for others or holds him/herself out as offering such services to others. The consequences of incorrectly classifying an employee as an independent contractor can be far-reaching and expensive (e.g., liability for unpaid payroll taxes and penalties, administrative claims for employee benefits provided to regular employees (as well as potential loss of tax-qualification of certain employee benefit plans), liability for unpaid unemployment insurance and workers compensation premiums, increased exposure to governmental audits, and potential exposure to employment-related civil suits and administrative claims). c. Employment Agreements While it is not required or necessary to enter into an employment agreement with any employee, social sector organizations may wish to enter into written employment agreements with one or more key leaders. If an organization chooses to enter into an employment agreement with a particular employee, such agreements typically spell out the term of employment (even if it is at will ), duties, compensation and circumstances under which the agreement may be terminated by either party. In addition, such agreements often contain provisions requiring key employees to keep information confidential even after they leave employment and barring them from becoming employed by certain competing organizations for a limited period of time following termination. The provisions of these agreements and whether any such agreement should be used should be discussed with an employment attorney before they are presented to an employee or prospective employee. d. Government Contractors A number of laws impose specific requirements on employers that contract with the government or a government-funded agency and on employers who receive grants or other funding from the government. These laws include special equal opportunity laws, affirmative action laws, prevailing wage laws, and drug-free workplace laws. The application of the laws depends on the value of the contract or funding and/or the number of employees in the company.

4 e. Employee Records Under New Jersey employment laws, an employer is either required to or should maintain the following records on each employee: Every employer is required to keep wage and hour records which include the name of each employee, the employee's birth date if the employee is under 18, the total hours worked each day and each week, earnings, regular hourly wage, gross wage, net wage, itemized deductions, and the basis on which wages are paid. Every employer is also required to maintain records containing each employee's full name, address, and social security number, total remuneration paid each pay period, which includes commissions and bonuses, special payments, date hired, information to determine weekly wage for each calendar week, the number of base weeks worked, and the wages paid. These records should be kept for 6 years. Employers must retain copies of injury, illness, and fatality records. Employers must provide information about hazardous substances including chemical abstract service number and chemical name, use of each substance, quantity of each substance produced, stored, used or shipped to or from facility, methods of storage and/or disposal of substance, and total amount of each substance discharged into the environment. In addition, employers must forward copies to Department of Environmental Protection and update them bi-annually. An Emergency Services Information Survey must be kept regarding each hazardous material in facility including name of material, Employers must also keep track of their Department of Transportation identification number and hazard class designation, approximate range of maximum inventory quantity, units of measure, major methods of storage or types of containers; and the level of concentration of the hazardous chemical in the mixture. Employers who employ minors under the age of 18 must keep a record of the employment certificate or special permit for each minor. In addition, every employer is required to keep the following information for all employees under 19 years of age: name, date of birth, number of hours worked each date, start and end time for each day worked, the start and end time for each meal period, and the amount of wages paid. The information must be kept for at least one year after the entry of the record. Every employer is required to maintain records for each employee that takes leave under the New Jersey Family Leave Act for at least two years. In general, under federal laws, an employer is either required to or should maintain the following records on each employee:

5 1 year documents related to hiring, accommodations, promotions, discipline, and discharge, including: job applications, resumes, or any other form of employment inquiry whenever submitted in response to an advertisement or notice of job opening, including records pertaining to failure or refusal to hire any individual; records relating to promotion, demotion, transfer, selection for training or apprenticeship, layoff, recall, or discharge of any employee; job orders submitted to an employment agency or labor organization for recruitment of personnel; test papers completed by applicants or candidates for any position; results of any physical examination if such is considered in connection with a personnel action; advertisements or notices relating to job openings, promotions, training, or opportunities for overtime work; requests for reasonable accommodation for disability or religious observance and what accommodation, if any was granted. This will cover the limitations period of claims under Title VII of the Civil Rights Act of 1964 ( Title VII ), the Americans with Disabilities Act ( ADA ) and the Age Discrimination in Employment Act ( ADEA ) (see Section 8 below for summaries of these and other federal laws). 6 years Payroll records listing employee s full name, home address, date of birth, sex, occupation/job title, time of day and day of week on which workweek begins, regular rate of pay, the basis for determining regular rate of pay (including any payments excluded from the regular rate of pay), straight-time earnings, overtime premium earnings, additions/subtractions from wages for each pay period, total wages for each pay period, and date of payment and pay period covered by each payment. 2 years Supplementary payroll records such as basic time sheets or production records that contain the daily starting and stopping times of individual employees and/or amount produced that day, wage rate tables for computing piece rates or other rates used in computing straight-time earnings, wages, salary, or overtime, and any records needed to explain the wage rate differential based on sex within the establishment (e.g., production, seniority, or other bona fide business criteria). Such information may be necessary in responding to claims under the FLSA, including the Equal Pay Act. 1 year after plan terminates Employee benefit plan records including: pension plans, insurance plans, seniority systems, merit systems You should be aware that certain payroll records should be kept indefinitely for purposes of qualified pension and 401(k) plans. This includes benefit plans covered by ERISA as well as set plans for advancement, layoff, or reinstatement based on seniority, merit, or some other formula which will be pertinent to either an issue under a collective bargaining agreement or claims of age or other discrimination. 3 years Records related to qualified family and medical leave including: basic payroll and employee data (used to determine qualification for protection under the Family and

6 Medical Leave Act ( FMLA )), dates and hours FMLA leave is taken, hours worked in 12 months prior to start of leave, copies of employee notices furnished to employer, copies of notices provided to employee of rights and responsibilities under FMLA, employer polices applicable to use of family and medical leave, documents verifying premium payments of employee benefits (both employer paid and employee portion of premium), records of any disputes with employees over use of FMLA leave. These documents will assist in supporting compliance with FMLA. 30 years Records of employee exposure to toxic substances. Such records are required by the Occupational Safety and Health Act ( OSHA ). 5 years Occupational illness or injury records. These records, required by OSHA, should be kept for 5 years after the year in which the injury was sustained or treatment ended, whichever is longer. 3 years or 1 year after termination I-9 Employment Eligibility Verification Form. These forms must be kept for a minimum of 3 years or 1 year after the employee s employment ends, whichever is longer. 4 years Tax records related to income and employment tax withholdings. This is required by the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. At a minimum, social sector organizations should maintain one or more personnel files for each employee, containing any offer letters and agreements signed by the employee, required wage and hour records, records regarding promotion, additional compensation, termination, disciplinary action, and any documents used to determine the employee s qualifications for employment. Medical records, immigration information, and other confidential documents, such as reference checks and investigative files for harassment claims, should be kept separately from an employee s regular personnel file and should be kept confidential. 3. Employment Policies and Employee Handbooks Every employer, except perhaps for those with only two or three employees, should have written employment policies. Written policies serve to clarify expectations, reduce risk and, in some cases, comply with statutory requirements such as those in the Family and Medical Leave Act ( FMLA ). In addition, both state and federal law require that certain laws be posted in an area accessible to all employees. There are several services that provide updated posters containing these notices. Most concern compliance with the FMLA, Title VII, the Uniformed Services Employment and Reemployment Rights Act ( USERRA ), workers compensation, the organization s anti-harassment policy and state and federal wage and hour laws.

7 Policies for any employment manual or handbook should include: a. Nondiscrimination Under federal law, employers are prohibited from discriminating on the basis of race, color, religion, sex, national origin, veteran status, pregnancy, age, or disability. New Jersey law also prohibits discrimination on the basis of certain additional categories including marital status, familial status, civil union status, affectional or sexual orientation, gender identity or expression, atypical cellular or blood trait, genetic information. The discrimination laws prohibit an employer from making employment related decisions, such as hiring, firing, promotions, pay increases, or conditioning other terms and conditions of employment on a person s protected status. Some local communities may have ordinances that provide for even greater protections, so it is important to check those local laws for any additional requirements. Failing to comply with discrimination laws can result in expensive lawsuits or administrative investigations. In general, these laws require that all employees be treated equally without regard to their protected status. In addition, employers may not retaliate against employees who seek to further or enforce employment discrimination laws. Employers also should be aware of their obligations to make reasonable accommodations for employees where the employees disabilities or religious beliefs conflict with employment requirements. These obligations, which exist under both federal and state law, are unlike other equal employment opportunity laws in that treating all employees equally will not satisfy the obligations. Instead, employers must take positive steps to reasonably accommodate employees with disabilities and specific religious practices. See federal laws regarding discrimination in Federal Law section below. See New Jersey laws regarding discrimination in Other State Specific Considerations section below. b. Harassment Both federal and New Jersey laws also prohibit harassment in the workplace against any of the classes of employees protected under federal and state discrimination law. Two types of conduct constitute harassment in the workplace. The most obvious occurs when a supervisor makes a job promotion or benefit dependent on the receipt of sexual favors (often called quid pro quo harassment). The other type occurs when an employee has to endure comments, physical contact, physical gestures, or other behavior that creates an offensive atmosphere for that employee (often called hostile environment harassment). While sexual harassment is most often thought of, harassment on the basis of race, disability, age, national origin, etc. is also prohibited.

8 An employer is required to take all reasonable steps necessary to prevent the occurrence of either type of harassment, which includes having an appropriate and comprehensive policy against harassment. For this reason, a harassment policy that both expressly prohibits harassment and provides avenues for employees to report harassing behavior are a must in any workplace. Employees should be encouraged to report any harassing behavior to their supervisor and/or a human resources person or senior manager should be designated to investigate such claims. Reasonable steps to prevent harassment would also include periodic dissemination of the harassment policy, harassment training (particularly for supervisors), investigations of any complaints, and, when harassment occurs, prompt and effective remedial action. As with discrimination, employers cannot retaliate against an employee who complains about harassment. c. OSHA Injury and Illness Prevention The Occupational Safety and Health Act ("OSHA") regulates work place safety for employers in businesses which affect commerce. Under OSHA, employers are required to furnish their employees with a place of employment free from recognized hazards that are causing, or are likely to cause, them death or serious physical harm. Employers must also comply with occupational safety and health standards which are issued under the Act. "Right to know" regulations issued under OSHA require that employees in certain industries be warned about hazardous materials and chemicals to which they may be exposed. OSHA sets forth a detailed procedure for adopting safety and health standards and provides for inspection, investigation and enforcement. Citations issued for noncompliance can result in civil and criminal penalties, including fines and, for violations causing the death of an employee, imprisonment. States are allowed to develop and enforce their own plans setting and enforcing occupational safety and health standards. Some industries have specific statutes which regulate employee safety and health. d. Workplace Violence Employers should take steps to prevent violence in the workplace. This may include policies against bringing weapons into the workplace, taking prompt and appropriate action against any acts or threats of violence, and creating an environment that will reduce the likelihood of violence in the workplace. 4. Hiring Process The hiring process involves receiving and reviewing applications, interviewing potential candidates, and selecting the employee. Several federal and New Jersey laws limit what employers can ask during the process.

9 Generally, employers that devote substantial time and attention to the hiring process have fewer employee problems. They are more likely to (1) hire and retain qualified employees, (2) be aware of the potential problem areas, and (3) avoid or reduce their exposure to wrongful discharge, discrimination, and other employment-related lawsuits. In general, an employer may hire whomever it desires, as long as the decision does not discriminate on the basis of protected characteristics. Characteristics that are protected under federal employment discrimination laws and/or the New Jersey Law Against Discrimination ( NJLAD ) are race, color, religion, sex, national origin, ancestry, age, disability, marital status, familial status, civil union status, or sexual orientation, gender identity or expression, atypical cellular or blood trait, genetic information and liability for service in the armed forces. Discrimination may occur in one of two ways. First, the employer's hiring system may be set up in a way which discriminates, e.g., by eliminating certain groups of persons from employment consideration on the basis of a protected characteristic. Second, the hiring system itself may not be discriminatory, but the individuals who administer it may discriminate when dealing with a particular person or category of people. For example, an individual interviewer may decide not to hire women because he or she feels they could not meet the necessary physical requirements or the preferences of customers. The Equal Employment Opportunity Commission ( EEOC ) has issued Uniform Guidelines on Employee Selection (the "Guidelines") to address selection procedures that are facially neutral but have an adverse impact upon persons of a particular race, color, religion, sex or national origin. While the Guidelines are not legally binding upon employers, courts look to them in determining whether neutral employee selection procedures have had an adverse impact on the employment opportunities of protected groups. If a neutral selection procedure is found to have an adverse impact, an employer must demonstrate that it is justified by business necessity. Under the Guidelines, this usually means the employer must validate the selection procedure by demonstrating a relationship between the criteria used in the selection procedure and job performance. a. Recruiting Newspaper ads, brochures and other solicitation forms should be screened for wording that could later be the basis of a wrongful discharge or discrimination case. These materials must be free of language that could arguably constitute evidence of race, sex, religious, national origin, age or disability discrimination. They also should be free of language that implies a fixed duration of employment. Generally, an employer is not required to state that it is an equal opportunity or affirmative action employer, or that women and minorities are encouraged to apply.

10 Inclusion of these phrases will not prove the absence of discrimination, if an advertising program is otherwise discriminatory. It is a good idea, however, to include equal opportunity language at the bottom of a job advertisement: "The X Company Is An Equal Opportunity Employer." Employers under the jurisdiction of the U.S. Department of Labor's Office of Federal Contract Compliance Programs ( OFCCP ) have specific equal opportunity employment hiring requirements. Employers with 50 or more employees and federal government contracts of $50,000 or more, and subcontractors with government contracts of $10,000 or more, must undertake affirmative steps to encourage the recruiting and hiring of women, minorities, veterans and handicapped persons. In addition, equal employment opportunity language must be contained in such an employer's job advertisements. b. Interviewing It is important for interviewers, like recruiters, to know how to properly conduct an interview. They should avoid "over selling" and know precisely what they can and cannot say to applicants. Interviewers should never promise "permanent employment" or state that "employment will last as long as the job is satisfactorily performed" or "that an employee will be terminated only for just cause." Interviewers should specifically mention that employment is "at will." Likewise, when discussing the employer s employee benefit scheme, interviewers should be clear that the scheme that they are describing is the current program only. Many employers have found that their ability to end or terminate certain expensive programs (such as employer-provided pension plans or retiree medical programs) is hampered by past promises made in employment agreements, offer letters, or recruiting scripts. Companies should provide interviewers with written instructions listing what they should and should not discuss. After each interview, the interviewer should complete written documentation or an evaluation sheet, verifying that the employment at will status of all employees was communicated to the candidate during the interview. This documentation can later be used as evidence if a lawsuit occurs. Employers should also be cautious about failing to disclose business plans during the interview process that will affect the jobs of new hires. Courts in New Jersey have held that employers have an affirmative obligation to disclose any material facts, such as an upcoming reduction in force that might affect the job in question, when recruiting new hires.

11 c. Testing The use of tests to measure the qualifications of applicants can be a valid means of evaluating job ability and fitness. Employment tests have, however, been the subject of considerable criticism in recent years due to the possibility that they might be discriminatory. If a larger percentage of persons scoring below the cutoff mark belong to a protected class (minorities, females, older applicants, etc.), a test may be found to be unlawfully discriminatory. If an employer cannot demonstrate that a test is related to the ability to perform the job for which the test is given, its use may be deemed a pretext for unlawful discrimination. Once an employer decides to utilize a testing procedure, it should consider using professionally developed tests. Aside from the fact that these tests are frequently better prepared, the test's developers, who are professionals in the field, are usually available to testify as experts about the validity of the test if it is challenged. Most homemade tests are difficult to validate unless they qualify as per se valid, e.g., typing tests. The EEOC s Uniform Guidelines On Employee Selection Procedures are pertinent in testing matters. Under the Guidelines, the three principally accepted methods for determining the validity of a test are criterion-related, content and construction validity. "Criterion-related validity" means that the test accurately predicts work behavior or other criteria of employee competency, as evidenced by actual work proficiency. "Content validity" is established if the content of the test closely duplicates the actual duties performed in a particular position. "Construction validity" requires identification of general mental and psychological traits believed necessary to the successful performance of the job in question. An employer should periodically review the results of any preemployment test to ensure that its use is not excluding applicants in one or more of the protected classes. d. Immigration Reform and Control Act The Immigration Reform and Control Act and some state laws prohibit the employment of "unauthorized aliens," penalizing employers who hire them. The law requires every employer to verify the employment eligibility and identity of every candidate after November 6, Once an employee is hired, the INS Form I-9 must be completed by the employee and employer. In addition to completing the Form I-9, the employee must provide a document or documents that establish his or her identity and his or her employment eligibility. The employer should review the document(s) provided by the employee to ensure that they appear to be genuine and to relate to the individual. If an employee is unable to provide the required document(s) within three business days of

12 being hired, he or she must at least produce a receipt showing they have applied for the necessary document(s). The employee must produce the document(s) within 90 days of being hired. (In addition, certain employers are now required by other state and/or federal laws to use the E-verify system to verify employment authorization of applicants.) e. Employment Applications Generally The questions asked on the employment application and in applicant interviews should be the product of careful consideration. Generally, they should include only questions which are job related and elicit the applicant's qualifications for the position involved. Some employers have different types of employment applications for different classes of jobs, because the job requirements vary for each class. Other employers use the same employment application for all applicants. Even if an employer has several classes of employees, it is possible to design an acceptable employment application for use with all classes of jobs by using a very limited number of questions on the application. Where there are different classes of employees with different job requirements and one application form is used, applicants should be instructed not to answer any questions which are unrelated to the job for which the applicant is applying. Employers should remember that the use of questions in an employment application or a job interview unrelated to the job for which a person is applying can form the basis of a discrimination claim. The EEOC has suggested that an employer consider the following three questions in deciding whether to include a particular question on an employment application or in a job interview: (1) Does this question tend to have a disproportionate effect in screening out minorities and females? (2) Is this information necessary to judge this individual's competence for performance of this particular job? (3) Are there alternative non-discriminatory ways to secure necessary information? In addition, to assist employers in complying with the NJLAD, the New Jersey Division on Civil Rights has issued a guide to pre-employment inquires. f. Employment Application Questions Questions in the following categories can pose problems when included in an employment application or interview. Age, date of birth -- The federal Age Discrimination in Employment Act (ADEA) protects applicants for employment who are 40 years of age or older. The NJLAD does not specify a protected age group and protects employees from age discrimination at any

13 age. Generally, age is considered to be irrelevant in most hiring decisions and, therefore, date of birth questions are improper. Also considered improper are questions that indirectly elicit age, e.g., the date of graduation from high school. If you need the date of birth for internal reasons, e.g., computations with respect to a pension or profit-sharing plan, this information should be obtained after the person is hired. Race, religion, national origin, ancestry -- Generally, questions should not be asked about these matters, either on employment applications or during job interviews. The requirement that an applicant furnish a picture has been used to support a claim for race discrimination when it was demonstrated that an employer had never hired a minority applicant, the inference being that the picture was required so that the that employer would remember which applicants were minorities. Ordinarily, Title VII requires employers to make reasonable accommodation for their employees' religious practices. This eliminates, in most situations, the need to ask whether an applicant's religious beliefs would prohibit working at certain times or on certain days. Such questions should be avoided in employment applications and interviews in order to avoid claims that an applicant's religious practices influenced hiring decisions. If an employer has a legitimate business reason for seeking applicants to work specific days or hours of work, it can simply identify these job requirements early in the application process. If applicants notify the employer that their religious beliefs may conflict with these job requirements, the employer may then determine whether a reasonable accommodation can be made that eliminates the conflict without causing undue hardship. Physical traits, disabilities -- Minimum height and weight requirements have been found to violate the law because they eliminate disproportionate numbers of women and Asian-Americans and Hispanics. Therefore, height or weight requirements should not be imposed unless the physical standards are directly related to the ability to perform the applied-for job. The Americans with Disabilities Act prohibits employers from asking whether an applicant or employee has a disability, or requesting information concerning the nature or severity of a known disability. In addition, employers are prohibited from making any medical inquiry (e.g., regarding medical history, workers' compensation claims, etc.) and from requiring medical examinations prior to extending an offer of employment. Employers are permitted to ask an applicant about his or her ability to perform job-related functions, and may request that an applicant describe or demonstrate how, with or without reasonable accommodation, the applicant will be able to perform job-related functions. Employers are also permitted to provide information on attendance requirements and ask if an applicant can meet those requirements. Post-offer medical

14 inquiries and examinations are permitted if they are required of all new employees in the same job classification regardless of disability. Education -- If a job for which application is being made does not require a particular level of education, it is improper to ask questions about an applicant s educational background. Applicants can be asked about educational background, schools attended, degrees earned, and vocational training when the performance of a job requires a particular level of education. For example, inquiring into the English language proficiency and educational background of a secretarial candidate is proper, while the same inquiry would probably be improper for a janitorial applicant. The EEOC and some courts have looked closely at an employer's educational requirements to determine whether they are being used to exclude from employment minorities who, generally speaking, have obtained lesser levels of education. Sex, marital, family status -- Generally, questions relating to these matters should not be asked on an employment application or in a job interview. For example, questions about child-care arrangements and the likelihood of pregnancy are improper and should be avoided. If information concerning sex, marital and family status is needed for social security, income tax, and other purposes, it should be obtained after the applicant has been hired. Arrest, conviction records -- The New Jersey Division on Civil Rights takes the position that questions concerning arrests are impermissible and that questions about an applicant's conviction record are permitted only if they are in some way related to the job. These positions have been taken because of statistics which show that minorities are arrested and convicted at higher rates than non-minorities. Garnishment -- Questions concerning whether an applicant has been the subject of garnishment proceedings should be eliminated from employment applications and job interviews. The EEOC and many courts take the position that using the garnishment history of an applicant as a hiring criterion is discriminatory, because more minority members have their wages garnished than non-minorities. New Jersey employers must also remember that, under N.J.S.A. 2A: , an employer may not discharge or discipline an employee or refrain from hiring an applicant because his or her wages have been subject to garnishment. Citizenship -- The New Jersey Division on Civil Rights prohibits any inquires into whether an applicant is now or intends to become a U.S. citizen or any other inquiries related to the aspect of citizenship. Qualification to work in the United States should be determined by Form I-9 following an offer of employment.

15 Drugs, smoking -- It is permissible to ask an applicant if he or she uses illegal drugs. The application also affords an employer the opportunity to obtain the applicant's agreement to be bound by the employer's drug policies and to obtain the applicant's agreement to submit to drug testing. New Jersey law prohibits discrimination in employment against a person because that person does or does not smoke tobacco, unless the employer has a rational reason for doing so that is reasonably job-related. The Smokers' Rights Law does not limit an employer from restricting or prohibiting smoking on company premises or from requiring employee compliance with its policy. Other problem areas -- Questions concerning whether an applicant has friends or relatives working for the employer may be improper, particularly if an employer which has a predominantly non-minority work force gives a preference to such applicants. Questions concerning credit rating or credit references may be problematic because employers are required to comply with specific notice and disclosure obligations if they seek this information. In addition, questions concerning credit rating or credit references have also been found to discriminate against minorities and women. Questions concerning whether an applicant owns a home have been determined to be improper since a greater number of minority members are not homeowners. While questions about military experience or training are permissible, questions concerning the type of discharge received by an applicant have been held to be improper, because minorities receive a high proportion of other than honorable discharges. Believe it or not, there are still questions which can be safely asked on an employment application. Proper questions can relate to the applicant's name, present address, telephone number, present employment, former employment, and job references. Certain of the "problem areas" identified above may still be proper if the job-relatedness requirement is met. It is important to remember that questions which cannot be asked on the application for employment are also unacceptable during the job interview. g. Employment Applications -- Conditions of Employment An employment application gives an employer the opportunity to state conditions of employment. The prospective employee who signs the application acknowledges his or her consent to these conditions. The following statements are conditions of employment that may be included in an employment application: I hereby declare the information provided by me in this application is true and complete, and I understand that falsification of this information is grounds for refusal to hire, or if hired, termination.

16 I authorize any of the persons or organizations referenced in this application to give you any and all information concerning my previous employment, education, or any other information they might have, personal or otherwise, with regard to any of the subjects covered by this application, and I release all such parties from all liability for any damage which may result from furnishing such information to you. I authorize you to request, receive and verify all information given in this application. In consideration for my employment by your company, I agree to conform to the rules and regulations of the company and acknowledge that these rules and regulations may be changed, interpreted, withdrawn, or added to by the employer at any time, at the employer's sole option and without any prior notice to me. I further acknowledge that if I am employed by the employer, my employment will be at will, and may be terminated with or without cause at any time by me or by the employer. I understand that no representative of the company has any authority to enter into any agreement for employment for any specified period of time or to assure any benefits or terms and conditions of employment other than those set forth in the employee handbook, either prior to commencement of employment or after I have become employed. I consent to a physical examination (after a job offer) and to a drug test (either prior to commencement of employment or after I have become employed) as deemed necessary by the employer. The above list is only a sample of possible conditions. There are obviously numerous other conditions which can be included in an employment application, depending on an employer's specific circumstances. h. Pre-employment Physical Pre-employment physicals are often required as the last step in the selection process. Under the ADA and the NJLAD, pre-offer medical examinations and medical history questionnaires are prohibited. Employers may ask questions regarding the ability of an applicant to perform job-related functions. The ADA and the NJLAD allow employers to require a medical examination or medical history after an offer of employment has been made to a job applicant and prior to the commencement of employment. Thus, the ADA permits an employer to condition an offer of employment on the results of a medical

17 examination or information revealed on a medical history questionnaire. The use of postoffer medical examinations must meet certain requirements, however, including: (1) requiring all new employees in the same job category to submit to medical examinations, regardless of disability; (2) maintaining medical information on separate forms and in files separate from the regular personnel file; and (3) maintaining the confidentiality of medical records. Currently, in order to use pre-employment physical examinations (at the post-offer stage) to the best possible advantage and avoid potential legal problems, employers should be able to demonstrate that: There is a relationship between the medical examination and the essential functions of the job in question. The company acted in good faith in seeking and using an informed medical opinion about an applicant's health status. The examination reveals a current physical impairment that would prevent the prospective employee from performing the job even with a reasonable accommodation. (Employers should exercise caution in using physicals to predict future risk of injury or inability to perform a job.) Refusal to employ a person who cannot pass a physical does not reflect bias against the applicant in particular or against "disabled" individuals in general. After employment begins, under the ADA, employers may not require a medical examination or make medical inquiries of employees unless such examinations or inquiries are job-related and consistent with business necessity. i. Drug Testing of Applicants In private, non-union represented employment, there are generally no legal restrictions on drug testing of applicants. In fact, employers may be subject to certain governmental regulations, based on being a government contractor, that mandate employee testing, or be required to test applicants and employees holding certain transportation positions. In a union represented work force, both federal labor law and the terms of the applicable collective bargaining agreement may affect the employer's ability to impose drug testing and utilize test results in making employment-related decisions. Public employers considering drug testing must be prepared to address challenges arising under the Fourth Amendment to the U.S. Constitution, the New Jersey Constitution, and various federal statutes and regulations that apply to drug testing.

18 Legal problems in drug testing can be reduced by establishing a written policy, using qualified labs with chain of custody for collected specimens, and confirmatory testing of results using gas chromatography/mass spectrometry. The ADA specifically provides that tests for the use of illegal drugs are not considered medical examinations. Thus, New Jersey employers may prohibit the use of illegal drugs and alcohol in the workplace, and may test applicants for illegal drugs to the extent that such a test is otherwise lawful. Testing of employees for illegal drug use is not prohibited by statute in New Jersey. However, the New Jersey Supreme Court has suggested that random employee drug tests may be limited by privacy rights where employees do not work in safety sensitive positions. Where employers are justified in randomly testing their employees, the least intrusive testing measures should be used. These measures include providing notice to employees about the implementation of drug testing, the selection process, the effects of certain drugs on the body, the analysis method used, and the consequences of failing or refusing to take the test. j. Credit and Background Checks Many employers have relied on credit and background checks as a hiring tool and a means of maintaining a responsible and efficient work force. However, recent changes in the law impose new obligations on employers, significantly affecting the way credit and background information is obtained. Amendments to the Fair Credit Reporting Act ( FCRA ) impose notice and disclosure obligations on employers who seek information about an applicant s or employee s credit history, criminal background, medical history, workers compensation history, or motor vehicle record. Employers are required to notify prospective and current employees at the outset if they intend to use a credit check. The notification must be in writing and must be contained in a document that consists only of the notification. Employers must also obtain the individual s written authorization to release credit information. If, however, applicants or employees fail or refuse to execute an authorization, the employer maintains the right to refuse to consider them for hire until they authorize access to credit information. Once written authorization is given, the employer must forward the authorization to the consumer reporting agency with its own certification about how the information will be used. The employer must also certify that it will not use the information in violation of any federal or state equal opportunity law or regulation and that it will not take any adverse action against the applicant before providing him or her with a copy of the report and a written summary of his or her rights under the FCRA. If an employer is inclined to make an adverse employment decision based in any part on credit information, the employer must provide the job applicant or employee with (1) notice of the adverse action; (2) the identity of the consumer reporting agency that

19 provided the credit information; (3) a statement that the consumer reporting agency did not make the decision to take adverse action; and (4) notice of the individual s right to obtain a free copy of his/her report from the consumer reporting agency within 60 days and to dispute the accuracy or completeness of the information with the consumer reporting agency. The result of this procedure is that if an applicant is turned down for a job, he or she conceivably could correct the credit information and reapply. An investigative consumer report which contains information about an applicant s or employee s character, general reputation, personal characteristics, and mode of living, is broader in scope than a consumer report, and additional protections are provided under the law. Within three days of the date an employer requests such a report, the employer must disclose in writing to the applicant or employee that an investigative consumer report has been requested. The disclosure must include a description of what an investigative consumer report contains and advise the applicant or employee that he or she may obtain information about the nature and scope of the investigation. If an applicant or employee requests information about the investigation, the employer must provide the information within five days of the request. Such disclosures and notices are in addition to those that are given for ordinary consumer reports. For reports containing medical information about the job applicant or employee, an employer must obtain explicit consent for the release of medical information. Such consent is in addition to the written authorization necessary to obtain a consumer report. k. Negligent Hiring The number of "negligent hiring" lawsuits being filed against employers is rapidly increasing. This type of lawsuit usually arises when a third party is injured by an unfit employee who was hired by an employer. Ordinarily, the third party claims that the employer failed to conduct a thorough background check on the employee before hiring him or her and that, if there had been such an investigation, the employee would have never been hired. To prevail in New Jersey, the third party must show that the employer knew or had reason to know of the particular unfitness, incompetence, or dangerous attributes of the employee, that the employer could reasonably have foreseen that those qualities created risk of harm to other persons, and that the employee's unfitness proximately caused injury. Examples of these lawsuits are: (1) negligence in hiring and retaining a ranger who was known by the employer to keep guns on the premises; (2) a company s failure to discover a security guard's prior record of sex crimes -- filed by a customer allegedly molested by the security guard; (3) an apartment owner's failure to discover prior burglary convictions of a maintenance employee who had a pass key to all apartments -- filed by a tenant allegedly burglarized by the employee; and (4) the hiring of an employee by a security firm which handled large sums of money without doing a

20 thorough investigation of the employee's job history -- filed by a client from whom the employee allegedly stole a substantial sum of money. Despite the increasing use of this theory, it is unlikely that an employer will be required to do a detailed background investigation on every employee. For example, employees who have little contact with the public, have nothing to do with the operation of vehicles or hazardous machinery, have no access to sensitive records, have no responsibility for the security or safety of third parties, or have no duties involving money or financial information pose very little risk for employers under the theory of negligent hiring. However, most employers have some employees who perform these job duties and are, therefore, subject to potential liability under this theory. Since a thorough background check is usually the best defense against a negligent hiring lawsuit, employers should consider the following guidelines: Carefully review all information provided by a job applicant. Pay special attention to gaps between jobs and the failure of an applicant to answer certain questions. Obtain a consent and release to gather information from former employers, and even if the former employers have a policy against releasing personnel information, it can be demonstrated that, at the very least, an effort was made to obtain it. Contact personal references provided by the applicant. Verify prior residences given by an applicant to make sure that one has not been omitted or changed for some reason. Document the information that was obtained and what efforts were made to obtain additional information. 5. Compensation and Benefits Several different federal and New Jersey laws regulate various forms of compensation and benefits. Each social sector organization should adopt a compensation scheme that is compatible with the organization s mission and furthers its human resources goals. a. Wages Most employers regardless of size are governed by both federal and state wage and hour laws. Federal and state wage and hour laws differ slightly, and employers must follow both. On July 24, 2009, the both the federal and the New Jersey minimum wage was increased to $ 7.25/hr.