Supreme Court Holds That Employer Sponsored Arbitration Programs do not Violate National Labor Relations Act

Posted in Arbitration, Litigation, NLRB

On May 21, 2018, in a 5-4 decision, the United States Supreme Court issued a long-awaited decision in Epic Systems Corp. v. Lewis, 584 U.S. ____ (2018), holding that mandatory employer-sponsored arbitration agreements do not offend the National Labor Relations Act (“NLRA”). Justice Gorsuch, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito, delivered the opinion.

The Court reiterated that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) instructs “federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” Relying on that rule, the Court held that employers can require employees to submit all work-related disputes to individual arbitration. The Court thus concluded that nothing in the NLRA trumps the FAA’s mandate, particularly because the specific provision of the NLRA on which the employees relied “does not express approval or disapproval of arbitration” and “does not even hint at a wish to displace the Arbitration Act—let alone accomplish that much clearly and manifestly, as our precedents demand.”  In reaching its ruling, the Court notably chipped away at Chevron deference, rejecting the contention that it must defer to the National Labor Relations Board’s (“NLRB”) interpretation of the interplay between the NLRA and FAA. In support, the Court made specific reference to the fact that, as recently as 2010, the NLRB had expressed a view contrary to what it was now espousing. But, regardless of the seeming position changes, the Court held no such deference was warranted because the employees could not show any rule or precedent that authorizes the NLRB to interpret, much less oversee, the FAA. Justice Gorsuch’s “straight talk” on Chevron deference may portend further such rulings on the issue in the future.

The decision is a significant victory for employers. It confirms that arbitration programs with class action waivers are enforceable, even when they are a mandatory condition of employment. It thus rejected and put to rest the prior view of some lower courts which had distinguished between mandatory arbitration programs and optional ones, i.e., where employees could “opt-out” of arbitration. Employers who already use mandatory arbitration agreements that include class action waivers can now take comfort that the NLRA is no longer a potential obstacle to enforcement of such agreements. Employers who have previously held off implementing such an arbitration program should now reconsider in light of this new decision, as such a program will be enforced even as to putative class claims.

Employers who have employed an “optional” arbitration program containing a class action waiver but giving employees the right to “opt-out” may wish to consider removing the opt-out right. Employers may still conclude, for sound cultural reasons or to avoid potential state law pitfalls, not to utilize mandatory arbitration but the Supreme Court’s ruling appears to make clear that the validity of the agreement to arbitrate will not depend on the existence of an opt-out right.

Expect the Epic Systems decision to change significantly the landscape of employment-related class and collective action litigation. More employers are likely to adopt arbitration programs with class action waivers; so that portends less group litigation. At the same time, however, we do not see this as the end to aggregated claims and proceedings. As plaintiff counsel know and understand, employers may still sometimes conclude that a class or collective resolution, whether in court or arbitration, is still more efficient and cost-effective. Ask any employer that has had to arbitrate 50 or 100 individual employment matters which it could have litigated/tried collectively; and we expect employers will have no trouble finding employees’ counsel amenable to broader resolutions. Accordingly, we do not expect employees just to accept the ruling and go away; rather we assume several will continue to pursue claims individually in the hope of reaching a critical mass that effectively compels employers to agree to or even seek aggregation. Finally, be on the watch for statutory reactions at the state and local level. Rulings such as this make those more attractive venues, particularly in states and localities whose employment laws are already more favorable to employees.

New Jersey Adopts State-Wide Mandatory Paid Sick Leave

Posted in Wage & Hour

Earlier this month, New Jersey Governor Phil Murphy signed a much-anticipated state-wide paid sick leave law.  The law, which will go into effect Oct. 29, 2018, requires all New Jersey employers – regardless of size – to provide paid sick leave to their employees, whether full- or part-time.  Notably, while dubbed the “paid sick leave bill,” the law also requires employers to pay “sick” leave to employees absent from work for reasons wholly unrelated to their own or a family member’s illness.   In this GT Alert, we outline the law’s key provisions.

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California Supreme Court Creates New Worker Classification Test

Posted in State Law, Wage & Hour

On Monday, April 30, 2018, the California Supreme Court issued its long-awaited ruling in Dynamex Operations West v. Superior Court. The new ruling adopts a new worker classification test and makes it easier for independent contractors to be found to be employees under California Industrial Welfare Commission (IWC) wage orders, which impose obligations relating to minimum wages, maximum hours, overtime, and a number of very basic working conditions such as minimally required meal and rest breaks. Whether it will impact compliance issues beyond the Wage Orders remains to be seen.  This decision will impact employers who rely on independent contractors to conduct their business.

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Revisiting the Great Joint Employment Debate

Posted in EEOC, NLRB

Michael J. Slocum authored a New Jersey Law Journal article titled “Revisiting the Great Joint Employment Debate: From ‘Browning-Ferris’ to ‘Hy-Brand’ and Beyond.” The article discusses the joint employment doctrine under the National Labor Relations Act.

To read the article, click here.

Ninth Circuit: Employers May Not Consider Salary History in Deciding to Pay Men and Woman Differently

Posted in Compensation, Discrimination, Wage & Hour

The day before Equal Pay Day, the U.S. Court of Appeals for the Ninth Circuit, sitting en banc, ruled that employers defending claims under the Equal Pay Act cannot rely on workers’ past salaries in any respect in trying to justify pay disparities between women and men. Aileen Rizo v. Jim Yovino, 16-15372, 2018 WL 1702982 (9th Cir. Apr. 9, 2018) (en banc). This ruling expressly overturns the Ninth Circuit’s prior holding in Kouba v. Allstate Insurance Co., 691 F.2d 873 (9th Cir. 1982), conflicts with rulings from other circuits, and tees up a very important issue for potential Supreme Court review.

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Supreme Court Rejects Practice of Construing Fair Labor Standards Act Exemptions Narrowly

Posted in Department of Labor, FLSA

On April 2, 2018, in a 5-4 decision, the United States Supreme Court held that automobile service advisors are not entitled to overtime pay. Although the precise holding is of limited application because few companies outside car dealerships employ individuals as automobile service advisors, the Supreme Court’s analysis will have wide-reaching application. Departing from years of contrary thinking, the decision definitively states there is no basis for construing exemptions to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) narrowly. This is a major victory for employers, who have long faced the frequently-intoned argument that courts must construe the FLSA’s exemptions narrowly against them.

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New Jersey Legislation Raises the Stakes in Unequal Pay Claims

Posted in Discrimination, Wage & Hour

Last week, the New Jersey Legislature passed a high profile bill proposing sweeping amendments to New Jersey’s Law Against Discrimination (LAD). The most noteworthy amendments are designed to broaden LAD’s protections against alleged discriminatory pay practices. If Governor Murphy signs the bill into law, as is almost certain, New Jersey’s equal pay law will be among the nation’s most expansive laws of its kind and will carry severe penalties for employers who run afoul of its mandates.

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Federal Law Reaches a Tipping Point

Posted in Department of Labor, FLSA

On March 23, 2018, President Trump signed into law the 2,232-page Omnibus Appropriations bill – HR 1625, Consolidated Appropriations Act for FY 2018, which funds the government for the rest of the fiscal year. Included in that bill were a few paragraphs that prohibit restaurant owners from sharing server tips with supervisors, managers, or themselves.

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Unique Strategy in ERISA Class Action Results in Zero Liability to Defendants

Posted in Employee Stock Ownership Plan, ERISA & Employee Benefits Litigation

In Wema Hoover v. Brijon Management & Employee Leasing Services, et al., Case No. 3:14-cv-05786-MAS-DEA (D. N.J.), a former employee of Brijon Management & Employee Leasing Services, Inc. (Brijon) and a participant in the Employee Stock Ownership Plan (ESOP) sponsored by Brijon filed a class action complaint alleging that Brijon, its former Chief Executive Officer (CEO), and others violated ERISA when they approved the ESOP’s sale of 100 percent of Brijon’s stock to Defendant CarolBri, LLC (CarolBri), an entity partially owned by Brijon’s former CEO, for an amount that plaintiff alleged was less than the fair market value of the stock.

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GT Publishes a Multi-Country Survey with the ACC on Covenants Not to Compete

Posted in International Labor & Employment

Greenberg Traurig recently published a multi-country survey InfoPAKSM on covenants not to compete through the Association of Corporate Counsel (ACC). Covenants not to compete are important for employers to consider in order to protect proprietary information such as trade secrets, intellectual property, and highly confidential information. However, these post- employment restrictions vary country by country. These differences should be considered when an employer enters into an agreement with an employee.

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