The Department of Labor provides funding for JAN as a free, comprehensive, online resource to assist businesses in complying with the Americans with Disabilities Act (ADA). According to the website, the Toolkit “provides resources to support organizational efforts to accommodate applicants, candidates, and employees with disabilities; to train those serving in roles critical to managing disability; and to promote disability inclusion throughout the workplace.”

Earlier this week, Epstein Becker Green hosted our Annual Workforce Management Briefing, including a panel discussion relating to reasonable accommodations. We were joined by Jeanne Goldberg, from the U.S. Equal Employment Opportunity Commission. Learn more about the Briefing and access presentation materials here.

Following is an excerpt:

As background, FLSA Section 7(i) exempts a retail or service establishment employee from the FLSA’s overtime pay requirements if (i) the employee’s regular rate of pay exceeds 1.5 times the federal minimum wage for any week in which the employer seeks to claim the exemption and (ii) more than half of the employee’s compensation “for a representative period (not less than one month)” represents commissions on goods and services.  29 U.S.C. § 207(i).  In Opinion Letter FLSA2019-13, the WHD provided guidance on the representative period requirement, addressing whether four weekly pay periods or two bi-weekly pay periods, or alternatively, six consecutive weekly pay periods or three bi-weekly pay periods constitute a valid representative period.

As the WHD observed, the implementing regulations provide no guidance on the meaning of the phrase “not less than one month” other than the self-evident statement that the period cannot “be less than 1 month.”  29 C.F.R. § 779.417(c).  Accordingly, the WHD proceeded to interpret this language, guided by the Supreme Court’s holding in Encino Motorcars, LLC v. Navarro that FLSA exemptions receive a fair and appropriate reading.  Relying on Supreme Court and other case law, the WHD posited that a fair reading of a “month” is a “calendar month”—i.e., the period of time from a given day of a particular month in the calendar to the corresponding day of the following month. …

Read the full article here.

The Amendment broadens the definition of “victim of domestic violence” to make it consistent with the Domestic Violence Prevention Act (NY Soc. Serv. L § 459-A). In addition, although the NYSHRL previously prohibited discrimination against victims of domestic violence, the Amendment explicitly adds victims of domestic violence as a protected class under the NYSHRL. Further, the Amendment requires employers to reasonably accommodate victims of domestic violence who must be absent from work “for a reasonable amount of time” to:

• seek medical attention for injuries caused by domestic violence;
• obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence;
• obtain psychological counseling related to domestic violence, including for a child who is a victim of domestic violence;
• participate in safety planning relating to domestic violence; and
• obtain legal services or participate in legal processes relating to an incident of domestic violence.

Employers are not required to provide an accommodation where it would pose an undue hardship. A determination of whether the absence will cause an undue hardship requires an evaluation of factors, such as the size of the employer’s business and the nature of its operation, including the composition and structure of its workforce. Employers may require employees to use any available paid time off during any leave provided as an accommodation.

The Amendment requires an employee to provide the employer with reasonable notice of the need to be absent, if feasible. If advance notice was not feasible, the employee must, upon employer request, provide a certification confirming the need for the time-off accommodation.. A police report, court order or other court document, or document from a medical professional, domestic violence advocate, health care provider, or counselor are acceptable forms of certification. Of note, the Amendment was passed alongside other new laws aimed at offering greater support for victims of domestic violence.

In each compact, 15-minute installment, a member of our team will guide you through a topic. This on-demand series should be of interest to all employers that sponsor benefits and compensation programs.

In our newest installment, Tzvia Feiertag, Member of the Firm in the Employee Benefits and Executive Compensation practice, in the Newark office, presents “HIPAA Privacy and Security Rule Compliance.”

While employers themselves are not directly regulated by the Privacy and Security Rules of the Health Insurance Portability and Accountability Act (“HIPAA”), most employers that sponsor group health plans have ongoing compliance obligations. This crash course offers a brief overview of who and what is covered by these rules, why employers should care about HIPAA compliance, and five tips to maintain compliance.

Click here to request complimentary access to the webinar recording and presentation slides.

This episode includes:

• Increased Employee Protections for Cannabis Users
• First Opinion Letters Released Under New Wage and Hour Leadership
• New Jersey and Illinois Enact Salary History Inquiry Bans
• Deadline for New York State Anti-Harassment Training Approaches
• Tip of the Week

See below to watch the full episode – click here for story details and video.

We invite you to view Employment Law This Week^® – tracking the latest developments that could impact you and your workforce. The series features three components: Trending News, Deep Dives, and Monthly Rundowns. Follow us on LinkedIn, Facebook, YouTube, Instagram, and Twitter and subscribe for email notifications.

Following is an excerpt:

In Wild, which we discussed in a recent client alert, plaintiff Justin Wild (“Wild”) alleged that his employer, Carriage Funeral Holdings (“Carriage Funeral”) failed to reasonably accommodate his disability (cancer) and unlawfully discharged him in violation of the LAD because he used medical marijuana, as legally permitted by CUMMA. Carriage Funeral terminated Wild’s employment after he tested positive for cannabis following an on-duty motor vehicle accident.

The trial court dismissed the lawsuit holding that the fact Wild tested positive for cannabis  constituted a legitimate business reason for his discharge because cannabis use (medical or otherwise) remains prohibited under federal law. In rendering its decision the trial court relied on a provision in the law stating that CUMMA did not require employers to reasonably accommodate licensed use of medical marijuana in the workplace. The Appellate Division reversed, holding that the fact that CUMMA did not “require” employers to accommodate an employee’s use of  medical marijuana in the workplace, did not affect an employer’s requirement under the LAD to reasonably accommodate an employee’s disability, which could include an employee’s off-duty and off-site use of medical cannabis. …

Read the full article here.

Following is an excerpt:

Additionally, employers that can demonstrate a good faith effort through proactive measures to comply with the Act may be able to mitigate liability should a claim arise. Similar to “safe harbor” provisions in equal pay laws in Massachusetts and Oregon, such proactive measures should include regular audits of compensation practices. While these measures do not create a complete defense, employers that successfully present evidence of a “thorough and comprehensive pay audit” with the “specific goal of identifying and remedying unlawful pay disparities” may avoid liquidated damages. The key word here is “remedying”; employers that conduct pay audits, but then fail to take steps to correct unlawful pay discrepancies revealed by the audit, will not reap the benefits of the “safe harbor” defense and could instead find themselves without the proverbial port in a storm.

Notably, the Act goes further than most other comparable state wage discrimination laws by mandating notification to employees of employment opportunities. Employers must make reasonable efforts to provide notice of internal opportunities for promotion on the same calendar day the opening occurs. These announcements must disclose the hourly or salary compensation, or at the very least a pay range, as well as a description of benefits and other compensation being offered. Failure to comply with these provisions could result in fines of between $500 and $10,000 per violation. …

Read the full post here.

Following is an excerpt:

After a long legislative battle, the New York State Gender Expression Non-Discrimination Act (“GENDA” or “Law”), which was signed into law and became effective on January 25, 2019, explicitly added “gender identity or expression” as a protected class under the state’s non-discrimination laws. Now, under a proposed state regulation, the New York State Division of Human Rights (“DHR”) would amend its regulations, codified in NYCRR §466.13, prohibiting discrimination on the basis of gender identity, gender expression, and transgender status to conform with the Law.

The proposed regulation would amend NYCRR 466.13(b) to define “gender identity and expression” as “a person’s actual or perceived gender-related identity, appearance, behavior, expression or other gender-related characteristic regardless of the sex assigned to that person at birth, including but not limited to, the status of being transgender.” The change would match the definition in the Law.  Additionally, the phrase “gender identity or expression” would replace “gender identity” throughout the regulation. A new section, NYCRR 466.13(c), would also be added to clarify that “gender identity or expression” is now explicitly a separate protected class under the Human Rights Law. …

Read the full post here.

In response to the #MeToo movement, New York and New Jersey have enacted legislation banning workplace arbitration agreements covering sexual harassment and discrimination claims. On April 12, 2018, New York State, as part of its 2018-2019 budget, amended § 7515 of the New York Civil Practice Law and Rules (“CPLR”) to prohibit employers with four or more employees from incorporating mandatory, pre-dispute arbitration clauses in written employment contracts requiring the resolution of allegations of claims of sexual harassment. Additionally, any such clause in a contract entered into after the effective date of the law would be rendered null and void.

On June 19, 2019, the New York legislature passed a bill (which, as of the date of this post, has yet to be signed into law) that makes sweeping changes to New York’s harassment and discrimination laws. Among other things, the bill again amends § 7515 of the CPLR to ban mandatory pre-dispute arbitration clauses in written employment contracts requiring the resolution of allegations of claims of workplace discrimination generally, not just sexual harassment claims and renders any such clause null and void.

On March 18, 2019, New Jersey Governor Murphy signed legislation that declares unenforceable any “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment.” N.J.S.A. 10:5-12.7(1)(a).  The law further provides that “[n]o right or remedy under the [Law Against Discrimination], or any other statute or case law shall be prospectively waived.” N.J.S.A. 10:5-12.7(1)(b). Both provisions can be construed to prohibit the waiver of a right to a jury trial as required by an arbitration agreement.

Many observers have questioned whether these laws restricting arbitration would be preempted by the FAA. A recent decision in the Southern District of New York, Mahmoud Latif v. Morgan Stanley & Co. LLC, No. 18cv11528 (DLC), 2019 U.S. Dist. LEXIS 107020 (S.D.N.Y. June 26, 2019), confirms that state laws targeting enforcement of arbitration agreements are vulnerable to attack on FAA preemption grounds.

As discussed below, in Latif, the court held that New York’s ban on the arbitration of sexual harassment claims was unenforceable as preempted by the FAA. The court also stated, in a footnote, that the as yet unsigned June 19, 2019 New York legislation would be preempted by the FAA for the same reasons. Latif suggests that employers covered by the FAA can be more confident that their agreements seeking to arbitrate employment-related claims will be enforceable.

Background

In June 2017, Mahmoud Latif (“Latif”) was hired by Morgan Stanley and signed an offer letter that incorporated Morgan Stanley’s CARE Arbitration Program Arbitration Agreement (“Arbitration Agreement”). Id. at *1. The Arbitration Agreement provided that any claim involving, inter alia, “statutory discrimination, harassment and retaliation” would be subject to arbitration. Id. at *1-2. The Arbitration Agreement further stated that it “shall be governed by and interpreted in accordance with the Federal Arbitration Act (“FAA”).” Id. at *2.

Latif alleges that, starting in the autumn of 2017, he was subjected to, inter alia, improper comments regarding his sexual orientation, inappropriate touching, and sexual advances. Id. He also claims that around February 2018, he was sexually assaulted by a female supervisor. Id. Latif reported these incidents to Human Resources in February 2018. Id. at *2-3. On August 1, 2018, Latif’s employment was terminated. Id. at *3.

On December 10, 2018, Latif filed a lawsuit alleging, inter alia, discrimination, a hostile work environment, and retaliation. Id. The parties disputed whether the Arbitration Agreement was enforceable as to Latif’s sexual harassment claims “in light of the recently enacted New York Law, N.Y. C.P.L.R. § 7515.” Id. at *4. Morgan Stanley and the individually named defendants moved to compel arbitration. Id.

Analysis

In granting the motion to compel, the court reviewed United States Supreme Court cases interpreting the FAA and quoted Section 2 of the FAA which provides, in relevant part:

[A] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Id. at *5 (quoting 9 U.S.C. § 2). The court emphasized that the FAA’s “saving clause” only allows for “‘defenses that apply to “any” contract,’” thereby ensuring that arbitration contracts are afforded equal treatment. Id. at *5 (quoting Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1622 (2018)). Accordingly, “arbitration agreements may be ‘invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.’” Id. at *5-6 (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)). However, “‘defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue’ will not invalidate such an agreement.” Id. at *6 (quoting Concepcion, 563 U.S. at 339). Further, the saving clause does not preserve defenses that “‘target arbitration either by name or by more subtle methods.’” Id. (quoting Epic Sys., 138 S. Ct. at 1622).

The court also opined that any state law which “‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of the FAA’” is preempted. Id. at *6 (quoting Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1415 (2019)). Therefore, “‘[w]hen a state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.’” Id. (quoting Concepcion, 563 U.S. at 341).

The court next summarized the New York State law at issue, § 7515 of the CPLR, titled “Mandatory arbitration clauses; prohibited,” which restricts the arbitration of sexual harassment claims. Id. at *7-8. Section 7515(b) consists of three subparts. “Except where inconsistent with federal law,” subpart one prohibits a written contract entered into on or after the effective date from containing a “prohibited clause.” CPLR § 7515(b)(i) (emphasis added). A “prohibited clause” is defined as “any clause or provision in any contract which requires as a condition of the enforcement of the contract or obtaining remedies under the contract that the parties submit to mandatory arbitration to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.” CPLR § 7515(a)(2).

Subpart two makes clear that § 7515 does not “impair or prohibit an employer from incorporating a non-prohibited clause or other mandatory arbitration provision” in a contract agreed upon by the parties. CPLR § 7515(b)(ii). Subpart three provides that, “[e]xcept where inconsistent with federal law,” the provisions of a “prohibited clause” as defined by the law “shall be null and void,” and the inclusion of such a clause “shall not serve to impair the enforceability of any other provision of such contract.” CPLR § 7515(b)(iii) (emphasis added).

The court concluded that Latif’s sexual harassment claims were subject to mandatory arbitration under the Arbitration Agreement. Latif, 2019 U.S. Dist. LEXIS 107020, at *8. The law did not render the agreement to arbitrate sexual harassment claims null and void because the outcome would be inconsistent with federal law, specifically, the FAA. Id. at *8-9. The court made clear that the FAA’s “strong presumption that arbitration agreements are enforceable” was “not displaced by § 7515.” Id. at *9.

In addition, the FAA’s saving clause did not allow for the application of § 7515 to invalidate the agreement, because § 7515(a)(2) singles out “contract provisions that require ‘mandatory arbitration to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.’” Id. (quoting CPLR § 7515(a)(2)). In this way, § 7515(b) is a “‘state law prohibit[ing] outright the arbitration of a particular type of claim,’” which the Supreme Court has made clear is “‘displaced by the FAA.’” Id. (quoting Concepcion, 563 U.S. at 341).

Latif argued that § 7515 was part of a bundle of sexual harassment provisions in a single bill that reflected “a general intent to protect victims of sexual harassment,” and was not specifically intended to single out arbitration clauses for special treatment because the section “affects a number of different types of contracts and contract provisions.” Id. at *9-10. Latif also argued that because § 7515 does not apply to all arbitration, but only to sexual harassment claims, it was “not inconsistent with the FAA.” Id. at *10. The court dismissed these arguments and focused instead on the plain language of the law which is targeted specifically to sexual harassment and does not create a general contract defense. Id.

Latif further asserted that New York’s substantial interest in “transparently addressing workplace sexual harassment” was a “ground ‘in equity for the revocation of any contract’ and thus not displaced by the FAA.” Id. (quoting 9 U.S.C. § 2). The court responded that to take advantage of the saving clause the basis for providing an exception to arbitration must be generally applicable to all contracts. Id. at *10-11.

In a footnote, the court addressed the June 19, 2019 legislation passed by the New York legislature that would amend § 7515 “to encompass mandatory arbitration of claims of discrimination generally, rather than specifically of sexual harassment.” Id. at *9 n.2. The court stated, without further elaboration, that “[f]or the same reasons described above, § 7515 as so amended would not provide a defense to the enforcement of the Arbitration Agreement.” Id.

Takeaways

The court’s holding in Latif overturns New York State’s attempt to prohibit mandatory arbitration of sexual harassment and discrimination claims. Although the reasoning in Latif is well-grounded, the decision may still be appealed to the Second Circuit, so employers should continue to exercise caution. Employers are encouraged to review their agreements to ensure that they explicitly state that they are governed by the FAA.

The Latif decision does not apply in New Jersey; however, a similar analysis may likely lead to a similar conclusion in New Jersey. A court may find that the restrictions single out the arbitration of certain disputes for different treatment and do not create a defense applicable to all contracts.

This episode includes:

• State Legislation Heats Up
• NLRB Overturns Another Long-Standing Precedent
• SCOTUS October Term 2018 Wraps Up
• Tip of the Week: How inclusion and trust can increase innovation in the workplace

See below to watch the full episode – click here for story details, the video, and the extended audio podcast.

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