Gibbons Law Alert
Yesterday, Governor Murphy signed the Diane B. Allen Equal Pay Act. The new law will go into effect July 1, 2018. For a description of the law and how it will affect New Jersey employers, please see our previous blog post. If you have any questions regarding how to comply with New Jersey’s new pay equity law, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.
In a precedential en banc opinion, Rizo v. Yovino, the U.S. Court of Appeals for the Ninth Circuit determined that an employee’s prior salary cannot justify a wage differential between male and female employees under the Equal Pay Act. Significantly, this decision overrules established prior Ninth Circuit precedent that an employee’s prior salary constitutes a “factor other than sex” under the Act upon which a wage differential may be based. Background The Plaintiff, Aileen Rizo, was hired by the Fresno County Office of Education in 2009 as a math consultant. At the time of her hire, her starting salary was determined in accordance with Fresno’s standard operating policy which provided that the salary for all new hires would be set by adding five percent to their previous salary. In or about 2012, Rizo learned that male colleagues who were hired after her were earning more than she. In 2014, Rizo filed a lawsuit against Jim Yovino in his official capacity as the Superintendent of the Fresno County Office of Education alleging violations of the Equal Pay Act, Title VII, and California law. At the District Court, Fresno admitted that it paid Rizo less than her male colleagues for the same work, but argued that the pay differential was permissible based on the Equal Pay Act’s...
On April 2, 2018, in Encino Motorcars, LLC, v. Navarro, the Supreme Court held that auto service advisors – those who “interact with customers and sell them services for their vehicles” – are exempt from the overtime pay requirements of the Fair Labor Standards Act (“the FLSA”). The Court’s decision will certainly affect auto service advisors, but its impact will not be limited to the auto dealership industry. The crux of the Court’s decision centered around Section 13(b)(10)(A) of the FLSA, which states that “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” is exempt from the FLSA overtime requirement. In a 5-4 decision, the majority found that a service advisor is “obviously a salesman” under the ordinary meaning of salesman, given that a salesman sells goods or services and service advisors “sell [customers] services for their vehicles.” The Court also found that service advisors are “primarily engaged in . . . servicing automobiles” due to their integral involvement in the servicing process. Thus, the Court held that sales advisors are exempt from the FLSA overtime pay requirement under Section 13(b)(10)(A). Significantly, in reaching its conclusion, the majority departed from the Supreme Court’s longstanding principle that FLSA exemptions should be narrowly construed against employers, and, instead, held that the exemptions should be...
Yesterday, the New Jersey Senate and Assembly passed comprehensive pay equity legislation. The legislation passed both houses with significant bi-partisan support and it is expected that Governor Murphy will soon sign the legislation into law. Once in effect, the legislation, which amends the New Jersey Law Against Discrimination (“the LAD”), will be the most wide-ranging pay equity law in the United States. Significantly, unlike most pay equity laws passed in recent years by other states which target unlawful pay discrimination of women, the New Jersey law will prohibit pay discrimination of employees in any protected class. Specifically, the legislation makes it an unlawful employment practice to discriminate against a member of any protected class by compensating the employee at a lesser rate of pay, benefits, or other forms of compensation than an employee who is not a member of the protected class for “substantially similar work.” The “substantially similar” standard, which diverges from the “equal work” standard of the federal Equal Pay Act, mirrors the California Fair Pay Act. Moreover, the legislation provides that comparisons of wage rates shall be based on wage rates in all of an employer’s operations or facilities regardless of where located. An employer will be permitted to pay a different rate to an employee if it can show that the...
Governor Phil Murphy has signed an executive order which bars state workers from asking job applicants seeking positions with the state about their previous salaries in his first official act after his swearing-in on January 16, 2018. State entities may now only inquire as to an applicant’s past salary history after the entity has made a conditional offer of employment, which includes an explanation of the compensation package being offered to the applicant. The goal of the executive order is to eliminate wage inequalities that result from female employees who accept lower starting salaries and then remain on a lower compensation track, with pay disparities compounding over time. Significantly, at the signing ceremony, the Governor stated that he would sign a bill that extended these same provisions to private sector employers which the legislative sponsors vowed to move quickly to his desk. In fact, legislation has already been introduced that prohibits an employer from inquiring about the salary history of an applicant. Assembly Bill 1094 was introduced on January 9, 2018 by Assemblywoman Joanne Downey (D-11) and referred to the Assembly Labor Committee. Senate Bill 559 was introduced by Senator Nia Gill (D-34) on January 9, 2018 and referred to the Senate Labor Committee. The legislation, described by legislative sponsors as an effort to promote...
On January 5, 2018, the Department of Labor (DOL) withdrew its six-factor test, established by a 2010 DOL guidance, used to determine whether interns and students are considered employees and, thus, covered by the Fair Labor Standard Act (FLSA), and, in its place, adopted a seven-factor test – listed in Fact Sheet 71 – applied by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. The abandoned six-factor test, issued under the Obama Administration, required that all of the criteria be met in order to find that an intern is not an employee under the FLSA. In 2015, the Second Circuit disregarded the DOL test in the Glatt ruling. In deciding against the unpaid interns at Fox Searchlight, the Second Circuit held that the six-factor test was too rigid. Subsequently, the Second Circuit ruled that in determining whether interns are classified as employees under the FLSA, the “economic reality” between the intern and the employer should be evaluated to determine which party is the “primary beneficiary” of the relationship. The Second Circuit applied a non-exhaustive list of seven factors to use in the “primary beneficiary” test, but cautioned that “[a]pplying these considerations requires weighing and balancing all of the circumstances” and “[n]o one factor is dispositive.” Importantly, the new DOL guidance announcing the adoption...
On October 13, 2017, the Third Circuit held in Secretary United States Department of Labor v. American Future Systems, Inc., that under the Fair Labor Standards Act (FLSA), an employer was required to compensate employees for all breaks of twenty minutes or less that the employer treated as flex time for the employees. Facts and Analysis Defendant American Future Systems, d/b/a Progressive Business Publications (“Progressive”) employed sales representatives to sell its business publications. The sales representatives were paid on an hourly basis, but only when logged onto their computers. In 2009, Progressive eliminated its policy that permitted employees to take two 15 minute paid breaks per day and replaced it with a “flexible time” policy. The flexible time policy allowed sales representatives to “log-off the computer system at any time of the day, for any reason, and for any length of time, at which point, if they so choose, they may leave the office.” Employees were required to log off their computers if they were “not on an active sales call, recording the results of a call, engaged in training or administrative activities, or engaged in other activities that Progressive considers to be work-related.” If sales representatives were logged out of their computers for over 90 seconds, they were not compensated for this flexible time....
In 2017, employers in New York encountered several important statutory changes affecting recruitment of applicants and retention of independent contractors. More legal change will come in 2018, warranting a mid-year review of current employment and hiring practices, as well as preparation for next year’s developments. Employers should take the time now to audit current practices and prepare for the imminent future. Pay Equity On May 4, 2017, Local Law 67 was enacted to prohibit all employers in New York City from inquiring about an applicant’s salary history (including current or prior wages, benefits, and other compensation), and from relying on an applicant’s salary history when determining his or her compensation package during the hiring process, including contract negotiations. The law applies to both public and private employers and employment agencies, and to their employees and agents (collectively, “employers”). Employers may, however, engage in communications with an applicant about his or her expectations as to salary, benefits, and compensation, including any deferred compensation or unvested equity which the applicant may forfeit as a result of leaving his or her current employer. In addition, if the candidate voluntarily (and without any prompting by the prospective employer), discloses his or her salary history to the prospective employer, the employer may consider salary history in determining compensation for the applicant,...
On June 7, 2017, the U.S. Department of Labor (“DOL”), Wage and Hour Division (“WHD”), announced that it was rescinding two significant and heavily-criticized Obama-era Administrator’s Interpretations, the first on joint employer liability under the Fair Labor Standards Act, 29 U.S.C. § 1801 et seq. (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 201 et seq. (“MSPA”) (the “Joint Employer AI”), and the second on independent contractor misclassification under the FLSA (the “Independent Contractor AI”). In its June 7th statement concerning the rescissions, the DOL made its intentions clear: Removal of the two administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act or Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the Department’s long-standing regulations and case law. The Department will continue to fully and fairly enforce all laws within its jurisdiction including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act. Although neither AI constituted a legal precedent, the January 2016 Joint Employer AI presented the DOL’s analysis of the joint employer principles under caselaw interpreting the FLSA and the MSPA. Gibbons issued an alert about the Joint Employer AI when it was first published. The underlying caselaw is not affected by the DOL’s withdrawal...
On November 22, 2016, in Nevada v. United States Department of Labor, et al., a judge in the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the United States Department of Labor (“DOL”) from implementing and enforcing the Fair Labor Standards Act (“the FLSA”) final overtime rule that would otherwise become effective on December 1, 2016.