Labor & Employment Archives - Page 63 of 154

Terminating Right to Stock Options Through Severance Agreement in Massachusetts

Parting with any employee comes with a host of dangers and pitfalls for an employer. These liabilities are increased when the exiting employee holds ownership in or options to own the employer’s company. Especially for smaller businesses, restricting its ownership from departing with employees is essential to continuing to operate smoothly and effectively. But in cases where an employee has unexercised stock options in his or her employer’s company, how can the company ensure that shares of its ownership do not walk out the door with a former manager? A well-crafted severance agreement is the answer.

By taking the extra time to craft a comprehensive severance agreement, rather than an off-the-shelf template, a company can extinguish its former executives’ interest in the company. Because a grant of stock options is a part of the employment contract, it is essential that the severance agreement clearly and unambiguously terminate the employment agreement itself. Recently, in the case of MacDonald v. Jenzabar, Inc., 92 Mass App. Ct. 630 (2018), the Appeals Court for the Commonwealth deemed a former manager’s rights to both unexercised stock options and unclaimed preferred shares in his employer’s company to be extinguished by a broad general release by his employer.

Broad Release Term Specifically Terminating Employment Agreement

Among other provisions the general release at issue provided:

“As a material inducement to the Company to enter into this Agreement, you agree to fully, irrevocably and unconditionally release, acquit and forever discharge the Company…from any and all claims, liabilities, obligations, promises, agreements, damages, causes of action, suits, demands, losses, debts, and expenses (including, without limitation, attorneys’ fees and costs) of any nature whatsoever, known or unknown, suspected or unsuspected, arising on or before the date of this Agreement and/or relating to or arising from your employment and your separation from employment with the Company and/or any of the Released Parties, including, without limitation, … any and all claims under the [employment agreement].”

Integration Clause Terminating and Superseding All Previous Agreements

In addition to this general release of claims, the severance agreement contained a merger and integration clause:

“This Agreement constitutes a single, integrated contract expressing the entire agreement between you and the Company and terminates and supersedes all other oral and written agreements or arrangements; provided, however, that you understand and agree that the terms and provisions of the Confidentiality Agreement are specifically incorporated into this Agreement, and you remain bound by them.”

Stock Options Arise Out of Employment Agreement and Are Extinguished with Its Termination

Because the Court found that the plaintiff’s stock options and preferred shares arose from his prior employment, these provisions were found to be unambiguous and conclusive. Of note, the Court specifically observed that in addition to “generally [extinguishing] any and all agreements, of any nature whatsoever….[it] also expressly extinguishes the employment agreement.” Therefore, absent any language to the contrary, this contract provision is sufficient to extinguish the employment agreement and consequently the preferred shares and stock options arising therefrom.

Going forward, an employer seeking to extinguish the unvested stocks and stock options in its departing managers, would be advised to consult with an attorney to craft a broad severance agreement with specific reference to the operative agreements relating to employment. Such consultation will allow the employer to restrain the ownership of its business while also crafting exceptions for contracts executed in the employer’s favor. With the right severance agreement, an employer can make sure that its stock stays in-house while continuing to be protected by previously executed non-competes and confidentiality agreements.

This post was written by Evan K. Buchberger of Raymond Law Group LLC.

Three Takeaways from DOL’s Proposed New Overtime Rule

On Mar. 7, 2019, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM) regarding changes to the “white collar” overtime exemptions under the Fair Labor Standards Act (FLSA).

Here are three key points employers need to know:

1. The salary basis threshold would increase to $679 per week ($35,308 per year).

The DOL set this threshold by using the same methodology from the 2004 revisions, which set the salary level at $455 per week.

In 2004, $455 per week represented the 20th percentile of earnings for full-time salaried workers in the lowest-wage census region and in the retail sector. The new annual salary of $35,308 represents the DOL’s estimate for the 20th percentile standard in January 2020, when it anticipates the rule to become final. The NPRM would also permit employers to count nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more-frequent basis to satisfy up to 10 percent of the standard salary level.

With the prior rule issued under President Barack Obama, the DOL attempted to change the salary basis level from $455 to $913 per week. As we have covered in this blog, the change did not take effect because the United States District Court for the Eastern District of Texas blocked the rule from taking effect. Under President Donald Trump, the DOL ultimately stopped pursuing the rule and dropped its appeal of the Texas court’s ruling.

2. The salary basis threshold for highly compensated employees would also increase from $100,000 to $147,414 per year.

The proposed salary basis threshold represents the 90th percentile of full-time salaried workers nationally, as projected by the DOL for 2020. This was the same methodology used by the DOL for the Obama-era rule.

3. The duties tests for executive, administrative and professional employees remain unchanged.

Assuming an employer has properly classified its exempt employees, the NPRM will not change that classification, unless the employee no longer satisfies the salary basis threshold.

Given how the Obama-era rule met its demise, the NPRM is unlikely to be the final word. Stay tuned for additional developments.

This post was written by Rufino Gaytán of Godfrey & Kahn S.C.

Compliance with the New Proposed DOL Salary Threshold May Create Challenges for Many Employers

As we wrote in this space just last week, the U.S. Department of Labor (“DOL”) has proposed a new salary threshold for most “white collar” exemptions. The new rule would increase the minimum salary to $35,308 per year ($679 per week) – nearly the exact midpoint between the longtime $23,600 salary threshold and the $47,476 threshold that had been proposed by the Obama Administration. The threshold for “highly compensated” employees would also increase — from $100,000 to $147,414 per year.

Should the proposed rule go into effect – and there is every reason to believe it will – it would be effective on January 1, 2020. That gives employers plenty of time to consider their options and make necessary changes.

On first glance, dealing with the increase in the minimum salaries for white-collar exemptions would not appear to create much of a challenge for employers—they must decide whether to increase employees’ salaries or convert them to non-exempt status. Many employers that reviewed the issue and its repercussions back in 2016, when it was expected that the Obama Administration’s rules would go into effect, would likely disagree with the assessment that this is a simple task. The decisions not only impact the affected employees, but they also affect the employers’ budgets and compensation structures, potentially creating unwanted salary compressions or forcing employers to adjust the salaries of other employees.

In addition, converting employees to non-exempt status requires an employer to set new hourly rates for the employees. If that is not done carefully, it could result in employees receiving unanticipated increases in compensation—perhaps huge ones— or unexpected decreases in annual compensation.

The Impact on Compensation Structures

For otherwise exempt employees whose compensation already satisfies the new minimum salaries, nothing would need be done to comply with the new DOL rule. But that does not mean that those employees will not be affected by the new rule. Employers that raise the salaries of other employees to comply with the new thresholds could create operational or morale issues for those whose salaries are not being adjusted. It is not difficult to conceive of situations where complying with the rule by only addressing the compensation of those who fall below the threshold would result in a lower-level employee leapfrogging over a higher-level employee in terms of compensation, or where it results in unwanted salary compression.

Salary shifts could also affect any analysis of whether the new compensation structure adversely affects individuals in protected categories. A female senior manager who is now being paid only several hundred dollars per year more than the lower-level male manager might well raise a concern about gender discrimination if her salary is not also adjusted.

The Impact of Increasing Salaries

For otherwise exempt employees who currently do not earn enough to satisfy the new minimum salary thresholds, employers would have two choices: increase the salary to satisfy the new threshold or convert the employee to non-exempt status. Converting employees to non-exempt status can create challenges in attempting to set their hourly rates (addressed separately below).

If, for example, an otherwise exempt employee currently earns a salary of $35,000 per year, the employer may have an easy decision to give the employee a raise of at least $308 to satisfy the new threshold. But many decisions would not be so simple, particularly once they are viewed outside of a vacuum. What about the employee who is earning $30,000 per year? Should that employee be given a raise of more than $5,000 or should she be converted to non-exempt status? It is not difficult to see how one employer would choose to give an employee a $5,000 raise while another would choose to convert that employee to non-exempt status.

What if the amount of an increase seems small, but it would have a large impact because of the number of employees affected? A salary increase of $5,000 for a single employee to meet the new salary threshold may not have a substantial impact upon many employers. But what if the employer would need to give that $5,000 increase to 500 employees across the country to maintain their exempt status? Suddenly, maintaining the exemption would carry a $2,500,000 price tag. And that is not a one-time cost; it is an annual one that would likely increase as those employees received subsequent raises.

The Impact of Reclassifying an Employee as Non-Exempt

If an employer decides to convert an employee to non-exempt status, it faces a new challenge—setting the employee’s hourly rate. Doing that requires much more thought than punching numbers into a calculator.

If the employer “reverse engineers” an hourly rate by just taking the employee’s salary and assuming the employee works 52 weeks a year and 40 hours each week, it will result in the employee earning the same amount as before so long as she does not work any overtime at all during the year. The employee will earn more than she did previously if she works any overtime at all. And if she works a significant amount of overtime, the reclassification to non-exempt status could result in the employee earning significantly more than she earned before as an exempt employee. If she worked 10 hours of overtime a week, she would effectively receive a 37 percent increase in compensation. And, depending on the hourly rate and the number of overtime hours she actually works, she could end up making more as a non-exempt employee than the $35,308 exemption threshold.

But calculating the employee’s new hourly rate based on an expectation that she will work more overtime than is realistic would result in the employee earning less than she did before. If, for instance, the employer calculated an hourly rate by assuming that the employee would work 10 hours of overtime each week, and if she worked less than that, she would earn less than she did before—perhaps significantly less. That, of course, could lead to a severe morale issue—or to the unwanted departure of a valued employee.

This post was written by Michael S. Kun of Epstein Becker & Green, P.C.

Are New Jersey Uber Drivers Covered By Workers’ Compensation Insurance?

You might ask yourself the above question if you are considering signing up to drive for the transportation service Uber. Uber promises that anyone with a valid driver’s license, personal car insurance, a clean record, and a four-door car can meet the New Jersey requirements to drive for Uber.

The Uber driver makes his or her own hours and is free to pick up or drop off a rider anywhere they chose and the driver can work as much or as little as they choose. Uber requires its drivers to carry the appropriate automobile insurance to cover the driver’s liability to other parties, damage to the vehicle and injury to the driver.

Uber provides commercial auto liability insurance for drivers to protect against injury to others. Uber drivers are paid a percentage of the fares they generate and receive a 1099 form yearly from Uber so that they can declare their earnings and pay their own taxes on the money they earn.

Since Uber does not consider its drivers employees, or provide workers’ compensation coverage in the event an Uber driver is injured, it is important to know what you are giving up by being an Independent Contractor/Uber driver.

Workers’ compensation coverage in New Jersey includes weekly wage replacement paid at 70% of wages, medical care paid 100% by the workers’ compensation carrier, and partial or total permanency benefits paid for a period of time if the injured worker is left with an impairment after all of the medical treatment is provided.

The courts in New Jersey have not decided any workers’ compensation cases for Uber drivers, however, they have decided cases for other employees who drive for other car services. Although the facts of each individual case vary, the case explained below gives an idea of the factors the court considers when deciding if a driver is an independent contractor or an employee.

The courts have outlined a 12-part test to determine if a person is an employee or an independent contractor, for the purpose of whether or not New Jersey workers’ compensation coverage applies. These factors include the employer’s right to control the manner of the work, the extent of supervision needed, who furnishes the equipment, how the person is paid, whether there is paid vacation and sick time, and whether the “employer” pays Social Security taxes, and the intention of the parties.

In a recent court case in New Jersey, the Appellate Division found that a limousine driver for the XYZ Two Way Radio Company was an independent contractor and not an employee when the driver was injured in a serious motor vehicle accident. The court analyzed the above factors and found that XYZ Two Way Radio Company exercised little control over the driver since he could work as many or as few hours as he wanted.

The Court noted that the driver supplied his own equipment, including his own vehicle and auto insurance, and that the company only provided a small car computer that was used to communicate with the office. The driver was paid a percentage of the fares he generated, and was free to reject any pick-up sent to him by the company. The driver was sent a 1099 form every year and no Social Security or wage taxes were paid by the company.

Based on all of these circumstances the Court found that the driver for XYZ Two Way Radio was an independent contractor, and not an employee entitled to workers’ compensation coverage. This was despite the fact that that the driver worked for the company for 23 years, was told what type of car he must drive and what to wear, and worked a fairly regular schedule.

Comparing the above case to the factors relevant to the Uber driver, courts in New Jersey may consider Uber drivers independent contractors and not employees subject to workers’ compensation coverage. Uber is still taking the position that its drivers are Independent contractors, not subject to workers’ compensation in New Jersey.

However, this has not yet been the subject of an Appellate Court decision. If you work for Uber and get injured in an accident while working, your own automobile coverage would provide some medical care, and possibly some weekly wage replacement benefits, but probably not to the level of coverage provided under the workers’ compensation laws in New Jersey.

Your own automobile policy would not provide the permanency benefits provided under the workers’ compensation statute in this state. Probably not a deal breaker for many given the flexibility offered by Uber, but at least Uber drivers should be aware of the workers’ compensation benefits they may be giving up.

This post was written by Marci Hill Jordan of Stark & Stark.

DOL’s Long-Awaited Overtime Proposed Rule Announced

Recent developments on the wage and hour front will soon require employers to reexamine exemption classifications within their workforce.

On March 7, 2019, the U.S. Department of Labor (“DOL”) released its long-awaited proposed amended rule to the overtime provisions of the Fair Labor Standards Act (“FLSA”). If this proposed rule takes effect, the minimum salary threshold required for workers to qualify for the FLSA’s “white collar” exemptions (executive, administrative and professional) will be increased to $35,308 annually (or $679 per week). The current salary threshold under the FLSA’s “white collar” exemptions is $455 per week ($23,660 annually), and has not seen an increase since 2004.

The proposed rule also will increase the salary threshold for the “highly compensated employee” exemption, from the current $100,000 to $147,414 per year. Further, under the proposed rule, employers will be allowed to count certain nondiscretionary bonuses and incentive payments (including commissions) toward up to 10 percent of the new salary threshold.

By way of background, in May 2016, the DOL under President Obama issued a rule intended to increase the salary threshold to $913 per week ($47,476 annually). Other changes to the rule included an increased salary threshold for highly compensated workers from $100,000 to approximately $134,000 and a schedule for automatic increases to the salary threshold.

Days before the rule was set to take effect, a Texas federal district court preliminarily enjoined the rule, and later confirmed its ruling on the basis that the new regulations placed too much emphasis on the salary requirement and would have resulted in the reclassification of substantial groups of employees who otherwise performed duties qualifying for exempt status. At the time, the DOL predicted that its rule would cover about four million workers who were presently non-exempt.

While the DOL’s newly proposed rule is set to take effect in January 2020, it is subject to a 60-day comment period and may face legal challenges from business and worker advocate groups alike. Given that some increase to the salary threshold is imminent, employers should nevertheless remain proactive and audit their exempt worker population. As we have noted in prior publications, employers have a number of options available in addressing this issue. As a first step, employers should identify all positions in their organizations that are classified as exempt but pay less than $35,308, review employees’ job descriptions for compliance under each exemption’s duties test, and determine the number of hours exempt employees are working.

This post was written by Sadina Montani and Monique E. Chase of Vedder Price.

Read more labor and employment news, including updates on the DOL’s Overtime Rule, on our labor and employment page.

Lactation Law Update: New York and Illinois

Recent developments require employers to reevaluate their lactation and nursing policies and practices to ensure that they are in compliance with newly enacted local laws in New York City and Illinois.

Changes to New York City Lactation Laws: Effective March 17, 2019

Since 2007, New York City employers with four or more employees have been required to provide reasonable unpaid break time (or to allow an employee to use paid break/meal time) to express breast milk in the workplace, for up to three years following the birth of a child, and to make reasonable efforts to provide a room, other than a restroom, to express milk in private.

Additional lactation-related obligations for New York City employers with four or more employees go into effect on March 17, 2019. For example, by that date, a covered employer must provide lactating employees with a sanitary “lactation room,” which is not a restroom, and which has, at minimum, an electrical outlet, a chair, a surface on which to place a breast pump and other personal items, and nearby access to running water. The lactation room must be made available to the employee for lactation purposes only when it is needed (and notice to other employees regarding the same is required), and a refrigerator and the room itself must be in “reasonable proximity” to the employee’s work area.

Notably, the required lactation room must be provided unless the employer can establish an “undue hardship,” in which case the employer must engage in a cooperative dialogue with the employee to determine alternative accommodations and issue a final written determination to the employee that identifies any accommodation(s) that were granted or denied.

In addition, by March 17, 2019, a covered employer in New York City must implement a written lactation room accommodation policy, which states that employees have the right to request a lactation room and identifies the process (as outlined in the Administrative Code) by which an employee may request a lactation room. All new employees must receive the lactation room policy upon hire.

Changes to Illinois’s Lactation Law: Effective August 2018

Like many employers in New York, Illinois employers with five or more employees have been required, since 2001, to provide employees with reasonable unpaid break time to express breast milk, in an appropriate room that is not a toilet stall.

Effective August 2018, the Illinois Nursing Mothers in the Workplace Act was amended. Now, Illinois employers with at least five employees must provide “reasonable break time” each time an employee needs to express breast milk, for up to one year following the child’s birth. While the break time “may” run concurrently with any other break time, the employee’s pay cannot be reduced due to the time spent expressing milk or nursing a baby – meaning, in effect, that any additional break time needed to express milk or nurse must be paid. Further, covered employers in Illinois who do not provide the requisite break time must show, if challenged, that providing the breaks is an “undue hardship” – a heightened burden than that previously imposed under the Act.

Employers should act quickly to ensure full compliance with all of the requirements of the new lactation laws.

This post was written by Elizabeth N. Hall and Grace L. Urban

One-Two Punch for NJ Employers: State Enacts Minimum Wage Rate Increases and Expands Paid Family Leave Insurance Benefits

New Jersey’s minimum wage rates will steadily climb to $15 per hour, and both the duration and amount of the state’s paid family leave insurance benefits will significantly increase, under two recently enacted laws.

New Minimum Wage Rates

On February 4, 2019, Governor Murphy signed a bill that substantially increases the state’s minimum wage rate for non-exempt hourly workers.

Prior to the bill’s enactment, the state’s minimum hourly wage, as of January 1, 2019, was $8.85. With a few exceptions for seasonal workers (who work between May 1 and September 30), employees employed by a “small business” with fewer than six employees, and agricultural laborers, the minimum hourly wage will rise to $15.00 by January 1, 2024, in accordance with the following schedule:

7/1/19	$10.00
1/1/20	11.00
1/1/21	12.00
1/1/22	13.00
1/1/23	14.00
1/1/24	15.00

For seasonal workers and employees of small businesses, the minimum hourly wage rate increases will be more gradual and will not reach the $15.00 rate until January 1, 2026, based on the following schedule:

1/1/20	$10.30
1/1/21	11.10
1/1/22	11.90
1/1/23	12.70
1/1/24	13.50
1/1/25	14.30
1/1/26	15.00

It will take an even longer period of time for farm laborers to reach a minimum hourly wage rate of $15, given the following schedule:

1/1/20	$10.30
1/1/22	10.90
1/1/23	11.70
1/1/24	12.50

Any further minimum rate increases for farm laborers would be tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”).

New Jersey now joins three other states – California, New York and Massachusetts – as well as the District of Columbia in committing to minimum hourly wage rates that significantly exceed the current federal minimum hourly wage rate of $7.25.

Business groups in New Jersey have voiced two principal objections to the new minimum rates. First, the numbers threshold for meeting the “small employer” exception is relatively low – employers with six or more employees do not satisfy it. Second, the New Jersey statute, unlike the California and New York laws, makes no provision for suspending scheduled minimum hourly rate increases in the event of deteriorating economic conditions in the state.

Family Leave Enhancements

On February 19, 2019, Governor Murphy signed into law a bill that substantially expands the job-protected family leave requirements applicable to smaller employers under the New Jersey Family Leave Act (“FLA”), as well as expands the monetary benefits available under the paid family leave insurance (“FLI”) and temporary disability insurance (“TDI”) programs for employees employed in New Jersey.

Under the state’s leave and benefit programs (which must be coordinated with applicable federal requirements), an eligible employee may take time off from work and receive family insurance benefits during such leave to, among other things, care for a newborn child or a covered family member who is suffering from a serious health condition.

Effective immediately,

There no longer is a one-week waiting period before FLI benefits may be received.
Covered family members under the new law now include siblings, grandparents, grandchildren, and parents-in-law, as well as others related to the employee by blood or who have a “close association with the employee” which is equivalent to a family relationship (though evidence of same must be provided by the employee).
FLI benefits may also be taken by a covered employee while taking time off from work pursuant to the NJ Security and Financial Empowerment Act (“SAFE Act”), to assist a covered family member who is a victim of domestic or sexual violence.
An employer may not retaliate against an employee with respect to compensation, terms, conditions or privileges of employment because the employee took or requested any TDI or FLI benefits.

Effective June 30, 2019, NJ businesses employing at least 30 employees will be covered by the FLA and may not retaliate against employees returning from family leave by refusing to reinstate them, down from a 50 employee threshold.

Commencing July 1, 2020, the maximum duration of FLI leave benefits will increase from 6 to 12 weeks during any 12-month period; in cases of intermittent leave, the maximum FLI leave will increase from 42 days to 56 days. Further, the dollar amount of weekly FLI benefits will increase from two-thirds of a claimant’s average weekly wage to 85% of an employee’s average weekly wage, capped at $859 per week.

Although FLI benefits are funded entirely by employee contributions, NJ-based businesses have raised concerns that the broader eligibility for FLI leave, and the longer duration of such leaves, will increase business costs due to the need to pay more overtime wages to assure adequate staff coverage, or employ more temporary replacement workers, while eligible employees are out on leave. These increases may also lead to greater work load demands placed on regular employees who must cover while co-workers are out on such leave.

Employer Tips

NJ employers should assure that the wage rates they pay their employees meet the new NJ minimum wage rate thresholds.

Further, NJ employers should review and update their family leave policies to ensure that they comply with the requirements of the new law, which is complicated and substantially amends multiple existing laws.

This post was written by David I. Rosen and Jill Turner Lever of Sills Cummis & Gross P.C.

California Jury Rejects Employee’s Discrimination Claims Against Chipotle

Proving it still is possible to obtain a favorable jury verdict in California (see contrary evidence), a federal jury sided with Chipotle Mexican Grill last Wednesday in a case involving disability discrimination claims by former assistant store manager, Lucia Cortez.

Cortez alleged she suffered a miscarriage at work after years of trying to get pregnant, fell into a depression, and then needed extended medical treatment as a result. In response to her request for leave, her manager gave her 12 weeks of unpaid family medical leave. When Cortez later asked for another month off to “sort out a final doctor’s appointment,” her manager granted her one additional “courtesy week” of leave. Cortez then went behind her manager’s back and got her leave extended by another month by calling the employee benefits center.

Cortez failed to provide any medical documentation when she asked for the additional time off, while at the same time claiming that she might not be medically approved to return to work. When Chipotle informed Cortez that they were about to fill her position, she immediately asked to be put back on the schedule. Her manager refused to put her back on the schedule until she produced a doctor’s note certifying that she was able to return to work.

Cortez never sent Chipotle the required medical documentation and was thereafter fired, but was also told she could reapply for her job without losing any of her tenure or benefits. Instead of simply reapplying once she was able to return to work, Cortez sued Chipotle for discrimination based on an alleged mental disability and failure to accommodate.

Fortunately, the jury sided with Chipotle, finding that Cortez’s leave of absence and her alleged disability were not motivating factors in her termination. The jury found that her failure to return to work was the motivating factor for her discharge and that Chipotle had not failed to reasonably accommodate her alleged disability.

An employer can indeed require an employee to submit documentation from a health care provider, certifying that the employee is able to resume work following a medical leave (Cal. Code Regs. tit. 2 § 11091(b)(2)(E)). This case demonstrates, however, how complicated even a simple leave of absence situation can be in California and how easy it is for disgruntled employees to sue their employer – and to try to get a jury to second-guess the employer. The employer in this case no doubt incurred hundreds of thousands of dollars in costs and attorney’s fees in successfully defending against this action – none of which can be recovered from the employee who justifiably lost the case.

This post was written by Anthony J Oncidi and Cole D. Lewis of Proskauer Rose LLP.

Trend to Watch: State Legislatures Target Restaurants for Mandatory Sexual Harassment Training

In the New Year, two states – New Jersey and Illinois – have proposed legislation requiring restaurants to adopt a sexual harassment training policy and provide anti-sexual harassment training to employees. While it remains to be seen whether these bills will become law, attempts to target and reform working conditions in the hospitality industry are nonetheless noteworthy, particularly given that unlike New York and California, neither New Jersey nor Illinois have enacted broad legislation requiring private sector employers, regardless of occupation, to provide sexual harassment training to staff.

New Jersey Bill (A4831)

New Jersey Bill A4831 requires restaurants that employ 15 or more employees to provide sexual harassment training to new employees within 90 days of employment and every five years thereafter. This training requirement would go into effect within 90 days of the law’s effective date.

As to the content of the training, the bill specifies that supervisors and supervisees receive tailored content relevant to their positions/roles that include topics “specific to the restaurant industry” in an “interactive” format, including practical examples and instruction on filing a sexual harassment complaint. Implicitly recognizing the diverse nature of the hospitality workforce, the bill requires that such training must be offered in English and Spanish.

The bill would also require restaurants to adopt and distribute sexual harassment policies to employees (either as part of an employee handbook or as a standalone policy), though it does not prescribe the contents of such policies.

While the bill cautions that compliance with the act would not “insulate the employer from liability for sexual harassment of any current or former employee,” strict compliance is advisable as the bill creates fines for non-compliance – i.e., up to $500 for the first violation and $1,000 for each subsequent violation.

Illinois Bill 3351

Illinois Bill 3351, the proposed Restaurant Anti-Harassment Act, is broader than the proposed New Jersey legislation in that it applies to all restaurants regardless of the number of employees on staff. Like its New Jersey analogue, this bill requires restaurants to adopt a sexual harassment policy and provide training to all employees.

The sexual harassment policy must contain the following elements:

(1) a prohibition on sexual harassment;

(2) the definition of sexual harassment under Illinois and federal law;

(3) examples of prohibited conduct that would constitute unlawful sexual harassment;

(4) the internal complaint process of the employer available to the employee;

(5) the legal remedies and complaint process through the Illinois Department of Human Rights;

(6) a prohibition on retaliation for reporting sexual harassment allegations; and

(7) a requirement that all employees participate in sexual harassment training.

Like New Jersey’s bill, the Illinois bill requires separate training for employees and for supervisors/managers, and delineates the topics to be covered in each training. Specifically, the employee training must include: (i) the definition of sexual harassment and its various forms; (ii) an explanation of the harmful impact sexual harassment can have on victims, businesses, and those who harass; (iii) how to recognize conduct that is appropriate, and that is not appropriate, for work; (iv) when and how to report sexual harassment. The supervisor training must include the aforementioned topics in addition to: (i) an explanation of employer and manager liability for reporting and addressing sexual harassment, (ii) instruction on how to create a harassment-free culture in the workplace, and an (iii) explanation of how to investigate sexual harassment claims in the workplace. In addition to these requirements, the training programs must be offered in English and Spanish, be specific to the restaurant or hospitality industry and include restaurant or hospitality related activities, images, or videos, and be “created and guided by an instructional design model and processes that follow generally accepted practices of the training and education industry.”

If enacted, employees would need to receive training within 90 days after the effective date of the act or within 30 days of employment and every 2 years thereafter.

Like New Jersey, the Illinois bill contemplates a $500 fine for the first violation and a $1,000 fine for each subsequent violation.

Recommendation

Restaurants should carefully track the progress of these bills and be on the lookout for similar legislative efforts in other states. Given that a number of states, including New York and California, already require all private employers (of a particular size) to provide sexual harassment training, restaurants operating in Illinois and New Jersey may want to move towards implementing a sexual harassment policy and training program sooner than later.

This post was written by Jeffrey H. Ruzal and Carly Baratt of Epstein Becker & Green, P.C.

New Jersey Announces Minimum Wage Increase

Governor Murphy, Senate President Sweeney and Assembly Speaker Coughlin have just announced their plan to increase New Jersey’s minimum wage to $15 per hour. Currently, minimum wage in New Jersey is $8.85 per hour.

Under the proposed plan, minimum wage would increase to $10/hour on July 1, 2019. Minimum wage would then increase by a dollar per year as follows:

1/1/2020 – $11
1/1/2021 – $12
1/1/2022 – $13
1/1/2023 – $14
1/1/2024 – $15

Note that this increase will be delayed for some workers. Seasonal workers and employees at businesses with five or few workers won’t be eligible for the $15 minimum wage until 1/1/26. Agricultural workers will also be subject to different rules. More details on the plan will certainly follow in the coming weeks.

This post was written by Jay S. Becker Jeri L. Abrams and Ari G. Burd of Giordano, Halleran & Ciesla, P.C.

Read more news on minimum wage increases on the National Law Review’s Employment Law Page.