A VICTORY AGAINST FORCED ARBITRATION, a/k/a Another Kind of “Black Friday” for Best Buy
A VICTORY AGAINST FORCED ARBITRATION, a/k/a Another Kind of “Black Friday” for Best Buy
December 5, 2017
Sexually harassed at work? Sorry, you can’t take your case to court and have it heard by a jury. Terminated from your job because the Company thought you “too old” to adapt to new technology? Again, too bad. You can’t take your discrimination case to court and present it to a jury for their decision.
Unfortunately, as a result of large corporations forcing “agreements” on their employees requiring their cases to be heard only in arbitration – a secret, private proceeding, heard by a single arbitrator, not a jury of peers – this is becoming the reality for more and more employees here in New Jersey and around the country.
A recent study conducted on behalf of the Employee Rights Advocacy Institute for Law and Policy, found the following:
The ability to access courts is disappearing for workers in America because arbitration clauses have permeated the majority of the leading companies in America. Personal injury claims, wage claims, civil rights claims, sexual assault claims, and other claims involving the workplace and vulnerable workers may never be heard in a public court, with broad procedural protections for employees, because of the use of arbitration clauses. Further, through the use of class waivers, it is impossible for employees to join together in a class or collective action against their more powerful and far better-resourced employers. Access to courts has become increasingly more difficult for workers, and the vast majority of America’s top companies have tried to block workers from entering the courthouse door.
The key findings of this study are as follows:
• 80% of the companies in the Fortune 100, including subsidiaries or related affiliates, have used arbitration agreements in connection with workplace-related disputes since 2010.
• Of the 80 companies with arbitration agreements in the workplace, 39 have used arbitration clauses containing class waivers.
Here at Schall & Barasch, we are happy to report our recent victory upending Best Buy’s attempt to force arbitration down the throats of its employees. In late February, 2016, Best Buy informed all of its employees that as of March 15, 2016, they would be bound to arbitrate all disputes with the Company, including claims of employment discrimination. As many companies do, Best Buy tried to sell the arbitration policy to their employees as a better way to resolve claims than by going to court as part of the Company’s commitment to creating a “welcome, inclusive environment where employees come to work every day to do what they enjoy doing.”
But the Company’s sales pitch came with a “kicker.” As an employee, you had no choice: the Company was considering you bound by the arbitration policy whether you agreed to it or not.
Three weeks after implementing its forced arbitration policy, Best Buy fired our client, Kevin Dugan, one of its store managers, after 16 years of employment. As soon as we filed suit in state court in New Jersey, the Company attempted to get the court to dismiss the case and order Mr. Dugan to arbitration. We argued that, under New Jersey law, an employer cannnot bind its employees to an arbitration policy without getting some indication from them of their agreement to be bound –a choice that Best Buy did not give its employees.
After the trial court agreed with Best Buy and ordered the case to arbitration, we appealed that decision to the Appellate Division of the New Jersey Superior Court, where a two-judge panel found Best Buy’s arbitration policy unenforceable on the ground that the Company had never obtained any agreement from its employees to be covered by the policy.
In rejecting Best Buy’s argument that by “continuing their employment” its employees had indicated their agreement to be bound by the policy, one of the Appellate Division judge’s wrote as follows:
Plaintiff, by remaining employed for three weeks after [the policy’s] effective date did not indicate his assent to the policy; employment for that brief period does not establish an unambiguous waiver of plaintiff’s right to sue. . . . The policy was offered on a take-it-or-leave-it basis. . . . Plaintiff had worked for defendant for almost sixteen years. The choice given by defendant to ‘leave it’ if an employee did not agree with the policy amounted to no choice at all. It is unreasonable to expect an established employee to walk away from a career, without any prospects, when an employer unilaterally presents a new agreement.”
The second judge on the Appellate Division panel likewise found grounds to strike down Best Buy’s arbitration policy, finding that the Company had failed to ever make clear to its employees that by continuing their employment they had “agreed” to be bound by the arbitration policy, and that the Company had instead stated only that it was “considering” their employees to be bound, whether they agreed with the policy or not.
Best Buy, unwilling to live with the decision of the Appellate Division, sought to review of the decision with the New Jersey Supreme Court. On Friday, November 17, 2016 – one week before the actual “Black Friday,” the Supreme Court turned down Best Buy’s request for review. So, Best Buy’s arbitration policy has been found void and unenforceable by the New Jersey courts, and Mr. Dugan, along with all Best Buy employees in the State, is now free to pursue his case in court and have it decided by a jury of his peers.
The full study can be downloaded at http://employeerightsadvocacy.org/publications/widespread-use-of-workplace-arbitration/.
We are pleased to announce that Richard Schall was honored last month in Best Lawyers Magazine as having been recognized as a 2018 “Lawyer of the Year” in the practice area of Employment Law-Individuals in the South Jersey area. Selection is based on peer-review surveys conducted by Best Lawyers. Only three lawyers in the state of New Jersey were so recognized this year in the field of employment law representing individuals.
A cancer patient is suing the New Jersey Motor Vehicle Commission for discrimination. Read the article here: Giordano 7-27-17News Article
This blog has discussed non-compete agreements a few times before, touching on how they can make it unduly difficult for workers seeking out new employment after leaving a job. Non-competes were initially intended to prevent sensitive company and client information from falling into the hands of a competitor when an employee changes companies. However, many employers have been forcing non-compete agreements on low-wage employees who have no knowledge of their employer’s trade secrets, preventing even hoagie shop workers from finding work in other sandwich stores. This exploitative use of non-compete agreements can lead to depressed wages, higher unemployment, and a less competitive labor market.
While these exploitative practices have proliferated, in a positive turn of events, two top political leaders recently launched public campaigns taking aim against them. One of those leaders is New York Attorney General Eric Schneiderman, who, in announcing his actions to limit the use of non-competes, declared that, “workers should be able to get a new job and improve their lives without being afraid of being sued by their current or former employer.” He further promised to introduce legislation about the matter sometime next year. Recognizing that non-compete agreements should be limited only to preventing high-level executives and company insiders from taking trade secrets with them to a rival employer, Schneiderman proposed that employees under a certain wage threshold should be exempt from having to adhere to them. The legislation he intends to introduce would also place a time limit on the restrictions set by non-competes; force employers to pay their potential employees more if they are forced to sign one; and require employers to provide any non-compete agreements to job candidates before making an offer of employment.
Vice President Joe Biden also spoke out against non-competes on behalf of the White House, adding federal pressure on state political authorities all over the country to take action. Biden wrote in his blog post that, “workers can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off.” The White House also expressed its support for Schneiderman’s proposed plans, along with endorsing a ban on non-compete agreements on employees working in the area of public health and safety. The White House also spoke out against non-compete restrictions placed on those who are fired without cause.
Unfortunately, New Jersey’s Attorney General has been woefully silent on this issue, and his inaction on this issue only reinforces the conclusion we have reached over the years that the Office of the New Jersey Attorney General is concerned primarily with protecting the interests of the government, rather than advocating on behalf of the State’s citizens. The fact that New Jersey employers can continue to get away with imposing non-competes on employees without justification is a matter of concern to all of us. If you feel that you are being unfairly restricted by a non-compete agreement, it is important to consult with an experienced New Jersey employment lawyer. For a consultation with Schall & Barasch, we encourage you to fill out our online Questionnaire, which you can find on the home page of this website under “Contact Us Now.”
Written by: Richard M. Schall, Esq.
Schall & Barasch LLC
110 Marter Avenue, Suite 302
Moorestown, NJ 08057
Change is in the air thanks to new Labor Department rules introduced by the Obama Administration. The new rules have significantly expanded the categories of workers who should be paid for working overtime. The threshold for salaried workers who are entitled to time-and-a-half overtime pay if they put in over 40 hours a week has risen from $23,660 to $47,476 or $455 to $913 a week. Those who earn more than this and managers are exempt from this particular rule, but will also be entitled to overtime pay, regardless of annual earnings unless they fall into one of the three exemption groupings – administrative, professional, or executive (supervisors) . Also, employees who are paid by the hour are entitled to be paid overtime no matter what they earn. Another change is that salaried workers earning below the lower threshold will be paid overtime. The new rules will apply from 1 December 2016.
Previously, only 7% of workers qualified for overtime pay. This is a big drop from the 62% who qualified in 1975. With the new rule, an additional 4.2 million workers will be earning overtime pay. According to the Department of Labor, it was time for change considering that the previous cap had not been revised in 12 years despite the considerable rise in the cost of living. Fair wage advocates also say that it will ensure that employers do not take advantage of workers by misclassifying them as managers.
What should you be seeing on your pay slip?
According to labor experts, companies have three options in regard to the new regulations. One is increase salaries to above the $47,476 upper limit in order to exempt them from the rule. The second option is to pay workers time-and-a-half for the extra hours worked per week, and the third is to ensure that workers do not work for more than 40 hours a week and to hire others to pick up the slack.
How do I ensure my boss complies
For young professionals in creative jobs and others where long hours are the rule rather than the exception, claiming overtime may not be straightforward. Some bosses may also be reluctant to comply or may threaten workers with losing their jobs to avoid paying them more.
If you work in New Jersey and you find yourself in this situation, Schall & Barasch LLC are the employee rights advocates to contact to find a proficient and experienced New Jersey employment lawyer. You may also see changes on your pay slip but they may not be as required. Again, a New Jersey employment attorney from Schall & Barasch can advise you on what should be coming your way with the changes. Contact us and let is help you the pay you deserve.
May 2016 White House Report: 30 Million American Workers Now Covered By Non-Compete Agreements
May 21, 2016
Here at Schall & Barasch, we have far too often seen the harsh, and sometimes devastating, effects non-compete agreements can have on New Jersey employees.
A report by issued by the White House, on May 5, 2016, has focused some new attention on the alarming spread of non-compete agreements across the country. Here are some of the highlights from the report:
- Some 18 percent, or 30 million, American workers are currently covered by non- compete agreements. Even more workers, roughly 37 percent, report having worked under a non- compete agreement at some point during their career.
- A study of the issue by a prominent laws firm found a 61 percent rise from 2002 to 2013 in the number of employees getting sued by former companies for breach of non-compete agreements.
- Many workers do not realize when they accept a job that they have signed a non-compete, or they do not understand its implications.
- Many firms ask workers to sign non-competes that are entirely or partly unenforceable, suggesting that firms may be relying on a lack of worker knowledge. For instance, California workers are bound by non-competes at a rate slightly higher than the national average (19 percent) despite the fact that, with limited exceptions, non-competes are not enforced in that state!
- Worker bargaining power is reduced after a non-compete is signed, possibly leading to lower wages. When workers are legally prevented from accepting competitors’ offers, those workers have less leverage in wage negotiations and fewer opportunities to develop their careers outside of their current firm.
- Fourteen percent of workers earning less than $40,000 have signed non-competes, although those workers possess trade secrets at less than half the rate of their higher-earning counterparts. When an employer requires low-wage employees to sign non-competes, it can effectively limit the ability of their workers to bargain for higher pay by making it harder for them to find new jobs.
- At least 37 percent of workers are asked to sign non-compete agreements only after they have already accepted the job offer. In cases where job offers have already been accepted, workers often have less leverage to bargain, in part because they may have already turned down other job offers.
- Many workers report that they do not realize when they accept a job that they have signed a non- compete, or that they do not understand its implications. Workers are often poorly informed about the existence and details of their non-competes, as well the relevant legal implications.
- Very few states have legislation prohibiting the enforcement of non-competes when an employee is fired without cause. [Unfortunately, here in New Jersey, I would note, an employee can be fired even “without cause,” and the courts will still enforce the non-compete agreement.]
- Some states are taking action to curb the spread and abuse by employers of non-compete agreements. For example, in 2008, Idaho passed a law that restricts non-competes to “key employees.” “Key employees” are those who “by reason of the employer’s investment of time, money, trust, exposure to the public, or exposure to technologies, intellectual property, business plans, business processes and methods of operation, customers, vendors or other business relationships during the course of employment, have gained a high level of inside knowledge, influence, credibility, notoriety, fame, reputation or public persona as a representative or spokesperson of the employer, and as a result, have the ability to harm or threaten an employer’s legitimate business interests.”
- New Hampshire passed a law that went into effect in July 2012 that requires employers to provide a copy of any noncompetition agreement to employees before or contemporaneously with any offer of employment. The failure to abide by this notification requirement renders any such agreement void.
I would note that, despite successful efforts in some states to curb the abuse of non-compete agreements, the New Jersey Legislature, particularly with Governor Christie remaining in office, has yet to get any such legislature enacted into law, with the most recent effort being the unsuccessful attempt in 2013 to pass legislation making non-compete agreements unenforceable against employees who have been approved for, and are receiving, New Jersey State unemployment benefits.
As we have urged in our other discussions of New Jersey non-compete agreements on our website, any employee saddled with a non-compete agreement should follow our list of “Do’s and Don’ts.” For more information, or a consultation, please contact us at 856.914.9200 or click on the links on our website to “Contact Us Now,” or “Help Us Understand Your Case.”
If You’ve Been Sexually Harassed At Work, What To Do (And What Not To Do!)
written by Patricia Barasch
It’s hard to listen to the news these days without hearing about sexual harassment in the workplace. Unfortunately, it seems to be a fact of workplace life reaching all types of job sectors and industries and implicating all levels of employees. While employers are legally obligated to maintain policies prohibiting harassment in the workplace, and are further obligated to take prompt and effective remedial action in response to an employee’s complaint of harassment, harassment in the workplace continues to rear its ugly head. In addressing sexual harassment occurring in the workplace, there are important considerations for employees to be aware of which will be discussed below.
These considerations are the result of a 2015 ruling by the New Jersey Supreme Court in regard to hostile work environment sexual harassment cases alleging supervisor harassment brought under the New Jersey Law Against Discrimination. In Aguas v. State of New Jersey (2015), the New Jersey Supreme Court adopted the test previously established by the Supreme Court of the United States in Burlington Industries, Inc. v. Ellerth and Faragher v. City of Boca Raton for imposing liability on employers for a supervisor’s sexual harassment and held that an employer can rely upon the company’s anti-harassment policy as an “affirmative defense” to an employee’s claims of negligence or vicarious liability brought under the LAD. In other words, employers may now potentially avoid all liability for a supervisor’s sexual harassment when the complaining employee suffers no tangible adverse employment action, by asserting that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and “the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.”
In light of New Jersey Supreme Court’s ruling in Aguas, what should you do (and not do) if you find yourself in a situation where you have been subjected to sexual harassment and/or a hostile environment in the workplace? Here are some important considerations to be aware of:
- Document any harassment that occurs;
- Get a copy of your employer’s policy prohibiting discrimination and harassment in the workplace and ascertain the procedure to follow to file a complaint of harassment and make sure you follow it;
- If the employer’s policy is not readily accessible, make a request for it in writing;
- Make your complaint in writing. You may also complain verbally but be sure to also make your complaint in writing and keep a copy of it for your own records;
- Be specific in your complaint about the harassment to which you have been subjected;
- If the employer requests that you participate in an investigation following your complaint, including an interview, you should agree to participate. Do not refuse to participate on the grounds that you provided all the information in your complaint. Under the law, employers have an obligation to conduct a prompt and effective investigation, and your refusal to participate will likely be held against you;
- If there are witnesses to the harassment, be sure to provide the names to your employer. Again, it is best to provide any such information in writing and keep copies of any such information provided. Likewise, if you have documentary evidence of the harassment (e.g., emails you received, or written notes left for you, etc.), provide such information to your employer and keep copies of any information provided. In providing documentary evidence, be sure not to access “confidential” information and/or information to which you do not have access in the performance of your job;
- Following your complaint, keep notes about the employer’s investigation, as well as any retaliatory action following your complaint. If you are subjected to retaliation, make an additional written complaint of retaliation using the employer’s designated policy and procedure to do so;
- Don’t quit your job or resign your position. This is hardly ever a good idea, and if you do quit or resign, you are making it much more difficult to bring any kind of legal action to obtain relief. In addition, if you quit, you are putting your eligibility for benefits under New Jersey’s Unemployment laws in jeopardy;
- If your employer doesn’t take prompt and effective action to address your complaint of harassment and/or remedy the situation, obtain legal advice. You have the right to work in an environment free from sexual harassment, and an employer is obligated by law to take prompt and effective action to both prevent and remedy harassment.
If you believe you have been the victim of workplace sexual harassment and are concerned that your employer hasn’t taken prompt and effective action to address your concerns, feel free to contact the experienced New Jersey workplace sexual harassment lawyers at Schall & Barasch LLC.
EMOTIONAL DISTRESS DAMAGES: HOW MUCH IS TOO MUCH? NEW JERSEY SUPREME COURT HEARS ARGUMENT IN EMPLOYMENT DISCRIMINATION CASE.
written by Richard Schall
On March 15, 2016, I had the pleasure of appearing before the New Jersey Supreme Court on behalf of the National Employment Lawyers Association of New Jersey in the case of Cuevas v. Wentworth Group. The case involved two brothers, Ramon and Jeffrey Cuevas, who alleged that they had been subjected to a hostile work environment on account of their national origin and then were terminated from their employment when they raised complaints about how they were being treated.
The facts of the case were pretty egregious. While at Wentworth, the Cuevas brothers, who both held executive positions, were subjected to repeated taunts and insults on account of their Hispanic origin: being referred to as “busboys,” carrying “switchblades,” and eating only “tacos and burritos.” When the humiliation became too much for Jeffrey Cuevas, he complained to upper management. Four days later, Jeffrey was fired, and shortly after that the Company fired his brother Ramon, who had protested his brother’s termination.
The case was tried before a jury, and, during the trial, each of the brothers testified to the jury about the emotional effects they had experienced as a result of both the harassment and then being fired after complaining about it. Jeffrey Cuevas explained the effect on him to the jury as follows:
Well certainly, immediately after, you know, you fall into depression obviously. You lose your confidence. Your ego is shattered because you, you think you’re a professional. You think that you’re being judged solely on your merits, solely on your performance. And you realize that just wasn’t the case.
So now again, you have to second guess all your current and previous business relationships to say gosh, you know, if it happened there at Wentworth, is it possible that’s going to happen again. So I’m always leery, always almost like watching over my shoulder. I can never really truly be, you know, honest with myself or, or, or [sic] think the person in front of me is honest. That’s a horrible way to live.
I want to trust people. I want to, you know, feel like people are being honest and trustworthy to me. And now I don’t. So I’m tainted, I’m tarnished now because of this.
After hearing all the testimony, and following two days of deliberation, the jury returned verdicts in favor of both brothers, awarding them compensation for their lost income, but also awarding Ramon $800,000 and Jeffrey $600,000 for their emotional distress damages resulting both from the hostile work environment they had been forced to endure while employed and from the effects on them of their terminations. Neither of the plaintiffs had offered any “expert testimony” in support of their emotional distress damages, as neither had consulted with a psychologist or psychiatrist following their terminations.
Wentworth then attempted to get these jury awards for emotional distress damages significantly reduced, arguing to the trial judge, that, under New Jersey law, a judge is permitted to reduce a jury award in the event he or she finds the award “shocking to the judicial conscience” or a “gross miscarriage of justice.” It argued that, without expert testimony, emotional distress damages awards should be limited to very modest, nominal ones.
The trial judge, however, rejected Wentworth’s argument, finding that, while the damage awards may have been “generous,” they were not so extreme as to “shock the judicial conscience.” In support of her decision not to reduce the awards, the judge noted that the Cuevas brothers had been very credible in explaining their emotional distress damages, and that the jury had been very attentive throughout the trial and well-reasoned in the various verdicts it had awarded.
After first appealing to the Appellate Division of the New Jersey Superior Court, and losing there, Wentworth took its case to the New Jersey Supreme Court. At the oral argument, the justices focused on the guidance they should be providing to the trial courts on how to determine if a jury award is “shocking to the judicial conscience.” A number of the justices raised concern about reliance on so-called “comparable cases,” questioning whether it is really possible to fairly compare two cases and two verdicts, where the plaintiffs and their presentations to the juries in those cases will be different; the effects of discrimination on the plaintiffs will be different; the juries will be different; and the counties in which the cases are heard will be different. On behalf of the National Employment Lawyers Association of New Jersey, I stressed that the “judicial conscience” of our courts must reflect the goal announced by the New Jersey Legislature in enacting the Law Against Discrimination: “to eradicate the cancer of discrimination.” If awards of emotional distress damages were limited to only nominal, modest awards, as urged by Wentworth, I argued that discrimination in New Jersey would never be “eradicated.”
We can likely expect a decision in the case from the New Jersey Supreme Court in four to six months.
Are Non-Compete Agreements Fair?
New Jersey Employment Lawyers Share Their Views:
Simply put, we don’t think so. But unfortunately, under the current state of New Jersey employment law, the courts will still enforce these agreements if, in the eyes of the judge asked to review them, they protect some “legitimate business interest” and are reasonable in their geographic scope and the length of time they remain in effect.
When we are called upon to advise employees here in New Jersey as to what to do when confronted with a non-compete agreement, the first thing we do is to closely examine the language of the non-compete. We have found, on more than a few occasions, that the employer has done a poor job of drafting the agreement, and that its sloppy language can provide loophole that will allow an employee the freedom to change jobs.
If poor drafting by the employer doesn’t provide a way out, then the next question is whether the non-compete agreement is really protecting some “legitimate business interest” of the employer, or, is it just being used to stifle competition.
So, what kinds of interests have the courts found worth protecting?
Typically, if you have gained access to an employer’s customer lists and worked closely with those customers (often in some sort of sales position), the courts in New Jersey will enforce a non-compete agreement on the theory that your employer has a legitimate interest in keeping you from moving to a new employer and taking its customers with you.
In the same vein, if you have been given access to your company’s secret formulas, technical data, or other proprietary information, New Jersey courts will often find that a basis to enforce a non-compete agreement.
However, we think there are other ways for a court to protect these “legitimate interests” of your employer without enforcing a non-compete agreement that can keep you unemployed, out of your chosen field of endeavor, and unable to support your family. For example, we generally don’t object to an employer requiring that for a certain period of time, if you accept a job with a competitor, you not have any dealings with the former customers of your prior employer for a limited period of time.
If you would like more information on how to deal with non-compete agreements in New Jersey, we strongly recommend you take a look at our earlier post on this website, entitled, NON-COMPETE AGREEMENTS : EMPLOYEE MISTAKES WHEN LEAVING A JOB.
Or, feel free to contact us directly for a review of your non-compete agreement by filling out the questionnaire by clicking on this link and answering a few questions, HELP US UNDERSTAND YOUR CASE.
* In every year since 2014, the law firm of Schall & Barasch has been included in the Tier 1 list of best law firms in New Jersey practicing in the field of employment law on behalf of individuals. This list is compiled by U.S. News & World Report. A description of the selection methodology can be found at www.bestlawfirms.usnews.com/methodology.aspx.
** The methodology for the Avvo ratings of Richard Schall and Patricia Barasch can be found at www.avvo.com/support/avvo_rating.
*** In every year since 2009, Richard Schall has been chosen to be included on the list of Best Lawyers in New Jersey practicing in the field of labor and employment law. The Best Lawyers list is issued by Best Lawyers International. A description of the selection methodology can be found at www.bestlawyers.com/about/MethodologyBasic.aspx.
**** In every year since 2005, both Patricia Barasch and Richard Schall have been chosen to be included on the list of Super Lawyers in New Jersey practicing in the field of employment law on behalf of plaintiffs. The Super Lawyers list is issued by Thomson Reuters. A description of the selection methodology can be found at www.superlawyers.com/about/selection_process.html.
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