Staying Abreast Of Employment Law In New Jersey

Monday, July 5, 2010 - 00:00

Editor: Proskauer celebrated the 11th anniversary of the opening of its New Jersey office, of which you were one of the early members. How has your practice evolved over the decade?

Sandak : The original group of seven lawyers who started Proskauer's Newark office were traditional labor and employment litigation lawyers. The firm's concept was ultimately to create a full-service employment practice with skilled and experienced lawyers in every discipline within employment law - a model which to my knowledge is unique among New Jersey firms. Over the succeeding decade, we have grown to nearly 40 lawyers, adding benefits lawyers, ERISAlitigators and immigration lawyers. We have lawyers who focus on counseling, training and investigations, and a group that handles non-compete and trade secret cases. So, the concept of providing full-service one-stop shopping on labor and employment issues for businesses has been realized, and our clients seem attracted to the concept.

Editor: At the end of March, the New Jersey Supreme Court issued a ruling concerning the extent to which employers can monitor and restrict their employees' personal use of company computers. Since Proskauer submitted a "friend of the court" brief in that case, please tell us why this decision is important.

Sandak: The decision, Stengart v. Loving Care Agency, is one of only a handful of cases in the U.S. which addresses whether employees have a reasonable expectation of privacy in e-mails they send from their employers' computers. Stengart had sent an e-mail to her lawyer, a privileged communication, using the personal password-protected, Web-based e-mail account which she accessed through her employer's computer. The company's policy stated that e-mails sent or received on its computers were not private and could be reviewed by the company, but it also permitted occasional personal use of its computers. The court found that the company's policy was ambiguous, giving Stengart a reasonable expectation of privacy in her e-mails; but it also emphasized that even an unambiguous policy would not give the company the right to review attorney-client communications.

Editor: While seeking to abet a revived economy, there is a counter effort to more strictly construe the rule as to who is an independent contractor, denying many employers the use of part-time or work-from-home independent contractors who can supplement their regular workforce and reduce labor costs. How much traction do you see this effort having?

Sandak: There is no doubt that the use of independent contractors has come under intense scrutiny over the past few years. There have been multi-million-dollar settlements and verdicts in favor of classes of independent contractors for failure to pay them employee benefits. Here in New Jersey, the Conscientious Employee Protection Act has been held applicable to independent contractors even though its coverage is limited by its express terms to employees. Now before Congress is the Employee Misclassification Prevention Act, which would require all employers to notify workers of their status as either employees or independent contractors, and would give workers the right to challenge that classification. Employers would face substantial penalties for their failure to do so. The U.S. Department of Labor has spent millions to hire new wage and hour investigators to target suspected misclassifications. These initiatives have all undoubtedly undermined the desirability of utilizing independent contractors to supplement the workforces of many companies.

Editor: If historically you have been representing a corporation and an employment matter arises, do you also simultaneously represent the individual supervisor who is involved in the matter?

Sandak: The situation you describe arises frequently in employment matters, but it is not one that is easily resolved. There are both practical and ethical considerations that must be thoroughly considered. In the context of employment litigation, we cannot allow our service to one client to compromise or subordinate the position of another. In the majority of situations in which a supervisor and a corporation are named as defendants the interest of the corporation and the individual are united. To generalize, both will often say the allegations are simply not true. If it doesn't appear that our representation of the corporate client will compromise our advocacy on behalf of the equally important individual representation, we'll usually represent both. We will, however, make both parties aware of the potential for a conflict of interest. If, on the other hand, it appears that our representation of the corporate client will likely present a conflict, we are obligated to decline representation of the individual and suggest he or she seek separate counsel.

Editor: Why does New Jersey seem to generate so much whistleblower litigation?

Sandak: The simple answer is that New Jersey's whistleblower statute is the broadest of any state in the country. Many states limit whistleblower protections to health and safety issues. In New Jersey, an employee can become a protected whistleblower by complaining about an employer's violation of any law - or even employer actions that do not violate any law, but which are allegedly contrary to public policy. Furthermore, the employee doesn't have to be right. If the employee reasonably believes there has been a violation of law and complains about it, even if he or she is wrong, the courts of New Jersey hold the employee to be protected anyway. Given the breadth of the law, it is not at all surprising that New Jersey has become a hotbed of whistleblower litigation.

Editor: What can employers do to protect themselves from whistleblower claims?

Sandak: Employers would be well served to have a comprehensive policy in place, establishing a mechanism for employees to raise concerns as well as a procedure to have those concerns promptly investigated. Whistleblowers, even those who are misguided, are less likely to bring lawsuits if they are made to feel that they have a voice and are taken seriously. It is in the employer's interest that legitimate concerns be brought to light and addressed promptly. There should also be a written policy assuring employees that they will not be subject to retaliation for bringing forward a complaint or concern.

Editor: Is there an overlap between immigration law and employment law?

Sandak: A very significant number of companies must handle employment matters for their workforces which increasingly include not just U.S. citizens but also resident aliens, refugees and immigrants. All companies must verify the identities of new hires to confirm the employment authorization for each of them and maintain appropriate records, which are subject to audit by the U.S. Departments of Labor and Homeland Security. Furthermore, the process of having foreign nationals working lawfully for U.S. employers has become increasingly complex and challenging - precisely why our immigration practice group is such an integral part of our employment practice.

Editor: In the wake of Arizona's controversial new immigration law, is there any similar legislation pending in New Jersey?

Sandak: This May a bill was introduced in the New Jersey Senate barring employment of unauthorized workers and requiring all employers in the state to use the federal government's E-verify employment eligibility and verification system. The bill would require the New Jersey Department of Labor to develop and implement a program to randomly audit employers for compliance with the new law. The bill has been referred to the Senate Labor Committee and a similar bill was introduced in the State Assembly and referred to its Labor Committee. Previous similar legislative efforts have not gone very far, but we have recently seen similar legislation gain momentum in other states, so it remains to be seen whether this will pass or not.

Editor: The Lilly Ledbetter Fair Pay Act was a highly publicized event for the President. Is there any litigation currently in the pipeline because of the Ledbetter Act?

Sandak: You won't be surprised to hear that there has been quite a bit of post-Ledbetter Act activity. Thus far, courts have resisted efforts to expand the effect of the Act beyond its intended purpose, which was to revive otherwise untimely claims concerning discriminatory compensation decisions. Consequently, courts have rejected attempts to revive untimely claims under statutes that were not expressly amended by the Act and do not involve equal pay claims. On the other hand some courts have allowed plaintiffs to proceed under discriminatory promotion and denial of tenure claims that would otherwise have been untimely where they are found to be closely intertwined with claims about the lingering effects of these decisions on the plaintiff's pay.

Editor: Has the Ledbetter Act had an impact on personnel policies?

Sandak: It certainly has. The Ledbetter Act allows pay decisions made many years ago to be the subject of discrimination lawsuits today. Employers should review and reevaluate their policies concerning records retention, including payroll records and any records relating to compensation decisions, such as documents justifying particular starting salaries or explaining merit pay increases. Of course, decisions about how long to retain these documents must weigh the costs and logistics of retention against the risks of being without documents should the employer need to defend against a pay discrimination lawsuit. We also encourage employers to conduct regular compensation audits, which allow employers to discover and take action to correct pay disparities that do not appear to be based on legitimate business considerations or employee performance. One note of caution! If an employer does choose to do an audit, it should commit to taking appropriate remedial action if disparities are found to exist. You can imagine how damaging it would be in a discrimination lawsuit if it were revealed that an employer simply ignored evidence of pay disparities, which it discovered in an audit.

Editor: What is the significance of a trend for employees to move among competitors in terms of trade secrets? Discuss this issue and whether you see it as an emerging problem.

Sandak: My partner, John Barry, co-heads Proskauer's non-compete and trade secrets group from our Newark office. He litigates non-compete cases and counsels companies across the United States and globally on the meaning and enforceability of various types of restrictive covenants. Given the economic slowdown, it seems that companies are becoming more aggressive in initiating actions to enforce non-competes. At the same time, since the economic climate makes it much more difficult to find a job, courts in New Jersey and courts across the country are more reluctant than ever to enforce non-compete agreements which could prevent an individual from earning a living. So more and more companies are seeking advice and counsel on drafting enforceable non-compete agreements. This is an area of practice in which experience really makes a huge difference. John's non-compete group is always right there on the cutting edge of this dynamic area of practice.

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