In a case with monumental implications for the temporary staffing industry in the State of New Jersey, a group of industry trade associations and advocacy groups representing New Jersey temporary staffing agencies have sued the State over its recently enacted Temporary Laborers’ Bill of Rights.

In their twenty-five page complaint filed in New Jersey federal court on May 5, 2023, the New Jersey Staffing Alliance, New Jersey Business and Industry Association, and American Staffing Association seek to have the highly controversial law declared unconstitutional and to prevent the State and its agencies from implementing or enforcing it.

The bill, which was signed into law by New Jersey Governor Phil Murphy on February 6, 2023, as previously described here, provides robust protections to temporary workers in the State while heavily burdensome obligations and requirements that challengers content are “egregious” and in numerous respects “vague and indecipherable.” With most of the bill’s substantive requirements set to go into effect on August 5, 2023 (and some provisions having already become effective as of May 7, 2023), many temporary staffing firms and the third-party clients they service alike have been scrambling to register with the New Jersey Department of Labor and Workforce Development (as required under the law), negotiate new contractual arrangements and servicing agreements with third-party clients, and timely and effectively implement the assortment of changes required to come into compliance. Temporary staffing firms and other impacted businesses cannot afford to take the possibility of enforcement under the new law lightly, as the statute has sharp teeth. The rights and protections afforded to temporary workers under the bill are accompanied by an arsenal of remedies, and violators run the risk of steep penalties.

The pending federal action challenging the bill echoes the sentiment felt by the temporary staffing agencies in the State that it most directly impacts. The lawsuit contends the new law is unconstitutionally vague and, “if allowed to be implemented and enforced, will lead to insurmountable problems, resulting in paralysis within the temporary staffing industry.” In their complaint, plaintiffs claim “[t]he meaning of this Legislation has proven difficult, if not impossible, to discern and, as members have indicated, would be extraordinarily burdensome, if not impossible to implement.” They point to “significant and oppressive” record keeping requirements, record producing requirements, pay requirements (particularly including, but not limited to, the requirement that temporary staffing employees be paid the same average pay and benefits or monetary equivalent of similar situated employees of the third-party clients), and placement fee limitations “that will force financial and administrative unconstitutional burdens on every staffing agency in New Jersey.”

A hearing has been set for June 13, 2023, before U.S. District Judge Christine P. O’Hearn, on the plaintiffs’ request for a temporary restraining order and preliminary injunction against implementation and enforcement of the law. If the plaintiffs’ request is granted, it will prevent the law from going into effect, at least temporarily, with the ultimate goal being a permanent injunction and judgment declaring the bill unconstitutional.

The district court’s ruling will have significant implications for New Jersey staffing agencies and employers that utilize or place temporary workers. Unless and until the court enters an order preventing the State from moving forward with its implementation and enforcement of the law, however, temporary staffing firms and businesses utilizing temporary workers in the State should continue to take the necessary and appropriate states to develop and implement a plan to ensure they are in compliance or will be able to come into compliance by August 5, 2023, when most of changes under the new law are set to go into effect. Temporary staffing firms can ill-afford to wait for a decision from the federal court before taking those steps, as registration and certification alone can be a lengthy process, and the other newly imposed requirements are tedious, demanding, and logistically complex.

We will be keeping a close eye on this case and continue to keep you posted on any new developments. In the meantime, if you own or operate a temporary staffing firm that places workers in New Jersey, or you have a business that utilizes such labor, and you have questions regarding your obligations or need help navigating the new law, the Labor and Employment attorneys at Stark & Stark are here to help. Contact us by phone at 609-895-7278 or via email at crand@stark-stark.com.

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The U.S. Department of Labor (DOL) recently updated the required federal worksite posters that all covered employers must display under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA), and more changes are on the horizon. Here’s what employers, business owners, and HR managers need to know about the newly-updated forms and what needs to be done to ensure compliance:

FLSA Poster Update

Earlier this month, the DOL released a new “Employee Rights Under the Fair Labor Standards Act” poster to reflect recent changes to the law made under the Provide Urgent Maternal Protections for Nursing Mothers Act (the “PUMP Act”) which was passed last year.

Previously, the right of nursing mothers to express breastmilk only applied to non-exempt workers, i.e., employees subject to the FLSA overtime requirement. That reference has been removed from the updated FLSA poster, as the PUMP Act expanded the right to mandated pumping breaks to both exempt and nonexempt employees. The section regarding nursing mothers’ rights to pump at work is now called “Pump at Work.” Additionally, the new poster notes that certain narrow exemptions apply to the pump-at-work requirements. The “Pump at Work” section of the poster now states:

The FLSA requires employers to provide reasonable break time for a nursing employee to express breast milk for their nursing child for one year after the child’s birth each time the employee needs to express breast milk. Employers must provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by the employee to express breast milk.

A copy of the updated poster is available here and is provided by the DOL for employers to use to satisfy FLSA general notice and posting requirements.

Every employer of employees subject to the FLSA’s minimum wage provisions is required to display the DOL’s FLSA poster in a conspicuous and prominent place in all of their establishments, and the poster must be large enough for employees to be able to read it.

Critically, the DOL has stated that the updated FLSA poster is mandatory – all employers subject to the FLSA (which is virtually every business or enterprise that has any employees, with a few limited exceptions) are required to display the recently revised version. Prior versions of the FLSA poster are no longer compliant and will not fulfill employers’ posting requirements, so it is important that they be replaced and that the new version be posted.

FMLA Poster Update

The DOL also recently released a newly-updated model Family and Medical Leave Act (FMLA) Poster titled, “Your Employee Rights Under the Family and Medical Leave Act” in April 2023. A copy of the updated poster is available here and is provided by the DOL for employers to use to satisfy FMLA general notice and posting requirements, summarized below.

The new model FMLA Poster provided by the DOL provides a brief description of FMLA leave generally, and summarizes the major provisions of the law, including employee eligibility requirements, leave entitlements, benefits and protections, leave request information and procedures, employer obligations and responsibilities under the law, and where employees can find additional information and how to file a complaint for alleged violations. With the exception of a few minor changes and formatting changes, the updated poster by and large contains the same substantive information as the two prior versions the DOL previously published in April 2016 and February 2013. According to the DOL, FMLA-covered employers may start using the updated model FMLA Poster or may continue to use either the April 2016 or February 2013 versions of the poster to fulfill their posting requirements. In other words, employers currently using the April 2016 or February 2013 version of the model poster do not have to immediately replace it with the DOL’s updated model. As a best practice, however, employers should consider replacing prior versions with the new one and posting the April 2023 poster as soon as practicable, especially given the updated model’s more reader-friendly format and layout.

All FMLA-covered employers—i.e., generally, most private employers with fifty (50) or more employees^[1] as well as government agencies—are required to display the DOL’s FMLA Poster (or acceptable substitute^[2]) in a conspicuous and prominent place where employees and applicants can see it in plain view, and must do so at all of the employer’s facilities and locations, regardless of whether any employee works there and even if some or all of the employees are not eligible for FMLA leave. If a significant portion of its workforce is not literate or proficient in English, the employer must provide the general notice of employee rights under the FMLA in the language the employees speak. Currently, the new DOL FMLA Poster is only available online in English; a Spanish version of April 2016 version of the FMLA poster, however, is available on the DOL’s website and may be downloaded here.

In addition to displaying the FMLA Poster, if a covered employer has any FMLA-eligible employees, it must also provide each employee with a general notice about the FMLA by including it in an employee handbook or other written guidance materials explaining employee leave and benefits. If no such handbook or written leave materials exist (though they should), the employer may distribute a copy of the general notice to each new employee upon hire. This general notice requirement can be met by either duplicating the general notice language found on the DOL’s FMLA Poster or by using another format so long as the information provided includes, at a minimum, all the information contained in the DOL’s FMLA Poster. The general notice may be distributed electronically provided all the requirements are met.

Compliance with these posting and notice requirements is mandatory, and businesses that willfully fail or refuse to comply may be assessed a civil money penalty of up to $100 per violation for each separate offense.

More Changes Coming Soon

In addition to the recent updates by the DOL, another federal labor law poster update likely is forthcoming in the near future from the U.S. Equal Employment Opportunity Commission (EEOC) as well. While the EEOC released a new “Know Your Rights: Workplace Discrimination is Illegal” poster this past fall, the agency is expected to release a new notice in June 2023 to add additional information under the recently passed Pregnant Workers Fairness Act, which goes into effect June 27, 2023.

For covered employers that purchase their federal labor law posters from a third-party vendor, you may want to hold off on purchasing a new all-in-one poster until after the EEOC releases its updated poster next month. In the meantime, however, you still should print and post the free version of the FLSA (and FMLA) updated posters, discussed above, from the DOL’s webpage to ensure compliance until a new all-in-one poster is made available and properly displayed.

The Labor & Employment Attorneys at Stark & Stark Are Here to Help!

Employers with employee handbooks that include the DOL’s model posters should also consider updating their handbooks with the new models, and should be on the lookout for the new EEOC poster next month. All employers are encouraged to re-familiar themselves with both applicable state and federal labor and employment legal requirements to ensure compliance now and going forward. The attorneys in Stark & Stark’s Labor and Employment Group are available to help should you have any questions about these recent or any future changes, or if you have any other questions regarding your obligations to your workforce. We are here to help your Company develop notices, satisfy your legal requirements, and navigate any personnel or HR issues you may have. Contact us by phone at 609-895-7278 or via email at crand@stark-stark.com.

[1] The definition of “covered employer” under the FMLA is a bit more nuanced than a simple isolated headcount of an employer’s workforce at any given point in time. Rather, a private sector employer is covered by the FMLA if it employees fifty (50) or more employees for each working day during each of twenty (20) or more calendar workweeks in the current or preceding calendar year. See 29 U.S.C. § 2611(4)(A)(i); 29 C.F.R. § 825.104 (defining “covered employer”). An employee is considered to be employed each working day of the calendar week if the employee works any part of the week, and the workweeks do not have to be consecutive.

[2] The DOL’s FMLA Poster is specifically designed to fulfill the employer’s posting requirements, but employers are not required to use the DOL’s model poster. Employers may create their own poster or use another format, so long it includes, at a minimum, all of the information contained in the DOL’s FMLA Poster, is viewable by current employees and applicants for employment, and otherwise meets all other posting requirements.

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In a case with potentially significant and wide-ranging implications for federal whistleblower retaliation protections, the United States Supreme Court has agreed to review a Second Circuit Court of Appeals ruling regarding the evidentiary burden of corporate whistleblowers under the anti-retaliation provisions of the Sarbanes-Oxley Act of 2002 (SOX), 18 U.S.C. § 1514A. The Court will examine a subtle but critical issue – whether a whistleblower who sues his or her employer for retaliation under SOX bears the burden of proving his or her employer acted with “retaliatory intent,” or whether it is the employer that must show it did not intend to retaliate against the employee.

The Court’s review comes on the heels of the Second Circuit’s 2022 decision in Murray v. UBS Securities, LLC, which held that to prevail on a whistleblower retaliation claim under SOX, an employee must prove by a preponderance of the evidence that the employer took the adverse employment action (e.g., termination of employment) against the whistleblower-employee with retaliatory intent—i.e., an intent to “discriminate against an employee . . . because of” lawful whistleblowing activity. In so ruling, the Second Circuit created a circuit split the Fifth and Ninth Circuits, which previously held that retaliatory intent was not an element of a whistleblower-plaintiff’s claim under SOX. The Supreme Court now will consider the issue and resolve the split of authority amongst the federal circuit courts of appeals.

BACKGROUND

The Sarbanes-Oxley Act protects employees of publicly traded companies who disclose or report certain forms of financial wrongdoing, including but not limited to information they reasonably believe shows a violation of federal securities laws, SEC rules, or other provisions of federal law relating to fraud against the shareholders. Protected whistleblower activity under the law may include reports to federal regulatory and law enforcement agencies, Congress, an employee’s supervisor, and internal corporate investigators. The law also protects employees who participate or testify in SEC regulatory proceedings or other federal proceedings related to fraud against shareholders. Covered employers are prohibited from discharging, disciplining, or otherwise discriminating or retaliating in any manner against an employee who engages in protected whistleblower activity under the statute. Under SOX, an employee may file suit against an employer for taking retaliatory action against the employee in reprisal for exercising his or her rights, and where a violation is established, the employee may obtain a variety of damages and other remedies.

The case now before the Supreme Court involved one such whistleblower, plaintiff Trevor Murray, who sued his former employer, UBS Securities, LLC, an SEC registered broker-dealer, and its parent company, UBS AG (collectively, “UBS”), alleging they wrongfully terminated his employment in retaliation for engaging in protected whistleblowing activities. Plaintiff was employed by UBS as a strategist in the company’s commercial mortgage-backed securities group. Murray performed research and created reports that were distributed to UBS clients and potential clients about commercial mortgage-backed securities products, services, and transactions. In that role, Murray was required by SEC regulations to certify that his reports were produced independently and accurately reflected his own views. Murray claimed that he was targeted, and ultimately terminated from his employment, in retaliation for blowing the whistle to his supervisors about illegal efforts by leaders of UBS’s trading desk to improperly pressure him to skew his research and to publish reports to support their business strategies—which Murray refused to do.

Ultimately, after being terminated, Murray brought suit alleging various claims under federal law, including violation of the anti-retaliation whistleblower protection provision of SOX. Murray prevailed at trial, with the jury finding UBS liable and returning a verdict in excess of $903,000 for back pay and non-economic damages. The district court adopted the jury’s verdict on damages and also entered judgment awarding Murray more than $1.7 million in attorney’s fees and costs.

UBS appealed, and the Second Circuit vacated the $2.67 million award and ordered a new trial. On appeal, the Second Circuit held that the district court had erred by failing to instruct the jury that retaliatory intent was an element of the plaintiff’s SOX whistleblower retaliation claim. In other words, the district court did not instruct the jury that a SOX anti-retaliation claim required a showing of the employer’s retaliatory intent by the plaintiff as part of its case-in-chief, and, therefore, a new trial was required. As noted above, in so doing, the Second Circuit created a split amongst federal appellate courts which previously had held this was not an element of the plaintiff’s claim, but rather lack of retaliatory intent was an affirmative defense to be asserted and proved by the employer.

Murray petitioned the Supreme Court for review, which was granted. The Court will hear the case in its 2023-2024 term, which begins in October.

IMPLICATIONS

As with any Supreme Court case, the Court’s ruling will have significant implications for future whistleblower retaliation claims under SOX and possibly many other anti-retaliation and employee protection statutes—including the twenty-plus other whistleblower-protection statutes that use a similar burden-shifting paradigm.

Further, if the Second Circuit’s decision is affirmed, the bar for plaintiffs to plead, prove, and recover on a whistleblower retaliation claim under SOX will be raised significantly. The onus would be on the plaintiff to produce evidence of the employer’s subjective intent to retaliate in the first instance as part of the plaintiff’s case-in-chief, which, as in most employment discrimination and retaliation cases, is no small burden to clear. The clear difficulty in proving motive could curtail these kind of whistleblower retaliation lawsuits going forward. On the other hand, if the Supreme Court reverses the Second Circuit’s ruling, we may witness an increase in not only the number claims of violations of SOX’s anti-retaliation provision, but also the settlement value of those cases. Either way, the Court’s opinion will have significant implications for employers and employees alike.

We will continue to keep you posted on any new developments.

In the meantime, if you are an employer with questions regarding your obligations to your workforce or need help navigating any personnel issues, or if you are an employee who believes you have been wrongfully discharged or retaliated against for engaging in protected whistleblowing activity or otherwise exercising your rights, the Labor and Employment attorneys at Stark & Stark are ready to help. Contact us by phone at 609-895-7278 or via email at crand@stark-stark.com

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