Tag Archives: employment law

NJ Supreme Court Restricts Employer’s Ability To Review Employee’s Communications With Personal Attorney on Employer’s Computers

While many employers worry that some court decisions will add “insult to injury,” New Jersey employers must now be aware of Stengart v. Loving Care Agency Inc., — A.2d –, — N.J. — (2010), decided March 30, 2010, which presages adding “injury to injury.” That is because it first injures employers’ interests by stating that an employer cannot write an enforceable policy that “ban[s] all personal computer use and provide[s] unambiguous notice that an employer could retrieve and read” all emails that an employee wrote through a personal email account using an employer’s computer. Slip op. at 28. InStengart, this meant that an employee’s communications with personal counsel concerning matters adverse to the company may occur during work time using the employer’s resources. And if that were not injury enough to the employer’s interests in having employees actually work on company business while at the office using the company’s resources, the Stengart Court then went on to add another possible injury—on remand, the trial court should consider disqualifying the company’s counsel for not immediately upon finding such communications on the employer’s computer returning to the departed employee (or her counsel) all copies of such communications. The Stengartdecision demands that employers, especially in New Jersey, not only revisit their written policies, but also that they consider how such policies are actually being applied and enforced. Decisions like Stengart can also directly impact on steps that have become part of best practices responses in trade secret and restrictive covenant cases involving departing employees, and which occur in all manner of employment situations.

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New York State Emergency Regulations Modify NY Employers’ WARN Responsibilities

With very little fanfare, the New York State Department of Labor (the “Department”) recently filed a Notice of Emergency Adoption and Proposed Rule Making (the “Emergency Regulations”) that significantly amends the existing regulations to the New York State Worker Adjustment and Retraining Notification Act (the “NYS WARN Act” or the “Act”). The Emergency Regulations became effective on February 12, 2010. For additional information about the Emergency Regulations, visit the Department’s Web site at http://www.labor.ny.gov/workforcenypartners/warn/warnportal.shtm.

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The Federal HIRE Act: It Can Pay To Hire The Unemployed

On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment Act (the “HIRE Act”) PL111-147—a possible precursor to other legislation in the pipeline to decrease unemployment.

In brief, under the HIRE Act, an employer that hires a new “qualified employee” will be able to save on certain payroll taxes for each such new hire who:

1. Begins employment after February 3, 2010, and before January 1, 2011;

2. Certifies, by a signed affidavit, that he or she has not been employed for more than 40 hours during the 60-day period prior to the beginning of employment; and

3. Is not hired to replace another employee (unless that former employee voluntarily quit or was fired for cause).

If an employer (other than a governmental employer) hires a qualified employee who commences employment on or after February 4, 2010, and not later than December 31, 2010, the employer need not pay the employer’s portion of the FICA (Social Security) tax (6.2 percent of the first $106,800 of earnings per year) during the employment period from April 1, 2010, to January 1, 2011. From the period of February 4, 2010, through March 31, 2010, an employer must continue to pay its portion of the FICA tax on wages paid to a qualified employee. Such payments, however, will be credited against the employer’s portion of the FICA tax due in the second quarter relating to all of its employees.

It is also important to note that employers will still need to withhold the employee’s portion of the FICA tax. Further, the employer and employee share of Medicare taxes will still be due on all wages paid to qualified employees.

In addition, if the qualified employee is retained for at least 52 consecutive weeks, the employer may be entitled to an additional tax credit of the lesser of $1,000 or 6.2 percent of the wages paid to the individual during the 52-week period. But to qualify for this credit, the employee’s wages for the last 26 weeks must equal at least 80 percent of his/her wages during the first 26 weeks of the 52-week period. This tax credit would be taken on the employer’s 2011 tax return.

What the HIRE Act Means to Employers

The HIRE Act is intended to encourage employers to hire the unemployed, and the savings can be significant. An employer who hires a qualified new hire can save thousands of dollars in taxes. Assume that a qualified employee is hired effective April 1, 2010, at a salary of $60,000 per annum. Between April 1, 2010, and January 1, 2011, the employee’s earnings will be $45,000 and the employer will save 6.2 percent of $45,000 in FICA contributions (or $2,790). In addition, if the employee remains steadily employed with the employer after April 1, 2011 (a full year), the employer will be entitled to an additional $1,000 credit against payroll taxes.

What Should Employers Do Now?

1. Ascertain whether any new hire who starts work on or after February 4, 2010, had been out of work more than 60 days prior to employment and/or was not employed for more than 40 hours during that period;

2. Have the employee sign an affidavit to that effect;

3. Confirm that the new employee did not replace an employee who was terminated “without cause” or otherwise involuntarily left his or her position; and

4. Alert your Payroll Department or payroll service to take the following actions with respect to qualified new hires:

a) do not to pay the employer-paid portion of FICA with respect to each such new hire for the period April 1, 2010, through December 31, 2010; and
b) take a credit for the employer-paid portion of FICA paid for the period February 4, 2010, through March 31, 2010, in the second quarter of 2010.

We fully expect that there will be future guidance that interprets the HIRE Act, but employers should begin to document their qualification for these credits and benefits, and perhaps consider whether they are able to structure their hiring needs to take advantage of these incentives.

For more information about this Client Alert, please contact:

Peter M. Panken
New York
212-351-4840
Ppanken@ebglaw.com

Scott M. Drago
New York
212-351-3750
Sdrago@ebglaw.com

Susan Gross Sholinsky
New York
212-351-4789
Sgross@ebglaw.com

Steven Swirsky
New York
212-351-4640
Sswirsky@ebglaw.com

 

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Department of Labor Supplements 403(b) Annuity Plan Guidance for Tax-Exempt Entities: Where Does Your Plan Stand?

The Department of Labor (the “DOL”) recently clarified that tax-exempt entities (such as non-public schools or charitable hospitals) offering 403(b) annuity programs subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)must file an Internal Revenue Service Form 5500 Annual Report (“Form 5500”) for the 2009 plan year and thereafter. The new guidance, Field Assistance Bulletin (FAB) No. 2010-01 (February 17, 2010), also details which employee annuity contracts must be reported on the Form 5500 and what types of annuity contracts are grandfathered from the reporting requirements.

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195.1 UPDATE: New York Issues Guidelines, Instructions and Additional Model Notices of Pay Rates and Pay Days

The New York State Department of Labor (“DOL”) has recently made available important new information for employers regarding their obligations under Section 195.1 of the Labor Law including notice of pay rates, pay dates and other information.

As we previously reported (see our Client Alerts of December 11, and October 30, 2009), pursuant to Section 195.1 of the Labor Law (the “Statute”), as of October 26, 2009, employers must provide newly hired New York employees with written notice of their: (1) pay rate; (2) overtime pay rate (if they qualify for overtime pay); and (3) regular paydays.

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California Supreme Court Holds That Labor Code Section 233 Is Not Applicable To Sick Leave Policies That Provide For Unlimited Number Of Days Off

While employers are not required to provide paid sick leave to their California employees, those that do provide such a benefit are required to abide by the provisions of Labor Code sections 233 and 234. Labor Code section 233 mandates that employers who provide a paid sick leave benefit must allow employees to use one-half of their annual accrued paid sick leave to care for an ill family member (parent, child, spouse or registered domestic partner). This provision of the Labor Code is commonly called “kin care” leave. In addition, Labor Code section 234 prohibits employers from disciplining or terminating employees because they use “kin care” leave.

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DAVIS MALM ATTORNEY DAVID M. COGLIANO CONDUCTS EMPLOYMENT LAW PROGRAM FOR SBANE

February 11, 2010 – Boston, MA
For more information contact: Jeanie Griggs
(617) 589-3895; jgriggs@davismalm.com

On February 11, Davis Malm attorney David M. Cogliano conducted an employment law program, “2010 Legal Update,” for the Smaller Business Association of New England in Waltham, Massachusetts. David was joined by two other employment attorneys on the panel. The interactive program provided a comprehensive overview of the many employment law changes that came about in 2009 that directly impact employers and their HR practices and the consequences of non-compliance. Specific topics included: the importance of properly classifying workers; utilizing non-compete, non-solicitation and confidentiality agreements; changes to the Americans with Disabilities Act; the use of social media in the workplace; the duty to accommodate persons with disabilities; and the Employee Free Choice Act.

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President Obama Backs Department of Labor Misclassification Fight

by Evan J. Spelfogel

February 2010


On February 1, 2010, President Barack Obama released his federal budget for the coming fiscal year, including $117 billion for the United States Department of Labor, of which $25 million was set aside expressly to help the DOL combat employee misclassification. This includes, specifically, identifying and litigating against employers that categorize workers as independent contractors when, in fact, they are employees, and that classify as exempt from overtime those employees who do not meet the requirements of the White Collar Exemptions under Part 541 of the Wage and Hour Regulations.

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Ninth Circuit: Managers Can Be Liable For Unpaid Wages Upon Bankruptcy

On July 27, 2009, the U.S. Court of Appeals for the Ninth Circuit held that a corporation’s managers can be held personally liable under the Fair Labor Standards Act (“FLSA”) for wages that the corporation failed to pay to employees prior to the employer’s filing for bankruptcy. This opinion serves as a cautionary reminder of the risks managers potentially face when a corporation files for bankruptcy and has failed to pay its employees for all wages earned prior to the filing.

In Boucher v. Shaw, —- F. 3d —-, 2009 WL 2217517 (9th Cir. 2009), former employees of the Castaways Hotel, Casino and Bowling Center sued three senior managers for unpaid wages under Nevada state law as well as federal law. The managers moved to dismiss the claims based on, among other grounds, the fact that the hotel had filed for bankruptcy protection. The Ninth Circuit asked the Nevada Supreme Court to address the issue of whether, under state law, the managers could be personally liable as “employers” for the unpaid wages. The Nevada Supreme Court ruled that individual managers are not “employers” under state law. However, the Ninth Circuit ruled against the managers on the federal FLSA claims and allowed the employees’ claims to proceed.

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Employer Posting Requirements Under New Jersey Law

With the start of 2009, New Jersey employers may find it useful to review the notification requirements relating to employees’ workplace rights and responsibilities under both state and federal law.

Employers are mandated under both New Jersey and federal law to display official posters informing employees of the law relating to their rights and responsibilities. An employer who fails to comply with these requirements may face monetary fines or other penalties. Generally, to comply with these regulations, an employer must post the most recent version of the posters in locations visible to all employees and applicants for employment. Employers should display these notices in areas accessible to all employees, such as a lunchroom, break-room or human resources office. New Jersey also requires that certain of the notices be distributed to employees. This article serves as a reminder and summary of New Jersey’s notification requirements applicable to most employers.

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