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					                 RECENT DEVELOPMENTS AFFECTING
                     NEW JERSEY EMPLOYERS
                              A-Z

                                 Mark Diana, Esq.

                            Stanton, Hughes, Diana,
                        Cerra, Mariani & Margello, P.C.
                         10 Madison Avenue, Suite 402
                         Morristown, New Jersey 07960
                                 973 656 1600
                           www.stantonhughes.com


Arbitration
    United States Supreme Court Rules That Federal Arbitration Act Covers
    Employment Contracts

    Circuit City Stores, Inc. v. Adams, 121 S.Ct. 1302 (March 21, 2001) - In a much
    anticipated decision, the United States Supreme Court addressed the issue of whether the
    Federal Arbitration Act ("FAA") applies to employment contracts. The FAA requires the
    enforcement of a wide range of written agreements to arbitrate disputes, but excludes
    coverage of "contracts of employment of seamen, railroad employees, or any other class
    of workers engaged in foreign or interstate commerce." Some courts interpreted this
    exclusion to apply only to contracts involving transportation workers, but most courts
    interpreted the exclusion more broadly to cover all employment contracts. In a 5-4
    decision, the Supreme Court sided with the majority of courts, ruling that the FAA
    applies to most employment contracts and excludes only employment contacts involving
    transportation workers.

    NJLAD Claims Must Be Arbitrated Pursuant To Employment Agreement

    Garfinkel v. Morristown Obstetrics and Gynecology, 333 N.J. Super. 291 (App. Div.
    July 25, 2000), certif. granted, 166 N.J. 606 (2000) - The Appellate Division held that
    an arbitration clause in an employment agreement providing that "any controversy arising
    out of, or relating to, this agreement or the breach thereof, shall be settled by
    arbitration…" required plaintiff to arbitrate sex discrimination claims under the NJLAD,
    as well as his claims that the employer defamed him and interfered with his employment
    prospects after the termination. The court held that this broad arbitration provision
    required arbitration of any claim which "involved significant aspects of the employment
    relationship…or required an evaluation of either the employee's or employer's
    performance in the course of the employment relationship." The court rejected the
    plaintiff's argument that the arbitration provisions was limited to claims based upon the
    contract itself.

    The Garfinkel case is seemingly at odds with an earlier Appellate Division case, Quigley
    v. KPMG, 330 N.J. Super. 252 (App. Div. April 25, 2000), certif. denied, 165 N.J. 527
    (2000). In Quigley, the court refused to compel arbitration of plaintiff's NJLAD claim --
    where the language of the arbitration agreement was nearly identical to that in Garfinkel -
    - reasoning that the language did not specifically state that discrimination claims would
    have to be arbitrated.

    CEPA Claims Must Be Arbitrated Under NASD Rules Despite Rules' Exclusion Of
    Discrimination Claims

    Littman v. Morgan Stanley Dean Witter, 337 N.J. Super. 134 (App. Div. February
    14, 2001) - Plaintiff appealed from a trial court order compelling him to arbitrate claims
    under New Jersey's Conscientious Employee Protection Act ("CEPA") pursuant to the
    Rules of the National Association of Security Dealers ("NASD"). Plaintiff argued that a
    1998 amendment to the NASD's Rules, which exempted employee-discrimination claims
    from mandatory arbitration, should apply to CEPA claims. The Appellate Division
    disagreed, holding that CEPA prohibits retaliation against employees for exercising
    protected rights and is not "designed to protect against a discriminated class." In
    affirming the lower court's ruling, the Appellate Division also relied upon three state
    court decisions, which predated the NASD's 1998 amendment, and which held that
    CEPA claims are subject to NASD mandatory arbitration.

    Arbitration Agreement In Employment Application Enforceable

    Martindale v. Sandvik, Inc., (App. Div. May 2, 2001) - Arbitration agreement in
    employment application enforced - Employee required to arbitrate claims under NJLAD
    and NJFLA - offer of employment constitutes valid consideration to support agreement to
    arbitrate.


Base Hours (Calculation for NJLFA Purposes)
    Kenney v. Meadowview Nursing and Convalescent Center, 308 N.J. Super. 565
    (App. Div. 1998) - In determining whether an employee has worked the requisite 1,000
    hours necessary to qualify for leave under the NJFLA, the employee is entitled to credit
    for any time spent on workers' compensation leave. Put another way, hours for which an
    employee is paid workers' compensation benefits count toward the eligibility requirement
    under the NJFLA.




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McConnell v. State Farm Mutual Insurance Company, 61 F.Supp.2d 356 (D.N.J.
1999) - However, sick leave unrelated to work is not included in an employee's "base
hours" for purposes of calculating eligibility for leave under the NJFLA.




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Class Actions
    The number of class action suits filed in the last few years has increased
    dramatically. The following is a summary of just some of the class action suits filed,
    certified or settled in 2000:

       Landis Plastics, Inc., agrees to pay $782,000 to settle sex discrimination class action
        brought on behalf of 30 women denied promotions. 245 DLR 1 (December 20,
        2000).

       Class action suit certified against University of Washington by female faculty
        members alleging disparate pay. 227 DLR 1 (November 24, 2000).

       Ford Motor Co. settles class action alleging sexual harassment at two plants for $9
        million. 226 DLR 1 (November 22, 2000).

       Coca-Cola agrees to pay $192.5 million to settle race discrimination class action with
        2000 employees. Average award is $40,000, with named plaintiffs each to receive
        $300,000. 223 DLR 1 (November 17, 2000).

       CBS agrees to pay $8 million to settle sex discrimination class action brought by 200
        female technicians. 208 DLR 1 (October 26, 2000).

       Class action suit filed against Microsoft by 4500 female employees alleging
        discrimination in pay and promotions. 200 DLR 1 (October 16, 2000).

       FDIC agrees to pay $15.5 million to settle race discrimination claims brought by class
        of 3000 employees. 197 DLR 1 (October 11, 2000).

       Class action suit filed against Girl Scouts USA by male graphic artist alleging that
        Girl Scouts maintains a "glass ceiling" blocking male employees from promotion.
        188 DLR 1 (September 27, 2000).

       Class action suit filed by EEOC against GM plant in Linden, New Jersey alleging
        discrimination against women and African Americans. 184 DLR 1 (September 21,
        2000).

       300 current and former Nextel employees file race and sex discrimination charges
        with EEOC. 120 DLR 1 (June 21, 2000).




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       Enterprise Rent-A-Car agrees to pay $300,000 to settle class action age
        discrimination suit brought by EEOC, on behalf of 600 employees. 115 DLR 1 (June
        14, 2000).

       Class action certified by non-managerial African American employees against
        Federal Reserve Bank. 111 DLR 1 (June 8, 2000).

       Class action suit filed against Eagle Global Logistics alleging pattern of
        discrimination against women and minorities. 103 DLR 1 (May 26, 2000).

       Class action suit filed against Lockhead Martin in Georgia alleging class wide race
        discrimination. 92 DLR 1 (May 11, 2000).

       Class action suit filed by current and former secret service agents. 88 DLR 1 (May 5,
        2000).

       Class action suit certified alleging race discrimination by applicants turned down for
        positions as dealers on riverboat casino. 67 DLR 1 (April 6, 2000).

       Class action suit filed by 40 former and current employees of Boeing alleging
        discrimination due to national origin. 52 DLR 1 (March 16, 2000).

       Class action suit filed against Boeing by class of 30,000 current and former female
        employees. 44 DLR 1 (March 6, 2000).

    Recent Class Certification Denials:

       Reap v. Continental Casualty Company d/b/a CNA, 199 F.R.D. 536 (D.N.J. March
        21, 2001).

       Miller v. Hygrade Food Prod Corp., 198 F.R.D. 638 (E.D. Pa. January 29, 2001).

       Robinson v. Metro-North Commuter Railroad, 197 F.R.D. 85 (S.D.N.Y. September
        27, 2000).


Defamation
    Employer May Be Liable for Defamatory Electronic Communications

    Blakey v. Continental Airlines Inc., 164 N.J. 28 (2000) - The Supreme Court
    considered whether an employer has a duty to prevent defamatory statements made by its



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    employees on an on-line computer "bulletin board" that are intended or likely to injure a
    co-employee. The court held that an employer which has notice that its co-employees are
    engaged, in a work-related forum, in a pattern of retaliatory harassment directed at a co-
    employee has a duty to remedy that harassment.

    Employer Had Qualified Privilege to Report to Other Employees that Employee
    Had Been Terminated For Engaging In Sexual Harassment

    Taliaferra v. Marina Associates, (App. Div., January 5, 2001) - Plaintiff alleged that
    he was defamed when his employer told other employees that he had engaged in sexual
    harassment and had been terminated because of it. Court rejected defamation claim,
    finding that employer had a qualified privilege to communicate this information to its
    employees. The employer's legitimate interest in "communicating to its employees the
    reason for plaintiff's termination was the public policy against workplace sexual
    harassment, defendant's interest in demonstrating to its employees its commitment to
    upholding that policy, and the interests of defendant's staff in knowing that they could
    trust defendant to enforce the policy." Court further noted that employer had "published
    the reason for plaintiff's termination only to employees, who had to be informed if the
    interests were to be fulfilled."


English Only Rules
    Spanish Speaking Employee Discharged For Violation Of Employer's English-Only
    Rule Cannot Sue For National Origin Discrimination

    Rosario v. Cacace, 337 N.J. Super. 578 (App. Div. March 9, 2001) - Appellate
    Division upheld the dismissal of the plaintiff's claim that her former employer
    discriminated against her because of her ancestry and national origin. Although plaintiff
    was hired as a secretary/medical assistant to communicate with the employer's Spanish-
    speaking patients, she often spoke Spanish with other office personnel and patients about
    subjects unrelated to her job duties. On these occasions, plaintiff was told that she must
    speak English, not Spanish. Plaintiff continue to speak Spanish despite these warnings
    and she was eventually terminated. The trial court dismissed plaintiff's discrimination
    claim for two reasons. First the court concluded that since "the plaintiff was hired
    because she was bilingual…[I]t would be impossible for a rational factfinder to say that
    she was fired because she was bilingual." Second, the court found that there was no legal
    or factual basis for holding the employer's English language requirement to be per se
    discriminatory.




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Front Pay
    Front Pay Awards Not Subject to Title VII's Damage Caps

    Pollard v. E.l. duPont, 121 S.Ct. 1946 (June 4, 2001) - Title VII imposes a $300,000
    cap on compensatory and punitive damage awards. On June 4, 2001, the United States
    Supreme Court held that "front pay" damages -- damages for future lost wages -- are not
    subject to the damage cap, and thus, may exceed the $300,000 limit. As a result, only
    awards for emotional distress and punitive damages, but not for economic losses, are
    subject to the cap.


Guidelines (New Guidelines Issued by EEOC)
    The EEOC has recently issued a spate of Enforcement Guidelines and Regulations, which
    are available at its website, www.eeoc.gov. Topics include:

          Final Regulations on "Tender Back" Payments and ADEA Waivers

          Enforcement Guidance on Application of ADA to Contingent Workers Placed by
           Temporary Agencies

          Enforcement Guidance on Disability-Related Inquiries and Medical Examinations


Handbooks
    Alteration Of At-Will Employment Relationship Must Comply With The Provisions
    Of The Employer's Handbook

    Mita v. Chubb Computer Services, Inc., 337 N.J. Super. 517 (App. Div. March 2,
    2001) - The plaintiff claimed that the defendant-employer wrongfully discharged her for
    refusing to sign a non-compete agreement. Plaintiff argued that the employer's alleged
    promise that she would never be terminated for refusing to sign the non-compete
    agreement had altered her at-will relationship. The Court held that when an employee
    handbook "clearly and unequivocally provides the exclusive means by which an
    employment-at-will relationship can be altered and the limitation is placed in a prominent
    position in the handbook, it should be enforced." Here, the handbook provided that the
    at-will employment relationship could only be altered by a writing stating that the
    individual was not an at-will employee and setting forth the specific terms and duration
    of the employment. Although plaintiff did offer a writing to support her claim -- a


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    memorandum signed by the employer's CEO - the Court held that this memorandum did
    not meet the requirements set forth above and dismissed her wrongful discharge claim.

    Employer's Unilateral Handbook Modification Upheld

    Puglis v. Kearfott Guidance & Navigation Corp. (App. Div. November 22, 2000) -
    The plaintiff's breach of employment contract claim and tortious interference claims were
    properly dismissed because the plaintiff had reasonable notice that provisions of earlier
    editions of the defendant's employee manual, upon which the plaintiff's Woolley claim
    was based, had been deleted from the handbook some two years before he was
    discharged. Court holds: "we reject plaintiff's contention that Woolley or any of its
    progeny limit an employer's ability to modify a handbook by using means of employee
    notification that are substantially similar to the notification methods previously used in
    respect of prior versions of the handbook, or which are reasonably calculated to reach the
    employee and inform him of the changes made."


Independent Contractors
    Independent Contractors Not Protected Under NJLAD

    Konstantinidos v. Jiffy Trucking Co., Inc., A-1413-99T3 (App. Div. October 12,
    2000) - The Appellate Division reiterated that independent contractors are not protected
    by the NJLAD. In determining whether an individual is an employee or an independent
    contractor, court applies the "totality of the circumstances test." "This test looks at the
    economic realities of the situation, but focuses on the employer's right to control the
    employee as the most important factor in determining the employee's status."


Joint Employers
    NLRB Permits Bargaining Units To Include Both Temporary and Regular
    Employees

    In Re M.B. Sturgis, Inc., 331 NLRB No. 173 (N.L.R.B. August 30, 2000) - The NLRB
    held that both temporary workers supplied by an agency to an employer and regular
    employees of the employer can be included in the same bargaining unit, even without
    consent of both the employer and the temporary agency, if the employer and agency
    qualify as "joint employers". This represents a significant change in law because,
    normally, a "multi-employer" unit (i.e., a unit made up of workers who work for different
    employers) requires consent of all the employers. The temporary agency and the
    employer using the temporary employees must bargain jointly with the unions that



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    represent the bargaining unit. The Board further held that , if a union seeks to represent
    all the employees of a single temporary agency, even if they work for multiple end users,
    the union can do so, without obtaining the consent of all the end users.

    Professional Facilities Management, 332 N.L.R.B. No. 40, 2000 WL 1449837
    (N.L.R.B. September 26, 2000) - The union petitioned to represent stagehands
    performing work at the user employer's facilities, naming only the user employer in the
    petition. The user employer argued that the supplier, which provided the stagehands, is a
    necessary party to the petition because they were "joint employers." The Board, citing
    M.B. Sturgis, Inc., determined that there is no statutory or policy impediment to a unit
    where a petitioner seeks to represent an appropriate unit of the employees of a single
    "user" employer without regard to whether those employees are also jointly employed by
    another employer. The Board concluded that the absence of one of the alleged joint
    employers at the bargaining table does not destroy the ability of the user employer to
    engage in effective bargaining with respect to employees to the extent it controls their
    terms and conditions of employment. Thus, the Board determined that a petitioner may
    seek to bargain with and name in the petition, only the single user employer.

    Individual May Be Employee of Two Separate Entities

    Kurdyla v. Pinkerton Security, 197 F.R.D. 128 (D.N.J. 2000) - The plaintiff who
    worked as a security guard sued both Exxon and Pinkerton alleging that she was subject
    to sexual harassment, gender discrimination and an FMLA violation. Exxon argued that
    it was not liable under the NJLAD because the plaintiff was an employee of an
    independent contractor, Pinkerton. The court applied the Zippo test for distinguishing
    between employers and independent contractors and found that it is possible that the
    plaintiff was an employee of both.



K
Loyalty     (Breach of Duty of Loyalty, Unfair Competition,
Misappropriation of Trade Secrets)
    Collection of Confidential Client Information Violates Duty of Loyalty

    Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285 (May 14, 2001) - By secretly
    collecting confidential and proprietary client information while employed by Lamorte
    Burns & Co., Inc., and using the data to solicit and take away Lamorte's clients
    immediately after resigning, two former Lamorte employees breached their duty of


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loyalty, tortiously interfered with Lamorte's economic advantage, misappropriated
confidential and proprietary information, and competed unfairly. The information taken
included clients' names, addresses, telephone and fax numbers, file numbers, accident
dates, details concerning the individual P&I claims, and billing rates. The Court held that
the information was protectable because "The information surreptitiously gathered by
defendants from plaintiff was not generally available to the public, but was shared
between plaintiff and its clients. Defendants would not have been aware of that
information but for their employment. The information went beyond the mere names of
plaintiff's clients. It included specific information concerning the clients' claims, such as
the name of the injured party, and the type and date of injury. Defendants admitted that
that information gave them an advantage in soliciting plaintiff's clients once they
resigned."

Court Excludes Confidential Information That Employee Obtained From
Employer's Computer To Support Retaliation Claim

Tartaglia v. Paine Webber, Inc., __ N.J. Super. __ (Law Div. February 21, 2001) -
Plaintiff, an in-house attorney, accessed confidential information from the defendant-
employer's computer records to assist in prosecuting her retaliation lawsuit against
defendant. The trial judge excluded the evidence as a result of plaintiff's unlawful pre-
litigation evidence-gathering activities. The judge also ordered plaintiff to destroy the
documents and permanently enjoined her from revealing their contents to anyone for any
reason.

Court Affirms Four-Year Injunction Against Disloyal Employees

Reiner Services v. Kruis (App. Div. December 15, 2000) - Where employees started
competing business, and were soliciting and performing work for employer's customers
while still employed, the employees were guilty of disloyalty and unfair competition.
The court held that a four-year injunction on the employees was appropriate, plus an
award to the plaintiff corporation of its lost profits.

Confidential Information Need Not Be Novel to Qualify As Trade Secret

Rycoline v. Walsh, 334 N.J. Super. 62 (App. Div. August 15, 2000), certif. denied,
165 N.J. 678 (2000) - The Appellate Division held that an employer's formulae were
entitled to protection as trade secrets, and therefore could not be disclosed by former
employee to a competitor, even though the formulae were not novel and may have been
reversed-engineered by the employer from another competitor. "Only a very minimal
novelty requirement is imposed for a trade secret." The employer's reverse engineering
itself represented a significant investment of time, effort, and expense. Thus, when the
former employee disclosed these formulae, he had disclosed a trade secret in violation of
his legal obligations of confidentiality, and was liable to the employer.


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Medical        Conditions          (Discovered           During         Pre-Employment
Physicals)

     Pre-Employment Physical May Result in Physician Liability

     Reed v. Bojarksi, 166 N.J. 89 (2001) - The Supreme Court held that when a physician
     performs a pre-employment examination on behalf of an employer, a duty arises to
     inform the patient of a potentially serious medical condition discovered. According to
     the Court, when a person is referred to a physician for a pre-employment physical, a
     physician-patient relationship is created, at least to the extent of the examination, and the
     patient has an absolute right to expect that the physician will not remain silent about a
     potentially life threatening abnormality discovered during the examination.


No Docking Rule (Preservation of Exempt Status Under FLSA)
     To be treated as exempt under the FLSA, and therefore not eligible for overtime, an
     employee must receive a regular, predetermined salary that is not subject to reduction
     because of variations in the quality or quantity of work performed. Thus, subject to
     specific permissible exceptions set forth in the FLSA regulations, the employee must
     receive his full salary for any week in which he performs any work, without regard to the
     number of days or hours worked. This is known as the “No Docking Rule.”

     The DOL, however, has adopted a “window of correction” regulation, that provides an
     employer who has made a deduction an opportunity to correct the error under certain
     circumstances and thus preserve the employee’s exempt status.

     In Klem v. Santa Clara, 208 F.3d 1085 (9th Cir. 2000), the court found that the
     Secretary of Labor reasonably construed the regulations implementing the window of
     correction to conclude that the window of correction is only available to employers that
     have demonstrated an objective intention to pay employees on a salary basis. The
     employer classified 5,300 of its 14,000 workers as exempt under the white-collar
     exemptions. The court found that 53 improper disciplinary suspensions imposed on
     exempt employees over six years was sufficient to constitute a “pattern of practice” of
     improper deductions and as such could not be cured through the window of correction.
     See also Yourman v. Guiliani, 229 F.3d 124 (2d Cir. 2000) (identifying factors to
     consider to determine if impermissible deductions were correctable).




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Obesity
     Obesity Is a Protected Handicap if Due To Physical or Psychological Cause

     Lally v. J.P. Woods Co., Inc. (App. Div. February 15, 2001) - For obesity to rise to the
     level of a protected handicap under NJLAD, it must be due to a physical and
     psychological cause, and not just "overindulgence and lassitude."


Privacy (Drug Testing)
     Reasonable Suspicion Drug Testing Upheld

     Tamburelli v. Hudson County Police Dep't, 326 N.J. Super. 551 (App. Div. 1999),
     certif. denied, 163 N.J. 397 (2000) - Police department had reasonable suspicion to test
     officer where department received information from a known and reliable confidential
     informant that the officer had been smoking crack at a known drug location and the
     department later received corroborating information from another informant who
     provided the information against her own interests. The court held that even though four
     months had elapsed between the time the department received the first indication of the
     officer's conduct and the time the department ordered the drug test, this fact did not
     diminish reasonable suspicion. "That the police department waited approximately four
     months to act, arguably tends to diminish the vitality of the information, but we are aware
     of no case holding that a specific period of delay will negate reasonable suspicion."


Q&A
     Monthly Q&A’s posted on Stanton, Hughes website, www.stantonhughes.com.



Representation            (Right to Representation During Employer
Investigations)

     NLRB Rules That Even Non-Union Employees Can Demand To Have Co-worker
     Present When Questioned by Employer

     In Re Epilepsy Foundation of Northeast Ohio, 2000 WL 967066 (N.L.R.B. July 20,
     2000) - Reversing its own precedent, and extending a right previously thought to be held



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    only by union employees, the NLRB held that even non-union employees have the right
    to have a co-worker present when subjected to an investigatory interview by the
    employer. Such a request constitutes "concerted protected activity" for which the
    employee cannot be discharged. Therefore, the employer in this case violated Sec.
    8(a)(1) of the National Labor Relations Act by discharging its employee when he refused
    to participate in an investigatory interview without a co-worker present. In so holding,
    the NLRB overruled its own decision in E.I. DuPont & Co., 289 NLRB 627 (1988).


Sexual Harassment
    Single Explicit Remark Does Not Constitute Sexual Harassment

    Clark County School Dist. v. Breeden, 121 S.Ct. 1508 (April 23, 2001) - The United
    States Supreme Court held that no reasonable person could believe that the single
    sexually explicit remark uttered by plaintiff's supervisor to plaintiff, i.e., "I hear making
    love to you is like making love to the Grand Canyon," was sufficiently severe or
    pervasive to constitute sexual harassment. Thus, the Court ruled that plaintiff's Title VII
    retaliation claim was properly dismissed because her complaint regarding the remark was
    not "protected activity" under Title VII.

    Valid Defense Under Title VII May Not Protect Employer From Liability For
    Sexual Harassment Under NJLAD

    Newsome v. Administrative Office of the Courts, 103 F.Supp.2d 807 (D.N.J. July 5,
    2000) - This case involved Plaintiff's claims of sexual harassment under both Title VII
    and the NJLAD. The Court held that plaintiff's Title VII claims were barred because the
    employer had promulgated an anti-harassment policy, had provided training to
    employees, and had investigated plaintiff's complaints as soon as she made them.
    However, the Court held that these same facts were insufficient to bar plaintiff's NJLAD
    claim, and ruled that she was entitled to proceed to trial on the that claim.

    Prompt Response Shields Employer From Liability Under the NJLAD

    Gaines v. Bellino (App. Div. May 30, 2001) - Employer not liable under NJLAD for
    supervisor's sexual harassment when employer had well publicized anti-harassment
    policy, conducted training of employees and took prompt and effective action when it
    learned of harassment. Significance of decision, however, should not be overstated --
    Under the NJLAD, an employer cannot avoid liability for economic damages when a
    supervisor engages in sexual harassment; here plaintiff made no claim for economic loss.




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     Seventh Circuit Rules That Insufficient Reporting Procedure Justified The
     Employer's Liability For Sexual Harassment

     Gentry v. Export Packaging Co., 283 F.3d 842 (7th Cir., January 25, 2001) - The
     Seventh Circuit upheld a $25,000 verdict against the employer in a sexual harassment suit
     brought by a female employee. The court found that although the employer had a clear
     policy against sexual harassment and a procedure for dealing with grievances under the
     policy, the procedure was flawed because it did not name a designated person in the
     human resources department to deal with such complaints. This breakdown in the
     grievance system hindered the employee's ability to properly report the alleged
     harassment and justified the employer's liability.


Time to Sue (Statute of Limitations Issues)
     Supreme Court Clarifies Statute of Limitations on NJLAD Claims

     Ali v. Rutgers University 166 N.J. 280 (November 30, 2000) - The Court revisited an
     issue created by its own decision in Montells v. Haynes, 133 NJ 282 (1993). In Montells,
     Court held that the statute of limitations on NJLAD claims is 2 years, but that in cases
     where the operative facts arose prior to the date of that decision (July 27, 1993), the 6-
     year statute of limitations would apply. In Ali, the Court was concerned with the
     appropriate statute of limitations where some operative facts arose prior to Montells, and
     some arose later. Court holds: where some facts arose prior to Montells, and some arose
     after Montells, the statute of limitations will be 6 years or within two 2 years of the Ali
     opinion (decided November 30, 2000) whichever is earlier.

     Court Applies Continuing Violation Theory To NJLAD Claims

     Shepherd v. Hunterdon Developmental Center, 336 N.J. Super. 395 (App. Div.
     January 15, 2001) - Employees who brought hostile work environment, retaliation,
     negligent supervision, and conspiracy claims under the NJLAD could rely on events that
     took place outside the two year statute of limitations under the continuing violation
     theory. The Appellate Division held that the employees' claims of pervasive, regular and
     intentional discriminatory conduct were not barred by the statute of limitations because
     they brought their claims within two years after the conduct ceased and at least one
     incident occurred during the statute of limitations period.

     In Wrongful Termination Case Under CEPA, Statute of Limitations Begins On
     Date Of Actual Discharge, Not Date Of Notice of Termination

     Alderiso v. Medical Center of Ocean County, Inc., 167 N.J. 191 (May 2001) -- The
     New Jersey Supreme Court held that a wrongful termination claim under CEPA accrues


                                             14
    on the date of actual discharge, not the date on which plaintiff received notice of her
    termination, nor the first day on which she was fully unemployed. The Court defined the
    date of discharge as the last day for which an employee is paid a regular wage or salary,
    notwithstanding plaintiff’s absence from work on that date, and does not include any
    subsequent date on which severance, health or other extended benefits are paid.


    In Fraudulent Inducement Case, Statute Of Limitations Begins On Last Day Of
    Work, Not When Notice Of Termination Given

    Holmin v. TRW, Inc., 167 N.J. 205 (May 9, 2001) - Supreme Court holds that when
    employee asserts claim for fraud (based on allegation that he was fraudulently induced to
    leave prior employment on representation he would not be laid off), statute of limitations
    begins to run on employee's last day of work, not on earlier date when employee was
    given notice he was being laid off. Cause of action accrues (and limitations period starts
    to run) only when actual damage occurred.

    In Constructive Discharge Cases, Statute of Limitations Begins On Date Resignation
    Tendered, Not on Last Day of Work

    Daniels v. The Mutual Life Insurance Co., 2001 WL 418972 (App. Div. April 24,
    2001) - The Appellate Division held that in constructive discharge cases, CEPA's one-
    year statue of limitations begins to run from the date the employee tenders his
    resignation, not from the employee's last day of actual employment. The court
    distinguished constructive discharge cases from cases where an "express termination"
    takes place, in which case the statute of limitations begins to run from the last day of
    actual employment (not when the employer provides notice of termination), reasoning as
    follows: "In an actual termination situation, the retaliatory action which starts the
    running of the period of limitations is the separation from work. In a constructive
    discharge situation, the retaliatory action is the creation of intolerable conditions which a
    reasonable employee cannot accept. The conditions become intolerable when the
    employee tenders his or her resignation. Thus, by definition, the act of discrimination
    cannot occur any later than the date of resignation."


Unemployment Compensation
    Appellate Division Finds An Employer-Employee Relationship Despite Explicit
    Contractual Language Indicating Independent Contractor Relationship

    Trans World Systems, Inc. v. New Jersey Dep't of Labor, A-3002-98T5 (App. Div.
    January 10, 2001) - Employer challenged order directing it to pay unemployment and



                                             15
    temporary disability contributions on workers it claimed were independent contractors,
    not employees. Court held that employer failed to satisfy "ABC" test to support a finding
    of independent contractor status, even though the employer's agreement with its sale
    agents stated that the relationship was one of an independent contractor, and not of an
    employer-employee. Court held that sales representatives the agents were employees and
    not independent contractors because: they had production quotas; they were subject to
    dismissal for non-production and other reasons; they could not compete with the
    employer; they were required to forward to the employer each sales order received along
    with the client's check made payable to the employer; they were trained by the employer;
    they worked in employer-controlled workspace; they carried business cards with the
    employer's logo; and they did not have an independently established trade, occupation, or
    business.


Voluntary Relationships
    Voluntary Relationships Between Co-Workers, Occurring Outside the Workplace,
    Not Probative of Hostile Environment

    K.S. v. ABC Professional Corp., 330 N.J. Super. 288 (App. Div. 2000) - Plaintiff
    alleged that she was raped by a partner at the law firm where she worked. She claimed
    that the other partners should have know of the partner's behavior and condoned,
    tolerated and encouraged the hostile environment by their own relationships with staff.
    Plaintiff sought discovery from all partners to disclose their consensual, voluntary and
    welcomed sexual relationships with any woman who had ever worked for the firm. The
    court found that these proofs did not support an inference that several, long-past, isolated
    relationships created the alleged ribald and licentious atmosphere which plaintiff alleged.


Whistleblowers (CEPA Claims)
    FDU Professor Awarded $5M on CEPA Claim

    Renzulli v. Fairleigh Dickinson University - On May 18, 2001, a Morris County jury
    awarded $5.3 million in compensatory and punitive damages to an FDU professor who
    gave a zero on a midterm exam to the daughter of N.J. Nets owner Michael Rowe.
    Professor Renzulli alleged that he was pressured to give the daughter credit for the
    course, and when he refused, he was investigated for sexual harassment as retaliation.

    CEPA Protects Employees Who Complain About Co-Worker Activities




                                            16
Higgins v. Pascack Valley Hospital, 158 N.J. 404 (1999) - CEPA protects an employee
who complains to his employer about the misconduct of fellow employees, if his
complaints are founded upon a reasonable basis. This protection attaches even in the
absence of employer complicity in the misconduct.

CEPA Protects Employees Who Complain About Co-Worker Activities, Even If
The Activities Do Not Implicate A Broad Public Policy

Estate of Roach v. TRW, Inc., 164 N.J. 598 (July 19, 2000) - The Court held that an
employer violates CEPA when it discharges an employee for objecting to a co-
employee's activity which Plaintiff reasonably believed to be fraudulent, criminal, or in
violation of a law, even though the co-employee's alleged activity was not incompatible
with a clear mandate of public policy. Reversing the Appellate Division's ruling in favor
of the employer, the Court held that where the conduct the employee complains of is
either criminal or in violation of law, there is no requirement under CEPA that a broader
public policy also be implicated. The Supreme Court also held that, by failing to take any
action against the co-worker when plaintiff employee complained, the employer could be
found to have ratified the co-worker's conduct and thus to have adopted the co-worker's
actions as its own.

CEPA Protects Employees Who Testify Adversely To Co-Workers

DeLisa v. County of Bergen, 165 N.J. 140 (July 25, 2000) - Expanding on its decision
on Higgins v. Pascack Valley Hospital, the Court holds CEPA protects employees from
retaliation for giving adverse testimony about co-workers in a judicial or administrative
proceeding, even though the alleged wrongdoing about which the employee testified did
not benefit the employer and was outside scope of the co-workers' employment. Court
holds that plaintiff asserted a sustainable cause of action under CEPA where his negative
characterization of his co-employees' conduct occurred in the course of testimony to
representatives of the Prosecutor's and the Attorney General's offices.

Second Circuit Rules That CEPA Protects Employees Who Report Co-employee
Wrongdoing Directed Against Their Private Employer

Nettis v. Levitt, 241 F.3d 186 (2d Cir., February 22, 2001) - Following the New Jersey
Supreme Court's recent pronouncements in Higgins v. Pascack Valley Hospital and
Roach v. TRW, the Second Circuit reinstated the CEPA complaint of a controller who
reported internal corporate wrongdoing directed at the employer itself, i.e., a company
vice president's alleged abuses of expense accounts and unaccounted for budget
shortfalls. The Second Circuit stated that CEPA does not require a plaintiff to identify a
public interest implicated by the reported conduct and can prosecute such a claim even if
his employer is not complicit in the conduct.



                                       17
Employee Had Reasonable Belief That Direction To Search Building For Bomb
Violated OSHA

Scholtz v. Garden State Park, (App. Div. December 7, 2000) - Employee discharged
for failing to follow an order to search for a bomb in the employer's building sues under
CEPA. Employee refused to follow the order because he believed he did not have the
necessary training to conduct such a search and he believed the order required him to risk
serious injury or death which, in turn, he believed violated OSHA's "general duty clause",
as well as public policy. The court held that the evidence was sufficient to show that the
employee had an objectively reasonable belief that there was an OSHA violation of the
statute. That reasonable belief was sufficient to support plaintiff's CEPA claim, and he
was not required to prove an actual OSHA violation.

Employee Did Not Have Sufficient Information On Potential Ills Of Asbestos To
Support A Reasonably-Held Belief Under CEPA

Zydiak v. Caldwell College, (App. Div. December 21, 2000) - Employee brought
claims under CEPA alleging that he was passed over for promotion because he refused to
go into the basement of the school building in which he worked after seeing a sign stating
that asbestos was present in the building. The court held that the employee's CEPA claim
was "fatally flawed" because the employee did not have an "objectively reasonable"
belief to support his claim that the levels of asbestos in the school buildings in some way
violated law or public policy. The court reasoned that the employee was not qualified to
hold an opinion on the amount or condition of asbestos that was present and did not have
sufficient information from outside sources to form a reasonably-based belief.

Employee Is Not Protected If There Is No Clear Mandate Of Public Policy

Smith-Bozarth v. Coalition Against Rape and Abuse, Inc., 329 N.J. Super. 238 (App.
Div. 2000) - The plaintiff was an employee of a social services agency who alleged that
she was wrongfully discharged for denying the head of the agency unrestricted access to
files containing confidential information obtained from the agency's clients. The court
ruled that there is no clear mandate of public policy implicated and affirmed the dismissal
of the plaintiff's CEPA complaint.

An Isolated Incident May Not Amount To A Requisite Violation

Staller v. Trocki Hebrew Academy, (App. Div. November 3, 2000) - Summary
judgment in favor of the defendant, a Hebrew school, on the plaintiff's CEPA claim was
justified. The plaintiff alleged that she was terminated because she reported a kosher
dietary infraction -- service of meat and a dairy product at the same meal -- to the
principal. The court held that such an isolated incident does not amount to a requisite
violation of public policy or the Consumer Fraud Act.


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