California Now Prohibits No-Rehire Provisions in Certain Employee Settlement Agreements

Q: My Company’s standard employment settlement agreement includes a no-rehire provision. Can I continue to include that provision for California employees?

A: If the agreement settles an employment dispute with an “aggrieved person,” you may no longer include a no re-hire provision in the agreement for California employees. Assembly Bill No. 749 (“AB 749”), which amends the California Code of Civil Procedure, became effective January 1, 2020 and provides that if an unlawful no-rehire provision is included in a settlement agreement, the provision is void as a matter of law. An “aggrieved person” is defined as a person who has filed a claim against the employer in court, before an administrative agency, in an alternative dispute forum, or through the employer’s internal complaint process.

AB 749 provides an exception if the employer has made a good faith determination that the settling employee engaged in sexual harassment or sexual assault. Moreover, the law also does not require an employer to continue to employ or rehire a person if there is a legitimate, non-discriminatory or non-retaliatory reason for terminating the relationship or refusing to hire the person.

The new law impacts many employers, as most settlement agreements with employees include no rehire provisions. It is common for these provisions to be an essential term for many employers, especially when the employee’s separation from employment and/or the litigation of the claim was contentious. Now that companies can no longer include no rehire provisions in settlement agreements, they should consider how much value they would place upon such a provision and adjust the settlement amount accordingly.

Employers should also ensure compliance with the new law by providing training to appropriate HR personnel, especially those who are not based in California but whose role includes working on California employment issues.

Lastly, because AB 749 provides that employees still may terminate employment and/or refuse to rehire a person if there is a legitimate, non-discriminatory reason, it is even more important for employers to properly document performance concerns and other issues that could lead to discipline and/or termination. For example, if an employer will not rehire a former employee because the employee had poor performance during his/her employment, it is essential for the employer to have good documentation, such as performance reviews and/or other performance metrics, to support that assertion.

Jessica Rothenberg

New York and New Jersey Ban Salary Inquiries

Q.  Is my company allowed to inquire about an applicant’s salary history when considering him or her for employment?

A.   The growing trend to eliminate inquiries into a job applicant’s salary history continues. In July, New York and New Jersey became the latest states to enact legislation that will restrict employers from obtaining and utilizing an applicant’s salary history information during the hiring process.

For more information, click here.

Leigh H. McMonigle

 

Employers May Have to Accommodate Medical Marijuana Users Under Some State Laws

Q: Can my company refuse to hire or terminate an individual because the individual is a medical marijuana user?

A: Not necessarily.  While we have not seen any laws to date explicitly requiring employers to accommodate employees’ use of marijuana for medicinal purposes while at work, in some states at least, employers may not terminate employees for their use of medical marijuana outside of the workplace, even if it means that the employee tests positive in a drug screen.

According to the National Conference on State Legislatures, as of January 23, 2019, a total of 33 states and Washington, D.C.—including every state in the Mid-Atlantic—has a comprehensive medical marijuana program. At the federal level, marijuana still is considered to be an illegal drug under the Controlled Substances Act.  However, the U.S. Department of Justice’s current guidance on prosecution for marijuana-related offenses allows federal prosecutors to decide how and whether to prosecute marijuana-related crimes.

Many state laws governing the use of medical marijuana contain provisions addressing the intersection of medical marijuana and employment. While state governments have an interest in protecting users of medical marijuana from discrimination based on their status as a medical marijuana user, they also have recognized the duty of employers to protect co-workers and the general public by ensuring that medical marijuana users do not come to work or operate dangerous equipment while under the influence of marijuana.

The Pennsylvania Medical Marijuana Act, for example, provides that employers cannot discriminate or retaliate against an employee solely on the basis of the “employee’s status as an individual who is certified to use medical marijuana.” At the same time, employers are not required to accommodate the use of medical marijuana on employer property or premises.  Furthermore, Pennsylvania’s law permits employers to discipline or terminate an employee who is under the influence of medical marijuana in the workplace or who performs work while under the influence of medical marijuana “when the employee’s conduct falls below the standard of care normally accepted for that position.”

Given that state-sanctioned use of medical marijuana is relatively new, there are few cases interpreting state medical marijuana laws with regard to employment. The case Noffsinger v. SSC Niantic Operating Co., LLC, 338 F. Supp. 3d 78 (D. Conn. 2018), is a recent federal court decision interpreting Connecticut’s medical marijuana law.  Connecticut’s law contains an “anti-discrimination provision” that bars an employer from refusing to hire a person or from “discharging, penalizing or threatening an employee” solely because of the person’s status as a “qualifying medical marijuana patient under state law.” The statute also provides, however, that an employer could refuse to hire a medical marijuana user if “required by federal law or required to obtain funding.”

In Noffsinger, the plaintiff accepted a job offer (contingent on passing a drug test) from the defendant employer.  Prior to taking the drug test, the plaintiff informed the employer that she was an approved user of medical marijuana under state law, and that she utilized medical marijuana to treat her post-traumatic stress disorder.  When plaintiff’s drug test came back positive for marijuana, the employer rescinded the job offer and refused to hire the plaintiff.  In doing so, the employer acted on the basis that it maintained a “zero tolerance” drug policy and that marijuana is illegal under federal law.  The plaintiff sued under the medical marijuana law’s non-discrimination provision.

The court granted summary judgment to the plaintiff, finding that the employer violated Connecticut’s medical marijuana law. The court paid little heed to defendant’s argument that it was required to reject plaintiff for employment because the federal Drug Free Workplace Act (DFWA) barred it from hiring plaintiff.  In coming to this conclusion, the court wrote that the DFWA neither required drug testing nor prohibited employers from employing someone who uses medical marijuana outside the workplace.  The court also stated that the DFWA did not require a “zero tolerance” drug policy.  The court then concluded that the Connecticut statute protects a qualified user’s use of medical marijuana outside work hours.

We will surely see an uptick in medical marijuana related litigation as more jurisdictions adopt medical marijuana laws, and as more employers make decisions regarding the employment of medical marijuana users. If one of your employees is a user of medical marijuana and you have concerns about your company’s obligations and/or responsibilities with regard to such use, contact any member of the Pepper Hamilton Labor & Employment team.

– Lee E. Tankle

SOCIAL MEDIA JOB POSTINGS AND AGE DISCRIMINATION

Q:        Does using social media advertisements targeted to younger potential applicants raise age discrimination concerns?

A:        The Age Discrimination in Employment Act (“ADEA”) makes it illegal to discriminate against workers over the age of 40 in employment advertising, recruiting, hiring, and other employment opportunities.  The publication provision of the ADEA generally makes it unlawful to “print or publish” job notices or advertisements “indicating any preference, limitation, specification or discrimination, based on age.”  Age preferences for younger employees are only appropriate when age is demonstrated as a bona fide occupational qualification that is reasonably necessary for the normal operation of the business.

Age discrimination claims pursuant to the ADEA have been rising steadily in the past 10 years. The number of age discrimination complaints submitted to the U.S. Equal Employment Opportunity Commission totaled about 18,000 in 2017 — about 20% of all complaints filed with the federal agency.

At the same time, the manner and method by which employers are posting job advertisements has been changing and evolving. Not surprisingly, given the rise of social media usage, many employers are turning to sites like Facebook to recruit new hires.  However, using such sites to target specific demographics, such as younger applicants, may run afoul of the ADEA.

In December 2017, a group of some of the largest U.S. employers found themselves in federal court, facing tough questions about their social media hiring practices. A class action lawsuit was filed against the various employers, alleging that they used Facebook-provided targeting tools and algorithms to direct ads to younger potential applicants, thereby discriminating against older applicants in violation of the ADEA.  The individual plaintiffs in the case, who are all recently unemployed workers over the age of 40 who use the social media site, claim they have been denied the opportunity to view certain employment advertisements simply because of their age. Because they could not view the ads, consequently, they could not apply for the posted jobs.

Although we do not yet know the outcome of the pending litigation, it is likely similar claims will follow. So what can an employer do to mitigate the risks associated with posting jobs on social media sites?  Treat the online posting no differently than any other publication, such as a newspaper.  Avoid using language that may be deemed discriminatory (i.e. “young” or “new grad”).  Research the social media site’s advertising policies and procedures.  When completing the criteria for the posting, do not affirmatively limit how the advertisement will be shared among different age demographics who use the site.  Ensure that your company’s advertisements are accessible and open to potential applicants of all ages.

Leigh McMonigle

U.S. Department of Labor Endorses More Flexible Unpaid Intern Test

Q.  Our company wants to establish an internship program and host student interns to work alongside our employees. Do we need to pay the interns?

A.  Possibly. Over the past few years, courts and the Department of Labor (“DOL”) have carefully examined the relationship between businesses and unpaid student interns to determine whether students working at a company are more properly classified as unpaid interns or employees protected by the Fair Labor Standards Act (“FLSA”).  Under the FLSA, if an individual is deemed a non-exempt employee, that employee must be paid at least a minimum of $7.25 per hour and one and a half times their regular rate of pay for all hours worked in excess of 40 in a workweek.  The minimum wage is higher in many states, including New York and New Jersey.

Previously, the Department of Labor required employers to meet a six-part test to prove that an individual was properly classified as an unpaid intern. One of the benchmarks employers were required to prove under the prior test was that the employer providing the internship opportunity “derives no immediate advantage from the activities of the intern . . . and on occasion its operations may actually be impeded.”

Citing four separate appellate court rulings that had rejected DOL’s six-part test, the DOL recently announced that it would use a more flexible “primary beneficiary” test in order to determine the “economic reality” of whether an individual is an intern or an employee. Going forward, the DOL will consider the following seven factors to determine whether an individual is an intern:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

No single factor described above is determinative and DOL cautions that whether an individual is properly classified as an unpaid intern will depend on the unique facts of any particular case.  Employers should also be aware that some states have their own test for determining whether an intern must be paid. For example, the New York Department of Labor lists eleven separate factors relevant to determining whether an unpaid intern should be considered an employee under New York law.

Before establishing an internship program or allowing a student to intern at a business, companies should examine the “economic reality” of their relationship with interns, review the new DOL Fact Sheet on interns, and consult with a qualified employment lawyer to ensure that the internship program complies with both federal and state wage and hour laws.

Lee E. Tankle