Gibbons Law Alert

Gibbons Law Alert

Author: Richard S. Zackin

Supreme Court Reviews Employer Reimbursement Provisions in Employee Benefits Plans

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Posted in Employee Benefits

On May 2, 2013

In US Airways, Inc. v .McCutchen, decided on April 16, 2013, the U.S. Supreme Court once again emphasized that in disputes involving employee benefits plans governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”), it is the unambiguous language of the plan in question that controls the rights of the parties and that general equitable principles cannot be used to supersede the terms of the plan. In areas where the plan is silent, however, courts may employ appropriate equitable principles to construe the plan. At issue in US Airways was the reimbursement provision of an employer’s health benefits plan that purported to give the employer the right to recoup medical benefits paid to an employee injured in an automobile accident who thereafter recovered funds from third parties as a result of the accident, although the amount the employee actually recovered after paying his attorney was less than the amount he owed his employer. The Supreme Court rejected the employee’s attempt to apply equitable principles of unjust enrichment to limit the application of the reimbursement provision. Holding, however, that the plan was silent as to the allocation of the costs, including attorneys fees, incurred by the employee in his efforts to recover from third parties, the Court further held the equitable principle known as “the common fund rule” should apply, entitling the employee to reasonable attorneys fees from the funds recovered. The decision makes clear the importance to employers of accomplishing the objectives of their benefits plans with clear-cut language.

The Supreme Court Addresses Offers of Judgment in the Context of Collective Actions

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Posted in Wage and Hour

On April 29, 2013

In Genesis Healthcare Corp. v. Symcyk, the U.S. Supreme Court, by a vote of 5 to 4, rejected an employee’s contention that her employer should not have been permitted to thwart her attempt to bring a collective action under the Fair Labor Standards Act (“FLSA”) by making an offer of judgment to her under Rule 68 of the Federal Rules of Civil Procedure that included all of the relief to which she would have been entitled in connection with her individual FLSA claim. The Court’s April 16, 2013, ruling provides encouragement to employers who may seek to block an FLSA collective action with an offer of judgment–although, as detailed below, the Court’s opinion did leave one issue unresolved. The Court’s opinion also applies to cases brought under the Age Discrimination in Employment Act (“ADEA”) and the Equal Pay Act (“EPA”), as both of those statutes are governed by the collective action procedures of the FLSA rather than by the class action procedures of Rule 23 of the Federal Rules of Civil Procedure.

The New Jersey Appellate Division Holds that Requiring Self-Declared Alcoholics to Abstain From Alcohol Use and to Submit to Alcohol Testing Constitutes Handicap Discrimination in Employment

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Posted in Disability

On December 10, 2012

In a recent decision, A.D.P. v. ExxonMobil Research and Engineering Company, the New Jersey Appellate Division held that an employer’s drug and alcohol policy requiring recovering alcoholics to submit to periodic testing to determine whether they have used alcohol since returning to work after undergoing rehabilitation constitutes handicap discrimination in violation of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 (the “LAD”). The decision presumably applies as well to recovering drug addicts. Employers with alcohol and drug policies should immediately evaluate and, if necessary, modify them in light of the Court’s decision.

EEOC v. United Airlines, Part II — Denying a Disabled Employee’s Request to Fill a Vacant Position as an Accommodation Because More Qualified Candidates are Available Remains Problematic Under the ADA

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Posted in Disability

On September 12, 2012

Four months ago we reported on the decision of the United States Court of Appeals for the Seventh Circuit upholding United Airlines’ position in a lawsuit brought by the Equal Employment Opportunity Commission (EEOC) that United did not violate the Americans with Disabilities Act (ADA) by its policy of filling vacant positions with the most qualified candidate even though another employee, unable to perform his own job because of a disability, had applied for the vacant position as a reasonable accommodation. The three-judge panel of the Seventh Circuit that issued that decision has now vacated its opinion and has decided the case in favor of the EEOC. The panel’s reversal of its position is not that surprising. The panel originally ruled in favor of United because it felt bound by a Seventh Circuit ruling in a similar case decided in 2000, EEOC v. Humiston-Keeling. The panel, however, questioned that earlier decision in light of the Supreme Court’s 2002 decision in US Airways, Inc. v. Barnett and thus recommended that the issue be considered by the court en banc (i.e. by the entire membership of the Seventh Circuit). The EEOC promptly moved for reconsideration en banc. Each member of the court expressed the view that EEOC v. Humiston-Keeling should be overruled and, in lieu of formally rehearing the case en banc, simply directed the original panel to vacate its decision and issue a new opinion.

Third Circuit Establishes Test for Determining “Joint Employer” Liability Under the FLSA

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Posted in Wage and Hour

On July 26, 2012

A recent Third Circuit decision, In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, addresses the circumstances under which a parent company will be liable under the Fair Labor Standards Act (“FLSA”) as a “joint employer” of employees of the parent’s subsidiaries. The Third Circuit’s opinion gives concrete guidance to employers confronted by the broad definition of “employer” set forth in the FLSA’s regulations, providing a standard for assessing joint employer liability. (The FLSA defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”) Although the standard announced by the Third Circuit is by no means a bright-line test, it does provide fair notice to employers of the factors that will determine joint employer status.

Seventh Circuit Applies FLSA’s Administrative Exemption to Pharmaceutical Sales Representatives

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Posted in Wage and Hour

On May 29, 2012

The United States Court of Appeals for the Seventh Circuit has held that two pharmaceutical companies did not violate the Fair Labor Standards Act (FLSA) by failing to pay overtime to their sales representatives, concluding that the FLSA’s “administrative exemption” from the statute’s overtime requirements was applicable to these employees. Although the Court’s opinion focused on the job duties of pharmaceutical sales representatives (PSRs), the Court’s analysis of the general scope of the administrative exemption may prove useful to employers in other industries.

Denying a Disabled Employee’s Request to Fill a Vacant Position as an Accommodation Because More Qualified Candidates are Available Remains Problematic Under the ADA

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Posted in Disability

On May 11, 2012

Are employers obligated, as a reasonable accommodation, to fill a vacant position with an employee whose disability renders him unable to perform his own job when other candidates for the vacant position are more qualified? The position of the Equal Employment Opportunity Commission (EEOC) that employers have that obligation under the Americans with Disabilities Act (ADA) was recently rejected by a three-judge panel of the Court of Appeals for the Seventh Circuit. But the panel took the unusual step of recommending that the issue be considered by the court en banc (i.e. by the entire membership of the Seventh Circuit). In the great majority of circuits, the issue remains unsettled, and employers must tread carefully when responding to such accommodation requests.

EEOC Publishes New ADEA Regulations for the “Reasonable Factors Other Than Age” Defense

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Posted in Discrimination

On March 30, 2012

The Equal Opportunity Commission (“EEOC”) today published its final regulations and commentary concerning the “reasonable factors other than age” provision of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”), as that provision pertains to claims of disparate impact. A disparate impact claim is one that alleges that the implementation by an employer of a policy or practice, although non-discriminatory on its face, has had an adverse impact on a category of employees protected by the laws against discrimination in employment.

New Jersey’s New Trade Secrets Act

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Posted in Restrictive Covenants

On January 10, 2012

New Jersey employers should be aware that yesterday Governor Chris Christie signed into law the New Jersey Trade Secrets Act (“the Act”), which for the first time codifies the law in New Jersey concerning the misappropriation of trade secrets. The new law is derived largely from, although is not identical to, the Uniform Trade Secrets Act, variations of which have been adopted in the great majority of states. New Jersey companies who are concerned about potential trade secret misappropriation by current or former employees should study the new law carefully.

Donelson Update — Employer Liable for Punitive Damages and Attorneys’ Fees Under CEPA

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Posted in Whistleblower

On November 15, 2011

In our June 15, 2011 post, we reported on Donelson v. DuPont Chambers Works, a case in which two employees alleged they were retaliated against after they raised safety concerns about the employer’s manufacture of a dangerous chemical. The jury rendered a verdict in favor of one employee (Seddon) and against the other (Donelson). On appeal, the New Jersey Supreme Court held that the employer was liable under New Jersey’s Conscientious Employee Protection Act (“CEPA”) for the economic losses of Seddon, who was unable to continue working because of his mental injuries caused by the employer’s retaliatory actions. The Court reversed the decision of the Appellate Division that Seddon could not recover his economic losses because he had not been discharged or constructively discharged from his job. The Supreme Court remanded the case to the Appellate Division to decide the issues of punitive damages and attorneys’ fees.

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