Continuing New Jersey’s efforts to eliminate and to hold employers accountable for employee misclassification, the state’s Department of Labor and Workforce Development (NJDOL) recently adopted Regulations implementing a 2010 law (“Law”) that empowers the NJDOL Commissioner (“Commissioner”) under certain circumstances to direct the suspension or revocation of one or more licenses held by an employer who has failed to maintain and report required State wage, benefits and tax records or who has failed to pay wages, benefits, taxes or other contributions required by State law.  The Regulations specifically empower the Commissioner to direct the suspension and revocation of State-issued occupational and professional licenses, such as for physicians, dentists and other licensed healthcare professionals, where such individuals have management responsibilities sufficient to be deemed an “employer.”  Incorporating the definition of employer contained in Article 1 of New Jersey’s “Wages” law N.J.S.A. 34:11-4.1(a), the Regulation states,  “the officers of a corporation and any agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation.”

By way  of summary, under the Law, upon the Commissioner’s finding that an employer has failed to maintain and report all required documentation regarding wages, benefits and taxes and has failed to pay the wages, benefits, taxes or other contributions due – for even a single employee –  an employer will face a NJDOL audit within 12 months.  Such taxes and contributions owed to the State include for example, employment taxes, and unemployment and temporary disability contributions.

If the NJDOL audit reveals further violation, the Commissioner may direct other New Jersey agencies to suspend or revoke State-issued licenses held by the offending employer. In addition, the employer will be subject to another audit within 12 months. If the Commissioner finds, after hearing, that the employer has continued in its failure to comply with the Law, the Commissioner is empowered to direct permanent revocation of the employer’s State-issued licenses.

Since taking office in 2018, New Jersey under Gov. Phil Murphy has taken action targeting employee misclassification, including the establishment of a Task Force on Employee Misclassification (“Task Force”) (see Task Force Act Now Advisory) and a sweeping “Wage Theft” law (see Wage Theft Act Now Advisory), which added substantial penalties for failure to pay wages and benefits to employees, including workers who were incorrectly classified as exempt or independent contractors.  The Regulations, further highlight the Murphy Administration’s focus on this issue by adding another potential element of personal liability for such violations for New Jersey’s licensed professionals who are deemed employers.

In September 2019, the New Jersey Division of Rights (“DCR”) issued enforcement guidance (“Guidance”) clarifying and explaining how the DCR applies the state’s Law Against Discrimination (“LAD”) to discrimination based on hairstyles, particularly with respect to those “closely associated with Black people.”  The Guidance states that the LAD’s prohibition on discrimination based on race encompasses discrimination that is ostensibly based on hairstyles that are inextricably intertwined with or closely associated with race and therefore prohibits employers from refusing to hire or otherwise treating “a Black person differently because they wear their hair in a style that is closely associated with being Black.”

Moreover, singling out such a hairstyle will be deemed to constitute direct evidence of disparate treatment and discrimination on the basis of race in violation of the LAD.

The Guidance also applies to “discrimination based on hairstyles that are inextricably intertwined with or closely associated with other protected characteristics, such as hairstyles associated with a particular religion,” e.g., payot (sidelocks) worn by Orthodox Jewish men and Sikh persons who wear uncut hair.

The Guidance directs that employers may not:

  • “enforce grooming or appearance policies that ban, limit, or restrict hair styled into twists, braids, cornrows, Afros, locs, Bantu knots, fades, or other hairstyles closely  associated with Black racial, cultural and ethnic identity;”
  • Selectively enforce facially neutral grooming policies – such as requirements to maintain a “professional” appearance; for example, Black employees with shoulder length hair or braids cannot be told to change their hairstyle, if white employees with long hair are permitted to maintain their hairstyles; or
  • “justify policies that explicitly or in practice, ban, limit, or restrict natural hair or hairstyles associated with Black people based on a desire to project a certain ‘corporate image,” because of concerns about ‘customer preference’ or customer complaints, or because of speculative health or safety concerns.”

According to the Guidance, any health and safety justification must “be rooted in objective, factual evidence – not generalized assumptions – that the hairstyle in question would actually present a materially enhanced risk of harm to the wearer or to others.”  Moreover, the guidance requires employers to consider whether a legitimate health or safety risk can be eliminated or reduced by reasonable alternatives, such as hair ties, hairnets, or other head covering, to banning or restricting a hairstyle.

The Guidance largely tracks enforcement guidance issued earlier this year by the New York City Human Rights Commission and follows the enactment of legislation in California and New York State amending their civil rights and education laws to add “traits historically associated with race, including but not limited to hair texture and protective hairstyles” to the statutory definitions of race.  Similar legislation has been proposed in the New Jersey legislature, but has not been enacted.

Although the Guidance is not statutory and reflects only the DCR’s interpretation of the LAD, given recent trends and the deference afforded to administrative pronouncements, New Jersey employers should review their workplace grooming and appearance policies to ensure compliance with the newly issued legal enforcement guidance.

new-jersey-health-doctor-stethoscope-216585487

As discussed in our March 28, 2019 blog post, New Jersey adopted its own individual health insurance mandate, the   New Jersey Health Insurance Market Preservation Act (“NJHIMPA”).  The NJHIMPA requires, with certain qualifying exemptions, New Jersey residents to have minimum essential health coverage. New Jersey employers must verify health coverage information provided by individuals. To assist with employer reporting, New Jersey launched an official website with guidance on the filing requirements.

Recent updates to the official website, which was lasted updated on July 25, 2019, are summarized below.

Use of Forms 1094 and 1095 Are Expected to Satisfy Employer Reporting in New Jersey

The State requires that employers provide New Jersey taxpayers and the State with the same Forms 1094 and 1095 health-care coverage information they send to the IRS. Employers will file health coverage forms through New Jersey’s system for filing of W-2 forms. Since March 28, 2019, the State has provided additional guidance encouraging companies to send data pertaining only to New Jersey full-year and part-year residents. However, for ease of filing, New Jersey will accept the same 1094/1095 data files sent to the IRS, even if they include data about individuals who are not residents of New Jersey. In other words, the State will accept “bulk” files.

Bulk Files May Raise Privacy and Other Laws

The State cautions out-of-state companies who provide information on non-residents of New Jersey that they should consult privacy and other laws pertaining to residents of other states before sending any sensitive or personal data to New Jersey.

Electronic Filing is Required

Updated guidance from the State provides that there is no paper filing option available.

Insurers or employers can submit the required health insurance coverage returns using their Division of Revenue and Enterprise Services (DORES) MFT SecureTransport service user credentials. For those without MFT SecureTransport, user credentials and/or technical specifications may be obtained by emailing e-GovServices@treas.nj.gov. Files for multiple companies can be submitted via a single file (that must not be in a zipped file format) from a single MFT SecureTransport account.

New Jersey strongly encourages filers to participate during their testing period, which will run from July 1, 2019 through September 1, 2019.

Filing Deadline for the 2019 Tax Year is March 31, 2020

The deadline to electronically file 2019 coverage information for the 2019 tax year is March 31, 2020. This deadline tracks the deadline to file Forms 1094 and 1095 electronically with the IRS. Under preliminary guidance, the deadline was earlier, by February 15, 2020.

Employer Takeaways

Employers in New Jersey and out-of-state employers with New Jersey residents should work with legal counsel and their vendors to assess their obligations and prepare for the 2019 tax year reporting obligations. They should consider participating in the State’s testing period and continue to monitor the State’s website for further updates on their reporting obligations.

California, Massachusetts, Rhode Island, Vermont, and the District of Columbia also have adopted individual health insurance mandates, and several other states including Connecticut, Hawaii, Maryland, Minnesota, and Washington are considering their own individual health insurance mandates.

As more states adopt mandates, employers operating in multiple states should monitor their obligations in the various jurisdictions where their employees reside and expect reporting obligations to become more complex than they are under the ACA.

Following an effort in the state legislature to legalize recreational marijuana, on July 29, 2019, Governor Andrew Cuomo signed S.6579A/A.8420 (the “Law”), a law decriminalizing marijuana possession in New York State. The Law will take effect on August 28, 2019. The Law expunges many past convictions for marijuana use and reduces the penalty for possession of small amounts (less than two ounces) of the drug from a misdemeanor to a violation.

Importantly, the Law does not legalize marijuana, and – relevant to this blog – therefore provides no employment protections for users or possessors of marijuana. But employers should stay tuned, as sponsors of the “Marihuana Regulation and Taxation Act” (S.1527B/A.1617B) – a bill to legalize adult-use marijuana in New York – have vowed to revive it in the next legislative session.

marijuana_medical_marijuana_cannabis_dispensary_shutterstock_1251170581_1280x720

On August 9, 2019, Illinois Governor Pritzker signed legislation amending the state’s current medical marijuana pilot program. The Compassionate Use of Medical Cannabis Program Act (the “Medical Cannabis Act”) makes the medical marijuana program, which was initially enacted as a pilot program in 2013, permanent and expands the qualifying medical conditions for a medical marijuana card to include at least 12 new conditions, including chronic pain, irritable bowel syndrome, migraines, osteoarthritis, and ulcerative colitis. The Medical Cannabis Act also provides easier access to a medical marijuana card by expanding the range of medical professionals who can certify eligibility of applicants to the program. In addition to physicians, advanced practice registered nurses or licensed physician assistants can diagnose and certify an individual’s eligibility for the medical marijuana program. The amendments to the medical marijuana pilot program are effective immediately.

The Medical Cannabis Act continues to protect the status of a registered medical marijuana cardholder and prohibits an employer from discriminating against a cardholder based on his or her status as a registered qualifying patient of medical marijuana. However, employers may continue to take into account an employee’s medical marijuana cardholder status, if failing to do so would force the employer to violate federal law, such as the Department of Transportation regulations or the provisions of the Drug Free Workplace Act.

The Medical Cannabis Act does not change the express workplace protections previously included in the state’s medical marijuana pilot program. Employers should be able to continue to enforce zero-tolerance or drug free workplace policies, discipline a cardholder for violating a workplace drug policy, and discipline an employee based on a good faith belief that an employee is impaired at work. Similar to Illinois’ recreational marijuana law (the Cannabis Regulation and Tax Act) which takes effect January 1, 2020, if an employer disciplines a marijuana cardholder based on its good faith belief of impairment, the employer must afford the employee a reasonable opportunity to contest the basis of the determination.

However, employers should be aware that they may need to engage in an interactive process to determine whether they are able to accommodate an employee’s off-duty use of medical marijuana. Recent rulings in federal and state courts outside of Illinois have found that, depending on the language of the state’s anti-discrimination or medical marijuana statutes, the use of medical marijuana may be a reasonable accommodation for an employee, when the use occurs outside of working hours and does not adversely affect safety or job performance.  The Illinois Human Rights Act prohibits employment practices that discriminate on the basis of a person’s actual or perceived disability, if the disability is unrelated to the person’s ability to perform the job in question. Thus, for example, if an employee contests his employer’s impairment determination by informing his manager that he has a medical marijuana card for migraines, his employer may need to engage in the interactive process prior to taking a disciplinary action.

By legalizing recreational marijuana use and expanding the medical marijuana program, marijuana use in Illinois is likely to become more prevalent, and employers can expect an increase in marijuana-related issues to infiltrate the workplace.   Accordingly, Illinois employers should take steps now to ensure they are ready to address marijuana-related issues in the workplace. Some actions for employers to consider include:

  1. Review and update workplace drug policies to ensure employees are on notice of prohibited workplace conduct and the disciplinary action and process for violating the policy. The policy should include a written procedure for employees to be able to contest a cannabis-based disciplinary determination. In addition, for employment policies that cover employees in multiple states, consider whether to include state-specific information relating to Illinois’ medical and recreational marijuana laws effect on Illinois-based employees. Similar information may be required to tailor specific language for employees in other states that have their own recreational and/or medical cannabis regulations to ensure that employees clearly understand the state-specific cannabis regulations and the Company’s workplace drug policies.
  2. Review and update reasonable accommodation policies, as employers may need to engage in an interactive process and make an effort to accommodate an employee’s off-duty use of medical marijuana.
  1. Train supervisors on how to recognize, properly document and promptly report the signs of suspected marijuana impairment. Illinois’ medical and recreational marijuana laws provide specific symptoms to look for when making a determination that an employee is “impaired” or “under the influence” of marijuana,  including  the employee’s speech, physical dexterity, agility, coordination, demeanor, irrational or unusual behavior, negligence or carelessness in operating equipment or machinery, disregard for the employee’s own safety or the safety of others, involvement in any accident resulting in serious damage to equipment or property, disruption of a production or manufacturing process, and carelessness that results in any injury to the employee or others. This training will help establish that an employer had a “good faith belief” that the employee was impaired on the job and therefore that discipline was warranted and lawful. This training should also include reminders that company policy must be applied in a nondiscriminatory manner.

Please contact James Oh and Kathleen Barrett if you would like to discuss assistance in preparing your workplace for handling marijuana-related issues in Illinois or elsewhere.

Our Employee Benefits and Executive Compensation practice now offers on-demand “crash courses” on diverse topics. You can access these courses on your own schedule. Keep up to date with the latest trends in benefits and compensation, or obtain an overview of an important topic addressing your programs.

In each compact, 15-minute installment, a member of our team will guide you through a topic. This on-demand series should be of interest to all employers that sponsor benefits and compensation programs.

In our newest installment, Tzvia Feiertag, Member of the Firm in the Employee Benefits and Executive Compensation practice, in the Newark office, presents “HIPAA Privacy and Security Rule Compliance.”

While employers themselves are not directly regulated by the Privacy and Security Rules of the Health Insurance Portability and Accountability Act (“HIPAA”), most employers that sponsor group health plans have ongoing compliance obligations. This crash course offers a brief overview of who and what is covered by these rules, why employers should care about HIPAA compliance, and five tips to maintain compliance.

Click here to request complimentary access to the webinar recording and presentation slides.

This Employment Law This Week® Monthly Rundown discusses the most important developments for employers in August 2019.

This episode includes:

  • Increased Employee Protections for Cannabis Users
  • First Opinion Letters Released Under New Wage and Hour Leadership
  • New Jersey and Illinois Enact Salary History Inquiry Bans
  • Deadline for New York State Anti-Harassment Training Approaches
  • Tip of the Week

See below to watch the full episode – click here for story details and video.

We invite you to view Employment Law This Week® – tracking the latest developments that could impact you and your workforce. The series features three components: Trending News, Deep Dives, and Monthly Rundowns. Follow us on LinkedIn, Facebook, YouTube, Instagram, and Twitter and subscribe for email notifications.

new_jersey_garden_state_license_plate_shutterstock_711126331_1280x720

On July 16, 2019, the New Jersey Supreme Court (“Court”) granted certification to review the Appellate Division’s decision in Wild v. Carriage Funereal Holdings, which ruled that the New Jersey Law Against Discrimination’s (“LAD”) requirement that employers reasonably accommodate disabilities applied to an employee’s use of medical cannabis legally prescribed pursuant to New Jersey’s Compassionate Use of Medical Marijuana Act (“CUMMA”[1]). Employers may expect to see additional direction regarding their obligation to accommodate employees’ use of legally prescribed medical cannabis, particularly in light of amendments to CUMMA enacted after the Appellate Division’s decision.

In Wild, which we discussed in a recent client alert, plaintiff Justin Wild (“Wild”) alleged that his employer, Carriage Funeral Holdings (“Carriage Funeral”) failed to reasonably accommodate his disability (cancer) and unlawfully discharged him in violation of the LAD because he used medical marijuana, as legally permitted by CUMMA. Carriage Funeral terminated Wild’s employment after he tested positive for cannabis following an on-duty motor vehicle accident.

The trial court dismissed the lawsuit holding that the fact Wild tested positive for cannabis  constituted a legitimate business reason for his discharge because cannabis use (medical or otherwise) remains prohibited under federal law. In rendering its decision the trial court relied on a provision in the law stating that CUMMA did not require employers to reasonably accommodate licensed use of medical marijuana in the workplace. The Appellate Division reversed, holding that the fact that CUMMA did not “require” employers to accommodate an employee’s use of  medical marijuana in the workplace, did not affect an employer’s requirement under the LAD to reasonably accommodate an employee’s disability, which could include an employee’s off-duty and off-site use of medical cannabis.

As we recently reported, since the Appellate Division’s decision in Wild, New Jersey amended CUMMA. Among other things, the amendments (“Amendments”) prohibit employers from taking an adverse employment action[2] against a current or prospective employee based upon the individual’s status as a “registered qualifying patient” of medical marijuana. The Amendments additionally require employers that maintain drug-testing policies to offer applicants and employees the right to respond, in specific ways, to a drug test that came back positive for cannabis. Of particular note, the Amendments deleted the provision in the original statute stating that nothing in the act imposed “an obligation on employers to accommodate an employee’s use of medical marijuana.” Court-watchers will certainly be curious to see if the Court addresses the issue of requiring employers to accommodate what is still considered a federal crime, and whether not an employer may plead that it is a per se hardship to require them to accommodate an employee’s illegal acts, such as the use of medical marijuana.

This post was written with assistance from Radhika Gupta, a 2019 Summer Associate at Epstein Becker Green.

[1] The amendments to the law changed the statute’s name to the “Jake Honig Compassionate Use of Medical Cannabis Act.”

[2] Under the Law, “adverse employment action” means “refusing to hire or employ an individual, barring or discharging an individual from employment, requiring an individual to retire from employment, or discriminating against an individual in compensation or in any terms, conditions, or privileges of employment.”

On July 9, 2019, Hawaii became the 26th state to decriminalize possession of small amounts of marijuana. HB 1383 (the “Law”), which became law when Governor David Ige allowed the veto deadline to pass without signing or striking down the bill, decriminalizes the possession of up to three grams of marijuana. It will go into effect on January 11, 2020.

Under the Law, those caught with up to three grams of marijuana will no longer face jail time but will still face a fine of $130. This is the smallest amount of marijuana that any state has decriminalized so far. Currently, possession of any amount of cannabis is punishable by up to 30 days in jail, a criminal record, and a $1,000 fine.

The Law also provides for the expungement “of criminal records pertaining solely to the possession of three grams or less of marijuana.” The state has amended its expungement statute in order to reflect this change, noting that courts must grant an expungement order, provided the individual is not facing any other criminal charges, and provided that the amount of marijuana possessed was three grams or less.

The Law establishes a “Marijuana Evaluation Task Force,” in an effort to examine other states’ laws, penalties and outcomes related to the decriminalization and legalization of marijuana. The task force, which will be active until June 30, 2021, will make recommendations on further changing marijuana laws in Hawaii.

The Law does not provide employment protections for recreational users, nor does it modify Hawaii’s Medical Use of Cannabis Law, which was amended last year in part to form a working group to evaluate potential discrimination against medical cannabis users and the employment protections made available in other states.

Employers and health care professionals should be ready to handle issues that arise with the potential conflict between state and federal law in devising compliance programs, both in terms of reporting and human resources issues, including practices and policies addressing drug use and drug testing. States continue to consider – and pass – legislation to decriminalize and legalize cannabis (both medicinal and recreational), and we are slowly marching toward 50-state legalization. All organizations – and particularly those with multi-state operations – should review and evaluate their current policies with respect to marijuana use by employees and patients.

This post was written with assistance from Radhika Gupta, a 2019 Summer Associate at Epstein Becker Green.

This Employment Law This Week® Monthly Rundown discusses the most important developments for employers in July 2019. Both the video and the extended audio podcast are now available.

This episode includes:

  • State Legislation Heats Up
  • NLRB Overturns Another Long-Standing Precedent
  • SCOTUS October Term 2018 Wraps Up
  • Tip of the Week: How inclusion and trust can increase innovation in the workplace

See below to watch the full episode – click here for story details, the video, and the extended audio podcast.

Stay tuned: Sign-up for email notifications and subscribe to the extended podcast edition on your preferred platform – Apple Podcasts, Google Play, Overcast, Soundcloud, Spotify, Stitcher.