Yesterday, the New York Attorney General (“NYAG”) announced a settlement with national retailer Aldo Group Inc. (“Aldo”) for violation of New York City’s ban the box law, which, among other things, prohibits employers from inquiring into a prospective employee’s criminal history on an initial employment application. The NYAG’s investigation revealed that (i) Aldo’s employment applications impermissibly inquired into the applicant’s criminal history and (ii) Aldo lacked consistent policies and procedures for evaluating the criminal records of applicants and employees, leading store-level managerial employees to believe they had wide latitude in how they could consider the criminal records of applicants and that they could bar applicants with a felony conviction from employment.

Under the settlement terms, Aldo will pay a $120,000 fine to New York State, modify their employment applications to bring them into compliance with New York’s ban the box law, create new policies and training to ensure that its stores individually assess applicants’ criminal histories at the appropriate point in the application process, and report the company’s remediation to the NYAG.

This is the first ban the box settlement reached by the NYAG in 2018, but the fifth such settlement overall. In 2017, the NYAG settled with Marshalls and Big Lots, as reported here.

This settlement should serve as another wake-up call to businesses operating in New York to bring their pre-hiring practices into compliance with New York’s ban the box law. The NYAG’s enforcement efforts are likely to continue and the costs of noncompliance are steep.

Featured on Employment Law This Week: NJ Senate Advances Ban on Sex Harassment Confidentiality Agreements.

The New Jersey Senate wants no more secrecy around harassment claims. On a 34-to-1 vote, the chamber approved legislation banning

involving sexual harassment claims. The bill is still pending in the House, where a vote is expected in the next few weeks. The legislation would also allow victims to keep their identities confidential and would establish jurisdiction in Superior Court, arguably bypassing arbitration agreements.

Watch the segment below.

Our colleague  at Epstein Becker Green has a post on the Hospitality Labor and Employment Law blog that will be of interest to our readers in the retail industry: “Massachusetts Attorney General Enforces State Ban the Box Law for First Time, Fining Three Businesses and Issuing Warnings to 17 Others.”

Massachusetts is one of many states which have adopted legislation, commonly known as a “ban the box” law, prohibiting public and private employers from requesting criminal record information in a prospective employee’s “initial written employment application” and limiting the type and scope of questions an employer may ask a candidate following receipt of an “initial written employment application.” Massachusetts Attorney General Maura Healey announced that her office has settled with four businesses and issued warning letters to 17 others for violations of Massachusetts’s ban the box law, marking the first enforcement efforts by the Massachusetts Attorney General’s Office. …

Read the full post here.

Our colleague at Epstein Becker Green has a post on the Hospitality Labor and Employment Law blog that will be of interest to our readers in the retail industry: “The Generally Prevailing Website Accessibility Guidelines Have Been Refreshed – It’s Time to Officially Welcome WCAG 2.1.”

Following is an excerpt:

After nearly ten years, on Tuesday, June 5, 2018, the World Wide Web Consortium (the “W3C”), the private organization focused on enhancing online user experiences, published the long awaited update to its Web Content Accessibility Guidelines 2.0 (“WCAG 2.0”), known as the WCAG 2.1. Those who have been following along with website accessibility’s ever-evolving legal landscape are well aware that, despite not having been formally adopted by regulators for the vast majority of the private sector, compliance with WCAG 2.0 at Levels A and AA has become the de facto baseline for government regulators, courts, advocacy groups, and private plaintiffs when discussing what it means to have an accessible website. …

Read the full post here.

On May 30, 2018, Vermont Governor Phil Scott signed bill H.707, titled “An Act Relating to the Prevention of Sexual Harassment” (the “Act”). Effect on July 1, 2018, the Act provides expansive protections for employees and prospective employees, as well as some groundbreaking employer obligations and potential penalties for violations of the law.

Among its key provisions, the Act:

  • Applies to all persons “hired to perform work or services,” thereby covering independent contractors and unpaid interns;
  • Prohibits employers from requiring any employee or prospective employee, as a condition of employment, to sign an agreement that waives “a substantive or procedural right or remedy available to the employee with respect to a claim of sexual harassment.” In effect, this provision bans employment agreements requiring that sexual harassment claims be resolved through arbitration;[1]
  • Prohibits employment agreements that prevent or restrict an employee or prospective employee from “opposing, disclosing, reporting, or participating in an investigation of sexual harassment;”
  • Requires that all sexual harassment settlement agreements contain specific statements (discussed below) describing when a claimant-party has the right to disclose information about his or her allegations and the settlement;
  • Mandates that a sexual harassment settlement agreement may not prohibit the claimant-party from working for the employer “or any parent company, subsidiary, division, or affiliate of the employer;”
  • Directs the development of a public education and outreach program, including the establishment of a hotline and web portal for the reporting of sexual harassment complaints to the Vermont Human Rights Commission or the Attorney General’s Office;
  • Requires the Attorney General’s Office to develop a streamlined reporting system;
  • Provides the Attorney General broad powers to investigate and enforce the law, including, among other things, the authority to conduct an inspection of an employer’s records, and in certain circumstances (described below), require the employer to conduct employee training; and,
  • Directs the Office of Legislative Affairs to develop “mechanisms” for essentially voiding non-disclosure agreements in prior settlements where, in a separate, later claim, the alleged harasser is “adjudicated by a court or tribunal of competent jurisdiction to have engaged in sexual harassment or retaliation in relation to a claim of sexual harassment.”

Further, consistent with existing law, which mandates that employers must adopt an anti-harassment policy, the new Act reiterates that employers:

  • Must provide all new hires with a copy of their written policies on sexual harassment, and again distribute copies to all employees if the policies are revised; and
  • Are encouraged, but not required, to provide sexual harassment prevention training to all employees as well as supervisors and managers.

Inclusion of Required Statement in Sexual Harassment Settlements

As noted above, the Act imposes limits on the extent to which a sexual harassment settlement agreement can require confidentiality. Under the new law, employers must expressly state in such settlement agreements that the agreement does not prohibit or restrict the claimant from:

  • Testifying, assisting, or participating in an investigation of a sexual harassment claim conducted by any state or federal agency:
  • Complying with a discovery request or testifying in a proceeding concerning a claim of sexual harassment; and
  • Exercising “any right” the claimant has under State or federal labor relations laws “to engage in concerted activities with other employees for the purposes of collective bargaining or mutual aid and protection.”

The statement also must make clear that the claimant “does not waive any rights or claims that may arise after the date the settlement agreement is executed.”

The State’s Powers to Audit Employers and Enforce the Law

As stated above, the Act grants the Attorney General broad authority to conduct inspections and collect data. Specifically, the Act authorizes the Attorney General’s Office, on 48 hours’ notice to the employer, to “enter and inspect any place of business, question any person who is authorized by the employer to receive or investigate complaints of sexual harassment, and examine an employer’s records, policies, procedures, and training materials related to the prevention of sexual harassment.” This authority includes the right to examine all documents related to sexual harassment claims, including the number and details of such complaints and their resolution.

If, after inspection, the Attorney General’s Office or the Human Rights Commission determines that action is “necessary to ensure the employer’s workplace is free from sexual harassment,” either office can, among other remedies, order the employer to provide annual sexual harassment education and training for up to three years.

Finally, the previously described directive to the Office of Legislative Affairs to explore “mechanisms” which would allow the Attorney General to void non-disclosure agreements in prior settlements after a subsequent finding of sexual harassment in a separate case would be a significant development in this area of the law should it actually be developed and implemented.

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[1] Arguably, mandatory arbitration of sexual harassment claims already was banned in Vermont under another law, which bars arbitration agreements that prevent a person from “seeking or obtaining the assistance of the courts in enforcing his or her constitutional or civil rights.” It should be noted that this arbitration ban, along with others, such as the one recently enacted in New York, may be preempted by the Federal Arbitration Act. With the increase in these kinds of laws, it is likely that, at some point, there will be a court challenge to at least one of them on preemption grounds.

This post was written with assistance from Alison Gabay, a 2018 Summer Associate at Epstein Becker Green.

Our colleagues , at Epstein Becker Green, have a post on the Hospitality Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Ninth Circuit’s Decision Holds That Salary History Is Not a Defense to Equal Pay Claims.”

Following is an excerpt:

The federal Equal Pay Act (“EPA”) mandates equal pay for equal work regardless of sex.  Employers that pay men and women different wages for the same work are strictly liable for violations of the EPA unless they can show that one or more of four exceptions apply to explain the wage disparity. The four statutory exceptions are seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.”  The Ninth Circuit recently took up the question of the meaning of the fourth, catchall exception – “any factor other than sex” – in order to consider whether an employer may rely, in whole or in part, on an employee’s prior salary as a basis for explaining a pay differential in Aileen Rizo v. Jim Yovino. …

Read the full post here.

On March 21, 2018, Washington Governor Jay Inslee signed bill SB 5996 (the “Law”), which prohibits employers from requiring as a condition of employment that employees sign a nondisclosure agreement preventing them from discussing workplace sexual harassment or sexual assault. The Law goes into effect on June 7, 2018.

In addition to sexual offenses in the workplace, the Law covers such incidents that occur at work-related events “coordinated by or through the employer,” or between employees, or between an employer and an employee off the employment premises. The new Law also prevents employers from retaliating against employees who disclose workplace sexual harassment or sexual assault.

Notably, however, the Law does not prohibit an employer from including confidentiality provisions in a settlement agreement with an employee regarding sexual harassment allegations. Further, the Law provides exceptions for human resources, supervisory, and managerial staff who are expected to maintain confidentiality as part of their jobs. It also excludes employees who participate in an “open and ongoing” sexual harassment investigation and are requested to maintain confidentiality during that investigation.

Under the Law, “sexual harassment” is defined broadly to mean unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact, or other verbal or physical conduct or communication of a sexual nature if submission to that conduct or communication is, among other things, used as a factor in decisions affecting that individual’s employment or creates a hostile environment. “Sexual assault” is similarly defined as any type of sexual contact or behavior that occurs without the explicit consent of the recipient.

Employers in other states should be aware that the kind of nondisclosure agreements banned by the new Washington law also may be unlawful under federal labor laws protecting concerted activity (i.e., with at least one other employee) for the employees’ mutual aid or protection.

State Commission to Develop Model Policies and Best Practices

Also on March 21, 2018, Governor Inslee signed bill SB 6471, which directs the Washington State Human Rights Commission to create a “work group” to develop model policies and best practices for employers and employees to keep workplaces safe from sexual harassment. The bill requires the agency to adopt the model policies and best practices developed by the work group and to post them on the agency’s website by January 1, 2019.

Our colleague at Epstein Becker Green has a post on the Wage and Hour Defense blog that will be of interest to our readers in the retail industry: “Federal Court Concludes That 7-Eleven Franchisees Are Not Employees of 7-Eleven.

Following is an excerpt:

In November 2017, four convenience store franchisees brought suit in federal court against 7-Eleven, Inc., alleging that they and all other franchisees were employees of 7-Eleven. The case was filed in the United States District Court for the Central District of California, entitled Haitayan, et al. v. 7-Eleven, Inc., case no. CV 17-7454-JFW (JPRx).

In alleging that they were 7-Eleven’s employees, the franchisees brought claims for violation of the federal Fair Labor Standards Act (“FLSA”) and the California Labor Code, alleging overtime and expense reimbursement violations. The trial court granted judgment in 7-Eleven’s favor, concluding that 7-Eleven was not the four franchisees’ employer under California law or federal law. …

Read the full post here.

Featured on Employment Law This Week:  The Ninth Circuit held that certain auto service advisors were not exempt because their position is not specifically listed in the FLSA auto dealership exemption.

The 9th relied on the principle that such exemptions should be interpreted narrowly. In a 5-4 decision last week, the Supreme Court found no “textual indication” in the FLSA for narrow construction. Applying a “fair interpretation” standard instead, the Court ruled that the exemption applies to service advisors because of the nature of the work.

Watch the segment below and read our recent post.

In any given week, dozens of lawsuits are filed in federal courts across the United States alleging that businesses violate Title III of the Americans with Disabilities Act (“ADA”), which governs the accessibility of places of public accommodation. While many of these lawsuits now focus on website accessibility, a significant number of them continue to focus on the alleged inaccessibility of brick-and-mortar business establishments, particularly restaurants and hotels. These “drive by” ADA lawsuits often focus on the inaccessibility of architectural elements that can be easily assessed by “testers” without even frequenting the establishment in question—e.g., parking spaces, sidewalks, entrances, public restrooms, host/check-in stations, and pools—sometimes even relying on online images. Moreover, the allegations asserted are often highly technical in nature—living and dying by a matter of centimeters—known only to those who specialize in accessibility. Notably, the vast majority of these claims are brought by a relatively small community of serial plaintiffs and plaintiffs’ counsel for whom achieving compliance is secondary to quickly obtaining a settlement payment and attorneys’ fees.

On February 15, 2018, in an effort to curb such drive-by ADA lawsuits, the U.S. House of Representatives passed legislation—the ADA Education and Reform Act (H.R. 620) (“ADAERA”)—that would require that would-be plaintiffs first provide written notice of alleged architectural barriers and a period to cure before being able to commence a Title III litigation in federal court. Under ADAERA, before plaintiffs could file a Title III claim alleging architectural barriers in federal court, they would first have to provide written notice of the existence of barriers to accessibility (containing sufficient specificity, and citations to the relevant sections of the ADA, to allow the barriers to be identified by the business). The business would then have 60 days from receipt of the notice to provide a plan for the remediation of the existing barriers and an additional 120 days to eliminate the barriers or make substantial progress in doing so. If the business does not respond to the initial letter within 60 days or does not make substantial progress in eliminating the barriers within the following 120 days, then the plaintiff can commence a federal Title III litigation. ADAERA also seeks to create a model program for the use of alternative dispute resolution mechanisms in the resolution of federal Title III claims (e.g., a mediation program that stays discovery while the mediation proceeds). Of course, before it can become law, ADAERA still needs to be passed by the Senate (given the Senate’s current composition, there is no guarantee that it will pass) and then signed by President Trump.

It should come as no surprise that ADAERA has been met with a wide range of reactions. Proponents of the bill argue that ADAERA would preserve the intended purpose of Title III—removing barriers to accessibility—but eliminate the existing incentives for plaintiffs’ counsel to flood the courts with lawsuits premised on minute technical architectural violations with the primary goal of churning up and quickly collecting fees via a settlement. Opponents argue that, as the ADA has been law for more than 25 years, businesses that are not currently in compliance with Title III should not get the benefit of notice and additional time to comply with the long-established law. They fear that ADAERA would encourage businesses to ignore their Title III obligations until receiving a notice of deficiency.

Even if ADAERA, as currently constituted, ultimately becomes law, it could very well have unintended consequences that could create even less desirable circumstances for businesses. First, ADAERA would not prevent plaintiffs from bringing similar cases in state court under state and local accessibility laws, which often are even broader and more liberally interpreted than their federal counterpart. Indeed, plaintiffs often already include such claims as part of their federal actions because, unlike under the ADA, many state and local accessibility statutes allow plaintiffs to seek the recovery of damages and/or civil penalties. Second, as ADAERA does not impose notice requirements for claims under Title III relating to businesses’ obligations to (i) make reasonable modifications to their policies, practices, and procedures, or (ii) provide auxiliary aids and services to enable effective communication, plaintiffs might simply turn their focus to a different type of federal Title III claim. In both of these instances, the result could very well be more protracted litigations under less favorable conditions (e.g., a less efficient forum or less clarity regarding requirements for compliance).

While ADAERA still has a way to go before becoming law, this is the furthest a legislative effort to reform Title III to prevent the rampant proliferation of drive-by filings has progressed, and it is worth tracking.

UPDATE: On March 28, 2018, forty-three Democratic senators united to protest the proposed H.R. 620. The filibuster-proof bloc sent a letter to Majority Leader Mitch McConnell warning that the proposal “will never receive a vote in the United States Senate during the 115th Congress.” The letter also points out the H.R. 620, as contemplated, would do nothing to curb plaintiffs from pursuing damages claims under state/local laws. The senators instead favor investing in greater education about Title III’s requirements and the development of a mediation program.

A version of this article originally appeared in the Take 5 newsletter An Assortment of Legal Issues Hospitality Employers Should Be Considering This Year.”