United States: Employment Reminders For 2015: New York And New Jersey Employers Can Contractually Limit Employees' Time To File Employment-Related Claims; New York And New Jersey Minimum Wage Increases; New York's Annual Pay Notice Reminder

New Jersey and New York Appellate Courts Enforce Provision in Job Application Reducing Statute of Limitations

This year, New Jersey's Appellate Court enforced a provision in an employment application that limited the amount of time in which an employee could sue the employer to no more than 6 months after the alleged adverse employment action.  A New York appellate court last year reviewed the same provision, in the same application, and reached the same conclusion.  These rulings are significant to employers as they provide a roadmap to limit exposure to employment-related claims and lawsuits.

The Decisions

In Rodriguez v. Raymours Furniture, decided by the New Jersey Appellate Division, the plaintiff applied for a position with Raymours Furniture.  As part of the application process, he completed and signed an application which included the following provision:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT. I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.

Over three (3) years later, the plaintiff was laid off based on his poor job performance.  Approximately nine (9) months later he filed suit alleging that his termination was in retaliation for having filed a worker's compensation claim and constituted disability discrimination in violation of New Jersey's Law Against Discrimination (LAD).    The lawsuit was well within the two (2) year statute of limitations applicable to those claims.

The trial court granted Raymours Furniture's motion for summary judgment on the grounds that the complaint was time-barred given the waiver contained in the employment application and dismissed the complaint.  The Appellate Division affirmed.

The Appellate Court found the waiver contained in the application enforceable.  As an initial matter, the court cited the well-established principle articulated by the U.S. Supreme Court that parties to a contract may reasonably reduce a statute of limitations.   Moreover, the court stressed the following: (i) the provision was prominent, in capital letters under a bold and capitalized heading; (ii) the provision was conspicuously placed above the signature line in the application and was not "buried" within the document; (iii) the plaintiff was not under any pressure to sign the application and was permitted to take the application home and complete it at his leisure; (iv) the language of the provision was clear and simple; and (v) the abbreviated 6 (six) month filing period was reasonable.

The court cautioned, however, that contractually shortened limitations periods will generally be enforced only as to those claims that do not require the exhaustion of administrative remedies before proceeding to court.  Contractually shortened limitations periods, will not be enforceable as to most federal employment claims, such as those filed under Title VII, the Americans with Disabilities Act ("ADA") and the Age Discrimination in Employment Act ("ADEA"), which require the exhaustion of administrative remedies prior to proceeding to court.

The New York decision, Hunt v. Raymour & Flanigan, involved the very same employer, employment application, and waiver provision as the New Jersey proceeding in Rodriguez.

In Hunt, the plaintiff signed the application containing the waiver provision before he was hired.  The plaintiff was eventually discharged and, more than six (6) months later, filed a lawsuit alleging unlawful discrimination and retaliation under the New York State and New York City Human Rights Laws.  Raymour & Flanigan moved to dismiss the complaint, as it did in Rodriguez, since the claims were time-barred by the waiver provision contained in the employment application.

The Appellate Division, reversing the trial court, agreed with Raymour & Flanigan and dismissed the action.  The court specifically held that parties to a contract may agree to limit the period of time within which an action must be commenced to a period shorter than that provided by the applicable statute of limitations.  The court explained that, unless the contract is one of adhesion or the product of overreaching, or the altered period is unreasonably short, the abbreviated period of limitation will be enforced.

What This Means for You

New Jersey and New York employers should revise their employment applications to include shorter limitations periods for bringing employment-related claims in accordance with the following critical guidelines:

  • The limitations period should be reasonable.  In Rodriquez and Hunt six (6) months was considered a reasonable time period.  Enforcement of a shorter limitations period could be problematic.
  • The employment application should be relatively short and written in clear, understandable language. 
  • The provision containing the shorter limitations period should be set out in bold typeface, with a larger and/or capitalized font and positioned prominently immediately above the signature line. 
  • The application should contain a directive for applicants to read the application carefully.
  • The applicant should not be rushed or pressured in reviewing and completing the application and should be permitted to complete the application at home.

While the waiver provision at issue in Rodriguez and Hunt was contained in an employment application, the rulings in these decisions are not limited to applications.  Employers could include such a provision in offer letters, employment agreements, and handbooks, so long as they adhere to the guidelines summarized above.

New York and New Jersey Increase Minimum Wage

New York

Beginning December 31, 2014, the minimum hourly wage rate for employees in New York State has increased from $8.00 per hour to $8.75 per hour.  The minimum hourly wage rate will again increase to $9.00 per hour on December 31, 2015.Moreover, the minimum salary amounts that must be paid to New York employees who are exempt from New York's overtime requirements as administrative or executive employees has increased to $656.25 per week effective December 31, 2014.  The minimum salary will increase to $675 on December 31, 2015.Employers should be aware that the New York State minimum wage exceeds the federal minimum wage.  Thus, although an employee's hourly wages may comply with federal law, such wages may not comply with New York law. Similarly, an employee paid a salary between the federal minimum of $455 per week and the New York minimum of $656.25 per week may qualify as "exempt" from overtime under federal law, yet may not qualify for the same exemption under New York law.  In such circumstances, the employee is entitled to overtime and must be paid at a rate of at least one and one-half times the minimum hourly rate of $8.75 per hour for any hours worked in excess of 40 per week.

New Jersey

New Jersey's minimum wage increase is scheduled to take effect on January 1, 2015. The minimum wage in New Jersey will increase by 13 cents an hour, from $8.25 to $8.38 per hour. Every January 1st thereafter, the minimum wage will be subject to increase based upon a formula tied to the Consumer Price Index.

Like the New York State minimum wage, New Jersey State minimum wage exceeds the federal minimum wage. Employers should be aware that although an employee's hourly wages may comply with federal law, such wages may not comply with New Jersey law.

What This Means for You

Employers should review the compensation paid to their employees in New York and New Jersey to ensure compliance with the new minimum wage and salary obligations in those states and should take the following steps:

  • Confirm the necessary payroll adjustments have been made and they are in compliance with the new minimum wage laws.
  • Update their minimum wage posters at the workplace. 
  • Ensure that their employees who are classified as "exempt" under the administrative or executive exemptions are being paid a salary of at least $656.25 per week in order to avoid violation of New York State's overtime laws.

New York's Annual Pay Notice Reminder

In accordance with New York's Wage Theft Prevention Act (the "Act"), New York employers must provide an annual notice of pay ("Pay Notice") form to all employees between January 1 and February 1 of each year. The Pay Notice must contain the following information:

  • The employee's normal rate(s) of pay and the basis thereof (e.g., whether the employee will be paid by the hour, shift, day, week, salary, piece or commission);
  • The employee's overtime rate of pay, if applicable;
  • The employee's regular pay day;
  • Any allowances that will be claimed as part of the employee's minimum wages (e.g., allowances for tips, wages or lodging); and
  • The employer's name, main address and telephone number.

Employers must provide the annual Pay Notice to employees both in English and in the language identified by the employee as his or her primary language. Employers also must obtain from each employee a signed and dated written acknowledgment confirming receipt of the annual Pay Notice, which the employer must retain for at least six (6) years.

We note that, while the New York State legislature passed a bill on June 19, 2014 that would amend the Act and eliminate this annual Pay Notice requirement, to date, the bill has not been signed by Governor Cuomo. Accordingly, employers should prepare to comply with the annual Pay Notice requirement for 2015.

Special thanks to Daniella M. Muller, an associate in the Employment Practice Group, for her assistance preparing this alert.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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