Legal Lingo! – Transcript – Wayne Pinkstone with Kurt Baker
Written by Kurtis Baker on May 20, 2018
Our Host, Kurtis Baker, is joined by Wayne Pinkstone of Fox Rothschild! Find out about changes in the law under the Trump Administration!
00:00 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9:00 AM on 1077thebronc.com.
00:09 Announcer : The financial views and opinions expressed by the host and guests on this program do not necessarily reflect the viewpoints of 1077 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal, or tax advice.
00:25 Announcer : Planning your financial future does not have to be overwhelming. 1077 The Bronc presents Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment. For the next 60 minutes, Kurt and his expert team of financial guests will help to decipher financial terms, navigate market trends, interpret federal and state regulations, and more. So you can make smart decisions with your money to increase your personal wealth. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up, Master Your Finances. Master Your Finances is underwritten by Certified Wealth Management and Investment. Focusing on personal, financial, and small business planning. For more information about all of Certified Wealth Management and Investment Services online it’s cwmi.us. Now, here’s Kurt Baker with this week’s edition of Master Your Finances.
01:19 Kurt Baker: Good morning, and welcome back to another addition of Master Your Finances represented by Certified Wealth Management and Investment. I am Kurt Baker, certified financial planner professional, hosting your show today. My office is located in Princeton, New Jersey and I could be reached through our website which is, www.cwmi.us, or you can call me directly at 609-716-4700. This week we’re very pleased to have with us, Wayne Pinkstone, a partner at Fox Rothschild. And he focuses his practice in labor and employment matters with significant experience in assisting in-house counsel, human resources executives, and company officials, in identifying and solving workplace legal issues. His clients include employers in the healthcare, manufacturing, service, retail, technology, and financial industries.
02:06 Kurt Baker: Wayne is experienced in developing strategies and tactics to help contain costs associated with employee relations, personnel, and labor issues. He advises clients on leave and disability matters at the federal and state level, and unemployment discrimination, diversity, and sexual harassment, workplace safety, wage and hour compliance, compliance and reductions in workforce. He also conducts in-house training sessions on such topics as leave and disability, hiring practices, employee discipline, terminations, investigations, harassment prevention, and supervisory skills and practices. He also defends employers in federal, state, and administrative courts and claims involving discrimination, wrongful discharge, employee whistleblower, and wage and hour collective actions. Wayne has litigated matters before the occupational safety and health administration with respect to matters involving OSHA, a fall protection noise, and construction standards. In addition, he handles disputes concerning restrictive covenants and trade secrets and assists clients with a creation of non-competition, non-solicitation, and non-disclosure agreements. And you’ve done a lot, and you’ve been around a long time, so you’ve…
03:16 Wayne Pinkstone: I have. Yeah.
03:17 Kurt Baker: So you’ve seen a lot, and I guess now, I guess the question is when we change like political atmospheres impact. They impact the employer-employee relationship and how that happens. And we’ve had… Since we last talked, you were on here about a year or so ago. A little before the new, this current administration is in place. And they’ve got a little different tact on how they may wanna handle it. So how can an administration, let’s start off with that, how can they actually affect what happens on an employer-employee level? What types of things can they do and what that means for us?
03:44 Wayne Pinkstone: Sure. Sure, so yeah. So we were a little over a year now into the new administration, and historically, when there’s a new administration, there are changes that occur. And this has been no different. There have been some significant changes that have occurred over the last year. What we’ve seen is the Trump administration has been really active in appointing, and then confirming judges at the federal court level. Both at the appellate court level and the trial court or district court level. In fact, the Trump administration has, as of… There’ve been 12 appellate judges confirmed in the first year which is more than any other president. So very, very active.
04:50 Wayne Pinkstone: Recently, the third circuit, the third circuit appellate court is the court that oversees New Jersey, Pennsylvania, and Delaware. There were two vacancies at that level, at that court, and President Trump has recently nominated two attorneys. One who is in private practice, another who works for… Is in industry. They’re likely to be confirmed, and once they’re confirmed, essentially, the third circuit court of appeals is gonna be split evenly between Democratic appointed judges and Republican appointed judges, which should lead for an interesting future. [chuckle] In terms of where cases go. So, from my perspective, the judiciary, there’s been significant changes, but I think we’re yet to see exactly how that’s going to play out. But I think we’re gonna start seeing that over the next year or two.
05:56 Kurt Baker: So what you’re saying is that the politics does matter because they appoint the judges. So, in this case, the court will slide a little bit more towards a conservative tilt theoretically, I just don’t… Are their own person, so to speak. No matter who appoints them, they don’t necessarily play out the way people expect them to play out some cases. That’s the thought process. As an employer and employee, what do we do about that? Is there anything we can do in a kind of proactive manner if we can see the trend that’s happening? Because at least for the next few years, ’cause these judges are there for a little while once they’re appointed?
06:28 Wayne Pinkstone: Yeah, they’re there, they’re there.
06:29 Kurt Baker: They’re there.
06:30 Wayne Pinkstone: They’re there for life.
06:31 Kurt Baker: Kind of a long trend. It’s not like, okay, an election where in a couple of years you could just switch it up.
06:37 Wayne Pinkstone: That’s right.
06:38 Kurt Baker: You gotta kind of plan out a little bit. Especially, employer-employee relationships could change a little bit. What are some things that employers should be doing or employees should be doing for that matter?
06:48 Wayne Pinkstone: Sure. What we’re gonna see from a… Typically, historically, when a Republican… You have a Republican presidency, a Republican administration, as you said, they’ll appoint judges who are typically Republican or more conservative. Theoretically, the way it’s played out is more conservative judges. The opinions that they provide or write in the employment context are generally considered more pro-employer. And maybe that’s the wrong terminology, but the way… They’re not actively, some will say, “legislating through the court process” and enacting new laws or changing new laws or significantly interpreting existing laws in favor of one side or another. They’re taking an approach that’s generally more conservative and they read these statutes literally, and apply them to the facts as written.
07:57 Kurt Baker: I’ve heard “the intent of the law” as opposed to the what they call the, “the letter of the law”.
08:02 Wayne Pinkstone: The letter of the law.
08:03 Kurt Baker: They’re reading it exactly as it’s written and not trying to read into what maybe the legislators had in mind. ‘Cause as we know, legislation is like making sausage. All the stuff comes together and they come out with this piece of legislation, which often has to get fixed because things conflict. People forget that, and that’s where the judges and all the lawyers… That’s why you have a job. You have to come in and figure this stuff out, figure out what actually is going on and that becomes a little bit different dynamic when… I guess, when the judges aren’t willing to quite so much say, “Well, this is what I think they meant by this legislation.” They’re gonna say, “This is what it reads, and this is what is says, and that’s it. Go send it back to the legislator if you wanna change it.”
08:42 Wayne Pinkstone: Exactly. They’ll say… That’s exactly right. For example, Gorsuch, who was the newest Supreme Court Justice, who was confirmed last… I think it was April now. He is considered a strict constructionist. He reads the law, he sees the law as written, and does not attempt to interpret and read into that. What that does from an employment perspective is, is that employer… For employers to provide some consistency. You know what the law says, and if you have judges who are going to apply that law based on what it says, you sort of know…
09:22 Kurt Baker: It’s a little bit more predictable ’cause you can read it just as well as they can read it.
09:25 Wayne Pinkstone: Exactly.
09:26 Kurt Baker: And you can make an opinion and say, “Oh, that’s what it says. That’s English, I understand it.” [chuckle]
09:29 Wayne Pinkstone: That’s right. Whereas a more liberal judge may take the law and say, “Look, the law says what it says, but we’re supposed to adapt this to the circumstances.” And there may be some interpretation, and there’s less consistency. You’re not exactly sure where it’s gonna go with each particular fact situation. We’re likely to see at the Appellate level and the District Court level, there’s gonna be a bit more consistency from an employer, a business perspective. From an employee perspective, it’ll be different. There’ll be less interpretation. You’re going to see a judiciary in general that is less active in taking laws and maybe interpreting them in favor… That in a way that may favor the employee.
10:30 Kurt Baker: ‘Cause typically, employers write the contracts that you sign. They say, “Always read what you’re signing,” so to speak. I guess what it sounds like, it’s gonna tilt things slightly more towards the employer’s side, so it makes it even more important that if an employee is signing an employment contract, be really careful about what you’re reading and what you’re signing.
10:47 Wayne Pinkstone: That’s right.
10:47 Kurt Baker: And if you have a question, get it answered now because it’s unlikely that a court’s gonna come in and interpret it in your favor. Less likely, I should say than it was in the past. A lot’s happening and now that we… When we come back from the break in a few minutes, I guess we’ll go through what things we can do and what else is gonna happen or what we think is gonna happen over the next few years.
11:06 Wayne Pinkstone: Alright, sounds good.
11:07 Announcer : We are talking finances so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen previous shows. Just look up, “Master Your Finances”. Now back to Master Your Finances with Kurt Baker. A certified financial planner professional with certified wealth management and investment. Exclusively on 1077 The Bronc and 1077thebronc.com.
11:36 Kurt Baker: Welcome back, you’re listening to Master Your Finances. I am Kurt Baker here with Wayne Pinkstone, a partner at Fox Rothschild. We’ve been talking about employer-employee and labor relations, and how things may be changing. We’ve got a new administration in place, and Wayne was describing how appointing the different judges on the different levels of the court system, do have an effect. They tend to be more to the letter of the law as opposed to interpretive of the law, so employers can rely a little bit more on what’s written than maybe in the past. So that’s one part of it, but there’s also other things that are being appointed, right? So it’s big government, a lot of agencies out there. What else might be affected by, when you have a shift in administrative on a federal level. What are things may be changing out there that we need to be aware of from an employer/employee perspective?
12:22 Wayne Pinkstone: Sure. So another thing that when there’s a change in administration, another thing that typically changes are the membership of the various federal agencies. So for example, in the employment context, you have the NLRB, the National Labor Relations Board, which oversees and governs the NLRA, which is the National Labor Relations Act, which generally governs activities within the union setting. But that law and many employers, I think many people, interpret that as only applying in the union setting. It could apply in a non-union setting. And when there are employees in that setting that may be engaging in activities, that may be considered collective in nature.
13:11 Kurt Baker: Well that reminds me, and you could correct me on this, but I remember there was like the teachers unions, as an example. Like if you belong to the union, you have to pay the dues, I guess, is the way it’s written now.
13:19 Wayne Pinkstone: Yes.
13:19 Kurt Baker: But some teachers are saying, “Well, I wanna opt out of that.” But they’re saying, “Well, no you can’t.” So this is like an argument going on right now.
13:26 Wayne Pinkstone: And that issue is actually one that’s before the Supreme Court now. And that is whether, mandatory union dues in the public union setting is permissible. And the argument is, on the flip side, that it’s not, is that it’s a potential violation of someone’s First Amendment rights. So that issue is before the Supreme Court now, and that’s gonna be really interesting. We should hear this year where that’s going.
13:57 Kurt Baker: Okay. Yeah, I just remember reading about that recently… It sounds interesting.
14:00 Wayne Pinkstone: It does. So there’s the NLRB, there’s the EEOC, the Equal Employment Opportunity commission, which I deal with a lot. That’s the agency at the federal level that governs the application of federal discrimination laws, Title VII, the Americans with Disabilities act, the ADEA agency.
14:26 Kurt Baker: So what are some expectations as far as how that might shift? Most people want to discriminate, hopefully not, right?
14:32 Wayne Pinkstone: No. Most people do not.
14:34 Kurt Baker: Hopefully, we don’t want to discriminate. [chuckle] I think that’s a bad thing really.
14:37 Wayne Pinkstone: Most people do not. But under the former prior democratic administration, both the NLRB and the EEOC became much more active in their enforcement. For example, the EEOC was generally considered by us employment lawyers to have become more active, taking on cutting edge issues, issues that may not specifically fit within Title VII on its face or the ADEA on its face, but taking them and trying to enforce them anyway. Whereas under this administration, it’s likely, very likely to become less active in enforcement and more active in what we call conciliation. There’s an issue instead of undergoing enforcement proceedings and litigating, they’re gonna reach out to the employer and say, let’s try to resolve this, but settle it. And, as part of that settlement, let’s do x, y, and z. For example, put in place, policies and procedures. You provide training to your employees. So I think, with the EEOC and to some extent the NLRB, you’ll see more focus on conciliation, and I think less focus on enforcement.
16:02 Kurt Baker: Oh interesting. Yeah. Because I know years ago, and when I first got involved in being regulated, so to speak, you always had this fear, like this big agency is gonna come in. But actually, my personal experience has been actually pretty good. As you come in and you say, “Hey, I’m not sure about this. Is this correct or not correct?” And even if it’s wrong, as long as your intent is to comply, I’ve personally found most regulators say, “Hey look, that’s fine, but this is what we prefer to see.” And then you just do it. If you’re both working towards the same goal, which is to do things right, so to speak, that’s what regulation is supposed to be about, is helping employers do things the way they’re supposed to do. I think I find that positive. So I guess I’m trying to understand why would the other side… I guess I’m trying to understand. What’s the benefit? Are they going outside of the interpreting the intent of the the law, kind of expanding it a little bit? Is that what’s been going on?
16:53 Wayne Pinkstone: Yes. Yeah. So the last eight years, there’s been more of an expansion of how the law’s interpreted, what is and what isn’t a potential violation of the law. So employers have been… I don’t wanna say, “on edge”, but they’ve looked at this and they’re like, “We’re not exactly sure how the EEOC or the NLRB are gonna see this.” Now, again I think there’s probably gonna be a bit more consistency, more conservative application of the law, less enforcement, and I think more focus on conciliation. You raise a very good point. Some of my fellow management side employment lawyers may not agree with me, but I will t ell you, take for example, OSHA, safety and health. I deal with them on a regular basis. I have found them to generally be pretty reasonable, pretty understanding. But what they want is, they want…
18:00 Wayne Pinkstone: They wanna save workplace which is not unreasonable and I think that often times in my experience the investigators will work with the employer to make sure that what’s happening is safe and then moving forward that what’s in place will prevent accidents from happening. And I think that’s the way it’s supposed to work. But we’ll see how it plays out through the years
18:26 Kurt Baker: Of course. Of course. [laughter] So alright, we’ve got a couple other major agencies and then we are gonna adjust… So things would be more… So if something doesn’t look like it’s what they like then you have to go back to legislature. So they’re gonna have to pass a new law if there is something outside of that what’s current legislation.
18:42 Wayne Pinkstone: That’s right.
18:42 Kurt Baker: That’s gonna be kind of the new approach. They’re gonna have to go and do that and we live in an interesting place ’cause in New Jersey of course we had a republican governor and a democratic president and now we’ve got a republican president and a democratic governor. So how is that gonna change things on a local level when things kind of just flip like that? Because I know you’ve got the federal set of laws and you’ve got the state set of laws and sometimes that creates a little bit of an issue for somebody who works on kind of both levels. [chuckle]
19:07 Wayne Pinkstone: Yeah. It does.
19:11 Kurt Baker: You gotta deal with both. [chuckle]
19:11 Wayne Pinkstone: It does and New Jersey’s a very interesting place to be an employer, to have a business.
19:17 Kurt Baker: That’s a good way to say it. [laughter]
19:18 Wayne Pinkstone: Yeah. Yes, and New Jersey is traditionally considered a more, even from a judicial perspective and a legislative perspective to be a bit more pro-employee, employee friendly. Now that the governorship has changed to a democratic administration we are seeing some new laws, some new regulations in New Jersey which are going to be more expansive in nature, more I guess you could say, more liberal in nature and less conservative in nature. So employers need to be aware of what they mean and how they may apply.
20:08 Kurt Baker: Do you have any examples of the things that may be happening? [chuckle]
20:11 Wayne Pinkstone: Sure. Sure. Absolutely so… Yeah.
20:13 Kurt Baker: Give me one and then we’ll pick up the rest after the break. Just start us off here.
20:16 Wayne Pinkstone: Yeah, no problem. So under New Jersey, New Jersey just enacted, it’s the 10th state in the country to require paid sick leave. So beginning October, effective October 29th of this year all employers are going to be mandated to provide certain amount of paid sick leave to their employees. That’s just one example of how New Jersey is expanding the law and employers are gonna need to be aware of it.
20:48 Kurt Baker: And that’s generally based on where the employee works, correct? ‘Cause you have a lot of cross border people right?
20:53 Wayne Pinkstone: It is.
20:54 Kurt Baker: So they live in Pennsylvania and they work in New Jersey.
20:56 Wayne Pinkstone: It’s where they work. Yeah. So, it’s certainly where they work.
20:56 Wayne Pinkstone: So all of this flows back to where you work.
21:00 Wayne Pinkstone: Yes, where you work. If you’re working in New Jersey as an employee you’re now gonna have beginning October 29th, 2018 mandatory paid sick leave. It’s 40 hours. You accrue it as you work throughout the year. But it’s mandated that there’s 40 hours of sick leave that must be provided by employers to employees.
21:25 Kurt Baker: Okay. Alright. Well, thank you. When we come back from the break we’ll talk a little bit more about the changes and how it affects us both on a federal and a state level, when we come back from the break in just a few minutes.
21:32 Announcer : We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up “Master Your Finances”. Now back to “Master Your Finances” with Kurt Baker, a certified financial planner professional with a certified wealth management and investment exclusively on 107.7 The Bronc and 1077thebronc.com.
22:00 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I am Kurt Baker, certified financial planner professional and we’re talking with Wayne Pinkstone, a partner at Fox Rothschild, we’re talking labor law on a state and a federal level and how it impacts, the fact we’ve had a change in administration and in New Jersey’s case we kind of flipped as far as a conservative governor, now more liberal governor. We have a more conservative president as opposed to a more liberal president. So we’ve had some changes going on here in Jersey and you were pointing out before the break that now we’re gonna have mandatory paid sick leave, I guess in the summer, coming up pretty soon, right?
22:32 Wayne Pinkstone: October 29, 2018 that’s the effective date.
22:36 Kurt Baker: Okay. Coming up.
22:36 Wayne Pinkstone: So be prepared. Yeah.
22:38 Kurt Baker: So anything else happening? I guess, I have another question is… First of all is anything else happening in New Jersey you can see on the line and how much does this change in regulation affect employers decision making processes as well?
22:51 Wayne Pinkstone: Sure. Sure. So first in terms of additional law, additional changes New Jersey also recently enacted what they call The Equal Pay Act. It takes effect July 1, 2018. So again, coming up in what? A month and a half?
23:10 Kurt Baker: Mm-hmm.
23:11 Wayne Pinkstone: It’s a very expansive, very aggressive law and essentially it renders unlawful any employment practice that results in discrimination in compensation for performance of what they call substantially similar work.
23:28 Kurt Baker: How do you regulate that? I’m just curious. To me I’m like… Also my mind is going like, “How do you define that?”
23:33 Wayne Pinkstone: Yeah. Not easy. So the New Jersey has an anti-discrimination statute called the New Jersey Law Against Discrimination. So it applies at the federal level, you have Title VII that prevents, prohibits discrimination in the work place. At the state level you have the New Jersey law Against Discrimination, and under that law an employer cannot discriminate against someone because of a protected classification; race, gender, age, disability, religion, national origin. There’s a whole list of protected classifications. This law, Equal Pay Act, says that an employer cannot discriminate against anyone within those protected classifications based on compensation. So the way that an employer needs to look at this is that they need to look at their workforce. They need to look how they’re paying people in substantially similar jobs.
24:28 Kurt Baker: Well how does experience flow into that? I mean, I’ve got somebody in the same job that’s been there for two weeks, that’s been there for 20 years. My 20 year person probably knows the job slightly better than the two week person.
24:38 Wayne Pinkstone: Excellent point.
24:39 Kurt Baker: I’m probably gonna wanna pay that person a little more. [laughter]
24:40 Wayne Pinkstone: You are, and that’s an excellent point and the law does provide for exceptions, defenses if you will, for experience, education, skill level. But the burden is going to be on the employer to show that’s the reason for the difference in compensation. Under this law, there’s essentially a presumption of illegality.
25:11 Kurt Baker: Not sure employers are gonna like that.
25:13 Wayne Pinkstone: They are not. So employers are going to have to… The burden is going to be on them to say, “wait a minute, the differences are because of seniority, education level, skill level”, and you’re gonna have to prove it.
25:26 Kurt Baker: Is there a level where this kicks in as far as size of employer as far as how many number of employees is there?
25:29 Wayne Pinkstone: I believe it’s all employees or the number is so low that it’s essentially all employees in terms of the number of employees. It’s essentially going to apply to everybody. The New Jersey Law Against Discrimination, you need one employee for that law to apply so it’s everybody. [laughter]
25:55 Kurt Baker: Wow. So I guess my next question’s gonna be, what are employers gonna start… What are they doing to prepare for this and how do they define all this? I mean, now you have to have job descriptions, even more so than ever, right?
26:06 Wayne Pinkstone: You got it.
26:07 Kurt Baker: You’re gonna have to define all your jobs exactly and you’re gonna say, “Well you fit into this box A and I’m gonna pay you this way, period.”
26:13 Wayne Pinkstone: That’s exactly right. So what we’re telling out clients is that you need, between now and July 1st, 2018, to look at your workforce, assess what you’re being paid across similar jobs and figure out based upon those issues that you just raised, seniority, and education, skill level; are your employees being paid, compensated fairly, evenly under this law? And you hit on a really important issue for employers, we’ve always preached. Management side employers always preach job descriptions, have them. You want them there for a variety of reasons, this is another one. ‘Cause you wanna say in writing, look this is what this job entails, these are the requirements that you need to meet in order to be successful and paid on the level that that position calls for.
27:08 Kurt Baker: Well this brings up a practical issue too. In my mind, having employees is that I can set you up with a job description and say this is your job, but we may have an issue like a surge in business from, that’s your job, but I need you to do this [laughter] for at least the next few months and so you’re gonna be shifting in and out, even on a daily basis sometimes you’re like, “Okay we need… Everybody gotta come together and help with this.”
27:30 Wayne Pinkstone: That’s right.
27:31 Kurt Baker: It may not even be in your job description.
27:33 Wayne Pinkstone: That’s right. So your job descriptions while helpful, and my advice is get them in place now, you’re right. In reality what’s gonna happen is that let’s say someone decides to file a lawsuit under this Equal Pay Act claim, claiming that they’re being compensated in an unfair way based on a protected classification. Let’s say it’s gender, you’re paying the men more than the women. To defend that case, you’re gonna say, “Alright, here’s my job description”, but what’s gonna happen is that in that litigation we’re gonna say, “Okay that’s nice, but let’s dig into what was really taking place”. So you’re gonna have to see exactly. There’s gonna be discovery. There’s gonna be, alright, we get the job description, but my guess is this employee was doing something different than just what’s said in the job description.
28:20 Kurt Baker: Is this where the review process comes in where you wanna more document reviews on an annual basis saying here’s what you did, and here’s what I’m grading you on and things like that because, and that’s always been more for compensation. Now, it’s almost like defense and litigation almost…
28:35 Wayne Pinkstone: It is.
28:36 Kurt Baker: As well, not just for honing into your workforce and saying, “Here’s what you did good and here’s what we think you need to improve on”. And now it’s like “I wanna make sure I documented what you did last year so that we can measure that up against everybody else who… ” Wow, whole another dynamic you’re getting in.
28:51 Wayne Pinkstone: You got it, you got it. So you got job descriptions, you got reviews, you got performance reviews, you have disciplinary counseling issues, and we always preach document, document, document. Now more than ever of this stuff is going to be very important, but there’s a flipside to document, document, document, and that is you need to make sure your documents are in good shape. The content is reflective of what is really happening and you need to take it seriously. It needs to be complete. I can’t tell you how many times I get into a case, I open a personnel file and I’ll see a performance review for 2014 and 2015, and there’s nothing for 2016 and 2017. It’s inconsistent. So documentation is important, but doing it consistently and regularly is really, really key.
29:43 Kurt Baker: So it becomes more important here in our home state of New Jersey. [laughter]
29:47 Wayne Pinkstone: Sure. Always been important, but now even more than ever.
29:51 Kurt Baker: Now it’s even more important, right? Anyway… Alright, so we’ll pick up on it when we come back and talk a little bit more about some of the changes that are happening here in New Jersey and across the country with the changes in labor.
30:06 Announcer : We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up “Master Your Finances”. Now back to “Master Your Finances” with Kurt Baker, a certified financial planner professional with a certified wealth management and investment exclusively on 107.7 The Bronc and 1077thebronc.com.
30:32 Kurt Baker: Welcome back. You’re listening to Master your Finances. I’m Kurt Baker, certified financial planner professional here with Wayne Pinkstone, a partner at Fox Rothschild, and we’ve been talking about some of the changes in labor law with the new administration’s both on a state and Federal level, and how that’s impacting employers and employees. So we need to be more on our game, so to speak, especially in places like New Jersey. It’s always been a good idea to do things like job descriptions, reviews and document discipline to be consistent in all that, but it’s gonna become even more important from a litigation standpoint or defense to the litigation, so to speak, that you document exactly what your employees are doing and that everybody’s being compensated fairly based on their job and their description and that you kind of keep up on that. And it’s always been a good idea just from a performance standpoint, but now it’s even more critical to make sure you do that as well. So I know there’s been some more changes, you wanna talk about some more of the changes that have been happening on a state and a federal level?
31:22 Wayne Pinkstone: Yeah. Sure, sure, one thing I just wanted to mention in terms of, it’s really just application, applies to both state and Federal employment laws, but there’s so much going on in this state from certainly an employment law perspective. There’s so many changes. We talked about updating job descriptions and conducting performance reviews. Employers are gonna wanna look at the, most employers have handbooks, employee handbooks containing all their policies and procedures. You’re gonna wanna look at those. You’re gonna wanna update those to add the new laws, to add provisions on the new laws, and you should have them reviewed. You should have them reviewed by a lawyer or many employers have HR professionals who know this area as well. So policies and procedures, and lastly, training.
32:15 Wayne Pinkstone: Training, particularly for managers and supervisors is key. Because there’s so many changes, employers are going to want to train their managers and supervisors on what’s new and how to react to changes in the workplace. The law requires, if a manager gets a complaint of harassment and discrimination, they cannot just simply sit on it and ignore it. They need to react to that and there’s a chain of command that they should be using in order so that the employer can properly remedy it, investigate it and prevent it; stop it from happening if it’s happening. So training, policies and procedures, documentation, all of these things are critical moving forward.
33:00 Wayne Pinkstone: New Jersey, some additional updates, New Jersey has also expanded its anti discrimination laws to require accommodations for women in the workplace, who breastfeed. Cannot discriminate against employees for breastfeeding during work breaks, the law specifically says that employers must provide reasonable break times and suitable locations for women to breastfeed. So that is now black and white. That is the law. Employers need to be aware of that.
33:43 Wayne Pinkstone: I think another area where we’re going to see New Jersey has a Department of Labor, of course. Within that Department of Labor are sub agencies focusing on wage and hour and other anti discrimination, other areas of the law. I’ve seen an increase in not only New Jersey, but I’ve seen it in New York as well where these agencies are taking a look at employers’ independent contractor relationships. So many employers will designate or define or call their workers independent contractors. So there’s a contract, you’re not an employee, you don’t pay them benefits, you pay them a lump sum, usually monthly, maybe bi weekly, and there’s no taxes taken out of that. Well, the states are coming in and saying, “I’m not sure that’s exactly right. I think these folks may actually be employees. And by the way, where are the taxes you should have been paying on these independent contractors, salary pay over the last two years”, I’d like. So we’re seeing the state looking at these relationships more and more. I really do think employers in New Jersey and in states like New York, and certainly in California and places like that, really need to take a hard look at their independent contractor relationships because the state, the agencies, and even the courts may not think they really are.
35:18 Kurt Baker: Yeah. I just recall years and years and years ago, in New Jersey, when I first moved there they did not license mortgage originators. So in theory, they could go where they wanted to. But I remember when the DOL did an audit for us, they said, “If you determine what they do and when they do it, I don’t care what your contract says, you’ve told them what to do where to go, they’re an employee. They can’t go to another entity and do what they do for you.” So I just remember that vividly, and so I just frankly, by default, I just pay everybody W2 because I don’t want to get in that conversation with them for a couple of percentages on the wages frankly for a lot of these things that we talk about that you’re bringing up right now especially in a place like New Jersey where they’re pretty aggressive about, if you’re really controlling that work relationship and it’s not just hiring your “local vendor,” that’s a real 1099 employee. But if they’re coming to work for you all the time…
36:11 Wayne Pinkstone: Smart decision.
36:12 Kurt Baker: Be careful because they really don’t play around with that.
36:16 Wayne Pinkstone: They do not.
36:17 Kurt Baker: And they make you write a check if you make a mistake. [laughter]
36:19 Wayne Pinkstone: That’s exactly right, and I think you’re absolutely right, and I think what you’ve done is a smart decision because the focus is really on direction and control. If there’s any element of direction and control, and usually there is, that worker is going to be deemed an employee, not an independent contractor, certainly in this state. So, I do think, and we tell clients all the time, “Take a long hard look at that relationship because it may not be what you think it is.”
36:55 Kurt Baker: Right. And I agree with that and every once in a while, I hear a story of like another state taking a little bit more aggressive, I don’t know any offhand, but I know that… Because they want their tax money, right? ‘Cause they’re gonna have to pay the benefits and they wanna make sure that’s coming in and that doesn’t always happen when they’re all being paid 1099 ’cause they could write them down, they can write their expenses against this. So, from a state perspective, they can lose significant revenue, so it’s in their own interest to try to… [chuckle]
37:17 Wayne Pinkstone: Exactly. And the response I’ll get from employers is, “Well, but the worker wants this too. The worker wants this.” State doesn’t really care. [chuckle]
37:30 Kurt Baker: Right, the state is not on board with that. [chuckle]
37:32 Wayne Pinkstone: They want their dollars because this is truly a W2 employee in their eyes.
37:36 Kurt Baker: Right. Right, right. But unfortunately, there are people I’ve known that have gotten caught by this and sometimes it could be fairly big amount of money. They were like, “Just what you just described to me.” They’re like, “Well, I thought it was fine.” That’s not a good defense. [chuckle]
37:50 Wayne Pinkstone: That’s right.
37:50 Kurt Baker: They don’t care.
37:51 Wayne Pinkstone: That’s right. And then another application, another expansion of that area is if they’re actually deemed… Courts may look at these issues as well from0 a discriminatio0n perspective. So, if there’s really an element of control over someone that you’re calling an independent contractor they really may be deemed employees. If they’re deemed employees, they’re then protected by the New Jersey law against discrimination.
38:17 Kurt Baker: And now you’re gonna get into all these new regulations you just pointed out.
38:20 Wayne Pinkstone: Title VII and the Equal Pay Act.
38:20 Kurt Baker: Are they compensated correctly?
38:21 Wayne Pinkstone: And then there are paid sick leave. Exactly.
38:25 Kurt Baker: And overtime and hours and all that other stuff which you don’t have to be concerned about with a 1099 employee.
38:30 Wayne Pinkstone: That’s right.
38:30 Kurt Baker: So yeah, it can really balloon into something far bigger.
38:34 Wayne Pinkstone: Right. It really can. It can be very expensive.
38:34 Kurt Baker: Very quickly, and that’s why I just said, “I don’t wanna deal with that.” It’s just, “Put them in the payroll system, be done with it.” [chuckle]
38:41 Wayne Pinkstone: That’s the way to do it.
38:43 Kurt Baker: That’s just me. I don’t like the stress. It’s like, “Okay.” So, anything else we need to pay attention to? I know there’s a lot happening here. You said all the things changing maybe on a federal level as well that are coming up, or maybe that didn’t come up that we thought were gonna come up?
39:00 Wayne Pinkstone: Yeah, I think that’s exactly right. I think that’s how to describe it on the federal level. For example, under the Obama administration, near the end of the Obama administration, there was a big push on changing the overtime laws where they were going to change the salary level for employee. We’re gonna raise the salary level. So, almost $20,000. So, by raising the salary level, anyone under that level would then be considered non-exempt and eligible for overtime. So, it was essentially gonna add 4 million… They estimated about 4 million workers to the eligible for overtime category. Those overtime regulations, they were blocked first by a court in, I believe, Texas. There was an injunction filed and now there’s no urgency on the Trump administration, the Department of Labor, on their part to revise or change those overtime rules. So, I think that they are, I don’t wanna say, dead, but we’re not gonna see a change there anytime soon.
40:09 Kurt Baker: Okay. So, for now, I don’t have to be concerned.
40:11 Wayne Pinkstone: So now, just be mindful of the existing regulations under what they call the, Fair Labor Standards Act. And so, it’s the same as it exists. The new tax law, which I’m sure we’re all familiar with and we heard about. Believe it or not, there are two issues in that new tax law which do impact employers. One, there’s a tax credit under that law for those employers who provide paid family and medical leave to their employees under the existing law, both state and federal. Both mandate 12 weeks of unpaid leave to employees who suffer from an illness or some kind of condition. So, employers do not have to pay them. For those employers who do provide a portion or maybe all of that as paid leave, there’s a tax credit under this new tax law for that.
41:06 Kurt Baker: Okay.
41:08 Wayne Pinkstone: And then another issue is this new law ended deductions by employers for settlements of sex harassment claims that were subject to a nondisclosure agreement. So, usually, if there’s a claim, let’s say it’s a sex harassment claim that’s filed, there’s a settlement of that claim between the employer and the employee. Almost always, there’s going to be… And part of that settlement agreement, there’s gonna be a nondisclosure provision, meaning it’s confidential.
41:39 Kurt Baker: Right, ’cause they don’t want that getting out most likely.
41:41 Wayne Pinkstone: That’s right. This law, this law, there’s a provision in it that says that, “and the employers could deduct and make tax deductions for the settlement monies that are paid to that employee.”
41:52 Kurt Baker: You could take deductions now under the new law?
41:54 Wayne Pinkstone: Now? Well, now…
41:55 Kurt Baker: No?
41:55 Wayne Pinkstone: This is… No. This has ended that. Yes.
41:57 Kurt Baker: And that to me sounds counterintuitive.
42:00 Wayne Pinkstone: Yes.
42:00 Kurt Baker: If you have a sexual harassment case and you pay somebody, how does that turn into a deduction for you?
42:04 Wayne Pinkstone: Yeah, I know, I know.
42:05 Kurt Baker: That doesn’t make a lot of sense to me.
42:06 Wayne Pinkstone: It doesn’t. Right.
42:08 Kurt Baker: We don’t want that activity.
42:09 Wayne Pinkstone: The new tax law has also has some additional issues in it that employers should be aware of. And then lastly, what I wanted to hit on is, and I had mentioned this the last time that I was here, and I think this is actually happening, is that the agencies, the federal agencies, the EEOC, the Department of Labor, OSHA, NLRB, the new administration, and this is fairly typical for Republican administrations. The funding for those agencies is usually less and we are seeing that, we are seeing that under this new administration, and usually that translates into a less active agency because they just don’t have the resources and the funding to be as active. So that is happening, so I do expect to see the ramifications of that beginning now and into the future.
43:10 Kurt Baker: Okay. Yeah. I think we’re good. I mean, that may not necessarily… We’ll have to see how that pans out.
43:17 Wayne Pinkstone: It depends. It depends. Employers may see that as a positive. Or agencies, organizations, for example unions who advocate on behalf of employees may not see that as a positive, but it depends…
43:30 Kurt Baker: But have also read places like New Jersey you’re talking about stepping up…
43:31 Wayne Pinkstone: That’s right.
43:33 Kurt Baker: Their enforcement because they feel the Feds are gonna back off a little. So just because the Feds are backing us slightly, it doesn’t necessarily mean you can sit, just relax. [chuckle]
43:43 Wayne Pinkstone: That’s right. If you’re in this state, if you’re in New Jersey and it doesn’t mean that you should take it lightly because New Jersey has its own agencies who are or not any less aggressive than they were under the Obama administration, it doesn’t matter there.
43:58 Kurt Baker: Yeah, and these regulations, I just wanna… ’cause what we hear just from a state perspective that we hear this argument a lot about the more regulated the state… One thing that always surprised me initially was, a higher regulated state seems to have higher paid individuals. People still move to Silicon Valley even though it’s highly regulated. People still move to New Jersey even though we hear about people moving out. So there’s more to that employer-employee relationship than just regulation and cost. You wanna touch on that slightly ’cause I think there’s some misunderstanding about all that?
44:26 Wayne Pinkstone: Yeah. I think that’s right, we hear it a lot and there’s some truth to it that because New Jersey is so heavily regulated, because California is so heavily regulated, places like New York, the companies are fleeing. They’re leaving these states to southern states, or western states, or midwestern states because they’re less regulated. And yes, there is an element of truth to that. There are employers that have certainly left. But the flip side to that is, and I think it depending on the industry you’re in, places like New Jersey, and California, and New York generally provide or generally have a highly educated, skilled workforce that, for example, the pharmaceutical industry, obviously New Jersey is heavily. There are many, many pharmaceutical companies that have facilities here or work here. And there’s a reason for that, it’s because they can pull from the college students who graduated from the colleges and universities. So while, yes, there’s some element of, some company’s fleeing New Jersey. I think there’s also a flip side to that is, is that maybe it’s heavily regulated, but at the same time, it provides benefits to those employers like a highly educated workforce.
45:42 Kurt Baker: So it’s just a lot of components to why employers may stay or leave, and I just wanna make sure we pointed that out because obviously, more regulation has more of a cost and that’s an issue. But there’s also other things that happen that sometimes we forget about. So it’s a balancing act, so to speak as of where you are and what you’re in, your workforce is.
45:57 Wayne Pinkstone: That’s right. What you’re doing.
46:00 Kurt Baker: Wayne, I appreciate you coming on again and helping us get an update on what’s going on, because there’s a lot happening. And I guess the bottom line is, you gotta stay up on it and you gotta basically need to have everything reviewed, especially an employer in a place like New Jersey, where things are changing, you have to stay up on it. You wanna make sure that you’re keeping up with everything and as always, especially when changes are going on. You’ve been listening to Master Your Finances. I am Kurt Baker, you can reach me at 609-716-4700 or at www.cwmi.us. Facebook page is facebook.com/masteryourfinances. You can subscribe to this podcast and reach all of our podcasts at masteryourfinances.us. And remember, together we can master your finances so you can enjoy financial peace of mind.
46:47 Announcer : The financial views and information provided by Master Your Finances and its guests are intended for general informational purposes only. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice. Always consult your financial planner for professional advice.
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