the attached, as i privately shared with penny during the

From: Barretta Todd C. (CEDpTCBITo: Santoro, Steve H. (~NLRSHSISubject: NTD Reportable EventsDate: Thursday, June 1, 2017 2:12:47 PMAttachments: imagel.PNG

ATTOOOO1.bcY

Hi Boss,

The attached, as I privately shared with Penny during the safety meeting this morning, indicates the criterion theFTA uses to define an event that it deems reportable. Please note, as I had suspected, this detinition somewhatdiffers from what had been presented and leads me to believe, with a fair• degree of certainty, that we overreportcertain incidents and occurrences which do not meet the criteria for• N7'D submission.

Todd

Todd Barretta

~rome Barretta, Todd C. (CEDOTCB)Sent: Thursday, June 1, 2017 326 PMTo: Warren Hersh ([email protected])Subject: System Safety Data

Hi Warren,

hope all is well. I received the confidential materials for the audit committee meeting —thank you.

Today I was told to take a look at our safety data, how it is collected and reported —what is is —metrics &the veracityand validity thereof, etc. Gardner mentioned that you had started the process or at least had some involvement withreviewing it. Steve asked me to touch base with you on it. I do respectfully note audit project no. 17-050 and 17-051and also see that you also have afollow-up scheduled as part of the FY18 IAP.

Was there an IA report issued for 050 and 051 and/or do you have any information and advice you can share with meabout the system safety metrics and reporting management process at some time of your choosing?

Thanks

Todd

Todd C. Barretta, J.D., M.B.A.('hiaf ('mm~lian~a (lffi~ar.....,.. ....... r........,.......,...

NJ Transit HeadquartersOne Penn Plaza East, 9th FI.Newark, NY 07105(973) 491-7821 (o)(201) 988-3358 (c)TBa rretta t~ n itra ns it. co m

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NJ Transit Rail Operations Control Center: Planning for the Future

Activu contacts:

Paui Johrden John Desmond y

[email protected]. [email protected]

973;332.8386 973.343.4904

Vertical Market Manager VP of Sales

_ ._...._ __L~a~e:_J.U.~1:e_23,..,?_Q].7~ ~~.~_..~.~.~._.~_~..~ ~__.~ ~m~..n._:~_____~ _m..~ _A.

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Page 1 of 5

Table of Contents

Why Overhead Video Displays were placed into the ROC :....................................................................... 2

Activu Corporation's Role in the ROC and 14+ Year Support :.................................................................. 2

Beyond End of Life of the OVDs and support equipment :........................................................................2

Mitsubishi/Activu Solution :.........................................................:.............................................................3

The OVDs will Continue to Fail :................................................................................................................. 3

_. The OVDs are Not Just "Eye Candy' :........................................................................................................ 3

NJ Transit's Customized Training :.............................................................................................................4

N1 Transit's Reputation as a leader in the Rail Control Room Venue :......................................................4

Activu Corporations' Recommendation :...................................................................................................4

Conclusion:................................................................................................................................................ 5

aCtIVU.COfTI ~'~l~ld~'tp~ ~ d:~a€'~~~[a~s~~Py~~~. Page 1 of 5

NJ Transit Rail Operations C

ontra) Center: Plannin ~for th

e Future

When planning for the future, it

's helpful to understand whe

re you came from and how tha

t led to to

your current situation. Keepi

ng that in mind, Activu Carpor

ation has provided a summar

y history, plus

feedback from NJ Transit Per

sonnel on their use and need

for the Overhead Video Disp

lays at the New

Jersey Transit Rail Operations

Center and lastly, our expert

recamrnendation for the futu

re based on 34

years in the Display Wali Ind

ustry.

tfUhy Overhead Video mispla

ys r~r~re placed in~~ the RC~C.

When Activu began working w

ith our partner Arinc, in early

2002, we understood that Ne

w Jersey

Transit was planning their ne

w NJ Transit Rai(Operations C

ontrol Center (ROC) and it was

required to be

a "state of the art" command

control and communication c

enter to aid all employees in t

heir quest for

superior performance, safety

and customer satisfaction.

NJ Transit's goal was to create

a working environment that

would increase situational awa

reness at a

glance, enabling viewers to g

ain knowledge of the current

situation and lead to fast, accu

rate actions

and responses by the operator

s and dispatchees. Millions of

dollars were dedicated to cons

tructing this

multilevel building, paying grea

t attention to every detail in

order to create an environmen

t that

minimized possible distractions

, so that multitasking operato

rs could focus on their duties.

~ctivu Corpora~ior~'s dole in t

he RC~C end 14+Year Suppor

t:

Activu provided and installed

189 iirsY ~;E~~rut~~n Mitsubish

i DLP lamp based Mitsubishi C

ubes in 2003,

*hat were rated to last appro

ximately 5-7 years. On schedu

le, these cuues r~a4"e~ their "

End of Life"

and replacement parts were

available until 2012. Once dep

leted, there were no replace

ment parts left

to service these cubes. The A

ctivu Servers, and support eq

uipmer~~ t"~t ac~?ss and displ

ay the ARINC

SCADA also reached its "End

of Life" in 2007.

Activu Corporation teas suppor

ted NJT with a support contra

ct until 2015, nearly twice the

expected (ife-

span; but, there is no Active S

upport Plan currently in place

to servi~;e these OVDs or the A

ctive

processing.

Beyond End of Life of the OVD

s end suppart equipment:

In early 2011, Active and NJ Tr

ansit ROC Personnel began di

scussing options to replace the

existing OVDs

with new equipment; a project

that was estimated to cost wo

uld 5 million dollars (not inclu

ding Active

processing equipment) and wo

uld have required removing a

ll existing equipment and prov

iding new

display cubes and bases. The

costs and the operational disr

uptions of a ful! system replace

ment were

major factors in NJT deciding no

t to replace the OVps and the

Active processing equipment

at that time.

Mitsubishi introduced LED Engi

ne Upgrade kit for certain late

-model cubes in 2013, but thes

e were not

applicable to the older, first g

eneration cubes installed at t

he ROC. Active then began upg

rading many

of its other control room cust

omers, installing higher resolu

tion LED Engines into their exis

ting cube

structures. This proved to be a

very economical upgrade tha

t could be irnplemen#Pd with

minimal

aCtIVU.COt't'1 9~4 i~' ~' ~e ta.( ;F~~ #~~'t L

Page 2 of 5

The OVDs allow operators to continue to monitor critical information when they must leave their desk,such as to walk to a printer, return from a restroom visit or confer with a colleague.

When an incident occurs that requires action, the OVDs also enable the Supervisor to look up at the FullTrack and Power Displays to fully understand the current situation without having to walk over to theoperator's desk and hover. We understand that hovering produces additional anxiety and stress for theoperator who is trying to perform and complete their assigned tasks.

We also understand that certain OVDs are dark now (cube failure) and prohibit display of certainportions of the NJ Transit Track such as in the case of the Atlantic City Line.

Power Side has expressed an immediate and future need to display HD or 4K security camera outputs,thermographic display, infra-red video output, real-time information, and analog/digital data outputfrom remote field locations. The higher resolution SXGA+ DLP LED engines proposed will providesupport for these sources, that cannot be effectively displayed with the current setup.

f~J Transit's ~us~omized Training:

Activu Corporation appreciates the specialized training required to perform as a dispatcher for NJTransit. We understand that this training was developed in house by N1 Transit, to meet the criticalmultitasking operation expected by the dispatchers; and, that training on selected OVDs in the TrackControl Room were dedicated to providing important "real life display situations" that could bemonitored and used as a teaching tool. Today those dedicated OVDs are in short supply, as some areused for spare parts which to support operation of the live track and power displays.

IV1 Transit's Reputation as a leader in the Rail ~~ntra[ Room Venue:

Finally, the NJ Transit ROC was considered the gold standard for all Rail Control Rooms being developedin the United States. The NJ Transit EOC and the NJ Transit Bus for example, have taken the lessonslearned from this site and have and will have installed Activu display walls. The N1 Traffic andTechnology Center in Woodbridge, NJ, initially installed in 2007 with Mitsubishi Lamp Based Cubes wasupgraded in 2016 with new Mitsubishi LED Engines. Touring of the NJ Transit ROC was very good forpublic relations, which promoted NJ Transit's safety operation and expertise in Rail and Power controlmonitoring.

Activu systems have been installed in dozens of transit and transportation control rooms throughout theUS and elsewhere globally. The operational model employed in the original 2002 NJ Transit ROC project,where local operators and managers rely on Activu enabled OVbs to increase situational awareness andimprove their effectiveness, has becor7~e a standard "best praclii:e" for organizations with similarresponsibilities, even those who only support a fraction NJ Transit's ridership.

Finally, Mitsubishi Corporation would also like to publish a case study promoting the long-termrelationship with NJ Transit and the latest installation of the Mitsubishi LED Technology in Upgrading theNJ Transit ROC and future proofing their OVDs in a National Rail Publication.

aCtIVU.00111 F' ~~f~~~` ~e ~. ~~F 9~`~lf~~. Page 4 of 5

,4c~ivu Csrparations' Recornmenda~ion:

Activu's recommendation for the New Jersey Transit, is that the SXGA+ (1400 pixels x 1050 pixels) LED

Engine Upgrade be installed. We were informed that Arinc is currently developing updated SCADA

Software that will include more detail, which requires more pixel space. An upgrade to a higher

resolution LED Display will enable display of that information in the same physical space. This, along

with upgrading the Activu Servers, will help prepare NJ Transit for this pending technology when it is

available.

I nstalling the LED based engines will also reduce the overall operating costs that NJ Transit by

eliminating the cost of replacement lamps and other replacement parts such as a color wheel, which are

no longer required. Reduced power consumption and BTUs, and the lower cost of the Activu Support

renewal will help offset the investment cost of this upgrade over the expected 11 to 12 years life span of

this LED Technology. This is all detailed in our Activu proposal.

Activu anticipates a 6 to 7 month timeframe to complete this project, which takes into account 3

months for of Mitsubishi to design, retool the factory and manufacture these custom N1 Transit LED

engines and 4 months for installation and integration by Activu on-site. Time is of the essence as the

existing cubes in NJ Transit ROC continue to fail creating potential safety issues to the NJ riders, NJ

Transit crews and NJ Transit staff.

Canclusion:

Safety and Quality Performance are the hallmarks of NJ Transit. These have has been achieved by the

OVDs, which are necessary tools being used by the ROC Operators these last 14 years. These

recommend OVD changes will keep the NJ ROC running efficiently and effectively for the next 12-14

years. Activu and Mitsubishi believe that this OVD Upgrade will restore the NJ Transit ROC back to a

world class operation with even better capabilities than the original installation.

aCtIVU.COfTI C~~° T` , ~7 ~~~i ~~'3~L Page 5 of 5

Fromc Barretta, Todd C. (CEDOTCBITo: Fitzsimmons. Neal A. (CLRONAF)Subject: RE: HBLRDate: Monday, May 8, 2017 1:26:00 PM

H i Neal,

OK, noting that there is an active police investigation, can we chat about it, in tree general sense, for

just a few minutes sometime today?

I'm hippy to come down to you if you have any time today —else it and I can wait no problem.

Thx

Tadd

From: Fitzsimmons, Neal A. (CLRONAF)Sent: Monday, May 8, 2017 1:13 PMTo: Barretta, Todd C. (CEDOTCB) <[email protected]>~c: Trucillo, Christopher (CPOLCXT) <CTrucilloC~njtransit.com>Subject: Re: HBLR

am available if you need to discuss - as Chief Trucillo notes, there is an active police investigation.

Neal Fitzsimmons

Sent firom my mobile phone

On May 8, 2017, at 1:09 PM, Trucillo, Christopher (CPOLCXT) <CTrucillc~~njtransit.corn> wrote:

Todd,

am not sure what you mean by a "formal briefing". There is a police investigationbeing conducted now on this incident. I am in Trenton today, but I would be happy toanswer any questions you may have on my end tomorrow when I am back in theoffice.

Cl

Sent from my iPad

On May 8, 2017, at 1:05 PM, Barretta, Todd C. (CEDOTCB) <CBarr~ttal~njtransit.cc~m>wrote:

Good Afternoon Gentlemen,

Will there be a formal briefing in re: the incident this past Friday in Jersey

City? I had a few questions and comments and wanted to know if

should hold them for a more appropriate time/place.

Thanks

Todd

Todd C. Barretta, J.D., M.B.A.Chief Compliance OfficerNJ Transit Headquarters

One Penn Plaza East, 9th FI.Newark, NY 07105(973) 491-7821 (o)(201) 988-3358 (c)

C E~arrQtta l~ n jtransit.com<image001.jpg>

From: Barretta. Todd G (CEDOTCB)To: Steve Santoro (SSantoroCc~njtransit.com)Subject: UpdatesDate: Friday, June 23, 2017 5:11:00 PM

Greetings Mr. Santoro,

To give you a brief update on my work, schedule, and plan:

This week I met further with Gardner and his deputy and we will continue to discuss delineation ofduties and responsibilities. Although there is definitely some overlap, I expect that Gardner andwill work closely and very well together. I hosted Navex Global here on Wednesday and Mike Slackjoined the first part of our meeting. We discussed several of their products as a good fit for ourenterprise wide compliance management software system. I also spoke for a second time with arepresentative from CEB (now Gartner) who I have dealt with in the past, and may ask you to fundsome compliance resource services that they can provide. The membership is on an annual basisbut in the conversation, I learned that our HR dept. already does business with Gartner so I will gettogether with Deb at some point in the future to understand what she gets from them and howmuch we currently pay to understand if we can bundle some services for savings.

Yesterday, I went to MTA HQ and spent a while with Lamar Kearse, their CCO who provided me withsome valuable information on their program. Although my focus and areas of responsibility willdiffer somewhat from his, there are a remarkable number ofsimilarities — in fact their latest riskassessment is practically a mirror copy of ours. My take away from that was a boost of confidenceas it became clear that our discussions and vision for the myself and the role of compliance at NJT ison track and in many ways parallels what has been done at MTA over the past 15 years. In fact,SOil'lE Gf li~ie Iieai'tei'iii gOdiS ti'ldi.'y'GU di'~u i ri2V~ ~dii:Eu c~u0ui arm Siiii strong areas of interest iGi'MTA compliance and their program is a decade and a half more mature than ours — We agreed tocontinue to stay in close touch and i believe that will be a supportive good resource if for nothingelse than a healthy exchange of ideas.

have been in communication with Gardner, Eric, and Emery regarding our risk as it relates toNJDOT's compliance with a April 15, 2019 FTA deadline to establish a state safety oversightprogram. I will provide you more information as it develops but I think this is something that weneed to really monitor. On the subject of deadlines, I did see your email forward of the FRAinspection report recommending a violation for the status of our PTC implementation. I imaginethis result ties well to the Q1 status report submitted to the FRA and publicly available on theirwebsite since May 25. I do respectfully note that in more than one candid and informalconversation, I have been told that we are very far behind and that it is unlikely that we will meetthe final end of 2018 deadline —this is brought to light fairly well by the Q1 status report and theviolation for not meeting the milestones identified in the implementation plan. Please advise onany role other than informal monitoring and cataloging any related inspection reports that youwould like me to play in helping to ensure that we are compliant with the ultimate deadline and onschedule according to the implementation plan or otherwise. So as to not step on toes, asunderstand that there are many people working on this large project, I am happy to serve any roleyou see fit, but will not proactively act on any PTC related issue or concern unless you tell me

specifically to do so otherwise.

met with Jackie Halldow at the beginning of the week and shared my in progress strategic plan for

compliance. Her feedback was mostly positive and I will incorporate her thought and comments, all

of which I value, into the working draft. She also shared with me some information on compliance

funding and budget and as I understand from her (and subsequently in an email from jay Patel)

there is now in place a compliance management center number and Jay has or will make some

provisions to set aside some funds — so I am encouraged, and very much look forward to an ability

to actually materialize the plan. I suppose it is on this point, that we need to have some additional

conversations to further document the roles and functions.

received an email from Terri Silverman setting the grade and description for a secretary but

unfortunately, I think their analysis falls a bit short of the role I had expected my administrative

support to be capable of serving. Under their analysis, I would not be able to recruit a competent,

capable, and experienced person to perform the tasks I laid out in the job description. date

yesterday, i did reach out to Doug Clark (as Terri Silverman was unavailable) to discuss my issues

and concerns. I explained how it would be close to impossible to find someone that can perform

the 6 out of 18 tasks in the job description that are relatively higher functioning, greatly exceeding

basic secretarial/reception duties while expecting to pay that person at a grade lower than every

other executive assistant/special assistant/executive secretary here except one whose current

duties do not at all favorably compare with the job description that has been agreed for this role. In

response, he agreed to take another look at it and see if they could revise. /"

(J18f1 LO UIIIIZe Ltle TIfSI iUll IC1S'ldiifll~f 1i Gi my ~aiu iiiiie oil I ICXL WCEIC iG iakE a ui iE~ i~iSi ley ufEaii

with my son. It had been on my calendar and although Jackie told me that you do not require a

forma! approval for varatf~n time, I nonetheless asked her to please make sure that you knew and ,~~/

that there was no issue with upcoming time off. Having heard none, i trust you do not have any ~C'

objection or issue. Since I do not yet have a delegate, I of course will forgo sending out a traditional

delEgation of authority; however, i will keep my NJT phone with me at all times end will also

continue to check and respond to emails while away. in addition to a little break, I also plan to

utilize some of the downtime to continue to develop and finalize my department plan and the

compliance charter and I am eager to share that with you upon your first availability following my

return. Please enjoy the weekend and thank you again for this opportunity.

Best Reagrds,

Todd


One Penn Plaza East, 9th FI.Newark, NY 07105(973) 491-7821 (v)

(201) 988-3358 (c)T~arrettaC~nitrs~n5it.cc:~~Y~

~~,,t r~~~stT ~ _~T'1-i~ 4+t'€iy '~e~ ~ry~

(~TRA~ISIT

l'O: Ms. Amy Herbold, Deputy Executive Director

FROM: Todd Barretta, Chief Compliance Officer

DATE: May 12, 2017

SUBJECT: FTA Drug &Alcohol Program Audit

VIa4 EMAIL AND lNTEf20FFICE MAIL

On or about March 20, 2017, NJT was notified of FTA's intent to audit our mandateddrug and alcohol program. The FTA routinely assesses compliance with their drug andalcohol testing regulations through on-site visits to transit grantees, state DOTs and 49U.S.C. section 5311 sub-recipients. The on-site visits include two components: (1) anin-depth review of the policies, procedures, and records related to drug and alcoholtesting and (2) interviews with drug and alcohol program employees including the drugand alcohol program manager(s), the medical review officer(s), and the specimenrn~~Pr~~r~. ThP cnllPct~rs are also required to perform mock breath and urinecollections for the audit team to observe.

Lash month, in response to the FTA's r~ques~, ~iJ r ~e~rr~pii~d c~~iaiie~i i~~`c~rm~~ti~r~ an~irecords related to our program and the programs of our contract carriers)/subrecipients and transmitted this information in advance to the FTA's Office of TransitSafety and Oversight. Under applicable federal regulations, NJT is ultimatelyresponsible for not only our own regulatory compliance; but the full compliance of eachof our sub-recipienfi contractors.

The FTA assembled an audit team which consisted of DOT Transportation IndustryAnalyst, Mr. Michael Redington from Volpe Center and five individuals employed byFTA's contract auditing firm, Cahil Swift, located in Cambridge, MA. Following theirinitial review of the pre-audit materials, the six-member team was on-site this week atNew Jersey Transit and at the field locations for four of our sub-recipients: AcademyExpress, 21St Century Rail Corporation, Bergen County Community Transportation, andMiddlesex Community Department of Transportation.

The audit team subsequently prepared a Final Audit Report which was shared with NJTthis morning during an exit interview. fVJT was not given an opportunity to discuss anypotential findings with the audit team prior to preparation of their final report. Thus, itremains significant to note the lik~lihaod thai one or more findings may very well gavebeen made in error. For example, under pressure of the interview, it is possible that a

drug and alcohol program employee incorrectly answered an interview question whichresulted in a finding that an area of our program was deficient when in fact, the personinterviewed simply misstated a detail of our official policy or procedure. Erroneousfindings will be addressed by NJT when we submit the details of our corrective actionsto the FTA in August 2017.

. _.__--am pleased to report that the Audit team did not identify any major deficiencies or

areas of concern with respect to NJT's drug and alcohol program or that of any of thefour selected sub/recipients/contractors. In fact, although the FTA does not provide anygrade or overall score, it remains significant to note that we were informed that this ---ouerall was a successful audit and that we are performing reasonably well and abovewhat the audit team had expected prior to the commencement of the on-site visits. Withthat, had the FTA, by and through the audit team discovered any serious defects, wewould have been required to perform immediate corrective action and would be re-visited one or more times again this year. Instead, we were informally told that thereare no such concerns and that we should not anticipate any further audits or action withrespect to our drug and alcohol program anytime in the near future.

f~otwithstanding the foregoing, and as is typical in these types of reviews, some minordefects and findings were respectfully noted and NJT has been given ninety (90) daysto take corrective action. For NJT and each of the four contract carriers, findings ofdeficiency are categorized and classified by one of seven functional areas of review:policy manual, program manager interview, records management interview, breathalcohol technician interview, urine collections interview, medical review officer interview,and substance abuse professional interview. With respect to NJT, it remains mostsignificant to note that in practice, NJT is in full compliance with the scope and spirit ofthe dr~~a end ~I~~h41 t~stina regulations.

As such, the noted minor findings are more representative of a defect in documentationrather khan an ac~uai error, omission, ~r~ c~versigh~ in ~~7e c~~~r~~ic,i~y ~~f c~ur~ p~~r~gr~rn. ~=~rexample, the audit team found that NJT does not properly document the decisionmaking process used to reach a decision not to administer post-accidenfi (PA) drugand/or alcohol testing when an employee is discounted as ~ contributing factor to anaccident. NJT does in fact utilize the industry accepted flow chart to reach saiddecisions) and a report is issued with each incident. Contained within each report isthe factual background surrounding the incident; however, the reports lack a conclusorystatement summarizing why the employee was not PA tested and how his or her actionsare discounted as a contributing factor. Consequently, although the FTA properly notesthat in each PA incident reviewed during this audit, NJT, in their opinion reached thecorrect decision with respect to PA testing, that decision is not supported in ourdocumentation without requiring the reader of the documentation to draw reasonabledeductions and inferences. Thus, we are properly making decisions according to whatis required in the regulations) and pursuit to the process recommended in the circularsbut we need to more definitively document our decision. A summary of the findings isas follows:

Although still considered a minor finding, the internal clock on the EBT machine located at Holy Name Hospital,which serves as the test collection site for NJT's sub-recipient, Bergen County Community Trans~ortatior7 wasfound #o be off by one hour and this must be adjusted within thirty (30) days. This is the only finding whichrequires corrective action in less than ninety (90) days.

2

NJ Transit

The review of NJT's policy manual reveals ten (10) minor deficiencies in corporatepolicy. All will be addressed and corrected and a revision to our existing policy, 3.25Agoverning drug and alcohol testing for FTA covered employees performing safetysensitive positions wil! be made. Although none of the policy review findings are major,it is important to note that the undersigned believes that some of these findings areclearly erroneous. For example, item 1 found that our policy does not indicate thatemployees are prohibited from using the five listed drugs at all times and asks that wesubmit to the FTA a revised policy that "includes the requirements of section 655.21(c).In actuality, our policy clearly defines prohibited drug as "marijuana, cocaine, opiates,PCP, amphetamines, ecstasy and/or any other drug for which an employer must testunder 49 C.F.R. 655.21." Other policy findings fail to note that the deficiency is a resultof NJT's policy actually being more stringent (as is allowed) than what is required by theregulations. For example, item two does note that our policy does not require furnishingproof of having completed a referral, evaluation, and treatment plan for an employeethat has failed a DOT pre-employment drug test. In actuality, this provision is notapplicable to NJT because our policy is simply to not hire someone who has failed apre-employment drug test.

There were four findings with respect to the interview with NJT's DAPM. Most of thosewere related to the DAPM simply not having first-hand knowledge of our actualemployment policies.

There were five findings related to the interview with NJT's record manager. All wereralatarl to minor r1n~~mPnt~tic~n c1PfP~t~. In nrac~ICe; our procedures are in comgliance

with the regulations.

there were three finings with respecf to fhe interview witih i~i,~T's ~rearh a~cohoitechnician. Again, all were minor, for example, the collector was not aware that a testmust be canceled in the event that the printer failed to print a confirmation test result.Also, at least one time, the documentation revealed an impermissible delay of alcoholtesting (such as drug test being performed before alcohol test). NJT will ensure that thetechnicians are fully trained and that all of our procedures are performed according toregulation.

There were two findings with respect to the interview with NJT's urine collectionstechnicians. Again, both deficiencies result from the technician incorrectly respondingto the interview questions. In practice, our official procedures are in compliance.

There was one finding with respect to the interview with NJT's Medical Review Officer.The interviewer discovered one instance where a return to duty test and one instancewhere a follow up test were not marked as having been observed. The MRO did notnotify NJT. In actuality, the MRO is supposed to notify the employer if a test requiringdirect observation was performed without observation. In practice, clearly we properlyperform tests which require direct observation as only two defects were discoveredfollowing review of many tests.

3

There were no deficiencies found with respect to the interview with NJT's substanceabuse professional.

Contract Carriers

NJT, although responsible for the regulatory compliance of our sub-recipients, does notitself manage their programs. Instead, their compliance is managed by NJT'scontractor, COSI. Again, findings related to the review of records and policies of andinterviews with the personnel from our contract carriers were minor in nature. NJT willwork with our contractor and directly with the sub-recipients to ensure that any requiredcorrective action measures are timely implemented and reported to the FTA. Withrespect to each of the contracted carriers, the bulk of the findings relate to the timing oftesting such that it was not impossible for an employee to ascertain whether or not anemployee would be tested at a given time or date. It was noted that tests are nottypically performed on the first day of the month nor our tests typically performedoutside of the administrative office hours. In one instance, an employee of ourcontractor carrier was given 24 hours' notice before a test. Employees should not begiven advance notice. NJT will ensure that contract carriers are performing all requiredtesting without advance notice and in a truly randomized fashion at all times of the day.

Of the four NJTsub-recipient's, 21St Century Rail had the most defects. COST explainedto us that this issue was known as the person responsible for coordinating their programhad abruptly left and never returned to work at 21St Century following an illness. Therewas no back-up person properly trained. Unfortunately, that person had left, withoutbackup, at precisely the same time period covered by this audit. Since that time, thereis a new person serving as their program manager and our contractor, COST, has beenworking extensively with that person. The undersigned was informed that an internalreview of their most recent records indicates that most problems have been resolved.

Very truly yours,

Todd C. Barretta

From: Barretta, Todd C. (CEDOTCB)To: Tabon. Gardner C. jCOSSGCT); Daleo. Eric R. (~CAPERD)Cc: Ll narady. Emery]. (CROPEJU,~; Kilcoyne, Michael P. (BSPVMPK~; Fitzsimmons, Neal A. (CLRONAF~; Lavell, Robert

M. (c.ROPRML); Schworn, James (CPRCJXSa; Wyckoff. Paul L (CCAPPLWI; Thomason. Lori M. (CCAPLMT);Merritts James C. (COSSJCMI

Subject: RE: F("A Posts Status of State Progress to Meet Rail Transit Safety Certification Deadline, Avoid Funding Impact ifDeadline is Missed

Date: Friday, June 23, 2017 3:48:00 PM

Nello Colleagues,

Please clarify, is there or is there not ~ risk (financial funding or otherwise) to NJT in the event thatthe state DOT fails to meet the deadline? And if so, can we quantify the potential impact?

Thanks

..•

Todd C. Barretta, J.D., M.B.A.Chief Compliance OfficerNJ Transit Headq~a~rters

One Penn Plaza East, 9th FI.Newark, NY 07105(973) 491-78?_1 (o};201; 9~8-3358 ,c;T Barretta(~njtransit.cam

T~A~l~SIT~~'r~~ ~v,,, rr, ~~~:,..

`~ ... :.~

From: Tabon, Gardner C. (COSSGCT)

Sent: Friday, Junc 23, 2017 3:33 PM

To: Daleo, Eric R. (CCAPERD) <[email protected]>

Cc: Ungrady, Emery J. (CROPEJU) <[email protected]>; Kilcoyne, Michael P. (BSPVMPK)

<[email protected]>; Fitzsimmons, Neal A. (CLRONAF) <[email protected]>;

Barretta, Todd C. (CEDOTCB) <[email protected]>; Lavell, Robert M. (CROPRML)

<[email protected]>; Schworn, James (CPRCJXS) <[email protected]>; Wyckoff, Paul L.

(CCAPPI W) <[email protected]~m>; Thompson, Lori M. (CCAPL.MT)<[email protected]>; Merritts, James C. (COSSJCM) <[email protected]>

Subject: Re: FTA Posts Status of State Progress to Meet Rail Transit Safety Certification Deadline,

Avoid Funding Impact if Deadline is Missed

Eric,

I met with the program's manager, Kevin Conover, yesterday. He is relatively confident theywill; nevertheless, I will request a written summary from them.

Gardner

On Jun 23, 2017, at 3:25 PM, Daleo, Eric R. (CCAPERD) <EDaleo(c~njtransit.com> wrote:

Gardner:

Thanks —obviously our funding is patentialiy impacted by NJDOT's compliance. Da we know thestatus of haw far along NJDQT is to meeting the deadline, and have they given you writtenassurances or a schedule that demvr~strates (if they have not already) that they will rt~eet T,hedeadline?

Eric

From: Tabon, Gardner C. (COSSGCT)Sent: Monday, June 19, 2017 7:41 PMT'o: Daleo, Eric R. (CCAPERD)Cc: Ungrady, Emery J. (CROPEJU); Kilcoyne, Michael P. (BSPVMPK); Fitzsimmons, Neal A. (CLRONAF);Barretta, Todd C. (CEDOTCB); Lavell, Robert M. (CROPRML); Schworn, James (CPRCJXS); Wyckoff, PaulL. (CCAPPLW); Thompson, Lori M. (CCAPLMT)Subject: Re: FTA Posts Status of State Progress to Meet Rail Transit Safety Certification Deadline, AvoidFunding Impact if Deadline is Missed

Eric,

No, NJT is not at risk. NJDOT, our SSOA, is responsible for meeting the mandate.

Gardner

On :Tun 19, ?01.7, at 4'47 PM; 1~a1~~, F;r~ R, (~(~;A.PF,R~I <F.T?~iPnnnitrancii ~~m> ~~rrntPo

Gardner,

Is NJ's prograrri FTA certified? Any risk to us here?

Eric

Sent from my iPad

On Jun 19, 2017, at 1:37 PM, Ungrady, Emery J. (CROPEJU) <E~Tn~radynn~transit.com>wrote:

I~'/~

From: Federal Transit Administration [mailta:usciotftaCa~ blic,govdelivery.com]Sent: Monday, June 19, 2017 12:24 PMTo: Ungrady, Emery J. (CROPEJU)Subject: FTA Posts Status of State Progress to Meet Rail Transit Safety CertificationDeadline, Avoid funding Impact if Deadline is Missed

FTA has notified the 30 states where rail transit systems operate that federal law

requires they establish an FTA-certified Mate Safety Oversight (SSO)Pro~ra~n by April 15, 2019. If a state fails to obtain certification for its SSOProgram by the deadline, FTA is prohibited by federal transportation law fromobligating any funds to public transportation agencies throughout that state untilcertification is achieved.

When FTA's SSO Program final rule took effect in April 2016, it established athree-year timeframe for states to obtain certification for their SSO Programs.With the certification deadline less than two years away, FTA is encouragingstates to act quickly to enact any necessary legislation, statutes and regulations,particularly those states whose legislatures meet only part-time or biennially.Currently, there are nine states remaining that still require legislative action at thestate level prior to FTA certification.

Links~tat~ Safety Oversigh~SSQ~ ProgramState Safety Oversight Program Certification Status

QuGstia~7s? Contact UsRead o~ir Privac~Policy

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PRELIMINARY DISCUSSION D R A F T —NOT FOR DISTRIBUTION

AUC~IT RE'-.PORT NO. 17-OOfi

NEW JERSEY TRANSIT C4RPORATIQNti~~-~~ts~►ti ;a~titi~ ~~~a~3~~~3

FAMILY MEDIAL LEAVE -ACT (FMLA) COMPLIANCE MANAGEMENTPROCESS

MAY 15, 2017

ADVISORY, CONSULTATIVE &DELIBERATIVE

Richard 7. Hammer, Commissioner of Transportation &NJ TRANSIT Board Chairman

NJ TRAfVSITBoard of Directors

Executive ManagementSteven H. Santoro, Executive Directorr~►~~r~ ~. ~-i~~~e~G~, ~e~~y~y ~~e~~c~~iv~ ~ir~cfr~r`Todd Barretta, Chief Compliance OfficerMichael J. Lihvarcik, Chief Financial (~fificer &TreasurerJoyce J. Zucz~k, Bc~~rd Secr~t~ry

Internal Audit DepartmentWarren A. Hersh, /luditor GeneralAntoinette T. Vll~tsh, Director,. Internal i4uditSteven F. Dei4ngelis, Managing Auditor

NJ DIVISfON OF -LAW: NJ TRANSIT &UNIVERSITY HOSPITAL SECTIONMichael Gonnefla, Deputy Attorney General, :Section ChiefJoseph Snow, Deputy Afitorney General, Assistant, Section Chief

ERNST & YQtJNG LLPLouis M. Roberts, Partner

DRAFTAUDIT REPORT NO. 'i7-006

FMLA COIVIPLlANCE MANAGEMENT PROCESS

TABLE OF CONTENTS

PAGE

I. EXECUTI~/E SUMMARY 1

~~. ~l~Tf~~~.~~.1 l~4SQ~T 4~EQGl4~~' — AllQtT ~tESIl~.~S A~itl ~t~EGCIt{LlR!l~~E~tDA,T~aR~l~

A. Explore ~h~ feasibility of Re-Organizing FMLA ComplianceManagement Processes Into a Single Reporting Department 5

B. Perform a Thorough End-1"o-End Reviewr of the FMLA Process 7

C. Retrain Applicable NJT Employees How to Use KRONOS 10

1l1~ APP~NC,.)~)(— A~1~1T' C1F~IT~RlA At~l~] R/.~TINt~S I~~FIi1~IT1C~~1IS 1

ADVfSORY, CONSULTATIVE & DELIB~aATIVE

PRELIMINARY DISCUSSION D R A F T —NOT FOR DISTRfBl.1TIONAUDiT REPORT NO. 17-003

FML.A COMPLIANCE MANAGEMENT PROCESS

1. EXECUTIVE SUtYiM~lRY

Management Responsibii.ityRobert Laveil, VP/GM Rai{ OperationsMichael P. Kilcoyne, VP/GM Bus Operations

.Neal A. Fitzsimmons, Acting, VP/GM, Light Rail &Contract ServicesChristopher Trucilla, Chief of Police, NJTPDDeborah L. Prato, AED, Human ResourcesMichael J. Lihvarcik, C~{~ and TreasurerPenelope L, Bassett, AED Gomrr~unications ~ Customer Service

BackgroundIn accordance .with the FY17 New Jersey Transit (NJT) Internal Audit Plan, InternalAudit completed an audit of the FML:A Carnpliance Management Process. There havebeen internal and industry-related concerns and challenges relating to the operationaland financial impact that FM~A has on NJT and similar agencies. As part of the audit,IA gathered and validated the sources of avaifabie metrics and data maintained by thebusiness units within NJT relative to the impact FMLA has. on their transportationmode or department from both an operational and financial perspective.

The Family and Medical Leave Act of 1993 (FMLA} is a federal law requiringr~~i~?rnr~i pm~,~n,~~r~ tr, nrnv~r~~ ~m~Ic~yePs with ;c~k~-~rot~cte~ ~nc~ un;c~~i~1 leave forqualified medical and. family reasons. Qualified medical and family reasons include:personal or family illness, family military leave, pregnancy, adoption., or the foster careplacement of a child. ThQ Wage and Haur Division of the United States Department ofLabor administers FMLA.

The FMLA was intended "to balance the demands pf the workplace with the needs offamilies"~ The. Act allows eligible employees to take up to twelve work weeks of unpaidleave. during any 12-month .period to attend to the serious health condition of theemployee, parent, spouse or child, ar for pregnancy or care of a newborn child, or foradoption or faster care of a child. In order to be eligible for FMLA leave, an employeemust have been at the business at least twelve month, and worked at lest 1,2.50hours (1,000 hours ifi FM~A is for other than salf) over the past 12 months, and workedat a (ocafion where the company employs 5d or .more employees within 75 miles.FMLA leave can be taken either consecutively or on ~n interrnitt~;nt basis. fntermitt~ntFMLA can be taken in whole days ar parts (i.e., hours).

Internal Audit interviewed key stakeholders in the fiollowing business unity anddepartments and r~vi~wec~ av~i(~bfe dQG~m~nt~tic~n: Human RPsaur~es, RailOperations., Bus Operations, Light Rail Operations, Access Link, Transit Information

ADVISORY, C(3NSULTATIVE &DELIBERATIVE1

PRJELINIINARY DI~CUSSlON D R A F T —NOT FOR DISTRl~UTIONAUDIT REPORT NO. 17-003

FNiI~eQ COMPLIANCE MANAGEIV9E~1T PROCESS

Center, NJT Police Department, Finance (Payroll and Financial OperationsC~mpRya~ce}, aid ~ommts~}ca#.yo~s ar~d Cr~stomer S~ecrisac~.

The audit was conducted in accordance with Generally Accepted GovernmentAuditing Sfandards (U.S, Accountability Office) and 'the lntern~tional Standards forthe Professional Practice of Internal Auditing (Institute of Internal Auditors). Thesestandards require that we plan and perform the audit to obtain sufficient, appropriateevidence. to provide a reasonable basis for our findings and conclusions based on ouraudit objectives. Internal Audit believes that the evidence obtained in this auditprovides a reasonable basis for findings and conclusions.

Purpose and ScopeThe purpose of this audit was #o determine whether business controls, including theplan of organization, policies and procedures, standards of performance, and recordsand reports adopted by management, are adequate and effective to address keybusiness risks and ensure that:

• key transactions (e.g., proper completion, approval and submission of key FMLAfarms) are firacked, monitored, reported and recorded in a complefie, accurate andtimely manner;

p process objectives are achieved (e.g., compliance with FMLA relative to eligibility,duration, proper advance notice, impact of FMLA usage on NJT's operating~~~vi~;~, ~t~.);

• key policies and procedures are complied with (e.g., Garporate-wide Policy 3.06AFamily &Medical Leave and FMLA Regulations};

• .resources are utilized in a cost effective manner (e.g., paid overtime for FMLA call-outs is actively monitored and mitigated); and,

a assets are safeguarded (e.g., key FMLA-related statistics and patterns, relatedFMLA costs, etc.)..

Note: An audit included in the NJT FY18 Internal Audit Plan wi{I include a review ofthe FMLA operation impacts and recommendations fia mitigate fihe impacts. NJTInternal Audit is currently working with the DAG to hirelconsult with an outsideFMLA subject matter consultant to perform a thorough review ofi the FMLAprc~c~clures ~nc~ policies that exist and develop recommenda#ions to strengthenNJT processes going forward and minimize the apprational and financial impact ofFMLA to NJT operations.

ADVISORY, CONSULTATIVI~ ~ DELIBERATIVE2

PRELIMINARY DISCUS510N D R A F T —NOT FOR DISTRIBUTIONAUDIT REPORT NO. 17-003

FMLA COMPLIANCE MANAGEMENT PROCESS

ConclusionTk~e audit deter~t~ed tktat business cor~trats foK the ~t~L~l Garn~ttia~ce t~ta~ageme~~Process need critical strengthening to address :key business risks, .and to ensure keytransactions are tracked, monitored, reported and recorded in a complete., accurateand timely manner; process objectives are achieved; .key policies and proceduresand/or applicable laws and regulations are complied with; resources are utilized in acost effective manner;. and, assets are safeguarded.

Specific audit observations include:

1. There is a direct correlation with stricter time and attendance :policies and theincrease in FMLA applications.

2. Intermittent FMLA (i.e., using FMLA time in short blocks of time — a day or days, oreven hours) is more prevalent afi NJT than the use of consecutive FMLA time(weeks far surgical recuperation, maternity leave, etc.). Ifi was noted that there areinstances where employees coil-out to use FMLA time just .before their shift isscheduled. to begin or even after it has begun (e.g., Transit Information Center~TIC> employees can call-in up to two hours after their shift starts) and indicatethey are using F'MLA time, leaving managers with gaps of operational coverage.There ara operational service and financial impacts of this on NJT's operafiingui'~(~.".7Sv ii.'~s.

3. There appears to be an inconsistency across NJT in the use of applying paid-timeoff far FMLA days. In certain departments, employees may choose to applyaccrued sick time, vacation time or choose not to have the time paid when takingFMLA. In other departments, accrued sick time, vacation time; etc. is applied whenthe employee takes FMLA.

4. The Timekeepers who track time in KRUN(~S are not fully aware of how to record. FM~A call-outs and associated overtime in the KRONOS program. Also, currently,T&E employees (Trainmen &Engineers} do not swipe into NJT's timekeepingsystem, KR~N~S; a new KRONOS module with functionality to record FMLA call-outs is currently under review by the Information Technology Technical SteeringCommittee.

5. There is an inconsistency in the form used for FMLA applications across NJT wifiha more-detailed version currently in use by Bus Operations.

ADVISORY,. CON~ULTATNE &DELIBERATIVE3

~'RELIMINARY DISCUSSION D R A ~ T —NOT FOR DISTRIBUTIONAUDIT R~PGRT NO. 17-003

FML,A COMPLIANCE 'MANAGEMENT PROCESS

Overall Risk Exposure: Overall Control Assessment:❑ Low ❑ Meets Requirements❑ Moderate ❑ Needs StrengtheningQ High (Important)

~ Needs Strengthening(Critical)

k~zacess GQ~tsat ~+ttatu~~t~ Levu: ~A~~a+~em~rtt Ftes~a~ses:Q Ad Hoc ~ Accepts~f Informal D Disagrees

Standardized❑ Monitored❑ Optimized❑ N/A

(See Audit Report Appendix for audit criteria and ratings definitions.)

S~!h~??~~t~~ h;

Warren A. Hersh, Auditor Gen~rat

ADVISORY, COIVSUL.TATIVE &DELIBERATIVE4

PRELIMIN/~RY DISCUSS1t3N D R A F T —NOT FOR DISTRIBUTIONAUDIT REPORY NO. 17-003.

FMLA COMPLIANCE MANAGEMENT ~'ROCESS

titi. 43~TAS~~EQ A4l~3ST 4~~~'4~tT -- f~,!lDRT ~2~S~Ll~~'~s Q.I~1~1 4Z~GO~AR+t~E~1DAT~4~lS

A. Explore the Feasibility of Re-Organising FMLA Compliance ManagementProcesses Into a Single Repoe-fing Department

Observation 1There are .approximately -1,500 NJT employees {Agreement and Non-Agreement)currently approved for FMLA, which is more than 10° /Q of the entire organization.The employees are spread across the operating areas, with a high concentration inboth Bus Operations and: Raiff Operations. Most of the employees approved forFM~A are using intermit#ent FMLA Isave, .which impacts operations and incursadditional costs for NJT. Processing FMLA applications- and tracking FMLA use iscurrently decentralized in NJT -and performed in each operating unit. !t was notedthat there is an inconsistency between how Bus Operations, Rail Operations andHuman Resources tracks FMLA approvals and compliance.

Observation 2Through testing and observation, Bus Operations utilizes a more formal process forFMLA than other units -from the time a request comes in, to the approval givenand the tracking of ensuring the employee is complying with the rules set forth inBus Operations policies.. and procedures. Bus Operations uses an in-house~i~Q~~tl i~ CY ~I~ fir• ^~ r~ ~` L~~r ~r~m 4r-~ rto~ ~~`n C~1~~ /~ K! ~r?n~n~ rZr ~~'?, r~~ n~

i.J Vl~i~~l l"~il Yt J~ 3 C:i I f l~.{` ~i i:9u C"i t f L,,.Y"'S ~:7 ♦{ c.i'lif lC7 ~,.f ~ Gi C~Y fu

management and employees are informed as to their status of unused FMLA daysis coming to an end.

Howaver~ due to the increase of 4QQ% in FMLA approvals they lack the staffrequired, and fear they will fall behind. There is na back-up staff qualified to replacethe FMLA coordinator if she were to cell out sick for an extended period, go onvacafiion, or vacate the position.

Observation 3Although Rail Operations has mechanisms in place to approve and trackcompliance with FML/~ procedure, it utilizes Microsoft Excel spread~he~t~ to trackcompliance. Given the volume of employees approved for FMLA in RailOperations, numerous management employees .spend substantial time trackingFMLA compliance rather than -their normal job duties.

Further, Rail t~7perations staff indicated that there is a lack of funds to hire anAssistant for the FMLA Coordinator. The Raif Operations FM~A Coordinatorreports directly to the Deputy Director, Libor Relations. ThQro is no middlemanagement position for this person to report to who would review their work.

ADVISORY, CC3NSULTATiVE &DELIBERATIVE5

k'4~ELtl~'t~~ll~4~Y QISCU~S4E7k~t D ~ A ~' T — tVlQ~C FOR ~ISTk~IBUTtO~IAU`DIl' REPORT NO, 17-003

FMLA COMPLI~4NCE MANAGEMENT PROCESS

Observation 4The Human Resources FMLA Coordinator relies solely on management and thepayroll clerks that report to them to track compliance with FMLA policies andprocedures. There is no follow-up or periodic' (e.g., daily, .weekly) tracking for.corporate employees on FMLA by Human Resources to ensure adherence andcampiiance with FMLA policies and procedures.

Further, ~lne 1-iuman Resources ~iViL,~ Coordinator; ~actua~ posifiion: PrincipalCorporate Policies, 'FN1LA &Reasonable- Accommodation. Analyst) reports to theSenior. Director, HR Business Partner .and has responsibilities other than FMLA.There is no middle management position for this person to report to who wouldreview their work.

fttisks• Higher costs due to ineffective management policy that could lead to, and

appears to have led to, employee abuse relative to FMLA.• Increased overtime costs due to the increase in additional staff to cover shifts

from FMLA call-outs.• Negative customer satisfaction and public perception due to delays and

cancellations of service due to unavailability of rail crews,. bus operations and lightrail operators.Insufficient budget to hire staff that would cover the impact of FMLA caH-outs.

Recommendation 1:NJT should consider consolidating the function under the Compliance Officer.Due to the time it takes to successfully administer FMLA ~r~lici~s and procedures, asingle repc~r~ing stricture that umbrellas the entire organization that approves andtracks FMLA provided to employees and ensures compliance with policies,procedures, state and federal regulations should be considered.

Recommendation 2:A staffing assessment should be part of a potential reorganization to ensure thereare adequate resources for the FMLA compliance .management process. Asmentioned in Observation # 2, each entity fihat tracks FMLA is short-staffed. Acost/benefit analysis sh~ul~i b~ performed to ensure adequate staffing is available.

Recommendation 3:Automation of the FMLA compliance management process should continue to beexplored and implemented as appropriate. Bus Qperations' internally developedautomated system has proven to be efficient. and effective thus far, and mostimportantly, easy to use. Consideration should !~~ given to using this systemcompany-wide.

ADVISORY, COPVSULTATIVE ~ DELIBERATIVE6

PRELIMINARY DISCUSSIOPI D R ~4 F T —NOT FOFt DISTRIBUTIONAUDIT REPORT NO. 17-003

FM~A COMPLDANCE MANAGEMENT PROCESS

~a~ac~emer~t 42es~o~s4kxta#~~s: Exe~~ttiue Dtirec~tar, Cle~u~y ~xec~t~~~ ~1i~ectQ~

Management Response:

implementation Date

B. Perform a Thorough End-To-End Review of the MLA Process

Observation 1There is a direct correlation with stricter time and attendance policies and theincrease in FMLA applications. It was noted that certain unions are encouragingtheir members to .apply for FMLA coverage due to a revised occurrence-basedattendance policy. For example, Bus Operations saw their FMLA certificationsincrease 400% -from approximately 200 applications to 800 (out of approximately3,500 Operators) after the new, stricter Time and Attendance policy wasimplemented. Further, .it was noted that there is along-standing practice by theATU (Amalgamated Transit Union; Bus Union) to encourage employees. topurchase supplemental insurance to provide wage replacement for unpaid ~IVILf~days.

Observation 2Infiermittent FML.A (i.e., using FMLA time in short blocks of time — a day or days, areven hours) is more prevalent ~t NJT thin the use of consecutive FMLA time(weeks far surgical recuperation, maternity leave, etc.). It was noted that there are

instances where employees call-out to use FMLA time just before. their shift isscheduled to begin or even after it has begun (e.g., Transit Information Center<T(C> employees can call-in up to two hours after their shift starts) and indicate#hey are using FMLA time, leaving managers with gaps of operational coverage.The impact of this on NJT's operating divisions includes:

• In ~~as C~~er~ti~ns, FMLA call-oufis result in missed trips and additional overtimeto provide a replacement for the employee who has called out.

• In Rail C?perations, .there are. approximately 50Q open intermittent FMLA cases.FMLA call-outs result in short-staffing on the trains, potential cancellation ofservice due to crew unavailability, delay- in making mechanical and signalrepairs and incurring overtime expenses to provide crew replacements.

ADVtS~RY, Ct~NSULT'ATIVE &DELIBERATIVE7

PRELIMiP1ARY DISCUSSION D R A F T —NOT FOR DlSTRIBUTlONAUDIT REPORT NO. 17-003

FMLA COMPLIANCE MANAGEMENT PROCESS

• ~in Light Raii Operations; for the Newark Line, one-third of the Operators areapprt~ved for FMLA. FMLA call-outs result in paying overtime incurred to coverfihe shift. In addition,. Light Rail'- has also had to widen the length of timebetween trips when they are short on Operators.

The TIC group has 14 employees on FMLA out of 50 (28%) They fallow the BusAttendance policy and have also seen an increase in FMLA applications underthe stricter Time and Attendance policy. From a service impact, they noted thatcustomer wait times. on the phone increase when they are short-staffed.However, this has been mostly mitigated by self-service features in their inter-active phone system. The TIC further noted that there are also four employeeswho essentially work part-time hours due to MLA callouts and yet receive full-tim~ benefits from 4~J3.

In the Payroll Department there is no overtime being incurred as a result ofemployees on FMLA. However, the. workload is increased for the remainingemployees that eeport fio work, and it was noted that they get disgruntled withtheir co-work~r(s) due to the additional workload they have as a result ofemployees not coming to work:

Access Link's Gall Center (30 employees) is impacted by the employees theyhave on FMLA (five). Access Link incurs overtime to accommodate for staffing~~° ~u~ia~~~ ~i~e~ his ~1 ~~~r~~~r~ar~y uvurker~s c~r~ coil ~o help. Access Lin(K alsoreported that in addition to FMLA, they are impacted by employees who are puton leave through the Employes Assistance Program. They reported one casewhere an employee has been are FMLA (through re-certification) and otherleaves (such_ as SAP}for more than six years and remains on NJT benefits.

The use of the same doctor to complete the FMLA applications: Although not aconfirmed issue in Rail or Bus Operations, far the TIC group, there is a goodportion of the employees that use a physician in Irvington, NJ to approve theirFMLA application. A concern was expressed that this physician's OfficeAssistant may be completing the FMLA applications, potentially withoutphysician's knowledge or consent.

observation 3There is an inconsistency in the form used for MLA applications. Bus Operationshas their own mare-detailed version while a(I other departments use the standardFMLA application farm that is found on @transit.

ADVISORY, CONSULTATIVE & DELIBERATIVIE8

PREL.IMIfdARY DISCUSSION D R A F T —NOT FOR DISTRIBUTIONAUDIT REPORT NO. 17-003

FMLA COMPLIANCE MANAGEMENT' PROCESS

Risks:• Higher costs due fio ineffective management policy that could - lead to, and

appears ~o have lets to, employee abuse reiafiive to ~rt~l.F~.• lncreased overtime costs due to the increase in additional staff to cover shifits

from FMLA call-outs.• Negative customer satisfaction and public perception due to delays and

cancellations of service due to unavailability of rail crews,'bus operations and'lightrai{ operators.

• Insufficient budgefi to hire staff that would cover the impact of FMLA call-outs..

Recommendation 4F~eview and update Corporate FMLA policy (3.06). Ensure that it states for all NJTemployees (Agreemenfi and Non-Agreement) haw accrued sick time, vacation time,etc., will be applied to FMLA call-outs directly within the policy.

Recommendation 5Corporate Policies 3.06 Personal, Leave of Absence, 3.1.2 Attendance and HoursWorked and x.19 Sick Leave only apply to non-agreemenfi employees. Consideringthat the majority of NJT employees (and FMLA applications-and related issues) areagreement employees, those polices should be reviewed and updated to a~piy toboth agreement and' non-agreement employees as permitted under current UnionAgreements, or revised appropriately through addendums to Union Agreements.

Internal Audit has completed some preliminary work in the preparation of the FY18Inferno! Audit Plan and has identified two potential policy improvements forconsideration to help mitigate the im{~act. Tl~~y include: (1) requiring morefrQquPnt recertification for intermittent leave rather thin the one-year recertificationprocess in place today and (2) update the po3icy to allow NJT management to visitemployees an FMLA leave at home during the leave.

These should be assessed in context of the agreement contracts as well as theimpact on non-agreement employees.

Recommendation 6Review the two FML.A A~~alication farms, fihe one in use by Bus t7perations and thestandard NJT form,. and develop and implement one form far consistent use acrossNJT.

Management R~sponsibility: Executive Director, Deputy Executive Director

Management Response:

ADVISORY, COIVSULTA~TIVE &DELIBERATIVE9

PRELIMINARY DISCUSSIQN D R A F T —NOT FQR DISTRIBUTIQNAUDIT REPORT NO. 17-003

FNiLA COMPLIANCE MANAGEMENT PROCESS

IL APPENDIX —AUDIT CRITERIA AND RATINGS DEFINITIONS

Overall Risk. ExposureIdentifies the level of potential significance of evenfi(s) and/or actions} that couldadversely affecfi NJT's operations and/or customers.

Ratite _Descri for Definition

1 Low Risks may cause minor losses or damages, system damage,minor ro ert damage, minor in'uries or illness.Risks .may result in increased costs, missed deadlines or

2 Moderate sacrifices in optimization; and, .may resuli in the costly foss ofassets ; .impede the or anization's mission andlor re utation.Risks may result in significant costs, missed deadlines or

3 High sacrifices in optimization; and, may resu{t in the costly loss ofasset(s), major property damage, serious injury, and/or impedethe or anization's mission and/or reputation.

Overall Control. AssessmentIdentifies the effectiveness of the system of internal controls and risk managementFsCsC~~.~i"~.-'.~i ~v ~iic~i,'ri~~i i4i~ {Cv~"ii C1~ io'Su~ E.~`~ <~.i c~i~ c~C.i,~1`~IGU~~ `~~'`ti~~ 1~~:.+~.~3 Glf ~f~~

objectives, scope, .and conclusions of the detailed Internal Audit work plan

Ratin De~cri fior Definition ~~

Meets Risk managPm~nt and control processes are adequate and~ Requirements effective far the level of risk identified. There may be some

minor. corrective action.Risk management and control processes need to be

Needs strengthened in important ways to reach "Meet: Requirements"2 Strengthening level. The number and. nature of deficiencies andlor

(Important) recommendations require. prompt managemenf attention toreduce exposure fio an acceptable level.Risk management and control processes are clearly deficient

Needs in critical ways exposing. the organization to an unacceptable3 Strengfihening risk level. The number and nature of deficiencies and/or

(Critical) recommendations require substantial management attention.Immediate corrective action is essential to prevent furtherdeterioration.

ADVISORY, CONSULTATIVE &DELIBERATIVE12

PRELIMINARYDISCUSSiON D R A F T— NQT IFOR DISTRIBUTIONAUDIT REPORT NO. 17-003

FMLA COMPLIANCE N3ANAGEMENT PROCESS

Process Control Maturity l.eveiIdentifies the level of the process control formalization and sustainability toefFectively manage risks and achieve objectives. (All processes should strive forLevel' 4, Monitored. However, processes may also achieve an Overall Assessmentof "Meets Requirements" with a maturity Level of 2 or 3 in relation to the riskexposure.)

Level D~~cri for ~ Definifion ~~Unpredictable environment where controls are not designedor in place.

1 Ad Hoc -Success depends on exceptional and seasoned managersand cannot be repeated without the same competentindividuals.Controls are designed and in place but are not adequatelydocumented.

2 Informal -Controls mostly dependent on people.- No forma! training or communication of controls.- Standard processes are established to allow for repeat ofpast results. ~__Controls are designed and in pace.

- Controls have been documented and communicated to3 Standardized employees.

v~V v{c~~i~4~'Y3.`'r ~!'"viil Gv~ir~'vf~ f ~ic~y~ r ~' l /Jl~~' ~~C~~.t~U.

Trainin is tanned and rovided according to roles.- Standardized controls with periodic testing for effectivedesign and operation with reporting to management.

4 Monitored ~ Deviations from controls wiH be identified,Automation- and tools may be used in a limited way tosapport controls.Performance measures are introduced.An integrated internal control framework with real timemonitoring by management with continuous improvement.

5 Optimized -Automation and tools are used to support controls and allowthe organization to make rapid changes fia the controlactivities-if needed.

N/A Nit h1r~t .annlirahlA fnr thr~ anr~anpmpnf

ADVISORY, CONSULTATIVE & DELIBER~4TIVE13

From: Barretta, Todd C. fCEDOTC6~To: Hester, Laura L. (CPOLLLHjCc: Truciilo. Christopher (CPOLCXl')Subject: GrievancesDate: Monday, May 1, 2017 12:07:00 PM

Good Morning Chief(s),

would like to schedule a time as soon as possible to receive a confidential briefing on two separate

cases related to disciplinary proceedings against police officers related to drug and alcohol testing.

The first has a grievance date of September 25, 2016 following a reasonable cause drug or alcohol

test and the second is dated January 17, 2017 following a random drug/alcohol test.

These two matters are among those selected for Audit by the FTA next week.

Thanks

Todd

Todd C. BarrettaChief Compliance OfficerNJ TransitOne Penn Plaza EastNewark, NY 07105(973) 491-7821 (o)(201) 988-3358 (c)

CBarretta(n~n itransit.com

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~ ~

1'O: Mr. Steven Santoro, Executive Di

FROM: Todd Barretta, Chief Compliance

DATE; June 2, 2017

SUBJECT: Preliminary Discussion DRAFT RDRAFT IA REPORT NO. 17-006

VIA EMAIL AND INTEROFFICE MAIL - CONFIL~... „--.~

On or about May 17, 2017, NJTs Internal Audit Department (IA) issued the abo~ referenced preliminarydiscussion draft report following the conclusion of an initial internal audit of NJTs compliance managementprocess with respect to the Family Medical Leap Act (FMLA). The undersigned has reviewed this draftreport and respectfully provides comment and feedback on its contents below.

Additionally, the undersigned kindly proposes the hereto attached draft response to be issued to IA onbehalf of the ED in and as managements response to the preliminary discussion draft report.Contemporaneous with the issuance of the abo~ captioned Draft IA Report, (the "report") the undersignedcommenced his own preliminary inquiry into NJTs FMLA Compliance practices at the request of the DEDin partial preparation for an external investigation of NJTs FMLA Compliance practices by the United StatesDepartment of Labor. The result of that preliminary inquiry is duly incorporated herein.

In many regards, the observations, recommendations, and conclusions contained in the report parallel -- atthe ~ry least align with -- those made and/or drawn by the undersigned as part of the Chief ComplianceOfficer's initial inquiry into and orientation to NJTs FMLA policies, procedures, and practices. AncFunfortunately, the prevailing themes dominating the perceived weaknesses and deficiencies therein are notentirely unique to the mans ement of FM liance u r er repres sere i7iarn es

ssues coupled with defects in mindset and an o~rall poor corporate culture that permeates anplagues our organization. ° `~

~~r all intents and purposes, NJT does not fully capitalize on synergies between operating andadministrative departments nor does it make use of efficiencies that can be readily gained througheconomies of scale resulting from ~e centralization of the management and administration of taskscommon to all business lines. Instead, the business lines operate independently of each other, and withlimited corporate oversight. Moreo~r, the prevailing attitudes and beliefs proacti~ly prevent ari efficientallocation of resources with the various department leaders preferring to isolate their operations andconduct their business within a tightly controlled and seldom breached silo. This results in duplicati~ efforts

t and process inconsistencies across the organization.

~~ Additionally, since central coordination and o~rsight (where a true subject matter expert (SME) would andshould reside) are often absent and operational budget constraints pre~nt employment of a real SME byeach department (rightfully sc~), eacf7 business operating line, instead, self-proclaims one of their own as adesignated SME ern though this person may or may not have e~;r had any formal training or educa#i~anon the subject matter and e~nen though their role as a particular SME may be conflicted with and/or inaddition to multiple other roles. This selfi proclamation serves to only further strengthen the walls err~ircliny

the siloed department and results in key stakeholders becoming even more resistant to assistance andefforts to vertically integrate the NJT Corporation.

Specifically, with respect to FMLA compliance and as accurately described in the draft report, NJT lacks acentral authority instead choosing to manage and administrate three separate, disparate, and widelyvarying programs, each with varying degrees of success and none without some fatal flaw. The end resultsin NJTs failure to uniformly apply NJT policy across departments and an inability to consistently complywith the statute. The lack of coordination, coupled with staffing deficiencies and a failure to train supposedSMEs, all of whom previously had little to no experience with FMLA leas NJT greatly exposed to a highle~l of risk resulting from this large employer's non-compliance with the statute. At the same time, ageneral lack of understandings of the statute has been exploited by employees, particularly those coredby a collecti~: bargaining agreement, perhaps upon instruction and encouragement by the labor unionsand perhaps in response to changes in time and attendance policies. In any e~nt, this has ern furtherelevated the risk and exposure of NJT for non-compliance with the FMLA statute as our weaknesses havenot only fostered a culture of FMLA abuse which has impacted service, safety, and o~rtime costs, but hasalso led to an inquiry and pending investigation by the U.S. Department of Labor. It is likely that the NJDOL may also follow suit for a review of compliance with NJ FLA.

The methods used to track and record FMLA cases is also widely varying across business lines. Bus isthe closest to employing a best practice through their use of a customized app, de~loped in house by NJTIT to firack FMLA compliance requirements on a case by case basis. This is not a perfect system, nor is itparticularly robust and it certainly lacks the advanced functionality and features of commercially availablemainstream packages developed explicitly for FMLA purposes; however, it is a remarkable impro~mentoar the paper system and cluster of word files, PDF forms, and excel spreadsheets utilized by HR andRail. Unfortunately, like most other disparate systems, the undersigned did request a demonstration of thesystem and access to its content but this request, to date, has been largely ignored by those controllingaccess to the systems. Should the recommendations of this report he implemented the undersigned wouldconsider expanding the functionality of the bus system and working with IS on an upgraded rollout butwould also weigh the time and cost factor against implementing a mainstream software solution —ideallyone that is fully integrated "with the Kronos timekeeping clock and payroll system. These products havealready been dewloped. In any e~nt, FMLA should and would be recorded and tracked in one system forall employees.

In what can be described only as an example of the most ironic oversight and statutory non-compliance,(VJTs leniency results in a truly off the charts rate of employees appro~d for FMLA (some 1500+); but atthe same time, iYs inconsistent and uninformed application combined with poor, sloppy, and fragmentedadministrative practices and procedures also results in one or more regulatory instigations into those fewcases that have been denied.

The report lists ten detailed recommendations to management and centrally concludes that managementperform a thorough revisvv of NJTs c~r77pliance practices with the act and consider consolidating saidcompliance function under the Compliance Officer. For all of the foregoing reasons, the undersigned ChiefCompliance Officer urges the Executi~ Director to adopt said recommendations and the CCO is ready andable to accept responsibility for this function across the entire organization. The CCO belies that he canmarkedly impro~ NJTs statutory compliance and once centralized, can ease the administration of ourFMLA program. As such, the undersigned respectfully encourages the Executi~ Director to issue amanagement response to the report in a form which is substantially similar to the following proposedpreliminary discussion draft management response to the report.

~ Significantly, the CCO respectfully notes that he corr~piled a referer7ce guide and set of best practices ice use bythose individuals tasked, inter alia, with purportedly administering IVJTs FMLA program and that this standardreference material was previously never distributed to responsible personnel.

PRELIMINARY DISCUSSION DRAFT

In re: Audit Report NO. 17-006

Management Response

Executive Director of NJ Transit, Steven Santoro respectfully responds to the abo~ captioned reportissued by the Internal Audit Department of IVJ Transit as follows:

Explore the Feasibility of Re-Organizing FMLA Compliance Management Processes into aSingle Reporting Department

Management Conclusory ResponseManagement accepts the o~rall recommendation of IA to explore the feasibility of reorganizingthe FMLA compliance management process into a single reporting department.

Response to Recommendation 1:NJT will begin the process of consolidating the function under the Chief Compliance Officer ("CCO")who reports directly to the Executi~ Director. Management will provide the CCO with thenecessary staff, budget, tools, and resources to properly execute the function. The CCO will ensurethat NJTs FMLA policy is current and in compliance with the statute. He will further see to it thatthe policy is applied consistently and uniformly to all employees and across all departments; andthat transactions are tracked, monitored, and properly reported. Finally, the CCO will strengthenall business controls for the FMLA compliance management process to reduce key business riskscaused by FMLA compliance and excessive employee absenteeism.

Response to Recommendation 2:Through reassignment and/or newly hired staffed, the CCO will ham sufficient staffed to administerNJTs FMLA compliance program.

Ftesponseto Kecommendation s:The CCO will be tasked with ensuring that FMLA compliance is executed in the most efficient andeffective manner. The CCO will explore expanding the use of the system currently utilized by BusUpera~ions anti wiii also ee~nsiaer cornrr~ercialiy avaiiauie su~virar~e airern~fives. i~7 seie~finy acompany-wide FMLA compliance system, the CCO will consider such factors as the user base,ease of use, extent of automation, record keeping and audit trail capabilities, and ease of integrationwith other tools and systems currently used and planned for use by NJT including the Kronostimekeeping system.

Implementation Date:Consolidation will begin on or before September 1, 2017 and will be targeted for completion by theend of calendar year 2017. The CCO will deli~r anew or expanded FMLA compliance softwaresolution thereafter upon an agreed timeline.

Perform a Thorough End-to-End Review of the FMLA Process

Management Conclusory ResponseManagement accepts the overall recommendation of IA to perform a thorough review of the FMLApracess.

Response to Recommendation 4:Corporate FMLA policy #3.06 will be reviewed and updated accordingly depending upon inputreceived by the CCO and any outside consultation already engaged for this purpose.

Response to Recommendation 5:Corporate policies 3.06, 3.12, and 3.19 will be reviewed and updated accordingly depending uponinput recei~d by the CCO and any outside consultation already engaged for this purpose.Moreover, a committee will be formed to explore expanding the scope of these policies (and anysubsequent updates and revisions) to employees cored by the terms of a collective bargainingagreement within the context of said agreemen4.

Response to Recommendation 6:The CCO will be tasked with reviewing and updating all FMLA related forms currently in use andwill explore the feasibility of using one form only across all departments.

Implementation Date:A comprehensi~+e review of FMLA compliance and practices will commence immediately under thedirection of the CCO and this process is expected to conclude before the end of calendar year2017.

III. Retrain Applicable NJT Employees How to Use Kronos

Management Conclusory ResponseManagement accepts in part and rejects in part the o~rall recommendation of IA to retrainapplicable employees on the Kronos system.

Response to Recommendation 7:Management will consider the use of implementing the KRONOS system for T&E employees;howe~r, management has been advised that this implementation is not feasible at this time asscheduling information for T&E employees is fed from other critical transit train managementsystems.

Response to Recommendation 8:Time clerks, in addition to their current procedures, will be instructed to report FMLA call-outs to acentral person designated by the CCO who will record and track the absence in a centralized FMLAcompliance system.

Implementation Date:Recommendation 7 will not be implemented until following any requisite updates to NJTs TMACand SCAC~/~ systems. i ime clerks will not be retrained; however, will pe required fo report theabsence to the new centralized department immediately following and/or concurrent with theimplementation of objective II abo~.

G!

(~y TRANSIT

r ~

1'O: Mr. Steven Santoro, Executive Director


DATE: March 10, 2017

SUBJECT: Status Report 1

VIA EMAIL AND INTEROFFICE MAIL.

Please accept my sincerest gratitude for both this tremendous opportunity which youhave provided to me and for the warm welcome I have received from you and your staff.

look forward to a making a significant and positive impact on the organization.

Attached hereto please find an informal report summarizing this first week of service.have asked Jackie to help schedule a time for us to meet alone whenever yourschedule permits.

have thoroughly enjoyed my first week at NJ Transit while meeting my new colleaguesand acquiring the knowledge I need to best serve you.

Very truly yours,

Todd C. Barretta

Enclosure (1)

1

Executive Report's Report —Progress, Plans, &Problems (PPP)

For the ~nreek ending 3/10/2017

T'o: Executive Director

From: Chief Compliance Officer

~_ EXECUTIVE SUMMARY

Today marks the successful completion of my first week as NJ Transits new Chief

Compliance Officer. This reports aims to provide the Executive Director with a summary of my

most recent activity and it describes the short and long term vision I hold for NJ Transit's

compliance department and the role I plan to play in the organization.

ACTIVITY OVERVfEW

These first few days were primarily dominated by introductions, orientations, information

gathering exercises, technology setup, and new employee processing. In addition to the

meetings I attended with the ED, including the NJ Transit Board Meeting, I met individually with

several key employees throughout the week.

My ~ge~~+a fer ~~~h ~eetir~C f~cuseu ~r ~b±~ininr ~ h~rh !eve! Qvervievv ~f the N~~ine~~

units, receiving an in depth explanation of the legal and regulatory compliance functions and

obligations contained in each unit, and learning of any needs for improvement. These face to

face meetings with my new colleagues lasted approximately one hour each.

also took part in my first project in which I advised upon and actively participated in

providing our response to a request for production of documents made by the Office of the State

Comptroller regarding HBLR. Finally, on Thursday I attended a fraud prevention presentation

by W. Hersh and on Friday, between scheduled meetings was able to sit in as revisions were

made to our responses to the legislative inquiry questions.

-- - ---- - ---1C~t~TA,GIfS A~11~ A,P~'0~~1~~1II~~IT'~

Monday G. Vrabel, D. Graham, G. Obert, J. Kanc Individual -Maplewood &Newark HQ

Tuesda S. Santoro, A. Herbold, P. W ckoff Grou —Newark HQWednesda Audit Committee, [3oard Meetin , K. Rotter & M. Strickland Grou —Newark HQThursda Fraud Trainin , E. Un rand , K. Rotter Individual —Newark HQFrida G. S elrum, C. Trucillo & L. Hester, J. Zuczek Individual —Newark HQ

2

NEXT WEEK'S PLAN

A busy week is planned and includes more one hour one on one sessions with senior

leaders and several group staff meetings and round table discussions. I also hope fio gain

access to and familiarity with our information systems and applications. A tentative schedule is

as follows:

Monda Staff Meetin , Ca ital Plannin R/T, G. TabonTuesda M. Sla er, P. Bassett, N. Fitzsimmons, S. Dra zenWednesda BD. Comm CSV & Admin , M. Kilco ne, B. Lavell, M. LihvarcikThursda M. Gonnella, D. PratoFrida W. Hersh 2 Hrs

AREAS OF CONCERN

Several immediate compliance and potential risk management issues, inter alia, were

revealed during the course of my information acquisition including document storage, retrieval,

and review; the coordination of response to official inquiry; processing of employee background

checks; and management of contracts. I will elaborate on all of the following when we meet

again and will formally address in a forthcoming proposed comprehensive compliance plan.

30 DAY GOALS

Over the next month, I hope to complete initial and follow up meetings with senior leaders

anti subordinate empioyees. Subsequent meetings with Yocus so~eiy upon the ~e~aiis o~ how

each business unit performs their required compliance functions. I hope to become better

acclimated with our existing tools and resources. I will continue to familiarize myself with all of

the statutes and regulations governing NJT while ramping up my knowledge of internal

regulations, policies, procedures, and controls. I will thoroughly review the results of past internal

audits and any derogatory regulatory findings and reports.

By this time, I hope to have full and unfiltered access to each department, physical

localities, and systems and applicatior7s and be provided wifih the fully functioning tools and

resources that- need to be procured for the compliance department.

60-90 DAY GOALS

Having spent the first month+ focused internally, I hope to utilize the second and third

month discovering and building key relationships outside of our organization. I hope to meet

with representatives from all of the federal and state regulatory agencies which we deal. I also

~3

would like to be introduced to NJT's most important vendors. I will become involved with APTA

and other industry specific associations while also introducing NJT to some of the relationships

have already built in the compliance industry. Finally, I think iYs prudent and wise to befriend

(or at least meet) my counterparts at other major providers of transit and transportation.

90-180 DAY GOALS

At the three to six-month interval, in addition to mastering all of the above, I will present

the ED with a proposal for the implementation of a Compliance Program and will draft the

according plan. Said plan will fully analyze and address the full compliance needs across the

entire organization. It will detail my full vision for this compliance department by simultaneously

addressing current and future needs against anticipated resource requirements. The proposed

structure and organization of the department will be detailed.

The plan will make provisions for providing all of the following services to NJT and each

of the business units: standardization, process revision for best practices, staff training, support

to all business unit's subject matter experts, requisite _policy changes, periodic audit and review,

and the full and active management of all regulatory relationships.

LONG TERM PROJECTS &PLANS

During the second half of the first year, I will continue to revise and improve the

compliance plan as our needs evolve and our performance is measured. By now, I will have a

full understanding of our compliance requirements and will have been repeatedly assisting the

business units ensure that their compliance needs are met efficiently and effectively. After all of

the compliance routines are fully documented, understood, practiced, and validated, I will begin

to automate the program and improve efficiency and effectiveness by leading the implementation

of an enterprise wide compliance management information system from a leading software

provider.

n

/i'"~~ -~~

,-- } ~~

~" , ~ J f

r

. ._. ._ .. . . . .. .Nance fio Individual Regarding Viola#ion{s) of Federal SEC]UENTfAt~CALENOAR

U,S. CSepadmeni of 7ranepattalion Railroad Safety or Hazardous Materials Transportation Y~^R "o.FederaE Railroad Administration. S~atUt@S, Regulations or Orders 17 - 02 - 03

The Federal railroad safety and hazardous materials transporfetion laws authorize the FedeCal Railroad Administraf+nn (FRA) to bringenforcement actions directly against individuals who violate those laws. lndividuais who willfully violate fhe railroad -safety laws or whoknowingly violate She hazardous materials transportation laws are subject to civil penalties oP up to S1p0,000 per violation. Individualswhose violations) of those ia~ws are shown io make fh~m unfit fpr the pe~'ormance of safety-ser7sitive funGfions are subject tosuspension ar disqualification from such service: (Willful violations of the hazardous materials transportation laws siibjecf an individualto passible criminal sanctions.) if you have questions about the taws pertaining to railroad safety or hazardous material transportation,contact the officer of your employee responsible for safety matters or the cipsest FRA office.FRA has reason to believe that you violated the statute, regulation ar order described. below. Box 4 below indicates whether or not aviolation repod recommending enforcement action will be sent fo FRA's Once of Chief Counsel. IE the t~ox is checked "YES," you willbe hearing from that office as to what action will be taken and will- have an opportunity to respond at that time. ff the box is checked"NQ," you should consider this a warning that any future violations you may cammikwiil rasult in enforcement action. In the case of awarning, you may suhmit any information in explanation or mitigation to the Regional Administrator at the address below. A copy of thisnotice will be provided to your employer, and in the case of joink operations, to the railroad rEsponsible for the operation.

PRIVACY ACT NQTICE: Under authority of the Pederai railroad safety and hazardous materials transportation laws, FRA collects theinformation on this notice for inclusion in its records concerning violations of fhe Federal railroad safety and hazardous materialstransportation laws by individuals, 1'ho~e ~eaor~G- r?~ay be uses :a supNort enfctcsmert actions agairtsi i~~dividuals and may bzdisclosed to other government agencies, the public. the railroad industry, or Congress in the interest of prbrrioting compliance with thesafety lativs. Disclosure of yau~ social security number is voluntary and would be used to distinguish your compliance records fromthose of someone with the same name and date of birth.

1. SUBJECT: 2. VIOLA7I~N OF 49 CFR: 3. X6180 REPORT 4. VIOL:/CHIEFTYPE & NO: COUNSEL

PERSONAL ELECTRONIC DEVICE wnRNirt~ ~~rr~R-USE ON A MOVING lI;ATN RECbMMENDE~:

2~0 j 3-0S a ~6 - 19 ~yEg ~p

5. NAME SIMPSON PETERCast ~FirsE: ~9 N7idd/e Int.:

s. HOtviE Strest:51 S NORWOOD STREETADDRESS

City. EAST ORANGE State; NJ zrp Code:. 0 7 018

7. SOCIAL SECURITY NI;MQERIEMPLUYEE ID NUMBER: 10. TIME AND DATE ~F V(~IATiOH345350 11 ; 00 attt pate: 0&/29./16

8. DATE OF BIRTH (mm/ddryy} 8. JOB TITLE qF INDIVIQUAL: Time:

01 / 2 6 / 5 7 CONDUCTQR ~ 17.17ME ANU QA~CE INDIVIDUAL NOTIFIEQ

i2. ~.i~~rl7iGiv GF ViUi.i~ i iU~v GS.v Cvuc is. OPEiv~Tir1G RR C~~G: Time: 17 • 0 5 c11T1 fete: G fi j 2 9 ~ 16city or MONTCLAIR 19 9 0 NJ~'RCounty: 15. EMPLOYING. RR 16. EMPLOYING DIVISION

14: OAR DIVISION COGS:state: NEW ~7ERSEY 34 NEC~1A171~ NJTR NT~WARK_._w._~_...................._ ........ ........................................~_,......_. _ .____

17. SUMMARY OF VIOLATION:

OPl WEDNESDAY JUNE 29, ?01.6 ZEN ODISOARD INSPECTION 4F A NEt~l JERSEY TE2~I.NSTTPA55ElVGET2 TRAIN RiTNP1ING FROM PENN STATION TO UPPER MONTCLAIR OBSEF.VED ACERTIFIED CONDUCTC7R WHG WA5 G]ORRING ~1S TF3E TICKET COI,L~CTOF2 OAT TRAIN 6233TALKING QN HIS PEI2SfJhI~ C~'LL PFi(7I~rE ~N A P~(C7VINC TRA.IA7, 4JI-1'~N ~JL7ES'?'IC.)t~TED ZkBOUT TF•iECELL PHONE CONVERSATION PETER SZMPSON STATED THAT I'I' WAS HIS PERSOD77aL CELL PT-IC~NEAIQD THAT HTS WIFE CALLED HIM. THE EMPLOYEE WF1S E3RIEI'~D ON TILE FEllERALR.EGUI,A'I'ION, ~TJT' S ELECT1201VIC DEVICE POI,TCY ANI7 ASKED Tt7 COMPLY. THE EMPLQI'EE~1CIthTpWLE1~GED THAT I-IE VIOLATED TI3E POLICX, APt7LOGIZEt~ ANTI STATED THAT HE WOiJLDI'UKN Ok'F HIS CELL PHONE AND STORE IT WHERE IT BEI:,~NGEI?. I'T-I12EE FRA INSPECTORSWERE INVOLVED ZN TFiE INSPECTIOiV AND WITI~TES5EL7 THE INCIDENT'.

18. NAME 0~ iNSPECTOR(S) ISPECIALIST(S) I. D, Number NAMElADQRES5-Regional AdministratorlStait DirectorSean Fitzpatr~.ck 28050 LES ~'IORENZO

55 BROADWAY, 10`I'I-i FI~O~R~7T.M F-IEA7.,FY 377~Q CAMI3RTDGF~, N1.A 0?~.4?..

Da e Report Prepared Date Report Mailed Registered Mail Number

Signature of Mspectnr(s)JSpeciaiist(s) pate 5ig~ature of Regional Administrator/Staff DirectorC.y:taty ~~m NGY:f rt.i[~.irt: G'(

TAMES K HEALEY ~,-~_~,.,wv.5,-,~...,.,,,.,,,..w.,~~f HACnmNu JeNP. w~•~~~:4 i~Ai:umtn i;i~~'Nq.m.in.Mtsa,~~n~~o,,~~: in ~ ~r.w nx wszsx ~ n~- ~~~~ ~~

=orm FRA F6180.80 (02-O~J) X0024 7—m-:54tl

REGIQNlMQ'SNotice to Individual Regarding 1/iolafion{s) of Federal s~~u~N-r~a~ca~.~NnaRRailroad Safety or Hazardous Materials Transportation YEAR "o.

U.~u.-Department of 7ransPortaUan -

Federel Railroad Administration ~f~tU~EB, Regulations or Orders 17 - 02 - Ol

The Federal railroad safeky and hazardous materials transportation laws authorize -the Federal Railroad Administration (FRA} Yo bringenforcement actions directly against individuals who violate those laws. individuals who willfully violate the railroad safety laws or whoknowingly violate the hazardous materials transportation laws are subject to civil penalties gf up to $1p0,000 per violation. individualswhose uiolation(s) of those laws are shown to make them unfit for the performance of safety-sensitive functians are subject t~suspension or disqua{ification from such service, (Willful violations of the haaardous rrrateriais transportation laws subject an individualto possible criminal sanctions.) Cf you have questions about the laws pertaining to raiiraad safety or hazardous material transportation,contact the officer of your employer responsible for safety matters or the ciasest FRA office.

~'RA has reason to believe that you violated the statute, regulation or order elescrib~d below. Box 4 below indicates whether or not avialatian report recommending enforcement action will die -sent to FRA's Once of Chief Counsel if the box is checked "YES," you willbe hearing from Yhat once as to what action wiA be taken and will have an opportunity to respond - at th2t time, if fhe box is checked"NQ," you should consider this a warning that any future violations you may commit will result ~n enforcement action. in -the case of awarning, you may submit any information in explanation or mitigation to the Regional Administrator at the address below: A copy of thisnotice will be provided to your employer, and in the case of joint operations, to the railroad responsible for the operation.

PRIVACY ACT NOT(CE: Under authority of the .Federal railroad safety and - hazardous materials trarrsportafion laws, FRA collects theinformation on this notice for inclusion in its records concerning violations of the Federal iailroad safety and hazardous materialstransportation laws by individuals. Those records may be used to support enforcement actions against individuals and may bedisclosed io tither government age^cies, the p~~blic, the railroad industry, or Congress in the interest of promoting compliance with thesafe#y laws. gisciosure of your social sectuity number is voluntary and would be used tv distinguish yavr compliance records fromthose of someone with -the same name and date of birth.

1. SUBJECT: 2. VIQLA'T'IQN OF 49 CFR: 3, X6160 REPpRT 4. VIOL/CHIEF'E'YRE & N0: COUNSCL .

PERSONAZ EI.,ECTR~NIC DEVICE WARNIhiG LETTER

USE ON ~. MO'VING TRAIN ~ecor,~Mer~o~~:z2o cos a 96 - 59 Qy~g ~p

5. NAME SANTIAGO JESCJSLast: ~Firsf: ~ Middle 1nt.:

6. HOME street:ll FREDWOOD PLACE APT 6FADDRESS

City: ~~AW~ State: N'3 Zip Gade: ~ 7 7 4 7

7. SOCIAL SECURITY NUMBER/EMPLOYEE ID NUMBER: 10. TfME AND DATE OE VIOLATION4 a ~.~ ~. a ~.:i, : 4~ min

8. DATE OF 61RTH (mm(ddlyy} 9. JOE3 TITLE.OF_.INDIVIDUAL: ~~me: Oate: d ~ ~~ ~ f ~ ~

( UL~11)IIC:`lUh' ~ 11. TIME AND DATE INDIVIDUAL NOTIFIED

72, LUCA~~flt7(~! OF. VIOL/~TIC?N GSN ~(Jt~E ~. C~NERATfh1G kht CODS; Time: -~ ,~. t 'a' Q c3TTt Date: Q ~ J~ ~ 4 ~ 1 ~city or NEW YORF~ 417 p NJTRCounty: 15. EMPLQYING RR 16. EMPLOYWG DIVISIpN

14. OPR DIVISION CQDE~State: NEW YORK 3 6 NEWARK 1'~TJTR NEWAIK

17. SUMMARY QF VIOLATION'WIIIL~ PIDING TRAIN 3II3G, IN~PL:CTOP. I3. RQSS I~ND T Z~7FRE S'Z'hN17INC IIJ Ia VESTTBTJL~E: AS THE.S'RAIN ARRIVED AT THE 5'PATTON ALONG t9ITH OTTiER PASSENGERS VdAi'I'TNG FnR THE TRA:[:N TOSTQP, AND TF3E I~QO~S TO QPEN. CONDUCTOR JESUS SAhT`I'TAGO t^]ALKED IN'?'0: TIDE VESTII3[7LE AI3D TASKED I-~1:M IF' HE; N~'~~L7EI) `1'O GE':[' `l'U '.1"HE POWER llC)QI2 CC?NTROLS, SINCE I WAS STANDT.S~TG I~FRONT OF 'TTiEM. 7-IE SA:I:1J 'l.'T-IA7' ~I'~a D:L"t7 N07'. IT' WAS AT THE PO:[:N'I' I NOTICED THE CFI,I, Fl-iCN~:IN HIS CI~tES'T' AdCKN'T'. AS WE PULLED INTQ NEW YORK PENDi STA'T'ION FIIS CrIEST PCJCKET 13EG"AMEILLUMINATED ANIJ THE SCREEN ON THW 1'T-IONE STARTED I~I,ASHING AS TF RIlVGIIVG. QNGE THE TRAINS"C'OPP~L7 AND 'T'HE PASSENGERS DISEMSARECED, 6VE SPOi<F, ~"tITH G'nND[TCTOFL SANTIAGO, fIE ADMITi:EpTF3AT I`P UTAS F~ISS PERSONAL CELT, PIiQNE AND TF3AT IT 6VAS TURT~TEI7 dN. I ASFCED HTP4 IF I-IE WASTHE C~NDUC'.i'OR ON °]'IIk. TN.AZ~i, HE SAIL1 'I'I[:AT II:E~ WAS; ANL~ WB IT~TSTRtTC'I`E;~3 HTM Tt~ TTJ~2nr "PfIEPI-fONE (}FF .

18. NAME OF INSPECTORS} /SPECIAIiSF(S) I.D. Number NAMEIADDRESS—Regional Administrator/StaN DirectorPATRICK VEDDER 91500 I.,ES FZC712ENZ0PATRICK JAMES VEDDER ; . V h.._~_ .,.. . ...~.., ~s sROAz~w.~Y, 10TH ~~oo~BRIAN ROSS 7519Q CAMBRIDGE, n']A 021.42

Brian Ross ""°Y_ ~"u ti - rn.c Fxn,,~~.uois ~ d, nro,~ rra~na:. r=usu za.titi~.n i a vso<r

Date Report Prepared Date Rzport P~tailecl Registeretl N~aif Number7 / ,?. l f 7 Fi

Signature of inspector(s}JSpecialist{sj Date Signature of Regional AdministratarlStaff DirectorA . r ~~ E M+aE

Form FRA F8180.80 (02-09) ~MPIpYER'S C '~~~ 6002A t-m-34d

{~TRANStT

• ~ I~

***Privilegec! and ConfidentiaB***

°TOe Attorney Christine Baker

Cc: S. Santoro, A. Herbotd, P. Wyckoff

FROM: Todd Barretta

DA~IE: April 26, 2017

Re: FRA 217 Audit —Preliminary Compliance Report

Last week inspectors from the FRA's Region 1 office were on-site at the ROC and in the field to

conduct a regulatory compliance review, under 49 C.F.R. § 217, of NJT's Program of Operational Tests

and Inspections Recordkeeping (the "program"). NJT was noticed of this visit by and through a March 3,

2017 letter to Mr. Richard Green, Jr., Senior Director of Systems Operations. The FRA last reviewed our

217 program via an audit of the Rules Department in September 2014. In addition to attending the

entrance and exit interviews with the FRA, the undersigned held pre- and post-audit meetings and

debriefings with responsible personnel from F2aii Ops including Fred Uattison, Richard vreen, and Evan

Zucarelli. NJT's program is not in full compliance with the regulatory requirements specified in part 217.

Aithc~ug'r7 we r7ave nit yef received any ins~ectior7 repc~ri'ts ~r summary or findings firom the FK%~, we have

been verbally advised that approximately fifteen (15) violations will be recommended for issuance against

NJT. In addition, NJT must scrap its current program and must resubmit documentation of a new

program to the FRA for approval.

Most displeasing to the FRA was the recurrence of virtually all of the same violations and defects

found during the 2014 audit. The Chief Compliance Officer (CCO) will assist and support the Rules

Department as they work to revamp the program and the documentation for resubmission. The CCO will

issue a formal and complete report following receipt of the official FRA findings and recommendations.

The CCO is in process of preparing an estimate of the costs (new analytical support staff, replacement of

antiquated systems, department-wide training) along with the necessary policy, process, and procedure

changes required to bring the program into compliance.

Based upon my understanding of the program and the regulatory requirements combined with my

informal conversation with the FRA, NJT has a high degree of risk exposure and liability associated with

continued program defects and violations of a section of the regulations that are held as particularly

important to the FRA. As such, requisite improvements to our program musf be assigned a high level of

priority.

''"'~''~Advisory, Consultative or Deliberative''~xX

Compliance Issues'Cc~esc-l~y, Maarch 1~, 2Q1~7 :l?:L~ PM

1. Personnel Termination/Arrest - 03/10/20172. Document Tracking/e-Discovery//Version ID3. FTA Asset Plan4. FTA Drug &Alcohol Program Audit -Need Responses5. FTA Drug Policy Statement Revision6. Employee Absenteeism

a. FMLAb. Storms

7. Scattered Processes - no central ownership8. Need Better Collaboration Platform9. Social Media Policy10. Cleanliness/Enforcement at Stations11. NJ Transit Regulations Expiration Deadlines12. MV Driver's License Check -Employees13. Consistent Application, Reporting &Disclosure14. Need Annual Compliance Plan15. Regulatory Restrictions &Waivers16. Contract Change Orders17. Co-mingling Grants, Ops, & CIP Funding18. Approval Controls -Rubber Stamp19. Financial Processes &Procedures20. Legacy Systems -New Implementation21, Succession Planning22. Intermediate Contract Compliance -Between Proj Mgr and AG Office~3 Rail Inc H~Ur~ of Sary r.,a - P~Iv R~ Pr~C - TRn-Q,24. Overtime -See IA 15-00625. Consistency26. P CARD Internal Controls27. Succession Planning28. Mid Dept Records - HIPAA29. FRA Inspection Reports -All Manual Forms30. PTC Implementation31. Document Retention32. EPA -Wetlands Credits33. FMLA -Audit Upcoming - IA Report Issued34. Rail PTC -Timeline35. FRA 217 Audit Findings / TRO / TQS36. FRA Horn Sounding at Crossing37, FTA Transit Asset Management Plan38. State office of System Safety Oversight SMP

Lists Page 1

Overviewfues~iay, M~,rrch 'I.~, 2C)1'7 9:2~ nM

On 03/10/17, CCO learned that a rail conductor, in a regulated safety position, had been pulled off fromhis train/shift by the N1TPD and arrested and terminated?

Apparently, fmr employee made derogatory comments about NJTPD and/or NJT on his social mediafacebook account. This drew attn from the NJTPD who investigated said fmr employee.

Police Investigation revealed that employee, for years had lied to NJT in that, upon his hire, he providedthe SSN and/or docs of his twin brother -not him. Further, NJTPD discovered that fmr emp. Has a list ofconvictions including poss weapons charges.

From Compliance perspective, several things are at issue in both HR and PD.

UPDATE -Spoke- with Penny -Story developed more -- no arrest and employee released afterinvestigatory detention revealed he was the person he proclaimed not his brother -- leaves open PoliceProcedure./ Regulation Compliance

UPDATE 2 -Spoke to Chief (ironically) in re social media policy generation. I will investigate, andresearch and prepare draft. Still no westlaw access or information resources.

UPDATE 3 - on 3/31 @ 1on1 meeting, CCO advised ED as to social media policy needs and my particularfindings. ED instructed CCO not to pursue.

Personnel Inquiry Page 1

From: Barretta, Todd C. (CEDOTCBITo: Debbie Prato (DPratoCalnitransit.com)Subject: New OSA Policy 3.34Date: Monday, May 1, 2017 2:38:00 PM

~~•

FYI, the new policy has a statutory reference to the Hours of Service Act as 45 U.S.C. 61-64b. That

citation is not current as that law has been repealed and replaced by the current adopted Hours of

Service Act which is located at 49 U.S.C. Chapter 211.

The correct statutory reference is 49 U.S.C. §§ 21101-21109.

There also appears to be a typo or character recognition error in the definition of OSA. The randomcharacters, "iL~/z" appear after the word "sleep"

Best

Todd

Todd C. Barretta, J.D., M.B.A.Chief Compliance OfficerNJ TransitOne Penn Piaza East

Newark, NY 07105

1~?73! 49~.-7R~~ (off

(201) 988-3358 (c)Tf3arr;ettaC~niTransit.~:c>rY~

t ~r~~►~~i~~r a» . ~,

Attention: One or more violations have been cited on this report.

llEPARTMENT OF TRANSPORTATION

FEDERAL RAILROAD ADMINISTRATION (PRA) INSPECTION REPORT OMB Approval No.: 2130-0509

Inspector s Name Inspector's Signature Inspector's ID No. Report No. Date

yy mm dd

CRAW, SEAN 19210 12 2017 06 12

Railroad/Company Nsme &Address R/C Division RR/Co. Representative (Receipt Acknowledged)

New Jersey Transit R Name Mr. Steven Santoro1 Penn Plaza Eask RR/Co.

Code Subdivision Ticte Executive Director

Newark NJ 07105NJTR SYSTEM Email [email protected]

SignaNre

From:Ciry NEWARK Codes 2130 Destination City &County Codes rrom Latitude

State j~J 34 C~Ty From Longitude

County ESSEX C013 County To Latitude

Mile Post: From 7'o Inspection Point To Longitude

Activity USCCode:Units: I

Sub Units: 0

Item Initials/Milepost Equipment/Track # Type/Kind 49 CFR/ Defect Subrule Speed Class Train #/Site SNFR* RCL** #of ActivityUSC Oce.*** Code

I USC 0201 57A2D N N 1 USC

Description

FAILURE TO IMPLEMENT A PTC SYSTEM IN ACCORDANCE WITH THE RAILROAD'S REVISED PTCIP. INCLUDING THE END-OF-2016IMPLEMEN"I'ATION MILESTONES.Seal Applied Seal Removed Hazard Class UN/NA ID

Viola[ionReconunended yes ~No Latihide: Longih~de:

Written Notificaho~~ to~Required ~~ Optional

Railroad Action Code

~ Date mm/dd/~ YYYY) Comments on back'?

1' P.A of Reu~edial Action is:

Page 1 of 1

PORM FRAY 618096 (Rcviscd 07/14) ° SNPR-Spuciul Nuiiue fur Rep~iis RAILROAD/COMPANY COPY "RCL-Ruwotu Cuutiul Lucuwulivu "+'ll of Oua-Nmnbni of Occmiuucns

From: Barretta Todd C. (CEDOTCB~70: Snow Joseph E. {CDAGJES)Subjecta Re: FRA Violations - Ceii Phone useDate: Tuesday, May 9, 2017 5:42:03 PM

Lol, I think we're on the same page with that. My reasoning, in part, of asking you if weindemnified was to ensure that we stopped asking for violations to be issued in the event thatwe were ultimately responsible. Even if not, I'm still not 100% sure if it makes sense to askthe FRA to violate our employee. That's definitely something I'd like to chat more with BobLavell about. Maybe we can do that together sometime?

Thanks

Todd

On May 9, 2017, at 5:25 PM, Snow, Joseph E. (CDAGJES) <JSnown.n~transit.com> wrote:

Also, did i read the note correctly that NJ Transit asked the FRA to fine the twoconductors who violated the cell phone use? Is that how it works, we ask and the FRAthen assesses a fine?

Joe

From: Barretta, Todd C. (CEDOTCB)Sep#a ?uesday, May Q9, 2Q17 3:57 PMTo: Snow, Joseph E. (CDAGJES)Subject: FW: FRA Violations -Cell Phone use

M i Joe,

f hope all is well. In the attached, for example, the FRA is recommending that

enforcement action be talon for a violation of a re~ul~tion against an individual

employee.

If the FRA's Office of Chief Counsel decides to take said enforcement action, to whatextent, if any, is NJT obligated by law or agreement to indemnify our employee?

Thanks

Todd

_ .From: Whitney, Kathleen J. (CROPKJWI)

Sent: Monday, May 8, 2017 2:56 PM

To: Barretta, Todd C. (CEDOTCB) <TBarretta~njtransit.com>; Tabon, Gardner C.(COSSGCT) <GTabonC~nitransit.com>

Cc: Lovell, Robert M. (CROPRML) <RMLaveIlC~njtransit.com>

Subject: FRA Violations -Cell Phone use

Please see attached.

~czl~~ ~~f/~Gi2e~~

Special AssistantOffice off' the 1!~/GIVI Rail Operations

NJ TRANSIT 1!\One Penn Piaza East —Third FloorNewark, NJ 07105

Office (973) 491-7755Email kwhitney_(c~njtransit.com

try T6~ANSIT

~.~~.

TO: Mr. Steven Santoro, Executive Director


DATE: March 24, 2017

SUBJECT: Status Report 2

VIA EMAIL AIVD INTEROFFICE MAIL

Attached hereto please find an informal report summarizing my thoughts and

experiences during this second and third week of employment with NJ Transit.

It provides an overview of the meetings I have had with your staff, offers a status

update on my currently tasked projects, and outlines my current and continued plans for

strategic improvement.

Very truly yours,

Todd C. Barretta

Enclosure (1)

1

Executive Report's Report —Progress, Plans, &Problems (PPP)

For the two weeks ending 3/24/2017

To: Executive Director

From; Chief Compliance Officer

EXECUTIVE SUMMARYToday concludes the third week of employment as NJT's Chief Compliance Officer (CCO)

and this is the CCO's second report of activity to the Executive Director (ED). The intervening

two (2) weeks have been busy but engaging and rewarding. At this time, the CCO has had the

opportunity to conduct aone-on-one discussion with each of the other Executives reporting to

the ED except with the CIO (due to reschedules) which should be completed early next week.

The CCO, for the most part, is on schedule to complete the 30 day tasks as outlined in the last

report. In addition, CCO is becoming well acclimated with his new colleagues and has enjoyed

receiving both breadth and depth of knowledge about NJT operations. CCO continues to

develop a stra#egic plan for the rca!l~~t of the ~Qr~p(ian~~ department whi[~ constantly I~arnina

about new issues and possible areas of compliance that require attention. CCO has been

prioritizing the same.

-- --- —ACTIVITIf OVEf~VIEVIi

__ _ - -The preceding two weeks proceeded largely as intended. Introductory meetings with

other executives and their staff has now nearly concluded and the CCO believes that in addition

to learning about NJT's overall operations and functionality of each business line, the CCO has

formulated a strong understanding of how the new compliance department will function and

interact with each of the other departments. In that realm, CCO significantly reports that he

anticipates no conflicts with other department or personnel. Moreover, the CCO and each of the

leaders of the departments which perform seemingly related functions (internal audit, Atty

General, Civil Rights, Safety) have come to a full agreement as to how each will partner and co-

2

function. It is expected that the compliance department will operate well with others as it gets

ramped up and functionally integrated across the corporation's lines. CCO has begun to

schedule more detailed meetings with some key secondary employees and follow-ups with

certain executives according to the initial report and plan.

While not necessarily a per se compliance function, the CCO, as a member of the ED's

Executive team, had the opportunity to first-hand witness the full force of NJT's emergency

planning and preparedness and the degree of camaraderie and dedication among and between

NJT's senior leaders during a weather event which necessitated opening of NJT's EOC at the

beginning of last week. For a new NJT senior leader, this experience was unique, impressive,

and rewarding. Despite this, CCO, like other executives, was required to make certain

scheduling adjustments and to cancel some planned meetings as a result of EOC and EOM

meetings and conference calls; but was not unduly burdened and was subsequently able to meet

with each of the transit operating line GMs that following week.

Ths~ week, the G(~C) r~~~i~~d hip fiat rt~ti~e of an upcoming audit of its Drug and Alcohol

Program by the FTA, one of NJT's largest primary regulators. The CCO was pleased to have

been tasked by the ED with managing NJT's audit readiness. CCO has compiled a full project

plan to assess and mitigate NJT's regulatory risk related to this audit. To begin this process, the

CCO compiled notebooks of regulation information, best practices, and audit interview guides to

share with the Medical staff. Upon review of that information and those checklists, the Med staff

report no anticipated issues with the MRO, the collectors, or our processes and procedures

employed by NJT in administering the program; the Med staff could not yet comment on the

condition of the inspected medical records but will report back to CCO next week. It was

however revealed in that process that NJT's policy on FTA regulated drug testing for safety

sensitive employees had not been updated since 2004.

3

Moreover, a 2009 attempt to finalize a review and revision to the policy was not completed

nor fully implemented. An initial review of the current policy, independently and in consultation

with NJT's Med staff indicates that policy revisions are necessary in order to ensure NJT's full

compliance with 49 C.F.R. 655. Ensuring that any requisite policy revisions are completed prior

to the deadline for submission has been made a top priority. Amore thorough update and

analysis of the FTA audit project is detailed below in a separate section.

CCO also spent some not so insignificant amount of time beginning to assemble a specific

document and knowledge library of relevant information necessary to well perform the

compliance function for NJT. This preliminary information has been organized and incorporated

into a Microsoft OneNote digital notebook project started during week one. One Note is related

to MS SharePoint server Architecture that CCO ultimately plans to utilize as a communications

interface, content management, and collaboration portal for the company wide exchange of

compliance information. At present, CCO is also using this software tool to manage the FTA

A~ad~t readir~sss project. GGQ had looked forward t~ attending a Manned te~hnol~gy steering

committee meeting as CCO believes he can make many valuable contributions to that panel but

said monthly meeting was canceled by the CIO.

CONTACTS AND APPOINTMENTS

3/13/2017 Gardner Tabon3/14/2017 EOC/EOM &Processing3/15/2017 Mike Livarcik3/16/2017 Mike Gonella; Deb Prato3/17/2017 Penny Bassett; Warren Hersh3/20/2017 Staff Meeting; Neal Fitzsimmons &Jim Schworn; CP-33/21/2017 Bob Lavell; Leotis Sanders; GAU Conf. Call3/22/2017 Mike Kilcoyne; Ed Hoff;Deb Martelli &Patrice Verner3/23/2017 Chris Baker; Policy 3.25A Exec Conference3/24/2017 Staff Mtg; EOC CC; Eric Daleo, Megan Strickland, Pat O'Connor

0

NEXT TWO WEEKSAs originally planned, CCO has follow-up appointments scheduled with specific strategic

staff members that were suggested following CCO's executive one-on one meetings. CCO will

also lead a number of scheduled meetings, conference calls, and site visits as part of CCO's

FTA Audit readiness plan. CCO will continue to monitor and participate in executive level

conferences and events. A tentative schedule is as follows:

3/27/2017 Staff Mtg; BIRC; FTA DAP Poly Review; Emery Ungrandy3/28/2017 Mike Slack; Joe Snow; Jay Patel; Ron Nichols, Gerard Bochino; Lea Sheridan3/29/2017 Lori Thompson ~ Sharon Young3/30/2017 CS Comm; Admin Comm; Deb Prato3/31/2017 Paul Kelly4/3/2017 Deb Martelli; Staff Mtg; ED BIR4/4/2017 Board Mtg; Kevin Amberg4/5/2017 FRA Hours of Service Application Demo4/6/20174/7/2017 FTA DAP Audit Conference Call

AREAS OF CONCERN -REVISEDCCO reiterates the previously reported areas of risk and noticed critical compliance

issues such as undocumented processes, no standard and centralized storage and retrieval of

information and stitched silo departments that lack a complete functional coordination precluding

the efficient exchange of information with other operating units. In addition, CCO respectfully

reports the relatively urgent necessity to review and revise all company policies. It has come to

the attention of the CCO that many of NJT's corporate policies have not been revised in more

than a decade. CCO has discovered that several important processes and checks were indeed

once performed but many have been dropped and lost with staffing changes -- along with

budgets, staffing levels, and salary concerns, this seems to be a recurring theme complained

about by nearly all departments. CCO strongly believes that the ability to craft and revise

corporate policies is among the most important and effective tools available to the ED to reduce

risk, increase compliance, drive productivity, and enhance morale and culture. CCO hopes to

work closely with the ED and the executive team to craft and revise many more policies (for

form, clari#y, and effect). Upon approval of the ED, CCO is pleased to help individual

departments develop and document formal processes guided by those policies. CCO also

learned of some potential issues with respect to NJT's Ethics Program. CCO believes it may be

most prudent, as was once briefly addressed, to move NJT's ethics program into the compliance

department. CCO will discuss these and other areas of concern in greater detail in person with

the ED on April 14.

30 DAY GOALS —STATUS UPDATEGreat strides were made toward completing CCO's initial 30 day goals. Already CCO

has met with all of the executive team (minus IT) and has secondary conferences scheduled

with many other employees. CCO has gained some limited access to some shared resources

and systems but is still locked out of most information systems. CCO has begun assembling a

library of relevant knowledge and information and grows his collection on a daily basis. CCO is

comfortable with what he has learned about NJT's operations and looks forward to the

continuous acquisition of new knowledge. CCO has begun to receive some reports and

information from some departments but some are more efficient at producing and more willing

#o share than others. CCO respectfully reiterates the importance of having unfiltered access to

each department, physical localities, and systems and applications in order to properly perform

the compliance function.

CURRENT PROJECTS - S~"ATUS UPDATEFTA Drug ~ Alcohol f~rogram Audit

CD assigned CCO as the project manager for the upcoming FTA audit on May 8-12. CCO

is using One Note to help manage the scheduling, assignments, and deliverables. As a

preliminary matter, CCO reviewed the relevanfi regulations and the guidance and implementation

materials published by the FTA. C;LU provided a copy of FTA's Best Practices Vuide and a

compilation of Audit Interview Questions to NJT's Medical Dept. when CCO met with Deb Martelli

and Patrice Verner on 3/22/2017. At that meeting CCO provided information resources to the

Med Dept. and reviewed key interview question that will be asked by the auditors. Med staffed

assured that collection and testing procedures follow regulatory protocols. CCO worked with

Deb Martelli to assign a person responsible to gather each of the documents that we are

requested to submit to the FTA by 4/10. During the course of the review, Med staff informed

CCO that the Doctor, our vendors, and our collectors are knowledgeable but that we may have

some exposure with respect to the records review and policy review. Deb and Patrice, next

week, are to pull some of the records and perform aself-audit in line with the questions that will

be asked by the auditor. Med staff indicated that they were nearly certain that our current policy

was not in compliance with the current regulations as cutoff levels for drug detection have

changed and additional direct observation standards have been set for suspect testing since the

last revision. Med staff confided in CCO that the process of policy revision began sometime in

2013 bit that it had not b~er~ ~or~plet~~e ~~C~ is currently r~ui~~nring #h~ pc~li~v end will work

with Deb Prato and her team to update and revise in the most efficient manner if and where

necessary. Upon most recent information, Deb Prato will update CCO on Monday following her

review of other information that she has recently obtained. CCO has meetings scheduled with

each of NJT contract carrier managers to repeat the same education, review, and inspection

process at the carrier's locations over the next week. At that first meeting, CCO will identify a

person responsible for obtaining the documents required by each of the Contract Carriers. CCO

will continue to manage the audit preparation and readiness and will update the ED as the project

continues.

Compliance E-Notebook

CCO now uses ashare-point portal (same as that used by the NJT Board) to organize

compliance information and issues. CCO has identified several issues of compliance and risk

7

and these are organized in this application. The notebook is also used for contact management,

project management (although not CCO's first choice for PM) and for notes from all meetings

and conferences. It is fully integrated with Outlook. This application was also used to organize

the information and communications regarding the HBLR production request. If so desired, CCO

is happy to share and demonstrate this technology to the ED.

STRATEGIC PLAN DEVELOPMENTAlthough somewhat initial and well ahead of final delivery, CCO has begun the first draft

of a Strategic Plan for Compliance. This detailed plan will provide a top down view and full

roadmap to the entire compliance function at NJT. Upon completion of the first draft, according

to or ahead of the initial planned delivery of 90+ days, CCO will present and review the details

to the ED, the DED, and the Chief of Staff for acceptance, comment, and revision, and will then

share the final draft with the AAG (who already requested a copy) and the full executive team to

help integrate the entire compliance function within each department and business operating

line according to the plan. At this early juncture, CCO is pleased to report that CCO has already

formed a close relationship with internal audit and the AG's office. All stakeholders seem to be

in agreement as to how the compliance function will function at NJT. The strategic plan rehashes

these understandings in detail and will be presented to the ED fQr formal approval upon

completion.

R0~4D BLOCKS & PROBLEi1lIS

No major problems to report. CCO does desire better access to information and systems

and that said systems were more current, less cumbersome, and better implemented. CCO

respectfully notes lack of cohesion and constituency across departments. CCO has devised

some several recommendations to improve efficiency and effectiveness, while eliminating

duplicative efforts in operations and CCO hopes to soon share the same with ED.

From: Barretta. Todd C. (CEDOTCB)To; Steve Santoro (SSantoroCc~njtransit.com)Cce Paul Wyckoff (PWyckoffCcanjtransit.com~; Amy Herboid (AHerboldCo~nitransit.com~Subject: Executive Session Item -Claim Settlement (Item 1705-16) -Alexander Son v. NJ TransitDate: Monday, May 15, 2017 3:21:00 PM

For the reasons stated below, I disagree with the conclusion of the legal evaluation provided byAttorney Hart and with your approval and support, I would like an opportunity to argue againstrecommending settlement of the claim in the amount of $1,000,000 for board approval.

1. It is clear that the passenger's "gross intoxication" was at the very least a contributory (andpossibly the sole cause) of the accident.

2. Our medical experts seem well prepared to address and rebut the opinions of P's experts onalmost every point

3. It seems to be a near impossibility that the hood of his jacket would become caught in thebus doors (without being noticed by the operator nonetheless) and would be capable ofcausing him to be dragged and fall to the ground. In addition, the jacket is not evenavailable for inspection or evidentiary admission as P, himself, intentionally caused thespoliation because it was "too painful to look at." Ridiculous.

4. The settlement valuation and risk analysis seem to be erroneous. Plugging the relativelyarbitrarily selected values into their damages formula results in a values between $1.825Mand $2.920M NOT $2.5M to $4.0 M.

5. The economic analysis is fundamentally flawed.a. It assumes that P will actually require all of the services contemplated in the life plan

but that plan, provided (and not rebutted) by P's expert, is inconsistent with thatexpert's own conclusion that P requires only "occasional, minimal assistance."

b. The present value calculation is presumptively based upon USA eranomic anddemographic data. Since it is believed that P is an illegal immigrant without legalstatus to work nor continue to reside in the USA, I think it is quite reasonable toargue that the economic analysis should utilize cost and demographic informationfrom Guatemala, not the USA. There is ample support in the case law to ~~tili~e theeconomic information from an immigrant's home country when calculating lostwages; i can't see how the future medical expense calculation would differ.

i. P's lifespan in Guatemala would not be 80 years, it is approximately 9years less than that of an American citizen living in the USA

ii. The cost of living in Guatemala is on average 50%+less than it is in theUSA and the cost of medical care in Guatemala is up to 90%+less thanit is in the USA

he evaluation gives great (and undue) weight to the credibility of P's sole eyewitness basedsolely upon the fact that the witness is "disinterested and a marine corps veteran."

i. Witness could not see both of P's handsii. Witness is not entirely disinterested as P and the witness both reside inthe same neighborhood and share a common ethnic decent

iii. The cre~iik~ilily ~f the witness is not infallible because he is a military vet.1. This witness is not a doctor, lawyer, or police officer. In fact, his sole

source of employment has been working as the manager of his

family's liquor store located in their same neighborhood.2. Significantly, the liquor store that he manages has recently (2016)

lost their final appeal to reinstate their liquor license.3. It was revoked due to selling alcohol to minors and for being a hub

of criminal activity including the trafficking and sales of narcotics forwhich this witness's family was criminally charged.

iv. Police say that liquor store is "one of the worst trouble areas in the cityfor criminal activity." From 2012-1013, police received 136 calls to thatstore for shootings, assaults, and drug activity.

Counsel seems intimidated by P's choice of counsel. Referring to him as well-prepared,experienced, and aggressive. In actuality, the counsel of record is not partner, David Mazie,but rather junior associate Adam Epstein who graduated from law school 6 years ago.

think that in the greater scope, we sometimes prematurely settle claims and do so for more thanthey are worth —the practical effect to this is simply inviting more claims and litigation becausewe're seen as an easy target.

This claimant, an illegal immigrant, was drunk, and at fault. It is outrageous to pay him a sum thatequates to many multiples times his lifetime earning capacity for injuries that he has already largelyrecovered and medical treatment that he received with almost no out of pocket costs to him ($500he owes to doctors only).

Thanks

Todd


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Created by the Public Transportation Act of 1979, NJTRANSIT

was established to "acquire, operate and contract for transporta-

tion service in the public interest"

In 1980, NJ TRANSIT purchased Transport of New Jersey, the

State's largest private bus company at that time. Between the

years of 198 I -85, the services of several other bus companies

were incorporated into NJTRANSIT Bus Operations, Inc.

On January I , 1983, a second subsidiary, NJTRANSIT Rail Opera-

tions, Inc. was launched to assume operations of commuter rail in

the State after Congress ordered Consolidated Rail Corporation

(Conrail) to cease its passenger operations.A third subsidiary,

NJTRANSIT Mercer, Inc., was established in 1984 when the agency

assumed operation of bus service in theTrenton/Mercer County

area. In 1992, following a full reorganization, all three subsidiaries

were unifed and operations were significantly streamlined.

Our stakeholders, residents are represented by an eight memberBoard of Directors appointed by the Governor. Seven members

are voting members; four members are from the general public

anti three are State or"ticiais. Vne non-voting member is recorn-

mended by the labor organization representing the plurality of the

employees.The agency is structured to encourage broad public

participation in the formation of transit policy for the State.

NJTRANSIT's board meets monthly.The Governor can overrideboard actions by vetoing the board meeting's minutes.NJ TRANSIT Corporation's Board selects an Executive Director to

administer the entire agency.The Executive Director serves as

President of all three subsidiaries (NJ TRANSIT Bus Operations,

NJTRANSIT Rail Operations, Inc, and NJTRANSIT Mercer, Inc.).

TF-~ E IDEAL~A~I D I DATE.~ _ ~~~~.F ~ ~~~

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NJ TRANSIT is seeking a dynamic ChiefFinancial Officer and Treasurer. The idealcandidate possesses a bachelor's degree inFinance, Business Administration, Accounting `~'or Public Administration with 10 years ofpublic sector experience in increasingly g $~@responsible leadership roles as a directreport to the Chief Financial Officer for anagency managing a budget of at least $50 M `or better. Must possess a current CPA.

S/he will have experience in gatheringand analyzing financial information anddeveloping actionable, well-reasonedrecommendations to the Executive Directorand senior leadership. S/he must be a ~ ~ ~ ' ~, y; ~~ Jsystems thinker, and a proactive business ~`''" ~ T-"— ~- ~ -~' ~u ..partner in amulti-business-line agency. ,, ~-' ~ ~ - ~ ~ ; ~ , ~ ~ ~ !~~y~~ ~ ~ ~ ~ ~~~~ ~The incoming CFO must be collaborative, ~' ~ ~ a. ~~ ~ ~~~ ~ ~ " '~ K '~~ , r ~~ ~~creative and flexible in his/her management ~ ~ ~ ~ ~~~ ~~~3~ ~~` ~~ ~ ~ '~ ` zstyle with a commitmentto public service, ~ ~+~~~ ~~'~"~. ~ ~ _~ ~ __ _ '$

and c:uslorner-focused outcai7ies. We'r-e ~ ~ "'"` -looking for a CFO who can hit the ground ~ ~ ~ " ~ ::running to find new ways to increase funding _ ._ ""s° ~" ~ ~ ~-u ~ ~-'streams, decrease expenses and develop ~ ~ ~;x:,,'rnew business processes, redefine organiza- fir': ~ ; i I t i`'~ ~` I .~ - `- _ ~V ~- ~, ~~tional structure, and improve technology to ~ ~ _ _ ' ~~' - - ~'~~..~,,.~ ~.,~.r.~~~.~^~~~<.~~;L.a„r~a.,~,.:E:s., ~z~aci~~.m ~~--~~+~ ~ `~~r

drive revenue.

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The salary for the Chief Financial Officer iscompetitive dependent upon qualifications andexperience of the successful candidate. NJ TRANSIToffers a competitive total compensation packagewhich includes:

• A generous health, dental and vision insurance ¢Ian• Retirement — 6 %contribution of salary to your 401(a)• Up to 20 days of vacation (pro-rated first year based on hire), plus 9Scheduled Holidays, 3 Floating Holidays and 10 Sick Days per year

• Disability and Life Insurance• 401(k) Plan with employer match o f SO%, up to a maximum of 3

The State of NewJersey has a residency law, must be willing to relocate.

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the attached, as i privately shared with penny during the

Documents