Appellate Division Finds That New Jersey Law Against Discrimination May Apply To Out-of-State Telecommuters

In Trevejo v. Legal Cost Control, Inc. (Docket No. A-1377-16T4, April 2, 2018), the New Jersey Appellate Division examined whether an out-of-state telecommuter may be afforded protections under the New Jersey Law Against Discrimination (“NJLAD”).  Plaintiff, an out-of-state resident of Massachusetts, was employed by Legal Cost Control, which is a New Jersey corporation based out of Haddonfield, New Jersey.  Following her employment termination, Plaintiff filed a lawsuit in the Superior Court of New Jersey alleging age discrimination in violation of the NJLAD.  Legal Cost Control moved to dismiss the lawsuit via motion for summary judgment, arguing that Plaintiff was not an “inhabitant” of the State of New Jersey, and therefore, could not pursue a claim under the NJLAD.

Following limited discovery, the trial court granted Legal Cost Control’s motion for summary judgment and dismissed the lawsuit.  However, Plaintiff appealed the decision, and the Appellate Division agreed with Plaintiff.  Specifically, the Appellate Division reversed and remanded the decision to allow the parties to take additional discovery to determine whether Plaintiff is entitled to protections under the NJLAD.  In so doing, the Appellate Division found that the NJLAD may apply to out-of-state residents who are subject to unlawful misconduct in the State of New Jersey.

In rendering its decision, the Appellate Division determined that “[t]he NJLAD is a remedial statute that has been broadly construed to protect not only ‘aggrieved employees but also to protect the public’s strong interest in a discrimination-free workplace.’”  In addition, the Appellate Division found that Legal Cost Control’s reliance on the term “inhabitant” was misplaced given that the NJLAD “explicitly uses the term ‘person’ to identify who is protected from discriminatory and unlawful employment practices and conduct.”  Accordingly, the Appellate Division held that additional discovery should be taken regarding whether the discriminatory conduct took place in New Jersey, including the following: where Plaintiff’s co-employees worked; whether those co-employees worked from home; the nature of the software used by Plaintiff and other employees to conduct business on behalf of the company; the location of the company’s server used to connect Plaintiff to the company’s New Jersey office; the location of the company’s internet service provider; the individual(s) who made the decision to terminate Plaintiff and the basis for the decision; and any other issues relevant to Plaintiff’s contacts with the State of New Jersey and her work for the company.

With today’s ever-increasing technological advances, the definition of workplace seems to be evolving.  Indeed, telecommuting and working from home appear to be more common than ever given the advances in computer technology.  Accordingly, this decision represents a further expansion of the New Jersey Law Against Discrimination given that it offers out-of-state residents potential coverage under New Jersey law.

If you have any questions about this decision or the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

New Jersey Legislature Passes Comprehensive Equal Pay Act

On March 27, 2018, the State of New Jersey passed comprehensive legislation, known as the Diane B. Allen Equal Pay Act, that protects all classes of employees recognized under the New Jersey Law Against Discrimination.  The law goes into effect on July 1, 2018.  Specifically, the law makes it an unemployment practice “[f]or an employer to pay any of its employees who is a member of a protected class at a rate of compensation, including benefits, which is less than the rate paid by the employer to employees who are not members of the protected class for substantially similar work, when viewed as a composite of skill, effort and responsibility.”

The Diane B. Allen Equal Pay Act expressly provides for narrow, itemized permissible reasons for offering employees a different rate of compensation.  Specifically, the law states that “[a]n employer may pay a different rate of compensation only if the employer demonstrates that the differential is made pursuant to a seniority system, a merit system, or the employer demonstrates: (1) that the differential is based on one or more bona fide factors other than the characteristics of members of the protected class, such as training, education or experience, or the quantity or quality of production; (2) that the factor or factors are not based on, and do not perpetrate a differential in compensation based on sex or any other characteristic of members of a protected class; (3) that each of the factors is applied reasonably; (4) that one or more of the factors account for the entire wage differential; and (5) that the factors are job-related with respect to the position in question and based on a legitimate business necessity.”  “A factor based on business necessity shall not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.”  The law also expressly provides that “comparisons of wage rates shall be based on wage rates in all of an employer’s operations or facilities.”

Significantly, the law enhances the damages available to prevailing employees under the New Jersey Law Against Discrimination.  In addition to available compensatory damages, punitive damages, and attorneys’ fees and costs under the New Jersey Law Against Discrimination, a prevailing party may be awarded three times the amount of monetary damages (known as treble damages) for unlawful discrimination or retaliation under the Dianne B. Allen Equal Pay Act.

This legislation is a significant victory for employees in the State of New Jersey as they will be afforded additional protection for unlawful differential in compensation.  If you have any questions about this law or the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

Proposed Bill Would Bar Provisions in Employment Contracts That Waive Rights Under the New Jersey Law Against Discrimination

The New Jersey Legislature is considering enacting a bill (S121) that makes any “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment” against “public policy” and “unenforceable.”  The proposed bill also makes any “provision in any employment contract or agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment” against “public policy” and “unenforceable.”

Under the proposed bill, no right or remedy under the New Jersey Law Against Discrimination “or any other statute or case law” could be prospectively waived.  The bill also prohibits “any retaliatory action, including but not limited to failure to hire, discharge, suspension, demotion, discrimination in the terms, conditions, or privileges of employment, or other adverse action, against a person, on grounds that the person does not enter into an agreement or contract that contains a provision deemed against public policy and unenforceable.”

The proposed bill contains a two-year statute of limitations for plaintiffs/employees to file claims in the Superior Court of New Jersey.  A prevailing plaintiff/employee shall be awarded reasonable attorneys’ fees and costs under the proposed bill.  In addition, a prevailing plaintiff/employee is entitled to all available common law tort remedies as well as those provided under any other statute.  If enacted, this law will have significant potential ramifications for both employers and employees.  This proposed bill is obviously a positive development for employees as they will be afforded additional protections. On the other hand, employers should be monitoring this bill and should update their agreements accordingly if the legislation is enacted.

If you have any questions about this proposed bill, employment agreements, or the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

The New Jersey Law Against Discrimination is Amended to Include Breastfeeding

Effective January 8, 2018, the New Jersey Law Against Discrimination (“LAD”) has been amended and expanded to prohibit discrimination and retaliation against women who breastfeed or express milk in the workplace.  Therefore, the LAD now expressly includes breastfeeding as a protected characteristic under New Jersey law.

The LAD requires employers to make reasonable accommodations in the workplace for pregnant employees, such as bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, job restructuring or modified work schedules, and temporary transfers to less strenuous work or from hazardous work for needs related to the pregnancy based on the advice of the employee’s physician.

The amended law provides additional protection for employees who are breastfeeding in the workplace.  Specifically, the amended law requires employers to make a suitable room or other location with privacy, other than a toilet stall, in close proximity to the work area for the employee to express breast milk for the child, unless the employer can demonstrate that providing the accommodation would be an undue hardship on the business operations of the employer.

The amended law has important ramifications for both employers and employees.  Indeed, the LAD now expressly requires employers to make very specific reasonable accommodations for employees who are breastfeeding in the workplace.  In addition, employees who breastfeed in the workplace are now afforded additional protections under New Jersey law as noted above.

If you have any questions about the above amendments, the New Jersey Law Against Discrimination and/or accommodations in the workplace, please contact the Law Office of Frank A. Custode, LLC.

Settlements of Sexual Harassment Claims Impacted by the Tax Cuts and Jobs Act

The newly-enacted Tax Cuts and Jobs Act will have an impact on both employers and employees with regard to the settlement of sexual harassment and/or sexual abuse claims.  Specifically, under IRS § 162(q), no deduction shall be allowed for “any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement” or “attorneys’ fees related to such a settlement or payment.”  Prior to the enactment of this law, employers were generally permitted to deduct legal settlements paid to plaintiffs as well as attorneys’ fees incurred for the defense of sexual harassment claims.  In addition, prior to the enactment of this law, plaintiffs were generally allowed to deduct their attorneys’ fees in connection with settlements pertaining to sexual harassment claims, even with the presence of non-disclosure language.  This provision appears to have been enacted to deter employers from including non-disclosure language in settlement agreements pertaining to sexual harassment claims.  However, this provision raises many questions or both employers and employees.

From the employer’s perspective, companies will need to weigh the value of having non-disclosure language included in settlement agreements pertaining to sexual harassment or sexual abuse claims.  Indeed, companies will have to decide whether, from a public relations stand-point, it is worth not including the non-disclosure language in order to claim the deduction for the settlement and accompanying attorneys’ fees; or conversely, whether it is more important for them to have the non-disclosure language included in the settlement agreement, which will prohibit the deduction. From an employee’s perspective, this law may be problematic as well.  Even though the intent of the provision is clearly to deter keeping sexual harassment or sexual abuse claims confidential, the provision may jeopardize the plaintiff’s ability to deduct their own attorneys’ fees in connection with settlements pertaining to such claims.  It remains to be seen whether the IRS or Legislature will provide any further clarification or guidance regarding this law.

If you have any questions regarding sexual harassment in the workplace, please contact the Law Office of Frank A. Custode, LLC.

District Court Expands Accommodations Protection under the New Jersey Law Against Discrimination for Pregnant Employees

Effective January 17, 2014, the New Jersey legislature amended the New Jersey Law Against Discrimination (“NJLAD”) to include “pregnancy” as a protected characteristic.  In addition, the legislature expanded the NJLAD to make reasonable accommodations to a pregnant employee.  Among the protections included require an employer to “make available to the employee reasonable accommodation in the workplace, such as bathroom breaks, breaks for increased water intake, periodic rest, assistance with manual labor, job restructuring or modified work schedules, and temporary transfers to less strenuous or hazardous work, for needs related to the pregnancy when the employee, based on the advice of her physician, requests the accommodation, unless the employer can demonstrate that providing the accommodation would be an undue hardship on the business operations of the employer.”  See N.J.S.A. 10:5-12(s) (emphasis added).

In Ologundudu v. Manorcare Health Services, Inc., 1:15-cv-04021-NLH-AMD (United States District Court, District of New Jersey, December 18, 2017), the court analyzed a failure to accommodate claim asserted by the plaintiff in the context of a pregnancy discrimination action.  In so doing, the court rejected defendant’s argument that employer is obligated to provide accommodations for a pregnant employee only if required to do so by a doctor.  Specifically, the court determined that “when the New Jersey legislature amended the NJLAD to add pregnancy as a protected status it recognized that the common side effects of pregnancy include ‘bathroom breaks, breaks for increased water intake, periodic rest,’ etc., and that those symptoms and common medical conditions have engendered unfair discrimination.  Defendant’s interpretation of the statute would require every pregnant woman, whether hale and hearty or not, to anticipate all symptoms that might impact her work no matter how temporary or ultimately tolerable, consult a doctor while asymptomatic, and preemptively seek accommodations before those common side effects manifest themselves at work – or risk, as in this case, being fired for sitting down and resting the first time she felt fatigued or unstable on her feet.  This absurd Catch-22 would bar failure to accommodate claims in any case the employer moves swiftly to take an adverse employment action as soon as pregnancy symptoms occur.  Such a rule would frustrate the expressed legislative intent, defeat the Act’s remedial purpose and render the obligation to engage in an interactive process a nullity.”  See id. at 17, footnote 5.

This decision is a significant victory for pregnant employees in the workplace. The court’s expansive reading of the NJLAD certainly gives pregnant employees further protection under the law.  In addition, the decision puts employers on notice as to the potential perils of failing to engage in the interactive process with pregnant employees in the workplace.

If you have any questions about pregnancy discrimination in the workplace or the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

New Jersey Senate Seeks To Limit Restrictive Covenant Agreements

In general, a restrictive covenant agreement is an agreement between an employer and employee where the employee agrees not to engage in certain specified activities which may be competitive with the employer following the conclusion of the employment relationship.  The most common type of restrictive covenant agreement is a non-compete agreement.  On November 9, 2017, the New Jersey Senate introduced Senate Bill 3518, which would significantly limit the enforceability of restrictive covenant agreements in the State of New Jersey.

Here are some highlights of the bill.  Under the bill, restrictive covenant agreements would not be enforceable against certain types of workers, such as an employee classified as nonexempt under the Fair Labor Standards Act, seasonal or temporary employees, an employee who is terminated without good cause or laid off by the action of an employer, independent contractors, or an employee whose period of service with the employer is less than one year.  In addition, restrictive covenant agreements would have to meet ten strict requirements to be enforceable, including but not limited to, the following: if the agreement is entered into in connection with the commencement of employment, the employer must disclose the terms of the agreement in writing to the prospective employee, the agreement must be signed by the employer and the employee, and the agreement must expressly state that the employee has the right to consult with counsel prior to signing; the agreement may not be broader than necessary to protect the legitimate business interests of the employer; the agreement may restrict the employee from engaging in activities competitive with the employer for no more than 12 months following the date of termination of employment; the agreement must not contain a choice of law provision that would have the effect of avoiding the requirements of the bill if the employee is a resident of or employed in the State of New Jersey at the time of termination or has been for at least 30 days immediately preceding the employee’s termination of employment; and the agreement must not restrict an employee from providing service to a customer or client of the employer, if the employee does not initiate or solicit the customer or client.

Furthermore, the bill provides that an employer seeking to enforce a restrictive covenant agreement must notify the employee in writing of its intent to enforce the agreement; otherwise, the agreement is void.  Moreover, the bill requires that “during any period after the employment has ended and a covenant is effective, the employer must pay the employee an amount equal to 100 percent of the pay which the employee would have been entitled for work that would have been performed during the period, and continue to make whatever benefit contributions would be required in order to maintain fringe benefits to which the employee would have been entitled for work that would have been performed.”

In short, if enacted, this bill would be a game-changer for employees and employers.  For employers, it would obviously be much harder to enforce restrictive covenant agreements.  As for employees, they would have increased mobility following the termination of their employment given the bill’s stringent requirements.

If you have any questions regarding this bill or restrictive covenant agreements, please contact the Law Office of Frank A. Custode, LLC.

What Constitutes A “Good Faith” Reduction In Force Under The New Jersey Law Against Discrimination?

To establish a prima facie case under the New Jersey Law Against Discrimination, a plaintiff must demonstrate that (1) her or she is a member of a protected group; (2) he or she was performing the job at a level that met the employer’s legitimate expectations; (3) an adverse employment action was taken against the employee; and (4) the challenged decision took place under circumstances that give rise to unlawful discrimination.  See Williams v. Pemberton Twp. Pub. Schools, 323 N.J. Super. 490, 502 (App. Div. 1999).  If the employee establishes a prima facie case, the burden of production shifts to the employer to establish a legitimate non-discriminatory reason for the adverse employment action.  See Bergen Commercial Bank v. Sissler, 157 N.J. 188, 210 (1999).  If a non-discriminatory basis is shown, the plaintiff must establish, by a preponderance of the evidence, that the alleged justification is a pretext for discrimination.  See Zive v. Stanley Roberts, Inc., 182 N.J. 436, 449 (2005).  However, it is important to understand how New Jersey courts analyze the employer’s “legitimate non-discriminatory” explanation for the termination in the context of a reduction in force.

Indeed, among the factors that courts analyze when reviewing whether an employee’s termination is the result of a “good faith” reduction in force are as follows: (1) whether the business reasons for the reduction in force and the anticipated economic savings therefrom were adequately documented; (2) the number of employees or percentage of the company’s work force affected by the reduction in force; (3) the existence of adequately documented selection criteria and procedures for implementation of the reduction in force; (4) whether reduction in force decisions were made on the basis of objective job related criteria and procedures or by reference to the individuals occupying the affected positions; (5) whether reduction in force decisions were based on fair and objective performance evaluations of the affected employees; and (6) whether there was any consideration of alternatives to laying off employees to achieve the economic savings anticipated from the reduction in force, such as shortened work weeks or work days, temporary shutdowns, voluntary reverse seniority layoffs with partial-pay, work-sharing, reductions in authorized overtime, salary freezes or reductions, hiring freezes and/or early retirement incentive programs.   See Leahey v. Singer Sewing, Co., 302 N.J Super. 68, 79-80 (Law Div. 1996).

Based on the foregoing, affected employees should consult with legal counsel if they are subject to a reduction in force.  If you have any questions about reductions in force and/or claims under the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

New Jersey Courts Continue To Erode Arbitration Policies In Employment Law Disputes

In Dugan v. Best Buy Co., Inc. (decided on August 11, 2017), the Appellate Division held that an employee’s continued employment may not be sufficient to establish the employee’s assent to an employer’s arbitration policy.  As set forth below, this decision has important ramifications for both employers and employees in the State of New Jersey.

Kevin Dugan served as Best Buy’s General Manager.  Approximately six years after Mr. Dugan commenced employment, Best Buy introduced its employees to an arbitration policy via an eLearning program.  Mr. Dugan clicked “I acknowledge” on the last screen of the program, but did not read the policy.   Approximately three weeks later, Best Buy terminated Mr. Dugan’s employment.  He then filed a lawsuit against Best Buy alleging age discrimination in violation of the New Jersey Law Against Discrimination.   In response, Best Buy filed a motion to compel arbitration and dismiss Mr. Dugan’s lawsuit, which was granted by the trial court.  Mr. Dugan then appealed to the Appellate Division, which reversed the trial court’s ruling and remanded the action back to the trial court.

The Appellate Division reversed the trial court’s decision for a variety of reasons.  First and foremost, the Appellate Division found that the policy did not express that employees were “waiving” their right to sue.  In addition, the Appellate Division found that there was no evidence that the employee assented or agreed to the terms of the policy.  Specifically, the Appellate Division determined that “the fact that plaintiff knew of the policy, and his status as a general manager who was tasked with having other employees complete the eLearning module, does not establish his assent to the policy.”  Furthermore, the Appellate Division found that Mr. Dugan’s brief period of employment with Best Buy following the effective date of the policy (three weeks) “did not meet the high standard required to establish an unambiguous waiver of plaintiff’s right to sue.”  Accordingly, the Appellate Division held that “no agreement to arbitrate was reached.”

From an employee’s perspective, this is a positive opinion because it gives employees further ammunition to argue arbitration policies unfairly erode and waive their right to a jury trial in employment law disputes.  From an employer’s perspective, the opinion provides guidance and demonstrates the perils of rolling out unclear electronic arbitration policies to their employees.

If you have any questions about arbitration policies and/or the rights of employees under the New Jersey Law Against Discrimination, please contact the Law Office of Frank A. Custode, LLC.

The Third Circuit Expands The New Jersey Conscientious Employee Protection Act (“CEPA”) To Protect In-House Legal Counsel

In Trzaska v. L’Oreal USA, Inc., 2017 U.S. App. LEXIS 13381 (3d Cir. July 25, 2017), the Third Circuit held that an in-house attorney may maintain a cause of action under the New Jersey Conscientious Employee Protection Act (“CEPA”) due to the in-house attorney’s allegation that his employment was terminated because of his refusal to violate the Rules of Professional Conduct governing lawyers in the State of Pennsylvania.  This is an important decision because it further expands the scope of CEPA by recognizing that in-house legal counsel may proceed with claims alleging whistleblower retaliation.

Steven J. Trzaska was an in-house patent attorney for L’Oreal, overseeing the company’s patent team and the process by which the company would patent its newly developed products and inventions.  As a legal practitioner, Mr. Trzaska is bound by the Rules of Professional Conduct established by the Supreme Court of Pennsylvania as well as the United States Patent and Trademark Office.  The company established a global quota of patent applications that each regional office must file each year.  At the same time, L’Oreal adopted an initiative to improve the overall quality of its patent applications filed with the United States Patent and Trademark Office, which resulted in fewer invention disclosures submitted to the company’s patent team for vetting.

Despite its initiative, the company continued to demand that the patent team meet the annual quota.  As a result, the patent team did not believe it could meet the quota for 2014 without filing patent applications for products that it did not, in good faith, believe were patentable.  Accordingly, Mr. Trzaska explained to his superiors that neither he nor his team would be willing to file any patent applications for products that they in good faith, did not believe were patentable.  He further advised that, if any attorney on the patent team filed such an application, it would be in violation of the Rules of Professional Conduct.  In response, the company offered Mr. Trzaska two severance packages if he wanted to leave the company or was otherwise told to “get back to [his] office and get back to work.”   The company subsequently terminated Mr. Trzaska’s employment after he rejected the severance packages.

Mr. Trzaska subsequently filed suit in the United States District Court for the District of New Jersey, alleging that his employment termination was retaliation in violation of CEPA.  The company moved to dismiss the suit on the grounds that the Rules of Professional Conduct were an inadequate basis to maintain a CEPA claim.  The District Court agreed, and dismissed the lawsuit.  On appeal, the Third Circuit reversed, determining that “an allegation that an employer instructed, coerced, or threatened its patent attorney employee to disregard the RPCs [Rules of Professional Conduct] binding him violates a clear mandate of public policy within the meaning of CEPA.”  In addition, the Third Circuit found that “rules of professional conduct in general can underlay a CEPA violation” and even though the applicable Rules of Professional Conduct do not regulate the company’s business practices, the company’s instruction to Mr. Trzaska nevertheless violates a clear mandate of public policy.

If you have any questions about this decision or CEPA, please contact the Law Office of Frank A. Custode, LLC.