Business Law

Published on: July 16, 2022

New Jersey Non-Compete Agreements and Employee Duty of Loyalty Examined by Appellate Division

New Jersey law imposes certain requirements on the behavior of employees, whether through the common law or contract. New Jersey employment law and business law will enforce restrictive covenants, including non-compete agreements, if they meet certain requirements. However, the tests for enforceability are different for restrictive covenants contained in employment agreements and those which are part of stock-photo-4786200-handshake-at-the-business-meeting the sale of a business. Likewise, whether or not there are restrictive covenants, New Jersey employment law imposes on employees a duty of loyalty to their employers. The Appellate Division recently examined these requirements.

Background

Robert Ryerson was a registered investment advisor (RIA), providing financial planning and investment services until the National Association of Securities Dealers (NASD) found him guilty of misconduct in 2006 by sharing commissions with non-NASD members and intentionally misleading his employer. Ryerson owned and operated NCP, a small financial advisory firm. However, the NASD’s revocation of his license meant he could no longer operate NCP.

Published on: January 16, 2022

Choosing the Right Form of New Jersey Business Entity

by Maurice W. McLaughlin

New Jersey business law gives owners the ability to choose between different forms of entities to meet their particular concerns. The choice is important and has long lasting effects. Below is an small-business-300x215 overview of the basic types of business entities allowed by New Jersey business law.

‍General Partnership

A general partnership is an entity where two or more people own a single business and have not formed any other form of business entity. The partners own the business and are personally responsible for the business’s debts and obligations, so if the business goes out of business they partners must still pay the business’s debts. A partnership may be “de facto,” where the partners are acting together but have taken no steps to formalize their relationship; or it may be “de jure,” where they have formalized their relationship and how the business will be run. There is no income tax at the entity level in a general partnership, meaning there is more revenue to be distributed as profit to the owners. While a de facto partnership will exist without a partnership agreement, it is important to have a well written partnership agreement to ensure the smooth operation of the business and to avoid disputes between the owners.

Published on: January 11, 2022

New Jersey Law Against Discrimination Prohibits Termination Influenced by Subordinate’s Gender Bias, State Supreme Court Rules

by Maurice W. McLaughlin

In an important New Jersey employment law ruling, the State Supreme Court held that an employer’s decision to terminate or otherwise take action against an employee influenced by the discriminatory bias of a subordinate, rather than the decisionmakers themselves, nonetheless gavel-300x200 violates the New Jersey Law Against Discrimination.

Background: Meade’s Employment

In the case of Michele Meade vs. the Township of Livingston, the Court explained that Michele Meade was the Township Manger for Livingston Township from 2015 until she was terminated by the Township Council in 2016. She was the first female Township Manager in Livingston’s history. She was replaced by a male candidate although there were female candidates, and when her replacement quit he was replaced by another male candidate.

Published on: January 6, 2022

Corporations and LLCs: If They’re Good Enough for a Lawyer….

by Maurice W. McLaughlin

Owners often choose to form their businesses as corporations or limited liability companies under New Jersey business law. The case of Colonial Records Storage, LLC v. Simpson, where a creditor tried to get individual liability against a lawyer who was a shareholder in a law firm operating as a corporation, illustrates exactly why.

Background

The law firm of Stein Simpson & Rosen was a New Jersey professional corporation; Nancy Simpson was an attorney with the firm and was a shareholder, or owner. A professional corporation operates under the same rules as a regular corporation, except that a professional corporation provides professional services such as those of lawyers, doctors, etc., and the shareholders may be personally liable for professional negligence, or malpractice in the course of providing those professional services. The law firm went out of business, although it had not formally dissolved. Simpson retired.

Published on: January 2, 2022

New Jersey Raises Minimum Wage Rate In 2022

by Maurice W. McLaughlin

The Increase

New Jersey’s minimum wage rate is going up again. The new minimum wage rate during this incremental increase is $13 per hour effective January 1, 2022. stock-photo-20612112-woman-leading-business-team

Background

Published on: November 24, 2021

OSHA’s Covid Vaccine Mandates for Large Employers

by Pauline M.K. Young

Mask, Surgical Mask, Virus, Protection
In September of 2021, President Biden announced a new mandate for all employers with 100 or more employees to require either vaccination or weekly testing and use of face masks for all of their employees. The mandate was issued under the authority of the United States Occupational Safety and Health Administration’s (“OSHA”) right to take certain actions in emergency situations.

As a result, dozens of lawsuits have already been filed seeking to delay and/or overturn the mandate. At least one court has already issued a stay on the enforcement of the mandate pending a final determination.

On November 4, 2021, OSHA issued an Emergency Temporary Standard (ETS”) which sets forth rules and requirements related to this mandate. The ETS specifies that the mandate applies to employers with 100 or more employees total – meaning, that even if the employer has 10 employees at 10 different locations, the rules still apply to them. Part-time, seasonal, and full-time employees all get counted towards the total number of employees. Staffing agencies would still count all jointly-employed employees. However, independent contractors are not counted towards this total.

Published on: November 8, 2021

New Jersey’s Prompt Payment Act is a Potent Tool for Subcontractors Trying to Get Paid, Appellate Division Confirms

by Maurice W. McLaughlin

New Jersey construction law involves many complex issues. However, one of the most common is also the most basic: Contractors and subcontractors getting paid for their work. The Appellate Division recently issued a published opinion on this topic in the case of JHC Industrial Services, Inc. vs. Centurion Companies, Inc., exploring one of the most potent tools which contractors and subcontractors can use construction to get paid: New Jersey’s Prompt Payment Act.

Background: The JHC Case

JHC Industrial Services, Inc. subcontracted to do demolition work on a project for Centurion Companies, Inc., which had in turn subcontracted with the general contractor to perform the work. JHC performed the work in full, and the general contractor accepted the work and paid Centurion in full. However, Centurion withheld $30,500 from JHC for no apparent reason other than not wanting to pay. JHC therefore filed a construction lien against the property and sued Centurion in the Superior Court of New Jersey for violation of the New Jersey Prompt Payment Act. The matter took two years reach conclusion. A trial was held, and JHC prevailed on all its claims. JHC won and received judgment against Centurion for $30,500, the full amount it claimed was owed. JHC requested $104,670.51 in “reasonable costs and attorney fees” pursuant to the fee shifting provisions of the Prompt Payment Act. The trial judge, however, awarded only $12,250.40 in attorneys fees and $4,125.33 in litigations costs for a total award of $16,375.73. The judge explained that he did not believe he could “grant over $100,000 in fees on a judgment that could not have exceeded $30,500.”

Published on: July 22, 2021

Appellate Division Enforces Subcontractors’ Right to be Paid in New Jersey Construction Law Decision

by Maurice W. McLaughlin

The Problem: Getting Paid

One of the most important considerations for construction contractors and subcontractors is getting paid for the work they perform. A recent construction law opinion examined some of the issues which contractors and subcontractors face under New Jersey construction law when seeking to get paid for their work.

The J&M Interiors Case

Published on: July 7, 2021

Requirements for Binding LLC Owners to LLC Operating Agreements Under the New Jersey Revised Uniform Limited Liability Company Act

by Maurice W. McLaughlin

It is always wise to have the terms governing the owners’ of a business’s relations and the management of the business spelled out in writing, whether this be a shareholder agreement for a corporation, a partnership agreement for a partnership, or an operating agreement for a office-2009693__340-300x200 limited liability company (“LLC”). Since limited liability companies offer both the shield from personal liability of a corporation and the single taxation structure of a partnership, these are often the preferred structure for small businesses.

Adoption of Operating Agreements Under the New Jersey Revised Uniform Limited Liability Company Act

The New Jersey Revised Uniform Limited Liability Company Act defines an operating agreement thus:

Published on: May 6, 2021

New Jersey Employment Law Opinion Examines Classification of Employees and Independent Contractors

by Maurice W. McLaughlin

New Jersey employment law governs the classification of workers as employees or independent contractors. The classification is important and fact sensitive. It has far reaching consequences. The Appellate Division recently issued a published opinion in imagesCAWQ89PS the case of East Bay Drywall, LLC vs. the Department of Labor and Workforce Development, which examined some of these issues and provides guidance for both employers and employees.

Background

The Department of Labor and Workforce Development administers the New Jersey Unemployment Compensation and Temporary Disability Insurance Laws. It collects revenues from employers and employees to fund these benefits. However, “employers” only need to make contributions for their “employees,” not for independent contractors. Therefore, there is an economic incentive for businesses to classify workers as contractors rather than employees. However, misclassification can trigger severe consequences.