Business Law

Published on: December 4, 2019

Appellate Division Continues Trend of Limiting Enforceability of Arbitration Clauses in Residential New Jersey Construction Contracts

New Home, Construction, For Sale, Buy
In October 2019, the Appellate Division of the Superior Court of New Jersey issued an opinion in the case of Becker v. Ollie Solcum & Son, Inc., examining the enforceability of an arbitration clause in a construction project. The decision continued the trend in New Jersey of limiting enforcement of arbitration agreements, particularly where one party is a customer.

The case arose from a dispute over a residential construction project. Robert and Catherine Becker entered into a contract with Ollie Slocum & Son, Inc. (“Slocum”) to build a new home for them for $1,850,000. Under the contract, the project was to be completed in no more than 52 weeks after excavation work started. Substantial completion was actually about one and a half years late. The Beckers sued Slocum in the Law Division of the Superior Court of New Jersey over the delay and alleged construction defects including water penetration and deterioration of the outdoor decking, siding, and finishing.

The contract, which contained a clause requiring arbitration of disputes, stated:

Published on: December 3, 2019

Third Circuit Court of Appeals Rules that Some Third-Party Payments to Employees are Properly Included in the Calculation of Overtime Rates

by Maurice W. McLaughlin

American, Bills, Business, Cheque
In the case of Secretary of United States Department of Labor vs. Bristol Excavating, Inc., the United States Court of Appeals for the Third Circuit, recently issued an important, precedential opinion on when payments by third-parties need to be included by employers in the calculation of their employees’ overtime pay rates.

Bristol Excavating, Inc. (Bristol) is a small excavation contractor. Bristol was a subcontract for Talisman Energy, Inc., a large producer of natural gas. Bristol provided Talisman with equipment, labor and services at Talisman’s drilling sites. Bristol’s employees often worked more than 40 hours per week, and Bristol paid them “overtime,” or one and a half times the regular hourly rate which Bristol normally paid them (“time and a half”) for all the hours they worked over 40 hours in one week.

Talisman offered workers at its sites – not just its own employees – separate bonuses rewarding them for safety, efficiency and productively measured by completion of work. Bristol’s employees asked Bristol if they could participate. Bristol agreed, and also agreed to do the administrative work. This administrative work included paying the bonuses through Bristol’s payroll, and taking out all applicable tax withholdings. Bristol did not include these bonuses in its calculation for overtime pay for its employees because it was not Bristol’s money with which the employees were being paid.

Published on: November 19, 2019

Equal Pay Act

by Pauline M.K. Young

Refugees, Economic Migrants

Governor Murphy signed New Jersey’s Equal Pay Act into law in 2018. The NJEPA takes a necessary step in making pay discrepancies in the workplace more transparent with the hopes that this will address the pay differential between white men minorities, and women. Essentially, it bars any penalty to any employee for requesting or disclosing information regarding any employee’s job title, rate of compensation, benefits, race, gender, ethnicity, or other protected characteristic when the purpose of the inquiry or disclosure to investigate the possibility of discriminatory treatment. (While the NJEPA was originally intended to address inequitable pay for women, it was expanded to cover all protected classes of people.)

This allows for employees to obtain information which previously (and even now) is largely safeguarded by employers as “private” in order to determine whether they are being discriminated against based upon a protected classification. Any employer “policy” which forbids discussing compensation in the workplace could be considered void by the law.

The NJEPA amended New Jersey’s Laws Against Discrimination to enable the use of the protections of that statute. The NJEPA also specifically makes it unlawful to pay employees in protected classes a different rate of compensation when performing substantially similar work considering skill, effort, and responsibilities. Differentials may still exist when based on seniority, merit, education, productivity, experience, and other legitimate business reasons. The Act also allows expands upon the LAD’s typical 2-year statute of limitations by setting forth that limitation period restarts each time the employee receives unequal compensation resulting from a discriminatory decision or practice. The employee may also recover up to 6 years of back pay as a result of a violation by the employer. Additionally, the employee may receive treble damages – meaning that they may recover three times the monetary damages awarded as a result of the pay discrepancy.

Published on: November 11, 2019

Chancery Division Issues Ruling on Valuation of Limited Liability Companies Under the New Jersey Revised Uniform Limited Liability Company Act

by Maurice W. McLaughlin

One of the most difficult questions in New Jersey Business law concerning the retirement of a business owner is determining the value of the laptop-3175111__340-300x200 owner’s share of the business which the remaining owners must pay to buy out his share. This can be difficult even if the departure itself is on good terms. The method and amount of the valuation can cause vicious disputes even among friendly partners. The Chancery Division of the Superior Court of New Jersey in Bergen County recently issued a published decision on this problem in the context of a limited liability company.

Background

In that case, Namerow v. Pediatricare Associates, LLC, four pediatricians were members (owners) of a medical practice named Pediatricare Associates, LLC. The Amended Operating Agreement which governed valuation of the business upon member retirements provided that:

Published on: November 4, 2019

Restraining Orders and Other Injunctive Relief in New Jersey Business Law Cases

by Maurice W. McLaughlin

Injunctive Relief

Injunctive relief is an order by a court requiring a party to cease an act, condition or behavior. It is a powerful tool in New Jersey business law civil cases. An order for injunctive relief is typically referred to as an “injunction.” A temporary injunction is granted only after a hearing, and a permanent injunction is granted after the case has been completed. A temporary restraining order may be granted prior to a hearing in emergency situations.

Where to File

Published on: October 22, 2019

Equitable Damages in New Jersey Business Law Disputes for Breach of Contract

by Maurice W. McLaughlin

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Types of Contract Damages

In New Jersey business law disputes, there are two broad categories of damages, legal damages and equitable damages.

Briefly, legal damages, or remedies in law, are money damages. Legal damages are for harms which can be compensated by the payment of money by the party which breached the contract. In New Jersey contract law, punitive damages are not allowed. Likewise, attorneys fees cannot be recovered unless the contract provider for it. Compensatory damages, which are the amount of money needed to make the innocent party whole, may be awarded when they can be proved. In business disputes these are often lost profits, but may also include other damages such as diminution of value of property.

Published on: October 9, 2019

Third Circuit Upholds Jury Verdict Finding Age Discrimination Under New Jersey Law Against Discrimination

by Maurice W. McLaughlin

New Jersey’s Law Against Discrimination has rightly been called one of the strongest employee protection laws in the nation. This is true both because of the broad range of inherent characteristics which it protects from discrimination, and the strong legal protections and remedies it provides. In short, the Law Against Discrimination prohibits employers from discriminating against employees because of a wide range of inherent qualities which make them who they are. It likewise prohibits harassment because any of these characteristics as well. These protected characteristics include race, creed, color, national origin, nationality, ancestry, sex (including pregnancy and sexual harassment), marital status, domestic partnership or civil union status, affectional or sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, genetic information, liability for military service, and mental or physical disability, including AIDS and HIV related illnesses. It also prohibits discrimination or harassment because of an employee’s age.

The Andujar Case

The Third Circuit Court of Appeals, which hears appeals from the federal district courts in New Jersey, Pennsylvania, Delaware and the United States Virgin Islands, recently issued an instructive opinion in the appeal of an age discrimination verdict under the Law Against Discrimination in the case of Santos Andujar versus General Nutrition Corporation.

Published on: September 22, 2019

Understanding the Various Types of New Jersey Liquor Licenses

by Jennifer C. Meusel

In New Jersey, you cannot sell alcohol unless you have a license issued by the New Jersey Division of Alcoholic Beverage Control. New Jersey issues many types of licenses which broadly fall within three general categories: Manufacturing Licenses, Retail Licenses, and Wholesale Licenses. Each license is attached to the “Licensed Premises,” and any change in the location or size or configuration of the Licensed Premises requires a place to place transfer application to be filed and approved before changes to the Licensed Premises can be completed. This transfer application is substantially the same as the process for transfer of ownership of the license. While the majority of licenses issued by the State of New Jersey fall into the Retail Licenses category, Manufacturing Licenses (designated as Class A licenses) include Brewery, Winery and Distillery Licenses which are a growing category. Wholesale Licenses (designated as Class B licenses) apply to wholesale distribution of alcoholic beverages to retail licensees.

The Retail Licenses (designated as Class C licenses) are issued to bars, restaurants, and liquor stores. There are 11 different types of New Jersey Liquor Licenses which fall within the Retail License categories:

Plenary Retail Consumption License (identified by license number 33): This license permits the liquor license holder to sell alcoholic beverages for consumption at the licensed premises, and the sale of packaged goods for consumption off premises, the sale of packaged goods must take place in the public barroom. This license counts toward the municipality’s population restriction which allows 1 license per 3,000 residents of a municipality based upon the most recent census data.

Published on: September 17, 2019

New Jersey Appellate Division Issues Opinion on Apportioning Damages in Construction Law Consumer Fraud Cases

by Maurice W. McLaughlin

The Appellate Division of New Jersey’s Superior Court recently issued an important construction law decision examining the effect of New Jersey’s Consumer Fraud Act in cases also involving the breach of a construction contract or negligent construction.

By way of background, coverage under New Jersey’s Consumer Fraud Act was expressly extended to include contractors engaging in home improvements and home repair. The New Jersey Department of Community Affairs issued regulations requiring specific items in contracts between home improvement contractors and homeowners. Violation of these technical requirements are “per se” violations of the Consumer Fraud Act, entitling the homeowner to triple damages and reimbursement of their attorneys fees by the contractor.

Under these regulations, the specific requirements which home improvement contracts must contain include the following.

Published on: June 3, 2019

Third Circuit Issues Important Decision on Non-Solicitation and Non-Compete Agreements Under New Jersey Employment Law

by Maurice W. McLaughlin

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The United States Third Circuit Court of Appeals (which hears appeals from the federal district courts in New Jersey, Delaware, Pennsylvania and the United States Virgin Islands) recently had the opportunity to address the state of New Jersey employment law on restrictive covenants in the case of ADP, LLC v. Rafferty.

Background

In the Rafferty case, two ADP employees, Kristi Mork and Nicole Rafferty, agreed to restrictive covenants in exchange for an award of company stock. Because they were high performing employees, they agreed to restrictions in exchange for the stock award which were more onerous than lower performing employees were required to agree to. The restrictions applied whether they quit or were fired.