New Jersey Lawyers Blog

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

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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 25, 2019

New Jersey Supreme Court Rejects Newark School District’s Firing of Tenured Secretary in Major Public Employment Law Decision

by Maurice W. McLaughlin

Both New Jersey’s tenure laws in Title 18A, which govern employees in New Jersey’s public schools, and the New Jersey Civil Service Act in Title 11A and Civil Service regulations are designed to ensure that government employment decisions, such as hiring, firing, promotion, etc., are made based on merit rather than nepotism, cronyism, racism, sexism, favoritism or politics. Of course, these factors still come into play, and employers seek ways around these laws. The New Jersey Supreme Court recently rejected such an attempt by the Newark School District to terminate a tenured secretary.

Brenda Miller was an employee of the Newark School District, which had been taken over and operated by the State of New Jersey. The District had adopted the Civil Service Act, Title 11A of New Jersey Statutes, to govern its employees. As public school employees, however, their employment was also governed by Title 18A, which governs New Jersey’s public grammar schools, middle schools, high schools and state colleges.

Brenda was hired in 1998 and held clerical and secretarial positions through 2012. By virtue of this service she had acquired tenure under Title 18A. These positions were also governed by the Civil Service System, and were considered “classified” titles. In 2012, however, the District reclassified Brenda’s current position to an “unclassified” confidential assistant, which as an unclassified title did not have the same civil service protections as classified positions – indeed, unclassified positions have little more protection than an employment at will job in the private sector. In 2014, citing the unclassified status of Brenda’s title, the District terminated her. It did not provide her with notice or a hearing.

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 21, 2019

Decision on Objections to Fraud and Criminal Activity of Whistleblowers by New Jersey Supreme Court

by Maurice W. McLaughlin

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Decision on Objections to Fraud and Criminal Activity of Whistleblowers by New Jersey Supreme Court

In the recent case of Chiofalo v. State, Division of State Police, the Supreme Court of New Jersey issued an important employment law decision dealing with whistleblower retaliation.

The Conscientious Employee Protection Act — New Jersey’s “Whistleblower” Law

Published on: October 18, 2019

Qualifying a Trust as the Beneficiary of an IRA While Taking Advantage of the “Stretch-Out”

by Jennifer C. Meusel

money-2724241__340-300x203 If a person wants to control the distribution of funds held in an IRA after their death, it is possible to do so by naming a trust as the beneficiary of the IRA. However, in order to minimize tax consequences, the trust named as the beneficiary must be a “look-through” trust which qualifies for payout of the IRA funds over time rather than as a lump sum upon the death of the IRA owner.

While IRAs and qualified retirement plans generally do not require probate, distribution of these assets are controlled by contract law and are distributed pursuant to the beneficiary’s “designations” which were filed with the financial institution prior to the account owner’s death. A trust can be named as the beneficiary. However, the structure of the trust will determine whether the proceeds must be paid in a lump sum, and thus subject to potentially significantly higher income tax, or if the Trust qualifies as a “look through” trust in which the payout of the proceeds can be stretched-out over the life expectancy of the oldest beneficiary of the Trust.

You might wonder why the owner of an IRA would want to name a trust as his or her beneficiary, particularly when it is much simpler to merely name the individuals as the beneficiaries. The primary reason is to control the distributions to the beneficiaries after death. You do not avoid paying taxes by naming a trust. However, you can prevent your beneficiaries from taking lump sum distributions of your IRA, which would likely result in additional taxes and the remaining balance of which could be squandered by your beneficiaries. But the purpose of a naming a Trust as the Beneficiary of an IRA is not tax savings. In fact, it’s quite possible to pay more in taxes even if trust is designed properly. Therefore, you would only use trusts for personal (non-tax) reasons.

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: October 7, 2019

Third Circuit Rules Adult Dancers Are Employees Entitled to Overtime and Minimum Wage Protections

by Maurice W. McLaughlin

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The Federal Fair Labor Standards Act requires that employers, including New Jersey employers, pay their non-exempt employees minimum wage and overtime (the vast majority of employees are not subject to an exemptions; the major exemptions are for executive, administrative and professional employees, and outside sales). Independent contractors, however, are not protected by the Fair Labor Standards Act. Claims of misclassification of employees have recently led to significant amounts of litigation.

The United States Third Circuit Court of Appeals recently issued an opinion on misclassification of workers in the case of Priya Verma v. 3001 Castor, Inc., which found that adult dancers were employees entitled to the protection of the Federal Fair Labor Standards Act. While the case arose in Pennsylvania Federal Court, the Third Circuit rules on appeals from federal courts in New Jersey, Pennsylvania, Delaware and the United States Virgin Islands, so it’s decisions determine how federal law, including the Fair Labor Standards Act, will be applied are binding in New Jersey.

Background