New Jersey Lawyers Blog

Published on: October 31, 2017

Fiduciary Duties Owed by Owners of Limited Liability Companies Under New Jersey Business Law

business-meeting-and-teamwork-large-team-at-the-table-300x160 New Jersey has followed the national trend in creating the “limited liability company,” (known as “LLC”), as an allowable form of business entity under New Jersey business law. The LLC combines the best elements of both a corporation and a partnership.

The Limited Liability Company

A (Limited liability company combines the best qualities of both corporations and partnerships (or sole proprietorships). Like corporations, but unlike partnerships and sole proprietorships, owners (known as “members” in an LLC) are shielded from personal liability for most corporate debts. However, like partnerships and sole proprietorships (but unlike many corporations, especially larger corporations), LLCs are “flow through” entities. This means that the business itself pays no income taxes. The profits “flow through” to the owners, who are then taxed on the profits as their income. This avoids the “double taxation” of corporations, where the company pays taxes on the profits before they are distributed to the owners, and then the owners pay income tax on the remaining after tax profits when they receive them. So essentially members in an LLC only pay tax once, while shareholders in a corporation pay tax twice, which can result in significantly higher after tax earnings for the owners on the same business revenue.

Published on: October 17, 2017

Employees Who are Being Retaliated Against or Discriminated Against by Their Employers Must Be Cautious in Preserving Records for Litigation

by Pauline M.K. Young

racism-2733840__340-300x300 When an employee is being harassed or disciplined in his employment as a result of discrimination or retaliation for the employee’s objections to illegal conduct, there are multiple laws which may provide relief to the employee. These include, for instance, New Jersey’s Law Against Discrimination (the “LAD”) and New Jersey’s Conscientious Employee Protection Act (“CEPA,” also known as the “Whistleblower Law.”)

Both Acts may allow the employee to bring a lawsuit against the employer for a wrongful termination or other adverse employment action (i.e. demotion), as well as harassment. When an employer is wrongfully disciplining or retaliating against an employee, it is important for the employee to preserve and maintain records of the wrongful conduct of the employer in order to support her claim that she suffered a wrongful employment action. However, employees need to be cautious in what records they preserve and how they preserve those records.

In the case of Quinlan v. Curtiss Wright Corporation Joyce Quinlan believed that as a result of gender discrimination, her employer had passed her over for a promotion. She then began copying confidential human resources files which she believed supported her claim that she was being discriminated against and she produced the copies in the course of discovery during litigation. The employer later fired her for “taking” the records (while litigation was ongoing). Quinlan then amended her complaint to include the claim that she was retaliated against for essentially participating in the LAD suit against the employer. The Law Against Discrimination not only prohibits employment discrimination on the basis of a protected classification (gender, nationality, religion, race, etc.), but it also prohibits retaliation against a person for opposing discrimination, filing a discrimination complaint, or participating in a LAD proceeding.

Published on: October 16, 2017

Should a Prospective Purchaser Obtain a Survey of the Property?

by Jennifer C. Meusel

new-home-2841442__340-300x200 Recently, many people who are purchasing real property have been reluctant to spend the money to obtain a survey of the property they are purchasing. However, in most circumstances it is obtaining a survey is vitally important and it is money well spent. Also, if the purchaser is financing the purchase with a mortgage loan, the lender will almost always require a survey before closing.

Surveys are performed by licensed surveyors who are subject to regulations imposed by the State of New Jersey. A survey will locate any structures and other above ground improvements on the premises, including fences, identify easements the property is subject to and provide the purchaser with the property’s dimensions. It will show the exact boundaries on the deed – which sometimes yields surprises.

There are many reasons why you should obtain a survey prior to closing (beyond it being required by the lender). These are some of the universally applicable reasons to get that survey:

Published on: September 25, 2017

New Jersey Appeals Court Reinstates Termination of Employee in Examination of the “Deemed Accepted” Rule and Progressive Discipline in New Jersey Civil Service Commission Decisions

by Maurice W. McLaughlin

A New Jersey appeals court recently issued an important decision in the case of In the Matter of William R. Hendrickson, Jr., Department of Community Affairs, in which it examined two core concepts in New Jersey’s Civil Service employment law: progressive discipline and the “deemed accepted” rule.

Background

William Hendrickson was a fire inspector for the New Jersey Department of Community Affairs (the “DCA”). He was alleged to have made vulgar, misogynistic comments toward a female supervisor who had changed his work assignment. The comments were alleged to have been made in a public setting, with members of the public present. The DCA initiated disciplinary proceedings and terminated Hendrickson’s employment. Hendrickson appealed to the Civil Service Commission. The matter was transferred to the New Jersey Office of Administrative Law (the “OAL”) where an administrative law judge (“ALJ”) conducted a trial. The ALJ found that Hendrickson did make the remarks, and that they merited discipline. However, using the concept of progressive discipline, the ALJ found that a six month suspension was more appropriate than termination given Hendrickson’s lack of any prior discipline during his eighteen month employment.

Published on: September 21, 2017

Void Contracts, Voidable Contracts and Severability under New Jersey Contract Law

by Maurice W. McLaughlin

New Jersey business law allows people and businesses to manage their relationships by entering contracts which define the terms of that relationship. Contracts are enforceable by the full force of the law. For instance, if one party owes another money under a contract but doesn’t pay, the wronged party can go to court; if it can prove its case the court will enter a judgment in its favor and it can then have the county sheriff go seize the breaching party’s property to pay the debt.

In some cases, all or part of a contract may not be enforceable. This area of New Jersey business law contains three distinct and important concepts: void contracts, voidable contracts, and severability.

Void Contracts or Contract Provisions

Published on: September 18, 2017

The Covenant of Good Faith and Fair Dealing Under New Jersey Contract Law

by Maurice W. McLaughlin

Contracts Under New Jersey Business Law

Under New Jersey business law, when two or more parties enter into a contract they are essentially writing their own law which will govern their relationship. A valid contract – one where each of the parties exchange value (“consideration”) and agree to the terms which will govern their relationship or transaction – will be enforced by courts. If there is a dispute, a court will make a decision which can be fully enforced.

The Covenant of Good Faith and Fair Dealing

Published on: September 11, 2017

New Jersey’s Conscientious Employee Protection Act Covers an Employee’s Refusal to Violate Professional Ethics

by Pauline M.K. Young

business-1753098__340-300x213 New Jersey’s Conscientious Employee Protection Act (“CEPA”) employees from being fired for objecting to or refusing to participate in conduct which the employee reasonably believes to be illegal or against public policy. If the employee is wrongfully retaliated against, CEPA provides a remedy through litigation. Also known as the “whistleblower law,” CEPA is one of the most strongest employee protection laws in the country. However, since it was enacted in only 1986, courts continue to disagree as to the exact scope and extend of the law.

In the recent case of Trzaska v. L’Oreal USA, Inc., the employee, Steven Trzaska claimed that he was fired in retaliation for his refusal to take actions which he believed violated the Rules of Professional Conduct (“RPC”). RPCs set forth the rules for ethical conduct which although must follow, and, in fact, an attorney may lose his license to practice law if certain rules are not followed. In the Trzaska case, L’Oreal had issued a quota or mandate for Mr. Trzaska to prepare a certain number of patent applications. Mr. Trzaska advised that he would not file any patent application unless he had a good faith believe that the product was patentable. Mr. Trzaska was fired thereafter and he filed a lawsuit in the District Court.

The United States District Court for the District of New Jersey then dismissed Mr. Trzaska’s case in the early stages requiring that the RPCs did not meet CEPA’s requirements that the employee object to or refuse to participate in illegal conduct. CEPA’s language

Published on: September 7, 2017

New Jersey’s Supreme Court Issues Major Decision on Disability Discrimination in Employment Law

by Maurice W. McLaughlin

group-418449__340-300x300 Our labor and employment attorneys represent employers and employees in cases of wrongful termination and discrimination. This is an area of New Jersey employment law which generates considerable litigation. New Jersey’s Supreme Court recently issued an important opinion on when an employee may be terminated because her disability impairs her ability to perform the essential functions of her job.

Maryanne Grande had been a registered nurse for thirty years, and employed by St. Claire’s Health System for ten years, from 2000 through 2010. St. Claire’s job description for a registered nurse included lifting fifty pounds from waist to chest “frequently” as an “essential” job function. Grande suffered a series of injuries at work beginning in 2007. Her final injury was suffered while she was preventing an overweight patient from falling. Her doctor cleared her to resume full-duty work. However, St. Claire’s ordered her to undergo a physical with its own doctor, who said she could perform lifting only “occasionally,” which it defined as “1-33% of the time.” However, the report also concluded that it was “improbable that this will significantly affect job performance ability.” The report also concluded that Grande could return to work with “altered duties.”

Her own doctor again examined her and provided her with a form which said she could return to work with only certain limitations on lifting. The next day Grande was fired. She returned to her doctor, who cleared her to return to full-time duty with no restrictions. However the termination was not rescinded.

Published on: August 25, 2017

United States Court of Appeals for the Third Circuit clarifies standard for providing illegal harassment

by Maurice W. McLaughlin

dc-court-appeals-district-columbia-building-abraham-lincoln-statue-74985350 One of the most vexing problems facing employees suing their employers for harassment is what legal standard the acts must meet in order to prove harassment. In the case of Castleberry v. STI Group, the United States Court of Appeals for the Third Circuit held that harassment need only be severe or pervasive, giving a significant victory to employees.

In that case, Atron Castleberry and John Brown were African-American men. They obtained jobs through a staffing agency, STI Group, which employed and placed them with Chesapeake Energy Corporation, an oil and gas company. Shortly after they were hired, the only other African-American on their crew was fired. They alleged that on several occasions someone wrote “don’t be black on the right of way” on their timesheets. They also alleged that they were only allowed to clean around pipelines despite their experience, when other employees faced no such restrictions, including white employees with less experience. They also claimed that while they were working on a fence-removal project their supervisor told them that they would be fired if they “n…..r-rigged” the fence. After the last incident, which seven co-workers confirmed, they reported the incident. Two weeks later they were fired.

They filed suit in the United States District Court under federal employment law. The district judge dismissed their case before any evidence was exchanged in discovery because he believed that the employees had not alleged harassment which created a hostile work environment which was both “severe” and “pervasive.” The employees appealed to the United States of America for the Third Circuit, which hears appeals of New Jersey Federal cases. The Third Circuit reversed.

Published on: August 1, 2017

New Jersey Civil Rights Act Protects Local Government Employees From Politically Motivated Acts

by Maurice W. McLaughlin

megaphone-1480342__340-300x200 The New Jersey Civil Rights Act, the state counterpart to the federal law known as “Section 1983,” is a powerful tool for government employees to protect themselves when their public employers violate their civil rights

After the Civil War, Congress passed a law known as “Section 1983.” Section 1983 was part of the Ku Klux Klan Act, also known as the Civil Rights Act of 1871. The Act was passed at the urging of President Ulysses S. Grant as part of a series of measures during Reconstruction to protect the rights (and safety) of freed slaves in the South, who were facing increased violence and intimidation from the Klan and others. Indeed, much of this was orchestrated with local government. Section 1983 therefore made it illegal for someone to act “under color of law or authority” to deprive another person of their rights under the United States Constitution or federal law. Essentially, it gave people a remedy for violation of their rights. It allowed for civil suits, injunctions, punitive damages and the recovery of attorneys fees as well. Over the years, Section 1983 has come to protect the rights of public employees from the denial of rights by local government employers.

However, New Jersey had no counterpart for a remedy for people deprived of their rights under the New Jersey Constitution or New Jersey law, which was not protected under Section 1983. To resolve this gap, in 2004, New Jersey enacted the New Jersey Civil Rights Act to provide a remedy for violations of a person’s civil rights protected by New Jersey laws or the New Jersey Constitution. Like its federal counterpart Section 1983, the New Jersey Civil Rights Act protects public employees from deprivation of their civil rights by their local employers. As currently interpreted by the courts, the New Jersey Civil Rights Act allows for suits only against local governments such as towns, cities, boards of education, counties and local government authorities (such as housing authorities, parking authorities, etc.).