New Jersey Lawyers Blog

Published on: February 14, 2014

Individual Liability Under the Fair Labor Standards Act

The Fair Labor Standards Act (“FLSA”) is a federal law that governs employment in all private employers and most government employers in all fifty states. In New Jersey, this federal law works in conjunction with the New Jersey Wage and Hour Law. These laws set forth requirements for minimum wages, overtime, pay, maintenance of employee records, and other work-related issues.

In New Jersey, the minimum wage in 2013 was set at $7.25 per hour (the federal minimum for wages). In 2014 that minimum wage in New Jersey will be increased to $8.25 per hour. Therefore, the minimum overtime payment for 2013 is $10.88 per hour and for 2014, it will be $12.38 per hour for hours worked in excess of forty hours per week.

If an employer violates the FLSA, the injured employee may bring an action against the employer for unpaid wages, and may also recover her attorneys fees and legal costs associated with bringing the action. If a court finds that the violation was willful, the employer may have to pay the employee double the wages that the employer wrongfully withheld.
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Published on: February 10, 2014

Enforceability of Letters of Intent

by Pauline M.K. Young

A letter of intent is a document executed generally by businesses to outline the basic terms of a commercial transaction, whether that be a complicated sale of goods or services or a real estate transaction. A letter of intent is entered into in the early stages of negotiation, when major obligations and expectations have been agreed upon, but specific details have not yet been determined. Letters of intent are useful in negotiating complex commercial transactions since they can provide a basic foundation of the understandings between the parties prior to taking part in lengthy and expensive research, investigations, financial review, environmental inspections, or other due diligence that must be conducted prior to the execution of a formal contract.

Perhaps the most important concern in drafting a letter of intent is whether the parties intend for that letter, or any sections of it to be binding. If the letter of intent resembles a contract too closely, under New Jersey contract law it could be considered an enforceable contract when the parties have actually yet to finalize the details of their agreement. That result could potentially leave one party unable to avoid a transaction that, following further negotiations or due diligence, proves to be unexpectedly disadvantageous. However, if the parties want the letter of intent to be binding, it is important to ensure that this intent is clearly set forth and agreed upon in the language of the document.

In many cases, letters of intent include both non-binding and binding terms which should be clearly delineated in the document itself. Certain sections of a letter of intent, such as a confidentiality or non-disclosure clause, will generally be considered binding because they are immediately applicable at the start of the negotiations. For instance, if the parties need to exchange information during the negotiations which is private, includes trade secrets, or is otherwise confidential in nature, it only makes sense that the confidentiality clause in the letter of intent be immediately binding upon the parties. Likewise, provisions such as those which promise exclusive rights to negotiate are also more likely to be binding since they too are immediately applicable while negotiations are continuing.
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Published on: February 5, 2014

The Fiduciary Obligations of an Executor in New Jersey

by Jennifer C. Meusel

When you discover that you are named as the executor of an estate, it can be overwhelming. The executor of an estate has a fiduciary obligation under New Jersey estate law to administer the estate and collect and distribute the assets in accordance with the last person’s will.

The first step is to probate the will. The executor must appear before the surrogate in the county where the person resided at the time of their death and provide the surrogate with the original will and a certified death certificate. In New Jersey you must wait ten days after the date of death to probate the will. If the will was properly executed and no caveats were filed objecting to the will, then the surrogate will admit the will and issue letters testamentary appointing the executor. The executor will then have the power to act. New Jersey probate law requires that the executor must act in the best interests of the estate and the beneficiaries. After the will is probated, the executor must provide formal notice of the probate to the beneficiaries named in the will and the deceased person’s next of kin.

Then the executor must gather the deceased person’s assets. This can be difficult as you must conduct a search to find all accounts, businesses, physical property and real estate. Appraisals of certain property must be obtained by the executor. The executor must apply to the Internal Revenue Service to obtain a federal tax identification number. Additionally, the executor must pay all of the decedents legitimate debts. One of the executor’s responsibilities is to confirm that the debts are actually owed by the estate. All uncontested bills must be paid, and the questionable bills, debts and obligations must be researched and resolved. Also, there may be statutory liens and liabilities which should be researched and paid. If legitimate debts of the estate are not paid the executor may become personally responsible for them.

The executor is responsible for preparing, filing and paying any applicable federal New Jersey estate and inheritance tax return and filing the estate tax return and the final income tax returns for the decedent. Each of these tax returns has filing and payment deadlines which must be met or the estate will be subject to interest and penalties for the late filings and/or payments. An executor may be personal liable for interest and penalties which are the result of the executor’s unexcused failure to act in a timely manner. After payment in full of any New Jersey estate or inheritance taxes, the state of New Jersey will issue inheritance tax waivers which are required to transfer assets to the estate and/or the beneficiaries. Tax waivers for real property must be recorded.
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Published on: January 28, 2014

UCC Liens and Securing Creditors’ Rights

by Pauline M.K. Young

A lien is a legal claim on property based upon a debt owed to the lien holder or creditor. It allows a creditor to use the debtor’s property as security when a debtor fails to repay a debt. It provides excellent protection for collection of a bad debt. For instance, while a debt may be discharged in bankruptcy, a creditor can still seize and sell collateral secured by a UCC lien. There are many ways to create a lien. For example, tax liens are imposed when someone forgets to pay their taxes; mortgages create liens in real estate; a judgment in a lawsuit creates a lien for the judgment amount awarded.

A UCC lien is obtained when a debtor, such as a borrower, and a creditor, such as a bank agree to ensure the repayment of the debtor’s debt with the security interest of a lien on personal property under the Uniform Commercial Code . The debtor still owns the personal property and retains possession of it, but the creditor also has an interest in it as well.

The Uniform Commercial Code (“UCC”) is a group of laws created to standardize the laws across the United States related to commercial transaction. Most states have adopted a significant portion of, if not all of, the UCC’s proposed laws. A UCC lien is a lien which has been obtained through the execution and filing of a UCC-1 financing statement, generally with the state’s Secretary of State. In New Jersey, this UCC-1 form must be filed with the New Jersey Division of Revenue and Enterprise Services. UCC liens may generally be placed on any property that is agreed to, such as equipment or vehicles.
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Published on: January 22, 2014

The Relationship Between A Bonus and Overtime Under The Fair Labor Standards Act

by Boris Peyner

The Fair Labor Standards Act of 1938 (“FLSA”) is a federal statute that was introduced to regulate certain employment practices. For example, the FLSA establishes a national minimum wage, guarantees pay at a rate of one and one-half times the employee’s regular rate of pay for certain jobs, and prohibits most employment of minors in oppressive child labor positions.

The FLSA also imposes various requirements on employers. It is important for employers to be aware of the requirements imposed on them by the FLSA. For example, many employers will pay their employees bonuses to reward them for their time and commitment during the year. The problem for employers is that a year-end non-discretionary bonus may be included in employees’ regular rate of pay when calculating overtime.

Generally, the FLSA requires that employers calculate employees’ regular rate of pay by including all compensation paid to employees during the workweek. Employers must then calculate overtime based on employees’ regular rate of pay. Sometimes bonuses are required to be included when calculating employees’ regular rate of pay, however, is an exception and not used for calculating overtime. If bonuses are included in employees’ regular rate of pay then employers must pay more overtime, and then more payroll tax as well.

There are exceptions that permit the payment of discretionary bonus which is not required to be included in employees’ regular rate of pay, however, is an exception and not used for calculating overtime. For a bonus to be excluded from the calculation of employees’ regular rate of pay it must be discretionary. For a bonus to be discretionary the payment must be solely within employers’ discretion. This means that the payment cannot be mandated by a contract, agreement, or based on an implied promise. Employers must have complete discretion to decide whether to pay the bonus, and how much to pay if they chose to do so.
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Published on: January 20, 2014

New Jersey Will Contests

by Jennifer C. Meusel

What happens if you believe that a loved one’s last will and testament is not valid? Under New Jersey probate law, if there is a last will and testament, it must be probated (filed) with the surrogate in the county where the decedent resided. The will’s terms control the distribution of the decedent’s assets. However, there are a number of reasons why a will can be challenged. If the challenge is successful, then the will is voided and the probate assets will be distributed either by a previously executed will or the laws of intestacy.

The simplest way to challenge a will is before it is probated. In New Jersey, you cannot probate a will until at least ten days following the date of death. Any time before the will is probated a caveat can be filed with the court and this will prevent probate of the will. Then any disputes regarding the will’s validity will be resolved before the court permits it to be probated.

The will’s validity can also be challenged after it has been probated. To challenge a will under New Jersey probate law you must be able to prove one of the statutory reasons which include undue influence, lack of capacity, fraud, forgery, revocation and mistake. There is a short time period to challenge a will, if you are seeking to challenge a will and you reside in New Jersey the statute of limitation is four months and if you are an out of state resident the statute of limitation is six months. The most often encountered bases of a will challenge are undue influence and lack of capacity.

To challenge a will based upon undue influence, you must show “coercion exerted [which] may be mental, moral or physical, or all three, but it must be such as to pre-empt the testator from following the dictates of his own mind and will and accepting instead the domination and influence of another.” Essentially the question here is whether the person who signed the will did so of his own free will without influence or pressure from someone who benefitted from the terms of the will. The person challenging the will must prove that a person in a “confidential relationship” with the testator unduly influenced the terms of the will, and that there were “suspicious circumstances” surrounding the execution of the will. To determine whether there was undue influence the courts will look at many factors, including: if the terms of this will are a significant change to a prior existing will; the age and health of the testator at the time the will was signed; if the testator lived with or under the supervision of the person benefitting from the will; if the person in the confidential relationship with the testator is benefitting from the terms of the will; and if the person benefitting from the will hired the lawyer to prepare the will.
Will challenges are also frequently based upon the testator’s lack of capacity to make the will. To successfully challenge a will for lack of capacity under New Jersey estate law, it must be shown that at the time the will was executed, the testator did understand: 1) the nature and value of the property he owned; 2) the identity of the “natural objects of his bounty” (the family members would receive his property upon his death if he did not have a will); and 3) the effect of the terms of his will.
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Published on: January 17, 2014

New Jersey Property Tax Appeals

by Jennifer C. Meusel

Now is the time to start thinking about appealing your property taxes.

The amount of property taxes a homeowner pays under New Jersey property tax law is determined by the municipal assessment. The lower the assessment, the lower the property taxes. While you cannot actually appeal the taxes you owe, New Jersey law allows you to appeal the assessment. The tax assessment of your property should reflect the fair market value of your home, which is adjusted by the municipality’s equalization ratio. The municipality is allowed a margin of error of fifteen percent. So, if your assessment is more than 15% over the equalized fair market value of your property, you should appeal your property taxes.

The first step is determining if your equalized assessment is more than fifteen percent above fair market value. First, you need a good approximation of the fair market value of your property – perhaps you know the sales prices of similar homes in your neighborhood, or a local realtor may be able to give you a rough estimate of the fair market value of your house, then you have a place to start. Next, you will receive a property assessment notice from the municipality which includes the assessed value of your property. Then, you need to check the equalization ratio for your municipality. Your assessment must then be equalized by applying the correct equalization ratio. Once you have applied the equalization ratio to the assessed value, you will know what the municipality believes is the fair market value of your property. If that number is more than fifteen percent above what you believe the fair market value to be, you should proceed to file a tax appeal petition.

At this point, you will need evidence to back up your assertion of your property’s fair market value. The best evidence is an appraisal by a certified appraiser who, if necessary, could testify at the tax appeal hearing. You can attempt to appeal your property taxes supported only by evidence of comparable recent sales, but the municipality can much more easily dismiss that evidence based on distinctions between your property and the each recent sale, or based upon facts surrounding the sale. For instance, it may have been a distressed sale where the seller was forced to accept a lower than market value price.
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Published on: December 13, 2013

Medicaid Asset Protection: Converting Coutable Spousal Resources into a Protected Income Stream Using Annuities

by Jennifer C. Meusel

Our clients often ask how they can protect their assets from Medicaid in the event a spouse must enter an assisted living facility in the future. While the Medicare Catastrophic Coverage Coverage Act of 1988 allows a community spouse (the spouse who does not require the coverage) to preserve certain assets,, the community spouse may only retain up to $113,640 (this is known as the “Community Spouse Resource Allowance”). However, often Community Spouse Resource Allowances will be insufficient for the community spouses to maintain their current standard of living.

One method which can be used to increase the funds available to the community spouse is an annuity which converts funds into income for the community spouse. As the community spouse’s income is not considered when determining Medicaid eligibility, the funds which would have been countable are removed from the eligibility determination. Those funds no longer need to be spent down prior to applying for Medicaid.

For instance, suppose a New Jersey couple has $500,000 in assets. While a community spouse may be permitted to retain $113,640, the balance of the assets would need to be “spent down” before the spouse would be permitted to apply for Medicaid. However, if the assets are transferred to the community spouse and then the community spouse uses the funds to purchase a qualifying annuity, then the assets are no longer “countable” for Medicaid purposes. This is a permissible way to protect assets for two reasons: First, transfers to spouses are permitted under the Medicaid rules and are not subject to the 5 year “look back” rule and, second, the money used by the community spouse to purchase the annuity was spent to purchase something of equal value and are also not subject to the five year look back rules. As the community spouse’s income is not considered for purposes of Medicaid eligibility, the assets have effectively been converted into an income stream and protected for the use of the community spouse. This, of course, is subject to the community spouse’s Minimum Monthly Maintenance Needs Allowance restrictions. The income cannot exceed the allowed amount.
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Published on: December 5, 2013

Internet Gambling in New Jersey

by Pauline M.K. Young

Gambling is one of the many activities that are regulated primarily by state laws (as opposed to federal laws). On February 26, 2013, New Jersey Governor Christie signed into law legislation allowing internet gambling, making New Jersey only the third state to allow internet gambling (after Nevada and Delaware). While there is a federal law called the Unlawful Internet Gambling Enforcement Act, which does, to a certain extent, restrict online gambling, that law allows individual states to permit and regulate internet gambling if the state so desires.

Atlantic City, New Jersey has always been a hot spot for gamblers from all over the world since the late 1970s and early 1980s. However, over the past several years, Atlantic City has been struggling financially with the increase of gambling in neighboring states. Therefore, New Jersey decided to combat this struggle by allowing online gambling. Six already established brick and mortar casinos were able to obtain internet gaming permits: Borgata, Trump Plaza, Trump Taj Mahal, Bally’s, Caesars, and the Golden Nugget. The first five of these permit holders were given approval to participate in a five day test run or “soft” start, of the internet gaming beginning at 6 p.m. on Thursday, November 21, 2013 (the Golden Nugget had not met all requirements in time to receive approval), with 13 websites approved for the online gambling.
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Published on: November 26, 2013

Residency Requirements for New Jersey State Employees

by Pauline M.K. Young

The New Jersey First Act makes it mandatory for many public officers and employees to live in New Jersey. The law, which went into effect September 1, 2011, requires all New Jersey state and local government employees to reside in New Jersey unless otherwise exempted. This includes, for example, employees of public agencies, commissions, public institutions of higher education, and school boards.

Employees who were already employed as of September 1, 2011 are grandfathered in, meaning they are not required to meet the residency requirement and are not required to move to New Jersey if they were not required to under prior law. However, those who begin working after September 1, 2011 must reside in New Jersey. If they do not, they have one year following the start of their employment to relocate to New Jersey. If the new employee does not move within a one year period, she may be removed from her position. The September 1, 2011 cutoff date is determined based upon when the employee actually started working, not when she received an offer of employment.

If there is a break in employment of more than seven days, an employee previously grandfathered in, may lose that status and become subject to the residency requirement. A “break in public service,” while not set forth in the language of the law, is defined by the New Jersey Civil Service Commission as “an actual separation from employment for more than seven calendar days due to such causes as resignation, retirement, layoff, or disciplinary removal.” Generally, a resignation for the purposes of a new public appointment in the same governmental jurisdiction is not considered a break in public service.
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