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Thumbnail image for photo-24897026-different-special-unique-leader-best-worst-teamwork-boss.jpgNew Jersey employers should be wary to take all allegations of retaliation or discrimination seriously or face significant consequences. New Jersey employment law provides some of the strongest protections in the nation for employees. In New Jersey employees are protected against discrimination and whistle-blowing retaliation.

New Jersey’s Law Against Discrimination (the “LAD”) applies to all employers. The LAD prohibits discrimination or harassment in employment for a prohibited reason, including race, religion, color, gender, national origin, nationality, ancestry, age, marriage status, domestic partnership or civil union status, sexual orientation, identity, and disability. The LAD is remedial in nature and therefore is applied by the Court expansively.

New Jersey’s Conscientious Employee Protection Act (“CEPA”), which is New Jersey’s “whistleblower law,” prohibits employers from retaliating against employees who disclose, object to, or refuse to participate in actions which they reasonably believe are either illegal, fraudulent or in violation of public policy. CEPA protects all New Jersey employees and some independent contractors. The New Jersey Supreme Court has described CEPA as the most far-reaching whistleblower law in the United States.

Given the expansive interpretation of these two laws courts have been interpreting them with a very liberal standard. As a result, New Jersey employers that do not take discrimination or whistleblowing seriously can face dire legal consequences.
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Thumbnail image for 800px-Flower-arrangement-funeral-white.jpgGifting your assets to your intended beneficiaries is an effective way to minimize Federal and New Jersey Estate taxes. In order to do so, you must consider the tax implications of making the gift, who will receive the gift, the type of gift, the value of the gift, and the cost basis of the gift.

There are several possible tax liabilities which can be incurred as the result of making a gift: federal gift tax, capital gains tax, generation skipping transfer tax, federal estate tax, New Jersey estate tax, and New Jersey inheritance tax.

Gifts made in contemplation of death can trigger New Jersey inheritance tax liability if the value of the gift is over $500 and they are made within three years of the date of a person’s death. New Jersey Inheritance tax is a tax imposed upon certain classes of beneficiaries. Thus, you must consider who is receiving the gift before you can determine if this will result in liability. The New Jersey tax code separates beneficiaries into “Classes.” Class A beneficiaries pay no inheritance tax, Class C beneficiaries will pay tax on gifts over $25,000 made within three years of the date of death and Class D beneficiaries will pay tax on gifts over $500 made within three years of the date of death.

The decedent’s spouse, civil union partner, domestic partner, children, grandchildren, great-grandchildren, parents, grandparents, great-grandparents, and step-children are Class A beneficiaries, and no inheritance tax will be attributable to gifts made to these people. The decedent’s brother and sister, and son-in-law, and daughter-in-law (if they are the spouse of decedent’s predeceased child) are Class C beneficiaries. Anyone not included in Class A or Class C are Class D Beneficiaries.
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handshake 2.jpg While many lawsuits settle prior to trial, many cases may proceed to the eleventh hour of litigation, just prior to trial, to settle. Though litigation may involve years of depositions, written discovery (questions and sworn answers regarding claims), and motion practice, the parties rarely, if ever, have a chance to sit down face-to-face with their opponents and try to resolve their case. Yet often this can be the best way for the parties to come to a resolution. This is why New Jersey courts have been so supportive of mediations.

Indeed, in many cases, the Court will require the parties to attempt to settle their dispute through mediation. When requiring the parties to attend court-ordered mediation, the court will initially assign the parties a mediator who has been approved by the court – meaning he or she has received the requisite mediation training.

However, the parties may also agree to select their own, mutually agreed upon mediator. This may occur if the parties believe that certain legal issues exist that the assigned mediator has insufficient knowledge of or experience with, or if there is some conflict or other relationship between the mediator and a party that makes it inappropriate for the mediator to be involved in the matter. If the court does not order the parties to mediate, the parties may still agree on their own to mediate the matter and may ask the court for a referral to mediation or simply have their own mediator.
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Thumbnail image for stock-photo-17214080-mortgage-loan.jpgRecently, many potential home buyers have been seeking (“FHA”) loans. FHA lenders will finance up to 96.5 percent of the purchase price for a property, and many buyers are attracted by the low down payment required to purchase a home (3.5 percent). Additionally, FHA lenders will allow a seller’s concession in the contract for sale of up to 6 percent of the purchase price. For example, if a property is being sold for $400,000 with a 3 percent sellers concession, the seller will pay $12,000 of the buyer’s closing costs, and the buyer will only need to pay $14,000 up front on the purchase price. If a buyer is obtaining a conventional mortgage, it will typically require at least 10 percent down at closing, or $40,000. The purchase of a home with an FHA loan which is structured with a seller’s concession can enable people who would otherwise not qualify to be able to purchase a home.

Additionally, FHA loans are assumable, which means the loan can be transferred to a qualified buyer when the home is sold, thus avoiding the costs associated with a new mortgage. Additionally, the new buyers can retain the low rate provided in the first loan. However, the transfer of an FHA mortgage can be a more difficult process than actually obtaining a new mortgage.

FHA loans, however, have disadvantages as well. FHA loans require borrowers to pay significant mortgage insurance premiums. There is at the onset of the loan, a fee equal to 1.75 percent of the principal amount of the loan. This can be rolled into the mortgage, however it increases the monthly payment. The borrowers will also be required to pay annual mortgage insurance premiums which are significantly higher than the mortgage insurance premiums required by convention loan for loans which exceed 80 percent of the value of the property. Additionally, if an FHA borrower makes a down payment toward the purchase which is less than 10 percent of the value of the property, the mortgage insurance will be required for the life of the loan. If an FHA borrower makes a down payment which is equal to or greater than 10 percent, the borrower can cancel the mortgage insurance after 11 years.

On a conventional mortgage, once the loan to value ratio is below 80 percent, the borrower no longer has to carry mortgage insurance. In a rising real estate market, this can happen quite quickly. Moreover, usually, when the outstanding balance on the loan reaches 78 percent of the home’s value at the time of the mortgage, the mortgage insurance must be cancelled even if the current value of the home has dropped. For this option, the borrower must not be in default on the mortgage, having made his or her payments on time throughout the life of the loan, and the 78 percent value must be reached through normal amortization of the loan, not by additional unscheduled payments being made by the borrowers.
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Thumbnail image for discrimination.jpgFederal employment law, in the Age Discrimination in Employment Act (the “ADEA”),prohibits employers from firing, refusing to hire, or discriminating in compensation, terms, conditions, or privileges of employment because of a person’s age. Case law has evolved over time regarding the extent to which age needs to influence employer decisions for the employer to violate the ADEA. A 2009 Supreme Court decision made a distinction between the ADEA’s prohibition against age discrimination and federal law prohibiting so-called status-based discrimination based on race, color, religion, sex, or national origin (Title VII of the Civil Rights Act of 1964). Title VII finds an employer culpable for employment practices for which race, color, religion, sex, or national origin is “a motivating factor,” even if other factors also motivated the practice.

When an employee claiming age discrimination tried to use the “motivating factor” standard for the court’s decision, the Supreme Court disagreed that the standard was appropriate for age discrimination, instead turning to the language in the age discrimination law specifically, which states, “It shall be unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” The Supreme Court found that the “because of” language brought the issue back to a term familiar in the legal realm, “but-for” causation — the idea that “but for” discrimination against the person’s age, the employer’s action would not have occurred. As applied in that way, the standard requires an employee to show that employer’s action (such as hiring and firing decisions) would not have occurred in the absence of age discrimination. That standard is harder to prove than proving that age discrimination was one of possibly other motivating factors.

Although the case itself and case law that followed emphasized that the decision reflected a distinction between the age discrimination law and discrimination for other reasons (such as race and religion), the reasoning behind the case has begun to seep into case law about other forms of discrimination. A 2013 case held that similar to the 2009 decision on age discrimination, a civil rights claim of unlawful employer retaliation for status-based discrimination requires proof that the desire to retaliate was the but-for cause of the challenged employment action (Univ. of Tex. Southwestern Med. Ctr. v. Nassar, 133 S.Ct. 978 (2013)).
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In 2010, the New Jersey State Legislature and Governor Chris Christie revised New Jersey’s Unemployment Compensation Law to combat the significant increase in funds needed to pay unemployment benefits as a result of the rise in the unemployment rate in New Jersey.

To achieve this problem of fast-depleting funds for unemployment benefits, the state created a new category of conduct, called “severe misconduct,” which would allow the state to disqualify employees from receiving unemployment benefits.

The prior two categories of misconduct which could be assessed were: “simple misconduct” and “gross misconduct.” Simple misconduct includes actions that are improper, intentional, malicious, or exhibit a willful disregard of the employer’s interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior which the employer has the right to expect, or negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design. Simple misconduct disqualifies the individual from disability for eight weeks (the week in which the misconduct occurred and seven weeks immediately following that).

Gross misconduct includes acts that are criminal, in the first, second, third, or fourth degree under the New Jersey Code of Criminal Justice. Employees fired for gross misconduct are disqualified from receiving any unemployment benefits.

The revisions implemented by the State in 2010 regarding “severe misconduct” failed to define severe misconduct, but included examples, such as: repeated violations of an employer’s rules, repeated lateness or absences after a written warning, falsification of records, physical assault or threats, misuse of benefits, sick time, or leave, theft of company property, excessive use of intoxicants or drugs on work premises, or where the behavior is malicious and deliberate.
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1341259_cosy_rural_cottage.jpgStandard form real estate contracts in New Jersey usually contain a provision that a home is being sold in “as is” condition. This is essentially an indication that the seller feels that the contract sale price takes into consideration the condition of the home and the seller does not intend to make any repairs to the property. However, buyers generally have a right under a separate provision of the contract to conduct inspections of the property to ascertain its condition. If the buyer is not satisfied with the condition of the property for the contract price, they can often still request repairs and may cancel the contract if the Seller fails to make them. Further, these clauses often provide that the buyer accepts the property in its “as is” condition at the closing and the seller will not be held responsible for defects discovered by the buyer afterward.

This does not, however, mean that a seller can intentionally misrepresent the condition of the property. Courts have held that if a seller knowingly makes a material misrepresentation they can be found liable for common law fraud if the seller intends the buyer rely on the misrepresentation, the buyer does indeed rely on it, and the buyer suffers damages as a result of it. If this occurs, the buyer may be able to cancel the contract or seek damages from the seller.

New Jersey courts have found that failing to disclose certain types of conditions will constitute material misrepresentations. If a seller fails to disclose a condition which is latent (not currently visible or obvious) and plays a vital role in the buyer’s decision to purchase the property, the seller may be liable for damages. For example, in Weintraub v. Krobatsch, although the buyers found the condition of a home acceptable during their home inspection, when they visited the property on another occasion they were able to see that the property suffered from an insect infestation. The inspection was during the day and the subsequent visit was at night. The buyers refused to close. As the insect activity only occurred at night, this was a latent defect which was not observable during the day. The court found that the failure to disclose this information to the buyers was an intentional and material misrepresentation, and therefore the buyer was permitted to cancel he contract.

Real estate brokers have responsibilities for not making misrepresentations as well. Arguably their responsibility is even greater than that of the seller if the condition is known to the real estate broker, as they can be subject to the Consumer Fraud Act. The New Jersey Division of Consumer Affairs publishes a property condition disclosure form which should be completed by a seller of real property. Under the Consumer Fraud Act, real estate brokers will only be liable for misrepresentations of sellers if they had actual knowledge of the condition or failed to make a reasonable inquiry as to whether the information provided was false. The reasonable inquiry can be satisfied by a home inspection report by a qualified inspector, the report of a governmental official, or by a seller’s property disclosure statement – provided the buyer is advised that the information came from the seller themselves. The seller’s real estate broker can also be held liable for the failure to disclosure a defective condition if it was a latent condition known to the broker, and the broker, intentionally concealed the condition with the purpose that the buyer would rely on the concealment of the condition.
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New Jersey’s Law Against Discrimination (“LAD”) protects employees from wrongful termination or other acts based on their race, nationality, ethnicity, gender, age, or other protected characteristic. The LAD is a remedial statute, meaning that the legislature enacted the law not only as a preventative measure, but as a direct response to the rampant discrimination in employment that was being observed. As a result, New Jersey’s courts read the LAD law broadly, providing for expansive protection to employees.

Not only does the LAD protect employees from being fired because of their race, gender, or other protected classification, it also protects employees from being fired, demoted, or mistreated in retaliation of that employee’s objections to discriminatory practices that she has observed against other employees. Therefore if one employee observes another employee being discriminated against and the observing employee complains, protests against, or objects to the discriminatory action, she cannot be fired in retaliation for objecting. The observing employee also cannot be retaliated against for aiding or encouraging any other person from objecting to discriminatory acts by the employer.

Therefore an employee may have a valid retaliation claim under the LAD if she was fired, demoted, or otherwise mistreated in retaliation for that employee’s objections to discriminatory acts by the employer. There needs to sufficient evidence to show that the employee’s objections played a role in the decision to fire her (or take other negative action). It is the employee’s burden to prove these elements.
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frameup.jpgIn New Jersey home improvement contractors are heavily regulated by the Consumer Fraud Act (the “CFA”). The CFA and administrative regulations require strict compliance which cannot be ignored. Failure to follow these requirements can result in the home improvement contract to be found invalid and a homeowner’s a ascertainable lose can result in the home improvement contractor paying triple that amount and attorneys fees to the home owner.

However, recently the New Jersey Appellate Division held that a home improvement contractor can recover the value of the services rendered even if the contract violated the CFA.

In Gemini a dispute arose between a homeowner and his contractor with regards to home improvement renovations. The homeowner hired a contractor and an architect, who was his friend, to perform renovations on the home. The architect was the intermediary between the homeowner and the contractor. The architect made all the decisions for the homeowner and worked directly with the home improvement contractor.

The contractor initially began the work for the homeowner pursuant to a written contract. After the work began, however, the homeowner sought various changes which the contractor orally agreed to perform and, subsequently, would forward his bills to the architect. A subsequent contract for the additional work was never prepared.
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If you are in the market for a new home, you may not be aware of the legal principle of “procuring cause,” but many New Jersey realtors are painfully aware of the ramifications of it. In the swirl of open houses and realtors involved in finally deciding upon a home, procuring cause helps determine which realtor is entitled to profit from the sale.

New Jersey law acknowledges that more than one real estate broker may be involved in developing the interest of a potential buyer in a home, and that often “one reaps what another sows.” Ordinary services that do not result in a home sale are considered the cost of doing business. Procuring cause enters in when the broker brings together a buyer and an owner with “no substantial break in the ensuing negotiations,” at which time the broker is considered to be the “efficient cause of the sale” and entitled to a commission. Further, New Jersey courts have found that negotiations do not need to be uninterrupted if the broker can establish his or her continuity in bringing the transaction to a conclusion. But a broker may be denied commission if negotiations break off and the broker abandons his or her efforts or if there is a “substantial break” in the negotiations and the broker does not help conclude the transaction.

Understandably, what counts as a “substantial break” can be the source of controversy and even litigation. Courts have found that a potential buyer’s passivity does not necessarily equal purposeful abandonment. Also, a seller’s acceptance of different terms than those in the listing agreement does not interrupt procuring cause. Further complicating the issue are sales occurring after expiration of an extension period in an exclusive listing agreement. Some courts look for evidence of “meeting of the minds” between seller and buyer or otherwise evidence of bad faith in deciding whether to apply the procuring cause doctrine. The area can be thorny, and all sides need effective legal representation.

Procuring cause finds its roots in contract law and the equitable principle that a person should not be allowed to enrich himself unjustly at the expense of another. Courts look for evidence of notice that a real estate broker expected payment when performing services and have allowed brokers to recover for services even though a contract may prove unenforceable because of lack of agreement on essential terms such as the amount of the broker’s commission. Courts rely heavily on terms of contracts drafted between buyers and sellers and will try to enforce them first before looking to other legal principles.
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