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New Jersey employment laws protect workers from wage theft. This may occur when an employer requires unpaid work from an employee, and the rate of pay that the employee receives for the total amount of hours worked falls below the state minimum wage. It also often happens when an employer does not pay the time-and-a-half rate required by state law for overtime. Employers that engage in wage theft are liable to employees for unpaid wages and additional damages. A law that took effect in 2019 expanded the “lookback” period for wage theft claims. This is the length of time before the date of an employee’s claim for which they may recover unpaid wages and damages. In May 2024, the New Jersey Supreme Court resolved a dispute over whether this lookback period extends before the date the 2019 law took effect. The court held that it does not.

Before the 2019 law, the lookback period for wage theft claims under both the Wage and Hour Law (WHL) and the Wage Payment Law (WPL) was two years. Suppose an employer begins engaging in wage theft against an employee in July 2014. If that employee filed a wage theft claim on July 1, 2018, they would only be able to recover damages for the period beginning on July 1, 2016.

The new law, enacted as Chapter 212, took effect as soon as the governor signed it on August 6, 2019. It expanded the lookback period from two to six years. It also added new damage provisions, including liquidated damages of up to 200% of the unpaid wage amount. Disputes soon arose about whether the expanded lookback period could include employer conduct that occurred before the law’s effective date. A claim filed on August 5, 2019 could recover damages back to August 5, 2017. The question was whether a claim filed on August 7, 2019 could reach back to August 7, 2013. One such dispute made its way to the state supreme court.
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Employers often use contractual provisions to prohibit employees from disclosing information about discrimination and harassment claims. Non-disclosure clauses can bar employees from revealing information about legal disputes. Non-disparagement provisions often have a much broader scope, prohibiting negative statements about the other party. These provisions may prevent employees from warning others about their experiences. A New Jersey employment law enacted in 2019, known as the “#MeToo law,” bans non-disclosure agreements in employment contracts and settlements involving harassment, discrimination, or retaliation claims. In May 2024, the New Jersey Supreme Court ruled that non-disparagement agreements also violate this law.

New Jersey law does not specifically define a “non-disparagement agreement.” The New Jersey Supreme Court relied on Black’s Law Dictionary, which defines it as “​​an agreement…that prohibits criticism by one party on the other.” Non-disparagement agreements might specifically prohibit “defamatory” information, which by definition means that information is untrue. They may also use more generic terms like “harmful to the parties’ business” or “harmful to their business or personal reputation.” Clauses that use this kind of language can bar people from making truthful statements that describe harmful experiences.

The New Jersey Legislature enacted the #MeToo law in the wake of the movement that seeks, in part, to raise awareness of sexual harassment and abuse in workplaces around the world. The law bans non-disclosure agreements in employment contracts and settlement agreements that would prevent people from speaking out about certain violations of antidiscrimination laws. The New Jersey Supreme Court states in its ruling that the law “was enacted in the wake of the ‘#MeToo’ movement to protect individuals who suffer sexual harassment, retaliation, and discrimination from being silenced by settlement agreements and employment contracts.”
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The U.S. Supreme Court issued a ruling in April 2024 that addresses an important question about what plaintiffs must prove in employment discrimination claims. Federal and New Jersey employment laws do not expressly state that a plaintiff alleging discrimination must prove that they suffered significant harm. Many courts, however, have interpreted antidiscrimination laws as requiring this kind of proof. The Supreme Court’s ruling in Muldrow v. City of St. Louis overturned multiple lower court precedents applying this interpretation to Title VII of the Civil Rights Act of 1964. It held that a discriminatory job transfer is unlawful even without evidence of a “materially significant disadvantage.”

Section 703(a)(1) of Title VII deals with unlawful employment discrimination. It mentions acts like “fail[ing[ or refus[ing] to hire” a person and “limit[ing], segregat[ing], or classify[ing]” employees in discriminatory ways. It does not specifically state that a discriminatory employment action must cause harm to the person experiencing the discrimination. Before Muldrow, many courts had interpreted this provision as requiring proof of harm in at least some cases. This includes courts in New Jersey.

The Third Circuit Court of Appeals has held that Title VII discrimination claims involving “adverse employment actions” require proof of a “cognizable injury.” The injury must be serious enough to alter the “terms, conditions, or privileges of employment.” In the 1997 decision establishing this rule, the court held that “unnecessary derogatory comments” made toward the plaintiff did not rise to this level. Refusal to recommend the plaintiff for a promotion based on discriminatory grounds, however, would meet the standard. Muldrow may overturn the Third Circuit’s rule.
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“Joint employer” rules help workers and their advocates in situations where more than one person or entity exercises control or authority over a worker. New Jersey employment laws establish obligations that employers owe to their employees. To assert a claim for damages under these laws, an employee must identify which employer or employers have those legal obligations. This issue can arise in disputes over labor rights under the National Labor Relations Act (NLRA), such as when an employee receives a paycheck from one company but works at a site operated by another company under a contract between the two companies. Joint employer rules allow workers to hold employers jointly and severally liable for unlawful practices. The National Labor Relations Board (NLRB) issued a final rule in late 2023 establishing a new standard for joint employment under the NLRA. In March 2024, however, a federal judge vacated the rule.

The NLRA protects employees’ rights to organize themselves, bargain collectively with their employers, and engage in other activities related to advocating for their rights and protecting their interests. Employers may not interfere with or retaliate against employees who are engaging in protected activities. Like many employment laws, the statute only briefly defines “employer,” leaving it to the NLRB to go into detail.

The NLRB’s joint employer rule looks at the amount of control an alleged employer has over a worker’s “essential terms and conditions of employment” (ETCEs). This includes issues like wages or salary, job assignments, supervision, workplace safety, and employment policies. In 2020, the NLRB adopted a rule that would only deem an entity a joint employer if it had “substantial direct and immediate control over one or more” ETCEs. This presents a fairly high bar for employees, which the NLRB sought to address with a revised rule.
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Discrimination based on a person’s national origin violates New Jersey employment laws. This includes discrimination in decisions related to hiring, promotions, job duties, benefits, firing, and other features of employment. It also includes harassment based on national origin, such as when unwelcome remarks, jokes, slurs, or other conduct creates a hostile work environment. Employers may not retaliate against an employee who reports or opposes national origin discrimination in the workplace. A lawsuit went to trial earlier this year in which a plaintiff alleged national origin discrimination based on her accent. In early March, a jury in an Essex County Superior Court awarded her $1 million in damages.

The New Jersey Law Against Discrimination (NJLAD) prohibits employment discrimination based on numerous factors, including national origin, ancestry, race, and color. This includes both actual and perceived national origin, as well as stereotypes about one’s national origin. The Equal Employment Opportunity Commission (EEOC), which enforces federal anti-discrimination law, states that the following may constitute unlawful national origin discrimination:
– Discrimination based on a person’s accent when their manner of speech does not interfere with their job;
– Language fluency requirements that are not reasonably related to the job; and
– English-only rules that are not necessary for workplace safety or efficiency.

The plaintiff in the Essex County lawsuit was born and raised in Romania. According to her complaint, she and her husband immigrated to the United States in 2000 and became naturalized citizens in 2005. She states that she began studying English in the second grade. She obtained a master’s degree from a New Jersey school, with all instruction taking place in English. She states that she began working for the defendant in 2012 and that her employment went well for several years.
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Employers have begun relying on various artificial intelligence (AI) tools to streamline the hiring process and other aspects of the employment relationship. While the marketing for these tools sometimes claims that they can perform certain tasks better than humans, experience demonstrates that they are not free of many human biases. Humans programmed the AIs, after all, and may have included their own biases in the code. Two pending bills would amend New Jersey employment law to regulate the use of these tools in the hiring process. One would require “bias audits” of AI-based analytical tools. The other bill deals specifically with AI tools that analyze video interviews of job applicants.

The Use of AI in Hiring

The term “artificial intelligence” can refer to several types of software applications. Generative AI, for example, can create written or visual works based on user prompts. Employers use analytical AI tools to go through large amounts of data and make recommendations or decisions. For example, an AI system could screen job applicants based on whatever factors employers choose. This is the source of much of the concern about AI in employment decisions. Employers are ultimately liable for bias in an AI tool’s algorithm.

Automated Employment Decision Tools

A3854, introduced in the New Jersey Assembly on February 22, 2024, would regulate companies that produce and sell “automated employment decision tools” (AEDTs), as well as the employers that use them. The bill defines an AEDT as a system that uses statistical theory or a learning algorithm to filter job applicants or employees in a way that “establishes a preferred candidate or candidates.” Any AI system that screens job applicants would fit this definition.
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When an employee leaves a job, either by their own decision or their employer’s, their ability to get another job in the same field might depend on whether they signed a non-compete agreement with their most recent employer. This type of agreement limits workers’ employment options, arguably to protect the employer’s business. Workers might sign a non-compete agreement as part of their original employment contract or at a later date. New Jersey employment law restricts the enforceability of these agreements, but a new rule from the Federal Trade Commission (FTC) might go much further than state law. The FTC published a final rule in late April 2024 that bans most non-compete agreements nationwide. The rule has not taken effect yet, and it will face legal challenges that could delay its effective date.

What Is a Non-Compete Agreement?

A non-compete agreement is a contract that restricts an employee from accepting a job from a competitor of the employer after their employment relationship ends. It may also bar an employee from starting a competing business.

Employers might view non-compete agreements as a way to protect the investments they make in training employees. An employer’s competitors cannot benefit from the knowledge and experience their employees have acquired. For employees, however, overbroad non-compete agreements can significantly interfere with their ability to find a job in their chosen career.
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New Jersey employment law prohibits employers from screening job applicants based on their salary history. Employers also may not require applicants to provide salary history information. The law helps job seekers overcome historical disparities in pay. It requires employers to base new hires’ pay on the market rate for their labor rather than their previous salary or wages. The law includes an exception for situations where a federal law or regulation requires job applicants to disclose salary history, or employers to verify that information. This exception might not be an issue much longer for many situations governed by federal law. In January 2024, the Federal Acquisition Regulatory (FAR) Council published proposed regulations in the Federal Register that would prohibit federal contractors from asking job applicants for salary information or using salary history to screen applicants.

A 2019 New Jersey law addresses how employers may use salary history during the hiring process. Employers may not require applicants to provide information about past wages or salary. They may not use that information in hiring decisions. If, however, an applicant provides such information voluntarily, “without employer prompting or coercion,” the employer may consider that information when determining that individual’s “salary, benefits, and other compensation.”

Employers who violate the 2019 law may face civil penalties, payable to the state, that start at $1,000 for a first violation. A second violation carries a $5,000 fine, and a third may result in a $10,000 fine. If a job applicant is part of a protected group under the New Jersey Law Against Discrimination, they may also have the right to sue for violations of the salary history law.
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Federal and New Jersey employment laws protect workers’ rights to engage in a wide range of “concerted activities” intended to improve conditions for workers, both in the workplace and society at large. These protections extend beyond activities that are directly related to union organizing and collective bargaining. In February 2024, the National Labor Relations Board (NLRB) ruled that federal law protects the display of certain social justice messages in the workplace. A customer-facing employee at a big-box retail store wrote “BLM,” the initials for “Black Lives Matter,” on his employer-issued apron. The employer considered this a violation of its dress code policy. The NLRB held that the employer violated the law by instructing the employee to remove the marking on his apron.

Section 7 of the National Labor Relations Act (NLRA) states that employees have the right to engage in activities related to self-organization and collective bargaining. It also states that they have the right “to engage in other concerted activities for the purpose of…mutual aid or protection.” The meaning of “concerted activities” is not limited to activities that involve two or more employees. An individual employee may engage in protected concerted activities, according to NLRB precedents, in several situations, including:
– They are acting with other employees’ approval;
– They are bringing a group complaint to management’s attention; or
– Their activity is a “logical outgrowth” of past concerted activity.

Employers commit an unfair labor practice under § 8 of the NLRA when they “interfere with, restrain, or coerce employees” who are trying to exercise their § 7 rights. They also violate the law if they fire an employee or take other adverse actions against them for engaging in protected activities.
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When a business engages in fraudulent, unlawful, or criminal activities, employees with inside knowledge of those activities are often the best source of information and evidence. Employees who object to their employers’ conduct might not want to come forward, though, if they could lose their jobs or suffer other employment consequences as a result. New Jersey employment laws at the state and federal levels work to protect these employees, commonly known as “whistleblowers,” by holding employers liable for retaliation. The U.S. Supreme Court recently ruled in Murray v. UBS Securities, a whistleblower case brought under the Sarbanes-Oxley Act of 2002 (“SOX”). This is a federal statute that applies to the financial sector. The court affirmed a trial court’s ruling in the employee’s favor and clarified the burden of proof under the statute.

Congress enacted SOX in response to a series of corporate scandals. The statute addresses recordkeeping and financial disclosure by publicly-traded corporations. It imposes civil and criminal penalties for violations and provides whistleblower protections to encourage employees to report concerns. It prohibits retaliation against employees who engage in certain activities, including:
– Assisting or participating in an internal investigation of suspected wrongdoing under federal fraud statutes or securities regulations;
– Assisting or participating in an investigation by the Securities and Exchange Commission (SEC), Congress, or another federal agency involving alleged fraud or securities violations; and
– Filing a complaint with the SEC.

An employee who alleges unlawful retaliation may bring a lawsuit against their employer after filing a complaint with the Secretary of Labor. The plaintiff has the burden of making “a prima facie showing that [their protected conduct] was a contributing factor in the unfavorable personnel action.” The defendant can obtain dismissal of the lawsuit if it can “demonstrate[], by clear and convincing evidence, that [it] would have taken the same unfavorable personnel action in the absence of that behavior.” This burden of proof was a significant part of the dispute before the Supreme Court in Murray.
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