Articles Posted in Employment Contracts

When an employee begins working for an employer, they are often required to sign an employment agreement that establishes numerous features of the employer-employee relationship. Most provisions involve standard matters like job expectations, wages, and termination of the employment relationship. Employment agreements may also include provisions for nondisclosure of various types of information, as well as waivers of certain rights. When employers and employees enter into settlement agreements to resolve disputes, an employer may seek a nondisclosure clause as well. Provisions like these may hinder individuals’ ability to assert their rights under employment statutes like the New Jersey Law Against Discrimination (NJLAD). At least partly in response to increased attention on sexual harassment in the workplace, the New Jersey Legislature enacted a bill in January 2019 that amends the NJLAD to prohibit enforcement of certain nondisclosure agreements, as well as waivers of rights under the NJLAD or similar statutes.

The NJLAD prohibits employers from discriminating against employees on the basis of race, religion, sex, age, sexual orientation, gender identity or expression, and many other factors. Courts have held that prohibitions on sex discrimination in the NJLAD and other laws cover sexual harassment, as well as harassment based on other protected factors. Unlawful harassment generally includes two scenarios: (1) acquiescence to or tolerance of harassing behavior, including sexual advances, is made a condition of employment; and (2) pervasive and unwelcome harassing behavior creates a hostile work environment that interferes with an individual’s ability to perform their job duties.

The #MeToo movement has allowed people all over the country to come forward with their own experiences, when many of them might have been afraid to do so before. Nondisclosure agreements (NDAs) in discrimination and harassment cases may prevent people with similar experiences from sharing their stories. Last year, California and New York enacted limits on NDAs in situations involving alleged sexual harassment. California now prohibits NDAs that purport to “prevent[] the disclosure of factual information related to a” lawsuit or administrative complaint alleging sexual harassment. New York now has similar provisions in its laws barring NDAs in settlements and other resolutions of sexual harassment disputes.
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Organized labor is arguably responsible for many features of employment that are often taken for granted today. Union membership has decreased considerably over the past few decades for a variety of reasons. Employees in New Jersey are union members at a higher rate than the national average, but union members still only account for less than twenty percent of New Jersey’s workforce. Public sector unions tend to receive a great deal of media attention today, and the most popular historical images of union membership probably involve trades like manufacturing and mining. Recent news coverage, however, has pointed to itself as an important sector for union organizing. Newsrooms at print and digital publications around the country have elected to organize for the purpose of collective bargaining. While it is not clear if employees at any New Jersey-based publications have taken this step, it has happened at many publications that reach New Jersey readers.

New Jersey remains generally favorable to labor unions. Federal law protects workers’ rights to organize and engage in “concerted activities” related to organizing, and prohibits employers from interfering with those rights. See 29 U.S.C. §§ 157, 158. It does not, however, prevent states from enacting so-called “right-to-work” laws. At least twenty-six states, not including New Jersey, have enacted such laws. Right-to-work laws prohibit “union security clauses” in collective bargaining agreements (CBAs) between employers and labor unions. A union security clause requires all employees to contribute to the union, either by becoming a member or paying a fee. Without a union security agreement, employees who contribute nothing to the union still benefit from the union’s efforts.

Despite offering a relatively favorable environment for labor unions, not many New Jersey workers are union members. According to the Bureau of Labor Statistics, part of the U.S. Department of Labor, New Jersey had 630,000 union members in 2017. This accounted for 16.2 percent of all employees in the state. New York had 2,017,000 union members in 2017, or 23.8 percent. Both states saw a decline in union membership since 2007. New York’s number of union members fell by 38,000, while New Jersey’s fell by 118,000.
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Federal and state antitrust laws prohibit agreements that attempt to restrain trade in various forms. This applies to New Jersey employment disputes when competing businesses agree not to hire one another’s employees, or to set limits on wages or benefits. This type of unlawful activity by employers is commonly known as “collusion.” In addition to statutes, collective bargaining agreements (CBAs) also often include anti-collusion provisions. A professional football player recently settled a dispute with the National Football League (NFL), in which he alleged that the league and its individual teams colluded to deprive him of job opportunities because of his participation in a controversial protest. The dispute was submitted to arbitration under the terms of the CBA between the NFL and players. It was styled Kaepernick v. NFL, et al, but it was not a lawsuit filed in a court of law.

At the federal level, the Sherman Antitrust Act of 1890 prohibits any “contract…in restraint of trade or commerce among the several States.” 15 U.S.C. § 1. This has been interpreted very broadly over the years to apply to a wide range of commercial activities, including employment. Similarly, the New Jersey Antitrust Act prohibits “contract[s]…in restraint of trade or commerce, in this State.” N.J. Rev. Stat. § 56:9-3.

The Kaepernick case cited Article 17 of the CBA between the NFL and the NFL Players Association (NFLPA), which has been in effect since August 4, 2011. The CBA is binding on the NFL and its thirty-two teams, also known as clubs. Section 1(a) of Article 17 prohibits clubs from “enter[ing] into any agreement, express or implied, with the NFL or any other Club, its employees or agents to restrict or limit individual Club decision-making” with regard to hiring decisions. Remedies, addressed in §§ 8 and 9 of Article 17, include termination of existing contracts and compensatory damages.
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Many New Jersey employers include provisions for arbitration of disputes in written contracts with new employees. In order for an arbitration agreement to be legally enforceable, it must, among other criteria, contain enough information to demonstrate a “meeting of the minds” between the parties. The New Jersey Appellate Division recently ruled that an arbitration agreement, signed decades after the plaintiff began working for the defendant, was not enforceable because there was no “meeting of the minds” in evidence. Flanzman V. Jenny Craig, Inc., No. A-2580-17T1, slip op. (N.J. App., Nov. 13, 2018).

The plaintiff in Flanzman is alleging age discrimination under the New Jersey Law Against Discrimination (NJLAD). This statute prohibits employers from discriminating against employees on the basis of numerous factors, including age. Whereas the federal statute addressing age discrimination expressly states that it only applies to individuals who are forty years of age or older, 29 U.S.C. § 631(a), the NJLAD does not set a minimum age. It does, however, state that an employer does not automatically violate the law if they “refus[e] to accept for employment or to promote any person over 70 years of age.” N.J. Rev. Stat. § 10:5-12(a). This exception only covers two specific discriminatory acts: refusal to hire and refusal to promote. It does not mention other acts, such as termination or unequal pay.

In order for a contract to be enforceable, the party seeking enforcement must demonstrate that the other party knowingly assented to the agreement. Courts are particularly strict about this requirement when the contractual term at issue involves a waiver of legal rights. An arbitration agreement waives the right to seek redress in court. If the agreement provides for binding arbitration, the parties may have no recourse in the court system at all. New Jersey courts therefore require evidence that an employee “clearly and unambiguously agree[d] to waive his or her statutory rights.” Flanzman, slip op. at 8, quoting Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003).
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Litigation is perhaps the most well-known method of dealing with legal disputes, but it is not the only method. Our legal system increasingly encourages would-be litigants to use alternative dispute resolution (ADR) before, or instead of, going to court. Many contracts now include clauses requiring the parties to submit disputes to arbitration. While arbitration may offer some benefits over the court system, it is subject to numerous criticisms in disputes involving a significant imbalance of power and resources. If you have questions of this nature, contact a New Jersey employment attorney without delay.

Court decisions interpreting New Jersey’s employment antidiscrimination statute have invalidated provisions of arbitration agreements that infringe on statutory rights. Federal law, on the other hand, favors arbitration over litigation in most cases. Several major technology companies, employing thousands of people, recently dropped mandatory arbitration of sexual harassment claims, which may allow more claims to see the light of day.

Statutes like Title VII of the federal Civil Rights Act of 1964 and the New Jersey Law Against Discrimination (NJLAD) prohibit discrimination in employment on the basis of sex, and include sexual harassment as a form of unlawful sex discrimination. In order to assert a claim under these statutes, an individual must first file a complaint with a state or federal agency like the Equal Employment Opportunity Commission (EEOC). The agency will investigate the claim, and if it determines the claim to have merit, it will issue a “right to sue” letter. This allows the complainant to file suit in state or federal court. Arbitration clauses in employment contracts prevent employees from accessing this process.

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Arbitration clauses are an increasingly common feature of New Jersey employment contracts, as well as around the country. If a dispute arises between the employee and employer, they agree to submit it to arbitration, a form of alternative dispute resolution (ADR) that somewhat resembles a trial, instead of the court system. Employment contracts may state that the results of the arbitration process are binding or non-binding. While arbitration may offer some advantages, it is widely perceived as favoring employers. New Jersey courts therefore tend to examine arbitration clauses very closely to ensure that employees have knowingly entered into an agreement that effectively bars them from taking their claims to court. A recent decision by the New Jersey Appellate Division, Walsh v. Prospect EOGH, Inc., et al, No. A-328-17T2, slip op. (N.J. App., Nov. 21, 2018), provides an example of this sort of scrutiny.

The arbitration process is essentially an informal trial, conducted by one or more arbitrators, who are often retired judges or attorneys. The parties submit evidence and arguments, and the arbitrators render an “arbitration award.” This could include an award of damages to one party, an order to do or refrain from doing something, or a declaration of some matter in dispute. If an arbitration clause states that the process is binding, statutes like the Federal Arbitration Act prevent courts from reviewing arbitration awards, except in cases involving alleged fraud or other misconduct.

Arbitration is arguably advantageous because it bypasses the slow-moving court system, where a lawsuit may wait years for a trial date. Parties in an arbitration may be able to select an arbitrator with knowledge of the specific issues involved in the dispute, rather than having the case decided by a randomly-assigned judge. These advantages, however, can also be distinct disadvantages employment disputes. The employer is likely to be at an advantage in selecting an arbitrator.
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A new law protecting New Jersey public sector unions, which was signed into law by Governor Phil Murphy in May 2018, faces a legal challenge based on a U.S. Supreme Court decision one month later. The law, entitled the Workplace Democracy Enhancement Act (WDEA), establishes standards for interactions between public-sector unions and government employers, and addresses several controversial issues. The Supreme Court’s ruling in Janus v. AFSCME, 585 U.S. ___ (2018), however, could represent a significant reduction in the power of public-sector unions. A lawsuit filed by several union members against their union and various state government officials argues that Janus invalidates certain provisions of the WDEA. Thulen, et al v. AFSCME, et al, No. 1:18-cv-14584, complaint (D.N.J., Oct. 3, 2018). The lawsuit is among the first to test how Janus will impact New Jersey employees’ rights.

Federal and state laws protect workers’ rights to organize for the purpose of collective bargaining, and either to form a union or to join an existing union that can negotiate with management on their behalf. The WDEA declares that any public sector union chosen as “the exclusive representatives of employees in a collective negotiations unit” must “hav[e] access to and be[] able to communicate with the employees it represents.” P.L. 2018, c. 15 § 2 (N.J. Rev. Stat. § 34:13A-5.12). The law requires public employers to allow union representatives to have reasonable access to employees, and to provide certain employee information to the union within a specified time frame.

Public-sector union members may authorize their employer to deduct union membership dues from their paychecks. The WDEA provision at issue in Thulen involves a restriction on employees’ ability to withdraw authorization for this payroll deduction. An employee may only withdraw authorization by giving written notice to the employer “during the 10 days following each anniversary date of their employment.” Id. at § 6, amending N.J. Rev. Stat. § 52:14-15.9e.

The role of labor unions in the modern economy is often a controversial issue. It is exceedingly difficult to deny, however, that they have improved working conditions for employees in New Jersey and around the country. Today’s unions are arguably victims of their own success, as many people no longer see them as necessary. Workers nevertheless still benefit from the ability to bargain collectively with their employers. Federal and state laws protect workers’ ability to organize for purposes of collective bargaining, but many states have enacted laws that limit unions in important ways. A recent decision by the U.S. Supreme Court, Janus v. AFSCME, 585 U.S. ___ (2018), specifically impacts public sector unions and their ability to collect fees to support their collective bargaining activities. If you have a question about your union, contact a New Jersey labor law attorney.

The National Labor Relations Act (NLRA) of 1935 allows workers to organize in order to engage in collective bargaining with their employer regarding pay, working conditions, and other features of employment. See 29 U.S.C. § 157. Union members support these activities by paying membership fees. Workers who do not become dues-paying members often still benefit from the union’s efforts. This is commonly known as the “free rider problem.” Some unions dealt with this by negotiating “closed shop” agreements, by which the employer could only hire union members; or “union shop” agreements, which required all employees to join the union or pay an “agency fee” once they had been hired.

The Taft-Hartley Act of 1947 banned closed shop agreements, and only allowed union shop agreements or agency fees to the extent that they do not conflict with state law. Id. at § 164(b). Many states have enacted “right to work” laws, which prohibit unions from charging agency fees to non-members.
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Federal law prohibits employers from engaging in practices that have an adverse effect on competition. This includes practices that harm consumers and those that harm employees. For example, employers engaged in the same business, who would ordinarily compete among each other for employees, may not enter into agreements with one another that diminish employment opportunities or set artificial limits on wages. Agreements not to solicit or hire one another’s employees, for example, can prevent those employees from advancing in their chosen careers. Agreements on wage limits impact employees’ ability to negotiate higher wages. The Federal Trade Commission (FTC), which enforces various federal consumer laws, may also investigate anticompetitive practices. It recently announced a settlement with a group of staffing companies, which it alleged violated federal law by colluding to limit pay rates. In the Matter of Your Therapy Source, LLC, et al, No. C-1710134, complaint (FTC, Jul. 31, 2018). Although the case did not involve events in New Jersey, federal antitrust and anticompetition laws have nationwide application. A New Jersey employment law attorney can help guide you in the right direction based on the unique facts of your situation.

The FTC was created by the Federal Trade Commission Act (FTCA) of 1914, 15 U.S.C. § 41 et seq. The statute prohibits “unfair methods of competition in or affecting commerce,” and authorizes the FTC “to prevent persons, partnerships, or corporations…from using unfair methods of competition in or affecting commerce.” Id. at §§ 45(a)(1), (2). It also specifically states that a finding of liability under the FTC Act does not preclude additional findings of liability under other antitrust statutes, such as the Sherman Antitrust Act of 1890. Id. at §§ 44, 45(e).

The respondents in the Your Therapy Source case operated staffing services that, according to the FTC’s complaint, provided therapists to “treat[] home health agency patients in the Dallas/Fort Worth, Texas area.” Your Therapy Source, complaint at 1. Although the companies competed with one another in the same market, the FTC alleged that they “agree[d], and invit[ed] other therapist staffing companies to agree, on rates paid to therapists.” Id. Ordinarily, therapists could “contract with multiple therapist staffing companies and choose among them based on pay rate” and other factors. Id. at 3. The agreement alleged by the FTC, however, prevented therapists from obtaining competitive pay rates.
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Organized labor, usually in the form of labor unions, is responsible for countless improvements in working conditions in New Jersey and throughout the country. The first half of the twentieth century saw the most improvements, as unions and their members fought—often literally—for reasonable hours, workplace safety, and better pay and benefits. Union membership has declined significantly in the past fifty years, however. One reason is a well-organized campaign that advocates for laws limiting the influence of unions in the workplace. These laws often go by the rather Orwellian name “right-to-work.” Voters in Missouri recently rejected a right-to-work law enacted by the state legislature and signed by the governor. Still, at least twenty-seven states have enacted right-to-work laws. New Jersey remains very favorable towards unions, with both laws and court decisions that affirm unions’ importance to the modern workplace.

Unions are able to negotiate on behalf of workers through collective bargaining agreements (CBAs) between a union and an employer. In order to understand how right-to-work laws affect unions’ ability to negotiate effectively, it is important to understand how unions have sought to ensure that they are able to speak for as many workers as possible. Some CBAs have, in the past, created “closed shops,” which means that employers could only hire union members. A “union shop” refers to an employer that, under the terms of a CBA, must require employees to join the union as a condition of employment.

One of the main objections to these types of arrangements involves the obligation of workers to join a union and pay dues, even if they do not agree with the union’s positions on various issues. The counter-argument to this is that all employees of a particular employer are likely to benefit from a union’s work, including those who are not members of the union. This is known as the “free rider problem.” Some union-shop CBAs, rather than requiring all employees to join the union, require workers who do not want to join to pay an “agency fee.”
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