Articles Posted in Employment Contracts

Employers’ workplace policies must comply with New Jersey employment laws. This includes federal laws passed by Congress and state laws passed by the New Jersey Legislature. At the federal level, the National Labor Relations Act (NLRA) protects workers’ rights to engage in organizing activities. The National Labor Relations Board (NLRB) adjudicates complaints from employees that allege violations of their rights. When an employment policy interferes with workers’ ability to organize themselves, the employer might be in violation of the NLRA. An August 2023 decision from the NLRB revises the standards that it uses to assess whether a particular policy or rule infringes on employees’ rights. It reverses a standard put in place in 2017 and reinstates an earlier standard with some modifications.

Workers have the right under § 7 of the NLRA to organize themselves in order to form or join unions. By organizing in this way, workers gain greater leverage in negotiations with their employers through a process known as collective bargaining. Employers violate the NLRA when they interfere with efforts to organize or engage in other activities intended to promote workers’ interests. Violations of these rights are possible even without obvious intent on the part of an employer. Policies or rules that appear neutral can still be unlawful in certain situations.

In 2017, the NLRB issued a ruling that established a standard for evaluating employment policies that remained in place until the recent decision. The 2017 standard gave greater leeway to employers than the standard it replaced. It identified three categories of employment policies, based on the level of scrutiny that it would apply:
– Category 1: Rules that are lawful, either because they generally do not interfere with workers’ rights or they serve a purpose whose important outweighs the possible impact on workers.
– Category 2: Rules that the NLRB assesses on a case-by-case basis to balance the extent of any NLRA violations against possible business justifications.
– Category 3: Rules that unambiguously infringe on workers’ rights.
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For far too many workers in New Jersey and throughout the country, employment can be uncertain or even precarious. Decisions made by employers far above an employee’s level can lead to them being out of a job through no fault of their own. New Jersey employment laws protect against wrongful termination, such as a decision to fire someone because of a protected category like race or religion, or termination in retaliation for legally protected activity. State and federal laws do not prohibit employers from laying workers off for non-discriminatory or retaliatory reasons, but they might set some limits. In the case of certain mass layoffs, for example, employers must provide advance notice and severance pay. Many collective bargaining agreements (CBAs) also contain provisions requiring negotiation prior to plant closures. Federal labor law requires employers to negotiate with authorized unions in accordance with their CBAs. The National Labor Relations Board (NLRB), which enforces the main federal labor statute, recently ruled that an employer violated the law by closing a facility and laying employees off without notifying the union.

The National Labor Relations Act (NLRA) prohibits employers from interfering with workers’ rights, as defined by § 7 of the statute, to engage in various protected activities. This includes organizing themselves for the purpose of collective bargaining, as well as other activities related to promoting employees’ well-being. The statute identifies a range of “unfair labor practices.” Many involve actions taken by employers, while others involve refusals to act.

Once a union has met the NLRA’s requirements for becoming the authorized representative of a group of employees, the employer must negotiate with that union in good faith. Section 8(a)(5) makes it an unfair labor practice for an employer to refuse to participate in collective bargaining with its employees’ representative. Under § 9(a) of the NLRA, the union is the employees’ “exclusive representative,” in most situations, with regard to negotiations with management for “rates of pay, wages, hours of employment, or other conditions of employment.” This often includes negotiation over decisions that could lead to employee layoffs, such as the closure of a plant or other facility. The union has the right to negotiate regarding the terms and effects of these kinds of decisions.
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Numerous government agencies investigate alleged violations of employees’ workplace rights. On occasion, they pursue enforcement actions on workers’ behalf. State agencies handle claims under New Jersey employment law, while federal agencies address alleged violations of statutes like Title VII of the Civil Rights Act of 1964 or the National Labor Relations Act (NLRA). Agencies may collaborate with one another in order to further their own missions and provide better service to the public. Two federal agencies announced a new collaboration in March 2023. The National Labor Relations Board (NLRB) and the Consumer Financial Protection Bureau (CFPB) will share information and resources in order to address several issues of concern. These include employment practices that have adverse impacts on employees’ privacy, data security, and financial well-being.

In its press release announcing the new collaboration, the NLRB states that despite “hav[ing] two distinct missions,” both agencies “share an interest in protecting American workers.” The NLRB is responsible for investigating alleged violations of workers’ labor rights under the NLRA, such as interference by an employer with efforts to self-organize or join a union for collective bargaining purposes. The NLRB’s General Counsel may file administrative actions against employers seeking compensation for workers and other types of relief.

While the NLRB came into existence nearly nine decades ago in 1935, the CFPB came into existence just over a decade ago in 2011. Congress established both agencies in the wake of major financial crises: the Great Depression and the 2007-08 financial crisis, respectively. The CFPB promulgates and enforces regulations affecting financial institutions and other businesses that may impact consumers’ financial interests. It may initiate administrative proceedings or file civil lawsuits in federal court. Enforcement actions by the CFPB might involve deceptive or abusive practices by banks, mortgage lenders, or payday loan companies. The agency has also investigated employment practices that “may leave employees indebted to their employers.”
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New Jersey employment laws at both the state and federal levels protect a wide range of workers’ rights. When federal and state laws seem to conflict with one another, federal law often supersedes state law, although, this is not always the case. The U.S. Supreme Court recently ruled on a preemption question related to labor rights. A group of workers and their union argued that the National Labor Relations Act (NLRA), which guarantees workers’ right to self-organization for collective bargaining purposes, preempted a property damage claim that the employer brought against the union. Unfortunately, the court ruled in the employer’s favor in Glacier Northwest, Inc. v. International Brotherhood of Teamsters Local Union No. 174, meaning that the court set a limit on the protection that the NLRA offers.

The NLRA protects the rights of workers to organize themselves into unions or join existing unions, and to engage in activities related to organizing, collective bargaining, and “other mutual aid or protection.” Workers also have the right to refrain from union-related activities. The statute prohibits both employers and unions from interfering with employees’ rights or coercing them. Once employees have formed or chosen a union to represent them, their employer must negotiate with that union in good faith on employment issues.

Because the NLRA is a federal statute, its provisions might preempt some state law claims. The doctrine of federal preemption is based on the Supremacy Clause of the U.S. Constitution, which states that federal law is “the supreme Law of the Land,” regardless of whether state laws say something different.
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Workers have the right to organize themselves in order to bargain collectively with their employers and advocate for better working conditions. Federal and New Jersey employment laws protect these rights and prohibit employers from interfering with or retaliating against employees who are engaged in lawful activities. The National Labor Relations Board (NLRB) adjudicates disputes over alleged violations of federal labor laws. In February 2023, it issued a ruling that invalidates a non-disparagement clause that an employer included in severance agreements for a group of employees it had just laid off. The NLRB found that the employer could not require workers to waive such a large number of legal rights. The following month, the NLRB’s General Counsel (GC) issued a memorandum providing guidance to NLRB directors and officers on how to implement this decision.

Section 7 of the National Labor Relations Act (NLRA) identifies a broad range of rights enjoyed by workers. This includes “the right to self-organization” and to join or form a labor union for the purpose of collective bargaining. The section also states that workers have the right to engage in “other concerted activities for the purpose of…mutual aid or protection.” The NLRB and the courts have interpreted this as providing rather broad protection of workers’ right to communicate among themselves and with others about various features of employment, such as working conditions and wages.

The case recently before the NLRB involved a hospital and a union representing various service employees. The hospital furloughed numerous employees at the beginning of the COVID-19 pandemic in 2020. It made the temporary furlough permanent for eleven union members later that year. Each of these employees received a “Severance Agreement, Waiver and Release” that offered a severance package in exchange for their signature. According to the NLRB’s ruling, the hospital did not inform the union of the furloughs or the severance agreements.
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Employers often use provisions in employment agreements to limit employees’ activities after the employment relationship has ended. The purpose of these provisions is to protect employers’ business interests, but they can be harmful to employees. Non-compete agreements restrict employees’ job prospects by limiting their ability to work for a company that competes with their current employer. The Federal Trade Commission (FTC) estimates that around 30 million workers are currently subject to a non-compete agreement. New Jersey employment law sets several important limits on non-compete agreements but still allows them. Only a few states have enacted laws that place significant restrictions on them. In early January 2023, the FTC issued a proposed rule that would make most non-compete agreements an unfair method of competition under federal law. The agency is currently accepting comments from the public regarding the proposal.

From an employer’s point of view, a non-compete agreement stops an employee from taking all the training and experience they have received on the job to a competitor. In practice, however, non-compete agreements can be so broad that they make it difficult for former employees to find new jobs at all. Employers may also try to enforce them against employees who were laid off, not just employees who quit.

New Jersey courts generally allow non-compete agreements if they meet the following three criteria:
– The agreement protects a valid interest of the employer.
– It does not place an undue hardship on the employee.
– It does not harm the public interest.
To meet the second criterion, a non-compete agreement usually has to have limits on the type of work involved, the geographic area, and the duration. A non-compete agreement could be enforceable, for example, if it prohibits a former employee from working for another company in a specific market sector within five miles of the employer’s location for a period of six months.
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Employment agreements often contain clauses and terms intended to protect an employer’s business interests. When a contractual provision limits an employee’s actions, it is known as a restrictive covenant (RC). Sometimes, RCs create difficulties for employees. A common type of RC is the non-compete agreement, which bars an employee from accepting work with the employer’s competitors under various circumstances. Many workers may feel like they are not in a position to try to negotiate different terms with a current or prospective employer. New Jersey employment law sets limits on the extent of RCs in employment or severance agreements. A bill pending before the New Jersey Legislature would expand the limits on some RCs, including non-compete agreements, and provide employees with additional rights.

A non-compete agreement may prohibit an employee from working for a competitor while employed by the employer. It may also prohibit employment with a competitor after the employee no longer works for the employer. In order to be enforceable, a non-compete agreement must be very clear about its terms, such as who counts as a competitor and how long the agreement remains in force for the employee. A 1970 decision by the New Jersey Supreme Court identified three elements that a non-compete agreement must satisfy:
1. The scope of the agreement is limited to the employer’s “legitimate interests.”
2. The agreement does not place an “undue hardship” on the employee.
3. The agreement is not “injurious to the public.”

The bill in the New Jersey Legislature, A3715, is currently pending before the Assembly Oversight, Reform and Federal Relations Committee. It identifies multiple groups of people who may not be subject to non-compete agreements at all, including anyone who is considered exempt under the Fair Labor Standards Act, undergraduate or graduate interns, temporary or seasonal workers, independent contractors, employees who are less than 18 years old, and employees who were employed for less than one year. For anyone who could be subject to a non-compete agreement, the bill sets numerous limitations on the agreement’s terms.
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Employers may include provisions in employment contracts or settlement agreements that limit employees’ ability to discuss issues like sexual harassment with others. When a settlement agreement contains this kind of provision, it may mean that the public cannot learn about the employee’s experience in the workplace. Other employees could be at risk of the same kind of experience if the employer took no action against the individual — or individuals — whose conduct led to the complaint and settlement. The New Jersey Legislature passed a law in 2019 that prohibits the use of non-disclosure agreements (NDAs) in connection with claims involving employment discrimination, harassment, or retaliation. A bill now pending in the New Jersey Senate would also prohibit non-disparagement clauses or agreements in those situations. If you have concerns about non-disclosure agreements involving a workplace matter, reach out to a New Jersey employment lawyer to get legal advice.

Businesses often use NDAs as a way to protect trade secrets and other proprietary information. An employment contract might include an NDA that protects information that could be of great interest or value to the employer’s competitors. Employers have also used NDAs to protect other kinds of information besides trade secrets, such as information that could be embarrassing.

News reports have identified numerous cases in which sexual harassment settlements included NDAs. Under this kind of NDA, one of the conditions for receiving a settlement payment is a promise by the complainant never to disclose the circumstances of the sexual harassment claims. The effect of this kind of NDA has been to keep important safety information away from the public. New Jersey passed a law in 2019 barring NDAs in employment contracts and settlement agreements as they might pertain to any “claim of discrimination, retaliation, or harassment.”
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Arbitration can allow the parties to a dispute to avoid the time and expense of litigation. More and more businesses are including clauses in consumer and employment contracts that require the parties to go to arbitration before filing a lawsuit. In some situations, arbitration may tend to favor businesses over individuals for numerous reasons. New Jersey lawmakers have attempted to limit the availability of mandatory arbitration contracts for certain claims, but several courts have ruled that the Federal Arbitration Act (FAA) precludes such laws. The FAA grants broad approval to arbitration contracts and arbitration awards. It also excludes certain groups of workers from its provisions. The U.S. Supreme Court recently ruled in favor of an airline employee who objected to arbitration of her overtime compensation claims. The ruling in Southwest Airlines Co. v. Saxon held that the employee is a “transportation worker” who is exempt from the FAA. If you have questions regarding arbitration in the workplace, contact a New Jersey employment lawyer to discuss your situation.

An arbitration proceeding resembles litigation in many ways. Both parties to a dispute must agree in advance to use arbitration. The parties present evidence and arguments to a neutral third party, known as the arbitrator. After considering both sides’ cases, the arbitrator may make an award that is similar to a verdict.

The FAA states that arbitration agreements are generally “valid, irrevocable, and enforceable,” except when they might not be under contract law principles like fraud or duress. If an arbitration agreement specifically states that the arbitrator’s award will be binding, the FAA limits courts’ authority to do anything other than confirm the award and enter it as a judgment, with few exceptions. Courts can only vacate or modify an arbitrator’s award with evidence of corruption, fraud, other forms of misconduct, or significant errors.
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The parties to employment law disputes in New Jersey and around the country may agree to use alternative dispute resolution (ADR) instead of the traditional litigation process. Many employers favor one particular form of ADR known as arbitration. Employment contracts often include clauses stating that any dispute must go to arbitration before — or instead of — a lawsuit. Mandatory arbitration is common in many types of employment law claims, supported by the Federal Arbitration Act (FAA). The U.S. Supreme Court recently ruled on a dispute over what an employer must do when they claim that an arbitration clause bars an employee from filing a lawsuit. The ruling in Morgan v. Sundance, Inc. allows the employee to make the case that the employer waited too long before filing a motion to dismiss the suit. If you are involved in a workplace dispute with your employer, reach out to a New Jersey employment lawyer to discuss the matter.

The arbitration process resembles litigation in some ways. An arbitrator conducts a trial and makes a recommendation, much like a judge issues a ruling or verdict. If the parties agreed in advance that arbitration would be binding, courts have very little authority to modify or vacate the arbitrator’s decision.

An employee who is subject to a binding arbitration clause has almost no recourse outside of the arbitration process itself. While arbitration agreements are voluntary, job applicants are rarely in a position to negotiate specific terms. They can either sign the agreement or look for a different job.
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