Employment Contracts

February 24, 2025

National Labor Relations Board General Counsel Takes on Non-Compete Clauses

Workers have the right, under both federal and New Jersey employment laws, to engage in activities related to organizing and negotiating with their employers. This might involve joining or forming a labor union, but the law also protects more informal activities that have the goal of protecting workers’ interests. Employers may not interfere with employees who are trying to exercise these rights, nor may they retaliate against employees who have engaged in protected activities. The National Labor Relations Board (NLRB) is responsible for investigating alleged violations of the federal labor rights statute. Its General Counsel (GC) may set certain policies for how the agency investigates and prosecutes charges of unlawful activity. In early October 2024, the GC issued a memo outlining her position that certain provisions in employment contracts, including non-compete agreements, violate federal law.

In a May 2023 memorandum, the GC defined a non-compete agreement as an agreement that “prohibit[s] employees from accepting certain types of jobs and operating certain types of businesses after the end of their employment.” Courts around the country have reviewed the validity and enforceability of non-compete agreements. They must balance an employer’s interest in protecting their business with an employee’s need for a job in their chosen career path.

While the specifics vary from one jurisdiction to another, most courts have held that non-compete agreements are enforceable when they have a limited scope in both duration and geography. A non-compete agreement that prohibits an employee from working for a competitor anywhere in the country for ten years, for example, would probably be unenforceable. It would prevent the employee from earning a living in their field of knowledge and experience. An agreement that only restricts competition within a twenty-mile radius of the employer for six months might be enforceable since it sets reasonable limits.
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February 5, 2025

Four Federal Agencies Partner to Investigate Antitrust Violations Affecting Workers in New Jersey and Nationwide

by Resnick Law Group, P.C.

Employees who have experienced unlawful practices in the workplace, such as wage and hour violations, misclassification, or discrimination, can turn to New Jersey employment laws. Some employment practices may violate antitrust laws at the federal and state levels. Antitrust laws prohibit actions that prevent or inhibit competition among businesses. The less businesses can compete, the more consumers will suffer without free market incentives to keep prices low. This can apply to employment, such as when employers collude to limit employees’ options for finding a new job. Several federal agencies entered into a memorandum of understanding (MOU) this fall. They agreed to cooperate and share information when investigating mergers that might violate antitrust law and harm employees.

The Sherman Antitrust Act of 1890 addresses monopolies that restrain trade. This may include employment practices, such as when competing businesses agree to fix wages or refrain from hiring one another’s employees. This can deprive employees of opportunities to advance in their careers or demand better wages. If employers know their employees have no other prospects in their area, they have no incentive to raise wages or improve other working conditions.

The Clayton Antitrust Act of 1914 deals with practices that Congress did not specifically address in the Sherman Act. This includes mergers that may harm consumers or employees. The law prohibits mergers that could create a monopoly in a particular market. Employees may suffer from an unlawful merger if it substantially reduces the number of employers in a market or geographic area.
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October 4, 2024

New Jersey Supreme Court Rules on Medical Staff’s Employment Contract Dispute

by Resnick Law Group, P.C.

Employers who enter into contracts with their workers have an obligation to abide by the terms of those contracts. These obligations exist independent of any federal or New Jersey employment laws. Contract law governs the enforcement of contractual terms. An employment action that does not violate an employment statute might still violate contract law. The New Jersey Supreme Court recently ruled in a case involving several contract law claims against a hospital. The plaintiffs alleged that the hospital breached the implied covenant of good faith and fair dealing. This is a legal principle that holds that every contract carries an implied agreement that the parties will deal fairly with one another and negotiate in good faith. The court’s ruling is complicated, going in the plaintiffs’ favor in some ways, but not in other ways. The ruling nevertheless provides a useful guide for how this implied covenant may arise in employment situations.

The implied covenant of good faith and fair dealing is almost impossible to define. It depends heavily on the circumstances of each case. Factors that may be important include the relative power and resources of each party to a contract, the history of negotiations and agreements between them, and the nature of a specific agreement. The implied covenant generally prohibits parties from acts like hiding or misrepresenting important information or taking steps to undermine the other party’s ability to perform their obligations or benefit from the contract. It may arise in claims like wrongful termination.

The plaintiffs in the case described above are a group of neurosurgeons. According to the court’s decision, they first obtained core privileges and admitting privileges at the defendant’s hospital in 2003. While this is not the same as most people’s employment arrangements, the same legal principles can apply to many employer-employee relationships. “Core privileges” means that the plaintiffs could use the hospital to perform neurosurgical procedures. “Admitting privileges” allow physicians to admit established patients to the hospital.
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August 25, 2024

Court Blocks FTC’s Non-Compete Ban: What It Means for New Jersey Employees

by Resnick Law Group, P.C.

In a recent case, the U.S. District Court issued a preliminary injunction against the Federal Trade Commission’s (FTC) “Non-Compete Rule,” which was set to take effect on September 4, 2024. The Non-Compete Rule aimed to make most non-compete agreements unenforceable, significantly altering the employment landscape across the U.S., including in New Jersey. Thus, if left to stand, the recent opinion out of Texas could have far-reaching implications for New Jersey employees.

The FTC’s Non-Compete Rule and Its Implications

The FTC introduced the Non-Compete Rule intending to protect employees from restrictive agreements that limit their ability to work for competitors or start their businesses after leaving a job. Historically, non-compete agreements have been widely criticized for stifling competition and limiting workers’ job mobility. If enforced, the FTC rule would have provided greater freedom for employees in New Jersey to seek better job opportunities without fear of legal repercussions from former employers.

However, the court’s recent decision temporarily blocks the FTC’s Non-Compete Rule, questioning the FTC’s authority under the Federal Trade Commission Act to implement such a sweeping regulation. In this case, the court found that the FTC might lack the substantive rulemaking power to enforce the Non-Compete Rule, raising concerns about the agency’s ability to regulate unfair methods of competition in this manner.

May 20, 2024

Federal Judge Vacates NLRB’s Joint Employer Rule

by Resnick Law Group, P.C.

“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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April 29, 2024

New FTC Rule Bars Non-Compete Agreements in New Jersey and Nationwide

by Resnick Law Group, P.C.

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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February 9, 2024

Domestic Workers’ Rights Under New Jersey Employment Law

by Resnick Law Group, P.C.

Domestic workers, such as in-home caregivers, play a vital role in our society. Federal and New Jersey employment laws treat some domestic workers differently than other workers, including exemptions for minimum wage and overtime pay. The federal government has made it a priority to improve legal protections for domestic workers. The U.S. Department of Labor (DOL) recently issued a series of sample employment contracts for domestic workers that outline their legal rights. New Jersey is making similar improvements, such as the New Jersey Domestic Workers’ Bill of Rights (DWBR), which the governor signed into law in January 2024.

The Fair Labor Standard Act (FLSA) sets a nationwide minimum wage of $7.25 per hour and requires employers to pay time-and-a-half for overtime work. The law contains numerous exceptions and exemptions, including domestic workers in certain circumstances. The DOL defines “domestic service employment” as “services of a household nature” performed in a private home. This may include babysitters, nannies, home health aides, nurses, and handymen.

As a general rule, the FLSA provides the same protections for domestic workers regarding minimum wage and overtime as it does for other workers. It does, however, make two exemptions:
– Section 13(a)(15) of the FLSA exempts several types of workers from its minimum wage and overtime provisions: babysitters who are “employed on a casual basis” and individuals who “provide companionship services” to people who cannot care for themselves. The DOL interprets employment “on a casual basis” to mean that the individual does not rely solely on babysitting income or only provides services intermittently. The “companion” exemption applies to individuals who care for an “elderly person or person with an illness, injury, or disability.”
– Section 13(b)(21) exempts live-in domestic workers from the FLSA’s overtime provisions.
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January 19, 2024

NLRB Issues Final Rule on Joint Employer Status

by Resnick Law Group, P.C.

To assert a claim for violations of New Jersey employment laws, a person must be able to demonstrate that an employer-employee relationship exists. State and federal employment statutes tend to provide vague definitions of terms like “employee” and “employer.” Courts and regulatory agencies provide more detailed definitions. For example, the New Jersey Supreme Court has adopted a test to distinguish between employees with the full protection of state and federal employment law and independent contractors with contractual rights and remedies. In other situations, multiple entities may exercise control over an employee’s work, making it difficult to determine who is their “employer” under the law. The National Labor Relations Board (NLRB) recently issued a new rule for determining when an employee has “joint employers.” The rule can help employees hold employers liable for violations of federal labor law.

The National Labor Relations Act (NLRA) protects employees’ rights to “self-organization” and “other concerted activities” intended to protect employees or promote their welfare. Employers may not threaten or interfere with employees who are engaging in protected activities. The NLRB investigates claims of unlawful activity by employers.

“Joint employer” status can be an issue in situations where more than one company or other entity has some degree of control over an employee’s work. An employee might draw a paycheck from a staffing agency, for example, but take orders from a business that contracts with the agency. Someone who works for a business that operates a franchise might be subject to requirements from their direct employer, known as the franchisee, and the franchisor. The joint employer rule seeks to determine how many entities are acting as an “employer.”
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December 15, 2023

NLRB Complaint Alleges Unlawful Firing by Social Media Company

by Resnick Law Group, P.C.

Employees’ ability to communicate with one another about working conditions and other workplace concerns is essential to their ability to assert their legal rights. Both federal and New Jersey employment laws prohibit employers from interfering with employee efforts to organize and communicate about important work-related matters. In late 2022, a major social media company fired an employee after he posted a message to the company’s platform that related to a change in management that was ongoing at the time. In October 2023, the National Labor Relations Board (NLRB) filed a complaint alleging that the company broke the law by firing the employee. The case could impact New Jersey employee rights, depending on how far it goes in the administrative law system. At a minimum, the case offers a useful look at how social media usage affects workers’ rights.

The National Labor Relations Act (NLRA) has protected workers’ right to organize themselves for collective bargaining purposes for almost ninety years. Section 7 of the statute goes beyond collective bargaining to protect a much wider range of “concerted activities for the purpose of…mutual aid or protection.” Under § 8(a)(1) of the NLRA, employers may not “interfere with, restrain, or coerce employees” who are exercising their § 7 rights.

Workers who believe their employer has violated their rights under the statute can file a charge with the NLRB. The agency will investigate the charge and decide on its merits. If it finds that a charge has merit, it will attempt to get the parties to agree on a settlement. The NLRB’s regional directors have the authority to file complaints when parties cannot reach settlements.
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September 15, 2023

NLRB Ruling Changes Standard for Many New Jersey Employers’ Workplace Policies

by Resnick Law Group, P.C.

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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