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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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Workplace harassment based on a protected category, such as sex, race, or religion, violates New Jersey employment laws. Under current state law, the legal standards for asserting harassment claims are mostly based on caselaw rather than statutes. A bill pending in the New Jersey Legislature, A2443, would amend the New Jersey Law Against Discrimination (NJLAD) to add a definition of workplace harassment and the legal standard for making a claim. The bill would codify much of the New Jersey Supreme Court’s hostile work environment standard and disavow several court rulings on harassment claims under the NJLAD. It would also set new requirements for employers, including harassment policies and staff training.

The pending bill primarily addresses hostile work environment claims. It includes legislative findings that cite three New Jersey Supreme Court decisions from 1993, 1998, and 2007. These decisions established a test for proving a hostile work environment claim:
– The conduct was based on a protected category.
– It was “severe or pervasive.”
– A reasonable person who belongs to the affected category would believe that the workplace is hostile enough to alter the conditions of employment.
The bill also cites Justice Ginsburg’s concurring opinion in the U.S. Supreme Court’s 1993 decision in Harris v. Forklift Systems. She stated that a plaintiff does not need to prove that the harassment negatively impacted their work performance. They only need to show that it became “more difficult to do the job” because of the harassment.

The bill also disapprovingly cites three decisions that limit the “severe or pervasive” standard. In 2008, the New Jersey Supreme Court held that harassment claims should be “described in sterile terms, stripped of the overlay of [the plaintiff’s] subjective reactions.” It further held that the alleged conduct “was one of the socially uncomfortable situations that many women encounter in the course of their lives.” In a 2011 decision, the Third Circuit Court of Appeals affirmed a lower court decision holding that repeated unwelcome romantic calls, texts, and emails by a supervisor did not create a hostile work environment. The Third Circuit ruled in 2013 that intentional groping by a supervisor did not meet the “severe or pervasive” standard.
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Employment disputes can often become quite complicated. Multiple issues and complaints can combine to create an untenable situation, or one grievance can turn into many. Workplace discrimination, for example, can lead to retaliation for opposing or reporting that discrimination. New Jersey employment law protects workers against numerous types of adverse actions by employers. A lawsuit filed in a New Jersey state court last month presents a complicated series of allegations, including sexual harassment, hostile work environment, and retaliation. It also alleges discrimination based on association with an individual who reported alleged wrongdoing.

The New Jersey Law Against Discrimination (NJLAD) prohibits discrimination based on sex and numerous other factors. This includes sexual harassment that creates a hostile work environment. The law protects people who have experienced unlawful acts but fear for their jobs if they come forward. Employers may not retaliate against someone because they “opposed any practices or acts forbidden under this act.” Employees have similar protections in the Conscientious Employee Protection Act (CEPA). This law prohibits retaliation against employees for reporting suspected wrongdoing by an employer.

The lawsuit described above also alleges “associational discrimination.” This cause of action derives from a 1995 decision by the New Jersey Supreme Court. The plaintiffs in that case were co-workers and relatives of an employee who had previously sued their employer under the NJLAD for retaliation. They alleged that the employer had retaliated against them because of their association with that individual. The court held that this was a valid NJLAD cause of action.
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Service in the U.S. military and other uniformed services can mean a great deal of uncertainty. People who serve in the National Guard or Armed Forces Reserves have training obligations and may find themselves called to active duty. This can cause difficulties with employment in both the private sector and non-military government jobs. New Jersey employment law prohibits employers from discriminating based on military service obligations, but its protections only cover mandatory service in the Armed Forces. Federal law goes further by addressing servicemembers’ ability to return to their jobs after their service ends. The Uniformed Services Employment and Reemployment Rights Act (USERRA) turns thirty this year, having become law in October 1994. It offers important protections for New Jersey servicemembers.

Who Does USERRA Cover?

USERRA applies broadly to people on active or inactive duty in any of the uniformed services of the United States. This includes the six branches of the Armed Forces: the Air Force, Army, Coast Guard, Marine Corps, Navy, and Space Force. It also includes the Commissioned Corps of the Public Health Service and the National Oceanic and Atmospheric Administration. The Surgeon General, for example, is an officer with the Public Health Service.

In contrast, New Jersey’s antidiscrimination law only applies to mandatory active duty service in the Armed Forces. This includes service in a National Guard or Reserve unit and induction through a draft.
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When applying New Jersey employment laws dealing with discrimination, courts have long held that plaintiffs must prove that they suffered actual harm. This might involve the loss of a job, lower wages, or the loss of other benefits or features of employment. Many courts around the country have applied similar interpretations to laws like Title VII of the Civil Rights Act of 1964. A case pending before the U.S. Supreme Court could change how courts in New Jersey and nationwide interpret these laws. A police sergeant alleges that her employer discriminated against her based on sex by transferring her to a different position. The lower courts found that she had not established that an “adverse employment action” had occurred. A ruling in her favor could help plaintiffs prove unlawful discrimination in cases where the discrimination did not cause them to suffer major disadvantages.

Title VII prohibits discrimination based on several categories, including sex. Section 703(a)(1) of the statute addresses unlawful practices by employers. While it identifies several specific adverse actions, such as firing someone or refusing to hire them, it also includes a catch-all category that simply states employers may not “otherwise…discriminate” against employees or job applicants because of sex or other protected categories.

The plain language of § 703(a)(1) does not necessarily require proof that a discriminatory act had a negative impact. This might affect the amount of damages a plaintiff could receive, but under this view, it would not affect whether or not they could assert a claim. Most courts, however, have taken the view that some employment discrimination claims require proof that a plaintiff suffered tangible harm.
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Numerous laws protect the rights of employees in the workplace. For those laws to apply to a particular individual, they must have an employment relationship with their employer, as defined by law. Not everyone in a workplace is necessarily an employee. Some might be independent contractors. While employees have a wide range of legal protections, independent contractors often only have whatever protections are included in their contracts. Employers sometimes falsely claim that an employee is an independent contractor, which is known as employee misclassification. New Jersey employment law uses a test to distinguish between employees and independent contractors that generally favors employees. At the federal level, the definition used by the U.S. Department of Labor (DOL) for wage and hour claims has changed several times in recent years. The DOL’s Wage and Hour Division (WHD) recently published a final rule regarding “employee” status under the Fair Labor Standards Act (FLSA). The new rule is more employee-friendly than its predecessor.

Employers might misclassify employees as independent contractors to avoid legal obligations like minimum wage or overtime pay. New Jersey uses the “ABC test” to determine whether an individual is an employee or an independent contractor. The test gets its name from the definition of “employee” found in § 43:21-19(i)(6)(A)-(C) of the New Jersey Revised Statutes. An individual is presumed to be an employee under the ABC test unless an employer can demonstrate all of the following elements:
A. The individual exercises total control over when and how they do their job.
B. Their work is either outside of the scope of the employer’s usual business, or they do their work away from any of the employer’s regular worksites.
C. They have their own business, occupation, or trade separate from the employer.

The WHD’s new employee classification rule applies to wage and hour claims under the FLSA. It replaces a rule that the WHD put into place in January 2021, less than two weeks before the end of the previous presidential administration’s term. That rule, which took effect on March 8, 2021, was generally more favorable to employers. Independent contractor status was based on two “core factors”:
1. The amount of control that an individual has over how they do their job; and
2. Their ability to increase their income without working longer hours or producing more output.
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Harassment in the workplace violates federal and New Jersey employment laws in certain circumstances. The harassment must be based on a protected category like race, sex, or religion. It must negatively impact someone’s employment, such as when it creates a hostile work environment. The Equal Employment Opportunity Commission (EEOC) investigates alleged harassment that violates federal employment laws like the Americans with Disabilities Act of 1990 and Title VII of the Civil Rights Act of 1964. In October 2023, the agency issued a new proposed guidance document on unlawful workplace harassment and sought comments from the public. Should the EEOC decide to issue a final guidance document, it would be the first significant update to its guidance in over twenty years.

When Is Harassment Unlawful?

Offensive conduct rises to the level of unlawful harassment in several situations. First, the conduct must be motivated by a protected characteristic like race or sex. Second, one of the following must apply:
– A worker must endure offensive, unwelcome conduct to maintain their employment;
– The conduct is so severe or pervasive that a reasonable person would consider the work environment to be hostile; or
– The conduct is intended to retaliate against a worker for legally protected activities like reporting alleged discrimination.

What Kinds of Conduct Can Constitute Harassment?

A wide range of behaviors can constitute harassment, including offensive jokes or comments, offensive images or gestures, ridicule, intimidation, threats, or physical assault. It can come from managers, supervisors, co-workers, and non-employees like contractors or customers.
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