The New Jersey Employment Law Firm Blog

February 4, 2020

New Laws, Administrative Actions Take on Employee Misclassification in New Jersey

New Jersey labor laws protect workers’ rights to a minimum wage, overtime pay, unemployment insurance, a workplace free of discrimination and harassment, and other matters. These laws regulate the relationship between employers and employees. Unfortunately, some employers try to evade their responsibilities by classifying employees as independent contractors. Employee misclassification is a violation of state law. New Jersey employment law places most of the burden of proof on employers to establish that an individual is not an employee. Legislation signed by the Governor in January 2020 assesses penalties for misclassification and requires employers to post notices of workers’ rights. In late 2019, the New Jersey Department of Labor and Workforce Development (LWD) demanded almost $650 million in unpaid employment taxes and interest from a rideshare company that has frequently been the subject of misclassification complaints.

Employees in New Jersey are covered by a rather vast array of federal, state, and local employment laws. They cover issues ranging from wages and hours to workplace safety. Some statutes only apply to employers with a minimum number of employees, while others apply to all employers. Independent contractors are not covered by these laws. Their legal protections are largely limited to the terms of their contracts and contract law. Many statutes do not provide a particularly helpful definition of an “employee.” The federal Fair Labor Standards Act, for example, defines an employee as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1).

State law fills in gaps left by federal statutes. In 2015, the New Jersey Supreme Court adopted a definition of “employee” known as the “ABC test,” based on §§ 43:21-19(i)(6)(A) through (C) of the New Jersey Revised Statutes. An individual is presumed to be an employee unless the employer can establish three elements:

1. The employer does not exercise control over how the individual performs their job, both in the text of the contract and in actual practice;
2. The individual’s job is outside the scope of the employer’s regular business, or the individual performs their job away from the employer’s business premises; and
3. The individual works in their own separate business or trade.

January 16, 2020

New Jersey Passes Law Against Hairstyle Discrimination in the Workplace

by Resnick Law Group, P.C.

New Jersey joined several other states in prohibiting hairstyle discrimination in late 2019 when the Legislature passed the “Create a Respectful and Open Workspace for Natural Hair Act,” also known as the CROWN Act. The new law adds a definition of “race” to the New Jersey Law Against Discrimination (NJLAD) that specifically includes hairstyles historically or traditionally associated with particular racial groups. Many workplaces maintain dress codes or grooming policies that, whether intentional or not, discriminate against Black workers, such as by placing an extra burden on them in terms of how they maintain their hair. New York City issued guidance about race discrimination based on hairstyles in early 2019, and versions of the CROWN Act became law in New York State and California in July. New Jersey race discrimination law thus served as a model for other states to follow.

The NJLAD bars employers from discriminating on the basis of race and multiple other factors. N.J. Rev. Stat. § 10:5-12(a). The statute identifies certain actions as discriminatory, including refusing to hire someone, firing someone or requiring them to retire, or barring them from consideration for employment based on a protected category. Discrimination in the “terms, conditions or privileges of employment” also violates the NJLAD. Id. This may include employment policies or practices that favor or disfavor one group over another, or that impose additional burdens on a group of employees without a reasonable business-related justification. These types of practices can violate laws like the NJLAD even in the absence of discriminatory intent.

New York City’s guidance on hairstyle discrimination, issued in February 2019, offers a useful overview of how it can violate antidiscrimination laws. The document describes various “hair textures [that] are common among people of African descent,” and discusses how people may choose particular hairstyles for “cultural,…personal, financial, medical, religious, or spiritual reasons.” It also describes “protective style[s], intended to maintain hair health.” Discriminatory workplace policies that prohibit many of these hairstyles are often based on “a widespread and fundamentally racist belief that [they] are not suited for formal settings.” Such policies usually derive from “white and European beauty standards.”

January 3, 2020

New Law Bars New Jersey Employers from Asking Job Applicants About Salary History

by Resnick Law Group, P.C.

Employers in New Jersey may no longer ask job applicants how much they made at their last job, thanks to a new law passed by the Legislature in June 2019 and signed by the Governor in July. The bill amends several provisions of New Jersey employment discrimination laws to prohibit employers from “screen[ing] a job applicant based on the applicant’s salary history.” Inquiries about salary history can offer employers a way around laws against pay discrimination, such as the federal Equal Pay Act (EPA). When an employer bases hiring or salary decisions on how much an applicant made at their previous job, it tends to perpetuate existing wage imbalances. As of December 2019, sixteen states, the District of Columbia, Puerto Rico, and multiple local governments have enacted laws prohibiting salary history inquiries to various degrees.

The EPA prohibits discrimination in pay on the basis of gender, meaning that employers must pay male and female employees the same for work that “requires equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d)(1). It makes exceptions for different rates of pay based on seniority, merit, “quantity or quality of production,” or “a differential based on any other factor other than sex.” Id. Bans on salary history inquiries are partly motivated by concerns that past salary could fit into that last category. The status quo in the United States in late 2019 is that multiple wage gaps exist. People can argue over what causes these gaps, but their existence is difficult to dispute. Employment decisions based on salary history, regardless of an employer’s intent, can serve to entrench the disparities.

State laws governing salary history inquiries vary widely in what they prohibit and allow. Alabama, for example, passed a law around the same time as New Jersey that bars employers from making an adverse employment decision based solely on an applicant’s refusal to provide information on their salary history. It does not expressly prohibit employers from asking for such information. California’s law, enacted in 2017, bars employers from asking, and goes much further. Employers in California may not “rely on the salary history information of an applicant for employment” in either hiring or salary decisions, unless the applicant voluntarily discloses the information.

December 13, 2019

Federal Appellate Court Vacates Arbitration Order in New Jersey Misclassification Lawsuit

by Resnick Law Group, P.C.

The court system encourages litigants to attempt alternative dispute resolution (ADR) before taking their cases to court. Many employment contracts in New Jersey and nationwide include clauses requiring arbitration before (or instead of) going to court. The Federal Arbitration Act (FAA) strongly favors these clauses, but it exempts certain groups of workers. The Third Circuit Court of Appeals recently vacated an arbitration order in a New Jersey employment class action. It found that the plaintiff, a driver for a major rideshare company, could be part of an exempt group under the FAA.

The Third Circuit case deals with alleged misclassification of employees as independent contractors, a common issue with rideshare companies and other “gig economy” employers. Employees are protected by multiple local, state, and federal statutes governing wages, hours of work, working conditions, paid and unpaid leave, discrimination and harassment, and more. Independent contractors do not enjoy most of these legal protections. Under New Jersey law, a worker is considered an employee unless they meet the “ABC test,” which looks at the degree of control the employer may exercise over the worker, and the extent to which the worker has their own established trade or business. See N.J. Rev. Stat. §§ 43:21-19(i)(6)(A), (B), (C).

ADR offers some advantages over litigation, but for employees seeking relief under New Jersey’s employment statutes, it can also have disadvantages. The parties must pay all of the costs associated with ADR, including the fees charged by arbitrators, mediators, or other ADR specialists. This can give employers with deep pockets an advantage. The FAA sets a very high bar for challenging, modifying, or vacating an arbitration award. In order for a court to compel arbitration in an employment lawsuit, however, an employer must first demonstrate that the FAA applies to its employees.

December 6, 2019

New Jersey State Employee Awarded $987,000 in Race Discrimination Lawsuit

by Resnick Law Group, P.C.

Workplace harassment on the basis of a protected category is considered unlawful employment discrimination under New Jersey law and throughout the country. Most people are familiar with how sexual harassment violates New Jersey employment discrimination laws, but it also applies to harassment based on race, religion, and other factors. The New Jersey Law Against Discrimination (NJLAD), N.J. Rev. Stat. § 10:5-1 et seq., prohibits discrimination and harassment on numerous bases, as well as retaliation for opposing or reporting alleged unlawful practices. The Conscientious Employee Protection Act (CEPA), id. at § 34:19-1 et seq., protects the rights of whistleblowers who report suspected unlawful activity by their employers. A state employee filed suit in 2013 for race harassment and retaliation under the NJLAD and CEPA. In April 2019, a jury in Mercer County, New Jersey awarded him over $987,000 in damages.

The NJLAD prohibits employment discrimination on the basis of race and multiple other factors. See id. at § 10:5-12(a). This includes a wide range of adverse employment actions. Firing or refusing to hire a person because of their race is perhaps the most obvious sort of discriminatory act in violation of the NJLAD, but workplace discrimination takes far more forms than that. Pervasive and unwelcome actions that create a hostile work environment based on race also support an NJLAD claim.

Employers who “take reprisals against any person” who either opposes or reports alleged violations of the NJLAD commit a separate violation of the NJLAD, commonly known as retaliation. Id. at § 10:5-12(d). CEPA provides similar protections for employees who “[d]isclose[], or threaten[] to disclose” alleged legal violations by an employer, either to a supervisor or a government body. Id. at § 34:19-3(a). This may include reporting NJLAD violations.

December 2, 2019

New Jersey Appellate Division Rules on Enforceability of Non-Competition, Non-Solicitation Agreements

by Resnick Law Group, P.C.

Employers often include restrictive covenants (RCs) in employment contracts. As the name suggests, these are contractual provisions that restrict employees from taking certain actions, both during and after employment. In order for provisions like these to be enforceable, they must balance the employer’s interests with the employee’s rights. The New Jersey Superior Court, Appellate Division ruled this summer in a consolidated group of cases in which an employer alleged RC violations by former employees. It addressed the “inconsistent” handling of the lawsuit by lower courts, and sought “to bring some clarity and uniformity” to how courts deal with RCs in New Jersey employment contracts.

Two common RCs are:
– Non-competition or non-compete agreements, which restrict employees from working for another company that competes with their employer; and
– Non-solicitation agreements, which restrict employees from soliciting clients or customers of their employer to do business with someone else.

In 1970, the New Jersey Supreme Court established three principles for non-competition agreements. In order to be enforceable, the court held that a non-competition agreement (1) must protect no more than an employer’s “legitimate interests”, (2) must “impose[] no undue hardship on the employee”, and (3) must not be “injurious to the public.” The court further ruled that New Jersey non-competition agreements must have reasonable limits on both duration and geographic scope. The court later held that the employer has the burden of demonstrating enforceability. A non-competition agreement that restricts a former employee’s ability to work indefinitely, or which prohibits working for a competitor anywhere in the United States would likely be deemed unreasonable and unenforceable in New Jersey.

November 26, 2019

Task Force Releases Report on Misclassification of Employees as Independent Contractors in New Jersey

by Resnick Law Group, P.C.

New Jersey employment statutes protect workers against a variety of acts by employers, but in order for these protections to apply, an employment relationship must exist. Independent contractors generally do not fall within the scope of these laws. Employers therefore sometimes attempt to classify workers as independent contractors when they should be employees. This is known as “misclassification.” In May 2018, the Governor of New Jersey established a task force to make recommendations on how the state can address employee misclassification. The task force released a report in July 2019 that provides 10 recommendations for identifying misclassification, enforcing state law, and deterring employers from misclassifying their employees.

Employee Misclassification

The task force defines misclassification as “the practice of illegally and improperly classifying workers as independent contractors, rather than employees.” It states in its report that the practice has increased over the past decade by about 40 percent. It attributes this, in large part, to the “fissured workplace,” in which companies use an extensive network of outsourced contractors and subcontractors.

In a 2015 ruling, the New Jersey Supreme Court adopted the “ABC test” for determining whether an individual is an employee or an independent contractor, based on a definition of “employment” codified at N.J. Rev. Stat. §§ 43:21-19(i)(6)(A) – (C). The test presumes that a person is an employee unless their working conditions meet three criteria. The individual’s work must be generally free from control by the employer, the services performed by the individual must be either not part of the employer’s usual business or performed somewhere other than the employer’s usual place of business, and the individual must have their own “independently established trade, occupation, profession or business.”

November 15, 2019

Appellate Division Affirms Verdict of Almost $1 Million in New Jersey Retaliation Case

by Resnick Law Group, P.C.

In addition to prohibiting discrimination on the basis of factors like race, sex, and religion, most anti-discrimination statutes also prohibit employers from retaliating against employees who report alleged discrimination, who participate in an investigation of alleged unlawful acts, or who engage in other legally protected activities. In 2016, a jury in Bergen County, New Jersey found in favor of a former bank vice president who alleged that she was fired for reporting her concerns about gender discrimination. It found that the bank had retaliated against the plaintiff in violation of the New Jersey Law Against Discrimination (NJLAD) and awarded her $935,000 in damages. In June 2019, the New Jersey Superior Court, Appellate Division affirmed the verdict and award.

Discrimination “on the basis of” a protected category generally refers to discrimination that is motivated by an individual’s membership, or perceived membership, in a protected group. Statutes like the NJLAD also protect employees against discriminatory or retaliatory actions based on their good-faith efforts to enforce these rights. A prohibition on discrimination is not much help if an employer can still fire someone because they made an allegation of discrimination. The NJLAD therefore prohibits employers from “tak[ing] reprisals” against employees who “oppose[] any practices or acts forbidden under this act.” N.J. Rev. Stat. § 10:5-12(d).

The Equal Employment Opportunity Commission (EEOC) reports that retaliation is the most common complaint it receives. In fiscal year 2018, the agency received 39,469 complaints alleging retaliation under at least one of the statutes it enforces. This accounted for 51.6 percent of all complaints received that year. More than 30,000 complaints, or 40 percent, were specifically for retaliation under Title VII of the Civil Rights Act of 1964.

November 1, 2019

Lawsuit by New Jersey Grocery Store Employee Alleged Disability Discrimination, Failure to Accommodate

by Resnick Law Group, P.C.

The New Jersey Law Against Discrimination (NJLAD) prohibits employers from discriminating on the basis of disability. It also requires employers to make “reasonable accommodations” for employees with disabilities, in order to enable them to perform their job duties. A New Jersey disability discrimination lawsuit originally filed in the Superior Court of Bergen County alleged failure to accommodate against a grocery store. The employee was bitten on the arm by a venomous spider while at work, resulting in hospitalization. He alleged in the lawsuit that the employer failed to accommodate the “anxiety and panic attacks” that arose because of the experience, and that he was fired in violation of the NJLAD. The parties settled the suit shortly after its removal to federal court.

The term “disability,” as defined by the NJLAD, includes “any mental [or] psychological…disability…which prevents the normal exercise of any bodily or mental functions.” N.J. Rev. Stat. § 10:5-5(q). Anxiety and panic disorders can be extremely debilitating for some individuals.

The Equal Employment Opportunity Commission (EEOC) issued a guidance document in 1997 that addressed whether anxiety may qualify as a disability under federal law. Its conclusions do not control New Jersey state courts applying the NJLAD, but they may still offer some useful guidance. The EEOC offered an example of an employee whose anxiety disorder affected their “ability to concentrate.” Legal antidiscrimination protections would be available, the EEOC concluded, if the impact of the anxiety disorder is “long-term or potentially long-term, as opposed to temporary.”

October 25, 2019

Class Action Alleges Age Discrimination in Job Advertisements on Social Media

by Resnick Law Group, P.C.

While Title VII of the Civil Rights Act of 1964 is considered to be the primary federal antidiscrimination law, the Age Discrimination in Employment Act (ADEA) of 1967 also provides important protections for workers nationwide. Both the ADEA and New Jersey’s antidiscrimination statute prohibit employers from advertising job openings in ways that restrict eligibility on the basis of age. A pending federal class action against several major companies addresses a relatively new method of advertising. The lawsuit alleges that the defendants restricted the visibility of job advertisements on social media to users in certain age ranges. Several recent decisions by the Equal Employment Opportunity Commission (EEOC) support the plaintiffs’ position that this violates the ADEA’s advertising restrictions.

The ADEA’s protections against age discrimination apply to workers who are at least forty years old. 29 U.S.C. § 631(a). The New Jersey Law Against Discrimination (NJLAD), on the other hand, does not set a minimum age but states that employers may “refus[e] to accept for employment or to promote” a person who is more than seventy years old. N.J. Rev. Stat. § 10-5:12(a). Both statutes prohibit the publication of job advertisements that demonstrate “any limitation, specification or discrimination” based on age. 29 U.S.C. § 623(e), N.J. Rev. Stat. § 10:5-12(c). Job listings that only purport to limit the eligibility of minors typically do not violate these statutes, since minors are subject to separate work restrictions. A job advertisement stating that a job is only open to applicants between the ages of eighteen and forty would violate both the ADE and the NJLAD.

In July 2019, the EEOC issued determination letters to seven companies based on charges filed under the ADEA. All of the charges alleged unlawful posting of job advertisements on the social media platform Facebook, which allows companies to target advertisements to certain audiences. The EEOC reported that it found evidence that the companies “used language to limit the age of individuals who were able to view the advertisement.” It notified the companies that it had found “reasonable cause to believe that [they] violated the ADEA.”