The Garden State Is Not Always Rosy For Employers

Clueless Corporation operates a successful widget manufacturing business in the western United States. Clueless's business is doing so well that the company is looking to expand its operations and open an office on the East Coast with over 50 employees. Clueless is considering various states for its new site, including New Jersey. Before making its move, Clueless seeks your counsel regarding the advantages and disadvantages of conducting business in New Jersey from an employment law perspective.

The above presents a very real scenario. Unfortunately, New Jersey's employee-friendly laws may discourage employers like Clueless from doing business here. In fact, New Jersey's wage and hour, civil rights, family leave and contract laws often favor individual employee rights over the business needs of employers.

Therefore, while New Jersey is a desirable state in which to work, this state's employers often find such protections to be a disincentive to conducting business here. Clueless will have to consider and prepare for New Jersey's liberal employment laws before opening its doors.

New Jersey Law Against Discrimination

New Jersey has very expansive anti-discrimination laws that are broadly interpreted by our courts. Because the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq., has a significant impact on an employer's daily operations, Clueless should be advised of the salient provisions of this statute.

Unlike Title VII of the federal Civil Rights Act of 1964, which applies only to employers with 15 or more employees, and the Age Discrimination in Employment Act, which applies only to employers with 20 or more employees, the LAD covers all employers, even those with as few as one employee.

In addition, the LAD covers a broad range of protected characteristics including not only those one would expect, such as age, race, handicap and sex, but also such characteristics as veteran or familial status, affectional or sexual orientation, genetic information, atypical hereditary or cellular blood trait, or refusal to submit to or make the results of any such test available.

Moreover, as recently passed, the LAD also covers possession of a United States flag. See N.J.S.A. 10:5-4(12).

The LAD's definition of "handicap" is also substantially broader than the definition of "disability" under the federal Americans with Disabilities Act, 42 U.S.C. §12101 et seq., and, therefore, a New Jersey employer must address and accommodate more employees with statutorily-protected handicaps.

For example, in Olson v. General Electric Astrospace, 966 F. Supp. 312 (D.N.J. 1997), the court held that depression and mental illness may constitute handicaps under the LAD. This is in contrast to recent U.S. Supreme Court law narrowing the definition of "disability under the ADA." See Toyota Motor Mfg., Kentucky, Inc. v. Williams, 534 U.S. 184 (2002).

Finally, under another employee-friendly decision, a plaintiff who is successful in prosecuting his LAD claim is entitled to enhanced attorneys' fees under Rendine v. Pantzer, 141 N.J. 29 (1995), thus further favoring New Jersey employee-plaintiffs.

Conscientious Employee Protection Act

Similarly, New Jersey's whistle-blowing statute, the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et seq., has been described as the most far-reaching whistleblower statute in the nation. See Mehlman v. Mobil Oil Corp., 153 N.J. 163 (1998).

Recent decisions have confirmed the expansive nature of this statute and have directed that courts construe the statute liberally to guarantee broad protections against retaliation for employees acting in the public interest.

In Gerard v. Camden County Health Servs. Ctr., 348 N.J. Super. 516 (App. Div.), cert. denied, 174 N.J. 40 (2002), the Appellate Division clarified prior law and held that employees are protected under CEPA where they reasonably believe that the activity complained of is fraudulent or criminal, even if the conduct does not rise to the level of an actual crime.

Moreover, the U.S. District Court for the District of New Jersey has held that employees or supervisors acting within their authority may be individually liable for retaliation under CEPA. See Paladino v. VNA of So. NJ., Inc., 68 F. Supp. 2d 455 (D.N.J. 1999).

Family Leave Act

Clueless should also be advised that, unlike some states, New Jersey has its own family leave act. Although the New Jersey Family Leave Act, N.J.S.A. 34:11B-1 et seq., does not protect an employee who needs leave to care for his "serious health condition," it allows a qualifying employee up to 12 weeks leave in a 24-month period to care for a family member's serious health condition.

As many New Jersey employers have learned, this statute sometimes hampers an employer's business. During an FLA leave, the employer must continue the employee's health benefits and, under most circumstances, must return the employee to the same or equivalent position when the leave ends.

As an employer with more than 50 employees, Clueless will also be subject to both the FMLA and the FLA. For example, when read together, these statutes guarantee pregnant employees leave to care for themselves and to care for their newborn child with as much as 22 to 24 weeks of job-protected leave (depending upon whether the birth is vaginal or as a result of a caesarean-section).

Although these leave periods are unpaid, during that time and under most circumstances, Clueless will have to hold the qualifying employee's job open and continue to pay its share of health insurance.

Employee Manuals

Before distributing its employee manual in New Jersey, Clueless should be made aware of New Jersey's laws regarding employee handbooks and implied contracts. In fact, New Jersey courts have extended themselves numerous times to find manuals to be enforceable implied contracts. See Woolley v. Hoffinann-LaRoche, Inc., 99 N.J. 284, modified, 101 N.J. 10 (1985).

For instance, a widely distributed employee manual that does not contain a clear and prominent disclaimer and which promises job security when reasonably read will constitute an enforceable contract. See Wade v. Kessler Institute, 172 N.J. 327 (2002).

Similarly, Clueless should know that other companywide employment policies, whether in a manual or in other written or verbal policies, may create an implied contract. See Gilbert v. Durand Glass Mfg. Co., Inc., 258 N.J. Super. 320 (App. Div. 1992). Thus, before opening its doors in New Jersey, Clueless must ensure that its employee manual and other policies are in acceptable form and that Clueless does not make unintended promises to which it could later be bound.

Wage and Hour Laws

Clueless should also be advised about New Jersey's employee-friendly wage and hour laws before deciding to conduct business here.

First, New Jersey's Wage Payment Law provides that "officers" and "agents having the management of such corporation" are deemed "employers" and are, therefore, personally liable for wage payment violations. N.J.S.A. 34:11-4.1(a). See Mulford v. Computer Leasing Inc., 334 N.J. Super. 385 (Law Div. 1999).

In fact, in permitting the commissioner of the department of labor to impose prejudgment interest on back wages owed, the Appellate Division confirmed the "humanitarian and remedial" nature of New Jersey's wage and hour law and directed that it be construed generously. See New Jersey Dept. of Labor v. Pepsi-Cola Co., 336 N.J. Super. 532 (App. Div.), aff'd, 170 N.J. 59 (2001).

As further evidence of the liberality with which these laws are viewed, in Troise v. Extel Communications, Inc., 345 N.J. Super. 231 (App. Div. 2001), aff'd, 174 N.J. 375 (2002), the Appellate Division recently held that claims brought under the Prevailing Wage Act - which dictates wages to be paid on public works - are subject to a six-year statute of limitations instead of a two-year statute of limitations.

Despite the summary judgment standard set forth in Brill v. Guardian Life Ins. Co., 142 N.J. 520 (1995), which was designed to make it easier to dispose of cases without any factual dispute, there is still a benefit to employees who pursue the claims indicated above because state trial courts are often reluctant to grant summary judgment on such claims.

Accordingly, employers may often have to litigate these employment claims to their conclusion.

Arbitration

Finally, Clueless should be told that New Jersey employers have been hampered when trying to enforce out-of-court mechanisms to resolve employment disputes. In fact, the New Jersey Supreme Court recently made it clear that, to be enforceable, an agreement containing an arbitration clause must do more than provide for the arbitration of "employment disputes." See Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124 (2001), and Grasser v. United Healthcare Corp., 343 N.J. Super. 241 (App. Div. 2001).

The Garfinkel Court held that, to be enforceable, an agreement must evidence an employee's knowing waiver of his right to pursue statutory claims, including workplace discrimination claims.

Thus, if Clueless wishes to have its employment disputes decided by an arbitrator rather than a jury, the company must carefully draft its agreements, keeping Garfinkel and its progeny in mind. Any question as to whether an employee knowingly or voluntarily waived his right to pursue claims in court will be decided in the employee's favor.

New Jersey may be a desirable state in which to conduct business based upon its strategic location and skilled labor pool. However, to operate a business successfully requires an understanding of the state's often employer-averse laws and sound legal advice to deal with these potentially thorny issues.