New Jersey Employment Lawyer Blog

New Jersey Supreme Court Reaffirms Lower Threshhold for Attorneys’ Fees Enhancements

February 3, 2012 | by Jonathan I. Nirenberg

Last week, in Walker v. Guiffre and Humphries v. Powder Mill Shopping Plaza, the New Jersey Supreme Court upheld the longstanding rule that a plaintiff can receive an enhanced attorney fee award under New Jersey laws that allow a prevailing plaintiff to recover his attorneys’ fees from the defendant. This applies to many New Jersey employment laws, including the New Jersey Law Against Discrimination (LAD), the Conscientious Employee Protection Act (CEPA), and the New Jersey Family Leave Act (FLA).

This right to a contingency fee enhancement dates back to Rendine v. Pantzer, a 1995 New Jersey Supreme Court case which discusses an employee’s right to recover his reasonable attorney’s fees if he wins a case under the LAD. After the court calculates the attorneys’ reasonable fee, it must determine whether and how much of an enhancement he should receive. The fee enhancement is intended to make up for the risk a lawyer takes when taking a case on a contingency fee basis. Contingency fee enhancements generally should range between five and fifty percent, and typically range between twenty and thirty-five percent. The maximum possible fee enhancement under New Jersey law is 100 percent, but such a high enhancement is available only in a “rare and exceptional case.”

In contrast, in April 2010, in Perdue v. Kenny A., the United States Supreme Court recognized that, under federal law, an attorney fee enhancement is permitted only in “rare” and “exceptional” circumstances. Fortunately, in Walker and Humphries the New Jersey Supreme Court decided not to follow Perdue, and instead continued to follow Rendine. As a result, employees who bring claims under New Jersey fee-shifting statutes such as the LAD, CEPA and the FLA are entitled to seek enhanced attorney fees. However, employees bringing claims under federal employment laws such as the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and the Family & Medical Leave Act (FMLA), are rarely entitled to fee enhancements.

New Jersey Passes Trade Secrets Act

January 30, 2012 | by Jonathan I. Nirenberg

New Jersey law prohibits employees from disclosing or using certain confidential information that belong to their employers. Since many companies are sensitive about having their trade secrets used by their competitors, they frequently require employees to sign confidentiality and trade secret agreements prohibiting employees from using or disclosing their confidential information. Employees should be aware that earlier this month employers gained additional protection for their trade secrets when Governor Christopher Christie signed the New Jersey Trade Secrets Act into law.

What Does The New Jersey Trade Secrets Act Prohibit?

The New Jersey Trade Secrets Act prohibits individuals from misappropriating someone else’s trade secret. It defines “misappropriation” as (1) obtaining someone else’s trade secret from someone who you know or have reason to know obtained it improper means; or (2) disclosing or using someone else’s trade secret without their consent if you: (a) used improper means to learn it; or (b) knew or had reason to know it was obtained by improper means when you disclosed or used it; or (c) knew or had reason to know it was obtained by improper means before you materially change your position based on it. It defines a “trade secret” as information in any form that has actual or potential economic value because it is not generally known or knowable by others through a proper means, but only if the owner of the information uses reasonable efforts to keep it secret.

Religious Ministers Are Not Protected by Anti-Discrimination Laws

January 12, 2012 | by Jonathan I. Nirenberg

Yesterday, a unanimous United States Supreme Court ruled that ministerial employees of religious groups cannot bring employment discrimination claims against the religious groups for which they work. It ruled that those claims would violate the Establishment and Free Exercise Clauses of the First Amendment to the United States Constitution. Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission.

The case involved Cheryl Perich, a teacher for the Hosanna-Tabor Evangelical Lutheran Church and School. Ms. Perich took time off because she had a disability, narcolepsy. When she tried to return to work, the Church fired her. The Church specifically stated that Ms. Perich’s threat to bring a discrimination lawsuit against it was one of the reasons it fired her.

Ms. Perich then filed a Charge of Discrimination with the United States Equal Opportunity Commission (EEOC). She claimed the Church had wrongfully terminated her employment, in violation of the Americans with Disabilities Act (ADA) by firing her because she has a disability, and in retaliation for her threat to bring a disability discrimination lawsuit. The EEOC eventually filed a lawsuit against the Church, alleging it fired Ms. Perich in violation of the ADA.

The Supreme Court ruled that the First Amendment requires a ministerial exception to federal and state anti-discrimination laws. Specifically, it held that “requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so . . . interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs.” It concluded this would violate the First Amendment’s Free Exercise Clause because it would be a government interference with an internal church decision that impacts the church’s faith and mission. As a result, the Supreme Court ruled that Ms. Perich cannot proceed with her lawsuit.

The Court did not define who is a “minister” protected by this exception. However, it found Ms. Perich was a “minister” even though she was a teacher. It based its conclusion on facts including, among other factors, that (1) the Church commissioner her as a minister, (2) she had substantial religious training and had to pass an oral examination before she could be commissioned as a minister, (3) she held herself out as a minister and received a special housing allowance and tax benefits as a result, (4) she was assigned to perform her job “according to the Word of God,” (5) her job duties required her to teach the “Word of God” and to lead her students in prayer three times a day, and (6) twice a year she lead a school-wide chapel service.

The Supreme Court noted that it was not deciding whether the ministerial exception bars other types of lawsuits against religious groups, such as lawsuits for breach of employment contracts or personal injury claims against religious employers.

Is Your Non-compete Agreement Enforceable in New York?

January 11, 2012 | by Jonathan I. Nirenberg

Under New York law, non-compete agreements and other restrictive covenants in employment contracts are disfavored, and are enforceable only in limited circumstances. New York courts enforce non-competes only if all three of the following conditions are met:

1. The non-compete is reasonably limited in scope and duration;

2. The restrictions are no greater than necessary to protect the employer’s legitimate interests;

3. The non-compete is not harmful to the general public;

4. The non-compete is not unreasonably burdensome to the employee.

Even when those four requirements are met, an employer seeking to enforce a non-compete agreement has to prove it is not merely seeking to use the non-compete agreement to prevent competition. Instead, it has to show the non-compete is necessary to protect its legitimate interests, such as to prevent the employee from using or disclosing its trade secrets or confidential information, to protect the company’s goodwill, or to prevent special harm due to the unique nature of the employee’s job.

There are few bright line rules regarding when a non-compete agreement is reasonable. In deciding whether a restrictive covenant is reasonable, courts consider a number of factors and balance the right of the employee to work and earn a living against the importance of the restrictions to protect the employer’s business. In terms of duration, covenants not to compete for 6 months or less are generally reasonable. New York courts have approved non-competes lasting up to two years when the restrictions are otherwise reasonable and not too burdensome for the employee.

If an employee is receiving compensation from her former employer during the period when she is supposed to refrain from competition, such as severance pay or garden leave pay, the non-compete is more likely to be upheld.

Even when a non-compete agreement is reasonable, it is still unenforceable if the employer fired the employee without good cause. Likewise, a reasonable covenant not to compete is unenforceable if the employer breached the employee’s employment contract.

Attorneys, as well as stock brokers and other registered representatives under Financial Industry Regulatory Authority (FINRA), should be aware that special rules apply to their non-compete agreements in New York. For example, agreements that restrict attorneys from practicing law are unenforceable, except as a condition for receiving retirement benefits. Likewise, contracts that prohibit customers from continuing to use the services of their registered representative are not enforceable.

Job Candidate Can Pursue Age Discrimination Claim Based on Decision by Independent Contractor

December 28, 2011 | by Jonathan I. Nirenberg

Late last month, a Federal Judge in the Southern District of New York ruled that a job candidate can continue with his age discrimination claim against a prospective employer based on a discriminatory hiring decision made by independent contractors who had the apparent authority to make hiring decisions on the employer’s behalf. Apparent authority is when a company’s actions lead someone else to incorrectly believe that he or she is an employee or agent of the company. This decision follows an earlier decision by the Second Circuit Court of Appeals in the same case, which recognized that Employers Can Be Held Liable for Discriminatory Hiring Decisions Made By Independent Contractors.

The case, Halpert v. Manhattan Apartments, Inc., involves Michael Halpert, who was applying for a position as a “shower” for Manhattan Apartments, Inc. He was interviewed by Robert Brooks, a salesperson who worked for Manhattan Apartments as an independent contractor. Mr. Brooks did not have the authority to hire employees on behalf of Manhattan Apartments.

During Mr. Halpert’s job interview, Mr. Brooks indicated that Mr. Halpert was “too old” for the job. Several days later, Manhattan Apartments’ receptionist said the company was not hiring Mr. Halpert because “we were looking for someone younger.” Mr. Brooks then repeated that Mr. Halpert was not qualified for the job because of his age.

Mr. Halpert sued Manhattan Apartments, claiming it failed to hire him because of his age in violation of the Age Discrimination in Employment Act (ADEA). After the Second Circuit ruled that an employer could potentially be held liable for the actions of an independent contractor, Manhattan Apartments filed a motion for summary judgment, arguing that Mr. Halpert was not its employee or agent, and there was not enough evidence to prove Mr. Brooks had the apparent authority to hire employees on its behalf.

However, the District Court disagreed. It found there was enough evidence for a jury to conclude that Manhattan Apartments had the apparent authority to hire Mr. Halpert. This evidence includes the fact that Manhattan Apartments allowed Mr. Brooks to use its offices, to answer his phones by saying “Manhattan Apartments, Inc.,” and to use business card that identify himself as a “Licensed Assc. Broker” for “Manhattan Apartments Inc.” It also included the fact that Manhattan Apartments’ receptionist explained the decision not to hire Mr. Halpert by saying that “we were looking for someone younger.” It therefore denied Manhattan Apartments’ motion for summary judgment to potentially give Mr. Brooks an opportunity to prove his case at a trial.

New York City Clarifies Right to Reasonable Accommodations for Religious Beliefs

December 16, 2011 | by Jonathan I. Nirenberg

Earlier this year, Mayor Michael Bloomberg signed into law an amendment to the New York City Human Rights Law (NYCHRL). The amendment clarifies when employers in New York City are required to provide reasonable accommodations for the religious observances and practices of their employees and prospective employees.

Employers must provide reasonable accommodations unless they cause the employer an undue hardship. The amendment to the NYCHRL indicates that some of the factors to consider when determining if an accommodation causes an undue hardship include:

1. The nature and cost of the accommodation;
2. The financial resources of the facility;
3. The number of employees working at the facility;
4. The effect providing the accommodation would have the facility’s expenses and resources;
5. The overall financial resources of the employer;
6. The number of employees working for the employer;
7. The number, type, and location of the employer’s facilities;
8. The composition and functions of the employer’s workforce; and
9. How geographically spread out or close together the employer’s facilities are.

The amendment also makes it that the employer has the burden to prove an accommodation would impose an undue hardship on it. However, it makes it clear an employer is not required to provide a reasonable accommodation for an employee’s religious practice or belief if the employee would be unable to perform the essential functions of his or her job even with the accommodation.

New York State, New Jersey, and federal law already require employers to provide reasonable accommodations for employees’ religious belief. However, this law is significant because New York City law has been interpreted very broadly. For example, as discussed in a previous article, New York’s Appellate Division has ruled, in the context of reasonable accommodations for a disability, that an Extended Medical Leave Can Be Reasonable Accommodation Under New York Law.

New Jersey Appellate Court Rejects 50% Reduction to Attorney’s Fees Award in Whistleblower Lawsuit

December 9, 2011 | by Jonathan I. Nirenberg

The New Jersey Appellate Division recently ruled, in an employment law case in which the same law firm represented two clients, and only one of those clients won at trial, it was improper to reduce the attorney’s fee award by 50%. Many employment laws, including New Jersey’s Conscientious Employee Protection Act (CEPA) and the New Jersey Law Against Discrimination (LAD), allow an employee who wins his case to recover his reasonable attorney’s fees and costs. Ordinarily, when an attorney achieves excellent results for his client, he should be awarded all of his attorney’s fees. Otherwise, the judge can reduce the fee based on the time that he finds was unnecessary or unreasonable.

The case, Donelson v. DuPont, involved two employees. Joseph Donelson brought a whistleblower claim under CEPA and an age discrimination claim under the LAD. However, he lost his case at trial. The other employee, John Seddon, brought a whistleblower claim under CEPA. Seddon won at trial, and the jury awarded him $724,000 in economic damages, plus $500,000 in punitive damages. As I discussed in June, in an earlier decision stemming from Donelson, the New Jersey Supreme Court ruled that New Jersey Employees Can Recover Lost Wages if Forced to Resign Because Retaliation Caused Psychiatric Disorder. But the Court sent the case back to the Appellate Division to decide whether the trial court had properly reduced Seddon’s attorney’s fees.

Since Seddon and Donelson were represented by the same lawyer, and their cases were factually related, it was difficult to determine how much of the total time the lawyers spent on the case was necessary to Seddon’s case, and how much was only necessary for Donelson’s case. As a result, the trial judge decided to cut Seddon’s attorney’s fee award in half.

The Appellate Division ruled that, when the trial judge calculated Seddon’s attorney’s fees, it was proper to consider the fact that Donelson lost his LAD case. However, it found it was improper to reduce Seddon’s attorney’s fee by 50 percent because Donelson would have been a witness in Seddon’s case even if he was not a party to the lawsuit, and his attorney would have had to spend much of the same time either way. Accordingly, the Appellate Division sent the case back to the trial court to reassess the appropriate attorney’s fee.

Beware: Your Boss Might Read Your Posts on Social Networking Sites

November 17, 2011 | by Jonathan I. Nirenberg

I often read status updates on sites like Facebook, LinkedIn and Twitter reflecting my friends’ feeling about their work, bosses, and co-workers. It is worth a reminder that such postings potentially can be used against you in an employment law case, such as a discrimination, harassment, or retaliation lawsuit. If your profile is public, or if one of your supervisors is your “friend,” your employer will have easy access to that information. But your employer might be able to obtain the information in a lawsuit even if it was originally visible only to individuals who you have accepted as “contacts” or “friends.”

For example, one of my clients recently received the following request from a large law firm that represents employers:

Produce a copy of the contents of Plaintiff’s account on any social media websites, such as Facebook, MySpace, Twitter, LinkedIn, etc.

I intend to object to this request because it is nothing more than a fishing expedition, and the employer is seeking information that is not relevant to the case. But there are many ways in which your posts may be relevant to an employment law matter. For example, if you are having a good day at work and post “I love my job,” that could be used against you to prove you did not experience a hostile work environment, and therefore harm your harassment claim. On the other hand, if you express negative feelings about your boss, co-workers, clients, or customers, then you could be accused of disparaging your employer, which could violate an internal company policy, your employment contract, or your duty of loyalty to your employer.

It is important to realize that, unless you delete it, all of the data you have posted on Facebook, including wall posts, photos with comments, videos, private messages, friend lists and other user profile content, remains accessible in an archive that is fairly easy to retrieve. You can download it from the Account Settings menu. Thus, even very old posts could hurt you if the employment relationship goes bad. Be very careful about what information you post about your job on social networking websites. At the very least, you should not post anything about your current or former employer that you would not want the employer to read.

However, once you are considering filing a lawsuit, you cannot erase your archive because you would be destroying potential evidence in your case, and you could be penalized. For example, in Lester v. Allied Concrete, a plaintiff who prevailed in a wrongful death case was ordered to pay a $180,000 fine for deleting his Facebook profile.

Jury to Decide Whether Caswell-Massey Discriminated Against Disabled Employee With Sleep Apnea

November 7, 2011 | by Jonathan I. Nirenberg

Last month, in Gibbs v. Caswell-Massey, New Jersey’s Appellate Division ruled that Linda Gibbs could proceed with her disability discrimination lawsuit against her former employer, Caswell-Massey. Caswell-Massey is a luxury bath and body products company in Edison, New Jersey. It hired Ms. Gibbs in 1993 . She was gradually promoted through the company’s ranks, and eventually became its Corporate Manager, Retail Stores and International Sales.

In 2000, Ms. Gibbs’s doctor diagnosed her with sleep apnea. This disability causes Ms. Gibbs fatigue, and often makes it difficult for her to stay awake at work. For example, she occasionally nods off at her desk. Caswell-Massey warned Ms. Gibbs on several occasions that her unexcused absences, sleeping, and poor job performance were unacceptable, and that she could be fired if she had any further performance issues. Nonetheless, Ms. Gibbs received an overall performance rating of “above overall expectations” in both 2005 and 2006.

In November 2006, Ms. Gibbs took a four-week disability leave to have hernia surgery. The company fired her two days after she returned to work. It claims its decision to fire was based on information it received from Steven Culter during Ms. Gibbs’s disability leave. Mr. Cutler was business partners with Ms. Gibbs’ husband. He and Mr. Gibbs apparently worked together at the Route 18 flea market in East Brunswick, New Jersey. Mr. Cutler claimed that Ms. Gibbs was stealing products from Caswell-Massey, and her husband was selling them at the flea market. He eventually provided the company with photographs of Caswell-Massey’s products that he was selling at the flea market, a copy of a book with Gibbs’s handwriting that listed prices for Caswell-Massey products, and his own sworn statement claiming Ms. Gibbs admitted she had taken products from Caswell-Massey.

Caswell-Massey investigated Mr. Cutler’s allegations. During the investigation, Ms. Gibbs claimed she did not know her husband was selling Caswell-Massey products at the flea market. She also claimed that Mr. Cutler was blackmailing her, and provided evidence including threatening voicemail messages that Mr. Cutler had left her. Caswell-Massey suspended Ms. Gibbs without pay while it conducted its investigation. At the conclusion of the investigation, it fired Ms. Gibbs, supposedly because she had violated the non-compete provision in her employment contract.

The trial court dismissed Ms. Gibbs’s case, including her claim that Caswell-Massey fired her because of her disability in violation of the New Jersey Law Against Discrimination (LAD). It ruled that she did not have enough evidence to prove that Caswell-Massey’s explanation for firing her was a pretext, or excuse, for discrimination.

The Appellate Division disagreed. It held that a reasonable jury could believe that Caswell-Massey discriminated against Ms. Gibbs, based on evidence supporting the conclusion that the company conducted an inept and cursory investigation, relied on Mr. Cutler’s statements even though he was a biased and questionable source, and ignored Ms. Gibbs’ 13 year history with the company, in addition to the lack of evidence that Ms. Gibbs’ husband ever sold a single Caswell-Massey product. However, the Court also indicated that a jury could come to the opposite conclusion, and could find that the company fired Ms. Gibbs because she violated her non-compete agreement. As a result, the Appellate Division sent the case back to the trial court, so a jury can decide whether Ms. Gibbs has proved that Caswell-Massey illegally discriminated against her.

New Jersey Court Rules Jury Must Decide If Employer is Responsible for Coworker’s Sexual Harassment

October 26, 2011 | by Jonathan I. Nirenberg

Earlier this month, New Jersey’s Appellate Division reversed a trial court’s decision to dismiss two employees’ sexual harassment case against their employer, the Mercer County Youth Detention Center. In Wallace v. Mercer County Youth Detention Center, the Appellate Division ruled that a jury needs to decide whether the employer’s anti-harassment policy was effective. Employers can be held liable under the New Jersey Law Against Discrimination (LAD) for sexual harassment committed by a coworker if the employer did not have an effective anti-harassment policy.

Moneck Wallace and Tina Stewart, two female employees who worked for the Mercer County Youth Detention Center, claim a male coworker, Jerel Livingston, sexually harassed them. Ms. Wallace and Ms. Stewart both complained about the sexual harassment. After conducting an investigation, the employer concluded that there was insufficient evidence to support their claims. The two women then filed a sexual harassment lawsuit.

The trial judge dismissed the case even though it found that Ms. Wallace and Ms. Stewart had enough evidence to prove that Mr. Livingston sexually harassed them. However, it concluded that their employer could not be held liable for the harassment because the alleged harasser was not a supervisor, and Ms. Wallace and Ms. Stewart did not have any evidence that their employer was aware of the harassment but failed to respond to it.

The Appellate Division disagreed with the trial court’s decision to dismiss the case. It explained that an employee might be able to prove her employer is liable for harassment committed by a supervisor or coworker if the employer did not have an effective anti-harassment policy.

The Appellate Division concluded that Ms. Wallace and Ms. Stewart had enough evidence to allow a jury to conclude that Mercer County did not have an effective anti-harassment policy. This included evidence that it:

Did not effectively inform its employees about its sexual harassment policy;
Did not provide adequate anti-harassment training to its employees;
Did not effectively enforce its anti-harassment policy;
Did not conduct a sufficient investigation into the alleged sexual harassment;
Did not use clear criteria when it evaluated whether the sexual harassment claim was substantiated; and
Did not have effective procedures to evaluate whether its sexual harassment policy was effective.

As a result, the Appellate Division sent the case back for a trial at which a jury will decide those issues.