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A new legislative bill has been introduced that would dramatically change New Jersey state law concerning restrictive covenants and non-compete agreements. Bill A1769 is intended to protect New Jersey employees in securing new employment while also taking into consideration the legitimate protectable interests some employers have in restraining certain employees’ post-termination business activities. Whether a restrictive covenant is enforceable will remain a fact-sensitive inquiry, the bill, if passed, will provide both the employee and the employer with a defined set of rules in determining whether a restrictive covenant can be enforced against a former employee.

A restrictive covenant is an agreement between an employee and their employer that restricts an employee’s ability to secure new employment after the employment has ended.  A non-compete clause is a common form of restrictive covenant that seeks to prohibit an employee from working for a competing business for a certain period of time after they are separated from their employment. Another common form of a restrictive covenant is a non-solicitation clause that prohibits a former employee from soliciting business from a former client or customer on behalf of another business.  Restrictive covenants are common for sale representatives, insurance and financial professionals, and other high-income professionals.

In introducing this new bill, the New Jersey legislature has declared that these types of post-employment contracts restrict, prohibit, and impede the development of business in New Jersey because they force skilled workers to find work outside of New Jersey while also requiring businesses to solicit skilled workers from other states to perform work in New Jersey.  For these reasons, the drafters of this bill state that restrictive covenants discourage innovation and production, impose special hardships on employees and may constitute a restraint on trade and commerce.

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The United States Supreme Court has ruled against a gay couple in favor of a Colorado baker who refused to bake a wedding cake for their wedding in the case Masterpiece Cakeshop v. Colorado Civil Rights Commission.  But lest people think that the Supreme Court was ruling on whether a business can refuse to provide goods or services to an individual based upon their sexual orientation, or based on religious objections, it was not.  That decision will surely have its day.

The Supreme Court ‘s ruling was limited to the actions of the Colorado Civil Rights Commission in which it ruled against baker Jack Phillips. This case was brought by same sex couple, Charlie Craig and David Mullins, who had gone to the suburban Denver Colorado Masterpiece Cakeshop to order a custom wedding cake for their upcoming wedding.   Baker Jack Phillips told the couple he would not create a cake for their same sex wedding because of his religious belief but told the couple that they could purchase pre-made products.   According to Mr. Phillips, baking a custom-made cake for a same sex couple interfered with his Christian beliefs.

The couple complained to the Colorado Commission in 2012 arguing that the baker had violated public accommodation law by discriminating against them on the basis of their sexual orientation under the Colorado Anti-Discrimination Act.  The Colorado Anti-Discrimination Act prohibits discrimination on the basis of an individual’s sexual orientation discrimination in a place of business engaged in any sales to the public and any place offering services to the public.  After holding formal hearings, the state administrative law judge rejected the baker’s First Amendment claim that it was a violation of his right to the free exercise of religion. Mr. Phillips felt that he would be compelled to create a cake that would require him to utilize his artistic talents to express a message that he disagreed with, on the basis of his religion.  The Commission and the Colorado Court of Appeals affirmed the decision.

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Most people know that it is against the law for employers to not pay their employees their earned wages.  But what if you are not an employee, but instead making a living as a freelance worker.  Because freelance workers are not considered employees, the laws that require employers to pay its employees their wages, such as the New Jersey Wage Payment Act and federal Fair Labor Standards Act, do not apply to freelancers.  While there are some laws such as the Independent Sales Representative Rights Act that protect independent sales representatives from not being paid their earned sales commissions, there is no specific law to protect many freelance workers. As a result, companies are far too often stiffing their non-employees from being paid their earned compensation.

New Jersey lawmakers have recognized this as a serious problem in today’s workforce and are now attempting to pass legislation to protect freelance workers from getting paid their earned compensation.  Assembly Bill No. 1526, approved on May 18, 2018, mandates that contracts between a company and a freelance worker, must now be in writing, and provides for severe penalties against companies for shirking their duty to  pay a freelance worker the compensation they are owed.

The bill requires a client to pay a freelance worker his or her compensation earned according to the work terms agreed to with the client.  If there is no agreement, payment shall be paid no later than 30 days after completion of the work or services performed.  The bill defines the term “client” to be any “sole proprietorship, partnership, corporation, limited liability company, association, other business entity or nonprofit organization in which that business has contracted with a freelance worker for compensation equal to or greater than $600.”

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The New Jersey Appellate Division has reversed the trial court’s dismissal of an out of state resident’s claim of age discrimination under New Jersey Law Against Discrimination.  The decision is an important reminder to employers that New Jersey’s strong public policy to eradicate discriminate in all its ugly forms may extend to non-New Jersey residents who suffer from discrimination that is protected under the New Jersey state law.

In the case Trevejo v. Legal Cost Control, Inc., and John Marquess, the employee, Susan Trevejo, lived in Massachusetts and worked remotely from her home for the employer, whose principal place of business was located in Haddonfield, New Jersey.  In claiming that she had standing to sue under the New Jersey Law Against Discrimination, Ms. Trevejo pointed out the fact that she was provided a company computer to connect to the company’s corporate server in New Jersey and a company phone to communicate with other company employees, some of whom lived and worked in New Jersey.  The employer argued that Ms. Trevino was never a resident of New Jersey at any point in her employment, never lived in New Jersey and never sought or received any benefits from the state of New Jersey.  The employer also pointed out the fact that although Ms. Trevejo had traveled to New Jersey for business at times during her employment, she had not done so any time from 2009 through 2015.

Twelve years into her employment, the employer terminated Ms. Trevejo’s employment. In response, Ms. Trevejo filed a lawsuit alleging age discrimination under the New Jersey Law Against Discrimination.  During the lawsuit, Ms. Trevejo’s employment lawyers requested broad discovery to prove she was entitled to pursue her age discrimination claims under New Jersey’s discrimination laws, including the nature and substance of her electronic and other virtual contact and connection to the employers’ New Jersey office as part of her day-to-day work activities.

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The New Jersey Appellate Division has overturned a trial court’s decision dismissing a Somerset County detective’s whistleblower lawsuit that stems from complaints he made regarding improper evidence collection and casework by the forensic unit and his supervisor.  The case was previously dismissed by the trial court who found that the Somerset County Prosecutor’s Office’s actions in transferring the detective from the forensic unit to the fugitive squad did not amount to an adverse employment action required under the New Jersey Conscientious Employee Protection Act (“CEPA”) “whistleblower” law.

The Appellate Division disagreed with the trial court and has ordered the case to move forward to the discovery phase.  The plaintiff in the case, Jeffrey Scozzafava, began working in the Somerset County Prosecutor’s Office forensic unit in 2007.  Prior to his employment with the Somerset County Prosecutor’s office, Mr. Scozzafava was employed as a forensic detective with the New Jersey State Police Crime Scene Investigation unit.  In the lawsuit, Mr. Scozzafava alleges that he made several complaints regarding poor evidence collection and inadequate casework completed by the Unit (which included his supervisor) and that he was retaliated against by his employer in response to those complaints.

Specifically, Mr.  Scozzafava contends that his supervisor’s decision to move him out of the forensic unit to the fugitive squad amounts to an adverse employment action. Mr. Scozzafava alleges that his supervisor told Mr. Scozzafava that “Everybody does time in the penalty box” when they discussed the job transfer.  In the new role, Mr. Scozzafava was no longer able to earn overtime compensation and his office car was downgraded. Mr. Scozzafava also claims that as a result of the transfer, he was no longer able to utilize the skills and knowledge he had gained in his experience and study of forensic detective work.  This was particularly demeaning to him because he had developed extensive expertise in the field in addition to having earned a proven reputation as an expert.

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The New Jersey Appellate Division recently held that an employee, who quit her job in response to being told that she would be fired, can collect unemployment benefits.

In the case Cottman v. Bd. of Review, Dkt. No. A-1908-16T2, 2018 N.J. Super. LEXIS 52 (App. Div. March 29, 2018), the Appellate Division reversed the Board of Review’s decision that found Ms. Cottman ineligible for quitting her job after her child care arrangements fell through requiring her to ask for the day off.  Ms. Cottman was a parent of three children all of whom had special needs and worked the night shift for Quality Management Associates as a residential counselor.  When Ms. Cottman’s babysitter unexpectedly quit, Cottman as per company policy, tried to find a coworker to fill in for her but was unsuccessful finding anyone to work for her. As a result, Ms. Cottman told her supervisor that she would not be able to make it to work for her shift because there was no one to take care of her kids.  Her supervisor responded that she “might” be fired and should not “play with [her] time.”  Upon being told she might be fired, Cottman instead resigned.

When Ms. Cottman subsequently applied for unemployment benefits, she was initially denied after it was determined she had left her work voluntarily and without good cause attributable to her work.  The Appeal Tribunal cited the New Jersey Administrative Code (N.J.A.C.) which includes “care of children or other relatives” in the list of personal reasons that will ordinarily disqualify someone from receiving unemployment benefits. The Board of Review affirmed the decision.

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The Appellate Division has denied an individual from proceeding with her unemployment appeal as a result of failing to appear for the scheduled Appeal Hearing.  In the matter of Boone v. Board of Review, Department of Labor and Workforce Development, and LSA Ventures, LLC, Respondents- No. A-2286-16T3, decided April 9, 2018, the claimant realized the day after the scheduled appeal hearing date, that she had misread the date of the hearing which had been scheduled for the previous day.  After the claimant was unable to obtain a rescheduled date from the Department of Labor, she appealed the decision requesting that she be provided the right to a new hearing as a result of her non-appearance.

The claimant, Sharon Boone, originally filed for unemployment benefits in September 2016.  At this first stage of the unemployment benefits process, Ms. Boone was found ineligible for benefits by the Deputy Director because she left her job voluntarily due to dissatisfaction with her working conditions.   Ms. Boone then appealed her original determination disqualifying her from receiving unemployment benefits and received notice on October 26, 2017 that a telephonic hearing would take place before the Appeal Tribunal, which is the next level in challenging a finding of ineligibility for unemployment benefits. The notice informed Ms. Boone that the hearing would take place on November 14, 2016, at 10:30 a.m. The notice also informed Ms. Boone in upper-case print that she was required to call the Appeals Office 15-30 minutes before the scheduled hearing to register for the hearing.   The notice also indicated that the appeal may be dismissed or that the claimant could be denied participation in the appeal if “you fail, without good cause, to follow these instructions.”

Unfortunately for Ms. Boone, she did not call the Appeals office on the appointed date and time and therefore, the hearing did not take place. The Appeals Tribunal found therefore, that because Ms. Boone had failed to participate in the telephonic hearing, her appeal was dismissed.  On November 15, Ms. Boone subsequently faxed a letter indicating that she had confused the dates and thought her appeal was to take place “today.”  She requested a new hearing date, but the Tribunal declined to reopen the decision.

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Governor Phil Murphy has signed into law the “Diane B. Allen Equal Pay Act”, which is rightfully being touted as the strongest equal pay law in the United States.  The New Jersey Equal Pay Act amends the New Jersey Law Against Discrimination to specifically protect employees from discriminatory pay practices.  It provides severe penalties to employers who violate the new law.

The New Jersey Equal Pay Act, which will be effective immediately on July 1, 2018, specifically prohibits employers from paying employees less than other employers because of their gender, race or other protected class.  Employers must be able to refute a claim of wage discrimination by showing that any difference in pay is based upon a seniority system, a merit system or other legitimate bona fide factors (e.g. training, education, experience, quality or quantity of work).

The new law also provides some significant changes to the applicable statute of limitations.  For example, the New Jersey Equal Pay Act strengthens the statute of limitations for claims based on pay equity to a period of six (6) years as opposed to the two (2) year statute of limitations

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Employees are often unable to defend themselves against employers attempting to restrain their post-employment business activities through non-compete agreements.  While employers can sometimes show they have a protectable interest in restraining a former employee’s post-employment business activities, it has become far too common that employers inappropriately use restrictive covenants against former employees who simply cannot afford to defend themselves in an expensive commercial litigation.  These employees are often left with no recourse and have no choice but to cave to their former employer’s unreasonable and anti-competitive demands.

Two recent New Jersey cases provide hope and a roadmap to fight against employers who unfairly attempt to use non-compete agreements to the detriment of the former employee and their ability to make a living.  Both cases illustrate that there are ways to fight back against employers who attempt to use non-compete agreements to restrain competition and retaliate against their former employees.

The first case, Abuaysha v. Shapiro Spa LLC, et al., Docket No.: BER-L-988-18, was brought by our firm, Smith Eibeler on behalf of a terminated employee. This case involves a former massage therapist who filed an emergent Order to Show Cause against her former employer to be relieved of her non-compete agreement after she alleged unlawful termination from her employment.  Specifically, the plaintiff alleged that she was unlawfully fired in retaliation for leaving work and taking leave in order in order to get medical treatment after being told that she may have contracted the shingles virus from a client upon whom she had just performed a massage.  The plaintiff alleged that she told her supervisor that she needed to leave work to get medical treatment to make sure she did not have shingles and that she would not perform any further massages until a doctor cleared her to return to work.  The employer terminated her when she returned to work after a few days of leave.

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New Jersey is getting closer to becoming the tenth state to enact a paid sick leave law. On Thursday, April 12, 2018, the New Jersey Senate passed  (A1827) and is headed for Governor Murphy’s desk for his signature.  The bill was approved in March by the Assembly.

The legislation would allow workers to accrue one hour of earned sick leave for every 30 hours.   Employees who work for employers with less than 10 employees can accrue up to a maximum of 40 hours per year and employees who work for employers that employ more than 10 employees can accrue up to a maximum of 72 hours per year. Workers would be eligible for paid sick leave after 120 days of employment.

Certain types of employees are exempt from the bill, namely certain construction employees, per-diem health-care workers and public employees who have sick leave benefits in place. Employees who are employed by temporary employment agencies will accrue the benefits based upon the time they are employed with the agency and not for each separate client they are assigned.  The employer must pay the sick leave earned by the employee at the same rate of pay with the same benefits as the employee usually earns.