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Shift from COAH to State Courts Could be a Boon to Developers

Published on: March 11, 2015 | by David R. Pierce

On March 10, 2015 the New Jersey State Supreme Court issued a unanimous ruling allowing trial courts in the state, rather than the state Council on Affordable Housing (“COAH”), to decide if towns are providing enough low- and moderate-income housing. The Court issued its decision after finding that COAH has repeatedly failed to establish new affordable housing guidelines.

The Court has delayed the implementation of its ruling for 120 days in order to allow parties to prepare “fair share” or “higher density” arguments. Ninety days after the Court’s March 10th ruling, municipalities will have 30 days to file declaratory judgment actions seeking immunity from litigation. Municipalities will need to show the court they have either (1) achieved substantive certification from COAH under prior iterations of the Third Round Rules before they were invalidated, or (2) had achieved “participating” status before COAH. If at the conclusion of the 120 day period municipalities have not either filed for a declaratory judgment, or have not been granted immunity, “builder’s remedy” actions may be brought against the municipality.

Currently 314 of 565 municipalities in New Jersey have plans pending before COAH. Developers and their counsel should remain vigilant as to how trial courts rule on declaratory judgment motions filed by these municipalities. For developers seeking to begin real estate development projects in any of the 251 New Jersey municipalities that do not have plans pending before COAH, developers may seek the assistance of the courts after 90 days from March 10, 2015.

Employers Who Implement Effective Sexual Harassment Policies Can Avoid Vicarious Liability

Published on: March 5, 2015 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In its recent landmark decision in, Ilda Aguas v. State of New Jersey, No. A-35-13 (Feb. 11, 2015), the New Jersey Supreme court broke new ground in the law of sexual harassment with an opinion that can be viewed as a victory for both employers and employees. For employers, the Court formally adopted the United State Supreme Court’s affirmative defense analysis, which may now be invoked to shield employers from liability for a supervisor’s sexual harassment. Consistent with the affirmative defense, the Court made clear that the defense is only available to those employers who develop comprehensive and effective sexual harassment programs that include written polices, complaint procedures, employee training and prompt investigation of harassment complaints.

On the employee side, the Court expanded the definition of “supervisor,” thus broadening the scope of employee’s whose conduct can trigger employer liability for workplace sexual harassment.

The Facts: Aguas, a corrections officer at the Department of Corrections (DOC), alleged her male supervisors sexually harassed her over the course of several months, including inappropriate comments and touching. Aguas conceded her supervisors did not take any tangible employment action against her.

Company Email Can Now Be Used By Employees For Union Activity

Published on: February 2, 2015 | by John H. Schmidt, Jr.

Section 7 of the National Labor Relation Act protects employees’ right to communicate with one another regarding their terms and conditions of employment and to engage in unionization activities at the jobsite. However, the National Labor Relations Board (“NLRB”) historically held that employers may place reasonable restrictions on employees’ conduct and communications while on employer property and while on working time without violating Section 7 rights. Consistent with those holdings, in 2007 the NLRB issued its ruling in, holding that employers could prohibit employees from using the employer’s email system to communicate with each other about union matters or other terms and conditions of employment, even if employees were permitted access to the email system for other purposes.

That all changed with the NLRB’s recent ruling, reversing the decision. Effectively immediately, employees provided access to employer email systems for work activities may now be permitted to use these systems during non-work time for “statutorily protected communications” concerning unionization efforts, salaries and benefits and other terms and conditions of employment. Employers looking to restrict email access for such purposes must demonstrate that the measures are necessary to maintain production, discipline or other “special circumstances” warranting restriction of these employee rights. However, the NLRB cautioned that “because limitations on employee communication should be no more restrictive than necessary to protect the employer’s interests, we anticipate that it will be the rare case where special circumstances justify a total ban on nonwork email use by employees.”

In ruling in favor of employee access to email systems for Section 7 activities during non-work time, the NLRB pointed to a recent observation by the U.S. Supreme Court that email has become a fundamental means of communication in the workplace and “some personal use of employer email systems is common and, most often, is accepted and tolerated by employers.” The NLRB concluded that employees’ Section 7 rights trump an employer’s property rights to its communications systems.

DOJ Expands Title VII Protection To Transgendered Individuals

Published on: February 2, 2015 | by Kathleen M. Connelly

By: Kathleen Connelly, Esq.

Last December Attorney General Eric Holder issued a memorandum directing the Department of Justice to consider prosecuting claims on behalf of individuals who believe they have been discriminated against based on their gender identity or transgender status. While such claims were previously not recognized under Title VII of the Civil Rights Act, the Attorney General’s memorandum observed that “the text of Title VII, the relevant Supreme Court case law interpreting the statute, and the developing jurisprudence in this area” support the DOL’s new interpretation that Title VII’s prohibition of “sex” discrimination encompasses gender identity and transgender bias.

This action is consistent with other federal efforts to expand lesbian, gay, bi-sexual and transgender rights. Last August the Office of Federal Contract Compliance Programs issued clarifying that Title VII’s prohibition of “sex” discrimination prohibits LGBT discrimination in all federal government contracts. This action was on the heels of President Obama's issuance of , amending to expressly include gender identity as a protected class requiring affirmative action and non-discrimination in government contracts. Likewise, in its 2012 holding in , the Equal Employment Opportunity Commission ruled that Title VII’s protections extended to an employee claiming discrimination on the basis of her gender identity and transgender status. On the Congressional front, lawmakers have introduced the Employment Nondiscrimination Act which would specifically prohibit employment discrimination on the basis of LGBT status, although those efforts have been stalled.

Employers Face Significant Difficulty Obtaining Injunctive Relief for Alleged Breach of Non-competition and Confidentiality Provisions

Published on: February 2, 2015 | by Eric B. Levine

By: Eric Levine, Esq.

In , the Superior Court denied Mega Brand’s application for injunctive relief against two former employees who purportedly violated the non-competition and confidentiality provisions of their employment agreements. The decision illustrates the burden faced by employers seeking to enforce post-employment restrictions against former employees, as well as the consequences of appearing less than truthful when seeking judicial relief.

The Facts: Mega Brands is a distributor of stationary products to large retail customers such as Wal-Mart and Target. Prior to joining Mega Brands, Michael Cerillo and Ben Hoch operated a company that sold stationary products comparable to those offered by Mega Brands. In 2006, Mega Brands acquired the company through a stock purchase agreement (“SP Agreement”) and hired Cerillo and Hoch under employment agreements containing standard non-competition and confidentiality provisions. These agreements expired on the later of five years from the date of the SP Agreement or twelve months after Cerillo and Hoch’s termination of employment with Mega Brands.

New Jersey Supreme Court Adopts Narrow Test for Determining Independent Contractor Status Under NJ Wage and Hour Laws

Published on: February 2, 2015 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

To avoid the costs inherent in the employer-employee relationship, including employee benefits, workers compensation insurance, employment taxes and other liabilities, many employers secure the services of an independent contractor to avoid these liabilities. There are significant risks with this approach, however. An employer who misclassifies a worker as an “independent contractor” who, in the eyes of the law, is actually serving as an “employee” faces significant liability for unpaid overtime, employee benefits, payroll taxes, statutory penalties and other consequences. To make matters worse, individuals who prevail on claims that they were misclassified as independent contractors are eligible for double damages and attorney fees from the employer.

Both at the state and federal levels, the courts have used various tests – applied to various legal contexts – to determine whether a worker should be classified as an independent contractor or an employee in the situation at hand. While some tests result in a greater number of workers qualifying as independent contractors, the far narrower “ABC test” is widely regarded as a more difficult test for employers to meet when facing an independent contractor misclassification challenge.

On January 14, 2015 the New Jersey Supreme Court issued its opinion in , resolving some of the uncertainty by declaring the ABC test as the governing test to determine an individual’s employment status for purposes of wage-and-hour and wage-payment disputes under New Jersey law.

Perceived Ostracism By Co-workers Does Not Create Employer Liability For Hostile Work Environment

Published on: February 2, 2015 | by Sergio D. Simões

Under the New Jersey Law Against Discrimination (the “LAD”), an employer who acts negligently in eradicating discriminatory conduct from the workplace may be held vicariously liable for the discriminatory actions of its employees. In a victory for employers statewide, the Appellate Division refused to find an oil delivery company liable for one of its trainer’s racially charged statements to a co-worker where the employer had appropriate mechanisms in place to prevent and address incidents of unlawful workplace harassment.

The Facts: In , the plaintiff employee, an African-American, asserted that he was subjected to a racially-hostile work environment as a result of certain offensive, racially-charged comments by a trainer who was not a supervisor of the employee. After the employee complained to the company about the trainer’s behavior, his supervisors met with him to discuss the incident, conducted an internal investigation and assigned the employee a new trainer. The company also maintained a detailed non-discrimination policy in its employee handbook that was distributed to every employee. The employee left the job despite the company’s efforts, claiming that he felt ostracized by his co-workers following his complaint to management. Thereafter, the employee filed suit claiming he was subjected to a racially-hostile work environment in violation of the LAD. The company argued that it was not liable for the co-worker’s actions, pointing to its policies against discrimination and the prompt remedial actions it took in response to the employee’s complaint.

The Finding: The court agreed with the company and dismissed the discrimination suit. The court cited the fact that the company kept a detailed employee handbook with a policy barring harassment and discrimination and providing detailed procedures to be followed when reporting and investigating harassment and discrimination claims. Moreover, when the company learned of the employee’s complaint it did not ignore it or otherwise overlook reprehensible behavior, but undertook efforts to investigate his claim and separated him from the alleged harasser. In the face of the efforts, the employee’s perception of his co-workers’ opinions of him was insufficient to support a hostile work environment claim.

Retroactive FMLA: For Employers It’s All About The Timing

Published on: February 2, 2015 | by Kathleen M. Connelly

By: Kathleen Connelly, Esq.

A recent holding by a New Jersey federal court in serves to remind employers that when employees fail to give timely notice of the need for medical leave they may be forfeiting the protections of the Family and Medical Leave Act (FMLA).

The Facts: On May 24, 2011 Camden County Corrections Officer Walter Radlinger had fully exhausted his intermittent family leave under the FMLA, and his subsequent absences were thus deemed absences without leave (AWOL) by the County, which triggered disciplinary action. In lieu of termination, the parties entered into a settlement agreement whereby Radlinger agreed to a 90 day staggered suspension, one year of probation and an acknowledgement that future abuse of the County’s FMLA, sick leave or absenteeism policies would result in termination proceedings.

THE SUPREME COURT SPEAKS: Time Spent by Workers at Employer Security Checkpoints is Not Compensable Under the FMLA

Published on: February 2, 2015 | by Kathleen M. Connelly

By: Kathleen Connelly, Esq.

In its rare unanimous, pro-employer ruling in the United States Supreme Court held that under the Fair Labor Standards Act (FLSA), employers are not obligated to compensate employees for time spent undergoing employer-mandated security checkpoints after normal working hours. The ruling resolved a split between rulings from the Ninth Circuit Court of Appeals, and all other federal appeals courts considering the issue – The Ninth Circuit Court ruled employers were obligated to compensate employees for this time, while other federal courts concluded the time was not compensable time worked within the meaning of the FMLA.

The Facts: Integrity Staffing Solutions, Inc. (“Integrity), a storage and order-filling facility for Amazon.com, implemented security procedures requiring workers to pass through security checkpoints for up to 25 minutes before leaving the facility. Employees challenged the practice, claiming that Integrity was obligated to compensate employees for these mandated post-shift activities under the FLSA. In the proceedings below, the District Court found that the time was postliminary and not compensable under the FMLA. The Ninth Circuit reversed in part, holding that these activities were compensable if they were necessary to the principle work and were performed for the benefit of the employer.

SUBCONTRACTOR’S RIGHTS PROTECTED AND LARGE CONSTRUCTION PROJECT RESUMES

Published on: January 13, 2015 | by Greg K. Vitali

Two years into a large federal design-build project through the Army Corps of Engineers here in New Jersey, the owner shut down the project and terminated the general contractor for cause, citing its failure to keep to the schedule among other issues. Our client, a mechanical subcontractor with an almost $1.5 million contract on the project, was caught up in the dispute. As the project sat dormant for a year, our client faced years of litigation to collect payment on work performed, the possibility of receiving only a percentage of the payments not made, and the loss of the rest of the work on the project that needed to be done. The client was also concerned about its obligations under the contract and the warranties on expensive equipment purchased for the project as it sat idle.

Lindabury construction attorney Greg Vitali was contacted by the client to provide guidance in protecting the client’s interest and rights. Greg stepped in to perfect the client’s bond rights under the Miller Act, thereby providing the client with additional assurances that it would be paid the monies due on the project. He also successfully negotiated a ratification agreement with the surety and the completion contractor that (i) resulted in an increase in the contract price to compensate the client for the consequences of the delays, and (ii) limited the exposure of the client for warranty claims on materials and equipment that had not yet been accepted but had otherwise sat idle at the project for over a year and a half. Through the efforts of Greg and the other parties, the dispute was resolved to everybody’s satisfaction. The owner and the surety are now able to proceed with the completion of the project. Our client avoided years of litigation and delays in payment. Instead, he was able to get back to work, receive payment in full for work previously completed but not paid, and obtain necessary and critical protections from the consequence of the delay.