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Yet again, New Jersey’s appellate court has demonstrated its reluctance to enforce agreements to arbitrate signed as part of a new employee’s orientation. In a previous post we discussed a ruling from the Appellate Division demonstrating the risk of having employees execute arbitration agreements during an orientation process. The court in that case refused to enforce the agreement because the employee maintained that pressure was exerted upon her to immediately execute the document, thus depriving her of the opportunity to bring the document home and seek out legal advice.

Another opinion issued by the Appellate Division on November 10, 2021, provides the latest insight on the missteps an employer can make when seeking to enter into a binding arbitration agreement with an employees.

The Facts:  In Cordero v. Fitness International LLC, a former employee of LA Fitness filed a complaint in the New Jersey Superior Court alleging sexually harassment by her former manager. LA Fitness moved to compel arbitration pursuant to an agreement executed by the employee during onboarding her first day on the job. According to the employee, a general manager with LA Fitness placed her at a desk and told her to “sign a few things electronically” before she could start work. He then sat next to her and instructed her to sign an electronic signature pad as he clicked through various documents. The employee claimed she never actually saw the documents that she electronically signed. When the employee later filed her sexual harassment complaint, LA fitness moved to compel arbitration based on the following language contained in a document she signed during onboarding:

New York has long lagged behind New Jersey in according protection to employees who blow the whistle on unlawful or unsafe conditions in the workplace. Unlike its sister state, New York employees had a higher bar for achieving protected whistleblower status under section 740 of the New York Labor Law (NYLL), and employers had viable defenses that could undermine an employee’s claim.

On October 29, 2021 Gov. Hochul signed into law amendments to NYLL Section 740 that significantly expand the rights of employees in ways that bring it line with the expansive protections accorded New Jersey employees. These amendments go into effect January 26, 2022.

Expanded definition of “employee”:  The definition of “employee” was amended to include not only current employees, but former employees as well as independent contractors providing services to an employer.

No sooner did OSHA issue its Emergency Temporary Standard (ETS) on November 4, 2021, to implement mandatory vaccination or testing programs for large employers, it was challenged in 11 of the 12 United States Courts of Appeals as an unconstitutional overreach by the agency. Last Friday the 5th Circuit Court of Appeals (covering most of Louisiana, Mississippi and Texas) confirmed its November 6th temporary stay of the ETS, stating that the rule “grossly exceeds OSHA’s” statutory authority.” The Court also held that the COVID-19 virus was not a proper subject of emergency administrative action by OSHA. Under the court’s ruling, the stay will remain in place until a further order that will come from the appeals court assigned by the U S. Judicial Panel on Multidistrict Litigation to hear the consolidated Circuit Court petitions.

In the face of these legal challenges, OSHA suspended the implementation and enforcement of the ETS pending the ongoing litigation. However, OSHA stated that it remains confident that the ETS will ultimately be withheld.

What should large employers covered by the ETS do? In light of the 5th Circuit ruling, employers of 100 or more no longer need meet the looming December 6th and January 4th deadlines imposed by OSHA to implement vaccination verification, weekly testing, and other requirements of the ETS.

On September 1, 2021, the remnants of Hurricane Ida struck New Jersey. Heavy rain and flooding ensued throughout the area, with many homes and businesses suffering significant damage as a result. Tenants of rental properties were particularly affected, as many were unaware their leased premises were located in a flood zone. Many commercial tenants suffered flood damage to their equipment, inventory, and other assets and incurred loss of business revenue but carried no flood insurance because they were unaware of its availability. This unfortunate circumstance raises questions about a commercial landlord’s obligation to inform its tenants about the flood zone status of their leased premises and its potential liability for failing to do so.

Many commercial landlords are unaware that New Jersey’s Truth in Renting Act (“TRA”), which is more commonly associated with residential tenancies, specifically addresses a commercial landlord’s obligation to advise tenants of the flood zone status of their leased premises. While the term “landlord” in the TRA is generally defined as one who leases “dwelling units,” see N.J.S.A 46:8-44(a), the “Tenant Notification of Flood Zone Location” provision, which requires landlords to notify tenants when a property is located in a flood area, expressly references lessors of commercial space. N.J.S.A. 46:8-50.

Many commercial landlords believe that the requirements under the TRA apply solely to residential leases. Yet, legislative history suggests the drafters of the TRA considered the damage caused by storms such as Hurricane Ida when determining flood zone notice requirements. The New Jersey Senate’s Community and Urban Affairs Committee reported favorably on the bill for the Truth in Rending Act, stating that “during the heavy flooding which occurred during the fall of 1999, many tenants discovered that the apartments or businesses which they rented were located in flood zones.” Notice to tenants was important because “had they been apprised of this information earlier, these tenants may have determined to purchase flood insurance, or to rent elsewhere.” Therefore, the plain language of N.J.S.A. 46:8-50 makes it clear that the flood zone notice provision of the TRA applies to commercial spaces, notwithstanding that the rest of the Act is limited to residential leased premises.

As part of President Biden’s plan for battling the COVID-19 pandemic, the Occupational Safety and Health Administration (OSHA) has issued the anxiously awaited emergency temporary standard (ETS) “to protect unvaccinated employees of large employers (100 or more employees) from the risk of contracting COVID-19 by strongly encouraging vaccination.” Consistent with the President’s plan, the ETS requires large employers to adopt policies mandating COVID-19 vaccination or alternatively, policies requiring employees to choose between vaccination or undergoing regular COVID-19 testing.

The ETS is expected to apply to two-thirds of private sector workers. While the ETS does not apply to state and local governments in states without OSHA-approved occupational safety and health programs (“State Plans”), jurisdictions with State Plans (such as New Jersey) must comply with the ETS. Although the ETS does not currently apply to small employers, OSHA cautions that it needs time to assess the capacity of small employers to meet the administrative burdens of the ETS and is seeking comment to help the agency make that determination.

We have distilled the 490-page ETS to provide an overview of the requirements that will be imposed upon large employers under the ETS.

On September 9, 2021, President Biden announced that large employers of 100 or more must mandate that their employees show proof of being fully vaccinated for COVID-19 or wear a mask and undergo weekly COVID-19 testing. These mandates were not slated to go into effect until the Occupational Safety and Health Administration (OSHA) developed an Emergency Temporary Standard (ETS) addressing the requirements employers must follow when implementing the vaccination and testing mandate.

On November 4, 2021, OSHA issued the highly anticipated ETS. The Lindabury team is currently wading through the 490-page ETS and will provide a more detailed analysis of the requirements in the near future. In the interim, here are only some of the ETS details employers have been anxiously waiting for:

  • The ETS is effective November 5, 2021, and will be in effect for 6 months

Can an individual get damages for the emotional distress suffered as a result of violations under the Rehabilitation Act (29 U.S.C.A. §701 to 796 (1973))? What if that is the only harm suffered and they have no financial losses? Can an organization still be liable? In New Jersey, the answer to these questions is likely yes.

The Rehabilitation Act (the “RA”) provides that individuals with a disability cannot be “excluded from, denied the benefits of, or be subjected to discrimination under” programs that receive federal funding. Individuals who believe they were discriminated against may sue an organization under the RA, alleging a violation. There is a split among Circuit Courts, however, as to whether emotional distress damages are an available remedy under the Act. For example, the Fifth Circuit Court has found that emotional distress damages are not warranted. In Cummings v. Premier Rehab, a deaf and legally blind patient filed suit against a physical therapy provider that refused to provide her with an American Sign Language (ASL) interpreter. The plaintiff sought emotional distress damages only. The Fifth Circuit dismissed the plaintiff’s claims, and held that because emotional distress damages are not available under a “breach of contract” case, they are not available under the RA.

Conversely, the Eleventh Circuit Court in Sheely v. MRI Radiology Network, P.A., found that emotional distress damages were warranted where a deaf plaintiff and her service dog were prohibited from accompanying her minor son into his MRI. The Court explained that even where only emotional distress was suffered by the plaintiff, it was nonetheless sufficient to award damages, noting that it was “the only available remedy to make good the wrong done.” Importantly, the plaintiff did not need to show physical symptoms of her emotional distress in order to recover damages.

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It is very common for parents to provide funds to their children over their lifetime, but are these transfers gifts or loans? A recent ruling in the Tax Court, Estate of Bolles v. Commissioner, T.C. Memo. 2020-71, 119 T.C.M. (CCH) 1502 (June 1, 2020), highlights the importance in estate planning of differentiating between loans and gifts.

Mary Bolles was a loving mother of five children whom she tried to treat equally. Her practice was to keep a record of her advances to and the occasional repayments from each child. Based on her intent and the advice of tax counsel, she treated the advances as loans. She forgave the “debt” account of each child every year to the extent of the annual gift tax exclusion amount. According to the Tax Court, her practice would have been noncontroversial had she not advanced substantial funds to one son, Peter.

When Peter ran into financial difficulties with his architectural business, Mary supported him and between 1985 and 2007 she transferred $1,063,333 to Peter or for his benefit.

It has been our hope that estate and gift tax reform would be settled by the time this article goes to print. Unfortunately, this is not the case. Revenue issues involving the debt ceiling and stop-gap spending are circulating in Congress at the same time as legislative priorities, like infrastructure, are being hashed out, and procedural steps, like filibuster and reconciliation, are being threatened. Tax reform is but one issue in the mix, and its ultimate resolution is influenced by, and dependent upon, the resolution of a number of the others which are still unresolved. This article will provide a summary of the most recent available information.

Perhaps the most significant proposal on the table is the reduction of the lifetime estate and gift tax exemption, often referred to as the “unified credit,” from its current $11,700,000 per person to $6,020,000 per person in 2022 as estimated by the staff on the Joint Committee on Taxation. The lifetime exemption was increased from $5.5-million to $11-million (with adjustments for inflation) as part of the 2017 Tax Act. The increased exemption amount is due to sunset by its own terms on December 31. 2025, but the current proposal would accelerate that timetable. Individuals looking to make maximum use of the higher lifetime exemption currently available will want to consider making gifts before any reduction becomes effective. Under the proposed bill, the provision would apply to decedents dying and gifts made after December 31, 2021.

The current proposals would eliminate the use of discounts for transfer tax purposes when valuing passive, nonbusiness assets. Discounts are generally based on concepts of minority interest and lack of control, and can reduce the value of an asset for gift or estate tax purposes by as much as 50% or more. The proposal would not affect the valuation of assets that are used in the conduct of a trade or business, which could continue to be valued at a discount. Discounts have been useful in leveraging lifetime estate and gift tax exemptions. The new rule, if adopted, would be effective as of the date of enactment.

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In response to an increasingly older workforce and higher ages in which employees are choosing to retire, on October 4, 2021, Governor Murphy signed a bill expanding the scope of the New Jersey Law Against Discrimination (“LAD”) by eliminating certain decades old provisions that permitted employers to make age-based decisions in certain circumstances. For private sector employers, this legislation amends the LAD to extend protections to older workers by: (1) eliminating a provision of the LAD that permitted employers to not hire or promote employees over 70 years of age; and (2) expanding the remedies available to an employee unlawfully forced to retire due to age to include all remedies available under the LAD.

These amendments are a significant alteration of the LAD, and now places age on equal terms with other recognized protected categories, including but not limited to race, gender, national origin, disability, religion, and sexual orientation. While the LAD has historically been touted as one of the most progressive anti-discrimination laws in the country, it nonetheless placed age on a separate footing with other protected categories, paradoxically putting it at odds with much less progressive State and federal anti-discrimination laws. Clearly, this new legislation seeks to remedy that contradiction.

These amendments will serve the laudatory goal of protecting older workers against workplace discrimination, and employers refusing to hire or promote otherwise qualified individuals simply because they are over age 70 may find themselves defending age discrimination claims. Thus, employers are advised to review and update employee handbooks and workplace policies to ensure compliance with the LAD amendments. Moreover, employers must be mindful of these amendments when making any personnel decisions affecting older employees to ensure they are made for legitimate business reasons unrelated to age.

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