Articles Posted by Insights

New Jersey has one of the most comprehensive statutes protecting employees against discrimination in the workplace. On October 5, 2021, Governor Murphy signed legislation expanding these protections even further by amending New Jersey’s Law Against Discrimination (“NJLAD”) to prohibit private-sector employers from discriminating against employees over the age of 70. Specifically, the legislation eliminates a provision of the NJLAD that previously permitted employers to refuse to hire or promote workers over the age of 70. It further expands the remedies available to an employee who is forced to retire due to age.

History of the NJLAD

The NJLAD, originally enacted in 1945, prohibits an employer from refusing to hire or employ, fire, or otherwise discriminate against an individual in compensation or other terms, conditions or privileges of employment based on the individual’s protected status. While not included in the original list of protected classes, in 1962 the NJLAD was amended to recognize age as a protected status. In 1985, the NJLAD was amended again to clarify that while employers were prohibited from terminating or demoting employees based on their age, they were nonetheless allowed to “refus[e] to accept employment or to promote any person over 70 years of age.” The 1985 amendment also limited the remedies available to employees forced to retire as a result of age to back pay only. While New Jersey continued to broaden the NJLAD and expand protections to a number of groups over the following years, the limited protections against age discrimination were never modified, thereby placing it on separate, inferior footing to the State’s other protected categories.

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Since early 2020, New Jersey has passed a series of legislation aimed at identifying and penalizing businesses for misclassification of employees as independent contractors. On July 8, 2021, New Jersey enacted A5890, which empowers the Commissioner of the Department of Labor and Workforce Development (“DOL”) to issue broad stop-work orders to employers in violation of wage and hour laws that extend across “all of the employer’s worksites and places of business.” As set forth more fully below, we are beginning to see the DOL invoking this extraordinary power to effectively shut down an employer’s business in its entirety.

A5890 Stop-Work Orders and Injunctions

Prior to the passage of this bill, the Commissioner’s shut-down orders could only extend to the specific location where the wage and hour violation occurred. Under A5890, however, the Commissioner may now issue stop-work orders that extend across “all of the employer’s worksites and places of business.” Moreover, these stop-work orders can remain in effect until the Commissioner determines that the employer is compliant and has paid any penalties due. Employers must pay workers affected by a stop-work order for the first ten days of work lost due to the order, and the DOL can impose up to $5,000 in civil penalties for each day the employer continues to operate the business in violation of the stop-work order.

We are proud to announce 4 of our attorneys have been selected to the 2022 New Jersey Super Lawyers® list, and 2 have been selected to the 2022 New Jersey Rising Stars® List. This recognition in The Super Lawyers© 2022 and Rising Stars® 2022 lists, identifies each attorney for their leading legal talent in their corresponding practice areas.

The following Lindabury attorneys were named as Super Lawyers honorees:

A recent Tax Court case, Smaldino v. Commissioner, T.C. Memo. 2021-127 (November 10, 2021) emphasizes the need to ensure that the phases of transactions are completed properly, and certain formalities are observed in order for an estate planning strategy to be successful. It is important to be careful even (and perhaps especially) in the case of emergency planning (i.e., planning because of health scares or impending tax law changes).

In the Smaldino case, rushed planning caused a tax deficiency that may have been avoided with a team of advisors working together to ensure that Mr. and Mrs. Smaldino’s plan was properly implemented.

Mr. and Mrs. Smaldino were married in 2006. Mr. Smaldino had 6 children from a prior marriage and 10 grandchildren. Mr. Smaldino was a CPA turned real estate investor, with a real estate portfolio worth approximately $80 million. Mrs. Smaldino held a master’s degree in economics and had worked in her husband’s business for many years.

The federal estate and gift tax exemption (known as the “basic exclusion amount”) has increased to $12.06 million per taxpayer in 2022. The exemption in 2021 had been $11.7 million. The increase means that in 2022, an individual can make gifts during life or at death totaling $12,060,000 without incurring gift or estate tax; a married couple can transfer $24,120,000 of assets. The annual gift tax exclusion has also increased, to $16,000 per donee (or $32,000 if spouses elect gift-splitting).

The gift tax annual exclusion for gifts to non-citizen spouses has also increased in 2022, to $164,000.

Note that the estate and gift tax exemption is slated to be reduced to $5 million, indexed for inflation, as of January 1, 2026. With this known reduction in the exemption approaching, we recommend consulting with your estate planning attorney to discuss possible strategies to take advantage of the large exemption presently available.

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While many may be familiar with Special Needs Trusts, some are still not familiar with tax-free Achieving a Better Life Experience (ABLE) savings accounts which were created under a 2014 federal law and currently available in New Jersey (and 46 other states). Funded correctly, ABLE accounts permit disabled individuals and their families to save money for disability-related expenses without compromising eligibility for needs-based benefits such as SSI, Medicaid, and other education, housing, health and food stamp benefits (such as FAFSA and SNAP). To establish an account, the designated beneficiary (and owner) of an ABLE account must be legally blind or have a medical disability that occurred prior to age 26. While interest earned on the account is tax-free, ABLE accounts with assets up to and including $100,000 are disregarded as a resource for SSI purposes. Distributions from the ABLE account may be made only to or for the benefit of the disabled individual for “qualified disability expenses,” which broadly include education, housing, transportation, assistive technology, health and wellness, legal and funeral expenses, etc. Starting in 2022, and for the first time in four years, annual contributions to an ABLE account increased to $16,000 (matching the 2022 annual gift tax exclusion amount). While ABLE account balances are subject to Medicaid estate recovery upon the death of the disabled beneficiary, in certain disability planning circumstances the utilization of an ABLE account, either alone or in conjunction with a Special Needs Trust, may be an integral part of smart disability planning.

On Monday, Jan. 24, 2022, in the case Hughes vs. Northwestern, the U.S. Supreme Court ruled that a fiduciary’s duty to monitor investments in defined contribution retirement plans means the plan cannot include non-prudent investments. In reaching this conclusion, the Court recognized that fiduciaries have an ongoing obligation to monitor plan investments. Simply offering participants a diverse menu of investment options is not sufficient to insulate fiduciaries from potential liability.

The Holding in Hughes v. Northwestern.

In Hughes, employees of Northwestern University participated in two defined contribution 401(k) plans offered by the University. The employees alleged that the trustees of the plans breached their fiduciary duty to the participants by “(1) failing to monitor and control recordkeeping fees, resulting in unreasonably high costs to plan participants; (2) offering mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged for otherwise identical share classes (institutional share class) of the same investments; and (3) offering investment options that were likely to confuse investors.” Both the trial court and the Seventh Circuit Court of Appeals accepted Northwestern’s argument that even if some options were not prudent, there was no violation of ERISA’s prudence standard because the plans offered a diverse menu of investment options that the plaintiffs agreed were prudent.

President Biden is expected to sign a bill amending the Federal Arbitration Act by banning pre-dispute employment arbitration agreements for sexual harassment and sexual assault disputes. The proposed law, “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” is the latest in a series of workplace changes initiated by the #MeToo movement.

Sexual assault and harassment claims no longer subject to mandatory arbitration. The amendment prohibits the enforcement of mandatory pre-dispute arbitration agreements, as well as agreements prohibiting participation in a joint, class or collective action in any forum “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct.” The Act also provides that any dispute as to whether or not a claim falls within the scope of the Act’s prohibitions will be decided by a court, not an arbitrator, irrespective of the designation set forth in the arbitration agreement. Although the bill bans pre-dispute agreements to arbitrate sexual harassment and sexual assault claims, employees can still voluntarily elect for arbitration after the claim arises. This carve-out was intended to allow victims of sexual assault or sexual harassment to voluntarily avoid going through the often-public process of the court system.

Under the legislation, the term “sexual assault dispute” retains the same definition as used in 18 U.S. Code §2246 as one “involving non-consensual sexual act or sexual conduct.” The term “sexual harassment dispute” is defined as one “relating to conduct that is alleged to constitute sexual harassment.” Sexual harassment is narrowly redefined under the Act to only include the following behaviors: a) unwelcome sexual advances, b) unwanted physical contact that is sexual in nature, including assault, c) unwanted sexual attention, including unwanted sexual comments and propositions for sexual activity, d) conditioning professional, educational, consumer, health care, or long-term care benefits on sexual activity, and e) retaliation for rejecting unwanted sexual attention. Notably, this definition does not include other forms of harassment that are not sexual in nature but may nonetheless constitute gender-based discrimination (e.g., disparate pay between similarly situated male and female employees).

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A recent amendment to the New York City Human Rights Law aimed at promoting wage equity for women and minority groups historically receiving less compensation than other groups will have a large impact on recruiting practices for City employers. By doing so, New York City joins a national trend of legislative initiatives promoting transparency and equity in compensation practices.

Beginning on May 15, 2022, employers with four or more employees (which includes independent contractors and employed family members) must include a minimum and maximum salary range in all job listings. This includes advertised jobs, promotions, and transfer opportunities. The range of the minimum and maximum salary may extend from the lowest to the highest salary the employer “in good faith believes at the time of the posting” it would pay for the advertised position.

While the term “salary” is not defined in the law, employers should comply with the minimum and maximum rage requirements regardless of whether the position is paid on a salary or hourly basis. It is not clear whether these requirements only apply to jobs that will be located in New York City, or if it extends to any job postings in New York City regardless of where the job will be physically located. The New York City Commission on Civil Rights is expected to issue regulations clarifying these issues.

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