Insights Archives — Page 3 of 46 — Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events

New Jersey Court Rules That the “ABC” Test Does Not Apply to Fully-Commissioned Real Estate Salespeople

Published on: August 1, 2023 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In a recent published decision, Kennedy v. Weichert, the New Jersey Appellate Division addressed the proper classification of fully commissioned real estate salespeople as employees versus independent contractors. The court ruled that these individuals are not subject to the “ABC” test for purposes of determining their classification under the New Jersey Wage Payment Law (“WPL”).

The “ABC” Test:

Under the “ABC” test, workers are presumed to be employees unless the business can show that: (1) it neither exercised control over the worker nor had the ability to exercise control in terms of the completion of the work; (2) the services provided were either outside the usual course of business or performed outside of all the places of business of the enterprise; and (3) the individual is customarily engaged in an independently-established trade, occupation, profession or business. A business’s failure to satisfy any one of the three criteria results in the worker being classified as an “employee” for wage payment and wage and hour purposes.

SCOTUS Imposes More Stringent Standard For Employers Managing Requests for Religious Workplace Accommodations

Published on: July 7, 2023 | by Joshua L. Weiner

On June 29, 2023, a unanimous U.S. Supreme Court issued its decision in Groff v. DeJoy, clarifying employers’ obligations to accommodate employees’ religious practices under Title VII of the Civil Rights Act. The Court reinterpreted the meaning of “undue hardship” and held that Title VII requires an employer who denies an employee’s request for a religious accommodation to show that the burden of granting an accommodation would result in “substantial increased costs in relation to the conduct of its particular business.” In doing so, the Court rejected a commonly applied, employer-friendly interpretation that an undue hardship exists if an employer can show that the accommodation would result in “more than a de minimis cost.”

The More Lenient “Undue Hardship” Standard Applied by the Lower Courts:

Under Title VII, employers are required to accommodate an employee’s religious practices unless doing so would impose an “undue hardship on the conduct of the employer’s business.” In Groff, a postal carrier who was unwilling to work on Sundays because of his religious practices sued his employer (the United States Postal Service), alleging that it could have accommodated his Sunday Sabbath without undue hardship. Initially, Groff’s position did not include Sunday work. This later changed, however, causing Gross to transfer to a small postal station that did not make Sunday deliveries. Once this station began making Sunday deliveries, however, Groff’s Sunday deliveries were redistributed to other workers. He was disciplined for failing to work on Sundays, and he eventually resigned. The trial court granted the employer summary judgment, which the Third Circuit Court of Appeals affirmed, finding that exempting Gross from Sunday work resulted in more than a de minimis cost, as the exemption had “imposed on his coworkers, disrupted the workplace and workflow, and diminished employee morale.”

New York Joins the Non-Compete Ban Wagon

Published on: June 29, 2023 | by Kathleen M. Connelly

Following through on Governor Hokhul’s promise in her 2022 State of the State address, New York lawmakers passed a blanket ban on all non-compete agreements, thus joining the growing federal and state efforts to curb their use. However, the bill imposes greater restrictions than those implemented in other jurisdictions, including California, North Dakota, Oklahoma, Colorado, Illinois and Maryland. The bill will take effect 30 days after it is signed by the Governor.

The Broad Scope of the Ban:

The bill prohibits all employers, regardless of industry, from seeking, requiring, demanding or accepting a non-compete agreement from any “covered individual,” defined as any person who performs services on such terms that the individual is economically dependent on the other. Thus, unlike other laws that include a carve out for highly compensated employees, the ban extends to all workers across the board, including workers hired as independent contractors.

NLRB Decision: New Standard for Independent Contractors

Published on: June 28, 2023 | by Kathleen M. Connelly

On June 13, 2023, the National Labor Relations Board (“NLRB” or “Board”) reverted to its prior employee friendly independent contractor test to find that makeup artists, wig artists, and hairstylists (“the stylists”) working for the Atlanta Opera were employees rather than independent contractors. This revived independent contractor test will significantly impact employers who will now face a higher bar when seeking to classify workers as independent contractors excluded from the protections of federal labor laws.

The Discarded SuperShuttle Standard: Since 2014 the NLRB applied the following non-exhaustive list of factors to determine independent contractor status:

The extent of control the employer exercises over the work

Benefits to Making a Section 645 Election for Trusts

Published on: June 15, 2023 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Internal Revenue Code Section 645 was enacted in 1997 because of the increasing use of revocable trusts as will substitutes to avoid probate in many states. While in some states like New Jersey and Texas, probate isn’t terribly expensive or difficult, an increasing number of individuals are designing their estate plans with revocable trusts for non-probate purposes. During the grantor’s life, they may be used for streamlined asset management and a less expensive alternative to guardianships in the event of incapacity. After death, trusts provide increased privacy as well as ease of administration when it comes to out-of-state property and possible inheritance tax freezes that can delay the availability of cash to administer an estate. By making an IRC Section 645 election, clients can treat certain trusts as part of their estate. Here are some of the benefits of doing that.

Statutory Requirements

Section 645 sets forth the statutory requirements for making the election to treat certain trusts as part of an estate. The Internal Revenue Service issued final regulations on Dec. 4, 2002.

DOL Issues Clarification on Calculating FMLA Leave During a Week with a Holiday

Published on: June 12, 2023 | by Kathleen M. Connelly

On May 30, 2023, the Department of Labor (“DOL”) issued an opinion letter clarifying how to calculate leave taken under the Family and Medical Leave Act (“FMLA”) during a week containing a holiday. It is important for employers to properly calculate employee FMLA leave time because a miscalculation could be considered an interference with an employee’s FMLA rights.

The FMLA requires covered employers to provide eligible employees up to twelve workweeks of unpaid leave within a twelve-month period for qualifying family or medical reasons or twenty-six workweeks of unpaid leave within a twelve-month period for caretaking of qualifying service members. Employees may take FMLA leave intermittently by taking leave in separate blocks of time or by working shortened weeks or days. The amount of FMLA leave taken by employees is calculated as a fraction of the employee’s actual workweek. For example, an employee who normally works forty hours a week but takes off eight hours for FMLA reasons, would use 1/5 of a week of his or her FMLA leave entitlement.

Full Workweek of FMLA Leave

Securing A Strong Retirement Act of 2022

Published on: June 5, 2023 | by Mary Patricia Magee

The goal of this article is to highlight some of the changes to the rules governing retirement account distributions under the Securing a Strong Retirement Act of 2022 (aka SECURE 2.0). The positive changes include the following:

The age at which one must withdraw required Minimum Distributions (RMDs) has increased to age 73 effective January 1, 2023; it increases again to age 75 effective January 1, 2033;
The penalty (excise tax) for failure to make a timely withdrawal is reduced to 25% from 50% and, in some cases, to 10%;

Another Nail in the Coffin For Non-Competes? NLRB General Counsel Issues Memo Claiming That Most Non-Competes Violate The NLRA

Published on: June 1, 2023 | by Kathleen M. Connelly

On May 30, 2023 Jennifer Abruzzo, General Counsel for the National Labor Relations Board , sent a memorandum to all Regional Directors expressing her view that except in limited circumstances, non-compete provisions in employment and severance agreements constitute unfair labor practices under Section 7 of the National Labor Relations Act (“NLRA”) because they “tend to chill employees in the exercise of Section 7 rights” which protect employees’ rights to take collective action to improve working conditions. While many mistakenly believe the NLRA’s reach only extends to unionized workplaces, both unionized and nonunionized employers are liable for unfair labor practices that violate employee Section 7 rights.

More specifically, the memorandum claims that non-competes interfere with employees’ ability to:

Concertedly threaten to resign to secure better working conditions;

EEOC Issues Guidance Highlighting the Risks to Employers Using AI In Employment Selection Procedures

Published on: June 1, 2023 | by Kathleen M. Connelly

BACKGROUND

Title VII prohibits employers from using neutral selection procedures that disproportionately exclude individuals on the basis of race, color, religion, sex or national origin unless the employer can show the procedures are “job related for the position in question and consistent with business necessity.” In 1978, the U.S. Equal Opportunity Commission (EEOC) adopted Uniform Guidelines on Employee Selection Procedures providing guidance for employers to determine whether selection procedures commonly used in making employment decisions ran afoul of Title VII’s protections.

In response to the increased use of algorithmic decision-making tools (commonly referred to as artificial intelligence or “AI”) to assist in making a wide array of employment decisions, in May 2023, the EEOC issued new guidance entitled “Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964.” While the EEOC’s guidance does not have the force of law and is not binding upon employers, it serves as a warning that the EEOC will be monitoring AI use to ensure that these decision-making tools do not adversely impact protected groups in violation of Title VII.

Rules and Regulations Every Medi-Spa Owner Needs to Understand

Published on: May 22, 2023 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In today’s market, many spas are looking to expand their service lines to include cosmetic medical services, such as laser therapies, IV hydration, and Botox treatments. With the prevalence of cosmetic medical services on the rise, people are now electing to receive these treatments in a spa setting – as opposed to a traditional medical office. Regulations abound, yet, they often fail to provide spas with direct guidance on these emerging services and the technological advancements in treatments. When forming a spa that provides cosmetic medical services (a “medi-spa”), there are a number of issues a business owner should consider.

First, it is critical to understand whether a medi-spa needs a state license or registration to operate. If a license or registration is required, it often must be obtained in order to form the entity itself. The time it takes to obtain any necessary license or registration can also impact the medi-spa’s application to state tax authorities during the formation process.

Second, it is critical to understand what licensing boards regulate the medi-spa and its professionals. For example, estheticians are typically regulated by a state cosmetology board. Healthcare professionals can be regulated by a variety of boards, including but not limited to boards of medical examiners, nurses, chiropractors, pharmacists, and dieticians. Each board has its own applicable rules and regulations, which often require certain credentialing and limit the scope of services the licensed individual can provide.