Insights Archives — Page 46 of 50 — Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events

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

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 Lisa Gingeleskie

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 Lindabury, McCormick, Estabrook & Cooper, P.C.

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 Lindabury, McCormick, Estabrook & Cooper, P.C.

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.

Ignorance of Employee Rights Proves Costly – Jury Awards Hundreds of Millions in Pregnancy Discrimination Suit

Published on: November 26, 2014 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

By: Kathleen Connelly, Esq.

The Los Angeles Times and other news outlets have reported that following eight years of protracted litigation, a San Diego jury awarded nearly $186 million dollars to a former AutoZone manager who claimed she was demoted by AutoZone after she announced her pregnancy and was terminated after she filed a lawsuit challenging her demotion. The reported testimony of trial witnesses serves as a perfect illustration how an employer’s ignorance of basic employee rights can lead to obscenely high jury verdicts.

Rosario Juarez claimed that when she announced her pregnancy to her district manager in 2005 he responded “Congratulations . . . I guess” adding “I feel sorry for you.” Thereafter, Juarez’s performance was increasingly criticized and she was demoted. After Juarez filed suit to challenge her demotion, she was terminated for allegedly misplacing $400 of company funds. However, AutoZone’s defense of the case was crippled by the testimony of its loss prevention officer who investigated the missing funds that she never suspected wrongdoing by Juarez and thought she was being targeted by the company. To make matters worse, a former district manager testified that he was scolded by an AutoZone vice president for hiring too many women. Such testimony undoubtedly provoked the jury to award $185 million dollars in punitive damages as a punishment to AutoZone, in addition to the $872,000 awarded to Juarez for lost wages.

The Perils of Not Using a Prenup

Published on: November 13, 2014 | by James McGlew, II

By: James McGlew

The perils of getting married without a prenuptial agreement were made clear this week with the news of the divorce of billionaire Harold Hamm. Mr. Hamm, Chief Executive Officer of Continental Resources, was ordered to pay nearly $1 billion to his now ex-wife in one of the largest US divorce judgments ever. The order requires Mr. Hamm to pay his ex-wife one-third of the settlement, about $320 million, by the end of 2014 and the remainder to be paid in monthly installments of at least $7 million. This award will help to make the former Ms. Hamm one of the 100 wealthiest women in the United States.

As I'm sure you can tell by now, Mr. and Mrs. Hamm had no prenuptial agreement.

BIG MAC ATTACK: The NLRB’s General Counsel Uproots McDonald’s Franchisor-Franchisee Relationship

Published on: October 23, 2014 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

By: Sergio Simoes, Esq.

In July 2014, the General Counsel of the National Labor Relations Board (“NLRB”) shook the foundations of the franchisor-franchisee relationship when he determined that McDonald’s Corporation could be prosecuted as a “joint employer” with its franchisees in forty-three cases, charging unfair labor practices at its franchised restaurants. Consequently, whenever a McDonald’s franchisee fails to pay overtime, bars employees from taking mandated breaks, or commits another unfair labor practice, the McDonald’s parent organization may be held jointly responsible for the franchisee’s transgressions.

The General Counsel’s decision is particularly significant because approximately 80% of McDonald’s 3,000 U.S. restaurants are privately owned by franchisees. The NLRB and the labor organizers supporting the determination reasoned that because McDonald’s exerts significant operational control over how its franchised restaurants are run, including menu selections, uniforms, décor and other day-to-day operations, it should also be held responsible for violations of workers’ rights under the National Labor Relations Act.

Appellate Division Extends New Jersey Law Against Discrimination to Divorcing Employees

Published on: October 23, 2014 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

The New Jersey Law Against Discrimination (“LAD”) has long prohibited discrimination against individuals on the basis of their “marital status,” barring employers from considering an individual’s status as married or unmarried in making any employment decisions. In the recent case of a New Jersey appeals court recently examined the scope of the marital status protections of LAD and determined that they also extend to engaged, separated and divorced individuals.

The Facts: Robert Smith, Director of Operations for the Millville Rescue Squad (“Millville”), supervised over one hundred employees, including his wife. In February 2005, Smith had an affair with a subordinate who later resigned, and shortly thereafter, Smith and his wife separated. Mr. Smith’s supervisor became aware of Smith’s affair and subsequent separation and told him he could not promise these developments would not affect Smith’s job, that it “all depends on how it shakes down.” Several months later, Smith’s employment was terminated for poor work performance. Smith’s supervisor purportedly told Smith that he had to present the situation to Millville’s board of directors because he believed there was no chance of reconciliation between Smith and his wife and “it’s going to be an ugly divorce.” Smith filed suit alleging marital status discrimination in violation of the LAD.

The Ruling: In the proceedings below, the trial court dismissed Smith’s marital discrimination claim because Smith failed to present evidence that Millville fired him because he was either married or unmarried. The Court reasoned that Millville had the right to terminate Smith because it was concerned about the potential impact his divorce proceedings might have on his work. Smith appealed that ruling.