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How Will My Divorce Matter Be Affected If My Spouse Is Not Employed?

Published on: January 30, 2019 | by James McGlew, II

In all divorce matters where alimony or child support is an issue, the income or earning capacity of the parties needs to be determined. If you and your spouse are employed on a full-time basis your annual income can be easily determined. However, if you or your spouse are unemployed (either recent or long-term), under-employed or at some point during the marriage one of you took a leave of absence from your prior full-time position, the issue of imputation of income to one or both of you would need to be addressed.

New Jersey Courts have the authority to, under appropriate circumstances, impute income or determine the earning capacity of an individual whether or not they are actually earning at that level. When the true earning potential of a spouse is at issue in a divorce setting, the parties can either stipulate to an income for the under-employed or unemployed spouse, or they can reference the “Occupational Employment and Wage Estimates for New Jersey.” This information is calculated with data collected from employers in all industry sectors in New Jersey.

As the employment history or qualifications of a spouse may not fit within the table or if they are specifically unique, the table itself may be of nominal value. When there is continued disagreement as to a spouse’s income potential one or both of the parties may retain an employability/vocational expert to evaluate the earning capacity of the unemployed or underemployed spouse. At the outset of the case, the parties can jointly retain one such expert or each can retain their own. There are dozens of such experts statewide who regularly perform these evaluations, issue reports, and subsequently testify at any hearing or trial.

Experts Warn of Cyber Attacks on Smart Cities and Buildings

Published on: January 4, 2019 | by Eric B. Levine

Eric Levine, co-chair of Lindabury’s Cybersecurity & Data Privacy practice group spoke recently to attendees during NAIOP New Jersey’s final installment of their “Future Proof Your Buildings” series.

Coverage of the event by Real Estate Weekly was recently published providing highlights and strategies for ensuring security of smart cities throughout the state.

Eric says he believes liability is one of the fundamental risks facing building owners.

How Cybersecurity Training Protects Your Organization Even After a Breach

Published on: December 18, 2018 | by Eric B. Levine

Eric Levine and Robert Anderson co-authored the recently published article in Training Industry addressing the need of businesses to assess their own cybersecurity risks and openly exchange internal information to effectively address and mitigate an actual breach situation. Yet a company’s internal assessments of its own weaknesses and the holes in its cybersecurity protections can, ironically, actually expose the company to even greater danger in future security breach litigation.

Read the full article online here.

Training Industry, Inc. (Dec. 18, 2018). How Cybersecurity Training Protects Your Organization Even After a Breach.

Recreational Marijuana Bill Stalls, But Employers Should Nevertheless Brace For Its Passage

Published on: December 17, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

On November 26, 2018 a Joint Committee of New Jersey lawmakers advanced a bill that would legalize recreational marijuana use in the state. Although the bill had widespread support, including from Gov. Murphy, disagreements among Senate Democrats over the percentage of state taxes on marijuana stymied the vote on the bill that was expected in mid-December. Predictions that the bill will be re-introduced and voted upon early this year may be overly optimistic given other pressing issues pending in Trenton. If the bill is ultimately passed, New Jersey will join 10 other states that have legalized recreational marijuana.

When reintroduced, it is not expected that there will be any changes to the bill’s provisions addressing marijuana in the workplace. A single paragraph of the prior version of the sweeping legislation specifically addresses recreational use and the workplace, and simply provides that nothing in the bill requires an employer

to require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growing of marijuana items in the workplace or to affect the ability of employers to have policies prohibiting marijuana use or intoxication by employees during work hours. No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions, or other privileges of employment because that person does or does not smoke or use marijuana items, unless the employer has a rational basis for doing so which is reasonably related to the employment, including the responsibilities of the employee or prospective employee.

District Court Finds LAD Hostile Work Environment Claims are Unavailable to Independent Contractors

Published on: December 17, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

The Third Circuit has long held that the provisions of Title VII only protect “employees” and not independent contractors from unlawful discrimination in the workplace. On the state side, New Jersey courts have similarly found that the employment discrimination provisions of the New Jersey Law Against Discrimination (LAD) extend only to those individuals deemed “employees”, and not to individuals properly classified as independent contractors.

However, unlike Title VII, the LAD also includes a provision that prohibits discrimination in the creation or termination of contracts, which makes it unlawful for any person to refuse to “contract with . . . or otherwise do business with any other person” on the basis of any individual characteristic (e.g., race, gender, age) protected under the LAD. In J.T.’s Tire Serv., Inc. v. United Rentals, N.A., Inc., the court recognized that this provision permitted a cause of action for quid pro quo sexual harassment where the defendant was alleged to have refused to do business with the independent contractor plaintiff unless she succumbed to his sexual demands.

In Axakowsky v. NFL Productions, the plaintiff independent contractor asserted a claim for hostile work environment harassment against the defendants for ongoing harassment while performing services for the defendant NFL. The Unites States District Court rejected Axakowsky’s claim that the holding in J.T.’s Tire Service – recognizing a quid pro quo sexual harassment claim for independent contractors under the LAD – should be extended to her hostile work environment claim. The court observed that while the LAD protects against refusals to do business with an individual because of their sex or other protected characteristic, it does not extend to hostile work environment harassment claims that may arise during the ongoing execution of the contractual relationship. In addition, the court noted that the plaintiff’s complaint did not expressly assert a quid pro quo sexual harassment claim.

Appellate Division Reminds Employers of the Essential Elements Needed to Support an Enforceable Arbitration Agreement

Published on: December 17, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

The Federal Arbitration Act, 9 U.S.C.A. §1 et seq., and the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 et seq., reflect the federal and state public policies favoring arbitration as a means for resolving disputes. Since these legislative initiatives, New Jersey courts have routinely enforced agreements to arbitrate employment disputes. Nevertheless, whether a specific arbitration agreement is enforceable under standard contract principles remain an issue that is often challenged before the courts. Enforceability will turn on whether there was a “meeting of the minds” to arbitrate, and whether both parties “clearly and unambiguously” agreed to waive statutory rights, such as a judicial forum and a right to trial by jury.

A recent ruling from the New Jersey Appellate Division in Flanzman v. Jenny Craig, No. A-2580-17, is a cautionary tale for employers seeking to draft or enforce agreements to arbitrate. In Flanzman, the Court invalidated the arbitration agreement, finding that there was no “meeting of the minds” because the agreement failed to specify the forum where the arbitration would be held (e.g,, the American Arbitration Association or the Judicial Arbitration and Mediations Services) or specify a method for selecting a different arbitration forum, nor any process for conducting the arbitration. The Court observed that “had this been done, the parties then would fully understand both the [jury] rights that had been waived and the rights that have taken their place.”

In reaching its conclusion, the Court pointed to the following cases where arbitration agreements were invalidated by the courts: Atalese v. US Legal Serv. Group (agreement failed to clearly indicate the waiver of a trial by jury); Leodori v. Cigna Corp. (finding no evidence that the employee consented to an arbitration agreement contained in an employee handbook that included a contractual disclaimer); Kleine v. Emeritus at Emerson (finding a lack of mutual assent because the arbitration process contemplated by the arbitration agreement was unavailable when the parties executed their contract); and NAACP v. Foulke (invalidating agreement because it did not clearly and consistently express the nature and locale of the arbitration forum).

N.J.’s Equal Pay Act: Employers Beware

Published on: November 28, 2018 | by Lisa Gingeleskie

Originally published in the November 21, 2018 issue of ROI-NJ.

According to statistics, women in New Jersey are paid 82 cents for every dollar paid to men. Until recently, New Jersey’s pay equity protections mirrored those of the Federal Equal Pay Act of 1963, mandating equal pay for men and women performing “equal work.” Under these laws, pay disparities could only be justified if the differential was based on a bona fide seniority or merit system, or “any factor other than sex,” an exception that gave employers significant room to defend wage disparities by pointing to the applicant’s pay history or other factors unrelated to gender.

With the passage of the Diane B. Allen Equal Pay Act in March 2018, New Jersey now takes a more aggressive approach towards eradicating pay disparities. While principally aimed at the gender wage gap, the act applies to all protected classes, thereby paving the way for disparate wage claims on the basis of race, age and any other status protected by the New Jersey Law Against Discrimination. In addition, employees can point to higher rates being paid to counterparts outside the protected class who are engaged in “substantially similar work,” as compared to the narrower “equal work” standard under prior law. “Substantially similar work” will be viewed “in light of the employees’ skills, effort and responsibility.” Because there are no regulations interpreting this ambiguous phrase, employers must look beyond mere job titles to all aspects of all positions to identify those that involve “substantially similar work.”

Monitor This Year’s Holiday Party and Avoid Next Year’s Litigation

Published on: November 14, 2018 | by John H. Schmidt, Jr.

How many of us remember the iconic holiday party in the movie “Scrooged?” As Bill Murray is passing out mail, the staff is drinking more than they should, employees are groping each other, and how can anyone forget the employee who is copying their bottom while sitting on the Xerox machine? “Enjoy yourself, it’s the Christmas party.”

How many of us have attended such events? Probably more than we would like to admit.

Regardless of your point of view, times have changed. Sexual harassment is the law. Drunk driving jeopardizes public safety and can cause you and/or your employees to end up in jail. Social mores no longer condone the conduct demonstrated in that now famous “Scrooged” party.

Agents Acting Under a Power of Attorney

Published on: October 19, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

One of the useful documents in the estate planner’s tool kit is the power of attorney. Briefly, a power of attorney allows a person (the “principal”) to name another individual (the “agent” or the “attorney-in-fact”) to act on the principal’s behalf, typically in financial and health matters. A power of attorney may be “general” or “limited,” meaning it can authorize the attorney-in-fact to act broadly on the principal’s behalf, or it may restrict the attorney-in-fact’s authority to certain enumerated types of conduct (i.e., a limited power of attorney may apply solely to acts involved in the sale of a principal’s real estate). In addition to being “general” or “limited,” a power of attorney may also be “durable,” meaning the power of attorney remains effective in the event of a future disability or incapacity of the principal. For purposes of this article, the power of attorney is to be considered a durable general power of attorney, meaning the power of attorney is effective immediately upon execution, it authorizes the attorney-in-fact to act broadly on the principal’s behalf, and it remains effective in the event of any subsequent disability or incapacity of the principal.

New Jersey’s Revised Durable Power of Attorney Act, as codified in N.J.S. 46:2B-8.1 et seq. (the “Act”), grants broad authority to an attorney-in-fact to act on a principal’s behalf. The Act provides: “All acts done by an attorney-in-fact pursuant to a durable power of attorney during any period when the power of attorney is effective in accordance with its terms, including any period when the principal is under a disability, have the same effect and inure to the benefit of and bind the principal and the principal’s successors in interest as if the principal were competent and not disabled.” N.J.S. 46:2B-8.3. This section purports to state that the acts of the attorney-in-fact are binding upon the principal and the principal’s successors in interest, suggesting that the acts of the attorney-in-fact have the same effect as if the principal had acted himself or herself. While this is true, the law in New Jersey requires more.

New Jersey law imposes a higher duty upon an attorney-in-fact acting on behalf of a principal under a power of attorney. An attorney-in-fact in New Jersey has a fiduciary obligation to the principal and must act “within the powers delegated by the power of attorney and solely for the benefit of the principal.” N.J.S. 46:2B-8.13.a [emphasis added]. A common situation in which a power of attorney may expressly authorize an attorney-in-fact to act, but where the act will be prohibited, involves lifetime gifts. While an individual generally has broad power to make lifetime gifts of his or her own property, unfettered by any restrictions or constraints, an attorney-in-fact operating under a power of attorney does not have that same authority. An attorney-in-fact may not use the principal’s resources unilaterally to favor himself or herself in ways that are contrary to the principal’s wishes.

Tax Updates from Washington (October 2018)

Published on: October 19, 2018 | by Elizabeth Candido Petite

State and local tax deduction workarounds rejected. The workarounds to the new federal cap on deductions for state and local taxes (“SALT”) are not likely to be effective, according to proposed regulations issued by the IRS in late August. The Tax Cuts and Jobs Act, signed into law by President Trump in December 2017, capped the SALT deduction at $10,000 for taxpayers who itemize their deductions. As a workaround, several states (including New Jersey and New York) have permitted municipalities to establish charitable foundations to collect property taxes, thus allowing residents to claim a charitable deduction for the property taxes paid, and the states have enacted state tax credits for such charitable donations. However, the IRS has indicated that these strategies will not work to the full extent envisioned by state and local leaders. The proposed regulations provide that taxpayers who itemize deductions shall be eligible for a federal deduction that equals only a small fraction of the state tax credits for such charitable donations. Local leaders have vowed to challenge these new regulations.

Income tax deductions for trusts and estates confirmed. The Treasury stated in Notice 2018-61 (issued on July 13, 2018) that trusts and estates are entitled to income tax deductions for administration expenses paid solely as a result of being an estate or trust. This guidance was necessary to explain the impact on trusts and estates of Internal Revenue Code Section 67(g), which was added as part of the Tax Cuts and Jobs Act. The new Code section suspends miscellaneous itemized deductions for individuals for tax years 2018 through 2025. Notice 2018-61 clarifies that trusts and estates may continue to deduct certain administration expenses, and states that Treasury intends to issue regulations confirming this position. Regulations will also be issued regarding the deductibility of such expenses for the individual beneficiaries of trusts and estates in the final year of administration, when deductions are typically passed through to the beneficiaries.