Articles Posted in Employment Contracts

by

Many New Jersey employers include provisions for arbitration of disputes in written contracts with new employees. In order for an arbitration agreement to be legally enforceable, it must, among other criteria, contain enough information to demonstrate a “meeting of the minds” between the parties. The New Jersey Appellate Division recently ruled that an arbitration agreement, signed decades after the plaintiff began working for the defendant, was not enforceable because there was no “meeting of the minds” in evidence. Flanzman V. Jenny Craig, Inc., No. A-2580-17T1, slip op. (N.J. App., Nov. 13, 2018).

The plaintiff in Flanzman is alleging age discrimination under the New Jersey Law Against Discrimination (NJLAD). This statute prohibits employers from discriminating against employees on the basis of numerous factors, including age. Whereas the federal statute addressing age discrimination expressly states that it only applies to individuals who are forty years of age or older, 29 U.S.C. § 631(a), the NJLAD does not set a minimum age. It does, however, state that an employer does not automatically violate the law if they “refus[e] to accept for employment or to promote any person over 70 years of age.” N.J. Rev. Stat. § 10:5-12(a). This exception only covers two specific discriminatory acts: refusal to hire and refusal to promote. It does not mention other acts, such as termination or unequal pay.

In order for a contract to be enforceable, the party seeking enforcement must demonstrate that the other party knowingly assented to the agreement. Courts are particularly strict about this requirement when the contractual term at issue involves a waiver of legal rights. An arbitration agreement waives the right to seek redress in court. If the agreement provides for binding arbitration, the parties may have no recourse in the court system at all. New Jersey courts therefore require evidence that an employee “clearly and unambiguously agree[d] to waive his or her statutory rights.” Flanzman, slip op. at 8, quoting Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003).
Continue reading

by

Litigation is perhaps the most well-known method of dealing with legal disputes, but it is not the only method. Our legal system increasingly encourages would-be litigants to use alternative dispute resolution (ADR) before, or instead of, going to court. Many contracts now include clauses requiring the parties to submit disputes to arbitration. While arbitration may offer some benefits over the court system, it is subject to numerous criticisms in disputes involving a significant imbalance of power and resources. If you have questions of this nature, contact a New Jersey employment attorney without delay.

Court decisions interpreting New Jersey’s employment antidiscrimination statute have invalidated provisions of arbitration agreements that infringe on statutory rights. Federal law, on the other hand, favors arbitration over litigation in most cases. Several major technology companies, employing thousands of people, recently dropped mandatory arbitration of sexual harassment claims, which may allow more claims to see the light of day.

Statutes like Title VII of the federal Civil Rights Act of 1964 and the New Jersey Law Against Discrimination (NJLAD) prohibit discrimination in employment on the basis of sex, and include sexual harassment as a form of unlawful sex discrimination. In order to assert a claim under these statutes, an individual must first file a complaint with a state or federal agency like the Equal Employment Opportunity Commission (EEOC). The agency will investigate the claim, and if it determines the claim to have merit, it will issue a “right to sue” letter. This allows the complainant to file suit in state or federal court. Arbitration clauses in employment contracts prevent employees from accessing this process.

Continue reading

by

Arbitration clauses are an increasingly common feature of New Jersey employment contracts, as well as around the country. If a dispute arises between the employee and employer, they agree to submit it to arbitration, a form of alternative dispute resolution (ADR) that somewhat resembles a trial, instead of the court system. Employment contracts may state that the results of the arbitration process are binding or non-binding. While arbitration may offer some advantages, it is widely perceived as favoring employers. New Jersey courts therefore tend to examine arbitration clauses very closely to ensure that employees have knowingly entered into an agreement that effectively bars them from taking their claims to court. A recent decision by the New Jersey Appellate Division, Walsh v. Prospect EOGH, Inc., et al, No. A-328-17T2, slip op. (N.J. App., Nov. 21, 2018), provides an example of this sort of scrutiny.

The arbitration process is essentially an informal trial, conducted by one or more arbitrators, who are often retired judges or attorneys. The parties submit evidence and arguments, and the arbitrators render an “arbitration award.” This could include an award of damages to one party, an order to do or refrain from doing something, or a declaration of some matter in dispute. If an arbitration clause states that the process is binding, statutes like the Federal Arbitration Act prevent courts from reviewing arbitration awards, except in cases involving alleged fraud or other misconduct.

Arbitration is arguably advantageous because it bypasses the slow-moving court system, where a lawsuit may wait years for a trial date. Parties in an arbitration may be able to select an arbitrator with knowledge of the specific issues involved in the dispute, rather than having the case decided by a randomly-assigned judge. These advantages, however, can also be distinct disadvantages employment disputes. The employer is likely to be at an advantage in selecting an arbitrator.
Continue reading

by

A new law protecting New Jersey public sector unions, which was signed into law by Governor Phil Murphy in May 2018, faces a legal challenge based on a U.S. Supreme Court decision one month later. The law, entitled the Workplace Democracy Enhancement Act (WDEA), establishes standards for interactions between public-sector unions and government employers, and addresses several controversial issues. The Supreme Court’s ruling in Janus v. AFSCME, 585 U.S. ___ (2018), however, could represent a significant reduction in the power of public-sector unions. A lawsuit filed by several union members against their union and various state government officials argues that Janus invalidates certain provisions of the WDEA. Thulen, et al v. AFSCME, et al, No. 1:18-cv-14584, complaint (D.N.J., Oct. 3, 2018). The lawsuit is among the first to test how Janus will impact New Jersey employees’ rights.

Federal and state laws protect workers’ rights to organize for the purpose of collective bargaining, and either to form a union or to join an existing union that can negotiate with management on their behalf. The WDEA declares that any public sector union chosen as “the exclusive representatives of employees in a collective negotiations unit” must “hav[e] access to and be[] able to communicate with the employees it represents.” P.L. 2018, c. 15 § 2 (N.J. Rev. Stat. § 34:13A-5.12). The law requires public employers to allow union representatives to have reasonable access to employees, and to provide certain employee information to the union within a specified time frame.

Public-sector union members may authorize their employer to deduct union membership dues from their paychecks. The WDEA provision at issue in Thulen involves a restriction on employees’ ability to withdraw authorization for this payroll deduction. An employee may only withdraw authorization by giving written notice to the employer “during the 10 days following each anniversary date of their employment.” Id. at § 6, amending N.J. Rev. Stat. § 52:14-15.9e.

Continue reading

by

The role of labor unions in the modern economy is often a controversial issue. It is exceedingly difficult to deny, however, that they have improved working conditions for employees in New Jersey and around the country. Today’s unions are arguably victims of their own success, as many people no longer see them as necessary. Workers nevertheless still benefit from the ability to bargain collectively with their employers. Federal and state laws protect workers’ ability to organize for purposes of collective bargaining, but many states have enacted laws that limit unions in important ways. A recent decision by the U.S. Supreme Court, Janus v. AFSCME, 585 U.S. ___ (2018), specifically impacts public sector unions and their ability to collect fees to support their collective bargaining activities. If you have a question about your union, contact a New Jersey labor law attorney.

The National Labor Relations Act (NLRA) of 1935 allows workers to organize in order to engage in collective bargaining with their employer regarding pay, working conditions, and other features of employment. See 29 U.S.C. § 157. Union members support these activities by paying membership fees. Workers who do not become dues-paying members often still benefit from the union’s efforts. This is commonly known as the “free rider problem.” Some unions dealt with this by negotiating “closed shop” agreements, by which the employer could only hire union members; or “union shop” agreements, which required all employees to join the union or pay an “agency fee” once they had been hired.

The Taft-Hartley Act of 1947 banned closed shop agreements, and only allowed union shop agreements or agency fees to the extent that they do not conflict with state law. Id. at § 164(b). Many states have enacted “right to work” laws, which prohibit unions from charging agency fees to non-members.
Continue reading

by

Federal law prohibits employers from engaging in practices that have an adverse effect on competition. This includes practices that harm consumers and those that harm employees. For example, employers engaged in the same business, who would ordinarily compete among each other for employees, may not enter into agreements with one another that diminish employment opportunities or set artificial limits on wages. Agreements not to solicit or hire one another’s employees, for example, can prevent those employees from advancing in their chosen careers. Agreements on wage limits impact employees’ ability to negotiate higher wages. The Federal Trade Commission (FTC), which enforces various federal consumer laws, may also investigate anticompetitive practices. It recently announced a settlement with a group of staffing companies, which it alleged violated federal law by colluding to limit pay rates. In the Matter of Your Therapy Source, LLC, et al, No. C-1710134, complaint (FTC, Jul. 31, 2018). Although the case did not involve events in New Jersey, federal antitrust and anticompetition laws have nationwide application. A New Jersey employment law attorney can help guide you in the right direction based on the unique facts of your situation.

The FTC was created by the Federal Trade Commission Act (FTCA) of 1914, 15 U.S.C. § 41 et seq. The statute prohibits “unfair methods of competition in or affecting commerce,” and authorizes the FTC “to prevent persons, partnerships, or corporations…from using unfair methods of competition in or affecting commerce.” Id. at §§ 45(a)(1), (2). It also specifically states that a finding of liability under the FTC Act does not preclude additional findings of liability under other antitrust statutes, such as the Sherman Antitrust Act of 1890. Id. at §§ 44, 45(e).

The respondents in the Your Therapy Source case operated staffing services that, according to the FTC’s complaint, provided therapists to “treat[] home health agency patients in the Dallas/Fort Worth, Texas area.” Your Therapy Source, complaint at 1. Although the companies competed with one another in the same market, the FTC alleged that they “agree[d], and invit[ed] other therapist staffing companies to agree, on rates paid to therapists.” Id. Ordinarily, therapists could “contract with multiple therapist staffing companies and choose among them based on pay rate” and other factors. Id. at 3. The agreement alleged by the FTC, however, prevented therapists from obtaining competitive pay rates.
Continue reading

by

Organized labor, usually in the form of labor unions, is responsible for countless improvements in working conditions in New Jersey and throughout the country. The first half of the twentieth century saw the most improvements, as unions and their members fought—often literally—for reasonable hours, workplace safety, and better pay and benefits. Union membership has declined significantly in the past fifty years, however. One reason is a well-organized campaign that advocates for laws limiting the influence of unions in the workplace. These laws often go by the rather Orwellian name “right-to-work.” Voters in Missouri recently rejected a right-to-work law enacted by the state legislature and signed by the governor. Still, at least twenty-seven states have enacted right-to-work laws. New Jersey remains very favorable towards unions, with both laws and court decisions that affirm unions’ importance to the modern workplace.

Unions are able to negotiate on behalf of workers through collective bargaining agreements (CBAs) between a union and an employer. In order to understand how right-to-work laws affect unions’ ability to negotiate effectively, it is important to understand how unions have sought to ensure that they are able to speak for as many workers as possible. Some CBAs have, in the past, created “closed shops,” which means that employers could only hire union members. A “union shop” refers to an employer that, under the terms of a CBA, must require employees to join the union as a condition of employment.

One of the main objections to these types of arrangements involves the obligation of workers to join a union and pay dues, even if they do not agree with the union’s positions on various issues. The counter-argument to this is that all employees of a particular employer are likely to benefit from a union’s work, including those who are not members of the union. This is known as the “free rider problem.” Some union-shop CBAs, rather than requiring all employees to join the union, require workers who do not want to join to pay an “agency fee.”
Continue reading

by

Antitrust laws protect both consumers and employees from anti-competitive practices. These laws are an essential part of any free market system. Monopolies and other accumulations of wealth or influence almost invariably lead to restraints on trade that harm both businesses and individuals. A single company that holds a monopoly over a particular product or geographic area has little to no incentive to set prices based on the conditions of the market. Companies that agree to fix prices do similar harm to competitors and consumers. Employees rely on a competitive job market, which enables them to seek out better opportunities with other employers. Some employers may attempt to restrain the mobility of their employees by entering into agreements with other companies to refrain from recruiting or hiring one another’s employees. These are commonly known as “no-poach” agreements, and they can have a major impact on employees. New Jersey’s Attorney General recently announced that, along with several other states, it is investigating alleged no-poach agreements among fast-food franchisees.

When employers enter into no-poach agreements, employees may find themselves unable to advance in their chosen careers. Workers cannot seek to move to a higher position, often with higher pay, at another company if that company has agreed ahead of time not to hire them. They are therefore at the mercy of their current employers. A press release from the New Jersey Attorney General quotes the state’s Labor Commissioner, who stated that no-poach agreements can keep workers from looking for jobs with better pay, better opportunities, or a better location. These agreements therefore “exploit low-wage workers who are most in need of job protections.”

The Antitrust Division of the U.S. Department of Justice (DOJ) has conducted its own series of investigations into alleged no-poach agreements over the past few years. In an April 2018 update, it noted that competitive markets for employees and jobs are subject to “the same rules” as consumer-oriented markets for goods and services. This applies both to no-poach agreements and wage-fixing agreements, in which employers agree to set a range or upper limit for employee compensation. The DOJ announced a plan in late 2016 to pursue criminal antitrust charges against companies that use “naked” no-poach and wage-fixing agreements, i.e. agreements that “are not reasonably necessary to any separate, legitimate business collaboration.”
Continue reading

by

Class actions and collective actions allow numerous individuals with similar claims to bring a single lawsuit against a common defendant, rather than hundreds or thousands of individual lawsuits. A New Jersey employee, for example, could file a collective action on behalf of themselves “or other employees similarly situated” for violations of state minimum wage law. See N.J. Rev. Stat. § 34:11-56a25. This offers many benefits for plaintiffs, particularly in situations where the cost of filing suit individually, when compared to the potential recovery, would make it too expensive to assert one’s legal rights. One could also argue that class actions help defendants by consolidating all claims against them into a single lawsuit, rather than hundreds or thousands of lawsuits. That is not how employers and other defendants usually see class actions, however, and they frequently argue against allowing employees to pool their claims in a single lawsuit. The U.S. Supreme Court recently sided with employers regarding collective arbitration, similar to collective or class actions. Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018).

The ruling in Epic Systems arose from a conflict between two federal statutes: the Federal Arbitration Act (FAA) of 1925, 9 U.S.C. § 1 et seq.; and the National Labor Relations Act (NLRA) of 1935, 29 U.S.C. § 151 et seq. The FAA generally states that arbitration clauses in written contracts “involving commerce” are “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. Courts have authority to order parties to such a contract to participate in arbitration, and to enforce the recommendations of the arbitrators. A court may only vacate or modify an arbitration award on grounds specified by the statute. See id. at §§ 10, 11. The Supreme Court held that the FAA applies to contracts executed under both state and federal law in Southland Corp. v. Keating, 465 U.S. 1 (1984).

The NLRA protects the rights of workers to organize for the purpose of collective bargaining—i.e. to form or join labor unions—and “to engage in other concerted activities for” those purposes. 29 U.S.C. § 157. It is an “unfair labor practice” for employers to “interfere with” or “restrain” employers engaged in these protected activities. Id. at § 158(a)(1). Courts have given rather broad interpretation to the meaning of “concerted activities.” The question in Epic Systems concerned whether collective arbitration was a “concerted activity” protected by the NLRA, or whether the FAA required enforcement of arbitration clauses in individual employment contracts.
Continue reading

by

The court system in the U.S. is often described as “overburdened.” Courts therefore encourage litigants to pursue a variety of alternative dispute resolution (ADR) methods. Many employers in New Jersey and around the country often include clauses in employment contracts requiring a form of ADR known as arbitration in disputes with their employees. Both federal and New Jersey employment laws establish a preference in favor of enforcing arbitration clauses but require that an employee receive adequate notice. A federal district court in New Jersey ruled on two separate motions to compel arbitration by an employer in a wrongful termination case. First, the court ruled that a genuine issue of fact existed as to whether the plaintiff received adequate notice of an arbitration agreement. Schmell v. Morgan Stanley & Co., Inc. (“Schmell I”), No. 3:17-cv-13080, op. (D.N.J., Mar. 1, 2018). It later denied a motion “to compel arbitration…to resolve disputed issues of fact related to arbitration.” Schmell v. Morgan Stanley & Co., Inc. (“Schmell II”), No. 3:17-cv-13080, op. at 2 (D.N.J., May 30, 2018).

The arbitration process involves presenting a dispute to one or more trained ADR professionals, often former judges, who conduct a proceeding similar to a trial and render a decision. If the parties have agreed in advance, this decision is binding. Arbitration offers some advantages over litigation, but it is often perceived as favoring employers, who typically have more resources to pay arbitration fees. New Jersey law holds that an employee is not bound by an arbitration clause if the employee “does not sign or otherwise explicitly indicate his or her agreement to it.” Schmell I, op. at 4, quoting Leodori v. CIGNA Corp., 814 A.2d 1098, 1106 (N.J. 2003).

The plaintiff in Schmell began working for the defendant in 2006. During his employment, he wrote “a self-help book that referenced his history with drug and alcohol abuse and ultimate recovery.” Schmell I at 1. In June 2017, according to the plaintiff, he presented the defendant with a draft of the book. The defendant allegedly threatened termination if he did not make certain edits. The plaintiff claims that he made the requested edits, but the defendant still terminated him on October 31, 2017. The book was published on November 14. The plaintiff filed suit one month later, alleging discrimination on the basis of disability because of his history of addiction.

Continue reading
Contact Information
New Jersey Office
5 Becker Farm Rd, Suite 410
Roseland, NJ 07068
Tel: (973) 781-1204
New York Office
535 5th Ave 4th Floor
New York, NY 10017
Tel: (646) 867-7997
This website constitutes an ADVERTISEMENT. Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If you believe this advertisement is inaccurate or misleading, you may report same to the Committee on Attorney Advertising, Hughes Justice Complex, CN 037, Trenton, New Jersey 08625. For the comparison standards employed by Super Lawyers, please visit superlawyers.com. No aspect of this advertisement has been approved by the Supreme Court of New Jersey.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Please do not include any confidential or sensitive information in a contact form, text message, or voicemail. The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.

Copyright © 2025, Resnick Law Group
JUSTIA Law Firm Blog Design