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Mashel Law filed a Complaint in the Middlesex County Superior Court on behalf of a client, whose initials are Q.B., alleging she was constructively terminated by out of state defendants because of her protected whistleblowing activities in violation of New Jersey’s Conscientious Employee Protection Act (CEPA).  Q.B. was hired by the defendants to be their Senior Human Resources Operations Manager tasked with performing payroll duties. During the course of her employment, the Defendants requested Q.B. to remove overtime hours from non-exempt hourly staff persons’ timesheets. As nonexempt hourly employees, the federal Fair Labor Standards Act (FLSA) and the New Jersey Wage and Hour Law require that employees be compensated at a rate of not less than one-and-one-half times their regular rate for all hours worked in excess of forty (40) hours in a workweek. See 29 U.S.C. § 207(a) and N.J.S.A., 34:11-56a4b. Q.B. refused to participate in the unlawful activity of removing overtime hours from Defendants’ staff members. The Defendants then side stepped around Q.B. and directly removed the overtime hours from their employee timesheets. Furthermore, Q.B. also objected to the Defendants’ unlawful practice of misclassifying certain staff as 1099 independent contractors when they were in fact W-2 employees; this too, was done to unlawfully avoid paying overtime wages. In response to Q.B.’s objections to Defendant’s violation of wage and hour laws and her refusal to engage in or facilitate such illegal practices, the Defendants retaliated against Q.B. by demoting and decreasing her salary and verbally reprimanding her. Because of this retaliation and the intolerably hostile work environment it created for her, Q.B. involuntarily resigned her position of employment with the Defendants (i.e., constructive discharge) and hired Mashel Law to file a CEPA based whistleblowing lawsuit against the Defendants.

In response to the Complaint filed on Q.B.’s behalf, the Defendants immediately filed a motion with the Court seeking to dismiss the Complaint by arguing, among others, that the Defendants did not do business in New Jersey and that their only contact with New Jersey was employing Q.B. who worked for them from her home in New Jersey, was insufficient as a matter of law to form the minimum contacts necessary for the New Jerseys courts to exercise personal jurisdiction over the Defendants.  In opposing the motion to dismiss, Mashel Law countered by arguing that New Jersey had sufficient minimum contacts with the Defendants because they: 1) chose to employ Q.B. to work for them from her New Jersey home, 2) provided Q.B. with company-issued equipment, including a laptop, a monitor, and a docking station, in New Jersey to perform her job functions remotely, 3) deducted New Jersey state income taxes, as well as New Jersey disability insurance, New Jersey unemployment insurance and New Jersey family leave insurance from Q.B.’s pay, 4) frequently communicated with Q.B. from her home in New Jersey using videoconferencing, email and telephone, 5) demanded that Q.B. commit violations of federal and state wage and hour laws from her home in New Jersey and 6) received Q.B.’s whistleblowing complaints which she communicated to them from her home in New Jersey.

In deciding whether the court had specific jurisdiction over the Defendants, the Superior Court Judge deciding the Motion to Dismiss was required to consider that decades ago in International Shoe Co. v. Washington, 326 U.S. 310, 316-17 (1945), the United States Supreme Court had instructed that a nonresident defendant must have certain “minimum contacts” with the forum state, “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). As the Court more recently explained, the “primary focus of [the] personal jurisdiction inquiry is the defendant’s relationship to the forum state.” Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773, 1779 (2017). In line with United States Supreme Court precedent, New Jersey courts have held that “courts may exercise personal jurisdiction over a non-resident defendant consistent with due process of law.’” Baanyan Software Servs., 433 N.J. Super. at 473 (quoting R. 4:4-4(e)).  Therefore, “a nonresident defendant must have certain ‘minimum contacts’ with the forum state, ‘such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.’” Jardim v. Overley, 461 N.J. Super. 367, 375 (App. Div. 2019) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). “[T]he fact-specific nature of the jurisdictional assessment…must be conducted on ‘a case-by-case basis.’” Jardim, 461 N.J. Super. at 377 (quoting Bayway Ref. Co., 333 N.J. Super. at 429). The court must consider “the burden on the defendant, the interests of the forum State and the plaintiff’s interest in obtaining relief.” Asahi Metal Indus., 480 U.S. at 113. New Jersey courts have “focused upon whether the contacts in question ‘resulted from the defendant’s purposeful conduct and not the unilateral activities of the plaintiff.’” Jardim, 461 N.J. Super. at 377-78 (quoting Lebel, 115 N.J. at 323). So too has the United States Supreme Court. “The plaintiff’s claims…’must arise out of or relate to the defendant’s contacts’ with forum.” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., U.S., 141 S. Ct. 1017, 1020 (2021) (quoting Bristol-Myers, 137 S. Ct. at 1780). “[T]here must be ‘an occurrence between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.’” Bristol-Myers, 137 S. Ct. at 1781 (quoting Goodyear, 564 U.S. at 919).

On March 11, 2024, the U.S. Department of Labor’s (USDOL) final rule for determining whether a person is an employee or an independent contractor under the federal Fair Labor Standards Act (FLSA) will take effect. 29 CFR part 795. FLSA establishes minimum wage, overtime pay, recordkeeping and child labor standards affecting full and part time workers in both the private and public sectors. Employees receive the protection of the FLSA as opposed to independent contractors who do not because they are considered in business for themselves.

Whether a worker is an employee or an independent contractor under the FLSA is determined by looking at the economic realities of the worker’s relationship with the employer.  See generally USDOL, Wage and Hour Division Fact Sheet 13 (Fact Sheet 13). If the economic realities show that the worker is economically dependent on the employer for work, then the worker is an employee. If the economic realities show that the worker is in business for themself, then the worker is an independent contractor.

The new final rule adopted the USDOL a six-factor test that delves into the economic relationship between potential employers and workers: 1) Opportunity for profit or loss depending on managerial skill; 2) Investments by the worker and the potential employer; 3) Degree of permanence of the work relationship; 4) Nature and degree of control; 5) Extent to which the work performed is an integral part of the potential employer’s business; 6) Skill and initiative. Additional factors may be considered if relevant to whether a worker is in business for themselves but economically dependent on the employer for work. See Fact Sheet 13.

Using enhanced powers provided by legislation signed by Governor Phil Murphy in 2020 and 2021 the New Jersey Attorney General’s Office recently filed a complaint (the “Complaint”) in the New Jerey Superior Court of Essex County on behalf the of the Commissioner of the New Jersey Department of Labor and Workforce Development (the “Commissioner”) alleging two trucking companies named STG Logistics, Inc. (STGL) and STG Drayage LLC (“STGD”) violated New Jersey wage and hour laws by knowingly misclassifying hundreds of drivers (“Drivers”) as independent contractors when they should have been classified as employees. Through this lawsuit the Commissioner seeks to immediately enjoin STGL and STGD from engaging in alleged ongoing unlawful misclassification of Drivers and seeks as well to impose statutorily authorized fines and penalties, recover reasonable costs of enforcement, including attorney’s fees, and obtain wages that have been improperly withheld from the Drivers.

According to the Report of Gov. Murphy’s Task Force on Employee Misclassification published in July 2019 (“the Report”), misclassification is the practice of illegally classifying workers as independent contractors rather than employees for the purpose of reducing labor costs.  The Report explains that:

“[M]isclassification deprives workers of a suite of rights guaranteed to employees, but not independent contractors, including the right to earn overtime for working in excess of 40 hours per week; to receive workers’ compensation benefits if injured on the job; to receive unemployment benefits; to receive earned sick leave; to take job-protected family leave and receive family leave benefits; to receive health and safety protections, as well as protection under state and federal antidiscrimination laws; and to organize under the National Labor Relations Act.”

A legal question recently presented to the New Jersey Superior Court on a Motion to Dismiss filed by a New Jersey based Defendant Corporation for answering was whether its former Plaintiff employee who worked remotely for it from her home in North Carolina was protected from an alleged unlawful retaliatory discharge in violation of New Jersey’s whistleblower law entitled the New Jersey Conscientious Employee Protection Act (CEPA). In answering this question in the affirmative by denying Defendant’s motion, the Superior Court accepted Plaintiff’s argument that CEPA applied to the Plaintiff because based on the facts pled in the Complaint, New Jersey had a substantial relationship to the parties and facts at issue. The Plaintiff in this case is represented by Mashel Law, L.L.C. (Mashel Law).

Plaintiff worked from her home in North Carolina for the Defendants as its Human Resources Manager. As such, she was tasked with applying New Jersey labor and employment laws when drafting an employee handbook for the Defendant. Plaintiff was responsible for ensuring Defendant complied with New Jersey laws. In her role as Human Resources Manager, Plaintiff repeatedly complained to her superiors about how the Defendant Corporation was violating the New Jersey Earned Sick Leave law and the New Jersey Secure Choice Savings Program Act by failing to have a policy in place paying their New Jersey employees paid sick time.  Plaintiff alleges in this lawsuit that she was wrongfully discharged by the Defendant (and individual decisionmakers) for disclosing and objecting about her reasonable belief that the Defendant was violating New Jersey law by engaging in these alleged unlawful practices.

In arguing for dismissal of Plaintiff’s Complaint, the Defendant claimed the fact that the Plaintiff worked for it from North Carolina meant that as a matter of law she could not avail herself of New Jersey’s CEPA law. In opposition, Mashel Law argued, inter. alia., that even though the New Jersey Supreme Court had yet to determine whether an out-of-state remote worker who worked for a New Jersey-based company is protected by New Jersey’s employment laws, the New Jersey Appellate Division in Halliday v. Bioreference Labs, 2022 N.J. Super. Unpub. LEXIS 1394 *32 (App. Div. August 3, 2022) had explicitly stated the New Jersey Legislature did not intend to limit CEPA’s protections to only employees who live and work in New Jersey. Notably, in Halliday, a CEPA case, the Plaintiff employee worked for a New Jersey corporation from a job site located in Houston, Texas. Our Appellate Division in reversing a dismissal below and remanding for further factfinding found the trial level court had court failed to sufficiently analyze all factors relevant to determining if New Jersey had a substantial relationship to the parties and facts at issue.

The Pregnant Workers Fairness Act (“PWFA”) which came into effect earlier this summer requires employers to provide “reasonable accommodations” for pregnant and postpartum workers went into effect expanding protections for millions of people. The PWFA applies to employers with 15 or more employees, including hourly workers. In addition to covering pregnant employees, it also protects those with “related medical conditions,” including women undergoing fertility treatment, as well as those who have postpartum depression and those who have had an abortion or pregnancy loss. Importantly, the PWFA does not replace state law such as New Jersey’s Law Against Discrimination (the “LAD”) which may arguably be more protective of workers affected by pregnancy, childbirth, or related medical conditions.

Examples where the PWFA would require reasonable accommodations for pregnancy include, but are not limited to, the ability to sit or drink water; receive closer parking; have flexible hours; receive appropriately-sized uniforms and safety apparel; receive additional break time to use the bathroom, eat, and rest; take leave or time off to recover from childbirth; and be excused from strenuous activities and/or activities that involve exposure to compounds not safe for pregnancy. Employers are required to provide reasonable accommodations unless they would cause an “undue hardship” on the employer’s operations. i.e., would cause significant difficulty or expense to the employer or coworker.

Fortunately, the PWFA prohibits employers from:

Can a Catholic Church which owns and operates a religious parochial school discharge one of its unmarried teachers because she became pregnant in violation of the Catholic Church’s teachings and her employment contract which both forbade engaging in premarital sex?  In Crisitello v. St. Theresa School, 2023 N.J. LEXIS 847 (2023), the New Jersey Supreme Court answered this question in the affirmative when it reversed the Appellate Division’s reversal of a trial court’s grant of summary judgment to St. Theresa’s under the “religious tenets” exception contained in the New Jersey Law Against Discrimination (LAD) at N.J.S.A., 10:5-12(a).

In response to her firing, plaintiff Crisitello filed a complaint in the New Jersey Superior Court against St. Theresa’s alleging employment discrimination in violation of the LAD based on pregnancy and marital status.  St. Theresa’s answered by claiming that their decision to terminate Crisitello was protected by both the First Amendment and LAD. In deciding this case in favor of the defendant the Supreme Court restricted its analysis to the LAD.

At the trial court level, the court concluded that Crisitello had failed to show that St. Theresa’s “proffered reason [for her termination] was false and that the real reason was motivated by discriminatory intent.” *20.  However, the Appellate Division disagreed with the trial court holding that “knowledge or mere observation of an employee’s pregnancy alone is not a permissible basis to detect violations of the school’s policy and terminate an employee,” and reaffirming its earlier determination that Crisitello made a prima facie case of discrimination under the LAD. *20-21.

The New Jersey Supreme Court has yet to decide whether an out-of-state remote worker who worked for a New Jersey-based company is protected by New Jersey’s laws prohibiting workplace discrimination. This is why the New Jersey District Court for the District of New Jersey in Schulman v. Zoetis, Inc., 2023 U.S. Dist. LEXIS 121702 (decided July 14, 2023) was required to predict how the New Jersey Supreme Court rule if faced with this same question. The District Court of New Jersey answered this question in the affirmative concluding that our New Jersey Supreme Court would hold that New Jersey’s Law Against Discrimination (LAD) protected out-of-state employees who worked for New Jersey based companies.

Schulman was a New Hampshire resident who worked remotely from home for defendant Zoetis, a company headquartered in New Jersey.  She sued Zoetis under, among others, New Jersey’s LAD law claiming she received less than her male counterparts performing same or similar work. Defendant filed a Motion to Dismiss arguing that the LAD did not extend to protect Schulman, a New Hampshire resident, who worked for the company from her home in New Hampshire.

The District began its analysis by acknowledging that our Appellate Division had already held that LAD protected a non-New Jersey resident who worked for a New Jersey employer from workplace discrimination where he was denied a promotion to a position in New Jersey employer’s and then was allegedly wrongfully discharged in violation of the LAD by the same New Jersey employer’s non-New Jersey subsidiary. Calabotta v. Phibro Animal Health Corp., 460 N.J. Super. 38 (App. Div. 2019). The Court in Calabotta reasoned that LAD protects “all persons” — and “[t]he statute’s plain language … does not limit the definition of ‘person’ to New Jersey residents or employees.” Id. at 61. The appellate court further noted that other relevant statutory terms defined in the LAD such as “employer” and “any individual,” did not purport to limit the statute’s coverage to those who work or live in New Jersey. Id. at 61-62.

“A constructive discharge occurs when the employer has imposed upon an employee working conditions ‘so intolerable that a reasonable person subject to them would resign.'” Daniels v. Mut. Life Ins. Co., 340 N.J. Super. 11, 17 (App. Div. 2001) (quoting Muench v. Twp. of Haddon, 255 N.J. Super. 288, 302 (App. Div. 1992)). It has been held that, “[t]he phrase ‘intolerable conditions’ conveys a sense of outrageous, coercive [,] and unconscionable requirements.” Jones v. Aluminum Shapes, Inc., 339 N.J. Super. 412, 428 (App. Div. 2001). Given this definition of constructive discharge, our Appellate Division in Moser v. The Streamwood Company, et. al., 2023 N.J. Super Unpub. LEXIS 1173 (decided July 13, 2023) issued an opinion finding that in a case brought under New Jersey’s whistleblowing statute, the Conscientious Employee Protection Act (CEPA), N.J.S.A., 34:19-1, et. seq., a Plaintiff/employee may pursue a constructive discharge claim at trial where an, “… employer’s repeated insistence, in the face of plaintiff’s objections, that she engage in actions she reasonably believed were in violation of LAD leading up to, and in conjunction with, the comment that induced plaintiff to resign.”

Plaintiff Moser worked for the Streamwood Company (Streamwood) as an assistant property manager. While plaintiff worked for Streamwood, she reported to codefendant Scott Leonard, Streamwood’s regional manager and son of Streamwood’s founder and owner. Moser alleged Leonard instructed plaintiff to check “no” on all housing screening form questions asking whether the form was being completed as a Section 8 housing application. Plaintiff believed checking “no” on the forms, as instructed, would make her complicit in violating New Jersey’s Law Against Discrimination (“LAD”), N.J.S.A., 10:5-1 to -49, which prohibits housing discrimination against prospective Section 8 tenants. When Moser continued to resist marking the boxes “no” on the housing screening forms, Leonard ominously forewarned Moser that “things don’t look good for you.”  Thereafter, Moser began experiencing acute anxiety and went on medical leave.

After her medical leave ended, Moser resigned her position with Streamwood. Thereafter, she filed a lawsuit alleging that she was constructively discharged as a result of her whistleblowing activities.  The trial court granted summary judgment to the defendants dismissing the lawsuit on a finding that, inter. alia., the facts underlying Plaintiff’s resignation did not as a matter of law rise to the level of outrageousness, coerciveness and unconscionability required to pursue a constructive discharge claim under CEPA. Moser appealed arguing that reasonably minded jurors could differ whether the hostility she claimed to have endured following her alleged whistleblowing activities rose to the level of outrageousness, coerciveness, and unconscionability necessary for a viable constructive discharge claim and therefore summary judgment was inappropriate under R. 4:46.

Plaintiff Kalloo, age 61, worked for New York New Jersey Rail, LLC (NYNJR) for some 13 years as a train engineer.  He got into a physical altercation with a coworker who was only 23 years old. Witnesses seemed to corroborate that Kalloo was the instigator. Kalloo was terminated for cause for allegedly violating work safety rules. After Kalloo was fired his engineering duties were assigned to an existing NYNJR employee with engineer experience who was also much younger than him. Kalloo filed a lawsuit alleging he was wrongfully discharged because of his age in violation of the New Jersey Law Against Discrimination because he was replaced by a much younger coworker. The trial court granted summary judgment to NYNJR finding as a matter of law that there were legitimate nondiscriminatory reasons for Kalloo’s firing. Kalloo appealed.

In affirming the trial court below, the Appellate Division first reviewed the elements necessary for a plaintiff to successfully assert a prima facie claim of age discrimination. The appellate court stated that a plaintiff must show that: (1) [he] was a member of a protected group; (2) [his] job performance met the ’employer’s legitimate expectations’; (3) [he] was terminated; and (4) the employer replaced, or sought to replace, [him].” Nini v. Mercer Cnty. Cmty. Coll., 406 N.J. Super. 547, 554 (App. Div. 2009) (quoting Zive, 182 N.J. at 450). Satisfaction of the fourth element “require[s] a showing that the plaintiff was replaced with ‘a candidate sufficiently younger to permit an inference of age discrimination.'” Bergen Com. Bank v. Sisler, 157 N.J. 188, 213, (1999) (quoting Kelly v. Bally’s Grand, Inc., 285 N.J. Super. 422, 429, (App. Div. 1995)). The court went onto to state that the plaintiff must also show that age played a role in the decision-making process and that it had a determinative influence on the outcome of that process.” Garnes v. Passaic Cnty., 437 N.J. Super. 520, 530 (App. Div. 2014) quoting Bergen Com. Bank, 157 N.J. at 207. “Although the discrimination must be intentional, an employee may attempt to prove employment discrimination by using either direct or circumstantial evidence.” Ibid. (quoting Bergen Com. Bank, 157 N.J. at 208). Upon plaintiff’s demonstration of a prima facie case, the burden shifts to the employer to articulate a legitimate non-discriminatory reason for the adverse employment action. Bergen Com. Bank, 157 N.J. at 209-10. If a defendant shows a legitimate non-discriminatory reason for the adverse action, the burden shifts back to the plaintiff to show the employer’s proffered reasons were pretextual. Id. at 210-11.

In siding with the NYNJR, the appellate court found Kalloo failed to meet the second prong of the LAD prima facie case because plaintiff failed to meet defendant’s expectations through his job performance, based on the physical altercation, threats and hostile working environment corroborated by co-workers. Plaintiff also failed to demonstrate that he was replaced by a younger employee as required under the fourth prong. Rather, his duties were reassigned to an existing employee who was already trained as an engineer. *11.  The court also concluded that even had Kalloo proved a prima facie case of age discrimination, his claims still fell short due to lack of proof that NYNJR’s nondiscriminatory reason for firing Kalloo, i.e., fighting, was pretextual.  In doing so, the court stated, “To prove pretext, a plaintiff may not simply show that the employer’s reason was false but must also demonstrate that the employer was motivated by discriminatory intent.” Zive, 182 N.J. at 449 (citing Viscik, 173 N.J. at 14). The plaintiff must persuade the court “he was subjected to intentional discrimination.” Ibid. (citing Baker v. Nat’l State Bank, 312 N.J. Super. 268, 287, (App. Div. 1998)). *12. No pretext was found because Kalloo failed to offer proof to the court supporting his contention of discriminatory intent nor did he create a genuine dispute of fact as to the physical altercation he had with a coworker. *13.

In a case of first impression, Judge O’Hearn of the United Stated District Court of the District of New Jersey (USDNJ) concluded that there is neither an express or implied cause of action under the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”), N.J.S.A. 24:6I-52. Judge O’Hearn likewise held that New Jersey common law does not recognize a cause of action based on an employer’s failure to hire.  These decisions resulted in a putative class action lawsuit entitled Zanetich v. Wal-Mart being dismissed under Fed. R. Civ. P. 12(b)(6) for failure to state a cause of action upon which relief could be granted.

Plaintiff Zanetich brought his lawsuit on behalf of himself, and others similarly situated, after a job offer to work for Walmart in its Asset Protection Department was rescinded after he failed a pre-employment drug test due to positive findings of marijuana.  Zanetich argued in opposition to Walmart’s Motion to Dismiss that even though CREAMMA did not expressly provide for a private right to sue for violations of the statute, an implied private cause of action existed, and further, that his common law cause of action was also cognizable as both a wrongful termination and failure to hire claim. Zanetich made these arguments premised in part on the fact that the language of CREAMMA states, “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, vape, aerosolize or otherwise use cannabis items …”

In determining that CREAMMA did not create an implied cause of action for violations of the statute, Judge O’Hearn applied the three-part test established by the United States Supreme Court in Cort v. Ash, 422 U.S. 66 (1975).  This was required because the language of CREAMMA is silent as to whether it permits a person the right to sue for violations of the statute. Prior thereto, no court had considered whether CREAMMA creates an implied cause of action. After finding Zanetich had established the first Cort factor of being a member of the class for whose special benefit the CREAMMA statute was enacted, Judge O’Hearn went on to conclude that Zanetich had failed to establish the other two Cort factors, that is, he failed to establish that the New Jersey Legislature in passing CREAMMA intended the statute to provide for a private cause of action, and relatedly, failed to establish the legislative scheme embodied within CREAMMA supported an inference that an implied private cause of action existed under the statute. In making these findings Judge O’Hearn heavily weighed the fact that the State Legislature in drafting CREAMMA empowered the Cannabis Regulatory Commission (CRC) to regulate, investigate, and prosecute all violations of the statute.  Considering this wide encompassing role of the CRC and given the lack of any provision in CREAMMA as to how its employment provision can be enforced, by whom, and what remedies, if any, are available under the statute as written, “in and of itself, negates the argument that the Legislature intended for an individual to bring a private cause of action under CREAMMA.”

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