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Employers enjoy tremendous freedom to impose restrictions on their employees. Employment contracts, company handbooks, company policies, and even oral communications, are all mechanisms an employer may use to restrict the actions of their employees. This control may extend even after an employee leaves a company through the employer’s use of restrictive covenants. Merriam-Webster defines a “covenant” to mean a contract or agreement entered by two or more parties. A “restrictive covenant” in the employment context refers to an agreement between an employer and an employee under which the employee agrees not to engage in certain specified activities deemed competitive with the employer after the employment relationship has ended. The most common, and commonly problematic restrictive covenants, are those that impose non-compete, non-solicitation, and non-disclosure of trade secrets or proprietary information restrictions on the employee. A restrictive covenant will typically specify the duration and geographic limits of the restrictions imposed, as well as the scope of the activities prohibited by the agreement.

Although disfavored in the law, post-employment restrictive covenants may be enforceable. Strong public policy interests in fostering competition, creativity, and ingenuity, as well as the importance of not inhibiting employee mobility or consumer freedom, are the chief reasons that restrictive covenants are disfavored by the courts. Maw v. Advanced Clinical Communications, Inc., 197 N.J. 439, 447 (2004). However, the courts will consider a restrictive covenant to be reasonable and enforceable when it, “simply [1.] protects the legitimate interests of the employer, [2.] imposes no undue hardship on the employee, and [3.] is not injurious to the public.” Solari Industries, Inc. v. Malady, 55 N.J. 571, 576 (170).

In addressing the validity of a post-employment restriction preventing an employee from competing against his former employer for a period of 5 years and covering a geographic area encompassing every state “east of the Mississippi”, the New Jersey Supreme Court in Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971), declared that although, “The employer has no legitimate interest in preventing competition as such … the employer has a patently legitimate interest in protecting his trade secrets as well as his confidential business information and he has an equally legitimate interest in protecting his customer relationships.” 58 N.J. at 33. In reversing the trial court’s imposition of preliminary restraints on the employee, the Court found the employer, Whitmyer Bros., had failed to show the extensive restraints it sought to impose on employee Doyle were, “necessary to protect its legitimate interests and that it would not impose undue hardship on the employee or injure the public.” Id. at 37.

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A person infected with HIV or AIDS cannot be denied medical treatment in a hospital or clinic, nor denied treatment by a medical practice or physical therapy group. HIV or AIDS under New Jersey’s Law Against Discrimination (NJLAD), N.J.S.A., 10:5-1 to 10:5-42, and its accompanying regulations have evolved to provide ever greater levels of protection for the disabled victimized by discrimination. Before a discussion of the law, let’s dispel any misconceptions about how HIV or AIDS is spread. HIV or AIDS is not spread through touch, tears, saliva, or urine. You cannot catch it by: breathing the same air; touching a toilet seat or door knob or handle; drinking from a water fountain; hugging, kissing, or shaking hands; sharing eating utensils; or using exercise equipment at a gym. Id.  However, HIV or AIDS can be spread from infected blood, semen, vaginal fluid, or breast milk. Id.

The NJLAD provides in N.J.S.A., 10:5-4: All persons shall have the opportunity to obtain all the accommodations, advantages, facilities, and privileges of any place of public accommodation without discrimination because of disability, subject only to conditions and limitations applicable alike to all persons. That opportunity is recognized as and declared to be a civil right. It is unlawful discrimination to refuse, withhold, or deny that opportunity, or to discriminate in furnishing it, because of disability. N.J.S.A.,10:5-12(f)(1); N.J.A.C. 13:13-4.3.

The NJLAD forbids “any owner, lessee, proprietor, manager, superintendent, agent, or employee of any place of public accommodation directly or indirectly to refuse, withhold from or deny to any person any of the accommodations, advantages, facilities or privileges thereof, or to discriminate against any person in the furnishing thereof. . . .” N.J.S.A., 10:5-12(f).  To prove a claim of unlawful discrimination under the NJLAD, a claimant must show that he or she (1) had a disability; (2) was otherwise qualified to participate in the activity or program at issue; and (3) was denied the benefits of the program or otherwise discriminated against because of his or her disability.

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Many mid-level to large companies use an attorney handbook or direct employees during the new hire onboarding process to an employee intranet site where the employer communicates its  company philosophy, policies, procedures, behavioral expectations, and worker benefits. The question often raised by employees is whether the employer is legally bound to fulfill the representations made in the handbook. Typically, not so long as the employer prominently displays a disclaimer in the handbook making clear the relationship between employer and employee is strictly a noncontractual at-will relationship, meaning the company has the right to terminate the employment relationship at any time, for any reason, or for no reason whatsoever. See generally Woolley v. Hoffman-La Roche, 99 N.J. 284 (1985). However, a recent unpublished New Jersey Appellate Division decision states that depending on the wording of the handbook disclaimer, an inroad may exist for employees to argue that the handbook disclaimer does not serve to waive an employee’s right to claim that the employer violated its policies or code of conduct by failing to put a stop to the employee being harassed or bullied in the workplace. Maselli v. Valley National Bancorp., No. A-0440-16T1, Super. Ct. N.J. slip op. (Oct. 2, 2017)

Most employees in the country are hired on an “at-will” basis. This means an employee can be fired for any reason (or no reason) so long as the reason does not violate, law, public policy, or a valid contract. English v. College of Medicine & Dentistry, 73 N.J. 20, 23 (1977). Prior to 1985, a handbook was viewed as not creating either an express or implied contractual promise whether a disclaimer was placed in the handbook or not. In Woolley, supra., the New Jersey Supreme Court held that a provision contained in the employee handbook converted the plaintiff’s employment from at-will employment to for-cause, and was enforceable against the employer. 99 N.J. 284, 289. The Court looked to the reasonable expectations of the employee and found that the handbook constituted a unilateral contract, the consideration being continued employment after receiving the handbook. Id. at 295. Woolley opened the door for various contract claims regarding different provisions of employee handbooks. However, Woolley also made clear that an employer could avoid liability for the representations and promises if it placed in the handbook a “clear” and “prominent” disclaimer explaining the policies in the handbook do not constitute a contract. Id. at 285.

In Maselli, supra., the plaintiff on appeal of a motion dismissing her complaint, argued that her former employer’ s handbook disclaimer was not worded in a manner sufficient to prevent her from pursuing a breach of contract claim stemming from her employer’s repeated failure to enforce anti-harassment provisions contained within its Code of Ethics. Although the appellate court agreed with the former employer that its disclaimer was sufficient to bar breach of contract claims related to a termination of employment (i.e., security of employment), the court found the disclaimer language sufficiently ambiguous as to make the employee’s interpretation of the disclaimer plausible, that is, the disclaimer did not bar claims for failure to enforce an anti-harassment policy established by the Bank’s Code of Ethics during her employment. Id. at * 3.  An ambiguity in a contract should be resolved against the party drafting the contract, and in favor of the employee’s interpretation of the disclaimer language. In Re Miller, 90 N.J. 210, 221 (1982). A lesson to be drawn from Maselli is that when an employee claims he or she has been bullied and harassed on the job by their boss, but the harassment was not motivated by a discriminatory animus or whistleblowing retaliation, the employer’s handbook, code of ethics, and/or conduct needs to be closely read to determine whether the disclaimer language contained within it provides an opening to allege in good faith a breach of contract claim.

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In New Jersey an employer cannot recover damages from their employee caused by the employee’s negligent errors or omissions.  Incredibly, this was not always the case. At one time, our New Jersey courts permitted employers to sue their employees to recover monies it the employer had to pay to third parties for damages caused by the employee’s negligence.  Frank Martz Coach Co. v. Hudson Bus Transportation Co, 23 N.J. Misc. 342 (N.J. Sup. Ct. 1945).  However, 16 years later in Eule v. Eule Motor Sales, 34 N.J. 537 (1961), the New Jersey Supreme Court found the proposition that an employer could seek indemnification from its employees to be “anachronistic”:

“The theoretical liability of an employee to reimburse the employer is quite anachronistic. The rule would surprise the modern employer no less than his employee. Both expect the employer to save harmless the employee rather than the other way round, the employer routinely purchasing insurance which protects the employee as well. ***”

The change in law articulated in Eule, has been applied by our New Jersey courts since then.  See e.g., Fried v. Aftec, Inc., 246 N.J. Super. 245 (App. Div. 1991) (New Jersey does not permit an employer to seek indemnity from an employee for acts of negligence causing the employer losses); Brown v. United Cerebal Palsy/Atlantic & Cape May, Inc., 278 N.J. Super. 208, (N.J. Law Div.  1994) (“The employee should not, therefore, be required to bear that cost by way of indemnification to the employer.”)

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America is in the middle of a social reckoning. Brave women are standing up and telling their stories of sexual harassment, assault, or other abuses by men in positions of power through use of the hashtag, #MeToo. The #MeToo movement, focused primarily on sharing stories of abuse, evolved into a call for action and female empowerment aptly named #TimesUp.  Although there has long been legal recourse found in our federal and state law for victims of sexual harassment in the workplace and/or victims of retaliation for reporting it, women today are being believed and vindicated on a larger scale than ever seen before. Here in New Jersey, our Law Against Discrimination (LAD) employees protects women and men alike from sexual harassment in the workplace. There are two kinds of sexual harassment: (1) quid pro quo, which is an agreement or an offer to receive a benefit (promotion, raise, continued employment, etc.) in exchange for the performance of sexual favors; or (2) a sexually hostile work environment, where, for example, a co-worker makes unwelcome and offensive sexual comments and/or advances. Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587 (1993). Any person who aids, abets, or otherwise assists in the harassment is in violation of the LAD. N.J.S.A. 10:5-12(e).

To prove the existence of a hostile work environment under the LAD, an employee must demonstrate that the conduct in question was unwelcome, that it occurred because of his or her sex, and that a reasonable person of the same sex would consider it sufficiently severe or pervasive to alter the conditions of employment and create an intimidating, hostile, or offensive working environment. Id.  However, a victim of harassment should be mindful that the LAD is not intended to be “a ‘general civility’ code” for conduct in the workplace.'” Mandel v. UBS/PaineWebber, Inc., 373 N.J. Super. 55, 73 (App. Div. 2004) certif. denied, 183 N.J. 213 (2005). “‘[D]iscourtesy or rudeness should not be confused with [protected status-based] harassment.'” Ibid.

The LAD expressly protects workers from retaliation for having reported sexual harassment of themselves or coworkers. This includes retaliation in the form of a hostile work environment, demotion, failure to promote, transfer, cut in pay or benefits, unpaid suspension, wrongful discharge, or even “constructive discharge”.  A constructive discharge occurs when an employer takes no official action, but creates a work environment so hostile and unbearable that a reasonable employee would have no choice but to resign.

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Employers can be held liable under Title VII of the Civil Rights Act of 1964, the American with Disabilities Act (ADA) and New Jersey’s Law Against Discrimination (“LAD”) for discriminating against an employee because of the employee’s association with a member of a protected group (e.g., sex, race, national origin, religion, disability, etc.).  This means an employer is prohibited from taking adverse employment action against a worker in the form of a hostile work environment, demotion, failure to promote, cut in pay, wrongful discharge, etc., where for example: (a) a Caucasian worker married an African American or other person of color; (b) a worker gets engaged to a Muslim; (c) a female employee gives birth to a child with disabilities; or (d) an employee’s spouse becomes afflicted with a potentially terminal disease.

Courts have found protection against “association discrimination” under New Jersey’s LAD”.  See e.g. Downs v. U.S. Pipe & Foundry Co., 441 F. Supp. 2d 661, 665 (D.N.J. 2006) (“In the absence of any contrary authority, this Court concludes that the New Jersey Supreme Court would hold that NJLAD bars employment discrimination based upon a person’s association with a person with a disability”) (citing O’Lone v. N.J. Dep’t of Corr., 313 N.J. Super. 249 (App. Div. 1998) and Berner v. Enclave Condo. Ass’n, Inc., 322 N.J. Super. 229 (App. Div. 1999), cert. denied, 162 N.J. 131 (1999)); see also Pailleret v. Jersey Constr. Inc., 2011 U.S. Dist. LEXIS 42364 *22 (D.N.J. Apr. 19, 2011) (“The NJLAD affords protection to both disabled persons as well as individuals associated with disabled persons”).

In O’Lone, the New Jersey Appellate Division held “where the plaintiff is wrongfully discharged for associating with a member of a protected group, that it is the functional equivalent of being a member of the protected group”.  O’Lone, 313 N.J. Super. at 255 (emphasis added).  Downs, supra., is very instructive in this matter.  In that case, the pertinent facts were set forth as follows:

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The New Jersey Workers’ Compensation Act, N.J.S.A., 34:15–1 to -146 (Workers Compensation Act), protects and allows workers who are injured on the job to receive compensation and be made whole for their injuries. This protection generally extends to third parties as well. For example, if an employer (IT, security, or custodial firm etc.) farms out their employees for use by a third party, the third party can be held liable to the employee for common-law personal-injury or wrongful-death claims. N.J.S.A., 34:15–40.  This is true even after the employee received workers’ compensation benefits from his or her original-direct employer.

Some employers and third-parties have tried to protect themselves from third party claims by requiring prospective and current employees to sign waivers releasing the company from third-party liability for workers’ compensation in the event the employee is injured while working for those third parties. Recently, the New Jersey Supreme Court held that such waivers violate New Jersey public policy, and therefore, are invalid and unenforceable.

In Vitale v. ScheringPlough Corp., No. 078294, 2017 WL 6398725 (N.J. Dec. 11, 2017), Plaintiff, Philip Vitale (Vitale), was hired by Allied Barton Security Services (Allied Barton), as a security guard. When it hired Vitale, Allied Barton required him to sign an agreement entitled “Worker’s Comp Disclaimer” (“Disclaimer”) as a condition of his employment. In the disclaimer, Vitale agreed to “waive and forever release any and all rights” that he may have had to assert a claim “against any customer … of Allied Security to which [Vitale] may be assigned, arising from or related to injuries which are covered under the Workers’ Compensation statutes.” Id. at *3.

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Under the federal Title VII of the Civil Rights Act of 1964 and New Jersey’s Law Against Discrimination (LAD) workers are protected from sexual harassment in the workplace. There are two kinds of sexual harassment; (1) quid pro quo –agreement to perform sexual favors to receive a benefit (promotion, raise, continued employment, etc.); or (2) a sexually hostile work environment, where, for example, a co-worker makes unwelcome and offensive sexual comments and/or advances.

Showing harassment through a hostile work environment requires a plaintiff to show: (1) objectively, a reasonable person would find such an environment hostile or abusive; (2) subjectively, the plaintiff perceives the environment as hostile or abusive; (3) the hostile environment is so severe or pervasive that someone can’t function or perform work properly; and (4) the hostile work environment was sexually motivated, in other words because of a characteristic protected by Title VII and LAD. There are two ways with which a workplace environment can be considered so hostile that someone can’t function or perform work properly; (1) a single incident occurred that was extraordinarily severe/egregious; or (2) a series of incidents was sufficiently continuous and concerning to have altered the conditions of the working environment.

If an employer has workplace policies in place to prevent and rectify harassment and the employee must take advantage of those procedures before bringing a harassment claim. This is known or referred to as the “Faragher-Ellerth defense”. See Faragher v. City of Boca Raton, 524 U.S. 775 (1998); Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998). Such procedures can include having a Human Resources department which accepts and reviews harassment complaints, and if concluding that harassment took place, acts appropriately against those perpetrating the harassment. However, if an employee does complain about harassment, and management, concluding harassment took place, does not move to rectify, and prevent future harassment, then the employer can be held liable for the harassment which took place.

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New Jersey is one of the states comprising the United States Court of Appeals for the Third Circuit.  In considering the scope of protections afforded workers by Title VII of the Civil Rights Act of 1964, 42 U.S.C § 2000 et seq. (“Title VII”), our Third Circuit defines an “employee” as including those workers placed by temporary staffing agencies. Faush v. Tuesday Morning, Inc., 808 F.3d 208, 213 (3d Cir. 2015).  The Third Circuit arrived at this conclusion by applying the so-called “Darden Test” set down by our United States Supreme Court in Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992).  Under the Darden Test, a court looks at the following 12 steps to determine whether a worker qualifies as an “employee” for Title VII protection purposes:  (1) the skill required; (2) the source of the instrumentalities and tools; (3) the location of the work; (4) the duration of the relationship between the parties; (5) whether the hiring party has the right to assign additional projects to the hired party; (6) the extent of the hired party’s discretion over when and how long to work; (7) the method of payment; (8) the hired party’s role in hiring and paying assistants; (9) whether the work is part of the regular business of the hiring party; (10) whether the hiring party is in business; (11) the provision of employee benefits; and (12) and the tax treatment of the hired party. However, in the Third Circuit, courts focus primarily on which entity paid the employees’ salaries, hired and fired them, and had control over their daily employment activities. Faush , supra.,808 F.3d 208 at 214.

In Faush, the Third Circuit concluded that a temporary agency worker who was “leased” to a store may be considered the store’s “employee” under Title VII, and therefore, can sue the store for discrimination.  There, Tuesday Morning Inc. (“Tuesday Morning”) had leased Faush and other temporary workers from a temporary staffing agency to perform basic labor tasks for the store such as stocking shelves. Faush alleged Tuesday Morning subjected him and other black temporary workers to racial discrimination. In reversing the grant of summary judgment to Tuesday Morning by the District Court below, the Third Circuit applied the Darden Test and found that Tuesday Morning controlled and supervised where, when and how the temporary workers worked. Further, while Tuesday Morning did not directly pay the temporary workers, the store did pay the temps based on the hours they worked and compensated them for overtime. Therefore, the Third Circuit found the method of payment used by Tuesday Morning was indistinguishable from directly paying them as permanent W-2 employees. Consequently, Faush was able to sue Tuesday Morning for employment discrimination under Title VII.

Because New Jersey’s Law Against Discrimination (the “LAD”) is supposed to be “liberally construed”, Battaglia v. UPS, INC., 214 N.J. 518, 546 (2013), and given New Jersey Courts will often look to the federal courts and their construction of federal laws for guidance in construing the LAD , Bergen Commercial Bank v. Sisler, 157 N.J. 188, 200 (1999) (finding that to the extent federal standards are useful and fair, they will be applied to LAD in the interest of achieving a degree of uniformity in the discrimination laws), it may be fairly predicted that our state courts would likely follow the Third Circuit and conclude that temp workers are to be considered employees under LAD, and permit temp workers to sue employers under LAD where workplace discrimination can be proved.

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Under Title VII of the Civil Rights Act of 1964 and under New Jersey’s Law Against Discrimination, it is unlawful for an employer to discriminate against an employee with respect to his/her compensation, terms, conditions, or privileges of employment because of the employee’s sex or gender. In such a circumstance, an employer is liable for a hostile work environment created by one or more of its supervisors if the employee suffering the discrimination establishes that: 1) the employee suffered intentional discrimination because of his/her sex, 2) the discrimination was severe or pervasive, 3) the discrimination detrimentally affected the plaintiff, 4) the discrimination would detrimentally affect a reasonable person in like circumstances, and 5) the existence of a respondeat superior relationship between the harasser and the victim employee. “Under respondeat superior, an employer can be found liable for the negligence of an employee causing injuries to third parties, if, at the time of the occurrence, the employee was acting within the scope of his or her employment.” Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587, 619 (1993).

To establish the existence of respondeat superior liability – namely, employer liability for a supervisor’s unlawful actions or inactions – a victimized employee needs to show that the supervisor acted as the employer’s agent. Usually, to be considered an employer’s agent the worker needed to have acted within the scope of employment. See Restatement (Second) of Agency § 219(2)(d) (Am. Law Inst. 1958). However, even if the supervisor acts outside the scope of employment, the employer can still be found liable. This is because under § 219(2)(d) of the Second Restatement, an employer may be liable when employees act outside the scope of their employment if they were “aided in accomplishing the tort by the existence of the agency relation.” Stated differently, even acting outside the scope of their employment, if the employee used their position as the agent of the employer to inflict harm against a subordinate the employer can be liable.

Recently the Third Circuit in, Moody v. Atl. City Bd. of Educ., No. 16-4373, 2017 U.S. App. LEXIS 17191, at *1 (3d Cir. Sep. 6, 2017), reversed and remanded to trial a district court’s dismissal of a complaint brought by a temporary fill-in employee against a public entity employer alleging her or foreman sexually harassed her.  Specifically, a custodian foreman named Marshall worked for the Atlantic City Board of Education (“ACBOE”) and oversaw scheduling the substitute custodian hours, and demanded sexual favors from Plaintiff Moody, a temporary school custodian, in exchange for favorable work schedules. When Moody refused Marshall’s demands, Marshall stopped scheduling Moody for work. Initially, the district court dismissed liability against the ACBOE finding there was no respondeat superior relationship because Marshall was not Moody’s supervisor, and therefore, the ACBOE was not liable for what Marshall had done. However, the Third Circuit reversed, concluding Marshall was in fact Moody’s supervisor because Marshall was the one who controlled whether Moody would work or not. Since Moody was a temp/fill-in worker Marshall controlled whether Moody worked at all – not  just (what an average foreman controls) deciding which hours and days she worked – this gave Marshall “supervisor” status. The court then held “[w]hen a supervisor takes a tangible employment action against a subordinate, the employer is vicariously liable because the injury could not have been inflicted absent the agency relation.” Since Marshall used his position as foreman under the ACBOE to demand sexual favors in return for providing Moody work, the ACBOE was found to be liable for Marshall’s actions.