New Jersey Employment Attorneys Blog

In 2021, the New Jersey Legislature enacted the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”) to legalize and regulate marijuana use in the State of New Jersey. Among its provisions, CREAMMA prohibits New Jersey employers from refusing to hire a job applicant for the use of cannabis, as well as protects employees from being terminated based solely on a positive cannabis drug test. However, CREAMMA does not expressly provide a private cause of action for remedying employment discrimination against cannabis users. A recent decision by the Third Circuit in Zanetich v. Wal-Mart Stores E., Inc., 2024 U.S. App. LEXIS 31051 (3d Cir. Dec. 9, 2024) makes clear that an employer’s failure to comply with CREAMMA cannot be the basis of an employment law claim.

In Zanetich, the Third Circuit held that an employee does not have the right to sue his/her employer for damages under CREAMMA for rescinding a job offer after testing positive for cannabis. The plaintiff in Zanetich was offered an asset protection position at a Walmart facility on the condition that he take and pass a drug test. Id. at *8. At the time, Walmart had a policy in place that specifically stated all job applicants and employees were ineligible for employment upon testing positive for any drugs, including cannabis. Id. When Zanetich tested positive for cannabis, Walmart rescinded the job offer. Id. Shortly after his job offer was rescinded, Zanetich filed a two-count putative class action complaint, alleging one count for violations of CREAMMA and one count for violations of New Jersey public policy. Walmart moved to dismiss both counts for failure to state a claim, which was granted by the District Court of New Jersey. Zanetich then appealed to the Third Circuit.

The Third Circuit found that, to create a private cause of action, CREAMMA must provide not only a private right but also a private remedy. Private remedies for statutory rights could be implied, but they cannot be presumed. The Third Circuit relied heavily on the United States Supreme Court case entitled Cort v. Ash, 422 U.S. 66 (1975) when rendering its decision. In Cort, the Supreme Court refused to presume that a private remedy should be implied for violations of federal criminal law. In doing so, the Supreme Court applied the following factors:

The New Jersey Law Against Discrimination (LAD) prohibits employers from discriminating against employees by treating them hostilely or differently based on the employee’s race/color, sex/gender, age, national origin/ancestry, religion/creed, disability (temporary or permanent), sexual orientation, and gender identity, among other protected class characteristics. Earlier this year, the New Jersey Division of Civil Rights (NJDCR) along with the Office of the New Jersey Attorney General (NJDAG) issued a guidance clarifying how the LAD applies to out-of-state employees who work for New Jersey-based employers (hereafter referred to as the “the Guidance”). The COVID-19 pandemic prompted New Jersey companies to adopt telework and hybrid working models allowing some employees to work from out of state locations. This rise in remote work created confusion as to whether the LAD applies to these out-of-state workers. The Guidance makes clear the LAD should be applied to all workers employed by New Jersey companies regardless of whether they perform their work inside New Jersey. The Guidance draws on the broad statutory language of the LAD and notes the terms “person” and “employee” are defined broadly and contain no geographical restriction in scope throughout the statute.

While the Guidance is not legally binding, legal precedent exists supporting the stance taken by the NJDCR and NJDAG. Specifically, the Guidance relies on two New Jersey cases: Calabotta v. Phibro Animal Health Corp., 460 N.J. Super. 38 (App. Div. 2019) and Schulman v. Zoetis, Inc., 684 F. Supp. 3d 275 (D.N.J. 2023). In Calabotta, an Illinois resident working for a subsidiary of a New Jersey employer brought a LAD claim after the employer failed to consider him for a promotion. Calabotta, 460 N.J. Super. at 45. In its analysis, the Appellate Division reasoned that the plain language of the LAD did not limit the definition of “person” to only New Jersey residents or employees working inside the borders of New Jersey and thus protects “all persons” employed by a New Jersey-based company. Id. The Calabotta court also recognized that “special rules of interpretation” applied to the LAD because it serves as, “remedial social legislation whose overarching goal is to eradicate the cancer of discrimination. As such, it should be liberally construed….” quoting Nini v. Mercer Cnty. Cmty. Coll., 202 N.J. 978, 108-09 (2010).

Similarly in Schulman, a case brought before the District Court of New Jersey, a remote worker residing in New Hampshire filed a LAD claim against their New Jersey-based employer. Schulman, 684 F. Supp. 3d at 277. Because the New Jersey Supreme Court has yet to decide the issue of whether the LAD applies to out-of-state workers employed by New Jersey companies, the District Court in Schulman had to predict how the New Jersey Supreme Court would likely decide the issue. Id. at 278. In doing so the District Court relied on the Calabotta decision and that court’s statutory interpretation of the LAD’s plain language and its broad remedial purposes. Id. at 279-280. Ultimately, the District Court concluded that the New Jersey Supreme Court would likely extend LAD protections to out-of-state workers of New Jersey companies. Id. at 281. Additionally, the District Court in Schulman pointed to an analogous New Jersey Appellate decision that extends whistleblower protections under New Jersey’s Conscientious Employee Protection Act (CEPA) to out-of-state employees as further proof the LAD would also extend to remote workers. Id; Halliday v. Bioreference Labs., 2022 N.J. Super. Unpub. LEXIS 1394 (Super. Ct. App. Div. Aug. 3, 2022). In Halliday, our Appellate Division reversed the dismissal of a CEPA case for lack of subject matter jurisdiction and remanded the case for further fact-finding because the trial level court had failed to sufficiently analyze all factors relevant to determining if New Jersey had a substantial relationship with the parties and facts at issue.

On behalf of a client, Mashel Law recently filed a multicount complaint in the New Jersey Superior Court alleging, inter. alia., that she as the Plaintiff/Employee, was the victim of a hostile work environment and disparate treatment because of her female gender which ultimately resulted in her retaliatory wrongful discharge for complaining about the alleged unlawful treatment she endured. In lieu of filing an Answer, the Defendant/Employer filed a motion to dismiss claiming that New Jersey courts did not possess subject matter jurisdiction over Plaintiff’s employment law claims based on the language of a choice of law/forum selection clause found in an employment agreement Plaintiff signed at the inception of her employment. The forum selection clause at issue stated that in the event of “any litigation arising from, to enforce, to interpret or otherer related in any way to this Agreement” such a lawsuit would have to be filed in the state courts of Tennessee where the Defendant/Employer was headquartered, and Tennessee law would need to be applied to any such claims brought.

In its opposition to the motion to dismiss, Mashel Law argued that the forum selection clause was effectively a waiver of rights clause because if enforced it resulted in the Plaintiff losing the benefit of many statutory rights and remedies which are afforded to victims of discrimination under New Jersey’s Law Against Discrimination (“LAD”) which are not available under the Tennessee Human Rights Act (“THRA”).  Specifically, it was argued that this would result in the loss to Plaintiff of the following rights and remedies provided under the LAD which are not available under the THRA:

1. The right to sue in the New Jersey Superior Court.

To be considered to have a protected “disability” under New Jersey’s Law Against Discrimination (LAD), one must show they have:

                     1.   Any physical disability, infirmity, malformation or disfigurement

                           caused by bodily injury, birth defect or illness

In the workplace the New Jersey Law Against Discrimination (LAD) generally prohibits disparate (different) treatment of workers based on or motivated by their actual or perceived race, religion, disability, ancestry/national origin, gender, sexual orientation, gender identity or expression, and other protected characteristics. Establishing a disparate treatment claim typically requires proof of an employer’s discriminatory animus or intent to treat members of a protected class differently. An exception to proving an employer’s intention to discriminate under the LAD is found in failure to accommodate disability discrimination claims where the employer can be held liable under the LAD for unreasonably failing to accommodate a request for a disability accommodation; this is akin to a negligence standard of liability. Another claim of discrimination not requiring intentional conduct are “disparate impact” discrimination claims which prohibit an employer from enacting and enforcing policies or practices that are facially neutral in their treatment of different groups but in fact cause hardship on one protected group more so than others [disparate impact] and cannot be justified by a business necessity. Peper v. Princeton Univ. Bd. of Trs., 77 N.J. 55, 81-82 (1978). Unlike most claims of disparate treatment, “disparate impact” claims do not require proof of a discriminatory motive. Id. The New Jersey Supreme Court first acknowledged the existence of a disparate impact cause of action under the LAD in Gerety v. Atl. City Hilton Casino Resort, 184 N.J. 391 (2005). Recently, the New Jersey Division on Civil Rights (DCR) has proposed new rules relating to claims of disparate impact discrimination brought under the LAD where employers will be required, among others, to establish a “substantial, legitimate, nondiscriminatory interest” when defending policies or practices which disproportionately impact a particular protected class.

In Gerety, the Court recognized that certain practices and policies can appear facially neutral while nonetheless preventing employees with protected characteristics from enjoying the benefits of the employer. Most significantly, in Gerety the Court held that a disparate impact discrimination claim does not require the employee to demonstrate proof of the employer’s discriminatory motive, but rather requires a showing that a facially neutral policy “resulted in a significantly disproportionate or adverse impact on members of the affected class.” 184 N.J. at 399. To establish a prime facie case of disparate impact discrimination, the Court stated that an employee must make a showing using empirical evidence that (a) an employer policy (b) causes (c) a disparate impact. 42 U.S.C. 2000e-2(k). Next, the employer must rebut this by establishing before the court that the policy is job related and consistent with a business necessity. Id. Even if the employer is successful in doing this, the employee can still prevail by then demonstrating that a viable alternative employment practice or policy exists. Id.

To codify the framework set out in Gerety into statutory law under N.J.S.A. 10:5-8, -12 and -18, the DCR has proposed the enactment of N.J.A.C. 13:16-1, et. seq.  These new rules set forth the legal standard and the burdens of proof that are required in disparate impact discrimination claims. Furthermore, these new rules seek to clarify the principles set out in Gerety and in preceding decisions by both New Jersey state and federal courts regarding disparate impact discrimination. For example, the proposed new rules require an employer to rebut a prima facie showing by establishing that a practice or policy is necessary to achieve a “substantial, legitimate, nondiscriminatory interest,” rather than a “legitimate business necessity.” N.J.A.C. 13:16-2.1. This difference in language and context would allow the courts to more easily account for claims of disparate impact discrimination brought against non-business entities, such as non-profit organizations and government agencies. Additionally, the new rules define “substantial interest” as a core interest of the business that has a direct relationship to the function of that business; “legitimate interest” as a practice or policy that is genuine, rather than false or pretextual; and “nondiscriminatory interest” as a policy or practice that does not itself discriminate based on a protected characteristic. Id. Providing a uniform standard such as this would eliminate unnecessary litigation, which in turn would greatly benefit prospective victims of discrimination and employers seeking to comply with the LAD.

Non-disparagement clauses in settlement agreements are provisions designed to prohibit designated parties from making negative, critical, or disparaging statements about the releasing party or each other. Until recently these clauses were used in employment settlement agreements to prevent claimants from bad-mouthing former employers or associated parties, or more broadly, to prevent settling parties from discussing the claims which served as the subject of the settlement agreement. However, in Christine Savage v. Township of Neptune, 2024 N.J. LEXIS 377 (2024), the New Jersey Supreme Court held that the use of non-disparagement clauses in settlement agreements resolving claims of discrimination, retaliation, and harassment are unenforceable. This pivotal ruling emphasizes the legal protections granted to individuals who wish to disclose their experiences of discrimination in the workplace thereby reinforcing the principles upheld by the New Jersey Law Against Discrimination (LAD).

In 2013, Christine Savage, a police sergeant in the Neptune Township Police Department (NTPD) brought a lawsuit against the NTPD claiming she was the victim of pervasive sexual harassment, gender discrimination, hostile work environment and retaliation. Her legal claims against the NTPD were settled in 2014 with the parties entering a settlement agreement which included promises of future promotion and training for Savage. Also included in the agreement was a non-disparagement clause which aimed to prevent her from speaking out about her experiences of harassment, discrimination, and retaliation when working for the NTPD. Unfortunately, the discriminatory and harassing behaviors sought to be remedied by the 2013 lawsuit not only continued but intensified according to Savage. This ongoing mistreatment compelled Savage to file a second lawsuit in April 2016 asserting similar claims against the same defendants as in the 2013 lawsuit but also claiming the defendants had breached the settlement agreement by failing to comply with its material terms.

Specifically, the second complaint filed by Savage in 2016 alleged the NTPD subjected her to unfair assessments, arbitrary internal affairs investigations, and overall directed more severe scrutiny of Savage’s actions as compared to her male counterparts on the police force. This second lawsuit resulted in a settlement agreement being entered between Savage and the NTPD in July 2020 which included a non-disparagement clause. After the settlement agreement was fully signed by all parties, Savage participated in a television interview where she discussed the discrimination she claimed she was forced to endure at the NTPD. The interview was considered by the NTPD as a violation of the non-disparagement clause and lead to another legal dispute over whether Savage had a legal right under the LAD to speak about these matters notwithstanding the terms of the non-disparagement clause.

Historically there has been an inherent imbalance of power between employers and employees in the workplace. Indeed, the employer-employee relationship in law used to be referred to as a “master-servant relationship”. www. law.cornell.edu. An example of this disparate power is found in noncompete agreements forced on employees which typically act to restrict the ability of employees to enter the marketplace to attain higher paying jobs and/or those with better work conditions. According to a recent article in the Washington Post more than 30 million employees or 18% of the United States workforce, have been required to sign noncompete agreements. Traditionally, noncompete agreements were created to protect a company’s trade secrets, confidential information, and competitive advantage. The primary purpose of noncompete agreements was supposed to be to prevent individuals from using proprietary information gained from their current employer for the benefit of a competitor or for their own self gain. However, the use of noncompete agreements has become so widespread that many employers now require low-wage employees, such as janitors, landscapers, and hairstylists, to sign these restrictive agreements. However, the pendulum appears to have finally swung in favor of employees as evidenced by the Federal Trade Commission (FTC)‘s enactment of a groundbreaking rule banning the use of noncompete agreements for most employees.

In its final rule banning the use of non-competition agreements enacted on April 23, 2024 (“the Non-Compete Ban”), the FTC in a 3-2 vote by its Commissioners concluded that such agreements constitute an unfair method of competition and violate Section 5 of the Federal Trade Commission Act (FTCA), which ““declared” that “unfair methods of competition in commerce” are “unlawful,” and it “empowered and directed” the Commission “to prevent” entities subject to its jurisdiction from “using” such methods.” 15 U.S.C. 45(a). The FTC found non-disclosure agreements to be less burdensome alternatives to noncompete agreements since they enable employers to protect their proprietary and confidential information without violating fair competition.

The Non-Compete Ban states that noncompete agreements constitute an unfair method of competition and therefore employers are banned from the following:

On February 6, 2023, New Jersey Governor Phil Murphy signed into law the Temporary Workers’ Bill of Rights (“TWBR”) The enactment the TWBR marked a significant stride forward towards ensuring fair and just treatment for all New Jersey workers because it elevates labor standards and holds employers accountable.

The TWBR protects a category of workers known as “temporary laborers.” These temporary laborers include workers in diverse fields such as construction, service and food preparation, installation, repair, and many others. Specific examples of covered occupations under the law range from construction labors, security guards, and janitors. The Temporary Workers’ Bill of Rights ensures that a diverse range of temporary workers receive their essential protections and rights.

Furthermore, the TWBR outlines specific pay requirements to guarantee fair compensation for temporary workers in various scenarios. First, if a temporary worker is assigned to a location where there is no work available or if they are transferred to another location, they are still entitled to be paid for their hours. Additionally, if a temporary worker is scheduled to work for a third-party client but their services are not needed, they must be compensated with a minimum of four hours’ pay for the cancelled shift at the agreed upon rate of pay. Furthermore, if a temporary worker is asked to change locations during their shift, they must receive a minimum of two hours of pay for the change in location at the agreed upon rate of pay. The temporary agency is also responsible for compensating them for any hours worked at the new location. TWBR requires temporary workers to be fairly compensated for their time and efforts, even in situations where their assignments may change unexpectedly.

Each claim brought against an employer has a statute of limitations which is the deadline for filing a lawsuit. Most lawsuits must be filed within a certain amount of time. In general, once the statute of limitations on a case expires the legal claim is no longer valid. However, a legal doctrine called the continuing tort or continuing violation theory if applicable may create an equitable exception to the statute of limitations deadline. Under this doctrine for an individual who is subjected to a continual, cumulative pattern of tortious conduct, the statute of limitations does not begin to run until the wrongful action ceases.   In Youngclaus v. Residential Home Funding Corp., 2024 N.J. Super. Unpub. LEXIS 347 (App. Div. Mar. 5, 2024), our Appellate Division recently applied the continuing violation theory in a gender discrimination and wrongful termination lawsuit brought under the New Jersey Law Against Discrimination (LAD).

In Youngclaus, plaintiff Georganne Youngclaus, was employed as a marketing manager and director of marketing at Residential Home Funding Corp. (RHFC). Youngclaus filed a lawsuit against RHFC, alleging gender discrimination, sexual harassment, emotional distress, and wrongful termination, and in doing so, detailed twenty-one instances of discriminatory acts spanning from 2016 to 2020.

However, in January 2022, plaintiff’s initial complaint faced dismissal due to failing to state claim upon which relief could be granted based on the LAD’s two-year statute of limitations. Undeterred, plaintiff filed a second lawsuit in March 2022, emphasizing her wrongful termination on July 20, 2020, as the last act of the discriminatory actions. Despite this, the trial court dismissed her second complaint, arguing she again failed to specify identifiable discriminatory acts within the two-year statutory period.

A crucial element in proving a claim brought under the New Jersey’s Conscientious Employee Protection Act (CEPA) is establishing a causal connection between the whistleblowing activity and the alleged resulting an adverse employment action (e.g., termination, suspension, demotion, denial of promotion, transfer, cut in pay, hostile work environment, etc.). In the recent New Jersey Appellate Division case, Ugarte v. Barnabas Health Med. Grp. PC, 2024 N.J. Super. Unpub. LEXIS 240 (App. Div. Feb. 16, 2024), the significance of this causal nexus was underscored.

In Ugarte, the plaintiff complained to her supervisor that several employees brought HIPAA protected patient charts home. Plaintiff alleged in her Complaint that her employment was eventually terminated in retaliation for her reporting HIPAA violations to her supervisor earlier in the year. However, discovery revealed that plaintiff got into a serious altercation with a subordinate. Numerous witnesses testified during discovery that the plaintiff was antagonistic towards the subordinate and did nothing as a supervisor to deescalate the conflict. The plaintiff’s supervisor witnessed the altercation and tried to intercede, before instructing another employee to call the police. Plaintiff was placed on paid leave and the plaintiff’s supervisor recommended the plaintiff be transferred. The defendant/employer alleged this altercation led to the termination of plaintiff’s employment. Notably, the individuals who made the decision to terminate the plaintiff testified to not having knowledge of her HIPAA violation complaints until after the plaintiff was terminated. Moreover, the supervisor who was the subject of plaintiff’s HIPPA violations apparently did not make the decision to terminate her, nor did the supervisor recommend for her to be terminated. Following the close of discovery the court granted a motion for summary judgment brought by the employer/defendant finding as a matter of law insufficient evidence of a causal connection between the alleged whistleblowing and the plaintiff’s employment being terminated.

CEPA aims to protect whistleblowers from retaliation by their employers. To establish a prima facie case under CEPA, an employee must demonstrate: (1) he or she reasonably believed that his or her employer’s conduct was violating either a law, rule, or regulation promulgated pursuant to law, or a clear mandate of public policy, (2) he or she performed a “whistle-blowing” activity described in N.J.S.A 34:19-3(c), (3) an adverse employment action as taken against him or her, and (4) a causal connection exists between the whistle-blowing activity and the adverse employment action. .” Dzwonar v. McDevitt, 177 N.J. 451, 461, 828 A.2d 893 (2003), 177 N.J. at 462 (quoting Kolb v. Burns, 320 N.J. Super. 467, 478, 727 A.2d 525 (App. Div. 1999). The fourth element, the causal connection, is critical. It requires plaintiffs to establish that their whistleblowing activity was a motivating factor behind the adverse employment action.