Q&A: managing the employment relationship in the USA (New Jersey)

Employment relationship

What state-specific laws govern the employment relationship?

New Jersey has several statutes regulating the employment relationship:

• Child Labor Law;
• Conscientious Employee Protection Act;
• Discrimination in Wages Law;
• Domestic Partnership Act;
• Earned Sick Leave Law;
• Emergency Responders Employment Protection Act;
• Employer Requiring Lie Detector Test Statute;
• Equal Pay Act;
• Fair Credit Reporting Act;
• Family Leave Act;
• Family Leave Insurance Law;
• Genetic Privacy Act;
• Jake Honig Compassionate Use Medical Cannabis Act;
• Law Against Discrimination (NJLAD);
• Medical Examinations Requested by Employers; Imposition of Cost on Employee Prohibited;
• Millville Dallas Airmotive Plant Job Loss Notification Act;
• New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act;
• Opportunity to Compete Act;
• Prevailing Wage Act;
• Public Employee’s Occupational Safety and Health Law;
• Security and Financial Empowerment Act;
• Smokers’ Rights Law;
• Temporary Disability Benefits Law;
• The Jury Service Statute;
• Unemployment Compensation Law;
• Wage and Hour Law;
• Wage Payment Act; and
• Workers’ Compensation Law.

Who do these cover, including categories of workers?

The following laws apply to all private employers in New Jersey, regardless of size:

• Law Against Discrimination (N.J.S.A. § 10:5-5(e));
• Discrimination in Wages Law (N.J.S.A. § 34:11-56.1(b));
• Equal Pay Act (N.J.S.A. § 10:5-12);
• Conscientious Employee Protection Act (N.J.S.A. § 34:19-2(a));
• Earned Sick Leave Law (N.J.S.A. § 34:11D-1);
• Temporary Disability Benefits Law and Family Leave Insurance Law (N.J.S.A. § 43:21-27(a)(1));
• Domestic Partnership Act (N.J.S.A. § 26:8A-1);
• Wage Payment Law (N.J.S.A. § 34:11-4.1 et seq.);
• Wage and Hour Law (N.J.S.A. § 34:11-56a et seq.);
• Smokers’ Rights Law (N.J.S.A. § 34:6B-1);
• Genetic Privacy Act (N.J.S.A. § 10:5-45);
• Fair Credit Reporting Act (N.J.S.A. § 56:11-30);
• Employer Requiring Lie Detector Test Statute (N.J.S.A. § 2C:40A-1);
• Workers’ Compensation Law (N.J.S.A. §§ 34:15-36);
• Medical Examinations Requested by Employers; Imposition of Cost on Employee Prohibited (N.J.S.A. §§ 34:11-24.1);
• The Jury Service Statute (N.J.S.A. § 2B:20-17);
• Emergency Responder Leave Law (N.J.S.A. § 40A:14-214(b));
• New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (NJ CREAMMA) (P.L. 2021, Chapter 16);
• Jake Honig Compassionate Use Medical Cannabis Act (N.J.S.A. § 24:6I-1 et seq.);
• The Unemployment Compensation Law (N.J.S.A. § 43:21-19(h)); and
• Child Labor Law (N.J.S.A. § 34:2-21.2).

The following laws apply to covered private employers in New Jersey as described below:

• The Family Leave Act covers employers that employ 30 or more individuals anywhere worldwide for 20 or more weeks during the current or preceding calendar year (N.J.S.A. § 34:11B-3(f)(3));
• The Security and Financial Empowerment Act covers employers with 25 or more employees (N.J.S.A. § 34:11C-2);
• The Millville Dallas Airmotive Plant Job Loss Notification Act applies to businesses that employ 100 or more full-time employees in New Jersey (N.J.S.A. § 34:21-2(a)); and
• The Opportunity to Compete Act covers employers with 15 or more employees over 20 calendar weeks, including job placement and referral agencies and other employment agencies (N.J.S.A. § 34:6B-13).

Are there state-specific rules regarding employee/contractor misclassification?

The New Jersey Supreme Court has adopted the “ABC test” to determine whether a worker is an independent contractor under the Wage Payment Law and the Wage and Hour Law (Hargrove v. Sleepy’s LLC, 220 N.J. 289, 316 (2015)). Under the ABC test, an employer is required to show that an individual providing services:

• (A) is free from the company’s control in performing the services;
• (B) performs work outside the usual course of the company’s business or outside the company’s place of business; and
• (C) is engaged in an independently established business.

New Jersey courts generally use a hybrid of the right to control test and an economic realities test to determine independent contractor status of workers under both the NJLAD and the Conscientious Employee Protection Act.  (See D'Annunzio v. Prudential Ins. Co., 192 N.J. 110, 123 (2007)).

Must an employment contract be in writing?

No. Employment contracts can be written or oral. Although New Jersey employees are generally deemed to be employed at-will in the absence of an agreement to the contrary, prudent employers typically confirm the at-will status in writing.

Are any terms implied into employment contracts?

New Jersey employees owe a duty of loyalty to their employers. In addition, a covenant of good faith and fair dealing is implied in all written agreements.

Are mandatory arbitration agreements enforceable?

Yes. Mandatory arbitration agreements of employment-related claims, including statutory claims for discrimination, are generally enforceable in New Jersey. New Jersey passed a law prohibiting any contractual provision that waives a substantive or procedural right or remedy relating to a discrimination, retaliation, or harassment claim effective March 18, 2019. However, that law has been enjoined by a federal district court as pre-empted by the Federal Arbitration Act. NJ Civ. Justice Inst. v. Grewal, 2021 WL 1138144 (D.N.J. Mar. 25, 2021).

New Jersey employers interested in resolving employment-related disputes through mutual arbitration should be cognizant of the following guidelines:

• Arbitration agreements must be the product of mutual assent and entered into knowingly and voluntarily. Although an employee’s signature is not required, an employee must take some affirmative action to otherwise explicitly indicate agreement. Leodori v. CIGNA Corp., 175 N.J. 293, 303 (2003); Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430, 447 (2014). A New Jersey appeals court has held that requiring employees to merely “acknowledge” receipt of an arbitration agreement is insufficient to compel arbitration. Skuse v. Pfizer, Inc., N.J. Super. 539, 542-43 (App. Div. 2019).
• Arbitration provisions should specifically identify the types of claims covered and those excluded from arbitration, and the waiver of the right to a jury trial should be prominent (i.e., using a bold and capitalized font).
• Arbitration agreements shortening the statute of limitations of state employment laws are unconscionable and unenforceable (Rodriguez v. Raymours Furniture Co., 225 N.J. 343, 367 (2016)).
• Arbitration agreements are generally unenforceable if contained in an employee handbook with at-will employment disclaimers. Arbitration agreements should be standalone agreements or contained in an offer letter or employment contract.

How can employers make changes to existing employment agreements?

Where the employment relationship is at-will, employers can unilaterally alter the terms and conditions of employment prospectively with notice. Changes to a written employment agreement with a term of employment specified can be made through an amendment with mutual agreement between the parties.