Litigation Quarterly Advisor – Spring 2023

When a client is sued by a former employee or receives notice of a governmental investigation into an employee issue, one of the first questions we frequently are asked is “How can this happen? He/she was an at-will employee.” It is true that a person typically is presumed to be an “at-will” employee and, as such, the employer retains the right to terminate the employee at any time (with or without advance notice) and for any reason (whether it be a good reason, bad reason or no reason at all). This leads many employers to conclude that at-will employment means they can handle terminations and other employee issues however they see fit. The reality is quite the opposite.

Although the at-will employment doctrine allows employers to terminate employees for any reason, there are a substantial number of local, state and federal laws that create exceptions to this rule. These exceptions not only limit an employer’s ability to terminate an at-will employee, but they also limit an employer’s ability to take certain other employment actions that might negatively impact the employee’s terms and conditions of employment. An employer’s failure to fully understand their obligations under these laws is not a defense. As such, even an unknowing violation of the law can result in costly litigation and/or governmental investigations and audits.

Most employers probably understand that one exception to the at-will employment rule is the anti-discrimination laws which prohibit them from terminating an employee because they are in a legally “protected” status such as age, race or gender. One challenge for employers is that many don’t fully understand how many protected statuses there are.

In addition to the anti-discrimination laws, there are other local, state and federal laws that impose obligations on employers to affirmatively provide certain workplace rights, benefits and/or accommodations (e.g., providing a job-protected leave of absence, paid sick leave, modifying standard work hours or duties, reassigning an employee to a vacant position and providing regular break times because of the employee’s disability status, religious beliefs or family needs). Such obligations exist regardless of the employee’s at-will status. Further, these laws provide that the employer can be sued if they unlawfully deny, or take adverse action against an employee after they request, any such any such right, benefit or accommodation.

For more information, contact:
Matthew Collins | 973.403.3151 | mcollins@bracheichler.com

When a company is obligated to provide its terminated employee with notice, the notice must be made in writing, state the reason for the termination, the number of other employees that were also terminated, and the rights available to the employee under the termination. Notice must be provided to all affected employees at least 90 days before the first termination occurs. In the event that the employer fails to properly provide notice, the employee is entitled to one week of severance pay for each full year of employment. The rate of pay for the purposes of severance the higher of wither the final regular rate of pay at termination or the average rate of pay over the course of the employee’s last three years of employment.

The New Jersey WARN Act also permits former employees to bring lawsuits against their former employers. If successful, these employers can be liable for to their former employees for compensatory damages, claims for lost wages (capped at the amount of severance pay required), benefits, other remuneration and reasonable attorneys’ fees and costs, which can be in addition to any remedies available under the federal WARN ACT. If a company violates both the federal WARN Act and the New Jersey WARN Act, the employee can recover the higher amount of damages available under both of these laws.

Further, failure to comply with the notice and severance provisions of the New Jersey WARN Act creates personal

Two recent court decisions should provide New Jersey employers with greater legal comfort about their employee paid time off programs. Employers voluntarily adopt these programs – for vacation or illness or other leaves like jury duty and bereavement – as part of a total rewards package to recruit and retain talent. (Some paid time off is required by the New Jersey Earned Sick and Safe Leave Law and these two cases did not address state-mandated paid leave.) What employers don’t expect is to be penalized for having these programs. Surprisingly, however, the law had been relatively unsettled about the enforceability of such programs and there continues to be some risk even after these decisions that all employers should consider in connection with these programs.

The issue in both of these cases was whether paid time off (PTO) were “wages.” In one case, the question arose under the New Jersey Wage Payment Law. If PTO were wages and if an employer did not pay out to an employee all earned PTO at the end of employment, then the employer would have violated the New Jersey Wage Payment Law. In the other case, the question arose under federal wage and hour law (i.e., the Fair Labor Standards Act). If PTO were wages and if an employer reduced a salaried employee’s amount of PTO based upon performance or hours worked, then there would have been an improper reduction in the employee’s base salary thereby making the employee retroactively eligible for overtime.

Advances in drug testing have been in the news lately, particularly for New Jersey employers. In February, New Jersey’s highest court favorably received a special master report that concluded, that although a test of bodily fluids cannot scientifically identify whether the person is impaired from cannabis use, a properly trained “Drug Recognition Expert” applying a twelve-step protocol could reliably determine whether a person is impaired. (The case is actually still open, as the special master has been directed to use a slightly different formulation to determine the admissibility of such evidence in civil and criminal actions.) In May, the U.S. Federal Motor Carrier Safety Administration formally approved the use of saliva to test for the presence of prohibited drugs, including cannabis, among regulated truck drivers. One of the great advantages of saliva testing, as compared to urine testing, is that a saliva test will generally detect cannabis within the past 24 hours whereas urine samples detect cannabis use generally during the prior 3 to 67 days.

Sounds like cannabis testing should be in a New Jersey employer’s wheelhouse. Not so fast. New Jersey’s 2021 law legalizing adult use of cannabis contains two critical prohibitions. First, employers may not test for cannabis without first conducting a “physical evaluation in order

For more information, contact:
Jay Sabin | 917.596.8987 | sabin@bracheichler.com

Impermissible Deductions

There is a bright line rule that all employers can follow in New Jersey. That is: employers cannot “withhold or divert”(i.e., deduct) any portion of an employee’s wages from the paycheck unless expressly permitted. As a practical matter, that means if you do not see the deduction you want to make in the section below on Permissible Deductions, you cannot make the deduction from the paycheck.

Making impermissible deductions from wages can result in the employer as well as the officers or agents of the entity having management of the employer (i.e., personal

For more information, contact:
Anthony Rainone | 973.364.8372 | arainone@bracheichler.com

Welcome Edward D. Altabet and Andrew Macklin, new members in the Litigation practice. Edward D. Altabet’s
practice focuses on high-stakes and high-risk litigation across many sectors, including financial services, banking,
wealth management, technology, manufacturing, export/import, construction, and real estate. He also handles
commercial litigation and investigations, resolving commercial and civil disputes and lender and creditor rights
is a core part of his practice. Andrew Macklin focuses his practice on construction litigation, complex commercial
litigation, consumer protection and probate disputes. He also represents clients in personal injury and
malpractice matters.

Konstantine Paschalidis obtained full dismissal on a motion to dismiss all claims against the Firm’s client, an
individual alleged to be the owner of a property who through construction caused hundreds of thousands of dollars
in damages to the plaintiffs’ adjacent property, based on the documentary evidence establishing that the LLC was the
owner and that there were no proper claims to pierce the corporate veil.