Terms of Employment: New Jersey
Federal law and guidance on this subject should be reviewed together with this section.
Author: Beth C. Rogers, Law Offices of Beth C. Rogers, LLC
- New Jersey state laws prohibit certain types of discrimination and retaliation in employment decisions. See New Jersey Employment Antidiscrimination Laws.
- In New Jersey, employment relationships are presumed to be at-will. See The At-Will Employment Relationship.
- New Jersey recognizes various exceptions to the at-will presumption. See Exceptions to the At-Will Employment Relationship.
- In New Jersey, restrictive covenant must be designed to protect legitimate business interests and to extend no further than is reasonably necessary to protect those interests. See Restrictive Covenants in Employment Contracts.
New Jersey Employment Antidiscrimination Laws
New Jersey employers must make certain that all terms of employment comply not only with federal antidiscrimination laws, but also New Jersey antidiscrimination laws.
The New Jersey antidiscrimination laws are as follows:
- The New Jersey Law Against Discrimination (NJLAD or LAD), +N.J. Stat. § 10:5-12, prohibits discrimination based on various protected classes, including but not limited to race, color, religion, national origin or sex.
- The New Jersey Equal Pay Act, +N.J. Stat. § 34:11-56.2, makes it illegal to (i) pay different wages; or (ii) use a different method of payment, to men and women if they perform equal work in the same workplace.
- New Jersey prohibits discrimination based on the use of any tobacco product. +N.J. Stat. §34:6B-1.
The LAD prohibits discrimination based on race, creed, color, national origin, nationality, ancestry, age, gender (including pregnancy), familial status, marital status, domestic partnership or civil union status, affectional or sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, genetic information, liability for military service, and mental or physical disability, perceived disability, AIDS and HIV status, refusal to submit to genetic testing and refusal to provide genetic information. See Employee Management > EEO - Discrimination: New Jersey.
Further, effective January 21, 2014, the LAD has been expanded to include pregnancy as a protected category. This means New Jersey employers may not treat female employees affected by pregnancy or childbirth less favorably than other employees who are similar in their ability or inability to work. A pregnant employee includes a woman who:
- Is currently pregnant;
- Is recovering from childbirth; or
- Has a medical condition related to pregnancy or childbirth, including recovering from childbirth.
New Jersey employers must honor pregnant employees' requests for reasonable accommodations, if made upon their doctors' advice.
Reasonable accommodations may include:
- Bathroom breaks;
- Water breaks;
- Rest breaks;
- Assistance with manual labor;
- Job restructuring or modified work schedules; and
- Temporary transfers to less strenuous or hazardous work.
Employers are prohibited from penalizing employees affected by pregnancy who request accommodations as to the terms, conditions, or privileges of their employment.
However, employers are not required to provide such accommodations if doing so would create an undue hardship. The following factors need to be considered in determining whether a requested accommodation amounts to an undue hardship:
- The overall number of employees;
- The nature and the cost of the accommodation;
- The extent to which the accommodation would require the employer to waive an essential requirement of the job.
The LAD also prohibits retaliation against employees for engaging in protected activity. For example, an employer may not take reprisals against an employee who seeks information from other employees regarding job titles, compensation rates or benefits. See Employee Management > EEO - Retaliation: New Jersey
The LAD also prohibits waivers and nondisclosure provisions in employment contracts and settlement agreements. See Terms of Employment: New Jersey.
Scope of LAD Coverage
In order to be protected by the LAD, the individual must be an employee or candidate for employment.
Virtually all employers, including private employers, federal government agencies, state and local government agencies and employment agencies, are covered by the LAD, regardless of the number of persons they employ.
Unlike the federal Age Discrimination in Employment Act, which protects employees age 40 and older, the LAD's prohibition of age discrimination begins at age 18.
The LAD does not prohibit the refusal to hire or promote any person over age 70, but employees over age 70 may not be terminated simply because of their age. With certain exceptions, mandatory retirement on the basis of age is prohibited by the LAD.
New Jersey antidiscrimination laws do not require an employer to give preferential treatment to members of a protected class.
Law Permitting Employees to Share Benefit and Salary Information
New Jersey enacted a law amending the LAD to make it easier for employees to bring wage discrimination complaints. +N.J. Stat. § §10:5-12r. The law expands the LAD's protections by permitting employees to ask current or former co-workers about job titles, occupational categories, compensation, pay and benefits, gender, race, ethnicity, military status or national origin for the purposes of investigating or taking legal action regarding discriminatory pay practices by employers. Moreover, it prohibits employers from retaliating against employees who request information from current or former co-workers regarding job titles, occupational categories, compensation, pay and benefits, and/or protected class status.
Equal Pay/Pay Discrimination
New Jersey's Equal Pay Act (NJEPA) provides that an employer shall not discriminate in any way in the rate or method of payment of wages to any employee because of his or her sex. +N.J. Stat. § 34:11-56.2.
Under the NJEPA, an employer is defined as any person acting directly or indirectly in the interest, or as agent, of an employer in relation to an employee and further includes one or more individuals, partnerships, corporations, associations, legal representatives, trustees, trustees in bankruptcy, or receivers, but not nonprofit hospital associations or corporations. See Employee Management > EEO - Discrimination: NJ.
New Jersey prohibits employers from refusing to hire applicants who smoke or use any tobacco product, including snuff and chewing tobacco.
In addition, employers may not discriminate against these persons in any term, condition, or privilege of employment, although they may make distinctions between smokers and nonsmokers if the basis is rational and reasonably related to employment. +N.J. Stat. § 34:6B-1.
The At-Will Employment Relationship
In New Jersey, in the absence of a contract, employment relationships are presumed to be at-will, terminable with or without cause.
At-will means that an employer can terminate an employee at any time for any reason (with certain exceptions) or for no reason without incurring legal liability.
Likewise, an employee is free to leave a job at any time for any reason or for no reason with no adverse legal consequences.
At-will also means that an employer can change the terms of the employment relationship with no notice and no consequences.
Exceptions to the At-Will Employment Relationship
Even if the employer and employee did not execute a written employment contract, New Jersey recognizes various exceptions to the at-will presumption, as follows:
In Pierce v. Ortho Pharmaceutical Corp., +84 N.J. 58 (1980), the New Jersey Supreme Court created an exception to the traditional New Jersey at-will presumption rule, holding that an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy.
Several years later, the Pierce decision was codified in a law called the Conscientious Employee Protection Act (CEPA), +N.J. Stat. §34:19-3.
New Jersey recognizes implied contracts of employment. An implied contract may be created in several different ways.
Oral assurances by a supervisor or employer representative may give rise to an implied contract.
For example, an implied contract may be created by the following statements: "we need good people around here, you've got a job for life!" or "we don't dismiss employees without giving them a chance to correct their behavior" may give rise to an implied contract.
Likewise, an employer's handbooks, policies, practices or other written assurances may create an implied contract.
Employee Handbooks May Give Rise to an Implied Contract
In Woolley v. Hoffmann-LaRoche, Inc., +99 N.J. 284, modified, +101 N.J. 10 (1985), the New Jersey Supreme Court held that representations made in an employee handbook may be enforceable against the employer.
When an employer distributes a handbook that, when fairly read, provides that certain benefits are an incident of the employment (including job security provisions), the provisions of the handbook will be enforced in accordance with the reasonable expectations of the employees.
Conversely, the provisions will not be enforced if the language is such that no one could reasonably have thought it was intended to create legally binding obligations.
In New Jersey, all that an employer needs to do in order to avoid creation of a contract is to include in a very prominent position an appropriate statement that there is no promise of any kind by the employer contained in the manual; that regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions without having to consult anyone and without anyone's agreement; and that the employer continues to have the absolute power to terminate an employee with or without good cause.
Statutory Exceptions to the At-Will Presumption
In addition to the exceptions outlined above, in New Jersey there are also several statutory exceptions to the at-will employment doctrine.
CEPA makes it unlawful for employers to take adverse employment action against employees who disclose, object to, or refuse to participate in certain actions that the employees reasonably believe are either illegal or in violation of public policy. In addition, "watchdog" employees - those whose job duties entail knowing or securing compliance with a relevant standard of care and knowing when an employer's actions or proposed actions deviate from the standard of care - are covered under CEPA. Lippman v. Ethicon, +2015 N.J. LEXIS 791. See Employee Discipline: New Jersey.
The LAD prohibits employers from basing employment decisions based on race, creed, color, national origin, nationality, ancestry, age, gender (including pregnancy), familial status, marital status, domestic partnership or civil union status, affectional or sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, genetic information, liability for military service, and mental or physical disability, perceived disability, AIDS and HIV status, refusal to submit to genetic testing and refusal to provide genetic information.
The LAD also makes it illegal to retaliate against job applicants or employees because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.
Written Employment Contracts
The at-will presumption is a default rule that can be modified by contract. Typically, New Jersey employers negotiate individual employment agreements only with high-level employees.There are, however, some industries that require all of their employees to enter into employment contracts, such as school teachers.
An employment contract sets out the duties of the employee and employer, and provides the employer with the opportunity to clarify the relationship, as well as include restrictive covenants to protect the employer from competition. As with other contracts, an employment contract is binding only after there has been an offer and an acceptance of that offer. If an employer withdraws the employment offer before the employee accepts, there is no employment contract. Employment contracts in New Jersey should be signed by the employer and the employee.
A New Jersey appellate court held that a contractual provision shortening the length of time an employee may file a claim or lawsuit relating to his or her employment is enforceable. See Rodriguez v. Raymours Furniture Co., +2014 N.J. Super. LEXIS 88 (App.Div. June 19, 2014). Such provisions are enforceable so long as they are clear in their terms, conspicuously placed in the application form, reasonable and not contrary to any public policy. However, see Terms of Employment: New Jersey
Implied Covenant of Good Faith and Fair Dealing
In New Jersey, the implied covenant of good faith and fair dealing applies to all contracts, including employment contracts. Palisades Props., Inc. v. Brunetti, +44 N.J. 117 (1965). The covenant also applies to implied employment contracts.
The covenant does not apply, however, where the employment relationship is at-will and not governed by contract.
Therefore, in the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing. See Noye v. Hoffmann-LaRoche, Inc., +238 N.J. Super. 430 (App. Div. 1990).
Agreements Regarding NJLAD Claims
The New Jersey Law Against Discrimination was amended to bar provisions in employment contracts that waive rights or remedies and bars agreements that conceal details relating to discrimination claims. +2018 Bill Text NJ S.B. 121.
The amendments apply to all contracts and agreements entered into, renewed, modified or amended on or after March 18, 2019.
A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment is against public policy and unenforceable.
Employment contracts or settlement agreements are against public policy and unenforceable if it has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation or harassment (referred to as a nondisclosure provision) against a current or former employee who is a party to the contract or settlement. If a nondisclosure provision is included, it can be enforced against the employer unless the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.
Notice. A settlement agreement resolving a discrimination, retaliation or harassment claim by an employee against an employer must include a bold prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.
Remedies. Employees may bring a private right of action against their employer and if they prevail they are entitled to reasonable attorney fees and costs.
Exclusions. This law does not apply to noncompetition agreements or nondisclosure agreements to protect an employer's proprietary information or trade secrets. Collective bargaining agreements are also exempt from this law.
Restrictive Covenants in Employment Contracts
Restrictive covenants such as noncompetition, nonsolicitation and nondisclosure covenants may be enforceable in New Jersey if they are reasonable under all the circumstances of the particular case.
A determination of reasonableness generally requires the findings that the agreement protects the legitimate interests of the employer; imposes no undue hardship on the employee; and is not injurious to the public.
Generally, the restriction must be reasonable as to the geographical area and time period.
Further, the New Jersey courts have held that the "existence of sufficient consideration to support a post-employment restraint may be found in either the original contract of employment or in a post-employment contract, where the supporting consideration is at least, in part, the continuation of employment." See Hogan v. Bergen Brunswig Corp., +153 N.J. Super. 37 (App.Div. 1977).
In New Jersey, attorneys are prohibited from entering into restrictive covenants that limit the attorney's ability to represent a client. Jacob v. Norris, McLoughlin & Marcus, +128 N.J. 10 (1992). A licensed psychologist also cannot enter into any business agreement that interferes with or restricts the ability of a client to see or continue to see his or her therapist of choice. +N.J.A.C. 13:42-10.16.
Restrictive covenants of other professionals such as doctors and accountants are not similarly prohibited and will be enforced if reasonable under the circumstances.
The Blue Pencil Doctrine and the Reformation Doctrine
New Jersey has adopted the blue pencil doctrine, thereby permitting total or partial enforcement of restrictive covenants to the extent reasonable under the circumstances. Solari Indus., Inc. v. Malady, +55 N.J. 571 (1970).
The New Jersey Trade Secrets Act
New Jersey has enacted the New Jersey Trade Secrets Act, which protects trade secrets and provides remedies for their misappropriation. The New Jersey statute is modeled on the Uniform Trade Secrets Act.
The New Jersey Trade Secrets Act defines trade secrets as information, in any of a number of possible formats, that derives current or potential economic value from not being generally known and is subject to reasonable efforts to maintain its
The New Jersey Trade Secrets Act sets forth a variety of remedies for trade secret misappropriation.
These include entry of injunctive or other relief to protect a trade secret, actual damages, unjust enrichment, punitive damages and an award of reasonable attorneys' fees and costs to the prevailing party.
Employment contracts entered into on or after April 1, 2018, with provisions assigning an employee's rights to an invention to an employer are unenforceable to an invention that an employee develops entirely on the employee's own time and without using the employer's equipment, supplies, facilities or information. However, this excludes inventions that:
- Relate to the employer's business, research or development; or
- Result from any work performed by the employee on behalf of the employer.
Further, employers are not restricted from including in an employment contract the following:
- Disclosure provisions of an employee's inventions made solely or jointly with others during the term of the employee's employment;
- A review process to determine any issues that may arise; and
- Title to certain patents and inventions to be in the US, as required by contracts between the employer and US or any of its agencies.
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