Just recently, on January 6, 2010, the New Jersey Superior Court Appellate Division held that business to business sexual harassment was prohibited under the New Jersey Law Against Discrimination (LAD).

In, J.T.’s Tire Service, Inc. v. United Rentals North America, Inc., 2010 WL 26495 (N.J. Super. Jan. 6, 2010), the owner of a tire company (the plaintiffs) had been selling approximately $30,000 a month in tires to a NJ branch office of an equipment rental company (the defendant) since 1998.  In 2005, the branch manager of the equipment company allegedly began to periodically sexually harass the tire company owner through 2007.  The owner repeatedly rebuffed the branch manager’s sexual advances, which resulted in the branch manager withholding business from the tire company.  By November 2007, the branch manager began delaying payments to the tire company and, in December 2007, the branch manager terminated the equipment rental company’s business relationship with the tire company.

The tire company and owner sued the equipment company (for whatever reason, the branch manager does not appear to have been sued individually as well), claiming that, among other things, the equipment company had engaged in unlawful sex discrimination (sexual harassment) in violation of the LAD.  Specifically, the plaintiffs claimed that the defendant had violated Section 10:5-12(l) of the LAD, which makes it unlawful “[f]or any person to refuse to buy from, . . . contract with, . . . or otherwise do business with any other person on the basis of . . . sex. . . .”  The lower court granted the defendants’ motion to dismiss the plaintiffs’ claims.

The Appellate Court reversed the lower court and denied the defendant’s motion.  According to the Appellate Court, based upon existing New Jersey court decisions (including, for example, cases previously holding that the refusal to do business with independent contractors on the basis of age, sex, or handicap violates this same Section of the LAD), the actual language of Section 10:5-12(l), and the social policies supporting the LAD, it is clear that refusing to do business on the basis of sex is unlawful under the LAD.

In reaching this conclusion, the Appellate Court also noted that such violations are different from those LAD claims brought under Section 10:5-12(a) involving violations related to employment (i.e., the far more common type of LAD claim), and which section would not have covered the plaintiffs’ claims.

As a result of this decision, all staffing firms – and particularly those who classify individuals or third parties as independent contractors – should continue to pay close attention to potential discrimination issues, and especially with the types of co-employment implications that always arise in the staffing context.

Last week Governor Christie warned New Jersey businesses that they can expect an increase of up to $1,000 per employee in their unemployment tax starting July 1 unless the federal government helps the state replenish the fund. Business taxes are increased by law when the fund’s balance dips below a certain level as measured every March. Christie says the fund will be $1.6 billion in debt by March.

The Governor said his administration will ask the federal government to forgive the debt, but he said the state can’t afford to pump money into the fund to stop the tax increase. New Jersey faces a deficit of more than $9 billion for the 2011 budget year, which begins in July. Christie said that over $3.6 billion has been raided from the fund over the past decade.

On October 5, 2009, the New Jersey Department of Labor and Workforce Development (“NJDOL”) issued a proposed amendment to the regulations governing the New Jersey Unemployment Compensation Law.  Specifically, the NJDOL is seeking to amend the existing definition of “misconduct” set forth in N.J.A.C. 12:17-10.2(a) for purposes of determining when a claimant may be disqualified from receiving benefits when they have engaged in such “misconduct” in connection with their work.

Under the existing regulation, misconduct “must be improper, intentional, connected with one’s work, malicious, and within the individual’s control, and is either a deliberate violation of the employer’s rules or a disregard of standards of behavior which the employer has the right to expect of an employee.” Under the NJDOL’s proposed amended regulation, however, “misconduct” would now be defined as “an act of wanton or willful disregard of the employer’s interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior which the employer has the right to expect of his employee, or negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to the employer.”

Consequently, among other things, employers would also appear to be able to establish “misconduct” more easily based upon a new negligence standard. To date, the proposed amended regulation has not yet been adopted.  However, written comments were required to be submitted to the NJDOL by December 4, 2009, and we anticipate that the NJDOL will ultimately adopt a regulation modifying the definition of such “misconduct” in some form.

Staffing NJ PAC contributed to the campaigns of the following Assembly representatives who were reelected: Jay Webber, Joe Cryan, Nellie Pou, Joe Malone, Upendra Chivukula, and Michael Doherty.

On July 10, 2009, new amendments to the New Jersey Workers’ Compensation Law went into effect. The law imposes severe monetary and injunctive penalties if a covered employer misrepresents any employee as an independent contractor or provides false, incomplete or misleading information concerning its total number of employees.
 
Under these changes, the employer:  a) will be deemed guilty of a fourth degree crime; b) will be subject to the Law’s existing monetary penalties which impose a penalty of up to $5,000.00 both for an initial violation exceeding 10 days and for each subsequent 10 day violation; and (c) will be subject to a stop-work order issued by the New Jersey Department of Labor and Workforce Development (NJDOL) Workers’ Compensation Division within 72 hours after determining that any such violation has occurred. 

Here’s your opportunity to have your business voice heard. In November 2009 the citizens of New Jersey and the Staffing Industry have the opportunity to be heard. We have an election for Governor and the entire State Assembly. This vote will set the stage for the next two years of our life in New Jersey! We really don’t have an option to “ignore it” since “the government” is increasingly intruding on our business and all levels of government appear to be mortgaging our children’s future for quick, short term solutions.

NJSA’s Legislative Committee and Staffing NJ PAC are doing something about it!

• On August 26th from 4:30pm – 6:30pm they are hosting for you a FREE reception in Morris Plains with the State Republican leadership in the Assembly, Alex De Croce and Jay Webber… hear what they have to say and ask the hard questions!
• Staffing NJ PAC will once again be contributing to as many candidates as we can who  will care about the Staffing Industry. We will have a voice with candidates in this year’s election – limited only by the level of donations from Staffing Industry Managers, Leaders and Owners like YOU!!
• Staffing NJ PAC is also launching over the next few months a “Get Out and VOTE” campaign to increase voter participation at Staffing Firms in New Jersey! We need to have the Staffing Industry represented on Election Day! Think what 80,000 votes could do?

New York Governor David Patterson signed into law legislation requiring employers to notify employees in writing at the time of hire of their regular and overtime hourly wage rates, and to obtain a written acknowledgement of receipt of such notice. The new requirements take effect October 26, 2009.
 
However, as a result of discussions with representatives from the New York Staffing Association, it was noted that staffing firm pay rates for particular employees vary by assignment and therefore it may not be possible for the staffing firm to determine a pay rate with precision at the time of hiring. It was agreed that application of the law to staffing firms needed clarification and the New York Department of Labor plan to provide such guidance through regulation or other administrative means “so that temporary employment agencies who in good faith lack the specific information they must disclose under this legislation will have a means of appropriate legal compliance applicable to their situation.”
 
Appropriate guidance for staffing firms will be provided prior to the October 26 effective date of the legislation.

An increase in individual income taxes passed by the state Legislature last month will also affect many New Jersey businesses, since many business owners pay personal income taxes on their business profits. The state increased the income tax from 6.37 percent to 8 percent for income between $400,000 and $500,000; from 8.97 percent to 10.25 percent for income between $500,000 and $1 million; and from 8.97 percent to 10.75 percent for income exceeding $1 million. The increases are set to expire after one year. The state increased taxes on upper-income earners as part of its effort to close a budget gap worsened by the recession. Nationally, nearly one-third of all business taxes are paid through the individual income tax, because many companies are organized as “S corporations” – limited liability companies or partnerships whose business profits are taxed as the personal income of the company’s owners.

On July 1, New Jersey became only the second state in the nation to impose a paid family leave mandate on all businesses. Under the law, all companies, even those with just one employee, must allow employees to take up to six weeks of paid time off to care for a newborn or a sick relative. Unlike State and federal unpaid leave laws, which exempt companies with fewer than 50 employees, there is no small business exemption for paid family leave.Employers may require employees to substitute two weeks of paid vacation and sick leave for the paid family leave, thus reducing it to four weeks. There is also a one-week waiting period for many employees who wish to receive benefits. Employees are eligible for up to two-thirds of their wages, with a maximum of $546 per week. Employers with one to 49 employees are not required to hold open the job for the employee who is taking leave under the paid family leave statute, but could face legal liability for discrimination under other federal and State laws.

Ask Sen. Menendez to Ensure That Any Employer Fees Can Be Prorated Based on Hours Worked.The U.S. Senate Finance Committee will soon consider a health care reform bill that is likely to include an employer mandate. It is vitally important that any such provision take into account the unique needs of temporary staffing firms.

The Finance Committee bill likely will require employers that don’t provide health insurance to pay an annual fee per employee. To ensure that they are not charged more than their fair share of any fee, employers of temporary, part-time, and seasonal employees-who work sporadically and whose hours fluctuate-must be allowed to prorate any such fee based on the actual hours worked by the employee.

ASA also believes that employees should meet minimum work requirements before the employer is charged a fee. We’re urging Congress to require employees to work at least 90 days, and satisfy a minimum weekly hours test, before a payment is imposed.

Sen. Menendez (D-NJ) is a key member of the Finance Committee and therefore we are asking all staffing firms in New Jersey to write to the senator immediately to make him aware of the need for an hours-based approach to prorating any employer fees.

Please click http://menendez.senate.gov/contact/contact.cfm, select “health care” in the topic field, cut and paste the letter set forth below into the message field, and click on “Submit Form.” Before sending, be sure you have filled in your name, title, company name, and company address at the end of the letter.