Q&A: management of the employment relationship in the USA (New Jersey)
State specific laws
What state-specific laws govern the employment relationship?
New Jersey has several laws regulating the employment relationship:
- child labor law;
- Conscientious Employees Protection Act;
- Discrimination in the law on wages;
- Domestic Partnership Law;
- Earned Sick Leave Act;
- Emergency Responders Employment Protection Act;
- Employer demanding law on lie detector testing;
- Equal Remuneration Act;
- Fair Credit Reports Act;
- Family Leave Act;
- Family Leave Insurance Act;
- Genetic Data Protection Act;
- Jake Honig Compassionate Use of Medical Cannabis Act;
- Law against Discrimination (NJLAD);
- Medical examinations requested by employers; Imposition of fees on employees prohibited;
- Millville Dallas Aircraft Plant Job Loss Notification Act;
- New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act;
- Opportunity to Compete Act;
- Wages Act in force;
- Civil Servants Occupational Health and Safety Act;
- Financial Security and Empowerment Act;
- Smokers’ Rights Act;
- Temporary Disability Benefits Act;
- The status of the jury service;
- Unemployment Compensation Act;
- Wages and Hours Act;
- Law on Payment of Wages; and
- Workmen’s Compensation Act.
Who are they covered, including categories of workers?
The following laws apply to all private employers in New Jersey, regardless of size:
- Anti-Discrimination Act (NJSA § 10: 5-5 (e));
- Discrimination in the wage law (NJSA § 34: 11-56.1 (b));
- Equal Remuneration Act (NJSA § 10: 5-12);
- Conscientious Employee Protection Act (NJSA § 34: 19-2 (a));
- Earned Sick Leave Act (NJSA § 34: 11D-1);
- Temporary Disability Benefits Act and Family Leave Insurance Act (NJSA § 43: 21-27 (a) (1));
- Domestic Partnership Act (NJSA § 26: 8A-1);
- Payment of Wages Act (NJSA § 34: 11-4.1 et seq.);
- Wages and Hours Act (NJSA § 34: 11-56a et seq.);
- Smokers’ Rights Act (NJSA § 34: 6B-1);
- Genetic Confidentiality Act (NJSA § 10: 5-45);
- Fair Credit Reporting Act (NJSA § 56: 11-30);
- Employer requiring lie detector test status (NJSA § 2C: 40A-1);
- Workers’ Compensation Act (NJSA §§ 34: 15-36);
- Medical examinations requested by employers; Charges on employees prohibited (NJSA §§ 34: 11-24.1);
- The status of the jury service (NJSA § 2B: 20-17);
- Emergency Responder Leave Act (NJSA § 40A: 14-214 (b));
- New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (NJ CREAMMA) (PL 2021, chapter 16);
- Jake Honig Compassionate Use of Medical Cannabis Act (NJSA § 24: 6I-1 et seq.);
- The Unemployment Compensation Act (NJSA § 43: 21-19 (h)); and
- Child Labor Act (NJSA § 34: 2-21.2).
The following laws apply to covered private employers in New Jersey, as described below:
- The Family Leave Act covers employers who employ 30 or more people anywhere in the world for 20 or more weeks in the current or previous calendar year (NJSA § 34: 11B-3 (f) (3)) ;
- The Financial Security and Empowerment Act covers employers with 25 or more employees (NJSA § 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 (NJSA § 34: 21-2 (a)); and
- The Opportunity to Compete Act covers employers with 15 or more employees over 20 calendar weeks, including placement and referral agencies and other employment agencies (NJSA § 34: 6B-13).
Are there state specific rules regarding misclassification of employees / contractors?
The New Jersey Supreme Court adopted the “ABC test” to determine whether a worker is an independent contractor under the Wage Payment Act and the Wages and Hours Act (Hargrove v Sleepy’s LLC, 220 NJ 289, 316 (2015)). Under the ABC test, an employer is required to demonstrate that a person providing services:
- (A) is free from the control of the company in the performance of the services;
- (B) performs work outside the ordinary course of business of the business or outside the place of business of the business; and
- (C) is self-employed.
Courts in New Jersey typically use a hybrid of the law of control test and an economic realities test to determine the independent contractor status of workers under both the NJLAD and the Conscientious Employee Protection Act. (See D’Annunzio v. Prudential Ins. Co., 192 NJ 110, 123 (2007)).
Should 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 generally confirm status at will in writing.
Are there any terms implicit in employment contracts?
New Jersey employees owe a duty of loyalty to their employers. In addition, a commitment to good faith and fair use is implied in all written agreements.
Are binding arbitration agreements enforceable?
Yes. Binding arbitration agreements for employment-related claims, including statutory discrimination claims, 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 claim of discrimination, reprisal or harassment effective March 18, 2019. However, this law was ordered by a federal court of district as preempted. by the Federal Arbitration Act. NJ Civ. Inst. v. Grewal, 2021 WL 1138144 (DNJ 25 Mar 2021).
New Jersey employers interested in resolving employment-related disputes through mutual arbitration should be aware of the following guidelines:
- Arbitration agreements must be the product of mutual consent and entered into knowingly and voluntarily. While an employee’s signature is not required, an employee should take positive steps to otherwise explicitly state their agreement. Leodori v. CIGNA Corp., 175 NJ 293, 303 (2003); Atalese v. US Legal Services Group, LP, 219 NJ 430, 447 (2014). A New Jersey appeals court ruled that requiring employees to simply “acknowledge” receipt of an arbitration agreement was not sufficient to compel arbitration. Skuse v Pfizer, Inc., NJ 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 clearly visible (i.e. using a bold font and In capital letters).
- Arbitration agreements shortening the statute of limitations for state employment laws are unreasonable and unenforceable (Rodriguez v. Raymours Furniture Co., 225 NJ 343, 367 (2016)).
- Arbitration agreements are generally unenforceable if they are contained in an employee manual with employment disclaimers. Arbitration agreements must be stand-alone agreements or contained in a letter of offer or employment contract.
How can employers make changes to existing employment contracts?
When the employment relationship is at will, employers can unilaterally change employment conditions prospectively with notice. Changes to a written employment contract with a specified duration of employment may be made through an addendum by mutual agreement between the parties.