New Jersey Employment Lawyer Blog
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Restaurant employee tired from working overtimeThe Second Circuit Court of Appeals recently ruled that the parties to a lawsuit cannot agree to dismiss a case under the Fair Labor Standards Act (“FLSA”) as part of a settlement unless they have the approval of a Judge or the United States Department of Labor (“DOL”). The FLSA is a federal wage and hour law which establishes minimum wage and overtime requires.

Dorian Cheeks worked as a server for Freeport Pancake House, Inc. and W.P.S. Industries, Inc. He filed a lawsuit in the Eastern District of New York against both companies in which he asserted claims under the FLSA and New York Labor Law. He is seeking unpaid overtime pay and liquidated (double) damages, as well as attorneys’ fees. He also alleges that the Pancake House demoted him and eventually fired him because he objected about the company’s failure to properly pay overtime to him and its other employees, and is seeking damages for his past and future lost wages.

Mr. Cheeks and the Pancake House eventually agreed to settle the case. Accordingly, they filed a stipulation with the court seeking to have the case dismissed with prejudice. However, the court refused to dismiss the case. Instead, it directed the parties to file a copy of their settlement agreement as part of the public record, and to explain why they believe the settlement is “fair and reasonable.” The Court did so because the FLSA prohibits employees from waiving their rights under it unless their settlement agreement either was supervised by the DOL or approved by a court.

Despite the court’s instruction, the parties did not file a copy of their settlement agreement, presumably because, like most settlements in employment law cases, they agreed to keep the terms confidential. Instead, they asked the court to certify a question to the Second Circuit, namely whether they had the right to agree to dismiss their case without needing the court’s approval. The district court did so, and the Second Circuit agreed to hear the appeal.

On August 7, 2015, the Second Circuit concluded that the parties’ attempt to dismiss the case was improper. In essence, it found they were trying to circumvent the requirement that either a court or the DOL approve settlements of FLSA claims. Therefore, in Cheeks v. Freeport Pancake House, Inc., it ruled that parties could not voluntarily dismiss FLSA cases.

The appellate court acknowledged its ruling is likely to make it more difficult for parties to amicably resolve FLSA cases. It noted that many such cases are too small to warrant employees filing lawsuits or even administrative actions with the DOL, and many employers cannot afford to engage in legal proceedings. However, it also explained that the FLSA’s requirement to obtain approval of any settlement in an FLSA case is intended to protect one of the primary purposes of the FLSA, namely “to prevent abuses by unscrupulous employers, and remedy the disparate bargaining power between employers and employees.” Accordingly, it remanded the case to the district court for further proceedings.

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A recent decision by New Jersey’s Appellate Division makes it clear that merely having an anti-harassment policy does not insulate employers from sexual harassment lawsuits. The ruling comes on the heels of the New Jersey Supreme Court’s ruling earlier this year in Aguas v. State of New Jersey, which created a new affirmative defense for employers in sexual harassment cases under the New Jersey Law Against Discrimination (“LAD”). I discussed Aguas in my article: Importance of Reporting Sexual Harassment Reinforced by New Jersey Supreme Court.

The Appellate Division ruling involved Anita Jones, who worked for Mott’s LLP as a machine operator. For most of her employment, Ms. Jones was a temporary employee.

According to Ms. Jones, numerous Mott’s employees sexually harassed her. For example, she says the individual who initially trained her repeatedly touched her breasts. She says that when she objected, the harasser yelled at her. She did not report this sexual harassment to anyone because she was just a temporary employee. When she complained to a supervisor about the employee yelling at her, the supervisor promised he would take care of it. However, she alleges that when she complained to the same supervisor several other times he either put his arm around her shoulders or touched her back. She did not object to this harassment because the supervisor warned her that “temps come a dime a dozen and [if] one don’t do what you want, you get another one,” implying he would have her fired if she complained about him.

Ms. Jones further claims her immediate supervisor asked her out on dates, offered her a massage, and made a sexually explicit comment to her while he was moving his hands from his thigh toward his genitals. She also asserts that another employee occasionally touched her shoulder and back, and at one point told her he liked her butt. She did not complain to anyone about these acts of harassment because she was afraid Mott’s would fire her.

Ms. Jones eventually sued. Among other things, she claimed Mott’s was liable for creating a sexually hostile work environment. The trial court dismissed the case, and Ms. Jones appealed.

In Jones v. Dr. Pepper Snapple Group, the Appellate Division reversed.  It explained that the Aguas defense applies only if the employer has an “effective” anti-harassment policy.  It recognized that Mott’s has taken steps to prevent sexual harassment. For instance, its Employee Handbook includes an anti-harassment policy which directs employees who experience sexual harassment to complain either to their supervisors or the Human Resources Department. The handbook also indicates that Mott’s is committed to resolving discrimination and harassment complaints,and  does not tolerate retaliation against employees who make such complaints. However, the court ruled that a jury could find the company’s anti-harassment policy was not effective because it did not provide a copy of the handbook to Ms. Jones until after the harassment stopped, and never provided her any anti-harassment training.

The Appellate Division also noted that an employer can be held liable for harassment committed by one of its supervisors if it fails to exercise reasonable care to prevent and promptly correct the harassment. It noted that if the company had trained Ms. Jones about its anti-harassment policy when it initially hired her, she “may not have endured — or at least may have been able to minimize — the sexual harassment she experienced.”

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A recent ruling by New Jersey’s Appellate Division makes it clear that, in some circumstances, an employee can enforce an employment contract even if the individual who entered into it on behalf of the company did not have the authority to do so.

The case was filed by four individuals, Arkadiusz Lukaszewski, Dariusz Gocal, Tadeusz Ogrodnik, and Ryszard Klysinski.  They each worked for Jasticon, Inc. as bricklayers.  They claim another employee, Piotr Zablocki, promised them “they would be given long-term employment” with Jasticon for “at least 18 months.”  They also claim Mr. Zablocki assured them they would work on “big projects” in New Jersey and that they “would never run out of work.”

Nonetheless, the company fired them after less than a year.  They subsequently filed a lawsuit in which they asserted numerous claims, including breach of an 18-month employment contract.

Construction workers reach handshake employment agreementJasticon filed a motion for summary judgment, asking the lower court to dismiss the breach of contract claim.  The court granted the motion.  It concluded that although Mr. Zablocki had the authority to hire employees, he did not have the authority to guarantee them a job for any particular period. It also found that Mr. Zablocki did not have apparent authority to hire the four employees for 18 months since the company did not take any actions to lead them to believe he had the authority to make such an offer on its behalf.

On appeal, New Jersey’s Appellate Division agreed that there was no evidence Mr. Zablocki had the actual authority to guarantee the employees would have jobs for at least 18 months.  However, it found a question of fact with respect to whether he had apparent authority.

In the context of an employment agreement, apparent authority exists when: (1) the employer’s actions lead a person to reasonably believe a particular employee (or agent) has the authority to act on the employer’s behalf; and (2) the person relies on the employee’s (or agent’s) actions, believing he or she is acting on the employer’s behalf.

In an unpublished opinion, Lukaszewski v. Jasticon, Inc., the Appellate Division found there was enough evidence for a jury to find Jasticon led the four employees to believe Mr. Zablocki had the authority to guarantee them jobs with the company for at least 18 months.  It relied on the fact that Mr. Zablocki was the only person who offered them employment with the company, and they actually worked for and were paid by Jasticon after he did so.  In fact, Jasticon admitted that Mr. Zablocki hired them. It only disputed that he had the authority to guarantee them jobs for 18 months, as opposed to offering them employment at will.

Accordingly, the appellate court reversed the lower court’s ruling that had granted summary judgment to Jasticon.  It concluded there needs to be a trial to determine whether Mr. Zablocki had apparent authority to guarantee the four employees jobs for at least 18 months, and whether Mr. Zablocki actually assured them that they would have jobs for that long.

For additional information, you may want to read my previous article:  The Doctrine of Apparent Authority.

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Yesterday afternoon, New York States’ Fast Food Wage Board approved a set of three resolutions that recommend raising the minimum wage for employees who work for fast food chains to $15 per hour. This would be $6.25 more than New York’s current $8.75 minimum wage.

The Fast Food Wage Board was formed the past May, at the request of Governor Andrew M. Cuomo, to review wages in the fast-food industry.

Under the three resolutions, covered “Fast Food Establishments” include any business in New York State that serves food and drink (1) at which customers order and pay before they eat; (2) which provides “limited service,” which presumably means they offer limited or no table service; and (3) which are part of a chain that has at least 30 locations throughout the United States.

The resolutions are not yet law. They still need to be ordered by New York State’s acting State Labor Commissioner, Mario J. Musolino.  However, the expectation is that Mr. Musolino will do so soon.

The resolutions would apply to all employees of any Fast Food Establishment, expressly including employees whose jobs relate to “customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.”

The proposed increase would be gradually phased in over time, which would happen more quickly in New York City than the rest of the state. Specifically, in New York City the minimum rate will increase to $10.50 by the end of this year; $12.00 by the end of next year; $13.50 by the end of 2017; and $15.00 by the end of 2018. In contrast, for the rest of the state the rate will increase to $9.75 by the end of this year; $10.75 by the end of 2016; $11.75 by the end of 2017; $12.75 by the end of 2018; $13.75 by the end of 2019; $14.50 by the end of 2020; and $15.00 by July 1, 2021.

In a statement announcing the resolutions yesterday, Governor Cuomo declared it to be “one of the really great days of [his] administration.” He indicated that “[y]ou cannot live and support a family on $18,000 per year in the state of New York, period. That’s why we have to raise the minimum wage.” He also vowed to work to increase the minimum wage for other workers, stating: “we will not stop until we reach true economic justice and we raise the minimum wage for every worker in every job in this state.”

A copy of the full text of the resolutions is available on the Fast Food Wage Board’s website.

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Yesterday, the New Jersey Supreme Court ruled that New Jersey’s whistleblower law, the Conscientious Employee Protection Act (“CEPA”), protects employees who blow the whistle about issues that relate to their job duties.

CEPA is a broad whistleblower law. It prohibits employers from retaliating against employees who, among other things, object to or refuse to participate in activities they reasonable believe are illegal, fraudulent, or violate a clear mandate of public policy relating to public health, safety, welfare or the environment. It also protects licensed medical professionals who object to or refuse to participate in activities they reasonably believe constitute improper quality of patient care.

On several occasions, New Jersey’s Appellate Division has ruled that employees are not protected by CEPA if their objections relate to their job duties. This threatened to dramatically limit the scope of CEPA’s protection since employees typically are in the best position to blow the whistle on activities related to their job functions.

A Happy WatchdogMore recently, in Lippman v. Ethicon, Inc., another panel of the Appellate Division recognized that employees can be protected by CEPA even if their objections related to their job duties. However, it added an extra requirement for those so-called “watchdog” employees. Specifically, it required them to prove they either made every effort to secure compliance with the law, or that they refused to participate in the conduct they found objectionable. I discussed the Appellate Division’s opinion in Lippman in my article: New Jersey’s Whistleblower Law Protects “Watchdog” Employees Whose Jobs Require Them to Report Violations of Law.

Both the employer and employee in Lippman asked the New Jersey Supreme Court to reverse its ruling. Mr. Lippman asked the Supreme Court to remove the additional requirements the Appellate Division had placed on watchdog employees, and Ethicon asked it to rule that CEPA does not protect employees who object in the course of performing their job duties.

In its opinion in Lippman v. Ethicon, Inc., the New Jersey Supreme Court explained that CEPA expressly protects “any employee” who engages in a protected activity. Further, the statute defines “employee” very broadly to even include individuals who might otherwise be considered independent contractors. As a result, the Court ruled that CEPA protects all employees, whether or not they can be considered “watchdogs.”

The Court noted that there is nothing in the language of CEPA to even hint that an employee’s job duties are relevant to whether he is protected by it. To the contrary, the statute protects employees who “refuse to participate” in an activities they believe are unlawful, implying it protects activities related to an employee’s normal job duties, since “it would be likely that the employee would be asked to participate in employer activity within the course of, or closely related to, his or her core job functions.”

The Court further found no basis for the extra requirement the Appellate Division had imposed on watchdog employees. Rather, it concluded that the same standard applies irrespective of whether the employee objects to an activity that is related or unrelated to her job duties.

Lippman is an extremely important ruling for employees. It removes an argument employers repeatedly have made in an attempt to dismiss otherwise valid retaliation claims. The Supreme Court’s ruling should now eliminate that argument once and for all, making it clear that all New Jersey employees are protected by CEPA.

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A recent decision by the Second Circuit Court of Appeals makes it more difficult for unpaid interns to successfully bring overtime and minimum wage claims under the Fair Labor Standards Act (“FLSA”) and New York State’s wage and hour law. The FLSA is a federal law that requires employers to pay certain employees at least the minimum wage, and time-and-a-half when they work more than 40 hours per week. The Second Circuit handles appeals from federal courts in New York, Connecticut and Vermont.

unpaid intern making photocopies for employerThe case was filed by Eric Glatt, Alexander Footman, Eden Antalik. Mr. Glatt and Mr. Footman worked for Fox Searchlight Pictures, Inc. in connection with the movie Black Swan, and Ms. Antalik worked for the company in another capacity. Their job duties varied, but included things like copying and scanning documents, taking lunch orders, making deliveries, hotel reservations and catering arrangements, and taking out the trash. They worked between 30 and 50 hours per week. Fox classified all three as interns and did not pay them at all. They sued, claiming Fox failed to pay them minimum wage and overtime in violation of the FLSA and New York State law.

The United States Department of Labor (“DOL”) has a longstanding guidance which sets a very high requirement before a company can treat someone as an unpaid intern without violating the FLSA. Under it, an employer must pay an intern unless all six of the following conditions are met:

  1. The internship . . . is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Most interns fail this test because, among other things, the work they perform provides an immediate advantage to the employer.

In Glatt v. Fox Searchlight Pictures, Inc., the Second Circuit rejected this test. Although it acknowledged some employers exploit unpaid interns by using them for free labor, it also noted that internship programs can be beneficial to the interns. With that in mind, it ruled that the proper test to determine whether the FLSA requires an employer to pay an intern is whether “the intern or the employer is the primary beneficiary of the relationship.”

The Second Circuit provided examples of some of the factors a court should consider when applying this new test. These factors include the extent to which:

  1. The intern and the employer both clearly understand there is no expectation of compensation;
  2. The internship provides training that is similar to what would be provided in an educational environment;
  3. The internship is tied to a formal education program by integrated coursework or academic credit;
  4. The internship corresponds to the academic calendar;
  5. The internship’s is limited to the period in which it provides the intern beneficial learning;
  6. The intern’s work complements, rather than displaces, the work of paid employees while providing the intern significant educational benefits; and
  7. The intern and the employer both understand that the intern is not entitled to a paid job at the conclusion of the internship.

The Court made it clear no one of those factors is determinative. It also instructed that Courts can consider other factors when determining which party is the primary beneficiary of the relationship. However, by making it a balancing test rather than six absolute requirements, it made it much easier employers to treat their workers as interns without violating the FLSA.

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The United States Court of Appeals for the Third Circuit recently ruled that the United States District Court for the District of New Jersey applied the wrong test to determine whether Sleepy’s LLC misclassified its delivery workers as independent contractors, rather than as employees. The case was decided under the New Jersey Wage Payment Law (“WPL”) and the New Jersey Wage and Hour Law (“WHL”).

The lawsuit was brought as a class action by Sam Hargrove, Andre Hall, and Marco Eusebio. They each worked for Sleep’s LLC as mattress delivery workers. They had signed Independent Driver Agreements (“IDAs”) which deemed them to be independent contractors rather than employees. Sleepy’s requires its delivery workers to sign similar agreements.

three mattressesThe workers claimed Sleepy’s misclassified them and the company’s other mattress delivery workers as independent contractors, rather than employees, in violation of the WPL, the WHL, the Family Medical Leave Act (“FMLA”) and the Employee Retirement and Income Security Act (“ERISA”). For example, they claim Sleepy’s improperly withheld money from their wages in violation of the WPL, and failed to pay them overtime as required by the WHL.

In 2012, the District Court ruled that Sleepy’s had correctly treated the deliverers as independent contractors. Accordingly, it dismissed their case. The workers appealed.

On appeal, the Third Circuit recognized that the New Jersey Supreme Court had not determined which test a court should apply to determine whether an individual is an employee under the WPL or the WHL. Accordingly, it asked the state Supreme Court to answer that question.

Earlier this year, the New Jersey Supreme Court answered that question. It indicated that the “ABC” test should be used to determine if an individual is an employee or an independent contractor under both the WPL and the WHL. Under that test, a worker is an employee unless: (1) the company does not exercise control over him and does not have the ability to do so; (2) the services the worker provides either are outside the company’s usual business, or are performed outside any places of business where the company performs those services; and (3) the individual normally works in an independently established trade, occupation, profession or business. I discussed this test in a previous article: New Jersey Supreme Court Broadens Definition of “Employee” Under Wage and Hour Law.

Since the District Court applied a different test to determine whether the mattress deliverers were employees or independent contractors of Sleepy’s, in the Third Circuit’s May 12, 2015 opinion, the court remanded the case so the lower court can apply the ABC test.

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Last week, the New Jersey Supreme Court permitted criminal charges to proceed against an employee who took documents from her employer to try to prove her employment discrimination and retaliation claims.

business woman copying employer's confidential documentsIvonne Saavedra worked as a clerk for the North Bergen Board of Education. In 2009, she filed a lawsuit which included allegations that the Board had discriminated against her because of her race, ethnicity, national origin and gender, in violation of the New Jersey Law Against Discrimination (“LAD”). She also alleged retaliation in violation of the Conscientious Employee Protection Act (“CEPA”).

In her employment law case, Ms. Saavedra produced copies of documents she took from the Board while she was working for it. This included both originals and photocopies of documents that the Board claims contain “highly confidential student educational and medical records.” According to Ms. Saavedra, she took these documents in an effort to prove her discrimination and retaliation claims. She did so without the Board’s permission.

The Board reported this to the county prosecutor. Eventually, a grand jury indicated Ms. Saavedra for two crimes: official misconduct and theft by unlawful taking of public documents. Her lawyer tried to get these criminal charges dismissed. Among other things, relying on Quinlan v. Curtis-Wright Corp., Ms. Saavedra argued that New Jersey law protects employees who take documents in an effort to support a discrimination lawsuit. I discussed Quinlan in my article: Can You Be Fired For Giving Confidential Company Documents to Your Employment Lawyer?

In December 2013, the Appellate Division denied Ms. Saavedra’s attempt to dismiss the indictment. On June 23, 2015, in State v. Saavedra, the New Jersey Supreme Court affirmed.

The Supreme Court first explained that the allegations against Ms. Saavedra, if true, would support the alleged crimes. It then rejected her arguments that the criminal charges should be dismissed based on the doctrine of fundamental fairness, the criminal statutes were vague as applied to her, prosecuting her under the circumstances would deter other individuals from trying to prove discrimination and retaliation claims, and prosecuting her would violate New Jersey’s public policy in support of preventing discrimination and retaliation. The Court relied heavily on the fact that Ms. Saavedra could have obtained the documents she needed to prove her claims through the discovery process in her civil litigation, instead of engaging in self-help.

However, the Supreme Court indicated that Ms. Saavedra can assert an affirmative defense to the criminal charges against her that she “has a claim of right or other justification based on New Jersey’s policy against employment discrimination, because she removed the documents from her employer’s premises in order to use them to prosecute her civil claim.” In other words, she can try to convince the jury she was justified in taking the documents because she genuinely believed she had the right to take them to try to prove her discrimination and retaliation claims.

The lesson of the Saavedra case is that employees who are considering taking documents from their jobs to help prove a legal claim should do so with caution. While it may be okay to keep copies of documents your employer provided to you, such as your offer letter, employment contract, or performance reviews, it is risky to take documents you are not entitled to keep. This is especially true with respect to the employer’s original documents, and documents that contain private or confidential information. The bottom line is that while although keeping copies of certain documents could help you prove your legal claim, employees should be very careful not to do anything that could subject them to discipline, let alone to criminal prosecution.

For more information about the Saavedra case, please see my previous article: Prosecuted for Trying to Prove Discrimination?

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The United States Supreme Court recently ruled that an employer cannot refuse to hire a job candidate because she needs a reasonable accommodation for her religious practice even if the prospective employee did not request an accommodation.

The decision was made under Title VII of the Civil Rights Act of 1964, a federal anti-discrimination law. Among other things, Title VII prohibits discrimination based on religion. For example, it prohibits employers from refusing to hire or from firing an employee because of his or her “religious observance and practice.” It also requires employers to provide reasonable accommodations to employees for their religious practices, observances and beliefs.

The case, Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., involves Samantha Elauf, an individual who applied for a job at Abercrombie & Fitch Stores, Inc. Ms. Elauf is a practicing Muslim who wears a headscarf. After interviewing Ms. Elauf, Abercrombie determined that she was qualified for the job. However, it did not offer her a position because the company’s “Look Policy” that prohibits employees from wearing “caps” because the company considers them to be too informal for its image. Abercrombie made this decision even though it realized Ms. Elauf’s probably wore her headscarf because of a religious belief.

The United States Equal Employment Opportunity Commission (“EEOC”) sued Abercrombie, claiming its decision not to hire Ms. Elauf violated Title VII. The trial court eventually found in favor of Ms. Elauf, granted summary judgment to her and awarded her $20,000 in damages. However, on appeal the Court of Appeals for the Tenth Circuit reversed and instead granted summary judgment to Abercrombie. The Tenth Circuit concluded that an employer is not obligated to provide a reasonable accommodation for an employee’s religion unless it had actual knowledge that the employee needs such an accommodation.

The Supreme Court overturned the Tenth Circuit’s ruling. It explained that Title VII prohibits discrimination that is motivated by an employee’s religion. It concluded that an employer does not necessarily have to be certain about an employee’s religion for its actions to be motivated by her religion. Accordingly, it held that “[a]n employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.” This does not necessarily require that employer knows the job candidate needs an accommodation for her religion, but also includes situations in which the employer correctly suspects or believes the employee needs such an accommodation if the employee’s need for an accommodation is a motivating factor in the employer’s decision not to hire her.

The Supreme Court noted that this is different from the reasonable accommodation requirement under the American’s with Disabilities Act (“ADA”). The ADA requires employers to provide “reasonable accommodations to the known physical or mental limitations” of the employee. In contrast, Title VII does not include an express limitation that the employee’s religious belief be “known” to the employer.

Accordingly, the Supreme Court reversed the Tenth Circuit’s ruling and remanded the case back to the trial court.

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A recent New Jersey Appellate Division ruling provides a good example of how dangerous it can be to compete with your current employer.

B&H Securities, Inc. designs, sells and maintains security monitoring systems. In spring 2007, three of its employees, Michael Poisler, Marc Palladino and Duane Pinkney, decided to start a competing business, Advanced Integration Security. At the time, Mr. Pinkney was B&H’s IT manager, Mr. Poisler was its sales manager, and Mr. Palladino was one of its salesmen.

A “Confidentiality Clause” in B&H’s employee handbook states that after leaving their job, B&H employees cannot contact the company’s customers. When he was hired by B&H, Mr. Pinkney signed a document agreeing to abide by this clause for 48 months after leaving the company. The company did not require Mr. Palladino or Mr. Poisler to sign any such agreement.

While still employed by B&H, Mr. Pinkney solicited two of B&H’s customers on behalf of Advanced Integration Security. He also altered a five-year agreement between B&H and one of its customers to permit the customer to cancel its contract by giving 30 days’ notice. He then resigned from B&H to work for Advanced.

On July 1, 2007, Mr. Palladino resigned from B&H and began working for Advanced. Meanwhile, Mr. Poisler continued to work for B&H, and provided inside information to Mr. Pinkney while simultaneously working for Advanced on weekends and evenings.

Employee stealing company's confidential informationIn August 2007, B&H sued Advanced, Mr. Pinkney and Mr. Palladino. The company alleged the three misappropriated the company’s trade secrets and confidential information, breached the confidentiality provision in their employment contracts, interfered with B&H’s contractual relations with its customers, engaged in unfair competition, and breached the implied covenant of good faith and fair dealing in their employment agreements. B&H subsequently added Mr. Poisler as a defendant, and added a claim under New Jersey’s Computer Related Offenses Act (“CROA”).

Following a bench trial, the court ruled in favor of B&H on all of its claims. It awarded $737,087 in compensatory damages, plus $100,000 in punitive damages against each of the defendants other than Mr. Poisler. The court subsequently awarded an additional $825,085 in attorney’s fees under the CROA.

Mr. Poisler appealed. In B & H Securities, Inc. v. Pinkney, the Appellate Division upheld the lower court’s finding that he violated the covenant of good faith and fair dealing “by participating in the misappropriation of B&H’s confidential information” while he was working for B&H. The court did so even though Mr. Poisler did not have a written employment contract with B&H, finding that since he was an employee of B&H he necessarily had an agreement with the company.

The Appellate Division also found sufficient evidence to establish that Mr. Poisler violated CROA. Among other things, it found evidence supporting the trial court’s finding that he assisted Mr. Pinkney’s unauthorized access to data on the company’s computer system. The Court noted that although B&H authorized Mr. Pinkney to access its computer system, he impermissibly transferred that data to his own computer in violation of CROA.

The Appellate Division also affirmed the lower court’s finding that Mr. Poisler breached his duty of loyalty to B&H even though he did not sign the company’s Confidentiality Clause since every employee has a duty of loyalty to his or her employer.

However, the appellate court reversed the award of $737,087 in compensatory damages against Mr. Poisler. It explained that the trial court calculated this figure based on Mr. Pinkney’s written agreement not to use the company’s confidential information for 48 months. However, Mr. Poisler did not sign a similar agreement, and only worked for Advanced for approximately 20 months. Accordingly, the Appellate Division asked the trial court to reconsider these damages, and to explain the basis for its new ruling.

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