New Jersey Employment Lawyer Blog

In the United States, the vast majority of employees are employees at-will, meaning they can be fired for almost any reason, as long as the decision is not the result of unlawful discrimination, retaliation, a breach of an employment contract, or some other form of wrongful discharge. However, certain employees of public schools eventually gain much greater protection -- the protection of tenure laws.

When most people think about tenure laws, they think of school teachers. In many states, including both New York and New Jersey, teachers attain tenure after they teach in the public school system for more than three years.

But at least under New Jersey law, in addition to teachers, secretarial and clerical employees working for public schools are eligible to attain tenure. The applicable tenure statute states that "[a]ny person holding any secretarial or clerical position or employment under a board of education of any school district" shall attain tenure after "a period of employment of three consecutive calendar years."

Once an employee attains tenure, the board of education cannot fire him or her unless he or she engages in "neglect, misbehavior or other offense." Moreover, a tenured employee can only be fired for "inefficiency, incapacity, unbecoming conduct, or other just cause, and then only after a hearing . . . after a written charge or charges."

My law firm currently represents an individual, Bernard Sharkey, who was fired by the Washington Township Board of Education after he worked for it for more than three years. Mr. Sharkey sought to enforce his rights under the tenure laws.

Although Mr. Sharkey's official job title was "financial officer," he basically functioned as a bookkeeper. After an administrative hearing, the New Jersey Office of Administrative Law (OAL) issued an opinion concluding that Mr. Sharkey's job was tenure eligible because his job was clerical in nature. In doing so, the OAL adopted the definition of clerical from Webster's Dictionary: "one employed to keep records or accounts or to perform general office work."

The New Jersey Department of Education subsequently affirmed the OAL's finding that Mr. Sharkey's position was tenure eligible, but ruled that he had attained tenure, finding he was, in fact, employed for more than three years. Accordingly, the Commissioner of Education ordered Washington Township to reinstate him.

In reaching its conclusion, the OAL relied on a previous decision of the New Jersey Appellate Division, Barnes v. Board of Education of Jersey City, 85 N.J. Super. 42, 45 (App. Div. 1964). Barnes recognizes that the term "clerical position," as used in the tenure statute, must be given a broad interpretation because tenure statutes are intended to secure better public service by providing job security to covered public employees.

Several other administrative cases which follow Barnes use similar broad definitions of the term "clerical position." For example, one such decision recognizes that two appropriate definitions are "an official responsible for correspondence, records, and accounts and vested with specified powers or authority" and "one employed to keep records or accounts or to perform general office work." Another administrative opinion relied on two other similar dictionary definitions of the term clerk: "a person employed, as in an office, to keep records, accounts, files, handle correspondence, or the like," and "a person who works in an office performing such tasks as keeping records and files." In Sharkey, the OAL adopted the second of those two definitions.

The protection the tenure law provides to clerical employees in public schools is very important. It provides job security to tenured employees, which is a particularly valuable employment law right at any time, but even more so in our current economic climate. In doing so, it encourages well qualified individuals who might otherwise seek higher paying jobs in the private sector to work for the public schools.

Washington Township has appealed the Commissioner of Education's decision in Sharkey. Its appeal is currently pending.

When a plaintiff wins a discrimination lawsuit, the judge or jury is supposed to award economic and emotional distress damages that compensate the employee for his or her losses. In particular, damages for past and future lost wages and benefits are supposed to compensate the employee for the economic losses caused by the illegal discrimination or retaliation. Courts often refer to this as making the employee whole.

However, because higher incomes are taxed at higher rates, an employee who receives an award for lost wages can end up paying much more in taxes than she would have paid if she had not experienced the discrimination or retaliation. In those cases, employees are not made whole for their economic losses. Rather, they end up with less money in their pockets after taxes than if the unlawful employment practice had not occurred.

For example, if an employee making $100,000 per year is illegally fired, a jury might award her $400,000 for past and future lost income. That individual would receive the $400,000 in one lump sum, rather than the $100,000 per year she would have received if she had remained employed. But because the income tax rate increases as your total annual income increases, that individual would pay significantly more in taxes than if she had remained employed and received $100,000 each year. The higher the total lost wages award, the greater the impact of this problem.

On January 30, 2009, the United States Court of Appeals for the Third Circuit (the federal appellate court that covers New Jersey) addressed this problem. Specifically, the Court recognized that under the appropriate circumstances a judge should increase lost wages damages awards in employment law cases to offset this adverse tax consequence. The Third Circuit ruled that federal district courts can, in their discretion, award an employee "an additional sum of money to compensate for the increased tax burden a back pay award may create." However, the court made it clear it was not suggesting that there should be a presumption that an employee is entitled to additional money to offset this negative tax consequences. Rather, courts have the option to increase a judgment if the employee proves she suffered a negative tax consequence as a result of a lump sum judgment for lost wages and doing so is fair under the circumstances.

The case, Eshelman v. Agere Systems, Inc., involves a disability discrimination lawsuit under the American's with Disabilities Act (ADA). However, the decision appears to apply to claims of discrimination due to race, color, sex (gender), national origin and religion in violation of Title VII of the Civil Rights Act of 1964 (Title VII), and its reasoning would apply equally to other discrimination and retaliation claims under federal law.

It is unclear why the Court resisted creating a presumption of a tax offset, even though this adverse tax treatment occurs in the vast majority of employment law cases in which the plaintiff is awarded lost wages stemming from more than one year. However, the case is an important step in the right direction, since it allows federal judges to increase judgments to offset this tax penalty, and help make more victims of discrimination and retaliation economically whole.