New Jersey Employment Lawyer Blog

Taxation of Employment Law Settlements

July 6, 2024 | by Jonathan I. Nirenberg

When you settle an employment law case, typically most or all of the money you receive will be taxable. Nonetheless, it is both common and important to discuss the tax allocation as part of the settlement negotiation, including what portion will be reported on an IRS form W-2, and what portion will be reported on a 1099.

While I am an employment lawyer rather than a tax expert, below is my understanding regarding the taxability of employment law settlements under federal law. These issues can be complex and have significant consequences to you, so you should consult with a tax expert before you make any decisions.

W-2 Payments: Lost Wages

Court Addresses When Commissions are Covered by Wage Payment Law

July 1, 2024 | by Jonathan I. Nirenberg

The New Jersey Wage Payment Law (“WPL”) is an important employment law that requires employers to pay employees their wages on time. Since August 2019, the WPL has entitled employees whose employers fail to pay them on time to recover not only their unpaid wages, but also up to 200% of that amount as liquidated damages plus their attorney’s fees.

One question that has been coming up with increasing frequency is when commissions are wages that are subject to the WPL, and thus when unpaid commissions (and belatedly paid commissions) are subject to the liquidated damages and attorney’s fee provisions.

The WPL defines wages to include at least some commissions, as follows:

Timing Between Protected Activity and Adverse Employment Action Supports Whistleblower Claim

June 4, 2024 | by Jonathan I. Nirenberg

A recent unpublished opinion from New Jersey’s Appellate Division overturned a trial court decision dismissing his whistleblower claim under the Conscientious Employee Protection Act (“CEPA”). The case serves as a reminder that close timing between a legally-protected activity and an adverse employment action can be powerful evidence to support a retaliation claim.

Joseph Silvestri was the Director of Information Technology (“IT”) for the Borough of Ridgefield. When he discovered that someone had tampered with the Lightning Alert System at Willis Park, he reported it to the Ridgefield Police Department. Paul Schaeffer, who is friends with a Ridgefield Councilman, Javier Acosta, was charged with tampering with the Lightning Alert System. Mr. Silvestri subsequently was subpoenaed to testify in Mr. Schaeffer’s municipal court case, and was present in court for the trial, but did not actually end up testifying.

Shortly thereafter, the Ridgefield Council President, Russell Castelli, told Mr. Silvestri that he is not entitled to receive overtime compensation because he is the head of the IT Department. Until then, Mr. Silvestri had been eligible to receive overtime compensation for approximately 20 years. According to Mr. Silvesti, Councilman Acosta caused Ridgefield to stop compensating him for his overtime.

Non-Disparagement Clause Cannot Prevent Employee From Discussing Discrimination

May 7, 2024 | by Jonathan I. Nirenberg

Today, the New Jersey Supreme Court ruled that the New Jersey Law Against Discrimination (“LAD”) prohibits non-disparagement agreements that have the impact of preventing an employee from discussing the facts of their discrimination, harassment or retaliation claim.

Non-disparagement clauses are very common in settlement agreements in employment law cases. Typically, they prevent the employee from saying anything negative about their former employer.

The case interpreted a 2019 amendment to the LAD that was passed in response to the #MeToo movement. Specifically, the legislature amended the LAD to deem that any provision in a settlement agreement that “has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment . . . shall be deemed against public policy and unenforceable.”

FTC Bans Most Non-Compete Agreements

April 25, 2024 | by Jonathan I. Nirenberg

New Rule Will Ban Most Non-Compete Provisions

The Federal Trade Commission (“FTC”) has issued a new Rule that soon will ban virtually all non-compete agreements in the United States.

Specifically, on April 23, 2024, the FTC issued a new Rule that deems it to be an unfair method of competition for anyone to (1) enter into or attempt to enter into a non-compete clause, (2) enforce or attempt to enforce a non-compete clause, or (3) tell someone else that a worker is subject to a non-compete clause. However, for “senior executives,” employers still can enforce non-compete agreements that were entered into before the Rule’s date effective date.

Discriminatory Job Transfer Can be Actionable Without Significant Harm

April 24, 2024 | by Jonathan I. Nirenberg

The United States Supreme Court recently ruled that an employee who brings a lawsuit alleging she was transferred to another position for a discriminatory reason does not have to prove the transfer caused her significant harm.

Jatonya Clayborn Muldrow is a police sergeant in the St. Louis Police Department. She served as a plainclothes officer in the Department’s specialized Intelligence Division. In that position, she investigated public corruption and human trafficking cases, oversaw the Gang Unit, and was the head of the Gun Crimes Unit. As part of her position, she also was a Task Force Officer with the FBI, which gave her FBI credentials, an unmarked vehicle that she took home, and the right to conduct investigations outside of St. Louis.

After a new Intelligence Division commander took over the Division, he decided to transfer Sergeant Muldrow out of the unit so he could replace her with a male Sergeant who he considered a better fit for the unit’s “very dangerous” work. As a result, Sergeant Muldrow was reassigned to a uniformed position in its Fifth District.

Condominiums Can be Required to Allow Emotional Support Animal as Reasonable Accommodation for Resident’s Disability

April 9, 2024 | by Jonathan I. Nirenberg

The New Jersey Law Against Discrimination (“LAD”) can require a condominium association to allow a resident to keep an emotional support dog as an accommodation for a disability even if the dog exceeds the association’s weight limit for pets.

K.P. and B.F. live at Players Place II, a condominium complex in New Jersey. Players Place II’s rules and regulations allow only pets under 30 pounds to live in its apartments.

The Association filed a lawsuit against K.P., claiming he violated its rules and regulations. K.P. and B.F. filed a counterclaim alleging the Association violated the LAD by denying B.F. a reasonable accommodation for her disabilities.

Employees Can Proceed with Claim Employer Sued Them for Alleging Discrimination

February 15, 2024 | by Jonathan I. Nirenberg

A recent decision by the United States District Court for the District of New Jersey recognizes that an employer filing a lawsuit against an employee because he asserted a discrimination claim against it can be an act of unlawful retaliation in violation of the New Jersey Law Against Discrimination (“LAD”) and Title VII of the Civil Rights Act of 1964 (“Title VII”).

The retaliation claim was asserted by Jean-Claude Franchitti and Vartan Piroumian, two former employees of Cognizant Technology Solutions Corporation and Cognizant Technology Solutions U.S. Corporation. Mr. Franchitti was Cognizant’s Chief Architect and Assistant Vice President, and Mr. Piroumian was its Principal Architect and Enterprise Architect.

Mr. Franchitti and Mr. Piroumian each previously asserted discrimination and retaliation claims against Cognizant. Mr. Franchitti filed a Charge of Discrimination with the United States Equal Opportunity Commission (“EEOC”) asserting age discrimination, national origin discrimination and retaliation, as well as a subsequent lawsuit in California asserting the same claims, a claim under the False Claims Act alleging the company was engaging in visa fraud, and a lawsuit in New York alleging retaliation. Mr. Piroumian has filed two Charges of Discrimination against Cognizant with the EEOC alleging unlawful discrimination and retaliation.

Court Dismisses Failure to Accommodate Claim But Allows Related Retaliation Claim to Proceed

February 1, 2024 | by Jonathan I. Nirenberg

Recently, the District of New Jersey dismissed an employee’s disability discrimination and failure to accommodate disability claims, but did not dismiss her related retaliation claim.

Amber Ray worked as a Project Manager/Estimator for Elecnor Hawkeye, LLC. Before she began working for Elecnor, Ms. Ray had been diagnosed with Lupus. However, sometime after Elecnor fired her, she learned she had been misdiagnosis and actually had Hypermobile Ehlers-Danlos syndrome, which is a complex musculoskeletal condition, and several other auto-immune conditions.

On Friday, July 30, 2021, Ms. Ray sent a text message to her supervisor, Hal Meeler, informing him that she would be working from home that day. In response, Mr. Meeler told Ms. Ray she was required to work in the office, and he would discuss the issue with her on Monday.

Gerber Must Bring Witness to New Jersey to Testify in Discrimination Lawsuit

January 8, 2024 | by Jonathan I. Nirenberg

A recent decision from the New Jersey Appellate Division affirms a trial court’s order requiring Gerber Products Company to bring a witness from Switzerland to New Jersey, at Gerber’s expense, to testify at a deposition in a discrimination lawsuit. A deposition is a formal interview under oath used to obtain testimony from witnesses in lawsuits.

Denise Willson is a former Vice President of Medical Sales North America for Nestlé Infant Nutrition. Ms. Willson sued Gerber Products Company, Nestlé Healthcare Nutrition, Inc., Nestlé Holdings, Inc., and Gerber’s President and CEO, William Partyka, alleging they discriminated against her because of her age and gender. More specifically, she claims they fostered a “boys club” culture, paid her less than her younger male peers, denied her a promotion to the position of general manager, and ultimately fired her in retaliation for her complaints about the discrimination in violation of the New Jersey Law Against Discrimination (“LAD”).

As part of her lawsuit, Ms. Willson alleges she spoke to Mr. Partyka’s supervisor, Alexandre Costa, about the retaliatory termination, gender discrimination and Gerber’s failure to promote her. When Ms. Willson’s lawyers sought to take Mr. Costa’s deposition, the defendants objected. They argued that Mr. Costa lives in Switzerland, claims his meeting with Ms. Wilsson was about sales rather than her allegations of discrimination and retaliation, denies he was involved in the decision to terminate her employment or has any other information pertinent to her case, and that requiring him to come to New Jersey for his deposition supposedly would “create a tremendous burden on [his] business.” The defendants also argued that neither Mr. Costa nor his employer, Nestlé Enterprises S.A., is a party to the lawsuit.