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Articles Posted in Business Law

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New Jersey employment law governs the classification of workers as employees or independent contractors.  The classification is important and fact sensitive.  It has far reaching consequences.  The Appellate Division recently issued a published opinion in imagesCAWQ89PSthe case of East Bay Drywall, LLC vs. the Department of Labor and Workforce Development, which examined some of these issues and provides guidance for both employers and employees.

Background

The Department of Labor and Workforce Development administers the New Jersey Unemployment Compensation and Temporary Disability Insurance Laws. It collects revenues from employers and employees to fund these benefits.  However, “employers” only need to make contributions for their “employees,” not for independent contractors.  Therefore, there is an economic incentive for businesses to classify workers as contractors rather than employees.  However, misclassification can trigger severe consequences.

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The New Jersey construction law opinion in Site Enterprises Inc. vs. NRG Rema, LLC highlighted several important areas of the New Jersey Construction Lien Law.

 

The New Jersey Construction Lien Law

The New Jersey Construction Lien Law replaced the Mechanic’s Lien law, and made it easier for contractors, subcontractors and suppliersconstruction-machine-3412240__340-300x202 to use construction liens to enforce payment for  their contract work on construction projects.

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On April 14, 2020, New Jersey Governor Murphy signed a food waste recycling bill (A2371)  aimed at requiring large producers of food waste in New Jersey to recycle their unused food.  This mandate is schedule to go into effect ondump-truck-1396587__340-300x215 approximately October 14, 2021.

The law applies to “large food waste generators” which are defined as “any commercial food wholesaler, distributor, industrial food processor, supermarket, resort, conference center, banquet hall, restaurant, educational or religious institution, military installation, prison, hospital, medical facility, or casino that produces at least 52 tons per year of food waste.”   Any large food waste generator that is located within 25 miles of a food recycling facility will be required to separate out food waste from other solid waste and send the food waste to the food recycling facility.  Alternatively, these generators can compost their food waste (or other authorized anaerobic or aerobic digestion) on-site, or use other recycling alternatives.

The New Jersey Department of Environmental Protection (known as the “DEP”) lists food waste recycling facilities to include Trenton Renewable Power, LLC (Trenton, NJ), and Waste Management Core (Elizabeth, NJ).  Therefore, a significant amount of generators in New Jersey will likely be considered to be within the 25 miles. Those outside the 25 miles range or with waste which is not accepted by the food recycling facility within their range may dispose of the waste as they normally would with other solid waste.

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At first glance, both commercial and residential New Jersey real estate transactions seem to be quite similar.  A contract is executed, title work must be checked, lender requirements must be met and the closing must be completed.  But, from the initial offer through closing on the transaction, there are significanthouse2-300x223 differences.

A commercial real estate transaction usually starts with a letter of intent.  This is a non-binding preliminary offer which states the basic terms of the anticipated contract and may include a non-disclosure agreement to give the parties security in the knowledge that the information provided will remain private.  Under New Jersey real estate law, commercial real estate contracts are not subject to the three day attorney review requirements which control residential real estate transactions.  Because of this, the contract will be prepared by one of the real estate attorneys and then negotiated and finalized before it is executed.    Once it is executed all parties are bound by its terms.

The contract will usually include due diligence clause during which the purchaser is permitted to conduct inspections of the property and the records related to it.  These Inspections can be quite detailed, particularly for industrial property, and can include structural and system inspections, environmental contamination inspections (which range from tank sweeps to phase 2 environmental inspections and compliance with the Industrial Site Recovery Act (known as “ISRA”), reviewing the history of the property, including the environmental history, investigating the zoning rules and regulations against the purchasers’ intended use of the property, performing title searches and searches with the New Jersey Division of Taxation to insure that the Seller is paid current on taxes, and examining records of income and expenses related to the property and/or its leases and tenants.  Once due diligence has been completed and the purchaser accepts the property in its current condition, or the parties agrees on repairs, remediation or credits in lieu thereof, the next step is purchaser obtaining approval of any financing, if financing is involved.

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A frequent problem in New Jersey employment law occurs when a business offers someone a job without a contract, that person then quits their current employment, the business rescinds the offer, and the employee is left without a job.  There is no contract, so the employee cannot sue for breach of contract.  What can she do?  In an important New Jersey employment law decision, the State Supreme Court ruled in the case of Goldfarb v. Solimine that the employeesignature-3113182__340-300x200 has a viable claim for promissory estoppel and may recover “reliance damages” from the prospective employer based on what she would have made had she not quit in reliance on the promise and stayed at her prior job.  Promissory estoppel is a legal doctrine which provides that a party should be responsible for the consequences when a promisee relied on its promise and suffers damages when the promisor fails to perform.

Background

David Solimine offered Jed Goldfarb a job managing his family’s investment portfolio.  Goldfarb would receive an annual salary of $250,000-$275,000, plus ten to twenty percent of profits made because of his efforts or advice.  Neither the offer nor a contract were ever put in writing.  However, Goldfarb left his current job as a financial analyst (where he had made between $308,000 and $466,000 per year) in reliance on Solomine’s promise of employment.  After Goldfarb quit, Solimine withdrew the offer and Goldfarb found himself unemployed.

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In February of 2021, Governor Murphy finally signed the long awaited “New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” which legalizes recreational, adult (at least 21 years old) use of marijuana (or “cannabis”).

One of the major concerns which has existed since the very beginnings of this Act was how it was going to effect drug testing in the workplace and what job protections might need to be created in relation to employees’ marijuana use.  The Act does address job protections.  However, while several sections of the Actphoto__1894482_mclaughlin_nardi_4712 came into effect immediately, the employment-related provisions are not expected to take effect until the newly-created Cannabis Regulatory Commission establishes regulations providing specific procedures and rules for generally practices in compliance with the Act.  That Commission is supposed to do so within 180 days of the passing of the Act, bringing us to approximately August 21, 2021 before marijuana job protections will come into effect.

The Marijuana Act specifically prohibits employers from refusing to hire, firing, or taking some other adverse action against someone specifically because that person uses marijuana recreationally. Indeed, an employer cannot discriminate against an individual in compensation or in any terms, conditions, or privileges of employment based upon marijuana use outside of the workplace. Thus, marijuana use appears to have the same protections as other protected classifications such as race and gender discrimination.  Again, we will have to see how the Committee addresses this to see what the specific rules will be.

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In New Jersey, sale of a business is governed by the contract negotiated by the parties.  But what if the contract is unclear, or the parties don’t agree on what theContract-pen-thumb-300x225-80678-300x225 terms of an oral contract are?  In the case of Lee v. Lee, involving the sale of a restaurant and liquor license in Bergen County, the Appellate Division examined several bedrock principles of New Jersey business law, including oral contracts, the duty of good faith and fair dealing, and how parties are required to deal with each other.  The opinion offers good guidance for the behavior of the parties in  the sale of a business in New Jersey.

Background

Mikyung Lee and Seoung Ju Bang orally agreed with Jung Lee to sell them a restaurant he owned in Fort Lee, together with its liquor license.  The purchase price was $892,000, with a $50,000 initial deposit, and then another $50,000 when the contract was signed, with the remainder to be paid over time.  The buyers paid the first deposit, but before a contact was signed, Jung Lee said he needed the second $50,000 deposit.  Believing him to be acting in good faith, they gave him the second deposit.  He promised to send a written contract with the terms they agreed on, which included having Lee’s company, Plan J. Inc., a part of the transfer because it held the liquor license.

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The Appellate Division of the State Superior Court recently issued an opinion on New Jersey construction law in the case of In re Protest Of Contract Award For Project A1150-08, N.J. Executive State House Comprehensive Renovation And Restoration which has troubling NJ_State_House-300x200implications for contractors.  The decision is published, so it is precedent for future cases in which contractors challenge the award of New Jersey construction contracts by state and local governments.  In this post I won’t dwell on the details of which contractor was right and which was wrong, but rather I’ll focus on the Appellate Division’s examination of the procedures followed, which is a cautionary tale about the ability of New Jersey construction contractors to meaningfully object to the award of public contracts.

Background

On November 15, 2019, the New Jersey Division of Management and Construction (“DPMC”) awarded a contract for renovation and restoration of the New Jersey State House to Daniel J. Keating Company, the lowest bidder at $199,498,000.  Hall Construction Co., Inc., which had bid $205,777,000, was the second lowest bidder.

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The New Jersey Wage and Hour Law regulates minimum wage and overtime requirements.  It is New Jersey’s counterpart to the Federal Fair Labor Standards Act.  The Wage and Hour Law and Fair Labor Standards Act are bedrock elements of New Jersey employment law.  Under the Wage and Hour Law, New Jersey employers must pay overtime at a rate of one and half times an employee’s regular pay if she works more than forty hours a week.  However, if the employer is in imagesCAWQ89PSthe trucking industry, the employer is only legally required to pay overtime at the rate of one and half times minimum wage.  However, if the employer should have paid the higher rate but paid the lower rate, it can raise the defense that it did so in “good faith” reliance on government orders or regulations.

In the case of Branch v. Cream-O-Land Dairy, Elmer Branch filed a class action lawsuit in the New Jersey Superior Court against his employer, Cream-O-Land Dairy, on behalf of himself and similarly situated truck drivers employees, for non-payment of overtime in violation of the Wage and Hour Law.  Cream-O-Land argued that it was not required to pay the higher rate for two reasons.  First, it argued that it was a “trucking industry employer,” and that all the employees were paid at least the lower overtime rate.  Second, it argued that it met the “good faith” defense.  The trial agreed that Cream-O-Land satisfied the good faith defense and dismissed the case on that ground.  Branch appealed to the Appellate Division of the Superior Court which reversed, finding that the matters on which Cream-O-Land relied did not satisfy the statutory requirements of the Wage and Hour Law.

Cream-O-Land then appealed to the Supreme Court of New Jersey.  Because the trial judge did not address the exemption for trucking industry employers the Supreme Court, like the Appellate Division,  examined only whether Cream-O-Land satisfied the good faith defense.  It ruled that it did not.

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The Appellate Division of the Superior Court recently issued an opinion illustrating several important points regarding construction liens under the New Jersey Construction Lien Law and collection of payment under the New Jersey Prompt Payment Act.

Background

In that case, Prime Time Construction, LLC vs. Vimco, Incorporated, , Prime Time Construction, LLC was the general contractor on three construction projects inconstruction-machine-3412240__340-300x202 Paterson.  The properties were owned by three limited liability companies which were related to Prime Time.  Prime Time executed written subcontracts with Build Logistics, Inc. (“BL”) to do the masonry and excavation work on the projects.  BL executed a written contract with Vimco to provide materials for two of the projects.  Vimco provided the materials directly to BL; it had no contract with Prime Time or the owners.  Prime Time paid BL the full amount under the contract for all the work it performed and materials it provided.  However, BL abandoned the project and failed to pay Vimco.

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