Articles Posted in Business Law

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Under New Jersey construction law, the New Jersey Consumer Fraud Act applies to most residential and commercial construction projects.  It is applicable to contractors, subcontractors and suppliers.  However, a New Jersey Appeals Court held in a recent decision that architects are not subject to the Consumer Fraud Act because of the “learned professional” exemption.

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Background

The Borough of Caldwell contracted with Cozzarelli Cirminiello Architects, LLC for architectural services including design, construction and rehabilitation of Borough-owned facilities.  CCA’s invoices were approved by municipal officials before being submitted to and approved by the Council before they were paid.  After a new Council was elected, the Borough terminated its contracts with CCA.  Caldwell then sued CCA in the Law Division of the Superior Court of New Jersey in Essex County for breach of contract, unjust enrichment and violation of the New Jersey Consumer Fraud Act. Caldwell claimed that CCA failed to perform its services, failed to produce “products,” failed to support the Borough on construction bids, failed to produce construction documents, double billed the Borough, and billed it above the agreed upon rate.

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Background: Anti-Discrimination Statutes and the Background Circumstances Rule

Title VII of the United States Civil Rights Act of 1964 and the New Jersey Law Against Discrimination both prohibit employers from illegally discriminating against their employees.  Normally the evaluation is straightforward under the McDonnell Douglas Test.  However, in the case of reverse discrimination, i.e., where an employer is accused of discriminating against an employee who is in the majority, New Jersey andpaterson-pd-john-and-andrew-300x183 many Federal courts imposed a higher burden of proof on the employee.  In cases of reverse discrimination, employees in New Jersey state courts and many federal courts had to satisfy the “Background Circumstances Rule,” which requires that the employee prove that he “has been victimized by the unusual employer who discriminates against the majority.”  However, in 2025, the United States Supreme Court unanimously struck down the Background Circumstances Rule in Title VII cases in the case of Ames v. Ohio Department of Youth Services.

The U.S. Supreme Court Steps In

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The New Jersey Appellate Division examined a town’s termination of payments to its former employee under a separation agreement when the employee became employed by another town.

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Alberto Cabrera was the municipal clerk of the Town of Guttenberg, New Jersey.  As so often happens, the parties wished to terminate their relationship.  They entered into a Separation Agreement which provided that Cabrera would stop performing his duties and go on paid leave beginning on August 18, 2022, and the leave would terminate with his retirement on March 31, 2023.  He would be on the payroll and paid his regular salary by the Town through that day.  He would continue to get medical benefits through March 31, 2023.  The Town would also pay him his accrued but unused vacation, sick, compensatory and personal days for 2022 and 2023.  Cabrera agreed to submit a letter requesting this paid leave of absence, which he did the same day.  The Town’s Mayor and Council voted to approve the agreement.  Cabrera inquired about amending the agreement once, but it was never changed in any way.

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The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act

The New Jersey Arbitration Act and Federal Arbitration Act generally require enforcement of agreements to arbitrate disputes.  This extends to the enforcement of arbitration agreements in employment contracts.

However, in response to the #MeToo Movement, Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.  The EFAA provided:new-york-county-courthouse-1540991328RMS-300x200

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New Jersey business law provides that parties to a contract may agree that after closing one party, usually the seller, can have the right to match another offer which a party receives.  This is called a “right of first refusal.”  This most frequently occurs in contracts for the sale of a business or the sale of real estate, but also often occurs in leases and other contracts as well.  A New Jersey appeals court’s decision in the case of PMG New Jersey II, LLC vs Amrit Inc. examined the law regarding New Jersey law regarding contractual rights of first refusal.6-300x225

Amrit, Inc. Buys a Gas Station and a Decade Later Litigation Ensues

The decision explained that in 2012, the parties entered into a into a Motor Fuel Supply Agreement (MFSA) in connection with Amrit, Inc.’s purchase of a gas station in New Brunswick, New Jersey from PMG New Jersey II, LLC.  The MFSA was amended three years later in 2015 to include a provision which provided that if the purchaser received an offer to buy the gas station, PMG had 30 days to give notice that it was exercising its right to purchase the gas station on the same terms and conditions as the new offer; if not it waived this right of first refusal.  The MFSA was later amended to last through 2027.

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New Jersey construction law incorporates the damages provisions of the Consumer Fraud Act in residential home improvement construction projects.  A New Jersey appeals court recently analyzed the recovery of triple damages and attorneys fees in construction projects under the Consumer Fraud Act, and personal liability for contractors, in two construction law decisions.

Background

Philip Dattolo hired EMC Squared, LLC to construct a new single-family home in Boonton, New Jersey.  They signed a written contract.  Toward the end of the project, Dattolo selected severalhouse-225x300 additional items to be included.  A written change order to the original signed contract was drafted, but the change order was never signed.  In January 2020 the home passed final inspections, and EMC’s owner, Edward Morgan, advised Dattolo that he could not continue working on the project.  Dattolo refused to pay “one additional cent,” and complained that there were numerous construction defects which would cost him thousands of dollars to remediate.

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New Jersey’s whistleblower law was recently amended to further protect New Jersey private and public sector employees from being forced by their employers to sit through required “captive audience” meetings in an attempt to improperly coerce their employees from exercising their rights.

The Conscientious Employee Protection Actcapt-andrew-209x300

The Conscientious Employee Protection Act (CEPA) is New Jersey’s whistleblower law.  Considered one of the United States’s strongest whistleblower protection laws, it forbids employers from retaliating against their employees for disclosing, objecting to, reporting or refusing to participate in activities which they reasonably believe are illegal, fraudulent, constitute improper patient care, or violate established public policy.

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In a recent New Jersey employment law decision regarding disability discrimination and employer’s duty to provide reasonable accommodations for disabled employees, a New Jersey appeals court explained in the case of Gould v. New Jersey Department of Transportation the requirement for employers to engage in a good faith “interactive process” with their disabled employees to determine what reasonable accommodations can be provided to allow the employee to continue working.6-300x225

Background

Leroy Gould worked for the New Jersey Department of Transportation from 2001 until he retired in 2021.  He was a transit planner and coordinator, coordinating bus and rail service.  In 2012, Gould was diagnosed with prostate cancer, undergoing surgery and radiation which caused incontinence.  As a result, he usually had to go to the restroom immediately upon arrival to work.  He drove to a main parking lot, then took an employee van to his office building; the drop-off point was only a two-minute walk, which worked fine.  He was allowed to wear jeans because the fabric soaked up urine quickly and prevented rashes, and he received a standup desk because of vascular issues.

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New Jersey real estate law received a significant change in the fees charged to buyers and sellers in NJ real estate transactions.

On June 30, 2025, New Jersey enacted P.L. 2025, c. 69, which amends the so-called “MansionJennifer C. Meusel Tax”.  Pursuant to the prior legislation, adopted in 2004, residential properties and certain commercial properties which sold for over $1 million in New Jersey were subject to a “Mansion Tax” which required the buyers of the real estate to pay 1 percent of the purchase price to the State of New Jersey.

Under the new law, a buyer no longer has to pay the 1% “Mansion Tax” and as of July 10, 2025, sellers will pay a progressive fee for properties sold for more than $1 million. The fee on sales between $1 million and $2 million remains set at 1 percent.  For a sale price over $2 million but below $2.5 million, seller will pay 2 percent of the sales price and fee—which roughly translates to an additional $40,000 expense. Properties over $3.5 million would see sellers facing a fee hike of up to 3.5 percent.

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Restrictive Covenants and Non-Compete Agreements

Restrictive covenants are clauses in contracts where the parties agree that one or both of the parties agree to restrict their ability to act in certain ways during or after the term of the contract.  There are a variety of restrictive covenants, such as “non-poaching” agreements, were a party agrees not to employ the other party’s employees; non-disclosure agreements, or NDAs, where the parties agree not to disclose the other’s confidential information or trade secrets; and non-solicitation agreements, where one or more of the parties agree not to solicit or do business with thesupreme-court-building-1209701__340-300x200 other party’s customers or clients after the expiration of the contract.

In the employment context, the most common restrictive covenant is a non-competition agreement, in which an employee agrees that during or after their employment with the other party, they agree not to compete against it.  Restrictive covenants are enforceable under New Jersey employment law, provided they meet certain requirements.  The Appellate Division of the Superior Court of New Jersey recently addressed when an employee may challenge the validity of a non-compete agreement in court in the case of Ondik vs. Princeton Eye and Ear, LLC.

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