Business Law

Published on: January 6, 2022

Corporations and LLCs: If They’re Good Enough for a Lawyer….

Owners often choose to form their businesses as corporations or limited liability companies under New Jersey business law. The case of Colonial Records Storage, LLC v. Simpson, where a creditor tried to get individual liability against a lawyer who was a shareholder in a law firm operating as a corporation, illustrates exactly why.

Background

The law firm of Stein Simpson & Rosen was a New Jersey professional corporation; Nancy Simpson was an attorney with the firm and was a shareholder, or owner. A professional corporation operates under the same rules as a regular corporation, except that a professional corporation provides professional services such as those of lawyers, doctors, etc., and the shareholders may be personally liable for professional negligence, or malpractice in the course of providing those professional services. The law firm went out of business, although it had not formally dissolved. Simpson retired.

Published on: January 2, 2022

New Jersey Raises Minimum Wage Rate In 2022

by Maurice W. McLaughlin

The Increase

New Jersey’s minimum wage rate is going up again. The new minimum wage rate during this incremental increase is $13 per hour effective January 1, 2022. stock-photo-20612112-woman-leading-business-team

Background

Published on: November 24, 2021

OSHA’s Covid Vaccine Mandates for Large Employers

by Pauline M.K. Young

Mask, Surgical Mask, Virus, Protection
In September of 2021, President Biden announced a new mandate for all employers with 100 or more employees to require either vaccination or weekly testing and use of face masks for all of their employees. The mandate was issued under the authority of the United States Occupational Safety and Health Administration’s (“OSHA”) right to take certain actions in emergency situations.

As a result, dozens of lawsuits have already been filed seeking to delay and/or overturn the mandate. At least one court has already issued a stay on the enforcement of the mandate pending a final determination.

On November 4, 2021, OSHA issued an Emergency Temporary Standard (ETS”) which sets forth rules and requirements related to this mandate. The ETS specifies that the mandate applies to employers with 100 or more employees total – meaning, that even if the employer has 10 employees at 10 different locations, the rules still apply to them. Part-time, seasonal, and full-time employees all get counted towards the total number of employees. Staffing agencies would still count all jointly-employed employees. However, independent contractors are not counted towards this total.

Published on: November 8, 2021

New Jersey’s Prompt Payment Act is a Potent Tool for Subcontractors Trying to Get Paid, Appellate Division Confirms

by Maurice W. McLaughlin

New Jersey construction law involves many complex issues. However, one of the most common is also the most basic: Contractors and subcontractors getting paid for their work. The Appellate Division recently issued a published opinion on this topic in the case of JHC Industrial Services, Inc. vs. Centurion Companies, Inc., exploring one of the most potent tools which contractors and subcontractors can use construction to get paid: New Jersey’s Prompt Payment Act.

Background: The JHC Case

JHC Industrial Services, Inc. subcontracted to do demolition work on a project for Centurion Companies, Inc., which had in turn subcontracted with the general contractor to perform the work. JHC performed the work in full, and the general contractor accepted the work and paid Centurion in full. However, Centurion withheld $30,500 from JHC for no apparent reason other than not wanting to pay. JHC therefore filed a construction lien against the property and sued Centurion in the Superior Court of New Jersey for violation of the New Jersey Prompt Payment Act. The matter took two years reach conclusion. A trial was held, and JHC prevailed on all its claims. JHC won and received judgment against Centurion for $30,500, the full amount it claimed was owed. JHC requested $104,670.51 in “reasonable costs and attorney fees” pursuant to the fee shifting provisions of the Prompt Payment Act. The trial judge, however, awarded only $12,250.40 in attorneys fees and $4,125.33 in litigations costs for a total award of $16,375.73. The judge explained that he did not believe he could “grant over $100,000 in fees on a judgment that could not have exceeded $30,500.”

Published on: July 22, 2021

Appellate Division Enforces Subcontractors’ Right to be Paid in New Jersey Construction Law Decision

by Maurice W. McLaughlin

The Problem: Getting Paid

One of the most important considerations for construction contractors and subcontractors is getting paid for the work they perform. A recent construction law opinion examined some of the issues which contractors and subcontractors face under New Jersey construction law when seeking to get paid for their work.

The J&M Interiors Case

Published on: July 7, 2021

Requirements for Binding LLC Owners to LLC Operating Agreements Under the New Jersey Revised Uniform Limited Liability Company Act

by Maurice W. McLaughlin

It is always wise to have the terms governing the owners’ of a business’s relations and the management of the business spelled out in writing, whether this be a shareholder agreement for a corporation, a partnership agreement for a partnership, or an operating agreement for a office-2009693__340-300x200 limited liability company (“LLC”). Since limited liability companies offer both the shield from personal liability of a corporation and the single taxation structure of a partnership, these are often the preferred structure for small businesses.

Adoption of Operating Agreements Under the New Jersey Revised Uniform Limited Liability Company Act

The New Jersey Revised Uniform Limited Liability Company Act defines an operating agreement thus:

Published on: May 6, 2021

New Jersey Employment Law Opinion Examines Classification of Employees and Independent Contractors

by Maurice W. McLaughlin

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 imagesCAWQ89PS the 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.

Published on: May 3, 2021

Appellate Decision Explains New Jersey Construction Lien Law

by Maurice W. McLaughlin

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 suppliers construction-machine-3412240__340-300x202 to use construction liens to enforce payment for their contract work on construction projects.

Published on: April 6, 2021

New Jersey’s New Mandate for Food Waste Recycling

by Pauline M.K. Young

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 on dump-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.

Published on: March 22, 2021

Commercial Versus Residential New Jersey Real Estate Transactions

by Jennifer C. Meusel

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 significant house2-300x223 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.