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imagesNew Jersey’s Law Against Discrimination (the “LAD”) makes it unlawful to discriminate against someone on the basis of race, age, nationality, gender, religion, sexual orientation and several other specifically protected groups.  While this covers an array of relationship scenarios, it is often applied in the context of an employment relationship.

Any person who has been subjected to unlawful discrimination in employment may file a lawsuit under the LAD. The LAD specifically provides for remedies to include all those that are available in typical tort actions.  A tort action is generally a civil action in which one person or entity sues another for some wrongful conduct which the actor committed in breach of some actual or implied duty to the other person or entity (other than by way of a breach of contract).  These damages may involve a number of categories such as back (past lost) pay, front (future) pay, emotional distress, lost benefits, etc.  The act also provides for punitive damages – meaning damages in addition to actual losses which are imposed to punish the wrongdoer for egregious and/or intentional acts, and deter future wrongful acts.

In virtually every employment discrimination case, the plaintiff is required to mitigate her losses.  This means that an employee who has, for example, been fired because of a discriminatory purpose or motivation, must make reasonable efforts to find another job to reduce her damages.

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student-2052868__340-300x198Our employment attorneys represent New Jersey public sector employees in disputes with their governmental employers.  One area in which we frequently see disputes is the failure to give a “Rice Notice” to employees whose employment may be affected by an action by their governmental employers.

New Jersey employees, including non-tenured employees, have the right to advanced notice whenever a governing body, such as a town council or a board of education, is going to discuss the employee’s employment.  This notice is called a “Rice Notice” after the case of Rice vs. Union County Regional Board of Education, which upheld the right.  Normally, under New Jersey’s Open Public Meetings Act, personnel actions must be discussed in closed session unless all the affected employees request in writing that the discussion be held in the open during the public session of the meeting.  The Rice Notice gives the employee the notice they need  to actually exercise that right.

In the recent case of Kean Federation of Teachers vs. Morell, the Appellate Division of the Superior Court of New Jersey had the opportunity to take a fresh look at the requirements for a Rice Notice.  In that case the Court was faced with a situation where the Board of Trustees of Kean University delegated the task of evaluating recommendations by the University President for the retention or dismissal of faculty members.  The subcommittee evaluated the University President’s recommendations and made its own recommendations to the Full Board.  The full Board of Trustees then voted on those recommendations without discussion.  The Board argued that because it did not actually discuss any employment matters, but just voted without discussion,a Rice Notice was not necessary.

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head-1825517__340It is important to consider certain essential factors when choosing which type of business entity for your new business.  In order to reach your goals and find the best fit for your company, you should consider protection from liability, taxation mechanisms, ease of formation, and your future requirements for raising capital. The two primary options for small businesses are the limited liability company (“LLC”) and the S Corporation (“S-Corp.”). The LLC is the structure most commonly used by small business owners, but it is important to review the S-Corp. before making your decision and forming your entity.   Once you understand the similarities and differences between the two structures, you can review your business goals and needs to make an informed decision as to which type of entity you should form.

The Limited Liability Company

Under the New Jersey business law, the LLC provides liability protection similar to that of a corporation while retaining the taxation structure of a partnership. For tax purposes an LLC is a “disregarded entity”, the LLC issues a K-1 form to each member at the end of the tax year showing the distributions made to each member.  This K-1 is used to prepare each member’s individual income tax returns.  An LLC is quite flexible as to the forms of management which are permitted.  It can be member-managed in that the members (owners) manage the business of the LLC; or manager-managed, in that an outside manager is hired to manage the business affairs of the LLC; or some combination of the two models. Additional flexibility is found in the LLC because profits and losses can be allocated in any way desired by the members, it does not have to be based on the amount of capital contributions contributed by each member. The operating agreement is the controlling document and it can be drafted to reflect the agreement of the members.  The operating agreement can also reflect different voting rights among the various members and it can relax the strict recordkeeping rules of a corporation.

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As the holiday season creeps up on us, it’s good that we have the chance to reflect on what we are thankful for. Here at McLaughlin & Nardi we have much to be thankful for this year.

First, we are thankful for you who give us the opportunity to help people for a living. This is a gift which for which we are profoundly grateful.

Second, we are grateful for the people who help us do that. This includes all of the people who work here. There are those whom you see, such as our attorneys and paralegals, but there are many who you don’t see, including those who do the administrative, research and support work which allows the rest of us to be your advocates and counselors. They are more than just coworkers; they are family.

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office-1319849__180The Corporation Business Tax (“CBT”) is a New Jersey State tax imposed on corporations for the privilege of doing business in the State.   Nearly every state has instituted a similar type of tax on businesses, sometimes including taxes referred to as franchise taxes or privilege taxes.  This tax is income-based and is measured by the net income which may be allocated to  New Jersey.  CBTs go towards general State use, with 4 percent of the CBT revenue dedicated to environmental projects and activities.

The following entities are exempt from CBT: corporations created under the limited-dividend housing corporation law, nonprofit cemetery corporations, nonprofit corporations without capital stock, federal corporations exempt from state taxes, certain agricultural cooperative associations, non-stock mutual housing corporations, canal and railroad corporations, water and sewer corporations, insurance companies subject to premiums tax, and certain municipal electric corporations.

A corporation may be either a “C” Corporation or a“S” Corporation.  Generally, a corporation chooses its election of classification when it is being formed.  A “C” corporation is subject to what is commonly referred to as “double taxation” because a C corporation’s revenue is taxed first as company revenue and then again when the shareholders are taxed for the revenue.  However, there are also certain tax advantages including being able to deduct certain business expenses.  On the other hand a “S” corporation is only taxed at the individual level, commonly referred to as a “pass-through” tax entity.  The owners of the company are the only ones taxed for profit of the company.  “S” corporation owners may be able to deduct corporate losses on personal tax returns.   There are also a myriad of considerations in addition to tax factors which should be considered before making the determination as to what type of company to form.

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frankfort-105591_960_720The Supreme Court of the United States has recently issued an opinion holding that, even perceived speech or associations (as opposed to just actual speech or associations) are protected by the Civil Rights Act.

A police officer, Jeffrey Heffernan, working in Paterson, New Jersey filed suit seeking redress for his demotion after he had been seen speaking to staff members for a candidate running for mayor and holding a yard sign supporting that candidate.  The candidate was running against the incumbent mayor who had appointed Heffernan’s superiors.  Heffernan was specifically demoted due to his “overt involvement” in the candidate’s campaign.

Unbeknownst to Heffernan’s superiors, Heffernan did not actually support the candidate, but was merely picking up the sign for his ill mother.

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capitol-22546__180Lawsuits can settle immediately after a complaint is filed or several years into the litigation process on the eve of trial, or even during the course of a trial.  Most cases will settle before a final resolution is determined by a judge or jury.  Settlements generally offer a more favorable resolution than trial for several reasons: (1) both parties avoid the risk of loss at trial, (2) both parties avoid the considerable costs, time, and efforts involved in further litigation and trial, and (3) both parties avoid protracted appeals.

Both parties in a suit seeking monetary damages should consider tax implications in agreeing upon a settlement.  This is true for defendants (the party who is being sued) and plaintiffs (the party who filed the lawsuit) since the defendant may need to make tax deductions prior to disbursement to the plaintiff and/or a plaintiff may need to include some types of settlement proceeds as taxable income.  Further, a defendant may need to issue a 1099 to the plaintiff along with the disbursement of settlement funds.   These determinations are highly fact-sensitive and every party should consult their own CPA or other tax professional who would be most familiar with each parties’ particular situation.

Generally, settlement money received for a personal physical injury is not taxable.  (There are exceptions, but this is the general rule.)  However, it is important to take into consideration that the settlement amounts may be subject to reimbursement to Medicaid/Medicare or medical insurance.  Indeed, the Social Security Act requires that Medicare payments be reimbursed by a subsequent lawsuit recovery, such as a settlement or award.

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The New Jersey Achieving a Better Life Experience (ABLE) Act became law on January 11, 2016, it becomes effective on October of 2016.  While due to its limitations it does not replace the special needs trust, it will be a cost effective way to assist individuals with disabilities.

Under the new Act the New Jersey’s Department of the Treasury and the New Jersey’s Department of  Human Services must establish the ABLE Program pursuant to federal law. Under the program, individuals who became disabled before they attained the age 26 and who are also able to meet the disability requirements for Social Security disability benefits are permitted to establish an ABLE account, and they themselves can be the beneficiary of that account. The purpose of an ABLE account is to enable people with disabilities and their families to save and pay for disability-related expenses.

An ABLE account is not subject to state income tax, and it will not be considered to determine the beneficiary’s eligibility for need-based public benefit programs or to determine the level of any benefit provided under such a program.  However, a disabled individual can only have one ABLE account established for their benefit.

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hauler
Virtually every business in New Jersey is regulated in some way, shape, or form. Accounting firms are regulated by the Department of Law & Public Safety and regulations require accounting firms to have certified public accountants. Home improvement contractors are often required to be registered with the Department of Labor and Department of Treasury. Health clubs are required to register and issue a security bond with the Department of Law and Public Safety. Restaurants are regulated by local health departments. However, businesses which involve the transportation, storage, or disposal of solid waste are some of the most regulated and highly scrutinized businesses in the State of New Jersey.

Solid waste haulers or transporters are regulated by the New Jersey Department of Environmental Protection (“NJDEP”), Division of Solid Waste Management and/or the Division of Solid & Hazardous Waste Management.

However, first, for tax and liability purposes, a business will generally form a company or business entity (such as a corporation or limited liability company). In doing this, the company will likely file for a Certificate of Formation and a request a FEIN (or Federal Employer Identification Number).

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McLaughlin & Nardi’s New Jersey construction attorneys recently completed a construction arbitration in the American Arbitration Association.  After hearing the evidence, the arbitrator awarded our clients $289,918.  Maurice McLaughlin was the lead trial attorney.  He was assisted throughout by Pauline Young and Robert Chewning, who second chaired the hearings.

Background

The case involved Essex County homeowners who had contracted for extensive renovations to their kitchen.  The total cost of the kitchen renovations was $152,725.  The homeowners paid $126,362.50.  However, the contractor never completed the job.