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One of the most difficult questions in New Jersey Business law concerning the retirement of a business owner is determining the value of the laptop-3175111__340-300x200owner’s share of the business which the remaining owners must pay to buy out his share.  This can be difficult even if the departure itself is on good terms.  The method and amount of the valuation can cause vicious disputes even among friendly partners.  The Chancery Division of the Superior Court of New Jersey in Bergen County recently issued a published decision on this problem in the context of a limited liability company.

Background

In that case, Namerow v. Pediatricare Associates, LLC, four pediatricians were members (owners) of a medical practice named Pediatricare Associates, LLC.  The Amended Operating Agreement which governed valuation of the business upon member retirements provided that:

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justitia-3222265__340-300x190Injunctive Relief

Injunctive relief is an order by a court requiring a party to cease an act, condition or behavior.  It is a powerful tool in New Jersey business law civil cases. An order for injunctive relief is typically referred to as an “injunction.”  A temporary injunction is granted only after a hearing, and a permanent injunction is granted after the case has been completed.  A temporary restraining order may be granted prior to a hearing in emergency situations.

Where to File

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Types of Contract Damages

In New Jersey business law disputes, there are two broad categories of damages, legal damages and equitable damages.

Briefly, legal damages, or remedies in law, are money damages.  Legal damages are for harms which can be compensated by the payment of money by the party which breached the contract.  In New Jersey contract law, punitive damages are not allowed.  Likewise, attorneys fees cannot be recovered unless the contract provider for it.  Compensatory damages, which are the amount of money needed to make the innocent party whole, may be awarded when they can be proved.  In business disputes these are often lost profits, but may also include other damages such as diminution of value of property.

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Decision on Objections to Fraud and Criminal Activity of Whistleblowers by New Jersey Supreme Court

In the recent case of Chiofalo v. State, Division of State Police, the Supreme Court of New Jersey issued an important employment law decision dealing with whistleblower retaliation.

The Conscientious Employee Protection Act — New Jersey’s “Whistleblower” Law

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money-2724241__340-300x203If a person wants to control the distribution of funds held in an IRA after their death, it is possible to do so by naming a trust as the beneficiary of the IRA.  However, in order to minimize tax consequences, the trust named as the beneficiary must be a “look-through” trust which qualifies for payout of the IRA funds over time rather than as a lump sum upon the death of the IRA owner.

While IRAs and qualified retirement plans generally do not require probate, distribution of these assets are controlled by contract law and are distributed pursuant to the beneficiary’s “designations” which were filed with the financial institution prior to the account owner’s death.   A trust can be named as the beneficiary.   However, the structure of the trust will determine whether the proceeds must be paid in a lump sum, and thus subject to potentially significantly higher income tax, or if the Trust qualifies as a “look through” trust in which the payout of the proceeds can be stretched-out over the life expectancy of the oldest beneficiary of the Trust.

You might wonder why the owner of an IRA would want to name a trust as his or her beneficiary, particularly when it is much simpler to merely name the individuals as the beneficiaries.  The primary reason is to control the distributions to the beneficiaries after death. You do not avoid paying taxes by naming a trust.  However, you can prevent your beneficiaries from taking lump sum distributions of your IRA, which would likely result in additional taxes and the remaining balance of which could be squandered by your beneficiaries.  But the purpose of a naming a Trust as the Beneficiary of an IRA is not tax savings.   In fact, it’s quite possible to pay more in taxes even if trust is designed properly. Therefore, you would only use trusts for personal (non-tax) reasons.

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New Jersey’s Law Against Discrimination has rightly been called one of the strongest employee protection laws in the nation.  This is true both because of the broad range of inherent characteristics  which it protects from discrimination, and the strong legal protections and remedies it provides.  In short, the Law Against Discrimination prohibits employers from discriminating against employees because of a wide range of inherent qualities which make them who they are. It likewise prohibits harassment because any of these characteristics as well.  These protected characteristics include race, creed, color, national origin, nationality, ancestry, sex (including pregnancy and sexual harassment), marital status, domestic partnership or civil union status, affectional or sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, genetic information, liability for military service, and mental or physical disability, including AIDS and HIV related illnesses.  It also prohibits discrimination or harassment because of an employee’s age.

The Andujar Case

The Third Circuit Court of Appeals, which hears appeals from the federal district courts in New Jersey, Pennsylvania, Delaware and the United States Virgin Islands, recently issued an instructive opinion in the appeal of an age discrimination verdict under the Law Against Discrimination in the case of Santos Andujar versus General Nutrition Corporation.

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The Federal Fair Labor Standards Act requires that employers, including New Jersey employers, pay their non-exempt employees minimum wage and overtime (the vast majority of employees are not subject to an exemptions; the major exemptions are for executive, administrative and professional employees, and outside sales).  Independent contractors, however, are not protected by the Fair Labor Standards Act.  Claims of misclassification of employees have recently led to significant amounts of litigation.

The United States Third Circuit Court of Appeals recently issued an opinion on misclassification of workers in the case of Priya Verma v. 3001 Castor, Inc., which found that adult dancers were employees entitled to the protection of the Federal Fair Labor Standards Act.  While the case arose in Pennsylvania Federal Court, the Third Circuit rules on appeals from federal courts in New Jersey, Pennsylvania, Delaware and the United States Virgin Islands, so it’s decisions determine how federal law, including the Fair Labor Standards Act, will be applied are binding in New Jersey.

Background

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Willful Violations Under The Fair Labor Standards Act

352099_construction_3-002-300x225The Federal Fair Labor Standards Act establishes rates of minimum wage and overtime pay which employers must pay to their employees.  Employees successfully suing their employers for violations of these requirements can recover their lost wages, and their employers will be required to pay their attorneys fees and litigation costs.  The Fair Labor Standards Act provides that willful violations of these requirements will result in double damages – ie., the employer will be required pay the employee twice the amount of wages or overtime it did not pay.  A willful violation also extends the statute of limitations for suing from two years to three.

Willfulness: The Question Facing the Third Circuit

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New Jersey passed the Wage Theft Act on August 6, 2019.  It is being viewed as one of the strongest and broadest wage theft laws in the nation, and rightly so.  The New Jersey Wage Theft Act increases penalties that employers may be subject to under New Jersey’s Wage and Hour Law with the addition of a liquidated damages provision and further protections for employees who bring retaliation claims.  The New Jersey Wage Theft Act also expands the employers who may be liable for employee claims by making both employers and labor contractors jointly and severally liable for violations and prohibiting waivers regarding joint and several liability.

What is Wage Theft?

Wage theft can come in a variety of different forms but boils down to circumstances where an employer does not pay an employee the amount he is owed.  The following are a few examples where an employee may have a claim for wage theft: (1) an employee is not getting paid for the full amount of hours worked; (2) a non-exempt employee is not be getting paid overtime wage rates for hours he has worked in excess of 40 hours for a week; (3) an employee’s paycheck from his employer bounces; and (4) an employer deducts time out of an employee’s paycheck for breaks which the employee never took.  As you can see from these examples, wage theft is not limited to any one industry or job.

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In New Jersey, you cannot sell alcohol unless you have a license issued by the New Jersey Division of Alcoholic Beverage Control.  New Jersey issues many types of licenses which broadly fall within three general categories:  Manufacturing Licenses, Retail Licenses, and Wholesale Licenses.   Each license is attached to the “Licensed Premises,” and any change in the location or size or configuration of the Licensed Premises requires a place to place transfer application to  be filed and approved before changes to the Licensed Premises can be completed.   This transfer application is substantially the same as the process for transfer of ownership of the license.  While the majority of licenses issued by the State of New Jersey fall into the Retail Licenses category, Manufacturing Licenses (designated as Class A licenses) include Brewery, Winery and Distillery Licenses which are a growing category.  Wholesale Licenses (designated as Class B licenses) apply to wholesale distribution of alcoholic beverages to retail licensees.

The Retail Licenses (designated as Class C licenses) are issued to bars, restaurants, and liquor stores. There are 11 different types of New Jersey Liquor Licenses which fall within the Retail License categories:

Plenary Retail Consumption License (identified by license number 33): This license permits the liquor license holder to sell alcoholic beverages for consumption at the licensed premises, and the sale of packaged goods for consumption off premises, the sale of packaged goods must take place in the public barroom.  This license counts toward the municipality’s population restriction which allows 1 license per 3,000 residents of a municipality based upon the most recent census data.