Are Severance Packages Negotiable?

Are Severance Packages Negotiable?

When there is a layoff, reduction in force, or termination of employment, employers will frequently offer employees severance pay. Generally, this will be memorialized in a severance agreement that requires the employee to, among other things, release any and all legal claims that the employee may have against the employer in exchange for the severance pay. In many instances, severance agreements include non-disparagement, confidentiality, non-compete, and non-solicitation clauses. As such, it is vital that employees retain legal counsel from an experienced employment attorney to ensure that they fully understand their obligations under the agreement as well as any rights that they may be waiving.

Severance Agreements: What Are They? 

At its core, a severance agreement is an agreement between an employer and the departing employee where the departing employee releases potential legal claims against the employer in exchange for receiving monetary benefits to which the employee would not otherwise be entitled.  

The severance agreement is valuable to both an employer and an employee. From an employer’s perspective, obtaining a release of potential legal claims by the departing employee is the only vehicle that assures that the departing employee will not bring legal action against the employer regarding the employee’s separation of employment. From an employee’s perspective, severance allows the employee to obtain additional compensation while transitioning to new employment. 

Can Severance Packages Be Negotiated?

Yes, severance packages can be negotiated however it often depends on the circumstances surrounding the employee’s separation of employment. Indeed, it is important for a separated employee to understand whether the severance package offered is fair and reasonable. That is why it is important to retain an experienced, trusted employment attorney.  

How to Negotiate a Severance Package 

When it comes to negotiating a severance package it is important to follow and understand the following four steps. 

Step 1: Retain an Employment Attorney to Review the Severance Package and Handle the Severance Negotiations 

It is important to understand the legal terms contained in any proposed severance agreement. Most notably, it is important for the separated employee to have a full understanding of the legal rights they may be waiving by signing the severance agreement. Therefore, it is vital that the separated employee retain an employment attorney to explain the same to them.

In addition, it is important for the separated employee to retain an employment attorney to provide an analysis of whether the employee has any potential claims of discrimination, retaliation, harassment, wrongful termination, or the like. If so, the separated employee may have valuable leverage to use in the severance negotiations.   

Step 2: Negotiate the Monetary Severance Terms  

Based on the facts pertaining to the separation of employment, legal counsel for the separated employee may be able to negotiate a better severance benefit for the employee. For example, if the circumstances surrounding the termination may be construed as unlawful, the separated employee’s employment attorney may be in a better position to negotiate a more favorable monetary severance package.  

Step 3:Negotiate the Non-Monetary Severance Terms 

In addition to a general release of claims, severance agreements usually contain other important non-monetary terms as well. As set forth above, such terms typically include non-disparagement, confidentiality, non-compete, and non-solicitation clauses. Depending on the circumstances surrounding the separation of employment, these terms may be important to the separated employee. Accordingly, it is important for the separated employee’s employment attorney to negotiate the non-monetary terms of the severance agreement as well.  

Step 4: Finalize the Severance Package

The final step is to finalize the severance package. Once all the terms of the severance package have been finalized, the severance terms are memorialized in the severance agreement. It is important for the separated employee to review the severance agreement with their employment attorney so that the separated employee is comfortable with the severance agreement and understands the terms of the severance package as set forth in the severance agreement. Once that occurs, the separated employee and a representative of the employer sign the severance agreement, which generally makes the severance agreement binding.   

Will Non-Compete Agreements Be Banned in New Jersey?

Will Non-Compete Agreements Be Banned in New Jersey?

Under New Jersey law, non-compete agreements are valid and enforceable if they are “reasonable in view of all the circumstances of a particular case.”  Solari Indus., Inc. v. Malady, 55 N.J. 576 (1970).  A non-compete agreement is reasonable when it 

(1) Protects the employer’s legitimate interests; 

(2) Imposes no undue hardship on the employee; and 

(3) Does not injure the public 

In all cases, “[t]he validity and enforceability of a covenant against competition  must be determined in light of the facts of the case.”  Graziano v. Grant, 326 N.J. Super. 328, 343 (App. Div. 1999).

However, it is questionable whether non-compete agreements will continue to be enforceable and viable in the State of New Jersey.  

What is Happening With Non-Compete Agreements?

In January 2023, the Federal Trade Commission (“FTC”) proposed a new rule that would essentially nullify the use of non-compete agreements in the workplace. Indeed, the proposal would make it an “unfair method of competition for an employer to enter into or attempt to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to an enforceable non-compete clause.”   

Similarly, in New Jersey, there is pending legislation (Bill No. A3715/S1410) that would put significant restrictions on the use of non-compete agreements in the State of New Jersey.  Among the more significant restrictions are that the non-compete obligations would not be able to exceed twelve (12) months in duration; the agreement would not limit the separated employee from providing services for a customer if the customer initiated the solicitation; the non-compete obligations would have to be communicated to the employee in a formal offer letter or thirty (30) days after commencement of employment (whichever is earlier); and non-compete obligations would be unenforceable against certain types of employees (such as non-exempt employees under the Fair Labor Standards Act or seasonal or temporary employees).  

The Future of Non-Compete Agreements in New Jersey 

The future of non-compete agreements in the State of New Jersey is murky. If the FTC proposal is adopted, non-compete agreements may be void.  Regardless, if enacted the pending New Jersey legislation noted above would significantly limit the viability of non-compete agreements in the State.   

What Does This Mean For Your Business? 

In light of the above, businesses in the State of New Jersey should brace themselves for the possibility that non-compete agreements may be more difficult to enforce. As such, businesses should consult with employment counsel to track the FTC proposal as well as Bill No. A3715/S1410. In addition, businesses should engage employment counsel to review any existing non-compete agreements and update the same to comport with applicable law.      

CMS employment attorneys use their extensive experience to help clients navigate through complex issues pertaining to non-compete agreements. If you need assistance with the review, drafting, or updating of non-compete agreements, please contact Curcio Mirzaian Sirot LLC.   

How to Prove Workplace Discrimination in New Jersey

How to Prove Workplace Discrimination in New Jersey

The New Jersey Law Against Discrimination strictly prohibits discrimination in the workplace. Indeed, individuals have the right to work in a professional atmosphere that promotes equal employment opportunities and prohibits practices such as employee terminations, demotions, and the denial of promotions motivated by discriminatory biases.  

What Qualifies as Workplace Discrimination? 

In New Jersey, workplace discrimination occurs when an employer takes an adverse action against an employee or job applicant based on a protected characteristic. The protected characteristics under New Jersey law include:

  • Race
  • National Origin
  • Ancestry
  • Age
  • Sex
  • Sexual Orientation
  • Gender Identity or Expression
  • Disability
  • Genetic Information
  • Pregnancy or Breastfeeding
  • Marital Status
  • Civil Union Status
  • Domestic Partnership Status
  • Military Status.  

What is Required to Prove Workplace Discrimination? 

In general, wrongful termination claims brought under the New Jersey Law Against Discrimination are analyzed under the three-step burden-shifting test articulated by the United States Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).  To establish a prima facie case of discrimination, an individual must prove by a preponderance of the evidence that they were a member of a protected class; that they were performing their job at a level that met their employer’s legitimate expectations; and that they suffered an adverse employment under circumstances that give rise to an inference of unlawful discrimination.  

If the individual can establish a prima facie case, the burden shifts to the employer to articulate a legitimate non-discriminatory reason for the adverse employment action.  Once the employer articulates a legitimate, nondiscriminatory reason for the decision, the individual must produce sufficient competent evidence to support an inference that the employer’s articulated reasons are merely a pretext for discrimination. 

Consult With an Experienced New Jersey Employment Lawyer 

Unlawful discrimination often negatively impacts an individual’s physical and emotional well-being.  As such, it is important to retain an attorney that you trust.  The Employment Lawyers at CMS understand this and empathize with the clients, utilizing their vast experience to strongly advocate for their clients and provide strategic legal advice to help them navigate through their complex legal issues. If you are in need of legal representation to assist you with an employment discrimination matter and/or are in need of the services of an experienced and well-versed New Jersey employment lawyer, please contact Curcio Mirzaian Sirot LLC.

Coming Soon: The New Jersey WARN Act Amendments Take Effect On April 10, 2023

On January 10, 2023, Governor Phil Murphy signed Assembly Bill No. 4768, which amends the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN Act”).  The amendments will take on April 10, 2023, which is 90 days from Governor Murphy’s signing of the bill.

The significant amendments to the NJ WARN Act include the following:

  • New Jersey employers with 100 employees will be covered by the law.  This includes both full-time and part-time employees.
  • 90 days-notice will be required for mass layoffs, termination of operations, or transfer of operations as defined under the NJ WARN Act.
  • Regardless of whether the requisite notice is provided, employers will be required to pay affected employees one-week of severance for each year worked. 
  • “Mass layoff” under the NJ WARN Act will mean a layoff that affects at least 50 employees at an establishment or reporting to an establishment in the State of New Jersey. 
  • In the event the requisite notice is not provided, employers will be required to pay four (4) weeks of severance.

The Amendments to the NJ WARN Act are extensive.  And, the penalties to employers are significant.  Accordingly, it is imperative that employers consult with legal counsel prior to implementing any action under these amendments.  If you have any questions about the new amendments to the NJ WARN Act, please contact Curcio Mirzaian Sirot LLC.

*    Frank A. Custode, Esq. is the Managing Partner and Chair of the Employment Practice at Curcio Mirzaian Sirot LLC. 

What Is A “Good Faith” Reduction In Force Under the New Jersey Law Against Discrimination?  

To establish a prima facie case under the New Jersey Law Against Discrimination, a plaintiff must demonstrate that (1) they are a member of a protected group; (2) they were performing the job at a level that met the employer’s legitimate expectations; (3) an adverse employment action was taken against the employee; and (4) the challenged decision took place under circumstances that give rise to unlawful discrimination.  See Williams v. Pemberton Twp. Pub. Schools, 323 N.J. Super. 490, 502 (App. Div. 1999).  If the employee establishes a prima facie case, the burden of production shifts to the employer to establish a legitimate non-discriminatory reason for the adverse employment action.  See Bergen Commercial Bank v. Sissler, 157 N.J. 188, 210 (1999).  If a non-discriminatory basis is shown, the plaintiff must establish, by a preponderance of the evidence, that the alleged justification is a pretext for discrimination.  See Zive v. Stanley Roberts, Inc., 182 N.J. 436, 449 (2005).  However, it is important to understand how New Jersey courts analyze the employer’s “legitimate non-discriminatory” explanation for the termination in the context of a reduction in force.

Indeed, among the factors that courts analyze when reviewing whether an employee’s termination is the result of a “good faith” reduction in force are as follows: (1) whether the business reasons for the reduction in force and the anticipated economic savings thereform were adequately documented; (2) the number of employees or percentage of the company’s work force affected by the reduction in force; (3) the existence of adequately documented selection criteria and procedures for implementation of the reduction in force; (4) whether reduction in force decisions were made on the basis of objective job related criteria and procedures or by reference to the individuals occupying the affected positions; (5) whether reduction in force decisions were based on fair and objective performance evaluations of the affected employees; and (6) whether there was any consideration of alternatives to laying off employees to achieve the economic savings anticipated from the reduction in force, such as shortened work weeks or work days, temporary shutdowns, voluntary reverse seniority layoffs with partial-pay, work-sharing, reductions in authorized overtime, salary freezes or reductions, hiring freezes and/or early retirement incentive programs.   See Leahey v. Singer Sewing, Co., 302 N.J Super. 68, 79-80 (Law Div. 1996).  

            Based on the foregoing, employers should consult with legal counsel prior to conducting a reduction in force.  Likewise, affected employees should consult with legal counsel if they are subject to a reduction in force.  If you have any questions about reductions in force and/or claims under the New Jersey Law Against Discrimination, please contact Curcio Mirzaian Sirot LLC. 

* Frank A. Custode, Esq. is the Managing Partner and Chair of the Employment Practice at Curcio Mirzaian Sirot LLC.

New York City Salary Transparency Law Now In Effect

Effective November 1, 2022, New York City employers must include a good faith salary range for every advertised job, promotion, and transfer opportunity.

Who Is Covered?  The law covers all employers with four or more employees or one or more domestic workers.  Employment agencies are also covered by the law.  Note, however, that the law does not apply to temporary help firms, which are defined by the New York City Commission on Human Rights (“NYCCHR”) as “businesses that recruit, hire, and assign their own employees to perform work or services for other organizations.” See New York City Commission on Human Rights May 12, 2022 Salary Transparency In Job Advertisements Fact Sheet. 

What is covered?  Any advertisement – which is defined by the NYCCHR as “a written description of an available job, promotion or transfer opportunity that is publicized to a pool of potential applicants”- for a job, promotion or transfer opportunity that would be performed in New York City is covered by the new law.  See id.  Note that the law applies to positions that would be “performed, in whole or in part, in New York City, whether from an office, in the field, or remotely from the employee’s home.”  See id.

What needs to be included in the job advertisements?  Employers are required to include the minimum and maximum salary “they in good faith believe at the time of the posting” in the job advertisements.  See id.  “Good faith” means “the salary range the employer honestly believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).” See id.

How is the law enforced?  The New York City Commission on Human Rights is the agency enforcing this law.  “Employers and employment agencies who are found to have violated the NYCHRL [New York City Human Rights Law] may have to pay monetary damages to affected employees, amend advertisements and postings, create or update policies, conduct training, provide notices of rights to employees or applicants, and engage in other forms of affirmative relief.”   

If you have any questions about the New York City Salary Transparency Law, please contact Curcio Mirzaian Sirot LLC.

* Frank A. Custode, Esq. is a Partner of Curcio Mirzaian Sirot and the Chair of the firm’s Employment Practice.

The New Jersey Supreme Court Finds That the Use of Two Offensive Slurs May Support a Hostile Work Environment Claim

In Rios, Jr. v. Meda Pharmaceutical, Inc., et al. (A-23-20) (08476) (June 16, 2021), the Supreme Court of New Jersey held that a supervisor’s use of two offensive slurs were sufficiently severe or pervasive enough to create a hostile work environment in violation of the New Jersey Law Against Discrimination (“LAD”).

In May 2015, Plaintiff Armondo Rios, Jr., a Hispanic male, commenced employment with Meda Pharmaceutical Inc. (“Meda”).  Mr. Rios’s direct supervisor was Tina Cheng-Avery.  Approximately one month after he commenced employment, Mr. Rios alleges that when he discussed his plan to buy a new house with Ms. Cheng-Avery, she responded with a derogatory comment about Hispanics, stating “it must be hard for a Sp** to have to get FHA loans.”  Then, in July 2015, Mr. Rios alleges that Ms. Cheng-Avery made another offensive remark about Hispanics in his presence, commenting that an actress auditioning for a Meda product commercial “would work if she didn’t look too Sp**ky.”  Mr. Rios further alleges that he reported each incident to Meda’s Director of Human Resources. In February 2016, Ms. Cheng-Avery placed Mr. Rios on probation for poor performance.  The next month, he was placed on a performance improvement plan and was terminated in June 2016.

Thereafter, Mr. Rios filed a lawsuit alleging, among other things, hostile work environment in violation of the LAD.  The trial court subsequently granted the Defendants’ motion for summary judgment, finding that no rational factfinder could conclude that Ms. Cheng-Avery’s comments were sufficiently severe or pervasive enough to create a hostile work environment.  The Appellate Division affirmed the trial court’s decision.  Mr. Rios subsequently filed a petition for certification with the New Jersey Supreme Court.  The key issue on appeal was whether the alleged slurs directed at Mr. Rios were sufficiently severe or pervasive enough for the claim to withstand summary judgment and proceed to trial.  The Supreme Court reversed and remanded, holding that the comments were severe enough to sustain a hostile work environment claim.

Specifically, the Supreme Court held that “Under all of the circumstances, a rational factfinder could have reasonably found from Rios’s evidence that the alleged slurs directed at him were sufficiently severe to create a hostile work environment.  He should therefore be allowed to present his claim to a jury.”  In so holding, the Court found that “the two comments Cheng-Avery allegedly made were highly offensive and demeaning slurs from the perspective of an objectively reasonable Hispanic person.”  The Court further found that “Cheng-Avery’s position as a supervisor compounded the severity of the alleged remarks” and relied on Mr. Rios’s contention that he reported the alleged slurs in accord with company policy.  Accordingly, the Court found that “the conduct he alleges presents sufficient evidence of severity to create a genuine issue of material fact and call for a trial on the merits.”

This is an important victory for employees in the State of New Jersey because it reiterates that even a few highly offensive and demeaning slurs may constitute a hostile work environment in violation of the LAD.   If you have any questions about hostile work environment claims, please do not hesitate to contact Curcio Mirzaian Sirot LLC.

Biden administration’s new executive order combats discrimination based on gender identity and sexual orientation

On January 20, 2021, President Biden issued Executive Order 13988 (“EO 13988”) which expands the prohibition of discrimination based on gender identity and/or sexual orientation.  In so doing, EO13988 relies on the 2020 United States Supreme Court decision of Bostock v. Clayton County, which holds that discrimination “because of . . . sex” under Title VII of the Civil Rights Act of 1964 “covers discrimination on the basis of gender identity and sexual orientation.”   Thus, based on the reasoning set forth in Bostock, laws that prohibit sex discrimination also prohibit “discrimination on the basis of gender identity or sexual orientation, so long as the laws do not contain sufficient indications to the contrary.”

EEO 13988 further states that it is the policy of the Biden Administration “to prevent and combat discrimination on the basis of gender identity or sexual orientation, and to fully enforce Title VII and other laws that prohibit discrimination on the basis of gender identity or sexual orientation” and “to address overlapping forms of discrimination.”  As such, most significantly, EO 13988 requires the heads of all federal agencies to “as soon as practicable and as appropriate and consistent with applicable law . . . consider whether to revise, suspend or rescind such agency actions, or promulgate new agency actions, as necessary to fully implement statutes that prohibit sex discrimination” and for the heads of all federal agencies to “as soon as practicable, also consider whether there are additional actions that the agency should take to ensure that it is fully implementing the policy” set forth in EO 13988.  Furthermore, EEO 13988 requires each agency head to consult with the Attorney General within 100 days of the date of the Order regarding “a plan to carry out actions that the agency has identified . . . as appropriate and consistent with applicable law.”

This is an important victory and an expansion of rights for those suffering from workplace discrimination due to gender identity and/or sexual orientation.  If you have any questions about EO 13988 and/or have any questions about workplace discrimination and/or harassment, please do not hesitate to contact Curcio Mirzaian Sirot LLC.

* Frank A. Custode, Esq. is a Partner and Chair of the Employment Practice at Curcio Mirzaian Sirot LLC.

EEOC Issues Guidelines Regarding COVID-19 Vaccination of Employees

On December 16, 2020, the United States Equal Employment Opportunity Commission (“EEOC”) published revised guidelines regarding COVID-19 vaccination for employees.  While the guidelines permit vaccination of employees, there are significant legal issues about which employers should be aware and many potential pitfalls.  Here are some key takeaways:

  • Employers need to be mindful of pre-screening vaccination questions. EEOC guidance indicates that administration of the COVID-19 vaccine itself is not a “medical examination” which violates the Americans with Disabilities Act (“ADA”). However, employers need to be mindful of pre-screening vaccination questions that may elicit information about any employee disability-related issues.  Indeed, employers are limited to pre-screening questions that are “job-related and consistent with business necessity” meaning that “an employer would need to have a reasonable belief, based on objective evidence, that an employee who does not answer the questions and, therefore, does not receive the vaccination, will pose a direct threat to the health or safety of her or himself or others.”  Exceptions to this requirement are when (1) the employee voluntarily chooses to get the vaccine; or (2) the employee gets the vaccine “from a third party that does not have a contract with the employer, such as a pharmacy or other healthcare provider.” 
  • Confidentiality and Health Insurance Portability and Accountability Act (“HIPPA”) Compliance. Employers need to maintain confidentiality about any medical information learned about their employees and should be mindful of compliance with HIPPA.
  • Employers may require proof of vaccination. Employers may require proof that their employees received the COVID-19 vaccine without violating civil rights laws or the ADA.
  • Disability-Related Concerns of Employees. If an employee declines vaccination due to disability-related concerns, an employer may prohibit an unvaccinated employee from the workplace if the employer can demonstrate the employee “would pose a direct threat due to a ‘significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.’”  This analysis is conducted on an individualized case-by-case basis utilizing the following factors: “the duration of the risk; the nature and severity of the potential harm; the likelihood that the potential harm will occur; and the imminence of the potential harm.”
  • Religious-Related Concerns by Employees.  If an employer requires COVID-19 vaccination, the employer must provide reasonable accommodations to employees who are unable to receive the vaccine due to a “sincerely held religious belief, practice or observance,” unless providing such accommodations would pose an undue hardship under Title VII of the Civil Rights Act.

We expect that legal guidance regarding COVID-19 vaccination will continue to be fluid as the vaccination becomes more readily available and anticipate that the EEOC will provide additional guidance in the upcoming months pertaining to COVID-19-related employment law issues.  If you are experiencing issues in the workplace due to COVID-19 and/or need guidance on how to navigate COVID-19-related employment law issues, please do not hesitate to contact Curcio Mirzaian Sirot LLC.

* Frank A. Custode, Esq. is a Partner and Chair of the Employment Practice Group at Curcio Mirzaian Sirot LLC.

 

State of New Jersey Executive Order No. 192 Requires COVID-19 Workplace Safety Protocols

Effective November 5, 2020, Executive Order No. 192 is in effect, requiring New Jersey employers to implement certain workplace safety protocols.  This is the State’s latest effort to increase workplace safety for employees. Specifically, Executive Order No. 192 requires the following protocols:

  • Individuals “at the worksite maintain at least six feet of distance from one another to the maximum extent possible;”
  • “Employees, customers, visitors, and other individuals entering the worksite to wear cloth or disposable face masks while on the premises, in accordance with [CDC] recommendations” (although employees may “remove face masks when the employees are situated at their workstations and are more than six feet from other individuals at the workplace, or when an individual is alone in a walled office”);
  • Employers must “provide sanitization materials, such as hand sanitizer that contains at least 60% alcohol and sanitizing wipes;”
  • Ensure that employees “practice regular hand hygiene;”
  • “Routinely clean and disinfect all high-touch areas in accordance with DOH [Department of Health] and CDC guidelines;”
  • “Conduct daily health checks of employees, such as temperature screenings, visual symptom checking, self-assessment checklists, and/or health questionnaires, consistent with CDC guidance;”
  • “Immediately separate and send home employees who appear to have symptoms, as defined by the CDC, consistent with COVID-19 illness upon arrival at work or who become sick during the day;”
  • “Promptly notify all employees of any known exposure to COVID-19 at the worksite” consistent with confidentiality requirements under the Americans with Disabilities Act and Equal Employment Opportunity Commission guidance;
  • “Clean and disinfect the worksite in accordance with CDC guidelines when an employee at the site has been diagnosed with COVID-19 illness;” and
  • “Continue to follow guidelines and directives issued by the New Jersey DOH, the CDC and the Occupational Safety and Health Administration.”

Note that the Order authorizes the New Jersey Department of Labor and Workforce Development (“DOLWD”) to enforce the requirements set forth therein.  Specifically, the DOL is required to “establish an intake mechanism to receive complaints” from employees, create “a process for consideration of such complaints” and coordinate with the “Commissioner of the DOH and any other applicable State entity to establish a process to address such complaints.”  Note the Order further authorizes the DOLWD to “provide compliance and safety training for employers and employees.”

Moreover, note that the Order states that “penalties may be imposed” against employers for failure to comply with the Order and that failure to comply may result in “closure by the Commissioner of the DOH.”   Lastly, while no private right of action exists under the Order, employers may be susceptible to claims under the New Jersey Conscientious Employee Protection Act (“CEPA”) for taking adverse employment action against employees who avail themselves to the protections under the Order.

*  Frank A. Custode is a Partner at Curcio Mirzaian Sirot LLC and the Chair of the Firm’s Employment practice.