New Jersey Termination Laws

July 10th 2024

In New Jersey, termination laws govern the conditions under which an employee can be terminated, ensuring that dismissals are conducted fairly and legally. Understanding New Jersey termination laws is essential for both employers and employees to conduct the process properly and mitigate potential disputes.

This article explores the various aspects of termination laws in New Jersey, providing a comprehensive overview of employee rights and employer responsibilities.

This Guide Covers

Legal Considerations for Termination in New Jersey
“At-Will” Employment in New Jersey
Lawful Termination in New Jersey
Legal Protections During Termination in New Jersey
Terminated Employee Benefits in New Jersey
Layoffs in New Jersey
Resignations in New Jersey
Legal Cases Related to Wrongful Termination in New Jersey

Legal Considerations for Termination in New Jersey

In New Jersey, there are important legal considerations for termination before terminating an employee, these include:

  • Discrimination: Employers cannot terminate employees based on race, gender, age, religion, national origin, disability, or other protected characteristics under state and federal laws.
  • Retaliation: Employees cannot be fired for engaging in protected activities, such as filing a complaint about discrimination or harassment.
  • Whistleblowing: Termination in retaliation for reporting illegal activities or safety violations is prohibited under the Conscientious Employee Protection Act (CEPA).
  • Public Policy Violations: Employees cannot be terminated for reasons that violate public policy, such as refusing to engage in illegal activities.
  • Contracts: If there is an employment contract or collective bargaining agreement, with a clause relating to termination, the terms of the contract must be followed.
  • Notice: While “at-will” employment does not require notice, the Worker Adjustment and Retraining Notification (WARN) Act may require advance notice for mass layoffs or plant closures.

“At-Will” Employment in New Jersey

What is “At-Will” Employment?

“At-will” employment is a legal doctrine that means either the employer or employee can terminate the employment relationship at any time, for any reason, or no reason at all, without prior notice, as long as the reason is not illegal (e.g., discrimination or retaliation).

What are the Exceptions to “At-Will” Employment in New Jersey?

In New Jersey, exceptions to “at-will” employment include:

  • Public Policy: Employees cannot be fired for reasons that violate public policy, such as refusing to participate in illegal acts.
  • Employment Contracts: If an employee has an individual employment contract or is covered by a collective bargaining agreement, stating terms for termination, the terms of that contract must be followed.
  • Implied Employment Contracts: In some cases, company policies, employee handbooks, or verbal assurances may create an implied contract that limits “at-will” termination.
  • Covenant of Good Faith and Fair Dealing: This implies that employers should not terminate employees in bad faith or with malice. This means that employers must act in good faith and deal fairly with their employees, even in the absence of an explicit contract. Terminations must not violate this implied covenant.
  • Restrictive Covenants: Restrictive covenants, such as non-compete and non-disclosure agreements, are enforceable in New Jersey if they protect legitimate business interests like trade secrets and are disclosed in writing to employees before or promptly upon hiring. They can restrict competitive activities for up to 12 months after employment ends and must be reasonable in scope, geography, and the specific activities restricted. Exceptions include certain categories of employees like nonexempt workers, interns, and those terminated without misconduct. Employees must be notified in writing within 10 days of termination for these agreements to remain enforceable, and they can seek legal remedies if these terms are violated.

Employment Under Contract in New Jersey

Employment under contract in New Jersey involves specific terms agreed upon by both the employer and the employee. Key aspects include:

  • Written Agreement: Employment contracts detail the terms of employment, including salary, benefits, job responsibilities, and duration of employment.
  • Breach of Contract: If either party fails to adhere to the terms, it may constitute a breach, leading to potential legal action.
  • Termination Provisions: Contracts often include conditions under which employment can be terminated, such as for cause, without cause, or due to specific circumstances.
  • Non-Compete and Non-Disclosure Agreements: Contracts may contain clauses that restrict employees from working with competitors or sharing confidential information after employment ends.
  • Negotiation and Modification: Terms can be negotiated at the outset and modified with mutual consent during the employment period.
  • Dispute Resolution: Contracts may specify mechanisms for resolving disputes, such as arbitration or mediation rather than litigation.

Lawful Termination in New Jersey

Legal Grounds for Termination in New Jersey

In New Jersey, legal grounds for termination include:

  • Performance Issues: Employees can be terminated for consistently failing to meet job performance standards or objectives. Employers should document performance reviews and any improvement plans.
  • Misconduct: This includes violations of workplace policies, such as harassment, theft, and insubordination. Employers should investigate incidents thoroughly and maintain records of disciplinary actions.
  • Reductions in Force: Terminations due to business needs, such as downsizing or economic reasons, are permissible. Employers should follow applicable laws, such as the WARN Act, which may require notice for plant closures and mass layoffs.
  • Violation of Employment Contract: If an employee breaches the terms of their employment contract, such as confidentiality agreements or observing job duties, they can be terminated based on those violations.
  • Illegal Activity: Engaging in illegal activities, whether at or outside of work, can be grounds for termination, especially if it affects the employer’s business or reputation.

Read our comprehensive guide to firing employees in New Jersey for further information.

How Do I File a Wrongful Termination Claim in New Jersey?

To file a wrongful termination claim in New Jersey, you must gather all relevant documents and any correspondence related to your termination. Depending on the nature of your claim (e.g., discrimination or retaliation), you may need to file a complaint with the U.S. Equal Employment Opportunity Commission (EEOC) or the New Jersey Division on Civil Rights (DCR) under the New Jersey Office of Attorney General (previously had been housed in the New Jersey Department of Education as the “Divison Against Discrimination“).

These agencies will investigate your claim and may attempt mediation or settlement before deciding if there is enough evidence to proceed. If necessary, and if the agency issues a right-to-sue letter, your employment attorney can file a lawsuit in the appropriate court.

Legal Protections During Termination in New Jersey

  • New Jersey Law Against Discrimination (LAD): The New Jersey Law Against Discrimination prohibits discrimination in employment housing and public accommodations based on various protected characteristics, including race, gender, age, and disability. It aims to promote equal opportunities and eliminate bias in the workplace.
  • Whistleblower Law: Known as the New Jersey Conscientious Employee Protection (CEPA) Act, this law protects employees from retaliation for reporting illegal or unethical conduct by their employer. It encourages a safe and transparent work environment by allowing employees to disclose violations without fear of losing their jobs. Employees are protected when reporting internally or to external agencies.
  • New Jersey Business Closing/Mass Layoff Notification Law (NJ WARN): Known as Millville Dallas Airmotive Plant Job Loss Notification Act, this act requires employers to provide advance notice of mass layoffs or plant closures affecting 50 or more employees. It extends the federal WARN Act by mandating a 90-day notice period. Employers who fail to comply must provide severance pay to affected employees.
  • Labor and Workmen’s Compensation Law: Under New Jersey Statute Section 34:11:3, employers are mandated to provide the employee’s final wages on the next regular payday after termination. The final paycheck must include accrued and unused vacation leave.
  • Fair Labor Standards Act (FLSA): The Fair Labor Standards Act (FLSA) requires employers to promptly pay terminated employees their final wages, including any owed overtime, within the timeframe specified by state law. This ensures compliance with minimum wage and overtime pay requirements up until the termination date. While the FLSA primarily focuses on wage and hour standards rather than termination procedures, it mandates accurate record-keeping of hours worked and wages paid, which is essential for documenting termination terms. Employers must adhere to these regulations to avoid potential disputes or legal issues related to wage payments during employee terminations.
  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, and national origin. It applies to employers with 15 or more employees and covers various aspects of employment, including recruitment, workplace conditions, and termination. Title VII also addresses sexual harassment and requires employers to prevent and address discriminatory practices.
  • Age Discrimination in Employment Act (ADEA): The Age Discrimination in Employment Act (ADEA) protects employees aged 40 and older from age-based discrimination, ensuring that termination decisions cannot be based solely on age. Employers covered under ADEA must consider qualifications and performance rather than age when making termination decisions.
  • Americans with Disabilities Act (ADA): The Americans with Disabilities Act (ADA) prohibits discrimination against individuals with disabilities in employment, including termination decisions. Employers must provide reasonable accommodations to qualified individuals with disabilities, ensuring fair treatment in all aspects of employment, including termination processes.
  • Family and Medical Leave Act (FMLA): The Family and Medical Leave Act (FMLA) allows eligible employees to take unpaid, job-protected leave for specified family and medical reasons, without fear of being terminated. Covered employers must provide up to 12 weeks of leave for events such as the birth of a child, serious health conditions, or caring for a family member.
  • Occupational Safety and Health Act (OSHA): The Occupational Safety and Health Act (OSHA) ensures safe and healthy working conditions for employees by setting and enforcing standards. This federal law ensures that employees can report hazardous conditions without fear of termination.
  • Worker Adjustment and Retraining Notification (WARN) Act: The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide 60 days’ notice in advance of mass layoffs or plant closures. It applies to employers with 100 or more full-time employees and covers certain employment losses. The act aims to provide workers and their families with time to prepare for potential unemployment and seek new jobs or training.

Terminated Employee Benefits in New Jersey

In New Jersey, terminated employees may have access to the following benefits:

  • Unemployment Benefits: Employees laid off or terminated without cause may qualify for unemployment insurance, providing temporary financial assistance as they seek new employment. Eligibility, contingent upon meeting criteria like sufficient earnings history and actively seeking work, requires application through the New Jersey Division of Unemployment Insurance under the jurisdiction of the New Jersey Department of Labor and Workforce Development.
  • Health Insurance Continuation: Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) and New Jersey continuation laws, eligible employees can continue their employer-sponsored health insurance after termination. This allows them to maintain coverage by paying the full premium, plus a small administrative fee.
  • Severance Pay: Under New Jersey’s WARN Act, employers are required to provide severance pay for affected employees if the employer does not comply with the notice requirement.

Layoffs in New Jersey

Worker Adjustment and Retraining Notification (WARN) Act is the federal law that requires employers with 100 or more full-time employees to provide 60 days’ notice before mass layoffs or plant closures, aiming to assist workers and their families in preparing for job loss by allowing time to seek new employment or training. The federal WARN Act precedes the commonly known as the New Jersey WARN Act (Millville Dallas Airmotive Plant Job Loss Notification Act), which is a state-level version addressing similar requirements related to layoffs and plant closures.

In New Jersey, both the federal WARN Act and state law govern layoffs, offering protections for workers during layoffs and plant closures. They mandate notice for mass layoffs or plant closures when 50 or more employees are affected at a single site.

Here are key points of comparison between the federal WARN Act and the New Jersey WARN Act:

  • Coverage: The federal WARN Act applies to employers with 100 or more full-time employees, while the New Jersey WARN Act covers employers with 100 or more employees, including part-time workers.
  • Notice Period: The federal law mandates a 60-day notice period, whereas the New Jersey law requires a longer 90-day notice period.
  • Severance Pay: Under New Jersey’s WARN Act, employers are required to provide severance pay for affected employees if they fail to comply with the notice requirement. This requirement is not present in the federal WARN Act.

Both laws impose penalties for non-compliance, including back pay and benefits for each day of violation. However, New Jersey imposes additional penalties, such as mandatory severance pay, for failure to comply with the notice requirement.

Resignations in New Jersey

Voluntary Resignations

Voluntary resignations occur when an employee chooses to terminate their employment voluntarily without external pressure from the employer. Although it is not legally required, employees are expected to provide advance notice of their resignation, this may also be stipulated in their company policy or employment contract terms. While there is no specific minimum notice period for voluntary resignations in New Jersey, providing at least two week’s notice is considered customary and professional.

Employers must pay employees their final paycheck, including payment for all hours worked and any accrued vacation time, on or before the next regular payday following the resignation date.

Involuntary Resignations

Involuntary resignations occur when an employee feels compelled to resign due to intolerable working conditions or pressure from the employer, sometimes referred to as constructive dismissal. In these cases, the resignation is not entirely voluntary, as the work environment or employer actions effectively force the employee to leave. Employees who believe they have involuntarily resigned may have grounds for legal action if they can demonstrate that their working conditions violated laws or public policy.

Legal Cases Related to Wrongful Termination in New Jersey

1. Former Wentworth Property Management Employees Awarded $2.5 Million in Racial Discrimination and Retaliatory Termination Case

In the case of Cuevas v. Wentworth Group, brothers Jeffrey and Ramon, former employees of Wentworth Property Management, claimed they experienced racial discrimination and a hostile work environment under their supervisor. They reported being subjected to degrading remarks during senior meetings and were terminated shortly after Jeffrey filed a complaint. The brothers sued under the New Jersey Law Against Discrimination (LAD), alleging race-based discrimination, a hostile work environment, and retaliatory firing. The jury ruled in favor of Jeffrey and Ramon, awarding $2.5 million in damages, including $800,000 for Ramon’s emotional distress and $600,000 for Jeffrey’s. The trial court upheld the verdict, which was affirmed by both the Appellate Division and the Supreme Court. The trial court upheld the verdict, and the Appellate Division and the Supreme Court affirmed the judgment.

Key lessons learned from this case:
  • The case highlights the severe consequences for employers when a hostile work environment is proven, especially when racial discrimination is involved.
  • Significant awards for emotional distress signal the court’s recognition of the impact of a hostile work environment on employees’ mental health.
  • The case underscores the importance of handling complaints of discrimination appropriately, as retaliatory firings can lead to substantial liability.
  • Juries can and do play an important role in discrimination cases, leading to significant financial penalties for employers who violate anti-discrimination laws.

2. Former Rite Aid Employee Awarded $1,161,887.97 in Unfair Termination Case

According to the case, Hansen v. Rite Aid Corp, Harold Hansen, a former employee sued the American drugstore, Rite Aid, after his termination due to alleged age, sexual orientation, and gender discrimination under the New Jersey Law Against Discrimination (LAD). After three trials, the jury ruled in favor of Hansen on the sexual orientation discrimination claim, awarding him $420,500 in compensatory and punitive damages. Hansen sought over $5 million in attorney’s fees and costs, but the trial court awarded him $741,387.97 after adjusting the hourly rates and reducing the lodestar, which refers to the base calculation of attorney’s fees, due to his limited success and other factors, to his limited success and other factors. Therefore, the total amount awarded to Hansen was $1,161,887.97. The Appellate Division and the New Jersey Supreme Court upheld the trial court’s decision on the fees.

Key lessons learned from this case:
  • This case highlights the protections under the New Jersey LAD against discrimination based on sexual orientation, emphasizing that such claims can result in significant damages.
  • The case underscores courts’ broad discretion in determining reasonable fees and costs, balancing fairness to both parties.

Learn more about New Jersey Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.