Current Issues In New Jersey Employment Law

Thursday, January 1, 2004 - 00:00

Settlement Does Not Prevent Employee From Seeking Discovery In Subsequent Case

When an employer settles a lawsuit with a former employee, the employer almost always obtains a general release from the former employee. The purpose in obtaining such a release is to buy peace - or at least that is the intention of the employer. A recent decision, however, demonstrates that a former employee may be permitted to obtain discovery in a later lawsuit concerning events that happened prior to the settlement of the first lawsuit.

The plaintiff in both lawsuits, a retired policeman who had worked for an Essex County municipality, had initially filed a whistleblower claim against the town and the police department. In that first lawsuit, he alleged that he had been subjected to harassment by fellow officers in retaliation for his raising objections to unlawful acts committed by various municipal officials. The policeman and the department settled that first lawsuit. In connection with the settlement, the policeman gave the department a general release of "all claims, rights, actions and causes of action of any kind" preceding the date of the release.

Some time after the settlement of the first case, the policeman filed a second lawsuit against the department, this time claiming that his fellow officers had harassed him because of his having obtained a favorable settlement in the first lawsuit. But when the plaintiff's attorneys tried to obtain discovery from the police department in the second lawsuit, the department refused to provide discovery concerning anything that happened prior to the date of the settlement of the first lawsuit. The trial court judge agreed with the police department that such discovery was barred by the release that the parties had entered into in settling the first lawsuit, and entered an order prohibiting any such discovery.

The appellate court reversed that decision. In a November 2003 opinion, the appellate court noted that the release, while expressly extinguishing any claims that arose prior to the date of its entry, did not expressly contain a waiver of discovery. The appellate court went on to hold that the general language of the release concerning a waiver of "rights" was insufficient to support the police department's argument that its former officer has implicitly waived his right to take discovery of any pre-settlement events in connection with a retaliation claim that arose after the settlement.

Conclusion

Retaliation claims are on the rise. In many recent cases, courts have ruled in favor of the employer on the underlying discrimination claim, but nonetheless ruled in favor of the employee on the related retaliation claim, finding that the employer responded inappropriately to the employee's complaint. Therefore, you need to take extraordinary care in investigating and responding to an employee's claim, regardless of whether you think it is meritorious. Experienced employment counsel can guide you in responding appropriately to an employee complaint, thereby preventing your post-complaint conduct from giving rise to a retaliation claim from the employee.

Also, this case highlights the importance of a properly drafted settlement agreement. The employer could have succeeded in avoiding discovery of pre-settlement events if the settlement agreement in the first lawsuit had included a clause expressly waiving such discovery. When negotiating a severance or settlement agreement with an employee, whether in litigation or otherwise, be sure to get the input of experienced employment counsel in order to make certain the agreement accurately reflects the entire understanding.

Social Security Disability Benefits And Disability Discrimination

A former employee who told the Social Security Administration that he is totally disabled in order to obtain disability benefits cannot then argue that he is "qualified" for his job as part of a disability discrimination claim.

The federal appeals court with jurisdiction over New Jersey held in October 2003 that the former employee cannot take two contrary positions. The court therefore concluded that a manufacturing employee's disability discrimination claim was properly dismissed under those circumstances. There may be circumstances, the court explained, in which the employee is indeed "disabled" within the meaning of the Social Security law, and yet also "qualified" within the meaning of the disability discrimination statutes. But where the employee fails to reconcile these two seemingly contradictory positions, his discrimination claim will be dismissed.

Conclusion

When a former employee threatens your company with a claim of disability discrimination, your legal counsel should immediately investigate whether the former employee made statements about his alleged disability, either to the Social Security Administration or to anyone else that would contradict his argument that he is able to perform all the essential tasks of his job.

Handicap Discrimination: The Role Of Expert Testimony

When a former employee sues on a claim of handicap discrimination, and the handicap is not apparent to a layman, the employee's claim will be dismissed if he does not support it with competent expert testimony.

A former employee of a hospital claimed that she suffered from "Chemical Sensitivity Syndrome." She argued that the hospital was required under the N.J. Law Against Discrimination to provide her with a "reasonable accommodation" for her alleged handicap. When her attorney offered the testimony of her expert witness, however, the court disallowed the testimony, finding that it was not based on reliable, scientific knowledge. And without an expert to prove the existence of her handicap and the feasibility of the hospital accommodating it, the former employee did not have a sufficient case to go forward to trial. The court therefore dismissed her case in October 2003.

Conclusion

Some employee handicaps are obvious, and your company must accommodate those handicaps if reasonably possible. But if you doubt an employee's alleged handicap, have experienced employment counsel investigate the matter further. You are not required to accommodate an alleged handicap that cannot be proven by appropriate expert testimony.

Unemployment Compensation: Resignation vs. "Good Cause Attributable To Work"

When an employee chooses to resign, and the employer has not breached the employment agreement, the employee is not entitled to unemployment compensation.

To qualify for unemployment benefits, the departing employee must demonstrate either that he was terminated, or that he left voluntarily for "good cause attributable to the work." In a recent case, the former employee had initially worked on a salaried basis, but was later switched to a commission basis. When she had a "dry period" during which she received no commissions, she resigned. A New Jersey appellate court concluded in an October 2003 decision that the employer had not breached the terms of her employment agreement; therefore, there was no "good cause attributable to the work" that would justify the employee's voluntary decision to resign. The court therefore agreed with the board that she was not entitled to unemployment compensation.

Conclusion

It does not necessarily matter that the employee's decision to resign may be understandable. Nor does it necessarily matter whether there was any fault on the part of the employee. In determining whether the former employee is entitled to unemployment benefits, you and your employment counsel need to determine whether the employee resigned for "good cause attributable to the work." If your company did not breach the employment terms, then there is no "good cause," and therefore no entitlement to benefits.

C.E.P.A.: Only A True Whistleblower Is Protected

A former employee who sues under New Jersey's "whistleblower" law has no protection unless he can first show that he in fact blew the whistle on unlawful or improper activities in which he was asked to participate.

The presiding judge in a New Jersey court lost confidence in one of his court clerks, and fired him. The former clerk sued under the state's Conscientious Employee Protection Act ("C.E.P.A.,") claiming he was fired in retaliation for his blowing the whistle about problems with the court's system of assigning cases of indigent parties to attorneys.

A New Jersey appellate court recently agreed that the trial court acted properly in dismissing the case. The clerk had not in fact "blown the whistle" in any way, but rather had simply observed the problem in the court's procedures. Also, the court never asked the clerk to become involved in furthering any improper practices, and so on that basis as well the clerk was not a true "whistleblower" entitled to protection under the Act.

Conclusion

Whistleblower claims are among the most complex discrimination cases, requiring a painstaking analysis of, among other things, the purportedly improper acts of the employer and the whistleblowing activities of the employee. In this case, the employer was able to defeat the former employee's whistleblower claim by showing that it responded properly upon discovering of the improper activity. In addition, the employer was able to offer evidence that it terminated the employee not for retaliatory motives but rather because of a genuine lack of confidence in his work.

Sean R. Kelly is a Partner in the Employment Law Practice Group of Saiber Schlesinger Satz & Goldstein, LLC. He has more than 24 years experience advising and defending employers. A graduate of Yale College and the Georgetown University Law Center, he is a Master of the Sidney Reitman Employment Law Inn of Court and is Certified by the New Jersey Supreme Court as a Civil Trial Attorney. For additional information write to srk@saiber.com.