New Jersey Employment Lawyer Blog

When Zynga, the social network game developer known for addictive games such as Farmville, Cityville, and Mafia Wars, initially started, they attracted talented employees with company stock in lieu of a higher salary. Last year, while Zynga prepared for an initial public offering, the company realized that too much stock had been given out to earlier employees. As a result, Zynga executives decided to give some employees an ultimatum—either give back unvested stock or lose their job.

In deciding which employees were required to give back stock, Zynga evaluated whose contributions did not justify a potential cash “windfall” from the unvested stocks when the company went public. Unsurprisingly, the few employees asked to give back unvested stock were not happy. Some employees have decided to fight back with the assistance of lawyers and may be trying to settle the issue. It is unclear what specific agreement Zynga had with its employees when the company first started. Veteran employees of Zynga may now be regretting not negotiating a higher salary with Zynga instead of agreeing to the stock options. On the other hand, Zynga is well within its rights to fire employees they do not believe are performing well, in which case the employees would lose the unvested stocks anyway.

When employers do not give out high salaries and offer other types of incentives instead (such as stock options), employees should be mindful that while stock options may be lucrative for successful startup companies, they come with a risk. Lawyers and executives in Silicon Valley comment that taking back unvested stock from employees of internet startups is not a common practice, however they believe the practice has potential to become widespread.

Capital One Financial Corporation is suing former North Fork Bank executives, John Kanas and John Bohlsen, for the alleged breach of the non-compete agreements they signed with Capital One as part of Capital One’s purchase of North Fork in 2006. At issue in this case is a non-compete clause in the separation agreements the executives signed in mid-2007. The agreements stated that the two were prohibited from competing with Capital One as directors, stockholders, investors, employees, or in any other capacity in New York, New Jersey and Connecticut through August 2012. The executives had personally received more than $100 million each as part of the Capital One/North Fork merger and as compensation for agreeing to the non-compete.

After Kanas and Bohlsen left Capital One, they were members of a group of investors that purchased BankUnited, which operates in Florida. Clearly their involvement with BankUnited was not impermissible under their non-compete agreement with Capital One. The problem in this case arose when BankUnited signed an agreement to purchase Herald National Bank, a bank with offices in New York. Capital One claims, in their lawsuit, that the executives are violating their non-compete agreements by seeking to enter the New York market in direct competition with Capital One.

Mr. Kanas has issued a public statement re-asserting BankUnited’s planned acquisition of Herald Bank and that the acquisition will not cause him or Mr. Bohlsen to be in breach with their non-compete obligations with Capital One.

The issues in this case, as with most cases involving post-termination non-compete restrictions are complicated. We suggest that both the executives required to sign these agreements, as well as the companies who would like to enforce these agreements, consult a reputable employment law attorney to determine if the contract is reasonable and enforceable.

Peri Software Solutions, Inc., a Newark-based computer consulting company, has agreed to pay more than $765,00 in back wages and penalties to workers for violating provisions of the Immigration and Nationality Act, the U.S. Labor Department announced today. The company was investigated by the Department of Labor for alleged violations of the H1-B visa program -- a program that allows qualified foreign-born workers to take employment in the United States so long as they are paid the same as American workers. The Labor Department alleged that Peri Software had improperly compensated its H1-B employees and not displayed the appropriate documentation in its offices.

According to the Labor Department, the company will pay nearly $640,000 in back wages and interest for 67 employees under this program. The company must also pay nearly $127,000 in penalties for failing to provide notice of the filing of labor condition applications in the offices where the employees worked. Peri Software is also prohibited from participating in the H-1B program for one year.

This firm has handled dozens of similar cases on behalf of H1-B workers. The modus operandi of companies like Peri Software is to recruit overseas workers with promises of great pay and job stability. Then, when the employee leaves his homeland and moves to the United States, he finds out that the pay is much less and the job stability is zero. At that point, however, the employee has already signed an onerous contract which greatly restricts his ability to find new employment. When the employee moves to a new job, the company files a lawsuit against him. These practices are despicable and I am very glad that the Department of Labor has come through with a big win. Hopefully, other New Jersey consulting firms take notice and begin to bring their practices in line with the law.

The U.S. Department of Labor is seeking $1.9 million for alleged abuses of the H1-B visa program by Peri Software Solutions, Inc., a Newark, NJ consulting house. According to the DOL press release, Peri Software and its president, Sarib Perisamya, allegedly owe over $1.4 million in back wages to foreign workers.

The DOL's investigation found that the Newark company forced its H1-B employees to sign employment contracts, failed to pay the workers the required prevailing wage, and then sued the employees who left the company after their contracts were broken. The DOL assessed a $439,000 civil penalty against Peri Software "due to the willful nature of the violations." In addition to the civil penalty and back wage assessment, the company is facing a 2 year debarment from the H1 program.

I have seen many similar cases in my law practice. Consulting firms, many of whom are not properly registered as employment agencies, lure workers to the United States with promises of long-term employment and stability. When the workers arrive here, however, the employers require them to sign unfair and totally one-sided employment contracts. In some cases, workers are required to remain with the same company for 18 months or more. Then, when these employees are forced to quit due to unpaid bench time or other issues, the companies sue them.

If you are an H1-B employee who is being benched without pay, or otherwise not being paid properly, you may have legal recourse to get the money you are owed. You may also have grounds to terminate your contract. Before you move to your next employer, however, you should seek legal advice from a knowledgeable New Jersey employment attorney.

According to the New Jersey Department of Labor, employers in New Jersey continued to trim payrolls in December as the state’s unemployment rate climbed to a 33-year high of 10.1 percent. Overall the state lost approximately 2000 jobs in December. The largest job losses were in the manufacturing, construction, and financial services sectors. Some sectors, such as transportation, professional services, and information technology saw modest gains.

There is no question that many employees in New Jersey who are currently employed are at risk for downsizing in the near future. If you have been offered a severance package or will be offered one in the next few months, please consult with an experienced NJ employment lawyer to review your legal options.

I represent six former employees who have filed counterclaims against Xcel Solutions Corporation, a Matawan, New Jersey based consulting company, alleging that Xcel breached their employment contracts by failing to pay them wages, “bench pay,” bonuses, and other monies. The employees, who are computer professionals living and working in the United States pursuant to the H1-B visa program, were taken to court by Xcel after they resigned. Xcel has alleged, in the separately-filed lawsuits, entitled Xcel Solutions Corporation v. Tan (Docket No. MID-L-3604-08), Anaque (Docket No. MID-L-8372-08), Sebastian (Docket No. MID-L-4467-08), Wingpo (Docket No. MID-L-10300-08), Gayacao (Docket No. MID-L-3603-08), and Yap (Docket No. MID-L-7882-08), that the employees breached their employment contracts. According to the Counterclaims we filed on behalf of the six employees, however, Xcel violated the contracts first, by either failing to properly compensate for “bench” time, failing to pay wages when due, failing to pay promised bonuses, failing to pay overtime, and/or failing to reimburse for expenses. The employees are seeking dismissal of Xcel’s claims and payment of the monies they claim Xcel owes them.

My clients are good, hardworking people who have come to the U.S. to work and build a future for themselves and their families. I admire them for their courage in fighting these lawsuits and striking back against Xcel to recover the monies they feel they are owed.

Unemployment rates in New Jersey continued to rise in March, according to a recent press release from the Department of Labor. March was the 14th consecutive month of job losses in the State. The biggest losses occurred in the leisure and hospitality, professional and business services, manufacturing, and trade, transportation and utilities sectors.

Personally, I don't need another press release from the State telling me how awful things are out there right now. I hear it every day from the good people who contact me for help. Unfortunately, it appears that many employers are using "the economy" as an excuse to get rid of employees they don't like. And a few of those employers don't like people who are the wrong color, age, religion, or who come from the wrong countries. If you have been terminated recently, give some thought to the reason why your employer chose you instead of your coworker. If you need further advice on this subject, don't hesitate to contact a competent NJ employment lawyer, and please do not sign anything until you have a lawyer look at it.

A recent case from the New Jersey Superior Court should make any employee who has ever used a work computer to send or receive email from an attorney a little nervous. In Stengart v. Loving Care Ag. Inc., No. BER-L-858-08 (Feb. 5, 2009), the Court held that the attorney-client privilege did not apply to emails between an employee/plaintiff and her lawyer which were accessed on the employee's work computer -- despite the fact that the emails were accessed through a personal, password-protected email account. The Court thus permitted the company to use the employee's emails to and from her attorney to defend against her discrimination claims.

As reported by the law firm of Buchanan Ingersoll & Rooney, the Court based its decision on the fact that the employer had a published electronic communication policy which "adequately warned employees that there [was] no reasonable expectation of privacy" with respect to any emails generated or viewed on company issued computers, and the fact that the employee was aware of the policy.

This decision reminds us that any time you contact your lawyer from your work computer, you run the risk of exposing the communication to your employer or other third parties. This situation is particularly dangerous for employees who are engaged in litigation with their current employers, although it applies to everyone. If you must communicate with your lawyer during the work day, the most prudent thing to do is to step outside the office and make a telephone call. Save the emails for when you get home from work.

I keep telling consulting companies and employment agencies in New Jersey who want to sue my clients for violating non-compete agreements and other employment agreements to forget about it if they are not registered or licensed by the New Jersey Division of Consumer Protection. I guess they aren't listening. New Jersey's appellate court, in an unpublished opinion, Camo Technologies Inc. v. Pathan, Appellate Division Docket No. 25-2-2610, January 2, 2009, just affirmed a lower court's decision to dismiss an employment agency's case against its former consultant because it had failed to register with or become licensed by the State. When will these companies learn?

As I have blogged about before, employment agencies in the State of New Jersey must register with or become licensed by the New Jersey Division of Consumer Protection before doing business here. If a company fails to become registered or licensed, any employment agreements they enter into with their consultants are null and void from the inception. The law actually prohibits such consulting companies/employment agencies from bringing lawsuits to enforce agreements with its consultants. This is not a gray area of the law. Thanks to this recent Camo Technologies case, as well as the earlier cases, this principle of law is now well-established.

Camo Technologies and other unregistered/unlicensed employment agencies should be ashamed for suing consultants when they know that such lawsuits cannot be brought, let alone be successful. Unfortunately, many consultants, both domestic U.S. workers and those here on H1-B visas, are unaware of the law and the protections the law gives them. They may feel intimidated and decide to give in to their former employer's unreasonable and unlawful demands.

If you are a consultant who is being sued or threatened with a lawsuit from your employment agency, seek out a reputable and experienced NJ employment contract and non-compete agreement attorney to assist you. Your former employer's failure to register with or obtain a license from the State could be the "silver bullet" to help you quickly and successfully resolve your case.

New Jersey is home to over two thousand employment agencies, consulting firms, and career consulting or outplacement agencies, according to the latest government figures. http://www.state.nj.us/lps/ca/proposal/person107.htm. Many of these firms provide highly educated and highly skilled consultants to the State's largest employers, including those in the pharmaceutical, chemical, insurance, and financial industries. Employment agencies typically require its consultants to sign non-compete agreements before they commence working with an end-client. They do so to prevent the consultant from "eliminating the middleman" and working for the end-client directly. But are these non-competes enforceable?

One defense to non-compete litigation which my firm has used to good effect is based on the New Jersey Employment and Personnel Services Act. This law requires employment agencies and temporary help firms to obtain a license from, or register with, the New Jersey Division of Consumer Protection. If the employment firm is not in compliance with this law, any contracts it makes with its consultants, including non-compete agreements, are unenforceable. Surprisingly, many employment agencies are either unaware of this law or don't care enough to comply. They are in for a very rude awakening when they sue one of my clients.

I would suggest that if you are asked to sign a non-compete by your employment agency, do a quick search at http://www.njconsumeraffairs.gov/ocp/agency.pdf to determine whether the agency is properly registered or licensed. Then get some advice from an experienced non-compete attorney who can lay out your legal options and give you the advice you need to move forward.

When you receive a severance package from your employer, don’t immediately assume that it’s non-negotiable. You may have more leverage than you know. A skilled and knowledgeable employment attorney can identify where you have leverage and use it to get you more severance pay.

The first and most important thing you need to know is that you already have some leverage to begin with. When your employer offers you a severance package, they are, in essence, asking you to sell away some of your most valuable rights. And believe me, your employer is very motivated to buy this “property” from you. Why are they so motivated? Because if your employer can get you to sign that piece of paper, they can forget about you. You can’t sue them, ever, for anything they did or did not do from the beginning of time to the moment you sign the package. Most of the time, you can’t even complain about them publicly. Some times, they restrict you from working down the street for a competitor. Your right to sue, your vow of silence, your right to compete – the rights you are “selling” have a value. Your employer sets the “buy” price when it puts that severance package in front of you. Before you “sell” your rights away in a severance package, consult an employment lawyer and find out whether the “buy” price your employer is offering is fair.

I’ve had to turn away many potential clients because they didn’t understand the concept of leverage and went ahead and signed their severance package without consulting an attorney. Never, ever, sign something you don’t fully understand. Do the research, find a decent employment attorney, and spend the money for a comprehensive severance package review. Even employees without much leverage in the legal sense can have leverage in other areas, which I will save for a later post.

New Jersey's Law Against Discrimination prohibits employers from taking adverse actions against their employees on the basis of race, gender, age, religion, sexual preference, disability, or membership in other protected categories. The law does not prohibit an employer from taking negative actions against employees for other reasons, such as nepotism, favoritism, office politics, and the like. Yet employees who lose their jobs for these reasons, or who endure harassment or bullying which is not “discriminatory” in the legal sense, often suffer the same emotional and financial upset as do victims of unlawful discrimination. What are some strategies for dealing with unfair treatment in the workplace?

I would advise anyone experiencing negative treatment in the workplace to immediately begin to diary or journal the events as they occur. If the situation worsens and becomes legally actionable down the road, the written record can be important evidence in your case. In addition, the act of writing down your problems can have a cathartic and healing effect.

Next, you should report the unfair treatment to your Company’s human resources department, preferably in writing. Yes, I know, they won’t do anything about it. But, again, the main reason for making the report is to create a paper trail which may come in handy down the road. There is also the slight chance that they actually listen to you and try to help you.

If you have documented and reported the unfair treatment and it still persists, you should seriously consider changing jobs. Situations like these tend get worse over time, not better. I’m speaking from personal experience, as well as what I’ve learned from counseling employees for the last ten years. You will wind up quitting or getting fired some time down the road anyway, and in the meantime you will be extremely stressed out, lose sleep, get depressed, angry, or anxious, all of which can lead to more serious health problems. No job is worth losing your health. The decision to leave a job on your own terms, on your own timetable, is an empowering one. Just make sure your job search does not interfere with your current job duties or violate any non-compete agreements you may have signed. It goes without saying that you should never quit a job until you have secured a new one.

If you are an employee caught in the gray area between unfair treatment and illegal discrimination or retaliation, consider speaking to a competent employment attorney who can lay out your options and help you make an informed decision about your next career move.