A General Discussion of New Jersey Termination Law
The law in New Jersey regarding termination of employment is rooted in common law principles. However, it is not wholly based on such principles in that New Jersey has codified certain aspects of employment "at will" and the ability to terminate an employee without cause.
Most employment relationships are governed by an "at will" standard. This means that an employer is entitled to terminate an employee for a good reason, a bad reason, or no reason at all. However, there are exceptions to this general rule, one of which is the public policy exception. In N.J. State Tenure Employees v. La Vecchia, 93 N.J. 120, (1983), the New Jersey Supreme Court spoke to the public policy exception that an employer may not terminate an employee for reasons which "contravene" or go against public policy. An example of this is an employee is terminated for reasons which violate a statute, such as whistleblower laws. In such a case, if the employer did not have just cause to terminate the employee, the employee may be able to seek damages. However, other than a few exceptions, the general rule of "at will" employment applies in New Jersey . This means that unless you have a specific term employment contract with a company, an employer is free to terminate your employment at any time with or without cause. Accordingly, an employer is not required to provide an employee with any reason for termination. An employer can simply state that there has been a "restructuring" or "reduction in workforce".
Further, because an employee is considered an "at will" employee, you are not guaranteed any with respect to your job. For instance, you may think that you are guaranteed your job for life, and that you do well for many years at an employer. An employer does not have any obligation, however, to keep you as an employee, and can terminate your employment when it wants. Therefore, even if you have been employed for many years, or have received performance reviews which state that you are doing a good job, you can still be terminated if your employer sees fit. NJ is also a "sue anyone" state, and therefore there may be other avenues of relief for employees who believe that they were terminated unlawfully. For instance, if an employer terminates an employee because of their age, sex, or for other reasons outlined in various statutes, an employee may have a discrimination or harassment claim.
The “Employment at Will” Doctrine in New Jersey
New Jersey generally recognizes the at-will employment doctrine, which means that an employer can terminate employment relationship without providing any reason as long as the termination itself is not for an illegal reason (e.g., race, national origin, gender, disability, etc.) or an improper purpose. Therefore, subject to exceptions, either an employer or employee may terminate the employment relationship for any reason or no reason at all, whether or not that reason is good, bad, or even bad, but not illegal.
The at-will employment doctrine applies to employment in New Jersey whether a party is hired for an indefinite period of time (i.e., "permanent" employment with no specified term) or for a specific period of time. An employment relationship for a specific period of time creates a presumption that neither party has the right to unilaterally terminate the relationship during the specified period; therefore, if the employer terminates the relationship before the end of the specified period, the employer may be liable for breach of contract unless there is a legally-justifiable reason, such as termination for "good cause" (as discussed in the section headings below), to support termination prior to the end of the period specified in the agreement.
Claims for Wrongful Termination
The New Jersey Legislature has enacted a number of wrongful termination laws that provide swift and harsh remedies for discharged employees who can successfully prove that they were discharged in violation of an expressed legislative public policy. For example, employers cannot fire employees who are called to jury duty or serve as a juror, who are called to emergency service, or who refuse to use their expert knowledge to violate the law. Employers cannot terminate employees who engage in whistle-blowing activity by reporting an unlawful activity of the employer, or who report unlawful conduct affecting the public health, safety or welfare. Employers cannot terminate employees who are pregnant or who assert their rights under the New Jersey Family Leave Act, or who file a workers compensation claim or report a workplace injury.
A wrongful termination case can be based on more than just a statutory cause of action. If the employer’s conduct during the termination is intentionally harmful, it can also create a common law "tortious" cause of action for wrongful discharge. In this situation, if the employer acts in a particularly wrongful fashion, now one can be liable for punitive damages in addition to compensatory damages.
Of course, many employees are hired "at will," meaning that their employment relationship is understood not to require a contract for a fixed term. (There are exceptions, such as employees hired pursuant to collective bargaining laws and contracts, or for claims arising under New Jersey’s Conscientious Employee Protection Act (CEPA).) However, not all "at will" terminations of employment will necessarily be lawful. Instead, there has been a growing line of legal cases in New Jersey where at will employees are alleging wrongful terminations.
Protections for Employees Under the Law
In addition to the common law protections, New Jersey employees are also afforded a number of legal protections by statutes and regulations. One of the major concerns of the anti-discrimination laws is to prevent the wrongful termination of an employee based on certain protected characteristics. New Jersey’s Law Against Discrimination (LAD) prohibits discrimination against employees and job applicants based on their race, creed, color, national origin, age and disability, among other categories.
An employee who is terminated from employment for asserting his or her rights under a NJ statute or the State Constitution may have a cause of action for retaliation. As discussed in more detail in the context of State and Federal anti-discrimination laws, LAD prohibits retaliation against an employee who has opposed an unlawful employment practice, such as discrimination, or who has filed a charge or instituted a proceeding under the act.
The New Jersey Conscientious Employee Protection Act (CEPA) provides protection to an employee who discloses or threatens to disclose an activity that he or she reasonably believes represents an illegality or incompatible with a clear mandate of public policy which concerns public health, safety or welfare, or protection of the environment. CEPA also prohibits retaliatory actions based on the employee disclosing or threatening to disclose the illegality or incompatible activity, or refusing to participate in what the employee reasonably believes is an activity that is illegal or contrary to public policy. To prevail, the employee must also prove that the retaliation was a "but for" (direct) cause of the adverse employment action.
Post-Termination Severance and Benefits
As a practical matter, there are lots of things that employers do provide to departing employees in order to smooth the waters for the employee and/or to discourage legal action. These include employer-provided references and letters of recommendation, outplacement assistance, post-employment employment/educational assistance (e.g., payment for tuition for a community college course) and post-employment medical coverage. However, as can be seen, these benefits are not legally mandated or required. Also, there are no legal requirements regarding what should be offered to a terminated employee in general.
Similarly, severance payments are not legally mandated or required. By comparison, the Federal Worker Adjustment and Retraining Notification Act does require certain employers to pay severance in circumstances involving "plant closing" or "mass layoff" . But this is the Federal law and it does not apply to very many New Jersey employers. Therefore, the provision of severance pay is uncommon and not legally required in New Jersey, although many employees do receive some severance payments.
The benefits provided by employers to a terminated employee are in addition to any payments that the employee will receive based upon his or her accrued vacation and/or hired time or any other payments under the law. For example, an employer should pay any salary or wages that have accrued through the last date the employee worked (which could be the employee’s last day at work or the employee’s last day after using any paid time off or hired time). Also, an employer should pay any earned and unused vacation time.
What to Do if You Were Wrongfully Terminated
Steps to take if you believe you have been wrongfully terminated
If you believe you have been wrongfully terminated or discriminated against, the first step is to determine whether any statutes of limitation apply or whether your employer has any grievance procedures that must be exhausted before you file a complaint.
Next, it is essential that you document the facts that you believe support a claim for wrongful termination. If you believe you are a member of a protected class (i.e. race, color, national origin, sex, employer’s disability), you should document your employment history and document harassing statements made by your employer or co-workers. You should also document any comments about your protected status. Note that protected class status can also include an employee’s pregnant status or medical history. There is a broad scope of protected classes. Your attorney can help you understand whether your situation involves potential liability.
As with most cases, it is always best to document any verbal statements or promises made in relation to your employment. For example, if your employer makes promises to you regarding a promotion or wage increase, you should document those promises. You should also save all documents or correspondence between yourself and your employer.
If the allegations are of a sexual nature, you should contact the human resource department to document the harassment.
Finally, if you believe you have been discriminated against or have been subject to unlawful termination, you have the right to file a complaint with either the Equal Employment Opportunity Commission (EEOC) or their state counterpart. For instance, if you are a New Jersey employee, you do not need to do anything additional to protect your rights since the majority of New Jersey statutes and regulations are enforced by the EEOC.
Recent Trend in New Jersey Employment Laws
The recently concluded term of the Supreme Court of New Jersey and the recent legislative and administrative action affecting New Jersey law on employment law, has resulted in significant changes to the state’s legal landscape. Some of those changes impact the law on terminating employees. Until 2013, New Jersey was a "modified at will" employment state, meaning, absent a binding employment contract, both an employee and employer could terminate the employment relationship unless limited by a term or condition of employment contract or "legislation or regulation" that protected against it. The Court in Witkowski v. Thomas Jefferson University Hospitals, Inc, 621 Fed. Appx. 671, 673 (3d. Cir. 2015) (non-precedential, raising the question of the continued validity of the modified at will doctrine in New Jersey), and the State Legislature in the new Medical Marijuana statute (P.L. 2019, c. 153.), have both shed light on this "legislation or regulation." In Witkowski, the Third Circuit Court of Appeals, in a non-precedential decision (meaning not a binding ruling), acknowledged the language of the statute’s (N.J.S.A. 24:6I-7(b)) in which the New Jersey Legislature specifically narrowed its application to "persons" and removed "employees," therefore limiting protection to employment rights as opposed to employment rights and employment status, as intended by passage of the statute. In the Medical Marijuana statute, the New Jersey Legislature removed the language which defined "employment protections" as including both employment rights and employment status , now adopting a more limited interpretation to only employment rights. Another bill to have been passed which affected the "modified at will" employment doctrine in New Jersey this year was the Paid Sick Leave Law (P.L. 2018, c. 10). This law prohibits an employer from terminating or retaliating against an employee for using paid leave. Taking such action now could amount to retaliation in violation of the statute (N.J.S.A. 34:11D-1.). Even prior to the Paid Sick Day Law, the Court in Donelson v. Duchemne County Prosecutors Office, 230 N.J. 325 (2017) prohibited an employer from terminating an employee for exercising rights under the state’s Law Against Discrimination. In both of these instances, the statute protected employees from retaliation for exercising or attempting to exercise a known right under New Jersey law. It is now possible that other statutes in New Jersey, now or in future years, may impose restrictions on employers beyond those imposed by existing common law principles. In the interim, when terminating an employee, it is always best to insure that the termination does not violate any employment rights set forth in New Jersey Statutes or regulations, which even though may not appear on first glance to be applicable to the subject employee, may nonetheless yield a right of action. One way to do this, is to "audit" your employment policies and the effects they may have on employment rights causally overlooked when enacted or amended. Being prepared can help avoid a costly nightmare.