United States: Workplace Protections In A Post-Pandemic World: Federal Court Decision Applies New Jersey Law To Remote Out-of-State Employee

The "office" can be an elusive or non-existent concept these days. But New Jersey employers with workers outside the state need to appreciate the far-reaching protections of New Jersey's anti-discrimination laws. A Federal Court in New Jersey recently ruled in that a remote employee, working outside of New Jersey, but for a company headquartered in the state, is entitled to the rights and protections of the New Jersey Law Against Discrimination, reenforcing an earlier New Jersey appellate court decision.

In Schulman v. Zoetis, Inc. et al., No. CV 22-1351(MEF)(LDW), 2023 WL 4539476, at *1 (D.N.J. July 14, 2023) the Plaintiff, resided and worked in New Hampshire, reporting to the former Director of Anatomic Pathology, who was based in Salt Lake City. According to the complaint, Defendants Zoetis, Inc. and Zoetis Reference Labs were incorporated in Delaware, with headquarters in New Jersey. Plaintiff asserted that Defendants maintained a unified operation, had common ownership and management, and held themselves out as a single entity. Plaintiff asserted four causes of action against Defendants—violation of federal Equal Pay Act, 29 U.S.C. §206(d); et seq.; violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq.; violation of the equal pay provision of the New Jersey Law Against Discrimination, N.J.S.A. § 10:5-1 et. seq. (NJLAD), as amended by the Diane B. Allen Equal Pay Act, N.J.S.A. § 10:5-12(t) (NJEPA); and gender discrimination in violation of the NJLAD.

Defendants moved to dismiss Plaintiff's New Jersey state-law claims because Plaintiff was a resident of, and worked remotely in, New Hampshire. Defendants argued that Plaintiff's complaint constituted forum shopping because of the employee-friendly nature of the NJLAD. Defendants further argued that Plaintiff could not avail herself of the protections under New Jersey law because she was paid in New Hampshire, filed a charge of discrimination with the Equal Employment Opportunity Commission alleging violation of New Hampshire law, and was neither supervised nor assigned work by anyone in New Jersey.

In opposition, Plaintiff argued that Defendants were headquartered in New Jersey and the upper management responsible for personnel and pay decisions were based in New Jersey. Plaintiff contended that the appropriate circumstances outlined by the New Jersey Appellate Division in Calabotta v. Phibro Animal Health Corp., 460 N.J. Super 38 (App. Div. 2019), were present in her case. In Calabotta, a former Illinois-based employee sued his employer, which was based in New Jersey, asserting that he was unjustly passed over for a promotion for a position in New Jersey, and then fired, based upon "associational" discrimination. The Calabotta court held that when a New Jersey based company and its New Jersey based executives are making decisions on a discriminatory basis, there is "discrimination in the workplace" in New Jersey—regardless of where a particular employee reports to work. Therefore, the New Hampshire Plaintiff here claimed she was entitled to the benefits and protections of the NJLAD.

The District Court found Defendants' arguments unpersuasive. In so ruling, the District Court noted that the New Jersey Supreme Court has not decided whether the NJLAD applies to remote workers who are employed by New Jersey companies but working outside of New Jersey. Relying on "opinions of intermediate appellate state courts," the District Court predicted how the New Jersey Supreme Court would resolve the issue. Guided by Calabotta, the District Court found that the protections of the NJLAD applied to remote workers employed by a New Jersey based company but located outside of New Jersey.

Therefore, the District Court denied Defendants' motion to dismiss, allowing Plaintiff's claims under New Jersey law to proceed.

Understanding the Application of New Jersey's Anti-Discrimination Laws to Out-Of-State and Remote Employees

Schulman applied the Appellate Division's reasoning in Calabotta, where the court stated that the "Legislature has expressed an intention to allow certain nonresident plaintiffs to receive the benefits and protections of the NJLAD." Plaintiffs in both Schulman and Calabotta were out-of-state residents, working for New Jersey based companies, seeking the protections of New Jersey laws. Because there are limited decisions on the question of when New Jersey laws applied to out-of-state, remote workers and the analysis is fact specific, Schulman's examination of Calabotta provides additional guidance on the issue.

The Appellate Division in Calabotta reviewed the legislative history of the NJLAD and found that there was no indication that the Legislature intended to limit its protections to in-state employees. The court held that the intent to protect out-of-state residents could be "gleaned from both the words of the statute and the expansive policies that underpin it." The court's holding and general language about the legislative intent illustrates the wide-ranging implications of its decision. The court emphasized that the statute's plain language does not limit its definition of "person" to only New Jersey residents or employees. Additionally, the court noted that other relevant terms in the statute, such as "employer" and "any individual," don't restrict the law's coverage to those who live or work solely within the geographical boundaries of the state. Out-of-state plaintiffs don't need to make any specific factual allegations—beyond their employer being located in New Jersey and the decision-making having occurred there—to seek the protections of the NJLAD. Instead, courts must review the specific allegations and circumstances underlying any claim and determine whether there are sufficient ties to New Jersey to apply the state's anti-discrimination laws, as opposed to those from another jurisdiction where the plaintiff may reside.

New Jersey courts faced with deciding what state's law applies use a two-step conflict-of-laws analysis. The first step is to compare the laws of the states involved on the relevant issue. If there is no distinction between laws that would alter the outcome the case, New Jersey law applies. If there is an outcome-determinative difference (for example, the plaintiff in Calabotta, an Illinois resident, made claims based upon "associational" discrimination, which is not recognized in his home state) courts will try to follow the legislative intent of New Jersey on choice of law. If that is unclear, courts will use various factors to determine which state has the "most-significant relationship" to the case.

Factors to Consider for New Jersey Employers and Remote Workers

Calabotta's holding highlighted that the NJLAD focuses on "conduct" occurring within New Jersey and the remedial purpose of the statute extends protection to all "persons" working for New Jersey employers or businesses headquartered in the state. Thus, Calabotta established (and Shulman emphasized) where out-of-state employees seek protection under the NJLAD, the most important consideration should be where the allegedly discriminatory action took place, not the location of the employee where the harm was experienced.

The "critical factors" include:

1. The location of the individuals involved in the employment decision.

2. The dominant place where the decision was made.

3. The site of the conduct that led to the adverse employment decision.

Takeaways

Litigants asserting the applicability of different state laws must demonstrate that the difference matters practically. Therefore, understanding these critical factors becomes instrumental to employers and employees navigating employment disputes in an increasingly remote, and interstate, work environment. The NJLAD is indeed more expansive than Federal and most other States' anti-discrimination laws. For example, it applies to all employers regardless of size, it protects employees from "associational discrimination" based on their relationship with someone in a protected category (see Calabotta), and it does not limit the amount of compensatory or punitive damages that can be awarded to victims of discrimination.

This ruling affects many employers and employees in New Jersey. If you are an employer based in New Jersey, or have a substantial presence in the state, you need to be aware of the implications of this new interpretation of the NJLAD. Even if your employees are working remotely from other locations, you are still responsible for ensuring compliance with the NJLAD. This means that you need to review your policies, practices, and procedures to make sure they comply with the NJLAD, and that you train your managers and supervisors on how to handle employment decisions involving remote workers. You also need to monitor the work environment and culture of your remote teams, and address any issues or complaints promptly and effectively. By doing so, you can protect your employees' rights, as well as your own reputation and legal liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.