ATTORNEYS AT LAW
| FELLIG SCHWARTZ,
LLC ATTORNEYS AT LAW |
|
| 2 |
| Home | Attorneys | Key Practice Areas | Articles and Updates | Directions | Contact Us |
| Articles and Updates |
New Jersey’s
Pay Transparency Act goes into effect on June 1, 2025. The Act requires covered
employers to make reasonable efforts to announce, post, or otherwise make known
to current employees any opportunities for promotion in their departments that
are advertised internally or externally, prior to making a promotion decision. This
requirement does not apply to promotions of current employees on the basis of
years of experience or performance. Nor does it prohibit a covered employer
from promoting a current employee on an emergent basis due to an unforeseen
event.
The law also
requires a covered employer to disclose in each external and internal posting
or advertisement for a new job or transfer opportunity the hourly wage or
salary, or a range of the hourly wage or salary, and a general description of
benefits and other compensation programs for which the employee would be
eligible. The law does not prohibit a covered employer from increasing the
wages, benefits, and compensation identified in the posting when making an
offer for employment to an applicant.
Which employers
are covered by the Act?
Can employees
or applicants sue covered employers for violations of the Act?
What are the penalties for violating the Act?
Next steps for covered
employers?
Want information about the New York State Pay Transparency Law? Employers click here. Employees click here. Information about NYC's Salary Transparency Law can be found here.
Employment Practices (April 25, 2024, updated August 2024, October 2024, January 2025)NY
State’s pay transparency law, effective September 17, 2023, requires certain
employers to disclose the compensation or range of compensation in
advertisements for jobs, promotions, or transfer opportunities. A job
description for the position must also be disclosed - if one exists. While
there are gray areas in the law, it is clear this law reaches beyond NY State
borders. The following Q&As will give you some insight on the law and shed
light on the status of similar laws in NYC and New Jersey. Covered employers must
comply with all applicable state and local laws. If they haven’t already,
employers should take steps to get their houses in order. What does that mean?
There’s a Q&A for that as well.
The
NY State pay transparency law applies to employers with four or more employees.
This includes employers acting as employment agents or recruiters, or otherwise
connecting applicants with employers, but excludes temporary help firms. Unlike
the New York City law, independent contractors are not included in the employee
count. Click here for more information on the NYC law.
The
“range of compensation” that must be disclosed is the minimum and maximum
annual salary or hourly rate that the employer in good faith believes is
accurate at the time of the job posting. If the position is paid entirely on
commission, a general statement that compensation shall be based on commission
must be included in the advertisement. If compensation includes both commission
and wages, the advertisement must include a general statement about the commission
and the offered compensation or range of compensation for the wages.
The
law applies to advertisements for opportunities “that will physically be
performed, at least in part, in the state of New York, including a job,
promotion, or transfer opportunity that will physically be performed outside of
New York but reports to a supervisor, office, or other worksite in New York.”
Q: A NY employer (4+ employees) wants to advertise a fully remote position that will report to a supervisor in its NJ office. Must the employer comply with the NY State pay transparency law?
A: The original version of the NY State pay transparency law seemed to apply to NY based positions and fully remote positions because READ MORE
Q: Employer (4+ employees) wants to advertise a position for a job that will be
performed exclusively at its NJ office. The employee will report to a manager
that works at the employer’s NY office. Must the employer comply with the NY State
pay transparency law?
Q:
Can a violating employer be sued by an aggrieved applicant or employee?
Q: What steps might be considered to comply with the NY State pay
transparency law?
A: The primary objective of the law is to address and diminish pay inequity and discriminatory wage-setting and hiring practices by requiring transparent sharing of compensation information up front. With that in mind, employers may: READ MORE
Q: Does NJ have a similar state law?
A: While there are bills pending, NJ has yet to pass a state pay transparency
law. One NJ city passed a law in 2022. READ MORE
New
York
State’s Human Rights Law protects victims of harassment, including
sexual
harassment. All New York State employers are required to ensure
compliance with a sexual harassment prevention policy that meets or
exceeds
minimum standards set forth in Section 201-g of the New York Labor Law.
Employers can establish their own policies, as long as they meet or exceed
the
minimum standards, or they can adopt the model policy published by the
New York
State Department of Labor (NYSDOL). The state law also requires
employers to
provide all NY employees with annual, interactive sexual harassment
prevention
training.
Earlier this
month, the NYSDOL released a revised model policy, along with
updated training materials (a script, slides and a new training video, to be
used in conjunction with a written assessment form). The revised materials reflect
the DOL’s increased emphasis on a variety of issues such as:
Click here for more information and for NYSDOL’s
revised model sexual harassment policy and training materials.
NYC has separate
sexual harassment training requirements for NYC employers. Note, the state law
applies to all employers in New York State, including NYC employers. Employers subject to
the NYC law can comply with both the New York State and NYC training
requirements by using the online training provided by the NYC Commission on
Human Rights. NYC's online training is available here.
All New York employers should review their sexual harassment policies and training materials to ensure that they meet the minimum standards set by the state law and as outlined in the updated model policy. And, if using the updated materials, employers should make sure that they are customized to fit their particular needs.
Q:
An employee comes to work with an anti-abortion message written on his
t-shirt. When other employees complain, he responds that his
First Amendment right to free speech is being violated. What should the
employer do?
If you have at least four employees (or you employ one or
more domestic workers) and one of them works in NYC (yep, this includes remote
employees), the NYC Salary Disclosure Law applies to you – even if you do not
have a business location in NYC! Starting on November 1, 2022 covered employers will
be required to disclose minimum and maximum salary information in every job, promotion
and transfer opportunity advertisement if the opportunity “can or will be
performed, in whole or in part, in New York City, whether from an office, in
the field, or remotely from the employee’s home.” The posted salary range must
reflect what the employer believes, in good faith, is the range it would pay
someone for the job at the time of the job posting. Failure to include salary
range information will be considered unlawful discrimination in violation of
the New York City Human Rights Law.
On April 28, 2022, the NYC Council passed a bill amending the law. The bill clarifies that only current employees have the
right to bring a lawsuit against their employer for a violation of the NYC
salary disclosure law. An employer is subject to a civil penalty of $0 for a
first violation if the employer proves to the satisfaction of the NYC Commission
on Human Rights that the violation has been cured within 30 days of service of a
complaint. The submission of proof of a cure, if accepted, “shall be deemed an
admission of liability for all purposes.” The law is silent on penalties for
subsequent violations, but guidance issued by the Commission indicates that
violators may have to pay affected employees monetary damages, as well as civil
penalties up to $250,000.
Most significant is what the bill does not do. It does not limit the geographical scope of the salary disclosure law. The bill specifies that the law does not apply to positions that cannot or will not be performed, at least in part, in NYC. In other words, if the job can be performed by an employee in NYC, the law applies. Therefore, as of November 1, 2022, covered employers located outside of NYC hoping to hire remote employees will be required to include salary/hourly rate ranges in all job, promotion or transfer opportunity advertisements.
The bill also does not increase the threshold for a covered
employer from 4 or more employees to 15 or more employees, as anticipated.
The good news is that employers now have time to review
current employee salaries, determine pay ranges for all positions, identify
salary range discrepancies and address them before the NYC salary disclosure
law goes into effect. Please reach out to us if you, or one of your clients,
needs assistance with these tasks.
UPDATE - Mayor Adams signed the amendments into law May 12, 2022.
Q: Can (or must) private employers in NY and NJ require their employees to get vaccinated for COVID-19?
A: The answer is to this question is complex and, like all issues during the pandemic, subject to change on a daily basis. Click on the links below for updates on:
OSHA Emergency Temporary StandardRules implementing NY’s Sick Leave Law (NYSLL) were adopted
in late December 2021. The Rules, and the NY Department of Labor’s responses to
public comment, clarified some important issues. The Q&As below highlight these
issues. First, some basics about the NYSLL:
The amount of leave a private sector employer must provide under the NYSLL and whether it is paid, depends on the size of the employer’s workforce. Employers with 4 or less employees and annual revenue of $1 million or less must provide up to 40 hours of unpaid sick leave. Employers with 4 or less employees and annual revenue greater than $1 million, and employers with between five and ninety-nine employees, must provide up to 40 paid hours of sick leave. Employers with one hundred or more employees must provide up to 56 paid hours of sick leave.
Sick leave is accrued at a rate one hour for every thirty hours worked
(accrual method) unless an employer chooses to “front load”, meaning the
employer may choose to provide the full amount of sick leave at the beginning
of the year (e.g., a business with over a 100 employees could provide 56 hours
of sick leave to each employee starting January 1 of each year or at the
beginning of a twelve month period as determined by the employer).
Q: How do you determine the size of the employer's workforce? Do
employers use the number of employees working in New York, or the number of
employees working nationwide? Click here for the Answer
Q: For accrual method sick leave, would an employee
have to work at least 30 hours before accruing any leave or does an employee
accrue a fraction of a leave hour for each fraction of 30 hours an employee
works? Click here for the Answer
Sick leave under the NYSLL is separate and additional to the
quarantine leave for employees subject to a precautionary or mandatory order of
quarantine or isolation related to COVID-19 (Ch. 25 of the laws of 2020), and use
of COVID-19 leave does not impact or otherwise utilize an employee’s paid sick
leave accruals or usage. More information on COVID-19 Leave is available at
paidfamilyleave.ny.gov/covid19
Q: Can a supervisor’s use of an offensive racial slur on two
occasions support a hostile work environment claim under the New Jersey Law
Against Discrimination?
A: In Rios Jr. v. Meda Pharmaceutical, Inc., an employee claimed that his direct supervisor
used the term “Sp*c” on two occasions during conversations with him at their
workplace. He reported both instances to human resources, but HR was “dismissive”
and took no action. The supervisor placed the employee on probation and a
performance improvement plan and eventually fired him alleging poor performance.
The appellate court affirmed the trial court’s dismissal of the case based on the “absence of evidence that Rios
faced adverse employment consequences because of his complaints” about the
comments, and on the lack of corroboration for his testimony.
In June 2021, the NJ
Supreme Court unanimously Read More
On January 6, 2021, the U.S. Department of Labor announced a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act. It outlines how employers can properly classify workers as independent contractors, instead of as employees (and thereby, avoid minimum wage and overtime requirements when appropriate). While the DOL final rule, scheduled to take effect on March 8, 2021, gives employers more leeway in classifying workers as independent contractors, it remains to be seen whether the Biden administration will favor the rule or delay its implementation. Click here for the “nuts and bolts” of the final rule. The Q&As below are taken directly from the final rule.
Q: An individual accepts
assignments from a company that provides an app-based service linking those who
need home-repair work with those who perform home-repair work. The individual
is able to meaningful increase his earnings by exercising initiative and
business acumen and by investing in his own equipment. The company, however,
has invested millions of dollars in developing and maintaining the app,
marketing itself, maintaining the security of information submitted by actual
and prospective customers and workers, and monitoring customer satisfaction
with the work performed.
Q: An individual is the owner and operator of a tractor-trailer and performs transportation services for a logistics company. The owner-operator substantially controls the key aspects of the work. However, the logistics company has installed, at its own expense, a device that limits the maximum speed of the owner-operator's vehicle and monitors the speed through GPS. The company limits the owner-operator's speed in order to comply with federally mandated motor carrier safety regulations and to ensure that she complies with local traffic laws. The company also requires the owner-operator to meet certain contractually agreed-upon delivery deadlines, and her contract includes agreed-upon incentives for meeting, and penalties for missing, the deadlines.
Q: Can private employers require COVID-19
vaccinations for their employees?
See Feb 2022 UPDATE ABOVE
Under the Families First Coronavirus Response Act (FFCRA), an
employee is entitled to paid sick leave and/or expanded family and medical
leave if the employee is unable to work (including telework) because he or she
needs to care for his or her child if (a) the child’s school or place of care
is closed, or (b) the child care provider is unavailable, due to
COVID-19-related reasons. An employee
may take paid sick leave to care for his or her child only when the employee
needs to, and actually is, caring for his or her child. The US Dept. of Labor stated
“generally, an employee does not need to take such leave if another suitable
individual — such as a co-parent, co-guardian, or the usual child care provider
— is available to provide the care the employee’s child needs.”
Q: Can an employee take paid leave under the FFCRA to care for
his or her child because school is closed for the summer vacation?
A: The US Dept. of Labor’s answer to this question is Read
More
Q: Can an employee take paid leave under the FFCRA if his or
her preferred summer child care provider – a camp, daycare or other program - is closed
for COVID-19 related reasons, but other options are available?
A: This specific question has not been addressed by the USDOL,
but Read More
If you want to read FFCRA Questions and Answers posted by the US Dept. of Labor, Click Here.
Despite NJ
Exec. Order 122 requiring the closure of all non-essential construction
projects as of April 10, 2020, the NJ legislature did NOT extend the
deadline to file and record commercial construction liens! Such liens must be
filed no later than 90 days from the last time work was performed or
materials/equipment were provided to the site for which payment is due.
Warranty work and service calls do not extend this deadline. If a commercial construction
lien is not filed by the 90th day, lien rights are lost. Those interested in
filing commercial construction liens should not delay.
Commercial construction liens must be filed in the County Clerk's Office where the property is located. County Clerk’s Offices are closed to the general public due to the COVID-19 pandemic. To make matters worse, certain County Clerks are not set up for online filing. In many cases, lien claims will have to be mailed to the Clerk’s offices. These offices are backlogged and suffering from logistical and processing delays. For instance, a certain County Clerk’s Office that does not have online filing advised Fellig Schwartz that construction liens must be mailed in; one of their employees picks up the mail from the clerk’s office once a week, usually on Tuesdays. It is unclear how this Clerk’s Office will, for instance, confirm that a construction lien was timely delivered via mail on day 89, if the employee did not pick up the mail until day 95. Under such circumstances, ensuring that a construction lien is filed timely will be difficult if left to the last minute. The risks of late filing and loss of lien rights are real.
The Fair Labor Standards Act (FLSA) requires that certain employees be paid at least the Federal minimum wage for all hours worked, and overtime pay at a rate of time and one-half the regular rate of pay after forty (40) hours in any particular workweek. These employees are “nonexempt” – meaning they are not exempt from such requirements (ie. they are protected by such laws). “Exempt” employees are not protected by these laws, ie. exempt employees are not entitled to overtime pay.
Q: You pay your secretary a salary. Is she exempt under the FLSA (ie. you do not have to pay your secretary overtime if she works over 40 hours in a particular workweek)?
A: All salaried employees
are Read More
The US Dept. of Labor Issues Final Rule that Will Increase the Minimum Salary Threshold
Effective January 1, 2020, the FLSA requires that employees must be paid Read More
Q: Do these changes affect NJ employees/employers? Click here for the answer.
Q: Do these changes affect NY employees/employers? Click here for the answer.
NJ’s minimum
wage is going up. NJ’s current minimum
wage is $8.85 per hour.
Does this
apply to small employers? Click here for the answer.
New Jersey’s Paid Sick Leave Act went into effect on October 29, 2018 (final regulations and amendments went into effect in 2020). It applies to just about every private employer and employee in New Jersey!
What employers are covered? What employees are covered? Click here for the answers.Can accrued sick time be carried over to the next benefit year and if
so, to what extent? That depends . . . Click here for the answer.
What happens to unused, accrued sick leave upon separation? What happens to unused, accrued sick leave if a former employee is reinstated to employment? Click here for the answers.
For what
reasons may paid sick time be used? May an employer require advance notice and documentation? What
if an employee is absent for 3 consecutive days or more? Click here for the answers.
What if I work or run
a business in a NJ municipality that has its own paid sick leave ordinance - which
law applies? Click here for the answer.
NEW, BROAD EQUAL PAY ACT COMING TO NEW JERSEY
New Jersey will
soon be one of the first states to have an equal pay law that extends beyond
gender to all classes of employees that are protected under the state’s antidiscrimination
law. Governor Murphy is about to sign the Diane B. Allen Equal Pay Act, which makes
it unlawful for an employer to compensate employees of a protected class
less than employees that are not in that class for “substantially similar” work
in terms of skill, effort, and responsibility. It will also be a violation of
the law for an employer to retaliate against an employee for requesting,
discussing with, or disclosing to another employee or his/her lawyer or any government agency,
information related to employee compensation. Also, the law prohibits a NJ
employer from requiring an employee, as a condition of employment, to sign a
waiver or to agree not to make these types of requests or disclosures. The law
applies to both public and private employers in NJ.
Q: What is a
“protected class” in New Jersey? Click Here for the Answer.
Q: Under what
circumstances will an employer be allowed to pay different rates of
compensation to employees for substantially similar work? Click Here for the Answer.
Q: If a NJ
employer conducts an internal audit and finds violations of the NJ Equal Pay
Act, can the employer decrease the compensation of certain employees to the
compensation of other employees so that they are paid equally? Click Here for the Answer.
Q: What if a NJ employer is found to be in violation
of the Equal Pay Act? Click Here for the Answer.
As we get
closer to the date the Equal Pay Act takes effect, July 1, 2018, employers
should identify any problematic pay disparities and, if found, take steps to
remedy any differences that could be attributed to membership in a
protected class.
Q1: A private employer in NY fires an employee after seeing videos on Facebook of the employee branding a tiki torch and wearing a KKK t-shirt at the Charlottesville, VA rally. The employee argues that his First Amendment rights were violated by the firing. Is he correct?
A1: The First Amendment of the U.S. Constitution
protects free speech and "the right of the people peaceably to assemble." Read On.
Q2: The employee did not have an employment
contract and was employed “at-will”. Was
he wrongfully terminated?
Q3: What if the employee is a lawyer and the employer is a NY law firm that regularly represents victims of discrimination. Is the termination wrongful?
A3: Click here for the answer.
Q4:
Assume the same facts in Q1 and Q2 but the employee is fired by his NJ
employer. Was the employee wrongfully
terminated under NJ law?
On May 4,
2017, Mayor de Blasio signed a bill into law aimed at eliminating the wage gap
between men and women. When the law goes
into effect on October 31, 2017, it will be an “unlawful discriminatory
practice” for NYC private employers to ask for salary history information from an
applicant, an applicant's current or former employer, or from an employee or
agent of that employer. Employers will also be prohibited from conducting
any form of search through publicly available information for a prospective
employee’s salary history. The employer may not consider an applicant’s
salary history in determining the salary, benefits, or other forms of
compensation for that applicant. “Salary history” includes not only an
applicant’s current or prior wage, but also benefits and any other form of
compensation he or she may have received.
NYC private
employers should update their job applications, review and revise their
background check forms and phone screen and interview materials and train staff
for compliance. Questions regarding salary history must be eliminated. Anyone
involved in the recruiting and hiring process should be trained as to the law’s
requirements, including ways to avoid claims that salary history was disclosed
involuntarily or at the prompting of the interviewer. A process for documenting
when an applicant voluntarily discloses salary history and other compensation
information should be implemented. Employers in NJ and areas outside of NYC may
also want to take similar steps over the coming months as this is a trend that
is likely to come their way.
Q: Which
municipality is the 13th in NJ to require its private employers to provide paid
sick leave to employees? And, (in case
you haven’t been reading my prior newsletters) which 12 municipalities already
have such laws?
A: I previously reported a growing NJ trend – municipalities that are requiring their private employers to provide paid sick leave to employees. In just a few years, the number of municipalities has grown to 12. Number 13’s law becomes effective on January 11, 2017. Employers in that municipality or that have employees that work there must quickly modify their policies to ensure compliance. Click here to read about number 13. Click here to read my earlier post which lists the paid sick leave laws of the current 12 municipalities – just in case you missed it.
ALERT !
The new overtime rules issued by the U.S. Department of Labor raise the salary level for several overtime exemptions under the Fair Labor Standards Act. The FLSA currently requires covered employers to pay minimum wage ($7.25) and overtime (time and a half on more than 40 hours worked in a workweek) to employees, unless they are exempt. The exemptions are limited. For Executive, Administrative and Professional workers to be exempt, they must be paid a salary of $23,660 annually or $455/week. The new rules change the salary level to Read On
UPDATE – UPDATE – MAY 2018 - NJ PAID SICK LEAVE ACT PREEMPTS LOCAL SICK LEAVE ORDINANCES. CLICK HERE.
Employers in the following NJ municipalities should review their current sick leave policies to determine compliance with local ordinances, including notice and posting requirements: Click here for a list of the NJ municipalities that require paid sick leave and links to the ordinances and required notices. All other NJ employers should watch this growing trend - is your municipality considering mandating paid sick leave?
Want an overview of the NYC Earned Sick Time Act and a copy of the notice that employers must post?
On
April 4,
2016, Governor Andrew M. Cuomo signed legislation enacting a
statewide 12-week paid family leave policy. Under the new Paid Family
Leave law, NY
private sector employers will be required to provide paid family leave
to employees
that need to care for an infant or a family member with a serious
health
condition or to relieve family pressures when someone is called to
active
military service. Benefits will be phased-in beginning in 2018 and
fully
implemented in 2021. Paid leave benefits are to be funded through
employee
payroll deductions.
A: Starting in 2018, up to 8 weeks of leave at 50
percent of the eligible employee’s average weekly wage, to a maximum of 50
percent of the state’s average weekly wage.
In 2019, this increases to . . . Read More
Q: Does the
NY Paid Family Leave law have an exception for small businesses? Does it apply
to all employers or only those with 50 or more employees as under the federal
Family Medical Leave Act (FMLA)?
A: The law
applies to private sector employers . . . Read More
Q: To be
eligible for paid family leave, must the employee work full-time or does the law also
apply to part-timers?
Q: Plaintiff,
a gay employee, sues his employer under Title VII for discrimination citing
numerous examples of his supervisor’s anti-gay behavior including (i) a movie
poster, circulated to the office and posted on Facebook by the supervisor,
depicting Plaintiff’s head superimposed on the body of a bikini-clad woman
reclining on her back with her legs in the air which the supervisor describes
as “the gay sexual receiving position”; (ii) drawings put on a company
whiteboard by the supervisor, one of which showed Plaintiff’s torso on the body
of a four-legged animal with a tail and penis, urinating and defecating, and a
second drawing which depicted the Plaintiff naked, with an erection and
exaggerated muscles, and an air pump being manned by another employee and
attached to Plaintiff’s wrist, with text next to Plaintiff reading “I’m so
pumped for marriage equality,” while text by the other employee says, “I f*#ing
hate being pumped”; (iii) a comment made to a co-worker in which the supervisor
stated that “if he were gay, he’d like to have gay intercourse with [the co-worker]”;
(iv) the supervisor asked another employee during an office trivia game how it
felt to “be beaten out by the gay guy”; and (v) during a large office meeting,
when the supervisor was feeling ill, he turned to the Plaintiff and said “It
feels like I have AIDS, you know what that’s like?” Does the Plaintiff have a cognizable claim for
discrimination under Title VII?
NJ ALERT- Earlier this month, the New Jersey Supreme Court in Hargrove v. Sleepy’s, LLC, decided that the “ABC” test set forth in the New Jersey Unemployment Compensation Act, will be used to determine whether a plaintiff is an employee or independent contractor as to claims under New Jersey's Wage and Hour Law and Wage Payment Law. The ABC test presumes that an individual is an employee. The burden is on the employer to show that: (1) the employer neither exercised control over the worker, nor had the ability to exercise control in terms of the completion of the work; (2) the services provided were either outside the usual course of business or performed outside of all the places of business of the enterprise; and (3) the individual has a profession that will plainly persist despite termination of the challenged relationship. Failure to satisfy any one of these criteria results in an “employment” classification, requiring the employer to pay non-exempt employees at least minimum wage and overtime at time and a half. Click here for a Q&A on the ABC test.
Note - New Jersey’s Wage Payment Law governs the timing and mode for the payment of an employee’s wages. New Jersey’s Wage and Hour Law provides for minimum wage and overtime benefits paid to employees. Independent contractors are not protected by these laws. For more information on these laws, click here.
NY ALERT- As of
December 31, 2014, New York State's minimum wage is $8.75 per hour, with few
exceptions. Employers must post the NY Minimum Wage Information poster in their
place of work.
Q: Which
state has the higher minimum wage rate, New York or New Jersey?
NJ ALERT - PAID SICK LEAVE IN FIVE NEW JERSEY CITIES - Paterson, Passaic and East Orange recently passed ordinances mandating private companies to provide paid sick leave. Newark and Jersey City previously passed similar laws. Employers in these cities should review their current sick leave policies to determine compliance, including notice and posting requirements. Click here for links to these ordinances.
NY ALERT
- PAID SICK LEAVE IN
NEW YORK CITY?
In June 2013, the NYC
council passed the Earned Sick Time Act. At that time, I reported the
basic nuts and bolts of that law. After Mayor DeBlasio's inauguration last
January, the City council amended the Act making it even broader. The Act, as amended, went into effect April 2014. Click
here for the highlights of the amended Act.
ALERT UPDATE – As I reported in April 2013, New Jersey adopted the Revised Uniform Limited Liability Company Act effective March 2013, revising the charging order provision by allowing for the appointment of a receiver and, if a creditor could show that distributions under a charging order would not satisfy its judgment debt within a reasonable time, foreclosure of the member’s transferrable interest in the LLC. N.J.S.A. 42:2C-43 (2012). Earlier this year, Governor Christie passed into law an amendment to the LLC Act that eliminates receivership and foreclosure as a remedy and returns the provision largely to its 2012 state. Under the current law, a court order charging the transferable interest of a member is the sole remedy of the judgment creditor. The law further clarifies that the judgment creditor has no right to interfere with management, force dissolution or foreclosure of the transferable interest. In light of this Amendment, I am re-posting my original Q & A, updated for this revision.
Q: You obtain a large judgment against an individual and you want to collect. The judgment debtor has only one asset - he is a member of a NJ limited liability company (ie. he is an owner of the LLC). Can you force the sale of his ownership interest?ALERT – The NJ Revised Uniform Limited Liability Company Act went into effect as of March 18, 2013. It applies to LLC’s formed on or after March 18, 2012 and LLC’s formed prior to March 18, 2013 which elect to be subject to the revised Act. It applies to all other New Jersey LLC’s beginning on April 1, 2014.
Click Here for More Information on the Revised Act.