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Company VP Entitled to Litigate His New Jersey Wage Dispute in Court Despite the Existence of Arbitration Clause in Employment Contract

Everyone generally begins a new job hoping it will be a complete success, and it is generally while filled with these high hopes that an employee signs his employment contract, complete with all of its “fine print.” In the case of one pharmaceutical company employee, the New Jersey Appellate Division issued an important ruling in favor of workers, concluding that the law allowed him to bring his Wage Payment Law action and that the arbitration clause in his employment contract was unenforceable.

The dispute in this case pitted a Florida-based pharmaceutical company against its former vice president and chief medical officer. The two sides’ employment contract called for the employee to earn a base salary of $250,000 per year, with additional bonuses available. By February 2015, the vice president allegedly should have earned in excess of $740,000, but, according to his complaint, he had received less than $480,000.

This shortfall led the vice president to sue the employer. The employer had, according to the plaintiff, violated New Jersey’s Wage Payment Law in multiple ways, including:  “failing to pay him at least once per month; failing to pay him minimum wages; failing to pay him overtime compensation; and failing to pay him all wages due and owing upon separation of employment.”

The employer initially succeeded in getting the vice president’s case dismissed. It did so by relying upon the terms of the employment agreement. Disputes like this wage payment disagreement were covered by a clause in the contract that called for binding arbitration, the employer argued successfully to the trial judge.

The vice president appealed, and the Appellate Division sided with the employee, ordering a reversal of the order dismissing the case and compelling arbitration. One the key aspects of the Appellate Division’s ruling regarded whether or not the plaintiff had a right to sue at all. The employer had argued (successfully in the trial court) that the Wage Payment Act does not allow a private individual to sue under that law unless the employee asserts that the employment contract itself violated the law (which the vice president did not claim in this case). This was incorrect, the Appellate Division explained. The Wage Payment Law is not so restrictive and should be read to allow an implied private right to sue in cases, like this, in which the plaintiff alleges the violation of a statute (like the Wage Payment Law) that was enacted specifically to “protect employees from wrongful conduct by employers.”

When it came to the arbitration clause, the provision’s language in this case was not sufficiently clear. New Jersey law allows employees to agree to a waiver of certain rights (which is what the arbitration clause was in this contract), but the waiver must be unmistakably unambiguous. In this vice president’s case, his contract said that he agreed to arbitrate, but it did not explicitly say that he agreed to waive his statutory rights or his right to have his case decided in court by a jury. The absence of those latter explicit statements made the clause inadequate to meet the law’s requirements, which meant it wasn’t a valid waiver, and the employer wasn’t entitled to demand arbitration.

Whether you have suffered from discrimination or harassment at work, or your employer has violated New Jersey’s wage laws, you need aggressive and knowledgeable counsel fighting for you. The skilled New Jersey wage law attorneys at Phillips & Associates have many years of experience helping workers seek the recovery they deserve in their employment law cases. Contact us online or at (609) 436-9087 today to set up a free and confidential consultation with one of our skilled and experienced attorneys.

More blog posts:

New Jersey Township’s First Female Police Officer Receives $355,000 Sex Discrimination Award, New Jersey Employment Lawyer Blog, May 4, 2017

NJ Supreme Court: Employers Cannot Force Employees to Accept Shortened Period for Pursuing Discrimination Claims, New Jersey Employment Lawyer Blog, March 8, 2017

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