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New New Jersey Bill Would End Practice of Double-Taxing a Portion of Awards in Discrimination and Retaliation Cases

Legal News GavelTax laws can be complicated in some areas. There may be various reasons why you owe taxes on a particular sum, even though that might seem counter-intuitive or just plain wrong. For example, what about attorneys’ fees and court costs in a successful workplace discrimination lawsuit? Currently, you could owe taxes on sums even though that money went to someone else. However, if a group of New Jersey legislators are successful, that will change. Senate Bill 784 would change the tax laws and end the double-taxation of attorneys’ fees in your employment discrimination case. Whether or not this new bill becomes law, you should not let the tax laws discourage you from seeking to protect your rights if you’ve suffered from discrimination at work. Contact a knowledgeable New Jersey employment discrimination attorney to discuss which options are available to you.

Imagine it:  you were harmed professionally due to workplace discrimination. You retained skilled counsel to represent you. You sued in court under the Law Against Discrimination, and you won. The trial court awarded you compensation for your damages. Your attorney, having represented you diligently and successfully, was owed for the work he or she provided, and you happily paid. However, when tax time comes around, you discover that you owe taxes for an amount that never went to you but instead went to your attorney. (FYI, not only did you pay taxes on that amount, but your attorney did as well.)

SB 784, sponsored by three Republicans and one Democrat, would change that. The federal government has already taken action to fix this problem in federal litigation. In 2004, President Bush signed into law the Civil Rights Tax Relief Act, a bill that gave litigants a tax deduction that wiped out the tax obligations they previously owed. Under the modified federal law, attorneys’ fees in cases like employment discrimination actions are subject only to single taxation, which is paid by the attorney who actually received that money.

The new New Jersey bill would mirror what the federal government did in 2004. It would end the tax obligation on the part of the litigant (the worker who suffered from discrimination). It would not only apply to employment discrimination cases but also would relate to cases in which the harmed employee’s case was one alleging retaliation.

While previous versions of the bill gained little headway, SB 784 passed the state Senate with bipartisan support, receiving a vote of 37-0. As of May 2018, the bill was pending before the state Assembly’s Judiciary Committee.

There are several very important reasons to go to court if you have suffered harm at work due to illegal discrimination, with monetary compensation being one among many. If you have suffered from discrimination or been a victim of retaliation, reach out to the diligent New Jersey employment attorneys at Phillips & Associates. Our attorneys have spent many years working to help our clients pursue needed outcomes in the legal system. Reach us online or at (609) 436-9087 today to set up a free and confidential consultation and to find out how we can help you.

More blog posts:

Third Circuit Revives Employee’s Discrimination Action in ‘Mixed-Motive’ Case, New Jersey Employment Lawyer Blog, Aug. 9, 2017

Lesser Evidence Burden Allowed Professor to Continue Pursuing Her Title VII Retaliation Case, Third Circuit Rules, New Jersey Employment Lawyer Blog, July 7, 2017

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