Students need not hand over the Facebook Account to get into college

Written by Michael Pisauro on December 10th, 2012 in Employee/Employer, Legislation, Privacy | No Comments »

Effective on Friday, December 7th, 2012 no public or private institution of higher education may require a student to disclose their username and password to any social media site.  The college could not ask to the student whether they have such an account or for the student to show the college their entries in the site.  This prohibition also applies to those who are applying for enrollment at the school.

The version that passed out of the legislature and signed by the Governor on Dec. 7th is different than what was originally introduced.  The difference is that the law only applies to students whereas the previous version applied to job applicants and employees as well as students.

It may be the enacted version is different as a “companion bill”A2878 would apply to almost all employers which may include institutions of higher education.  A2878 is awaiting the Governor’s signature.  For more information on both bills take a look at my June Post, Do You Want a Job? Then Hand Over Your Facebook Account! or a portion of my presentation, Important Developments Affecting Businesses.

Presentation to Mercer Regional Chamber of Commerce on Social Media, Health Care and Site Remediation

Written by Michael Pisauro on July 27th, 2012 in Courts, Employee/Employer, Legislation | No Comments »

Last week I took part in a presentation put on by the Mercer Regional Chamber of Commerce entitled: Changes in Business Tax Law.  Linda Ialacci of Horvath & Giacin, P.C. discussed the tax implications of the Patient Protection and Affordable Care Act – What it Means to Businesses and Individuals.  My presentation, Important Developments Affecting Businesses, was a little broader.  I discussed the legal implications to businesses of the Act as well as some recent legal developments on Social Media on Businesses and the changes to NJ’s Site Remediation Program.  I want to thank Linda for inviting me to participate in the presentation.  I had fun but more importantly learned a lot from her.

Do You Want a Job? Then Hand Over Your Facebook Account!

Written by Michael Pisauro on June 28th, 2012 in Employee/Employer, Legislation | No Comments »

There has been a lot of stories in the newspapers recently about employers demanding from their potential employees their usernames and passwords of Facebook and other social network sites.  In these economic times many people feel that they have no choice but to hand over this intimate part of their lives to a potential employer with the hope of getting a job.  Unfortunately, giving a potential employer with access to your Facebook page, also gives this person access to information about your friend.  So while you may not have anything on your Facebook page that you would not want your employer to see, but maybe your friends posts are less than acceptable.

These stories have prompted the legislature to act.  The federal government is working on Social Networking Online Protection Act (SNOPA).  Maryland is the first state in the nation to pass a law prohibiting an employer to taking these actions.  There are several states that have pending legislation.  New Jersey is one of those states.  NJ has introduced two bills that would address this situation.  The first bill, A2878 would prohibit any employer from requiring “an individual to waive or limit any protection granted under this act as a condition of applying for or receiving an offer of employment.”  The bill prohibits an employer or potential employer from requiring a person to provide access to their social media accounts or to even inquire whether they have a social media account.

The bill also goes further and would prohibit any agreement to give an employer access to a social media account as against public policy.  Making it against public policy would prohibit any type of agreement between employer and employee from granting this kind of access.

A2878 also has a damages clause.  The victim of such an act could seek:

  • Injunctive relief, which could include re-instatement for employees.
  • Compensatory and consequential damages
  • Attorney fees and costs.

In addition the employer could be assessed a civil penalty of up to $1,000 for the first event and $2,500 for each additional violation.

The bill does limit these rights to some extent.  A victim of an employer’s demand or inquiry of a social media account has 1 year to bring a suit against the employer.

A2879 is very similar to A2878 but applies to private and public institutions of higher education and protects not only job applicants but students as well.  It does not apply to elementary and high schools.  So a principal or teacher would not be violating the act to inquire about or require their students to turn over access to their social media accounts.  This is unlike SNOPA which applies to all levels of the education system.  It is interesting to note, that unlike SNOPA, A2879 does not apply to elementary and high school.  Also, unlike A2878 there are no civil penalties applicable to the education system.  A victim will still only have 1 year to file a suit and has all of the remedies that a private employee has.

As noted above, there is a federal bill working its way through the Congress.  SNOPA applies to private employers and the education system so it does in one bill what NJ does in two different bills.  It is also broader than the state bills in that it applies to email accounts as well as social networking sites.

A2878 and A2879 have been released from committee.  A2878 has been passed by the full Assembly on Monday June 25th.  It is not scheduled for a vote in the Senate before the Legislature recesses for the summer.  I also note that while A2879 has a senate version A2878 does not have a senate version.   This means that unless a Senate version is introduced it is extremely unlikely that A2878 will be enacted into law at the current time.   SNOPA was introduced on April 27, 2012 and referred to committee. It has not be heard by the committee as of yet.

So as of today, a New Jersey employer could ask for an employee’s account information including password to their facebook, google+, twitter, etc. accounts and review them.  If these laws are based that ability will end.  The bigger question is whether an employer would like to start or continue the employee/employer relationship with such an invasion and distrust.


Violating a Consumer Fraud Act regulation can result in individual liability for employees or owners

Written by Michael Pisauro on August 15th, 2011 in Consumer Fraud, Home Improvement | No Comments »

Recently, the New Jersey Supreme Court issued a new opinion further defining the reach of New Jersey’s Consumer Fraud Act. In Allen v. V and A Bros., Inc., the Supreme Court ruled that an employee or owners of a company who has violated a regulatory provision can be liable under the consumer fraud act.  It is not new that owner can be liable with their own intentional misrepresentation of fact and thus liable under the consumer fraud act.  What is new is that a violation of a regulation, which may be truly a technical violation and not one that requires intent, can lead to the personal liability of an owner or employee responsible for the implementation of the regulation.

It has been the law for many years that an officer or employee could be liable for their affirmative act of misrepresentation or omission under the CFA. It was the individual’s acts that created the liability against them as well as their corporate employer.  In Allen the question became, in the absence of an affirmative act of misrepresentation, could an employee or owner of a company be personally liable under the CFA for violating a regulation.  A regulatory violation is a strict liability and does not require an affirmative act.  In this case, the plaintiffs allege that the contractor violated several regulations affecting home improvement contractors.  They alleged that the contractor did not have a written contract under NJAC 13:14A – 16.2; failed to obtain final approval for the construction before obtaining final payment as is required by NJAC 13:45A-16.2 (10), and finally that the contractor failed to obtain their consent for modifying the design as required by NJAC 13:405A -16.2 (a)(3) (IV)

Each of the regulations alleged to have been violated regulated the conduct of a “seller.”  The regulation’s definition of the “seller” means a “person engaged in the business of making or selling home improvements  . . .” and included not only the business entity but “their officers, representatives, agents and employees.”  NJAC 13:45A-16.1A.  Given the regulations’ definitions and the definition of person under the CFA, the Court had little trouble finding that an employee or officer could be liable based upon the liberal interpretation required of the CFA.

In this instance the Court had little trouble finding the owners and employees could be liable for violating the particular regulations and therefore, the Consumer Fraud Act.  The Court was also quick to point out that not all regulations may result in the liability of the individual.  Individual liability would be decided based upon the wording of the regulation.  So if a regulation only regulated the conduct of the business entity and did not extend to its agents, then only the entity could be liable for the violation.  Also the Court noted that if the business entity had a “policy” of not requiring a written contract, than its employees may not be liable for carrying out that policy because the employee had little choice in the employee’s actions.

The lesson to be learned is if you are an employer make sure you and your employees understand and follow the law.  If you are an employee it is for your own protection to understand what the law requires of you and not to violate it.  Neither the employee/owner nor the business entity wants to liable to a customer for triple the customer’s damages and to pay the customer’s attorney.  Violating a regulation, even if unknowingly, could put you and the business in that position.


Written by Michael Pisauro on August 9th, 2011 in Contracts, Leases, Sustainability | No Comments »

Just before leaving office in 2010, Governor Corzine signed into law P.L. 2009 c. 213, also known as the “Renewable Energy Farming Law”.  This law would allow farmers to use part of their farm for solar, biomass, or wind electricity generation without forfeiting their farmland assessment.  The law applies to both commercial farms and to farms that have been preserved, but each group must meet a different set of requirements in order to keep their assessment and the protections under the Right to Farm Act.

The Renewable Energy Farming Law has helped promote entrepreneurs seeking leases for solar farms.  These entrepreneurs are locking up properties with options and proposed leases and it would appear that many farmers are signing these documents without adequately reviewing them.  Developers seek to lock-in the property while they do the necessary planning and obtain the necessary approvals and permits but before signing any of such documents there are some basic contract provisions that you should consider.

solar panelsFirst an “option” is a legally binding contract that a property owner gives to another person or company which ties up the land or object of the option.  This option gives the option holder the right to tie-up the property for a period of time during which the developer conducts the engineering for the project.  The developer also uses this time to obtain the appropriate permits from local land use boards, approvals from Pennsylvania Jersey Maryland Interconnect (PJM) or local utility to connect to the grid and a power purchase agreement to sell the power.

Under basic contract law for there to be a binding contract there has to be consideration.  The asker for the option has to give something of value in exchange for the option.  Obviously, this consideration is usually money.  The developer pays a fee to the landowner so that the owner does not lease the property out to other people or sell it while the developer is doing what is necessary.

The option should also spell out how long the developer can tie up the property.  This period of time should be used by the developer to conduct their due diligence which should include identifying how big of a system can be put on the property and whether or not they can get the interconnections with a local utility and/or PJM.  During this time they should also determine whether there are any environmental issues including wetlands or c1 streams that would limit or impact the system.  Other environmental issues could include whether the property is contaminated by past activities.

The option also sets out the proposed lease agreement.  Therefore, the time to negotiate the terms of the lease is before you sign the option not afterwards. Once you have signed the option agreement the chances are that you have bound yourself to the terms of the lease agreement – whether you like it or not.

Some of the basic terms that should be outlined in the lease include: how long the lease is for and how much “consideration” you are going to receive from the developer.  The lease should also state how payments should be made – monthly, quarterly, or yearly – and whether those payments escalate over the years or remain static, if there will be a commission or percentage earned from the generation and whether you will receive some of the energy for your own use (this is required by the law).

It is very important that both the option and the proposed lease clearly delineate what the developer plans on doing and that there is an explicit recognition that the developer must comply with the renewable energy farming requirements.  The lease should also provide that if, for any reason, the development runs afoul of this law and the property loses its farmland assessment the developer – and not the farmer – will be responsible for paying the rollback taxes.  As we all know farmland pays a reduced property tax but, if the farmland status is ever lost, the property owner is required to pay the full amount of the property tax for the current year and the two prior years – which could be a very substantial amount of money.

You should also consider whether the developer has insurance that will cover any injuries that may occur on the property due to the renewable energy systems or from any environmental damages. While the renewable energy system itself may not cause pollution, the support systems for capturing that energy might.  For example a transformer might leak and those discharges will still need to be cleaned up.

Other things that should be dealt with up front also include how big the system will need to be.    In order to comply with the solar farming law, a system on a commercial form cannot be any bigger than two megawatts.  Additional restrictions apply to farmland that has been preserved.

And there are many other issues to consider. What happens to the lease, the system and your payments if the developer is in default of the lease agreement?  What happens to these things if the developer goes bankrupt?

As you can see, the terms outlined in a proposed option agreement are very important. They can set the parameters of the relationship between the farmer and the solar company for twenty, thirty or more years.  This is a very long time and requires careful consideration before entering.

Partnerships, LLCs and Corporations may not be represented by Owners

Written by Michael Pisauro on August 2nd, 2010 in Basics, Corporations, Courts, Limited Liability Company | No Comments »

The other day while researching an issue I came across a case that required noting.  It is not a new case but it discussed an issue I have come across several times over the last year.  If you are a partnership, corporation, or limited liability company, you cannot represent the business in Court.  All business entities must hire an attorney to represent the business in Court, with few exceptions.  This is a requirement set out by the New Jersey Supreme Court in the Court Rules.  R.1:21-1.

That means that if your partnership, LLC or corporation is owned money from a customer, you as an owner of that company cannot file a lawsuit in Court.  That means if your company is sued, you as an owner of the company, cannot file an answer on the company’s behalf.  If you do file a complaint or answer on behalf of the company, and for some reason the Court allows it, you could spend months if not years in litigation just to have the judgment voided by the other side because your company was not represented by an attorney.

As I noted above there are a few limited exceptions to the general rule.  One of the exceptions apply in cases under worth $3,000 or less and which could have been filed in small claims.  There are two exceptions that apply to municipal court.  In all of these exceptions the company could be represented by an authorized officer or employee.  Lastly, a partner of a general partner, not a limited partnership, can represent the business in summary actions for possessions of property.

Shareholders now entitled to 20 days notice of and to dissent to mergers, acquisitions, etc.

Written by Mike Pisauro on July 26th, 2010 in Corporations | No Comments »

When a Company wants to merge or consolidate with another business or wishes to buy another company or be sold to another company, the Company needs the approval of its shareholders.  That approval can occur in two ways.  First the Company can have a meeting of its shareholders where the proposal is voted on by the shareholders.  The second method, unless forbidden, by the corporate documents, is for the action to be approved by the shareholders through their written consent.

Recently, New Jersey has amended the time frames controlling the use of approval by written consent.   P.L. 2010 c. 105 amends NJSA 14A:5-6’s time frames.  The new law   requires the corporation to notify any who did not consent that the proposed action was approved and will take place no sooner than 20 days from the notice.  This notice must also provide that the shareholder has a right to dissent and to be paid the fair value of the shareholder’s shares.  Under the original statute, shareholders only received 10 days notice.

The new law also provides that the corporation can eliminate the post approval notice by providing in its original request for the written consent of its shareholders, the date that all of the written consents will be counted.  This request for written consent must be at least 20 days and not longer than 60 days before the counting of the “votes”.  This solicitation of consent must follow other requirements as well but they have not been changed from the original statute.

In short, P.L. 2010 c. 105 doubles the existing notice period for certain actions.

Principles can be liable for regulatory violations of CFA

Written by Mike Pisauro on July 16th, 2010 in Consumer Fraud, Courts | No Comments »

A couple of weeks ago the Appellate Division confirmed that employees and principals of a company can be held liable for violations of the consumer fraud act.  In Allen v. V and A Brothers, Inc the Plaintiffs alleged that the company, its principals and its employees violated the consumer fraud act by failing to comply with certain regulatory sections.  These violations included not having a written contract; failure to obtain final approval before accepting payment and failure to obtain Plaintiffs’ approval on changes.

The Court reasoned that the Consumer Fraud Act required liberal application to protect consumers.  The CFA defines person as “any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, ….”  NJSA 56:8-1d.

Prior case law has found, based upon the definition of Person under the Act, a principle of a company liable for the affirmative actions the principle took to violate the act. The Court in Allen reasoned that there was no reason to treat affirmative acts and regulatory violations different under the CFA.   An owner of a company can be liable for their violations of the CFA’s regulatory requirements.

Other posts on the Consumer Fraud Act:

NJ Consumer Fraud Act – What is Merchandise

With Consumer Fraud a person really means a person

Consumer Fraud Act and Any Person

Consumer Fraud Act – The Basics

Can you prove your independent contractor is not an employee?

Written by Mike Pisauro on April 22nd, 2010 in Basics, Contracts, Employee/Employer | No Comments »

In 2005 there was estimated to be over 10 million people operating as independent contractors.  Small, medium and large companies all use independent contractors to remain competitive and to grow their businesses but understanding the differences between an “independent contractor” and a regular “employee” is neither easy nor trival to the business. It is an area that is riddled with traps for the unwary. According to a Department of Labor study, approximately 38% of small businesses misclassify employees as independent contractors.  The problem is not limited to small businesses. Even large, more “sophisticated” companies, such as Microsoft, Federal Express and Wal-Mart, for example, are not immune to this error.   Given the current market conditions, it may be even more important for a business to get the classification correct.  Tax revenues for all levels of government are down while budget deficits are up.  In an attempt to bridge this gap, the Federal government and state governments are going to be taking a closer look at how companies classify their human resources.

There are many reasons why this classification is often hard to get right.  Realize that just because you, the employer, think of the person you hired as an independent contractor,  the contract itself might state that he or she is  an independent contractor and even the person thinks of themselves as an independent contractor but that doesn’t necessarily mean that they really are  an independent contractor. Furthermore, a person may be an independent contractor under one set of laws but will be considered as an employee under another set of laws. The tests to determine whether a person is an employee or an independent contractor may be different depending on whether it is for taxes, compliance with discrimination laws or the operation of respondeat superior or some other law.  At least for the purposes of determining whether the right taxes have been withheld it is up to the company to prove that the person was properly classified as an independent contractors and should not have been considered an employee.

New Jersey uses the “ABC” test for unemployment responsibility and hour and wage requirements.  NJSA 43:21-19.  Under this test it is up to you, as the employer, to prove that the relationship is that of an independent contract and not that of an employee.  Specifically the state would look at the following:

A.  Is the person now and continues to be free from the control and direction over the performance of the job?  This condition not only has to be in a contract but must be what occurs in fact.  If the actual practice is different than what is set forth in the contract, the contract will have little weight.

B.  Are the services either outside the usual course of the business or performed outside your physical location?  Does the independent contractor work in your office space or do they work from their own location?

C.  Is the individual customarily engaged in an independent established profession or business?  Are you the independent contractor’s only job or does the indepenent contractor perform work for several other companies?

The business must be able to prove that independent contractor meets all three prongs of the ABC test and it is important that a business gets the decision right. Failure to meet all requirements could result in the payment of all back taxes, penalties and interest.  Such ramifications could transform a company from a success to barley surviving or worse.  It may even open the business owner to personal liability for the back taxes.

As a business owner, it is crucial that you fully understand the differences between a true independent contractor and an employee.  You must fully understand what need you are trying to fill by the proposed relationship and then structure it to adequately meet your proposed business need so in order to avoid possible issues in the future.

Use only 5 digits for Credit Cards and soon to be Debit Cards

Written by Mike Pisauro on April 19th, 2010 in Uncategorized | No Comments »

In 2002 the State prohibited business from printing the full credit card numbers on receipts. Now the State is seeking to extend that prohibition to the use of debit cards. Senate 849 would prohibit business owners from anything other than the last 5 digits of a debit or credit card on a receipt or other document. There is an exception for business that record the credit card number by hand or use the imprint machines.

I would suspect that most credit card machines do this automatically so hopefully this bill will have little impact on the daily runnings of your business.