Litigation between employer and former employees, like matrimonial litigation, gets messy.  In the case reported below [which is posted in full on my web site under Leading Cases http://www.kirschenbaumesq.com/casesbystate.htm  - see NJ cases - 2 alarm company employees quit to form their own alarm company.  A third employee, suspected to plotting with the other 2, was fired.  All 3 ended up owning or working for a new alarm company which set off to directly compete with the former Employer alarm company.  The fired employee filed a Wage Claim proceeding with a NJ Administrative Agency seeking unpaid vacation time, severance pay and a bonus.     

    The Employer had already commenced a lawsuit against the former employees and new alarm company for misappropriation of trade secrets and confidential information, breach of the confidentiality provision of their employment contracts, breach of the duty of loyalty, tortious interference with contractual relations, unfair competition and breach of the implied covenant of good faith and fair dealing.

    The reported decision does not deal with the merits of the lawsuit, which will be the subject of a jury trial, unless settled, but with a procedural issue, whether the Employer could remove the Wage Administrative Proceeding  and  have it joined with the main action, a full blown jury trial case.  The Employer prevailed and both proceedings were joined in the main action.

    You have enough problems running a successful alarm business.  You don't need employees doing the types of things that the employees in this case are accused of [and of course the case is yet to be tried].  Competition from former employees is always a risk of doing business.  The more successful you become, the more employees you have, the more your risk of employee related issues.  I suppose the risks are inevitable and all you can do is try and take precaution to avoid these risks and potential damages.

    The facts reported in this case do mention that there is an employment contract, but the terms of that contract are not revealed.  You should use a properly drafted Employment Contract - for every employee who can conceivably hurt your business or you.  Get a standardized for at www.alarmcontracts.com

    You should also be aware of employee rights and laws governing the employment relationship.  These laws go well beyond the familiar anti discrimination laws regarding sex, race and religion.  There are laws dealing with working hours, working conditions, overtime, break time, health insurance, termination notices and rights, federal and state laws.

    If you have labor law questions you can send them to me or Jennifer Kirschenbaum at Jennifer@Kirschenbaumesq.com.  Be sure to let us know if you would like the inquiry kept confidential so we don't circulate it on this forum.

    Here are parts of the reported case.  The entire case is on our web site and the link is above.

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B&H SECURITIES, INC., a New Jersey Corporation,

               Plaintiff-Respondent, v. DUANE D. PINKNEY, MARC J.

              PALLADINO, MICHAEL POISLER and ADVANCED INTEGRATION

            SECURITY, L.L.C.

 

                           December 9, 2008, Decided

   The issue presented by this appeal is whether an employee's wage claim, filed in the Department of Labor under the Wage Act, N.J.S.A. 34:11-57 to -67, which is removed to the Superior Court for a jury trial, thereupon becomes a Superior Court action subject to the trial court's plenary authority, including the authority to consolidate with other pending actions, or continues to be an administrative claim that must be tried separately from any Superior Court action. We conclude that an employee's Wage Act claim that is removed to the Superior Court for a jury trial is a Superior Court action, which is subject to the same rules of practice and procedure as any other Superior Court action.

    Defendants Duane Pinkney, Mark Palladino and Michael Poisler are former employees of plaintiff B&H Securities (B&H), which provides security services such as video surveillance, intrusion detection and fire alarm systems. Pinkney and Palladino resigned from their positions with B&H in June and July 2007. Based on B&H's suspicion that Pinkney, Palladino and Poisler planned to establish a competing business, B&H terminated Poisler's employment shortly thereafter. Pinkney, Palladino and Poisler are all now employed by and/or own an interest in defendant Advanced Integration Security, L.L.C. (AIS), which also provides security services.

   In August 2007, B&H filed an action in the Superior Court, Chancery Division, against Pinkney, Palladino and AIS, which asserted claims for misappropriation of trade secrets and confidential information, breach of the confidentiality provision of their employment contracts, breach of the duty of loyalty, tortious interference with contractual relations, unfair competition and breach of the implied covenant of good faith and fair dealing. Pinkney and Palladino filed a counterclaim against B&H, which asserts that B&H owes them commissions as well as vacation and sick pay.

   In October 2007, Poisler filed a claim against B&H with the Department of Labor for unpaid wages under the Wage Act. Poisler alleged that B&H owed him $ 815.38 for two unused vacation days, $ 4,076.90 severance pay, and a $ 25,000 bonus.

   Shortly thereafter, B&H notified the Department that it intended to remove Poisler's wage claim to the Superior Court and join that claim with its pending action against Pinkney, Palladino and AIS. Although B&H did not thereafter file a demand for a jury trial and pay the statutory fee required to remove a wage claim to the Superior Court for a jury trial, B&H represents that it would have taken those formal steps required for removal to the Superior Court but was prevented from doing so by this appeal. Therefore, we treat B&H's notice of intention to remove Poisler's Wage Act claim to the Superior Court as the functional equivalent of a jury trial demand.

     Moreover, there is no basis in the language of any other section of the Wage Act to support Poisler's argument. Consequently, in the absence of an express provision in the Wage Act stating that a claim removed to the Superior Court for a jury trial remains under the Department of Labor's jurisdiction, we believe N.J.S.A. 34:11-66 should be interpreted to subject such a claim to the plenary control of the Superior Court in accordance with the rules of court, including the rule governing consolidation.

   Finally, we are satisfied that the trial court did not abuse its discretion in ordering such consolidation in this case. In determining whether to consolidate a Wage Act claim with other claims between an employer and employee, a court should, of course, be cognizant of the Wage Act's goal of assuring the prompt payment of wages to employees. However, there is no allegation in this case that B&H failed to pay Poisler's regular wages during the course of his employment. Poisler's claims are solely for two days of unused vacation time, vacation pay and, most significantly, a $ 25,000 bonus. B&H's claims against Poisler for misappropriation of trade secrets and confidential information, breach of the confidentiality provision of his employment contract, breach of the duty of loyalty, tortious interference with contractual relations, unfair competition and breach of the implied covenant of good faith and fair dealing, if proven at trial, could establish an affirmative defense to certain of Poisler's claims, particularly his claim to a bonus, which presumably depends on the quality of his performance as an employee. Therefore, Poisler's Wage Act claims and B&H's claims against Poisler, as well as the claims and counterclaims between B&H, Pinkney and Palladino, involve sufficient "common question[s] of law or fact" to justify consolidation under Rule 4:38-1(a).