Let’s revisit Friday’s post about what state’s laws apply to a remote NJ worker’s employment claims

Back by popular demand.

I see that Friday’s post threw some of you for a loop. Perhaps you were always told (or just assumed) that if your business has employees working from home in another state, then that state’s law would apply to some or all claims they may have against the company relating to their employment.

I want to emphasize again at the outset that this is not legal advice, and your mileage may vary depending on the state and the facts and circumstances surrounding any potential state law claim(s). However, regarding discrimination and whistleblower claims asserted under New Jersey law, the “state of employment” test guides this determination, which carries several considerations.

1. Location of Employment: The primary consideration is where the employee physically works. If the employee works in a state other than New Jersey, that state’s law will generally apply.
2. Employer’s Location: While the location of the employer’s headquarters is relevant, it is not determinative. The key factor is where the employee performs their job duties.
3. Employee’s Residence: The employee’s residence in New Jersey cannot trigger the application of New Jersey laws if the employment is based in another state.
4. Remote Work: The fact that an employee works remotely from New Jersey does not necessarily make New Jersey the state of employment. Courts look at where the employer is located and where the employee’s work is directed.
5. Nature of the Claims: The specific nature of the claims and the alleged misconduct are considered. If the claims arise from conduct in the state of employment, that state’s law will apply.
6. Business Conducted in New Jersey: Conducting business in New Jersey or having clients in New Jersey does not change the state of employment if the employee’s primary work location is in another state.
7. Choice-of-Law Provisions: Specific agreements, such as confidentiality agreements, may contain choice-of-law provisions. However, these provisions do not necessarily extend to general employment claims unless explicitly stated.

While this test is NJ-specific, the public policy considerations may extend beyond the Garden State. Courts have noted that applying the law of the “state of employment” ensures uniformity and predictability in employment relationships, allows employers to rely on a consistent set of legal and workplace standards, avoids the complexity and burden of navigating multiple legal regimes, increased administrative costs and legal uncertainty, and accommodates employee mobility. Additionally, the state where employment occurs has a significant interest in regulating the terms and conditions of employment within its borders, including protecting workers’ rights and ensuring fair labor practices without penalizing employers for hiring employees who reside in different states.

If you want to learn more about the “state of employment” test and its application, here are links (1, 2) to the briefs the parties filed in the case I blogged about on Friday.