NJCJI Opposes Efforts to Undercut Judicial Discretion in Workers’ Compensation Attorneys’ Fee Awards
In Spring 2023, the New Jersey Senate introduced Bill 3818 (“S3818”), which sought to amend the New Jersey Workers’ Compensation Act to impose a mandatory award of attorneys’ fees to prevailing claimants equal to 25 percent of any recovery. At present, the Workers’ Compensation Act permits judges to order a discretionary award of attorneys’ fees no greater than 20 percent of the recovery, which judges can then apportion to the claimant’s employer. As part of a business coalition formed to oppose this bill, NJCJI submitted a memorandum to the Senate Labor Committee, arguing that statutory fee-shifting arrangements must involve a judicial assessment of whether the fees sought are reasonable. Thanks to the efforts of the business coalition opposing this bill, the Senate Labor Committee announced that it would not conduct a hearing on the bill and the Assembly counterpart of the bill was withdrawn in late Spring.
Unfortunately, the Assembly counterpart to S3818 was quickly replaced by the deceptively titled “Establishes 21st Century Injured Workers’ Access to Justice Act.” (“A5659/S4059”). This new bill would impose a 25% cap on fee awards in these cases, but with an illusory grant of judicial discretion to satisfy opponents’ concerns. That is, the new bill ostensibly retained judicial discretion, but prohibited judges from considering the number of hours worked or an attorneys’ hourly rate in assessing the reasonableness of fee awards.
A5659/S4059 is currently moving during the lame duck session. During hearings before the Senate and Assembly Labor Committees, NJCJI forcefully argued that the facts and circumstances for each workers’ compensation case will vary, and that barring judges from considering the hours worked and rates charged by attorneys would lead to a de facto 25 percent mandatory award given that judges would have no basis for making an initial estimate of a reasonable fee. Despite the best efforts of NJCJI and its partners in the coalition, A5659/S4059 was voted out of both committees, and is currently on the floors of both Houses for consideration.
A copy of NJCJI’s memorandum to the Assembly Labor Committee opposing A5659 can be found here. A copy of NJCJI’s memorandum to the Senate Labor Committee on the bill can be found here. A copy of NJCJI’s memorandum to the entire Senate can be found here. A recording of NJCJI’s testimony before the Assembly Labor Committee can be found here, with testimony beginning at the 1:18:18 minute mark. A recording of NJCJI’s testimony before the Senate Labor Committee can be found here, with testimony beginning at the 16:54 minute mark.
NJCJI Advocates Against Bills That Would Permit Labor Unions from Filing Suits on Behalf of Non-Union Workers for Unpaid Wages
NJCJI recently submitted written comments and testimony against bills A5794/S1438, which would allow labor unions to file civil lawsuits on behalf of workers unaffiliated with the union against their employer for unpaid wages. The bill would only be applicable to the construction trades within the State. Under current law, only the New Jersey Department of Labor and Workforce Development, or a joint labor-management cooperation committee, may file a civil suit on behalf of union workers allegedly owed unpaid wages in this industry.
In advance of the Assembly and Senate Labor Committee hearings on this bill, NJCJI submitted written comments expressing concerns that the bill created a “backdoor” for bringing wage and hour class actions against construction businesses. The legislation would invite an unlimited universe of unions to jockey for influence through such litigation without any guardrails on their joint participation, fee splitting, or settlement authority.
In response to NJCJI’s stated concerns, the bill was amended twice. The first set of amendments prohibited unions from filing wage and hour lawsuits on behalf of workers if a collective bargaining agreement was in place between the workers and their employer. The second set of amendments required that workers provide written consent to the filing of such suits on their behalf. While these amendments were a positive development, they still did not address NJCJI’s fundamental concerns about the legislation, as stated above.
Labor unions in the construction trades wield bipartisan influence in New Jersey’s Legislature, and concerns regarding worker misclassification are near the top of the Governor’s policy agenda. Accordingly, despite NJCJI’s opposition to this legislation, it passed both Houses with bipartisan support during the pending lame duck session and is currently on the Governor’s desk for consideration. NJCJI subsequently provided a written comment to the Governor’s Office concerning this legislation.
A copy of NJCJI’s written comment to the Assembly Labor Committee can be found here. A copy of the NJCJI’s written comment to the Governor’s Office can be found here. A recording of NJCJI’s committee testimony can be found here, beginning at the 2:24:59 minute mark.
NJCJI Testifies Against Bills Seeking to Protect Mass Arbitration Tactic
NJCJI recently opposed efforts to pass bills A4961/S3572, which seek to provide legislative sanction to a problematic litigation tactic known as “mass arbitration.” By way of background, in recent years, the plaintiffs’ bar developed mass arbitration in response to federal and state court decisions upholding class-action waivers in arbitration agreements. As part of mass arbitration, attorneys recruit large numbers of consumers—sometimes numbering in the tens of thousands—to file identical arbitrations against a business. Leading arbitration providers often charge thousands of dollars in upfront fees to arbitrate individual cases, and businesses typically volunteer to pay these fees as part of their arbitration agreements. As a result, plaintiffs’ lawyers can leverage the threat of millions of dollars in cumulative arbitration initiation fees to extract large settlements from businesses before even a single arbitrator has weighed the merits of the consumers’ claims.
To counter this tactic, businesses now include bellwether clauses in their arbitration agreements to limit the number of arbitrations that can be brought at a single time by an attorney. Bellwether clauses effectively prevent plaintiffs’ attorneys’ use of initiation fees for settlement leverage. A4961/S3572 seeks to preserve the mass arbitration tactic by outlawing bellwether clauses in consumer contracts.
In opposition to the bill, NJCJI submitted written comments and provided oral testimony to the Senate Commerce Committee, Assembly Consumer Affairs Committee and Assembly Judiciary Committee. NJCJI argued, among other things, that mass arbitration unfairly extracts massive settlements from businesses without any consideration of the merits, and the Legislature should not sanction the tactic.
NJCJI’s committee testimony in opposition to A4961/S3572 can be found and here at 1:09. NJCJI’s coalition letter to the Legislature can be found here.