What state’s employment laws apply when a non-resident remote worker sues your business?

Last night, I read a New Jersey federal court opinion involving a woman who lived and worked remotely in New Hampshire for a company in New Jersey. She sued under New Jersey law, alleging she received less pay than certain male co-workers. The defendants moved to dismiss the action because the remote worker did not live or work in New Jersey. But the court denied the motion.

Here’s why.

The federal court adopted the analysis from a 2019 ruling from a state appellate court. Both courts predicted that the New Jersey Supreme Court, which has yet to rule on this issue, would conclude that New Jersey’s Law Against Discrimination (LAD) is broad enough to cover out-of-state residents/workers. Specifically, LAD protects “all persons,” and nothing in the LAD defines “person” as a New Jersey resident or employee. So, neither court felt it appropriate to read any other definition of “person” into the statute.

Also, the LAD is remedial legislation that the drafters intended Courts to liberally construe in favor of employees. So, if a New Jersey company, through its New Jersey officials, discriminates in the workplace, those decisions emanating from New Jersey can impact anyone regardless of location. The LAD is designed to stop that.

Further, some other federal courts (but not all) have agreed with the foregoing. Moreover, other state court judges, like this panel deciding a case involving the state’s whistleblower law, concluded that state employment law could reach outside the state.

But here’s the thing. Just because the LAD or some other state employment law can apply to non-resident remote employees doesn’t mean it should. To resolve that issue, a court must engage in a choice of law analysis to determine two employment laws conflict. If they don’t, then it’s a moot point.

However, if the two laws are materially different (e.g., one would alter the outcome of the case, or the law of one state is repugnant to the public policy of the other), then the court will have to decide which one to apply. This could happen in many ways:

• Coverage based on the number of employees
• Caps on damages
• Statute of limitation
• Definitions (e.g., one may cover more protected classes than another or impose more responsibilities on employers)

But the burden is on the employer to point this out.

In the decision I read last night, the employer failed to explain how the LAD differed from New Hampshire’s anti-discrimination law. So, the court denied the motion to dismiss.

Your mileage may vary outside of New Jersey. But not by much, I imagine. So, beware of non-resident remote workers and their lawyers forum shopping and trying to invoke whatever law puts them in the best position to prevail in an employment lawsuit.