SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4364-99T3
DATA INFORMATICS, INC.,
Plaintiff-Appellant,
v.
AmeriSOURCE PARTNERS,
AmeriSOURCE CONSULTING, INC.,
and RATHNA BALAWAT,
Defendants-Respondents.
Argued February 22, 2001 - Decided March 14, 2001
Before Judges Baime, Wallace, Jr., and Carchman.
On appeal from Superior Court of New Jersey, Law
Division, Middlesex County, L-984-99.
Bruce D. Ettman argued the cause for appellant (Spadoro
& Hilson, attorneys; George A. Spadoro, of counsel; Mr.
Spadoro and Mr. Ettman, on the brief).
John J. Murray, Jr. argued the cause for respondents
AmeriSOURCE Partners and AmeriSOURCE Consulting, Inc.
(Lawrence S. Coven, attorney; Mr. Murray, on the
brief).
Respondent Rathna Balawat did not file a brief.
The opinion of the Court was delivered by
CARCHMAN, J.A.D.
Plaintiff Data Informatics, Inc. brought a contract and tort
action against defendants, AmeriSOURCE Partners, AmeriSOURCE
Consulting, Inc. (collectively, "AmeriSOURCE") and Rathna Balawat
(Balawat), (collectively, "defendants"), seeking damages
allegedly resulting from AmeriSOURCE's placement of its contract
computer programmer, Balawat, directly with plaintiff's client,
Alliance Funding Company ("Alliance"), in contravention of the
parties' agreements. AmeriSOURCE defended asserting that
plaintiff was barred from proceeding on its claims for failure to
comply with the licencing requirements of the Private Employment
Agency Act,See footnote 11 N.J.S.A. 34:8-43 to -66 (the "Act"). The motion
judge granted defendants' motions for summary judgment and
dismissed the complaint. Plaintiff's appeal requires us to
interpret the Act to determine whether plaintiff was an
employment agency subject to its licensing requirements. We
conclude that plaintiff is subject to those requirements, and
that its failure to comply with the Act bars it from proceeding
on its cause of action. Accordingly, we affirm the dismissal of
its complaint.
The underlying facts presented by the parties on the motions
for summary judgment were not in significant dispute.
Plaintiff, a Delaware Corporation with its principal place of
business in Delaware, maintains "an office" in New Jersey.
AmeriSOURCE is a "computer consulting business" licensed and
registered "as an employment agen[cy] and placement [firm which]
. . . also do[es] project management." Both companies "engage[]
in the business of placement of contract personnel within other
entities" as computer services consultants. Balawat is a
computer programmer who entered into a one-year minimum
employment contract with AmeriSOURCE on January 16, 1997,
agreeing to work as an on-site computer software consultant for
AmeriSOURCE or any of its direct or indirect clients. That
contract contained comprehensive non-competition clauses which
prohibited Balawat's concurrent or subsequent employment with any
of AmeriSOURCE's clients for a period of one year after leaving
AmeriSOURCE's employ, unless AmeriSOURCE gave explicit written
permission to the contrary.
On April 18, 1997, plaintiff's predecessor in contract and
AmeriSOURCE entered into an agreement and work order for "the
supply of [Balawat] for programming services to [plaintiff],"
commencing at the "end-client," Alliance, on April 21, 1997.
That is, "[p]laintiff . . . placed [AmeriSOURCE's] employee,
Balawat, at Alliance." In conjunction with the work order,
plaintiff and AmeriSOURCE also entered into a "Master Service
Contract" whereby AmeriSOURCE agreed to supply plaintiff with
employees to meet plaintiff's requirements. We quote relevant
portions of the contract:
A SCOPE
A.1 General
[Plaintiff] agrees to hire contract personnel
from AmeriSOURCE as and when required by
[plaintiff], and AmeriSOURCE hereby agrees to
provide contract personnel to [plaintiff] as
and when required by [plaintiff].
B WORK ORDER & PROJECT
As and when contract personnel are actually
assigned by AmeriSOURCE to work for
[plaintiff] on specific projects, a WORK
ORDER (as per enclosed format Appendix-A)
shall be signed by both parties for every
contract person. All such Work Orders shall
be considered an integral part of this
Agreement. Each Work Order shall constitute
a Project.
C EMPLOYMENT STATUS OF CONTRACT PERSONNEL
All contract personnel employed or contracted
by AmeriSOURCE and assigned to work for
[plaintiff] shall at all times during the
term of this contract and for the period
specified in the restrictive covenants, be
employees of AmeriSOURCE . . . and not of
[plaintiff].
Notwithstanding any other provision in this
Agreement, should AmeriSOURCE fail to ensure
prompt payment of wages and fees to contract
personnel then assigned to plaintiff, the
latter may at its election contract directly
with the said contract personnel for the
continued performance of the services then
being provided.
. . . .
J RESTRICTIVE COVENANT
J.1 AmeriSOURCE agrees that, during the term of
this Agreement or any renewal thereof and for
a period of 1 (one) calendar year after the
completion of the contracted services,
AmeriSOURCE will not solicit, enter into
agreement with or assign contract personnel
to [plaintiff's] clients with whom
[AmeriSOURCE's] contract personnel have been
introduced by interview or placement, unless
[plaintiff] grants the proper authorization
in writing to waive this provision.
J.4 [The terms of J.1] shall survive the
termination of the Agreement.
. . . .
M OBLIGATIONS OF CONTRACT PERSONNEL
M.1 AmeriSOURCE shall be required to make all
contract personnel assigned to [plaintiff's]
projects by way of this Agreement, aware of
the provisions of this Agreement which affect
or obligate the contract personnel.
M.2 AmeriSOURCE shall be required to obtain in
writing the contract personnel's acceptance
of the provisions referred to in [M.1] above.
This will be obtained in the form of a
statement similar to the format enclosed as
Appendix-B.
. . . .
N LEGAL STANDING
. . . .
N.2 [Plaintiff] hereby declares . . . that it has
complied with all Federal State and Local
laws regarding business permits and licenses
that may be required in order to conduct
business, in general, and to carry out the
work stated in this Agreement; that it is
qualified to conduct business in all
jurisdictions in which the nature of the
business contemplated by this Agreement
requires such qualification; and, that it
currently enjoys the legal standing necessary
in order to enter into this Agreement.
[(Emphasis added).]
The parties' work order and agreement set forth the method
of Balawat's compensation. Balawat commenced working at Alliance
on April 21, 1997, and thereafter submitted weekly time sheets to
plaintiff, who then invoiced Alliance at an hourly rate for
Balawat's services; Alliance paid plaintiff, who then retained a
portion of the payments and forwarded the remainder to
AmeriSOURCE; AmeriSOURCE then retained its respective share of
the payments, and compensated Balawat pursuant to her employment
agreement with AmeriSOURCE. AmeriSOURCE was also responsible for
withholding and paying Balawat's applicable federal, state, and
miscellaneous taxes, as well as for paying her liability and
workers' compensation insurance premiums.
In February 1998, plaintiff stopped receiving time sheets
from Balawat, and upon inquiry to AmeriSOURCE concerning her
employment status, ultimately received a letter from AmeriSOURCE
dated July 16, 1998, which stated:
To Whom It May Concern:
Effective June 22, 1998, [AmeriSOURCE]
releases Ms. Rathna Balawat of NR Tech Corp.
from the contract dated February 20, 1998 to
accept employment with Larry Bernardo &
Company. This is a general waiver of the
non-compete clause in our contract of
February 20, 1998.
Although this letter does not reference the employment contract
of January 16, 1997 between Balawat and AmeriSOURCE, plaintiff
asserts that this letter "confirm[ed] that Balawat had resigned
from [AmeriSOURCE] and that [AmeriSOURCE] released her from her
obligations under the [January 16] Employment Agreement,
including the non-compete provision" of Balawat's agreement with
AmeriSOURCE.
Plaintiff filed a complaint against defendants seeking money
judgment and other relief for damages sustained as a result of
AmeriSOURCE's alleged breach of contract (Count One), Balawat's
alleged breach of a restrictive covenant (Count Two), and both
defendants' alleged tortious interference with plaintiff's
contract and economic advantage (Counts Three and Four), breach
of the implied covenant of good faith and fair dealing (Count
Five), and unjust enrichment (Count Six).
Plaintiff claimed that both plaintiff and AmeriSOURCE were
"engaged in the business of placement of contract personnel
within other entities," and that pursuant to the parties'
agreement, AmeriSOURCE supplied Balawat to plaintiff, who then
"placed" her with its client, Alliance, to provide computer
programming services. Plaintiff also claims that it never
received an executed copy of Balawat's required agreement not to
compete, that Balawat's alleged February 18, 1998 letter of
resignation to AmeriSOURCE was delivered to plaintiff when
Balawat stopped submitting her time sheets from her job at
Alliance, and that "upon information and belief," Balawat
continued to work at Alliance, and AmeriSOURCE placed other
employees there, both in violation of the parties' master service
contract. Obviously, plaintiff never identified itself as a
licensed or registered employment agency under the Act.
Following service of the complaint, defendants moved to
dismiss asserting, among other defenses, plaintiff's failure to
comply with the Act. That motion was denied and an answer was
filed. Thereafter, AmeriSOURCE and Balawat moved for summary
judgment.
In opposing the motions, plaintiff provided the
certifications of its president, Rekha Chandarana (Chandarana),
and its vice-president, Surindar Mohan Malhan (Malhan).
Chandarana stated that plaintiff was not an employment agency
subject to the Act, was "not in the business of placing
employees," and did not seek to collect "a fee, commission or
charge for placing employees." Rather, plaintiff was engaged in
the "Project Management" of implementing its clients' specific
computer programming needs, and had been hired by Alliance to
manage a programming project "[b]ecause Alliance did not have an
employee in-house who could [do so]." "As [plaintiff] did not
then have an employee available to be assigned to work on the
Alliance Project, [it] sought the services of a consulting
company [AmeriSOURCE,] to provide [plaintiff] with a consultant
to work on the Alliance Project on [plaintiff's] behalf."
AmeriSOURCE then provided Balawat to plaintiff, who, in turn,
assigned her to "the Alliance Project." In sum, Chandarana
claimed plaintiff's business consisted not of "finding job
placements for people," but of "manag[ing] its clients' computer
projects," and it "was not paid a fee to place Balawat," but
rather was paid for its "project management services [at] an
agreed hourly rate" "based on the amount of time Balawat worked
on the Alliance Project." Plaintiff in turn, paid AmeriSOURCE
"for the use of Balawat's services" on the project. Chandarana
also asserted that Balawat's letter of resignation from
AmeriSOURCE was "false," and that she "continued to provide
services to the Alliance Project after the date of her
'resignation', but directly or indirectly to AmeriSOURCE, who had
misappropriated [plaintiff's] client" and also "placed other . .
. employees directly at Alliance in derogation of . . .the Master
Service Contract."
According to Malhan, George Balinsky of Alliance called him
"seeking assistance regarding the technical aspects of a project
. . . because the then current manager, Larry Bernardo, was not
there full-time at their New Jersey location." Plaintiff
"contracted with Alliance to provide . . . Balawat to provide the
technical services Alliance required of her." Malhan opined that
defendants were "trying to get away with stealing [plaintiff's]
business," and that "Bernardo [was] a participant in their plan."
In support of their summary judgment motions, AmeriSOURCE
and Balawat relied on the certifications of Balawat,
AmeriSOURCE's principal, Probal Dasgupta (Dasgupta), William C.
Bracken, CFO of Alliance's parent company, and Larry Bernardo,
principal of his own company and the contract project manager
responsible for designing and implementing the subject computer
program for Alliance.
Balawat certified that while she was under contract with
AmeriSOURCE, an employment agency, she was placed at Alliance by
plaintiff, another employment agency, pursuant to industry
custom, after plaintiff arranged for her interview with Alliance
and presented her with Alliance's subsequent job offer. She also
stated that the programming project she worked on at Alliance had
commenced well prior to her placement there, and that she was
exclusively supervised and controlled by Alliance's project
manager, Larry Bernardo. In sum, she claimed that plaintiff had
only placed her at Alliance, and had never been responsible for
the management or oversight of her work or the Alliance
programming project.
Dasgupta confirmed Balawat's statements, and further offered
that plaintiff had merely "acted as an employment agency" by
placing Balawat at Alliance, had never engaged in software design
or "Project Management" at Alliance, and had no employees or
supervisors there. He noted that plaintiff "was paid . . . only
when [AmeriSOURCE] supplied Balawat to [plaintiff] to be placed
with Alliance by [plaintiff]," and was therefore "seeking to
recover from defendants the fee, charge or commission [plaintiff]
would have earned had [it] continued to place Balawat . . . and
the other alleged employees with Alliance."
Bracken and Bernardo also confirmed this version of events,
certifying that Bernardo was and had been the exclusive computer
programming project manager for Alliance's project since its
inception, that plaintiff never had any agreement, contract, or
responsibility for technical input or project management on
Alliance's project, and that plaintiff, upon inquiry by
Alliance's George Belinsky, merely placed Balawat as a programmer
to meet Alliance's needs as determined by Bernardo.
Plaintiff conceded that: (1) the only document evidencing
any type of agreement between plaintiff and Alliance concerning
Balawat's placement was "a purchase order type of document,"; (2)
its compensation from Alliance was not a "management fee," but
rather a share of Balawat's hourly wages; (3) its damages would
therefore be measured by its "lost" share of Balawat's earnings
at Alliance plus a share of the earnings of any employee
AmeriSOURCE might place there; and (4) there was no project
management contract between plaintiff and Alliance, and Bernardo
supervised the project's programmers.
Judge Rebeck granted summary judgment to defendants,
stating:
I think we've gone around this over and over
again. I'm satisfied that the . . .
employment agency statute 34:8-43 applies
here.
I'm satisfied from the evidence that . .
. [plaintiff] was not the project manager.
I'm satisfied . . . that Larry Bernardo was
hired by Alliance Funding to manage this
project, to supervise the project, to run the
project two years before [Balawat] ever came
on board.
I'm satisfied that Larry Bernardo needed
somebody. [Balawat] was an employee of
AmeriSOURCE who is an employment agency.
Plaintiff didn't have anybody to they went to
AmeriSOURCE, got [Balawat], and sent
[Balawat] over . . . to serve in the capacity
used.
Whether you look at this as an
employment agency or if you look at it as a
temporary help service _ I'm satisfied that
the Statute applies. Clearly, and that's why
it was so important for me to get an answer
[to] the very first question I asked and that
is what [are] your damages, how do you
compute your damages, . . . you compute your
damages by what you've lost by not getting
the money for using [Balawat], and you also
are losing money for not giving them other
possible employees of your's or someone
else's for which you would reap some sort of
a financial benefit. You don't want to call
it a commission, you want to call [it] a fee,
fine, whatever you want to call it. You look
at the vouchers and how did [plaintiff] get
its money. Well, it was [Balawat's] service
that was rendered a[t] X number of dollars
and from that money it was divvied up and
[plaintiff] got its share for . . . this
woman . . . doing her job at the premises.
Whether it's fair or not the Statute is
clear, the Statute says if you fall within .
. . one of the categories in the Statute you
have to be licensed or registered. If you're
not licensed or registered at the time the
cause of action arose, you can't collect.
Having abandoned its claim of serving as "project manager"
on appeal, plaintiff contends that the motion judge erred in
granting summary judgment to AmeriSOURCE because: (1) plaintiff
is not an "employment agency," but rather a "temporary help
service firm" exempt from the requirements of the Act; (2) even
if plaintiff were an employment agency, the Act would not
preclude its contract and tort claims; (3) even if the Act
applied and precluded plaintiff's claims, the judge abused his
discretion by failing to take "equitable considerations" into
account; and (4) genuine issues of material fact precluded
summary judgment.
In addressing the arguments raised by plaintiff, we first
review the Act, its purpose, and its relevant provisions. The
Act provides for the Division of Consumer Affairs' regulation and
oversight of mandated practices, licensing, and registration
requirements for private agencies which provide employment
services, N.J.S.A. 34:8-53 to 8-63; N.J.S.A. 52:17B-139.4 to -
139.6, and prohibits regulated agencies from engaging in
"deceptive or otherwise unfair practices when dealing with both
job seekers and employers," A. 3018, 203rd Leg., 2d Sess., 1989
N.J. Sess. Law Serv. 331 (West) (Introductory Statement). It
applies to "any person engaging in any of the activities
regulated by th[e] [A]ct including persons whose residence or
principal place of business is located outside of . . . [New
Jersey]." N.J.S.A. 34:8-45a; N.J.A.C. 13:45B-1.1(b). Employment
agencies must be licensed,See footnote 22 while temporary help service firms
must be registered.See footnote 33 Relevant to the primary inquiry before us,
the Act requires licensure or registration as a condition
precedent to an action for fees and mandates that
[a] person shall not bring or maintain an
action in any court of this State for the
collection of a fee, charge or commission for
the performance of any of the activities
regulated by this act without alleging and
proving licensure or registration, as
appropriate, at the time the alleged cause of
action arose.
[N.J.S.A. 34:8-45b.]
A "fee, charge or commission" is defined as:
any payment of money, or promise to pay money
to a person in consideration for performance
of any service for which licensure or
registration is required by this act, or the
excess of money received by a person
furnishing employment or job seekers over
what he has paid for transportation, transfer
of baggage or lodging for a job seeker.
"Fee, charge or commission" shall also
include the difference between the amount of
money received by any person who . . .
furnishes job seekers . . . and the amount
paid by the person to the job seekers . . . .
[N.J.S.A. 34:8-43.]
The Act and its implementing regulations govern "employment
agencies" and their "agents," N.J.S.A. 34:8-43, which must
demonstrate compliance with the Act's many preliminary
requirements to obtain required annual licenses, N.J.S.A. 34:8-
48, -52a; N.J.A.C. 13:45B-2.1(a)-(c), as well as "temporary help
service firms," which must also comply with the requirements of
N.J.S.A. 56:8-1.1, N.J.S.A. 34:8-43, including annual
registration with the Attorney General, N.J.S.A. 56:8-1.1a.
N.J.A.C. 13:45B-7.2; N.J.A.C. 13:45B-13.2a. The employment
agency licensing requirements are not insignificant, and reflect
a legislative scheme to insure that those engaged in the industry
are well-qualified and of good moral character. See, e.g.,
N.J.S.A. 34:8-44, -47 and N.J.A.C. 13:45B-2.1, -2.6(a)2, -2.7(b)2
(requiring license applicant's comprehensive disclosure
statements, including criminal convictions disclosure and
independent affidavits attesting to applicant's good moral
character); N.J.S.A. 34:8-48 and N.J.A.C. 13:45B-2.6(a)
(requiring, among other things, that license applicants pass a
written examination demonstrating knowledge of the Act's
requirements and sufficient knowledge necessary to qualify as an
employment agent); N.J.S.A. 34:8-49 and N.J.A.C. 13:45B-2.3
(requiring agency license applicant to post $10,000 bond);
N.J.S.A. 34:8-51, and N.J.A.C. 13:45B-2.2, -2.4, -2.5, -2.8
(delineating various fee schedule and record-keeping
requirements). In addition, out-of-State entities required to be
licensed or registered under the Act must also register the name
and address of a designated New Jersey agent "for service of
process and other matters." N.J.A.C. 13:45B-8.2.
Plaintiff's claim that it is not an "employment agency" is
based on its assertion that it did not engage in activities
within the statutory definition of "employment agency," and that
its activities were therefore outside the scope of the Act. In
discerning the meaning and applicability of statutory provisions,
we are mindful of the admonition to look to the purpose and
language of legislation as the "surest indicator of the
Legislature's intent." Mayfield v. Cmty. Med. Assocs.,
335 N.J.
Super. 198, 204-05 (App. Div. 2000).
An "employment agency" is defined as "any person who, for a
fee, charge or commission":
(1) Procures or obtains, or offers,
promises or attempts to procure, obtain, or
assist in procuring or obtaining employment
for a job seeker or employees for an
employer; or
(2) Supplies job seekers to employers
seeking employees on a part-time or temporary
assignment basis who has not filed
notification with the Attorney General
pursuant to the provisions of [N.J.S.A. 56:8-
1.1]; or
. . . .
(4) Acts as a placement firm . . . .
[N.J.S.A. 34:8-43(1), (2), (4); N.J.A.C.
13:45B-1.2.]
The Supreme Court defined the purpose of the Act in
Accountemps Division of Robert Half, Inc. v. Birch Tree Group,
Ltd.,
115 N.J. 614 (1989). It is "abundantly clear to one
examining the entire statutory scheme . . . that the
Legislature's primary purpose in adopting the . . . Act was to
regulate the conduct of all employment agencies providing
services to New Jersey employees and employers." Id. at 623
(emphasis added). "It would frustrate that purpose" to construe
the Act to require agencies which readily acknowledge the nature
of their activities and the consequent applicability of the Act
to be subject to comprehensive regulation, while allowing
agencies which carry on those same activities under color of
artful nomenclature to deny the applicability of the Act and
"carry on business in this State completely unregulated." See
ibid. "The Act is a regulatory measure intended to alleviate
abuses in the employment-agency industry. With this remedial
purpose in mind, the Legislature required the licensing of all
entities that 'perform any of the functions of an employment
agency.'" Ibid. (quoting former N.J.S.A. 34:8-26, now codified
at N.J.S.A. 34:8-47, -48).
A careful analysis of the Act as applied to plaintiff's
activities demonstrates that plaintiff's conduct falls within the
proscribed unregulated practices described by the Court in
Accountemps. The definitions provided by the Act are helpful.
An "employer" is defined as "a person seeking to obtain
individuals to perform services, tasks, or labor for which a
salary, wage, or other compensation or benefits are to be paid,"
N.J.S.A. 34:8-43, but, for purposes of the Act, an employment
agency is not an "employer," except of its own employment agents,
N.J.A.C. 13:45B1.2. A "job seeker" is "any individual seeking
employment . . . or employment related services or products."
N.J.S.A. 34:8-43; N.J.A.C. 13:45B-1.2. Although not defined by
the statute, "employee" and "placement firm" must be given their
ordinary and well-understood meanings. N.J.S.A. 1:1-1; Alan J.
Cornblatt, P.A. v. Barow,
153 N.J. 218, 231 (1998); Hubbard v.
Reed,
331 N.J. Super. 283, 290 (App. Div.), certif. granted,
165 N.J. 527 (2000). "Employee" is commonly defined as "[a] person
in the service of another under any contract of hire, express or
implied, oral or written, where the employer has the power or
right to control and direct the employee in the material details
of how the work is to be performed." Black's Law Dictionary 471
(5th ed. 1979). See also Conestoga Title Ins. Co. v. Premier
Title Agency, Inc.,
328 N.J. Super. 460, (App. Div.), aff'd,
166 N.J. 2 (2000) (defining employee as "person[] whom you have the
right to direct and control while performing services for you").
"Placement" is commonly defined as "[t]he act of finding
employment for a person as in the case of an employment agency,"
Black's Law Dictionary, supra, at 1034. The common meaning of
the provision's remaining terms are readily apparent, and not "so
unusual or subtle [as] to 'send the average citizen scrambling
for a dictionary." Binkowski v. State,
322 N.J. Super. 359, 382
(App. Div. 1999) (quoting State v. Afanador,
134 N.J. 162, 171
(1993)).
The factual scenario described by plaintiff in response to
the motions for summary judgment provides a sufficient basis for
demonstrating plaintiff's susceptibility to the Act's
requirements. Plaintiff procured an AmeriSOURCE employee,
Balawat, and placed her with plaintiff's client, Alliance.
N.J.S.A. 34:8-43(1). Alliance was obviously an "employer," as it
contacted plaintiff seeking to obtain an employee to perform
services for which wages were to be paid. N.J.S.A. 34:8-43.
Balawat was an "employee" of Alliance, as plaintiff conceded that
Alliance alone, through Bernardo, controlled and directed her in
the material details of how her work was to be performed.
Plaintiff received a "fee, charge, or commission" by direct
payment of that portion of Balawat's wages from Alliance to
plaintiff which plaintiff retained for its service of procuring
and providing Balawat to Alliance. Plaintiff's activities meet
the plain language definition of an "employment agency" governed
by the Act under N.J.S.A. 34:8-43(1). The totality of
plaintiff's conduct is most telling. It arranged the interview
with Alliance, supplied Balawat to Alliance, and was compensated
based on a percentage of Balawat's wages. Plaintiff's role in
the transaction, no matter how self-described by plaintiff, is
well within the scope and purview of the Act.
We reject plaintiff's additional claim that it was a
temporary help service agency exempt from the Act's provisions.
A review of the relevant provisions dispels the validity of that
argument. A "temporary help service firm" is defined as:
any person who operates a business which
consists of [1] employing individuals
directly or indirectly for the purpose of
assigning the employed individuals to assist
the firm's customers in the handling of the
customers' temporary, excess or special work
loads, and [2] who, in addition to the
payment of wages or salaries to the employed
individuals, pays federal social security
taxes and State and federal unemployment
insurance; carries worker's compensation
insurance as required by State law; and [3]
sustains responsibility for the actions of
the employed individuals while they render
services to the firm's customers. A
temporary help service firm is required to
comply with the provisions of . . . [the
Consumer Fraud Act, N.J.S.A. 56:8-1 to -97].
[N.J.S.A. 34:8-43 (emphasis added). See also
N.J.A.C. 13:45B-1.2. ("This definition
applies to "temporary help service firm" as
the term is used in both N.J.S.A. 34:8-43 et
seq. and N.J.S.A. 56:8-1.1.")]
N.J.S.A. 34:8-46 provides, in pertinent part, that the
provisions of the Act "shall not apply to:"
h. Any temporary help service firm
which does not:
(1) Charge a fee or liquidated charge to
any individual employed by the firm or in
connection with employment by the firm;
(2) Prevent or inhibit, by contract, any
of the individuals it employs from becoming
employed by any other person.
[N.J.S.A. 34:8-46h(1), (2).]
We first observe that although plaintiff now contends that
it "employed Balawat indirectly through [d]efendant to assist
[p]laintiff's customer (Alliance) with Alliance's temporary,
excess work load," plaintiff's prior claims are the polar
opposite. Both in its complaint and in opposition to the motion
for summary judgment, plaintiff alleged that Balawat was not its
employee, a position contrary to the very employment relationship
it now seeks to demonstrate.
At oral argument, plaintiff claimed that it "indirectly"
employed Balawat, thus exempting it from the registration
requirements of the Act. However, the record supports only one
conclusion, that AmeriSOURCE alone was responsible both for
paying Balawat's wages and associated taxes and for providing her
with workers' compensation insurance coverage. Plaintiff's
assertion that it fulfilled the "wage paying" provision of the
Act by paying Balawat "indirectly" is pure sophistry: the
statute does not contemplate "indirect" payments, as that
interpretation would eviscerate the meaning and substance of the
Act. The protection of the Act would become a mere shadow if
plaintiff's methodology fell within the exception to the Act.
Finally, despite plaintiff's now-abandoned claims of having
served as "project manager" for Alliance's programming project,
we perceive that no rational fact-finder could conclude that
plaintiff had either served as the programming project manager
for Alliance or had supervised or otherwise "sustained
responsibility" for Balawat's programming services to Alliance.
R. 4:46-2(b), Brill v. Guardian Life Ins. Co. of Am.,
142 N.J. 520, 540 (1995); Graziano v. Grant,
326 N.J. Super. 328, 338
(App. Div. 1999). We recognize that the concept of
responsibility in the context of the circumstances presented here
maybe more broadly viewed than day-to-day supervision, but there
is nothing to suggest that plaintiff's "responsibility" for
Balawat's services amounted to anything more than a report as to
her earnings. That falls well short of the "responsibility"
envisioned by the Act.
In sum, we conclude that even if plaintiff were a "temporary
help service firm," it could not prevail as: (1) the statutory
exemption from the Act's requirements for certain temporary help
service firms does not apply to plaintiff because it charged a
fee in connection with Balawat's employment and inhibited Balawat
from becoming employed by Alliance by virtue of the "Master
Service Contract," N.J.S.A. 34:8-46h(1), (2); (2) plaintiff
violated the Act by failing to register as a temporary help
service firm, N.J.S.A. 34:8-52l, -52o; N.J.S.A. 56:8-1.1; and (3)
plaintiff is barred from collecting any fee, charge, or
commission associated with its activities because it did not
allege, and cannot prove, that it was registered as a temporary
help service firm at the time its alleged causes of action arose,
N.J.S.A. 34:8-45b.
We find no merit to plaintiff's alternative argument that
even if its collection of a fee is barred by its failure to be
licensed or registered, it is not precluded from recovering on
its tort and contract claims. The argument is disingenuous and
contrary to the regulatory scheme designed to preclude unlicenced
agencies or services from benefitting from unlawful conduct.
Because the Act is "regulatory and penal" in nature, any
agreement between plaintiff and Alliance, and the agreements
between plaintiff and AmeriSOURCE for Balawat's placement and to
supply plaintiff with AmeriSOURCE employees to meet plaintiff's
requirements are void as illegal, and unenforceable as a matter
of public policy. Accountemps, 115 N.J. at 626 (collecting cases
where failure to comply with licensing statutes precluded
contract enforcement and recovery of fees); Nitta v. Yamamoto,
31 N.J. Super. 578, 584 (App. Div. 1954) (holding restrictive
covenant unenforceable where plaintiff failed to obtain
employment agency license); Saks Theatrical Agency v. Mentine,
24 N.J. Misc. 332, 333 (Dist. Ct. 1946). We will certainly not
countenance plaintiff seeking to do by indirection, that which it
cannot do directly, R.A. Intile Realty Co., Inc. v. F.P. Raho,
259 N.J. Super. 438, 474 (Law Div. 1992) (quoting Smith v. Cyprus
Indus. Minerals Co.,
178 N.J. Super. 7, 14 (App. Div. 1981));
McCann v. Biss,
65 N.J. 301, 310 (1974), especially in the face
of a significant regulatory scheme designed to protect not only
employees and employers, but the public as well.
Finally, we reject plaintiff's argument that pursuant to
Accountemps, we should apply equitable principles permitting
plaintiff to proceed despite its failure to comply with the Act.
Accountemps is inapposite to plaintiff's case. In Accountemps,
the Supreme Court departed from federal case law construing a
prior version of the Act as inapplicable to out-of-state
agencies, Robert T. Winzinger, Inc. v. Mgmt. Recruiters of Bucks
County, Inc.,
841 F.2d 497 (3d Cir. 1988), and held that the Act
applied to all out-of-state agencies doing business in New
Jersey. Accountemps, supra, 115 N.J. at 621-23. However, in
applying that holding to plaintiff, a licensed Pennsylvania
agency which sought to recover damages for unpaid fees from a New
Jersey client, the Court held that it would be inequitable under
the unique circumstances of that case to apply the Act
retrospectively to plaintiff because the decision embodied a new
principle of law and enforcement of the licensing requirement in
that instance would cause unreasonable surprise and prejudice to
plaintiff. Id. at 627-28.
The Act has been applicable to in-state agencies since its
inception in 1951, id. at 619, and to out-of-state agencies since
1989, id. at 623; P.L. 1989, c. 331, §4. While we appreciate
plaintiff's argument that enforcement of the Act should not
benefit alleged wrongdoers, ultimately, we must balance that
concern against a legislative mandate which precludes otherwise
possibly meritorious causes of action in order to insure
enforcement of a statutory scheme which serves the greater good.
Such legislative trade-offs are not unknown, and where well-
grounded in legitimate public policy considerations, will be
enforced. Thus, eliminating the consideration that AmeriSOURCE
may not be held responsible for its alleged misdeeds, we perceive
no equities which run in plaintiff's favor. Those equitable
considerations generated by a change in the applicability of the
Act in Accountemps are not relevant to plaintiff's case.
We hold that plaintiff's failure to comply with the
licensing and registration requirements of the Act bar it from
pursuing any claim for compensation, whether couched as fees in
contract or damages in tort. We thus conclude that Judge Rebeck
properly granted summary judgment dismissing plaintiff's
complaint.
Affirmed.
Footnote: 1 1 For historical purposes and completeness, we note that
although the former Act (L. 1951, c. 337; L. 1981, c. 500 § 6)
was repealed and substituted by L. 1989, c. 331, § 28, effective
Jan. 12, 1990, and is no longer titled, we have retained the
source act title for simplicity of discussion. We also note that
the current regulations for the substitute Act, N.J.A.C.
13:45B1.1 to -15.9, have titled the Act the "Employment and
Personnel Services Act." The Bureau of Employment and Personnel
Services in the Consumer Affairs Division of the Department of
Law and Public Safety was created to administer the provisions of
the Act, L. 1989, c. 331, § 2; N.J.S.A. 52:17B-139.4 to -139.6.
Further, the Act empowered its director to implement rules,
regulations, procedures, and prescribed penalties for violations
of the Act, N.J.S.A. 34:8-53 to -63.
Footnote: 2 2 N.J.S.A. 34:8-52 provides:
It shall be a violation of the
provisions of this act for any person to:
a. Open, conduct, or maintain, either
directly or indirectly, an employment agency
or perform any of the functions of an
employment agency without first obtaining a
valid employment agency license from the
director [of the Division of Consumer
Affairs, N.J.S.A. 34:8-43] and complying with
all requirements of this act regarding
agents' licenses for the agents of the
agency. . . .
. . . .
l. Make a deceptive or misleading
representation to a job seeker or employer,
or enter into any contract with any job
seeker or employer or induce or attempt to
induce job seeker or employer to make any
agreement, the provisions of which contract
or agreement, if fulfilled, violate this act;
[or]
Footnote: 3 3 N.J.S.A. 56:8-1.1 provides, in pertinent part:
a. Each temporary help service firm
operating within the State of New Jersey
shall, prior to the effective date of this
act or commencement of operation and annually
thereafter, notify the Attorney General as to
its appropriate name, if applicable; the
trade name of its operation; its complete
address, including street and street number
of the building and place where its business
is to be conducted; and the names and
resident addresses of its officers. Each
principal or owner shall provide an affidavit
to the Attorney General setting forth whether
such principal or owner has ever been
convicted of a crime.
b. When a temporary help service firm
utilizes any location other than its primary
location for the recruiting of applicants,
including mobile locations, it shall notify
the Office of the Attorney General of such
fact in writing or by telephone, and
subsequently confirm in writing prior to the
utilization of such facility.
c. Each temporary help service firm
shall at the time of its initial notification
to the Attorney General, and annually
thereafter, post a bond of $1,000.00 with the
Attorney General to secure compliance with
P.L.1960, c. 39 (C. 56:8-1 et seq.) as
amended and supplemented, provided however
that the Attorney General may waive such bond
for any corporation or entity having a net
worth of $100,000 or more.