INTERIM HEALTH CARE MIDDLESEX-SOMERSET, INC. v. THE HIGHLANDS

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4467-04T14467-04T1

INTERIM HEALTH CARE

MIDDLESEX-SOMERSET, INC.,

Plaintiff-Respondent,

v.

THE HIGHLANDS,

Defendant-Appellant.

______________________________________________________________

 
Argued Telephonically February 8, 2006 - Decided April 25, 2006

Before Judges R. B. Coleman and Seltzer.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Middlesex County, DC-015575-03.

Steven C. Rother argued the cause for appellant (Post, Polak, Goodsell, MacNeill & Strauchler, attorneys; Laura M. LoGiudice, on the brief).

John Wiley, Jr. argued the cause for respondent.

PER CURIAM

Defendant, the Highlands, appeals from an order granting summary judgment in favor of plaintiff, Interim Health Care Middlesex-Somerset, Inc., which required defendant to pay plaintiff a buyout fee of $4,000. We affirm.

Plaintiff is a registered health care service firm that provides medical and personnel staff to clients on a temporary basis. Defendant is a skilled nursing facility in Edison, with whom one of plaintiff's employees, a licensed practical nurse (LPN), was temporarily placed. Defendant eventually hired the LPN and contends that the provision in its agreement with plaintiff that requires defendant to pay a "buyout fee" or "placement fee" in such an event is unenforceable because plaintiff was not licensed as an employment agency.

The facts are not in dispute. On or about July 11, 2002, the parties entered into an agreement whereby plaintiff would provide medical staff to defendant on a temporary basis. Their agreement provided that if defendant should hire any of the medical staff employees provided by plaintiff, it would be required to pay plaintiff a buyout fee in an amount specified according to the categories of workers involved. The provision stated:

Should the facility wish to hire our Registered Nurse, Licensed Practical Nurse, Certified Nurses Aide or Certified Home Health Aide, there will be a buyout fee as follows: RN - $6,000; LPN - $4,000; CNA/CHHA - $2,000. We incur considerable costs in the advertising, recruiting and evaluating of our field staff. Thus making a buyout agreement necessary.

The agreement was signed by both plaintiff and defendant.

During the period between July 26, 2002 through November 15, 2002, one of the employees plaintiff placed with defendant was Kim Lockhart, an LPN. She provided nursing services at defendant's facility on a temporary basis pursuant to the terms of the agreement between the parties until defendant hired her as its own direct employee. As a result of that hiring, plaintiff sought payment of the $4,000 buyout fee specified in the agreement. Defendant refused to pay. Instead, it requested proof that plaintiff had an employment agency license, which plaintiff maintained was not required. Since neither party would relent in its position, plaintiff commenced this action and in due course moved for summary judgment. The trial court accepted plaintiff's argument that it is not an employment agency and granted plaintiff's motion.

A trial court is authorized to render judgment forthwith to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).

"We employ the same standard that governs trial courts in reviewing summary judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). On appeal, "[a] [motion judge's] interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Defendant maintains the trial court erred when it ruled that a health care service firm can collect a placement fee without first obtaining a license as an employment agency. Plaintiff asserts that it did not engage in activities within the statutory definition of "employment agency," and that it acted solely as a "temporary health service firm." We agree that plaintiff is not an "employment agency" and is, therefore, not required to have an employment agency license pursuant to N.J.A.C. 13:45B-2.

N.J.S.A. 34:8-43 defines "employment agency" 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 . . . .

In this case, plaintiff did not procure employment for individuals. Instead, plaintiff hired and engaged its own employees, whom it placed temporarily with its customers in the health care field. "Temporary help service firms," which are permitted to engage in such activities, are also defined by N.J.S.A. 34:8-43 to include:

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.]

[(emphasis added).] See N.J.A.C. 13:45B-14.2 (defining "health care service firm" using the same language).

Moreover, N.J.S.A. 34:8-46h provides an express exemption for temporary help service firms under certain conditions. That section provides, in pertinent part, that the provisions of the Private Employment Agency 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.

(3) knowingly send individuals it employs to . . . any plant or office where a strike or lockout is in progress for the purpose of replacing individuals who are striking or who are locked out.

An implementing regulation, N.J.A.C. 13:45B-14.6, likewise provides that no fee or damage charge may be imposed on an individual employed by a health care service firm:

a. A health care service firm shall not:

2. Charge a fee or a liquidated damage charge to any individual employed by the health care service or in connection with employment by the firm. If a fee or liquidated damage charge is imposed, the health care service firm shall obtain a license as an employment agency pursuant to N.J.A.C. 13:45B-2.

3. Prevent or inhibit, by contract, any of the individuals it employs from becoming employed by any other person. If the health care service firm charges an individual pursuant to such contract a fee when the individual becomes employed by any other person, the health care service firm shall obtain a license as an employment agency pursuant to N.J.A.C. 13:45B-2[.]

Thus, N.J.S.A. 34:8-46h and N.J.A.C. 13:45B-14.6 prohibit a temporary help service or a health care service firm from charging a fee or a liquidated damage charge to any individual employed by the service or in connection with employment by the firm unless it has obtained an employment agency license, but the trial judge interpreted the language of the statute and the regulation to prohibit charges to the individual employee and not to the company that ultimately hires the individual employee. Based on the plain language of the statute and the regulation, we agree with that interpretation.

The relevant language is clear that temporary help service firms or a health care service firm may place its employees with the firm's clients for temporary employment, that is, for a fixed duration or for a period of time defined by the occurrence of some specified event. N.J.S.A. 34:8-43. Such a firm is nevertheless, exempt from the requirements of the Act. The temporary help service firm may not charge its employees a fee and it may not prevent its employees from becoming employed by any other person. On the other hand, neither the statute nor the regulation precludes the temporary help service firm from agreeing with its client that the client must pay liquidated damages in the event it hires an employee from the temporary help service firm. Such a liquidated damages clause is calculated to reimburse expenses incurred to recruit, train and evaluate the employees. Charging such a liquidated damage sum from a client who hires an individual employee, as plaintiff seeks to do here, does not offend the Act or the regulations.

We reject defendant's argument that Accountemps Div. v. Birch Tree Group Ltd., 115 N.J. 614 (1989), supports a contrary position. The plaintiff in Accountemps never denied that it was an employment agency. Id. at 616-17. Rather, it contended that, as an out-of-state employment agency, it was not required to comply with our Act, N.J.S.A. 34:8-24 to -42. Id. at 624. Our Supreme Court agreed, in part, and held "that the Act applies only prospectively to out-of-state agencies engaged in providing employment services to New Jersey employers." Id. at 616. Thus, defendant's reliance on Accountemps is misplaced.

Similarly, Data Informatics Inc. v. AmeriSource Partners, 338 N.J. Super. 61 (App. Div. 2001), is not helpful to defendant's cause. In that case, we recognized a distinction between employment agencies and temporary help service firms. While employment agencies are required to be licensed, under the Private Employment Agency Act (the Act), temporary help service firms are only required to be registered. Id. at 71-72.

In Data Informatics, we observed that "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.]

[Id. at 72-73 (alterations in original).]

The factual differences between Data Informatics and the case before us are quite significant. There, we disallowed plaintiff's recovery of damages stemming from an alleged violation by defendant AmeriSource of the parties' agreement that contained a restrictive covenant. Defendant was an acknowledged employment agency. Id. at 76. The restrictive covenant purported to bar defendant from soliciting or entering into agreements with any of plaintiff Data Informatics' clients with whom defendant's personnel had been introduced by interview or placement during the term of the agreement or any renewal thereof and for a period of 1 (one) calendar year after the completion of the contracted services. Id. at 64. In that case, plaintiff procured an employee from defendant. Plaintiff then placed defendant's employee, a computer programmer, with its client to perform services for the client in exchange for wages. Id. at 64-65. Plaintiff would invoice the client and upon its receipt of payment, it would retain a portion of the fee and forward the remainder to defendant, which would, in turn retain its respective share and compensate the employee pursuant to her employment agreement with defendant. Id. at 66.

When defendant AmeriSource released the employee from the terms of the non-competition clauses of their agreement to allow the employee to become a direct employee of plaintiff's client, plaintiff claimed defendant had breached their master service contract. Id. at 67. In that master service contract, defendant had agreed that it would not "solicit, enter into agreement with or assign contract personnel" to clients introduced by plaintiff. Id. at 65. Plaintiff claimed defendant had effectively "misappropriated [its] client." Id. at 68.

Under the circumstances presented in that case, we concluded that plaintiff's actions met the statutory definition of an "employment agency" under N.J.S.A. 34:8-43(1) and were within the scope of the Act. Id. at 76. We observed that plaintiff could not seek refuge by asserting it was a temporary help service firm because "[b]oth in its complaint and in opposition to the motion for summary judgment, plaintiff alleged that [the employee] was not its employee, a position contrary to the very employment relationship it now seeks to demonstrate." Id. at 77. Moreover, the record in that case only supported the conclusion that defendant -- and not plaintiff -- was responsible for the employee's wages and associated taxes and for providing her with workers' compensation insurance coverage. Ibid. Since "plaintiff charged a fee in connection with [the employee's] employment and inhibited [the employee] from becoming employed by [the client,]" even if plaintiff had been a temporary help service firm -- which it was not -- it could not prevail. Id. at 78.

Here, there is no dispute that plaintiff was Lockhart's employer. It paid her wages and provided employment benefits. It did not charge Lockhart a fee and it did not try to prevent Lockhart's employment with the client. Rather, plaintiff, as part of the agreement with the client, anticipated its potential losses in the event the client hired its employee. When the anticipated event occurred, plaintiff sought reimbursement from the client under the terms of their agreement for the expenses incurred in advertising, recruiting and evaluating Lockhart. It was never plaintiff's desire to place Lockhart permanently or to lose her from its own workforce and it is entitled to recover reasonable compensation for the loss of its employee.

We agree with the motion judge that there are no material issues of fact present. The agreement of the parties did not prevent or inhibit the employee from accepting permanent employment and plaintiff does not purport to charge or collect a fee from the employee. We discern no statutory impediment or policy reason to bar plaintiff from enforcing an agreement that the parties freely and knowingly bargained for and executed.

 
Affirmed.

(continued)

(continued)

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A-4467-04T1

April 25, 2006