Accountemps Div. of Robert Half of Philadelphia, Inc. v. Birch Tree Group, Ltd.

• Decision Date: 13 July 1989
• Citation: 115 N.J. 614,560 A.2d 663
• Parties: ACCOUNTEMPS DIVISION OF ROBERT HALF OF PHILADELPHIA, INC., Plaintiff-Appellant, v. BIRCH TREE GROUP, LTD., Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 614

115 N.J. 614

560 A.2d 663

ACCOUNTEMPS DIVISION OF ROBERT HALF OF PHILADELPHIA, INC., Plaintiff-Appellant, v. BIRCH TREE GROUP, LTD., Defendant-Respondent.

Supreme Court of New Jersey.

Argued Jan. 31, 1989.

Decided July 13, 1989.

James Curcio, for appellant (Pennington & Thompson, Cherry Hill, attorneys).

James P. Manahan, for respondent (Strauss & Hall, attorneys; Gordon C. Strauss, Princeton, of counsel).

Andrea M. Silkowitz, Asst. Atty. Gen., for amicus curiae, Atty. Gen. (Donald R. Belsole, Acting Atty. Gen., attorney; Margery F. Nathanson, Deputy Atty. Gen., on the brief).

The opinion of the Court was delivered by

STEIN, Justice.

The critical issue in this case is whether the Private Employment Agency Act (the Act), N.J.S.A. 34:8-24 to -42, applies to out-of-state agencies that provide employment services to New Jersey employers. Plaintiff is an out-of-state employment agency that did not comply with the Act's licensing requirements before entering into a contract to provide services to a New Jersey employer. The employer refused to pay the agency its fee and this litigation ensued. The trial court granted the agency's motion for summary judgment. The Appellate Division reversed, holding that the Act applies to out-of-state employment agencies and that the agency's failure to comply with the Act's licensing requirements bars enforcement of the contract. Accountemps v. Birch Tree Group, 224 N.J. Super. 163, 539 A.2d 1261 (1988). We now reverse and hold that the Act applies only prospectively to out-of-state agencies engaged in providing employment services to New Jersey employers.

I.

Accountemps is an employment agency organized as a division of Robert Half of Philadelphia, Inc. (Half), a private employment agency operating in Pennsylvania. Accountemps has offices in Philadelphia and Bucks County and specializes in the temporary placement of accounting, financial, and data-processing personnel. Accountemps has operated an employment agency in Pennsylvania since 1964. During the course of this litigation it became licensed as an employment agency in New Jersey.

In February 1985, Birch Tree Group, Ltd. (Birch Tree), a music-publishing corporation located in Princeton, New Jersey, contacted Accountemps' Bucks County office seeking the services of an accountant for six to eight weeks. Accountemps agreed to provide Birch Tree with an accountant at an hourly rate of $15.30. The accountant began working at Birch Tree in March 1985.

Accountemps sent two letters to Birch Tree establishing the terms of the service agreement. The first letter confirmed the fee Birch Tree would be charged if it decided to hire the accountant on a permanent basis: "[T]he placement fee for an employee earning more than $29,001 is 30%." The second letter offered Birch Tree the opportunity to hire the accountant as a permanent employee.

Accountemps also provided Birch Tree with weekly time-recording forms, regularly signed and returned by Birch Tree, that certified the number of hours for which Birch Tree would be charged. The form bore the following legend:

In the event we [Birch Tree] employ this person in any capacity, and/or place him/her on our payroll during the temporary assignment or within one year of its severance, we agree to pay ROBERT HALF OF PHILA, INC., the regular placement fee. No part of the payments made by us on the temporary employment will be applied to the fee due for permanent placement. (A copy of the fee schedule is available on request.)

In May 1985, approximately two months after starting as a temporary employee, the accountant was hired by Birch Tree as the company's comptroller at a salary of $40,000 per year. Consequently, Half forwarded to Birch Tree an invoice for a permanent placement fee of $12,000 (30% of $40,000). Birch Tree refused to pay the fee, alleging that Accountemps neither performed the services of an executive recruiting firm nor was engaged to do so.

In July 1985, Accountemps instituted this action for damages. Birch Tree moved for summary judgment, contending that Accountemps was barred from asserting its claim because it had failed to comply with the Act's licensing requirements. N.J.S.A. 34:8-26. The trial court granted summary judgment in favor of Accountemps. The court observed that the Act did not expressly prohibit the enforcement of contracts entered into by unlicensed agencies and that "[i]t would be sound policy in this case to not permit the statute of licensing to operate in what the court feels would be a disproportionate severity." The Appellate Division reversed and entered summary judgment in favor of Birch Tree. The Appellate Division reasoned that "[t]he permanent placement of employees in New Jersey by anyone not licensed by this State as an employment agency is contrary to public policy." 224 N.J. Super. at 166, 539 A.2d 1261. We granted certification, 111 N.J. 651, 546 A.2d 559 (1988).

II.

New Jersey's long-standing practice of employment-agency regulation dates back to 1893 when the Legislature passed an Act permitting municipalities to regulate employment agencies. L. 1893, c. 41. The Legislature sought to remedy the many "evils of private employment agencies:"

Some of the practices of private employment agencies are very inimical to the interests of the laboring people; they invariably receive applications for employment and advance fees far in excess of their ability to supply situations; the advance fee of a poor, needy applicant is received with as much pleasure when the chances of securing a position are a thousand to one against the applicant as under any other circumstances; they nearly always advertise for ten times as many laborers as needed. They advertise for laborers and mechanics to go to the State of Washington or some other remote part of the country, under the vague promise that steady employment and good wages will be secured. In addition to the usual registration fee, the applicants must buy railroad tickets, out of which the agencies receive additional commissions; it makes no difference whether there is any employment for them at the point of their destination or not; the railroads get their pay, the agencies get their fees, and employers get a surplus of laborers, in consequence of which wages decline, many are unemployed, and thus trampism is superinduced through no fault of those honestly seeking employment. [Report of the New Jersey Department of Labor 73 (1893) ]

Municipal regulation of employment agencies became mandatory in 1907. L. 1907, c. 230. This legislation required the licensing of all employment agencies and criminalized the furnishing of employment-agency services without a license, "whether such business is conducted in a building or on the street or elsewhere." Ibid. In 1914, the New Jersey Commission of Immigration released a report critical of the municipalities' enforcement of the private employment-agency regulations. ¹ As a result, in 1918, legislation was enacted transferring to the State Department of Labor the authority to license and regulate all employment agencies. L. 1918, c. 227.

In 1951, the Legislature adopted the Private Employment Agency Act, which incorporated much of the prior legislation. L. 1951, c. 337 (codified at N.J.S.A. 34:8-24 to -42). The Act defines "employment agency" as "the business of procuring or offering to procure help or employment * * * " N.J.S.A. 34:8-24. The Act mandates licensing for all employment agencies "whether the business is conducted in a building or on the street or elsewhere." Further, "[n]o person shall either directly or indirectly, conduct or maintain an employment agency or perform any of the functions of an employment agency without first obtaining such license or licenses as is or are required by the provisions of this Act." N.J.S.A. 34:8-26. Failure to comply with the licensing requirements subjects an unlicensed agency or owner to civil penalties ranging from fines of $300 to $1,500. Ibid.

Applications for licenses are to be made in writing to the Attorney General. N.J.S.A. 34:8-27. The Attorney General may request further information of the operator "to assist him in determining the applicant's responsibility and qualifications." Ibid. Before a license may be granted, notice of the application and an opportunity to be heard is to be afforded every employment-agency licensee in the county where the applicant agency is to be located. The Attorney General may withhold a license if it appears, after investigation or hearing, that the municipality in which the applicant seeks to locate is adequately served by public or private employment agencies. N.J.S.A. 34:8-34. The licenses are issued on an annual basis and the fee structure is based on the population of the municipality in which the license is sought. N.J.S.A. 34:8-31.

Every applicant for an operator's license shall submit to the Attorney General evidence of "good moral character," including affidavits of three New Jersey citizens who have known the applicant for a least five years. N.J.S.A. 34:8-28. An application for an owners' license requires proof of "good moral character" in the form of affidavits of two New Jersey citizens who have known the applicant for at least one year. Ibid.

The Attorney General has broad authority to administer the Act. N.J.S.A. 34:8-36. In exercising that authority, the Attorney General has interpreted the affidavit requirements, N.J.S.A. 34:8-28, as "incidental to the essential requirement that some evidence of good moral character must be submitted." Attorney General Opinion Letter to Division of Consumer Affairs (Dec. 8, 1975); cf. Harvey v. Board of Chosen Freeholders of Essex County., 30 N.J. 381, 391-92, 153 A.2d 10 (1959) (waiver of statutory provision permitted when requirement is directory rather than mandatory). The Attorney General noted that the affidavit requirements of the statute "place a severe burden upon those applicants who have...