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The Bank of New York v. Michael P. Maloney Consulting, Inc.

A-0714-06T3 (N.J. Super. App. Div. 2007) (Unpublished)

EMPLOYMENT AGENCIES —Even though an employment agency may have a master contract with a customer in a state other than New Jersey, where the agreement is carried out in New Jersey and the agency places a New Jersey residence with its customer’s New Jersey subsidiary, that agency must be licensed under the New Jersey Private Employment Agency Act or it may not collect its fees.

A New York based employment agency allegedly placed New Jersey employees at a New Jersey subsidiary of a New York bank. Prior to the alleged placement, the bank sent a letter agreement from its New York office to the agency’s New York office. The agreement indicated that if one of its affiliates employs an applicant as a direct result of a referral from the agency, then either the bank or its affiliate would pay the agency a fee for the referral. The agreement did not indicate that it was to be construed in accordance with New York law. The agency signed the agreement. Eventually, the bank filed a declaratory judgment action in New Jersey seeking a ruling that it did not owe the agency any fees for those employees. The bank principally relied upon the New Jersey Private Employment Agency Act (Act), contending that the agency could not collect its fees pursuant to statutory law because it was not licensed in New Jersey. In finding for the bank, the lower court concluded that the transactions between the parties dealt with New Jersey employment and a New Jersey office. Correspondence confirmed the alleged placements were centered in New Jersey. The lower court found that New Jersey had a strong public policy interest in regulating the activities of employment agencies, and that the Act did apply to the agency’s activities in placing employees in New Jersey. It held that failure to obtain a license mandated that summary judgment be granted in favor of the bank.

On appeal, the Appellate Division affirmed the lower court’s ruling, finding that the agency was not entitled to collect fees because it was not licensed as an employment agency in New Jersey. The Court held that the Act requiring employment agencies to be licensed in order to operate in New Jersey even applies to agencies with principal offices outside the State, and precludes any unlicensed agency from using New Jersey’s courts to collect its fees. It noted that while the master contract was with the bank in New York, the agreement was carried out in New Jersey, as the agency corresponded with the bank’s New Jersey subsidiary and placed New Jersey residents with the subsidiary.


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