In Josifovich v. Secure Computing Corp. Slip Copy, 2009 WL 2390611 D.N.J., 2009, July 31, 2009 the New Jersey District Court ruled that a settlement between parties to an employment discrimination case brought under the New Jersey Law Against Discrimination that did no address tax liability is taxable to the Plaintiff for front and back pay. The lawyers in the case reached a settlement agreement after numerous hours of negotiation but never discussed the issue of withholding taxes. The court stepped in and made the call by ruling that the settlement was taxable to the plaintiff similar to wages for both front and back pay.
New Jersey employment lawyers can learn from this case that it may be wise to advise a client to seek tax advice before entering into a settlement agreement. Numerous articles have been written about the taxability of employment discriminatin cases which has been the subject of much litigation.
