In the past, employees who believed that they were not properly paid in line with minimum wage and overtime pay requirements under New Jersey’s wage payment law could either bring a lawsuit in state court or file an administrative claim with the New Jersey Department of Labor to recoup unpaid wages. Many politicians and leading legal activists have dubbed an employer’s failure to properly pay employees owed wages as “wage theft,” and vociferously campaigned for stricter enforcement laws to benefit employees in their quest to fight such “wage theft.” On August 6, 2019, new legislation was passed, giving employees here in New Jersey new legal tools to fight against this claimed “wage theft,” and then some.
On that date, New Jersey’s Acting Governor Sheila Oliver signed a new anti “wage theft” law that drastically expands the fines, penalties, and damages to be imposed for violations of the state’s wage payment law, and similarly extends the statute of limitations for bringing such claims from two to six-years. The new law takes effect immediately. These changes are groundbreaking and require employers to take prompt actions to audit payroll practices to ensure that these significant new legal requirements are not applied adversely against your company.
Expanded Civil and Criminal Penalties
One of the most important changes made by the new law is the availability of liquidated damages for wage payment violations. Violators are now required to pay the wages owed to the employee plus liquidated damages equal to 200% of the wages owed. Liquidated damages can be avoided, however, for a first time violation if the employer can show that (a) the violation was an inadvertent error made in good faith, (b) the employer had reasonable grounds for believing that the payroll action taken was not a violation of wage and hour requirements, and (c) the employer acknowledges the violation and pays the wages owed within 30 days of the notice of violation. In addition to the possible awarding of liquidated damages, the new law also sets fines of $500 and 20% of the owed wages for a first offense. Fines increase to $1,000 and 20% of the owed wages for each subsequent offense. Additional administrative penalties up to $250 for a first violation and $500 for each subsequent violation can likewise be assessed by the New Jersey Department of Labor and Workforce Development.
In addition to employer civil fines, penalties, and civil damages, the law similarly allows for the imposition of criminal penalties. Significantly, any corporate officer or employee responsible for the wage payment violation commits a disorderly person’s offense. A first violation comes with a fine of $500 to $1,000 or jail time of 10 to 90 days, or both a fine and jail. For subsequent violations, the fines can range from $1,000 to $2,000 and jail time could be imposed from 10 to 100 days. Thus, the law expressly allows for the simultaneous imposition of both a fine and jail time. Employers who violate the bill three or more times are deemed to be guilty of a new third-degree crime of “pattern of wage nonpayment.” Also, in a first in wage collection matters, employees who bring suit can now recover both reasonable attorneys’ fees and costs against the offending employer in having to file a wage collection claim.
The law likewise opens the door for expanded New Jersey Department of Labor and Workforce Development wage and hour payment audits. Under the law, employers may be made subject to a wage payment audit as an alternative to, or in addition to, any of the above referenced sanctions. If that audit ultimately reveals additional violations, the employer and corporate employees involved in the wage payment violation may likewise be subject to additional fines, penalties, damages, and jail time, as well as additional audits. The New Jersey Department of Labor and Workforce Development is also similarly granted the express authority to issue a stop work order or permanently revoke an employer’s operating licenses for repeat violations.
Strict Anti-Retaliation Protection
Along with its expanded civil and criminal penalties, the act also contains very strict anti-retaliation protections for employees who file wage claim complaints. In a drastic change from prior law, it will now be presumed that retaliation has occurred if an adverse action is taken against an employee within 90 days of the filing of a wage complaint. Retaliation against an employee who files a wage payment complaint also subjects a corporate employer to a disorderly person’s criminal offense and the potential imposition of employer fines in the range of $100 to $1,000, plus payment of wages lost as a result of the retaliation and liquidated damages of 200% of the wages lost.
In addition, if an employee is discharged in retaliation for filing a wage payment complaint, the employer is required to offer reinstatement, unless prohibited by law, along with all lost wages as a result of that discharge, which likewise is a quite radical change in how the law operated previously.
Other Prominent Legal Changes
The law‘s coverage is quite broad and is not just limited to failure to pay wages. It applies to both the failure to pay compensation and benefits, which includes health benefits, pensions, medical treatment, disability benefits, and workers’ compensation. In addition to the expanded scope of what is covered under the law, an employer’s failure to provide sufficient employee records in response to an employee’s wage claim now results in a rebuttable presumption that the employee worked for the employer for the period of time asserted and for the amount of wages alleged in the employee’s claim.
Moreover, as part of its incredible expansive approach, the new law similarly imposes joint and several liability on both an employer and a labor contractor providing workers to the employer. This liability cannot be waived or contractually shifted from the employer to the labor contractor.
Finally, in what will likely be deemed a quite controversial aspect of the new law, violations and names of violating employers will be made public on a government website. Employers will also be required to provide new hires and employees with a written copy of a statement of their rights under New Jersey’s wage-and-hour laws, and an explanation of how to file a claim or take other action in the event of an alleged violation, which is one more added responsibility that applies to orienting new employees to a company.
Next Steps for Employers
As the instant summary shows, the legal modifications made by this new law to the wage collection process are game changing and should concern all employers moving forward. At a minimum, employers must start internally auditing its payroll practices to ensure that employees are being properly paid and are correctly classified to avoid possible overtime payment violations. Thus, in light of this new law, employers must be even more proactive in keeping in step with wage and hour compliance, and obtaining effective legal advice will help employers meet such requirements in this always changing New Jersey legal environment.
Ralph R. Smith, 3rd is Co-Chair of the Employment and Labor Practice Group. He practices in employment litigation and preventative employment practices, including counseling employers on the creation of employment policies, non-compete and trade secret agreements, and training employers to avoid employment-related litigation. He represents both companies and individuals in related complex commercial litigation before federal states courts and administrative agencies in labor and employment cases including race, gender, age, national origin, disability and workplace harassment and discrimination matters, wage-and-hour disputes, restrictive covenants, grievances, arbitration, drug testing, and employment related contract issues.