In past articles I have referenced many times the potential audit risks that companies face if they are not in compliance with both federal and state wage and hour laws. As businesses began the quest to return to what was pre-COVID-19 pandemic normalcy, so too did the United States and New Jersey Departments of Labor as the agencies again started to aggressively audit companies for legal compliance. While compliance with each of the specific federal wage and hour laws continues to be the primary focus of these audits, the New Jersey Department of Labor (“NJDOL”) added one more compliance issue that is now an important part of that agency’s audit process. This emerging issue now presents a potential trap for the unwary about which employers must be ever vigilant to avoid a failing audit result.
So, I suspect at this point that many of you are wondering what this new issue can be that has sparked the interest of the NJDOL. Is it a new wage and hour requirement under a new recent law? Well, no, believe it or not, it involves New Jersey’s Paid Sick Law. On first glance, this law seems very different from the usual wage and hour rules that the NJDOL enforces. However, when you examine the paid sick time law closer, you see that the New Jersey legislature gave the NJDOL responsibility for monitoring employer compliance with the requirements imposed by the paid sick time law. And now during wage and hour audits by the NJDOL, the agency is using these examinations as an opportunity to remind employers about their recordkeeping and tracking obligations under the law. I found this out firsthand in a recent audit that I handled with the NJDOL.
Hopefully, as every employer who is doing business and has employees in New Jersey knows, the paid sick time law gives employees the opportunity to utilize paid sick time for certain absences from work. Whether employees obtain the time through actual work accrual, or where employers grant employees such time at the beginning of each benefit year, employees are entitled to use up to 40 hours of sick time in any benefit year. The statute also recognizes the right to carry over unused time from benefit year to benefit year or alternatively allows a buyback arrangement to be negotiated between the employee or employee. Along with these basic requirements, the law also directs that employers must keep detailed records relating to both the amount of leave accrued by or provided to the employer and the use of that time so there is effective tracking of such use. It is regarding these recordkeeping rules that the NJDOL has taken a special interest in its current auditing activities.
If your company is ever selected for a wage and hour audit by the NJDOL, you are now being asked to produce such accrual/tracking records so that the agency can confirm that you are meeting these recordkeeping requirements. If there are deficiencies in such recordkeeping, the NJDOL is holding employers accountable as just happened in a recent audit where a client of mine was cited for a violation. In that audit, the investigator expressed concerns that employees did not have a readily available way to check what current paid sick time they had and how much was available for future use. The auditor also claimed that other basic tracking records were missing as well. All of this led to a rather unexpected violation citation when the remaining aspects of the audit proved rather uneventful.
The moral of this story is that employers need to make sure that they have in place an effective recordkeeping and tracking system for overseeing your company’s compliance with the paid sick law because the NJDOL is actively monitoring compliance as part of its ever increasing audit activities. If you don’t, you can find yourself on the wrong side of failed audit findings that could have easily been avoided with greater attention to simple legal details.
