Full Service Law Firm in Mt. Laurel Township, NJ | Capehart Scatchard

wage and hour

View OTHER BLOGS

A More Aggressive NJDOL?

Anyone who owns a business in New Jersey knows that it is a very pro employee state in which to operate a company. They no doubt are also aware that the New Jersey Department of Labor (“NJDOL”) can be quite aggressive in enforcing New Jersey’s Labor and Employment Laws, especially if your company has been the subject of a wage and hour audit by that agency and experienced just how uncomfortable such an investigation can be. But are such audits becoming even more difficult and uncomfortable? Is it possible that today the agency is becoming even more aggressive and pushy in how they are treating companies and their staff in performing these audits?

Unfortunately, I am seeing a trend in that direction recently. A pair of my clients have been cited for a “hinderance” violation, meaning that the client is being accused of not cooperating in the investigation process. Such an offense carries a heavy potential fine of at least $1000 and is considered a serious violation.

So, what did my clients do to receive such a citation? They must have done something very significant to get cited for such a violation, correct?

Wanna know what my clients did? When the investigator from the NJDOL showed up unannounced and unexpected at their company the client simply advised the investigator that they did not want to move forward with the investigation without having their attorney involved in that process. Wow, such audacity….to have the nerve to not want to answer questions from a governmental official in a quasi-criminal proceeding without the company’s constitutionally protected right to utilize a lawyer in such a legal proceeding! 

Before I began seeing this unfortunate trend, my experience was that once an investigator was told that counsel was desired, the inquiry stopped and did not continue until counsel became involved and no one was cited for “hinderance” in making that request. I do not know why this practice suddenly changed. Maybe it is because the agency has become more aggressive post pandemic? Or maybe there is a heightened pressure being placed on the agency to more rigorously enforce New Jersey’s wage and hour laws and be less accommodating to those being investigated. Or maybe the agency just wants to prevent a lawyer from getting involved in the investigation as long as it can. Whatever the reason, companies need to be aware of what is occurring.

Despite this recent trend, if confronted with an audit, companies should still immediately reach out to counsel and get their lawyer on the phone quickly so there can be an early direct line of communication between the lawyer and the investigator. The lawyer can then counter any aggressive tactics of the investigator at the outset of the investigation and protect the company’s legal rights in the process. That way, for the client, there is less of a chance of being accused of hinderance for anything that the client may do at the outset of the investigation and the company receives the benefit of having an attorney involved early in the process.   

Wage and hour audits are not the most fun for a company to experience, especially now, when dealing with an even more aggressive investigator. Nonetheless, getting your company’s labor and employment attorney involved at the outset of the investigation will better protect the company’s legal rights and thwart the activities of an extremely aggressive agency investigator.             

Third Circuit Upholds 22 Million Dollar Wage and Hour Jury Verdict

The Federal Third Circuit Court of Appeals recently sent an earthshattering reminder to companies about both the importance of complying with critical wage and hour laws and the legal need to pay employees for all time worked. A Pennsylvania employer, East Penn Manufacturing Co., now owes over 11,000 hourly workers $22 million in back pay for time spent dressing and showering after the Court determined that these workers were entitled to compensation for the time they spent putting on and taking off their protective gear (also commonly known as ‘donning and doffing’) to perform their job duties.

Rather than recording and paying for the actual time spent by the employees donning and doffing their protective gear and showering after their shifts, the employer instead granted the workers a five-minute paid grace period before the start of their shift and a 10-minute paid grace period at the end of their shift. However, at trial it was found that employees actually spent more than 15 minutes at the beginning of their shift and 11 minutes after their shift completing these necessary tasks.

The Company argued that any violation of the federal Fair Labor Standards Act (“FLSA”) was “de minimis,” as the donning and doffing activities were claimed to be not actual work activities, an argument ultimately rejected by the court. Because of the nature of the job, and having to work around hazardous materials, the changing and showering activities indeed constituted work; otherwise, according to the court, employees would not have been able to perform the required duties they were hired to do with lead and other hazardous substances. The employer also argued alternatively that paying its employees for the actual amount of time spent changing and showering could lead to employees acting in a dilatory fashion in completing the tasks to increase their possible payout. The Third Circuit responded that in cases of such abuse, employees could always be disciplined if the employee takes too long to complete the required tasks. 

For employers, this case is a critical reminder of the importance of ensuring that you pay your employees properly and always include an accurate accounting of all actual work time. Interestingly, the Third Circuit did not prohibit the payment for a “reasonable” amount of time for employee activities not considered “work,” as the employer tried to do here, but the court failed to delineate how an employer is supposed to draw that legal line so acting in such a fashion could be legally perilous. Therefore, it is important as always that an employee’s paid time either equal or exceed the time actually worked, and pre-and-post-employee activities that are necessary for the employee to perform all required tasks should importantly be accounted for in that calculation. Otherwise, you could be the next employer in this kind of predicament.          

Enforcement of USDOL Overtime Rule Enjoined by Texas Federal Court

As anyone who follows my blogs know, the United States Department of Labor (“USDOL”) implemented new overtime rules that went into effect on July 1, 2024, that increased the salary threshold that had to be met in order for an employee to be deemed exempt and ineligible for overtime payments. The goal of this change in the law was to expand overtime eligibility for employees who previously would not have qualified to receive such payments. On November 15, 2024, a federal judge in Texas found that this new overtime rule was legally invalid and issued an injunction that now prohibits implementation of this rule nationwide.
 
The Texas judge ruled that the DOL exceeded its statutory authority with the 2024 rule that raised the salary threshold from $35,568 to $43,888, effective July 1, 2024, and later to $58,656, effective January 1, 2025. The rule also included automatic triennial updates to the threshold. In light of this decision, Employers no longer need to adjust salaries or reclassify employees to comply with this at present invalid rule. The current overtime threshold at least for now therefore remains at $35,568.

This ruling is likely to be appealed, so we will see if anything changes regarding the decision, though with a new administration taking control in Washington in January 2025, there is a significant chance that this changed overtime rule will be abandoned by the incoming USDOL and the old salary threshold will continue to remain the applicable legal standard.

USDOL Issues Final Overtime Rule

As I wrote a few months ago, the United States Department of Labor (“USDOL”) was taking the necessary legal steps to modify federal overtime requirements by increasing the salary threshold needed to render employees exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). On April 23, 2024, the USDOL released its long-awaited final rule raising the salary thresholds for overtime exemptions, meaning that employers will now need to pay overtime to a larger group of employees, unless employee salaries are adjusted to meet these new thresholds. 

The new rule raises the salary threshold under which salaried employees are eligible for overtime in two stages. The threshold will increase to the equivalent of an annual salary of $43,888, or $844 a week, starting July 1,2024 and then to $58,656, or $1,128 a week, on January 1, 2025. (The current threshold is $35,568 a year, or $684 per week.) The salary threshold will then be updated every three years, starting July 1, 2027. Also increased was the exemption salary amount for those employees’ ineligible for overtime because they are high earner employees. The minimum threshold for the highly compensated employee exemption will increase significantly too, as follows: July 1, 2024: The annualized compensation threshold will increase from $107,432 to $132,964. January 1, 2025: The annualized salary threshold will increase again to $151,164.

It is also important for employers to remember that paying employees a certain salary does not alone make such employees exempt. Employees must also qualify for one of the exempt classifications under the FLSA (i.e. executive, administrative, professional, etc.), along with meeting the new salary thresholds to be deemed ineligible for overtime. Those exemption categories are unaffected by the recent change to the salary requirements.

Already there have been significant rumblings that these new salary rules will face legal challenges that could impact whether they ever are enforced, and we will keep you updated on any such efforts. In the meantime, employers will need to start preparing for life under the new rules if they ever do go into effect. Employers should at a minimum canvas their workforce and determine whether increasing employee salaries to the new overtime exemption rate is a justifiable step for your company and is commensurate with the duties performed by those employees. Or alternatively employers will need to come up with other strategies for minimizing overtime costs for your business by better controlling what overtime gets worked to reduce possible increased exposure to overtime payments. The time for taking such steps is now and your business should not wait until July to decide the best way to legally cope with these new overtime requirements.  

Is Your Company Ready for an NJDOL Audit?

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.        

Capehart Blogs

Duty of Care
Ongoing Storm Rule Upheld Due to Plaintiff’s Inability to Establish Clear Endpoint to Precipitation
NJ School Law
N.J. Supreme Court Rules That Logs of Government-Related Emails From Elected Officials’ Personal Accounts Are Subject to Disclosure Under OPRA
Evidence
Court Determines Plaintiff’s Evidence of Black Ice “Conjecture” in Dismissing Complaint

N.J. Supreme Court Rules That Logs of Government-Related Emails From Elected Officials’ Personal Accounts Are Subject to Disclosure Under OPRA

Court Determines Plaintiff’s Evidence of Black Ice “Conjecture” in Dismissing Complaint

Court Denies School District’s Motion to Compel IMEs

Subscribe to Blog Updates

Categories

Tags
Alternative Energy Alternative Energy - Solar Alternative Energy - Wind Appellate Division automobile accident automobile insurance Burlington County Bar Association Cannabis Law Charity constructive notice coverage data privacy discovery dismissal Diversity & Inclusion Committee duty of care employees employers Employment Law evidence insurance Liability Litigation Litigation Quarterly Lorman Millennium Seminars NBI negligence New Jersey Workers' Compensation Act New York Law NJ Law notice Pennsylvania Law personal injury Public Entity Newsletter Real Estate and Land Use school law slip and fall statute of limitations summary judgment Taxes Tort Claims Act trip and fall Workers' Compensation Workers' Compensation Newsletter