On August 6, 2019, New Jersey enacted its Wage Theft Law, transforming the state's wage and hour laws into one of the most robust in the country. As discussed below, the law substantially expands the civil and criminal recourse available for nonpayment of wages and for retaliation. Among other things, the statute broadens potential individual, and joint and successor liability to employers and certain officers and agents. Most components of the law took immediate effect.
Employer Notice Requirement. Of particular importance to employers, the Wage Theft Law imposes a new written notice obligation. Upon publication by the Department of Labor and Workforce Development, employers must distribute to current employees a statement concerning their rights under New Jersey's wage and hour laws. This statement must also be provided to all new hires.
Statute of Limitations and Liquidated Damages. Under the Wage Theft Law, the statute of limitations for unpaid minimum wage and overtime claims increases from two to six years, both for actions initiated by the Commissioner of Labor in the Wage Collection Section and for civil actions.
In addition, employees may now obtain liquidated damages of up to two hundred percent of wages owed. Previously, liquidated damages were not available under New Jersey law for these types of claims.
The Wage Theft Law provides employers with a defense to liquidated damages in certain circumstances. In civil actions, employers may avoid liquidated damages for first violations by demonstrating that: (1) the act or omission leading to the violation "was an inadvertent error made in good faith;" (2) they had "reasonable grounds" for believing the act or omission was not a violation; (3) the employer acknowledges that they violated the law; and (4) they paid the amount owed within 30 days.
Additional Consequences for Failure to Maintain Proper Records. Employers that fail to produce the records required under the wage and hour laws face a rebuttable presumption that allegations concerning the period of time and number of hours relevant to an asserted violation are true. In criminal proceedings, the failure to present records creates an inference that the allegations are true, unless the employer can demonstrate good cause for the failure to present the records.
Anti-Retaliation Provisions. The amendments also bolstered New Jersey's anti-retaliation provisions. It is now a "disorderly persons offense" to take retaliatory action against an employee "by discharging or in any other manner discriminating against the employee" for, among other things, making a complaint, instituting an action, or informing another employee about their rights concerning wages and hours of work. The amendments implement a more expansive definition of retaliation, as the previous statute did not explicitly protect individuals who informed colleagues about their rights.
Moreover, there is a presumption of retaliation for actions taken within 90 days of an employee filing a complaint with the Commissioner or instituting an action in court. Whether actions against an employee constitute a disorderly persons offense, the fact that the actions occur within 90 days is considered "presumptive evidence." For civil claims, the presumption may be rebutted by "clear and convincing evidence that the action was taken for other, permissible, reasons."
Employers will be fined between $500 and $1,000 and/or imprisoned between 10 and 90 days for first violations. For second and subsequent violations, employers are subject to fines between $1,000 and $2,000 and/or imprisonment between 10 and 100 days.
Employers may be required to offer reinstatement or otherwise correct the discriminatory action, pay all wages lost due to the wrongful action, and pay liquidated damages of not more than 200%. For administrative proceedings, the Commissioner also may assess administrative penalties for retaliatory actions of up to $250 for a first violation and up to $500 for subsequent violations.
Enhanced Criminal Penalties—and Individual Liability. The amendments also expand the scope of disorderly persons offenses for failure to pay wages, compensation, or benefits. The amendments define "compensation and benefits" to include a longer list of benefits, such as "health benefits, pensions, medical treatment, disability compensation and workers' compensation, including death benefits to dependents of workers who have died as a result of their employment."
If an employer is found to have committed a disorderly persons offense, it must pay the employee the wages owed, 200% of that amount in liquidated damages, and reasonable costs. Guilty employers also will be fined $500 plus a penalty of 20% of the wages owed for a first offense. For subsequent offenses, they will owe $1,000 per offense plus the 20% penalty. Fines and penalties collected will be used towards enforcement and administration costs of the Division of Wage and Hour Compliance of the New Jersey Department of Labor and Workforce Development.
With regard to the definition of employer for purposes of the disorderly persons offense, "officers of a corporation and any agents having the management of that corporation shall be deemed to be the employers of the employees of the corporation." Excluded from the definition of employer for this purpose, however, are independent contractors, subcontractors, and employers and employees in the construction industry working under collective bargaining agreements.
The Crime of a "Pattern of Wage Nonpayment." Beyond the added penalties, the Wage Theft Law created a new crime. It provides that a person knowingly commits a crime of a pattern of wage nonpayment if they have been convicted of a violation of certain provisions of the Criminal Justice Code and/or wage and hour laws on two or more occasions. This offense is a third-degree crime; however, the presumption of non-imprisonment does not apply, and it does not merge with other convictions (meaning that a lesser included offense would not be absorbed into this conviction).
Expanded Joint and Successor Liabilities. In addition to the expanded corporate and individual criminal liability noted above, organizations may be held liable under the Wage Theft Law as joint or successor employers.
Under the statute, "client employers"1 and "labor contractors"2 are subject to joint and several liability for violations of state wage and hour laws, as well as certain criminal violations. For purposes of joint and several liability, "labor contractor" excludes "a bona fide labor organization or apprenticeship program, or a hiring hall operated pursuant to a collective bargaining agreement." Furthermore, any attempted waiver of these provisions is expressly against public policy and is void and unenforceable.
The Wage Theft Law also created a rebuttable presumption (and a low bar, at that) as to successor liability. There is a now rebuttable presumption that a successor entity is liable for the violations of the predecessor if only two of the following factors are shown: they (1) perform similar work within the same geographical area; (2) occupy the same premises; (3) have the same telephone or fax number; (4) have the same email address or Internet website; (5) employ substantially the same work force, administrative employees, or both; (6) utilize the same tools, facilities, or equipment; (7) employ or engage the services of any person or persons involved in the direction or control of the other; or (8) list substantially the same work experience.
Increased Authority of the Commissioner in Wage Collection Actions. Finally, the Wage Theft Law enhances the powers of the Commission in several ways.
With the amendments, the Commissioner's jurisdictional authority increases from $30,000 to $50,000. As a result, the Commissioner may take on claims asserting greater damages. Furthermore, employees may now recover for the full six-year period and liquidated damages up to 200% in wage collection proceedings. In addition to claims for unpaid wages, employees may also bring retaliation claims in wage collection proceedings.
If an employer fails to comply with a final determination of the Commissioner or a judgment from a court to pay wages or damages within 10 days of the time required, the Commissioner now may: (1) issue a written determination directing the appropriate agency to suspend one or more licenses held by the employer or any successor firm until they comply; and/or (2) issue a stop work order requiring cessation of all business activities. In the second instance, the employer must pay all employees for the first 10 days of the cessation of work.
Furthermore, upon conviction of the employer, the prosecutor or court shall inform the Commissioner, who may conduct an audit of the employer and any successor firm within 12 months. If during the course of an audit the commissioner discovers that the employer has failed to provide compensation, then the commissioner must initiate a wage claim on the employee's behalf.
The Wage Theft Law also requires the Commissioner to compile and "prominently place" on its website all final determinations and court judgments. This posting obligation will involve the public release of employer-specific information, including the name and address of an employer, the nature of the claim, the number of affected employees and wages owed, and any resulting findings, penalties, license suspensions/revocations.
Conclusion. Except for certain provisions setting forth the crime of a pattern of wage nonpayment, which go into effect on November 1, 2019, the law took effect when signed on August 6.
In light of these significant amendments, employers with operations in New Jersey should consider taking the following steps:
- auditing their pay practices particularly in light of the increased minimum wage and the increase in potential liability;
- confirming that all postings and policies are up to date;
- reviewing recordkeeping practices; and
- distributing the required notice upon publication, to all current and new employees.
1 A "client employer" is defined to include a "business entity . . . that obtains or is provided workers, directly from a labor contractor or indirectly from a subcontractor, to perform labor or services within its usual course of business."
2 Labor contractor means "any individual or entity that supplies, either with or without a contract, directly or indirectly, a client employer with workers to perform labor or services within the client employer's usual course of business."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.