Labor Relations

look out: New Jersey passed one of the toughest wage theft laws in the nation By: greg trif & kyle H. Cassidy, trif law llc

On August 6, 2019, New Jersey enacted one of the harshest wage theft laws in the United States. The New Jersey Wage Theft Act (“Wage Theft Act”) amends the existing wage and hour statutes by, among other things, significantly increasing employer penalties and liability for wage and hour violations. Employers violate these laws when they fail to pay their employees mandatory minimum wages, overtime, or for every hour worked. With the Wage Theft Act, contractors must be cognizant of the expansive and onerous requirements of the amendment to avoid liability thereunder. Below are some changes imposed by the Wage Theft Act that may have a significant impact on contractors.

Anti-Retaliation Protections. The amendment expressly prohibits retaliation against employees who complain or advise co-workers about their employer’s failure to pay full wages. Specifically, the amendment broadly protects employees who: (i) complain to the employer, union representative, or the Department of Labor; (ii) file or testify in an action commenced under the wage and hour laws; and (iii) inform fellow employees about their rights under such laws. The amendment also allows employees to file separate claims if their employer takes an “adverse employment action” (such as termination, demotion, or reprimand) in retaliation for the employee’s filing such a claim. Notably, under the Act, an employer’s adverse employment action is presumed to be retaliatory if it is taken within ninety (90) days of the employee’s complaint. This presumption is only rebuttable by presentation of clear and convincing evidence showing that the adverse action was taken for non-retaliatory reasons. Employers who are found to have terminated an employee in violation of the Act are required to offer the employee reinstatement plus pay for the time lost.

Considering the presumption of retaliatory conduct, contractors (and their human resources departments) must be especially cautious in taking any action against employees who have engaged in protected activities. Moreover, to the extent any justified action is taken against an employee, contractors must be particularly careful in properly documenting the non-retaliatory basis for taking such action.

Enhanced Employer Liability. An employee who successfully establishes a violation of the Wage Theft Act may recover the wages owed, plus additional liquidated damages of up to two hundred percent (200%) of the wages found due. In addition to liquidated damages, the amendment allows aggrieved employees to recover reasonable costs and attorneys’ fees. For a first offense only, employers may avoid liquidated damages if they: (i) establish that their act or omission was an “inadvertent error made in good faith;” (ii) had “reasonable grounds” for believing the act or omission was not violative of wage and hours laws; (iii) acknowledge violation of the law; and (iv) pay the owed wages within thirty (30) days of notice of the violation. Because there exists a timing component for avoiding liquidated damages, contractors facing liability must evaluate a claim expeditiously and, if appropriate, resolve it by making the required payment to reduce its financial exposure.

Notably, employers who knowingly fail to pay wages or retaliate against employees may face criminal liability. The severity of the penalties depend on the number of offenses as follows: - First Offense: Fines between $500 to $1,000 and prison sentence between ten (10) to ninety (90) days. - Second Offense: Fines between $1,000 to $2,000 and prison sentence up to one hundred (100) days. - Third Offense: Fines up to $15,000 and prison sentence up to five (5) years.

Statute of Limitations Increased from Two to Six Years. The amendment expands the time within which an employee can file a wage and hour claim from two (2) to six (6) years. The amendment also provides that all retaliation claims should be brought within the extended six (6) year time period. Because of the lengthened statute of limitations, contractors should consider maintaining their employee’s files and records for at least six (6) years after an employment ends. These records may be critical to defend against an otherwise baseless claim.

Joint and Several Liability. The Wage Theft Act makes New Jersey employers and “labor contractors” jointly and severally liable for violations of wage and hour laws, including claims for employer retaliation. This change may have significant impact on contractors who obtain their labor through staffing arrangements, excluding arrangements with bona fide labor organizations, apprenticeship programs, or hiring halls operated pursuant to a collective bargaining agreement. Importantly, contractors cannot avoid joint and several liability through contractual waivers because any such waiver is unenforceable and expressly deemed to be against public policy.