New Jersey wage and hours laws are pro-employee compared with many other state laws. If you’re not being paid as much as you should or have been mis-classified as exempt from overtime pay, learn more about your rights and consider filing a complaint with the NJ Department of Labor (DOL). Kingston Law Group can advise you on the law, assess your facts, and advocate for your financial interests.

The state’s Wage Theft Act (WTA) was signed into law in 2019. Its provisions are meant to punish and prevent intentional “wage theft” by greatly expanding employer liability compared with prior versions of the law. The WTA substantially changed three key wage statutes:

• NJ Wage Payment Law, which covers the time and type of employees’ wages;
• NJ Wage and Hour Law, which requires payment of minimum and overtime wages; and
• NJ Wage Collection Law, which enables the Department of Labor to investigate and remedy violations.

1. New Jersey Wage Payment Law

The WTA expressly prohibits retaliation against workers complaining about alleged wage payment violations. Anti-retaliation covers:

• Formal complaints filed with the NJDOL or a state court;
• Complaints to employers or employee representatives; and
• General discussions about wage rights with other employees.

If an employer takes an adverse action against an employee within 90 days of the employee’s filing a complaint with the DOL or in a court, there’s a rebuttable presumption the employer took those steps to retaliate against the employee. In addition to penalties and remedies, the WTA states an employer may need to offer reinstatement to a worker discharged for complaining about a legal violation.

Before the amended law’s passage, courts allowed employees to sue employers for alleged legal violations. The WTA expressly put that right into the statute, and expanded employer potential liability. Employees can recover attorneys’ fees and up to 200% percent of the wages recovered, so a successful employee may get three times the wages they claim.

Employers have a “good faith” defense when facing these claims, if it’s a first offense, they admit to the violation, and they pay the employee the disputed wages within 30 days.

“Knowing” statute violations can result in jail time:

• First-time violators may get a fine from $500 to $1,000 and/or prison time between 10 and 90 days
• Second or later violators may get a $1,000 to $2,000 fine and/or imprisonment from 10 to 100 days

The statute deems each week of violations as separate and accumulating offenses.

2. NJ Wage and Hour Laws

The NJWHL expressly prohibited retaliation even before the WTA’s enactment. However, the WTA significantly amended the anti-retaliation provisions of the NJWHL, as well as the remedies and penalties available for violations of same.

Significantly Expanded Employer Liability

The WTA significantly expanded employer liability for violations of the NJWHL. In addition to increased penalties for retaliation, the WTA allows, for the first time, liquidated damages of up to 200 percent of the wages recovered (for minimum wage, overtime wage, and/or retaliatory violations), and extends the statute of limitations from two years to six years. Successful claimants continue to be eligible to recover attorneys’ fees. Although, as with the NJWPL, first-time offenders may avail themselves of a good-faith defense to liquidated damages, in certain limited circumstances, the WTA’s provision for treble damages and tripling of the limitations period could result in recoveries up to nine times larger than would have been available before the WTA.

Significant Amendments to NJ Wage Collection Law

Expanded NJDOL Investigative Authority / Employer Liability

The NJDOL is authorized to investigate alleged violations of “State wage and hour laws,” which are defined to include the NJWPL and the NJWHL, among others. The WTA expands the NJDOL’s investigative and enforcement authority in two key respects: First, the WTA authorizes the NJDOL to hear employee claims of retaliation in violation of State wage and hour laws. Second, the WTA increases the jurisdictional limit on claims the NJDOL can hear from $30,000 to $50,000.

The WTA also expands the liability employers may face in proceedings before the NJDOL. The NJDOL may now investigate both wage and retaliation claims going back six years from the date a claim was filed and may order the payment of liquidated damages of up to 200 percent of the wages found due. Further, the WTA provides that where employers fail to maintain adequate records, the agency will presume that the employee is entitled to the amounts claimed in the complaint, and the employer will have the burden of proving otherwise.

Significantly Increased Audit Risk

The WTA further amends the NJWCL to increase audits. When the NJDOL finds an employer owes an employee more than $5,000 in wages, the NJDOL must now: (a) inform the employer of the NJDOL’s right to audit the employer, or successor firms; and (b) notify the Division of Taxation of the wage liability finding and recommend the Division of Taxation also perform an audit to ensure proper withholding and payment of payroll and other taxes.

License Suspension / Stop-Work Orders for Failure to Timely Comply With Orders

The WTA increases the NJDOL’s ability to enforce its own determinations and court judgments requiring the payment of wages and/or damages to employees. Importantly, where an employer fails to comply with an NJDOL determination or court judgment to pay wages or damages to an employee within 10 days of when that payment has been required, the NJDOL may direct the appropriate state agencies to suspend licenses held by the employer or its successor company until the employer complies with the determination or judgment. The NJDOL may also issue stop-work orders against violating employers, which may last until the violation is corrected, and which may result in the employer being placed on probation for two years, during which the employer may be required to file periodic compliance reports with the NJDOL. The stop-work orders will apply only at the employer location where the violation occurred. The WTA also sets forth extremely low standards for determining what may qualify as a successor entity.

Joint and Several Liability With Staffing Agencies

The WTA provides that “labor contractors” (e.g., staffing agencies) that provide laborers or workers to “client employers” shall be jointly and severally liable for violations of State wage and hour laws. The WTA states that both the staffing agency and employer have the right to recover the costs associated with the other’s violations, a nuance that increases the likelihood of litigation between staffing agencies and their client companies.

Required Distribution of the Statement of Employee Rights Under State Wage and Hour Laws

The WTA requires employers to provide current and newly hired employees with written copies of the statement produced by the NJDOL regarding employee rights under the State wage and hour laws. The NJDOL has not yet issued any new statement in response to the WTA.

NJDOL Partnerships with Community and Legal Aid Organizations

The WTA empowers the NJDOL to contract with community-based organizations and legal services organizations to disseminate information to workers and assist workers aggrieved by violations of New Jersey’s wages and hour laws. This provision allows the NJDOL to engage these organizations directly to investigate alleged violations of the State wage and hour laws, and even to prepare and/or represent employees in connection with actions arising under State wage and hour laws.

Wage Violator “Naming and Shaming”

The WTA now empowers the NJDOL to post wage enforcement information on its public website. Among other things, the information will include the names and addresses of violating employers, the nature of the claims, the number of affected employees, the amount of wages found to be owed, and any penalties, license suspensions, or revocations resulting from the claims.

Pattern of Wage Nonpayment Crime

Lastly, the WTA created a crime of “pattern of wage nonpayment”, defined as committed when an employer knowingly violates, for more than a second time, the wage payment laws subject to the WTA. Pattern of wage nonpayment is a third-degree crime, and is punishable by imprisonment for three to five years and/or a fine of up to $15,000. Critically, there is no presumption of non-imprisonment. This provision took effect November 1, 2019.

NON-RETROACTIVITY OF REMEDIES

The WTA’s provision of enlarged wage and hour statutes of limitations substantially increased causes of action, penalties, and damages, and the NJDOL’s enhanced investigative and remedial authority, should concern all New Jersey employers. These changes make employee claims more attractive, and employers should expect new litigation—and aggressive enforcement by the NJDOL itself. Employers should conduct internal pay audits, timekeeping, and recordkeeping practices in light of expanded liability under the WTA.

In Maia v. IEW Construction Group, the New Jersey Supreme Court decided a critical issue in employers’ favor regarding the “look-back” periods and availability of liquidated damages under New Jersey’s Wage and Hour Law (WHL) and Wage Payment Law (WPL).

Background

As background, the WHL requires covered employers to pay non-exempt employees overtime compensation and minimum wage. The WPL regulates the time, manner, and mode of wage payments.

Effective August 6, 2019, New Jersey passed the Wage Theft Act (the Act), which amended the WHL and WPL by adding enhanced damages to prevailing plaintiffs, such as liquidated damages “equal to not more than 200 percent of the wages lost or of the wages due.” The Act also amended the “look-back” period for the WHL from two years to six years.

The plaintiffs in Maia alleged that their employers violated the WHL and WPL by failing to pay them and similarly-situated individuals for pre- and post-shift work. The plaintiffs asserted that they were entitled to the six-year look-back period because they filed their complaint after August 6, 2019, the effective date of the Act. In other words, they argued that the longer statute of limitations, effective at the time they filed their lawsuit, should apply, instead of the shorter statute of limitations that was effective at the time the underlying conduct occurred. In turn, the longer statute of limitations would mean a longer time period for which potential damages could be alleged and more potential plaintiffs that could have been impacted.

The Wage Theft Act’s Amendments Are Not Retroactive

The New Jersey Supreme Court held the Act’s amendments are not retroactive. Consequentially, the plaintiffs’ wage-hour claims arising before August 6, 2019, were permanently dismissed.

The Court undertook a detailed analysis of the factors to be considered when weighing retroactivity. Ultimately, the Court reasoned that the Act’s amendments should only apply prospectively because the statute was silent on retroactivity and by adding liquidated damages and other remedies and extending the statute of limitations in the WHL, the Act “impose[d] new legal consequences to events that occurred prior to its enactment.”

Accordingly, “for claims based on conduct that occurred prior to August 6, 2019—[the Act’s] effective date—plaintiffs cannot rely on [the Act’s amendments]. Any claims for new damages or remedies added by [the Act] can be brought only as to conduct that took place on or after August 6, 2019.”

Takeaways

Maia provides New Jersey employers a defense to wage-hour allegations predating August 6, 2019, which were not brought within the then-existing two-year statute of limitations. This also means that employers will not face the full six-year potential liability period until August 6, 2025. It also provides powerful precedent that any after-passage amendments to New Jersey’s wage-hour and other employment laws — especially laws that increase penalties and potential damages — should also only apply prospectively — unless the Legislature specifies otherwise.

If you have questions about your rights under the NJ Wage Theft Act and related statutes, write or call The Kingston Law Group today. You will be glad you did.