New Jersey has adopted one of the strongest wage theft laws in the country and jumps to the forefront in protecting employee wages. Effective November 1, 2019, New Jersey employers will face enhanced civil and criminal penalties, including possible jail time, for failing to pay employees in accordance with the New Jersey Wage and Hour Law, the New Jersey Wage Payment Law and the New Jersey Wage Collection Law.
Enhanced Penalties for Violators: Under the new Wage Theft Act, an employer who fails to pay minimum wage or the agreed-upon wages to an employee, any overtime compensation due the employee, or pay the employee in a manner required by law (e.g., paying employees in cash without deducting appropriate taxes) is liable to the aggrieved employee for the full amount of the wages owed plus liquidated damages up to 200%, costs of the litigation and attorneys’ fees. An employer seeking to avoid liquidated damages must 1) be a first-time offender; 2) demonstrate that the failure to pay appropriate wages was an inadvertent, good faith mistake, and 3) acknowledge that it violated New Jersey wage laws and pay the amount owed within 30 days. An agreement between the employer and employee to work for less wages than required by law is not a defense to a violation.
In addition, violators face enhanced fines of $500 and 20% of the owed wages for a first offense, increased to $1,000 and 20% for each subsequent offense, and administrative penalties ranging from $250 for a first violation to $500 for every subsequent violation.
Criminal Penalties: The Wage Theft Act provides for the imposition of criminal penalties against employers who knowingly fail to pay wages in accordance with New Jersey’s wage payment laws or take retaliatory action against employees who pursue wage and hour claims. A knowing violation is a disorderly persons offense, exposing a first-time offender to a fine of $500 to $1,000 and possible incarceration for 10 to 90 days. A second violation exposes the employer to a fine of $1,000 to $2,000 and possible incarceration for 10 to 100 days. Each week in which a violation occurs is considered a separate violation, and thus fines and penalties can quickly escalate.
Expanded Statute of Limitations: The new law enlarges the time in which employees may file wage claims from two to six years, creating significantly increased exposures for employers who do not comply with wage and hour requirements.
Presumption of Retaliation: Under the Wage Theft Act, it will now be presumed that the employer took retaliatory action if an employee suffers any adverse employment action within 90 days of filing a wage complaint. That presumption can only be rebutted by clear and convincing evidence that the action taken against the employee was for lawful and permissible reasons. If it is determined that the employee was subject to a retaliatory termination, the employer will be compelled to reinstate the employee with back wages and liquidated damages to not more than 200% of the lost wages, under penalty of contempt of court.
Adverse Inference for Failure to Maintain Records: The Wage Theft Act eases the burden of employees to prove claims. If an employer has inadequate employee records of hours worked and wages paid, the factfinder – a judge of the Department of Labor – can infer that the employee worked for the time period and the amount of wages alleged in the employee’s complaint. However, this rebuttal presumption shall not apply if the employer demonstrates that records were lost as a result of a natural disaster. To overcome the adverse inference, the employer must demonstrate “good cause” for failing to maintain the records, a term that is not defined in the statute.
Encouragement of Class Actions and Administrative Audits: Employers can expect an increase in class actions because the Wage Theft Act specifically authorizes employees to maintain an action on behalf of themselves and all other similarly-situated employees. By increasing the civil penalties for noncompliance, the law also encourages additional wage and hour audits by the New Jersey Department of Labor. To make matters worse, if the Department of Labor determines that the amount of wages due an employee is more than $5,000, it must notify the Division of Taxation and may recommend an audit to confirm that proper withholding taxes have been paid.
Notice Requirements: The Wage Theft Act requires employers to provide new employees with a written statement of their rights under New Jersey wage and hour laws and an explanation of how to file claims for violations. The Department of Labor and Workforce Development is expected to develop a model template notice in the near future.
The Bottom Line: Employers can anticipate that the new Wage Theft Act will precipitate more claims and litigation against employers who fail to comply with New Jersey’s wage and hour requirements. In addition to giving aggrieved employees more time to file claims, the law enhances employer liability, encourages class action lawsuits and eases the burden of proof for employees to establish violations. Employers must ensure that they are in full compliance with all aspects of New Jersey wage and hour laws and correct any noncompliant practices to avoid greater civil and now criminal liabilities.