In 2019, New Jersey Lieutenant Governor Sheila Oliver (standing in at the time for Governor Phil Murphy) signed into law a bill that has sweeping consequences for employers and individuals who fail to pay wages in accordance with various state laws governing wages owed to New Jersey employees―including the New Jersey Wage and Hour Law, the Wage Payment Law and the Diane B. Allen Equal Pay Act. The consequences include not only steep civil damages and penalties, but also criminal prosecution. The bill has been coined the “Wage Theft Law” because it treats failure to pay wages as a crime. This law is yet another measure in a series of legislative enactments designed to address pay inequities and to ensure employees are paid on time.
Under the Wage Theft Law, employers who owe past due wages face exposure for more than the wages owed and the employee’s attorneys’ fees and costs.Under the Wage Theft Law, employers who owe past due wages face exposure for more than the wages owed and the employee’s attorneys’ fees and costs.
Enhanced Civil Damages and Statute of Limitations
Under the Wage Theft Law, employers who owe past due wages face exposure for more than the wages owed and the employee’s attorneys’ fees and costs. Employers also bear liability for liquidated damages equal to 200 percent of the wages owed. Employers can avoid liability for liquidated damages for a first violation if: (1) the violation was an inadvertent error made in good faith; (2) the employer had reasonable grounds for believing that the act was not a violation; (3) the employer acknowledges the violation; and (4) the employer pays the wages owed within 30 days of the notice of violation.
The Wage Theft Law extends the statute of limitations from two years to six years for wage-related claims, thereby resulting in increased exposure for damages.
Extensive Anti-Retaliation Protection
The Wage Theft Law provides new and extensive remedies to employees who engage in protected activity, such as voicing complaints about wages, initiating proceedings for payment of wages, or informing other employees about their rights under the law. Such employees may recover wages lost due to an employer’s retaliation, liquidated damages equal to 200 percent of the lost wages, and attorneys’ fees and costs. Reinstatement is another remedy available to employees who are subject to retaliation for the exercise of rights protected by the Wage Theft Law.
Under the Wage Theft Law, an employer will be presumed to have unlawfully retaliated against an employee if an adverse action is taken against the employee within 90 days of the employee’s filing of a wage complaint. This presumption is only rebuttable by clear and convincing evidence that the employment action was taken for other, permissible reasons.
Criminal Fines, Fees and Prison Time
Under the Wage Theft Law, an employer who “knowingly” commits a wage payment violation or commits a prohibited retaliatory act can be convicted of a disorderly persons offense. The definition of “employer” as it pertains to the disorderly persons offense includes “officers of a corporation and any agents having the management of that corporation.” The Wage Theft Law has expanded the definition of “employer” to include any successor entity or successor firm of the employer, meaning that a successor entity can also now be liable for the purported wage violations of its predecessor. The Wage Theft Law also imposes joint and several liability on employers and labor contractors providing workers to the employer, as well as certain officers and agents. Attempted waivers of liability are unenforceable and expressly against public policy. A disorderly persons offense under the Wage Theft Law can mean fines of no less than $500 but no more than $1,000, or imprisonment of anywhere from 10 to 90 days, or both. A second violation could result in a fine of $1,000 to $2,000, or a similar prison sentence, or both. Subsequent violations can result in fines ranging from $2,000 to $10,000, imprisonment for up to 18 months, or both. Each week in which the employer violates the Wage Theft Law is a “separate and distinct offense.”
Employers who have been convicted of violating the Wage Theft Law on two or more occasions can be found guilty of a “pattern of wage nonpayment,” which is a crime in the third degree. A conviction of a third degree crime can result in a prison sentence of three to five years, or fines up to $15,000, or both.
The New Jersey Department of Labor and Workforce Development (NJDOL) will also levy fines against employers found guilty of violating the Wage Theft Law. The NJDOL will impose a $500 fine for first offenses, plus a penalty equal to 20 percent of the wages owed. Subsequent offenses will result in a $1,000 fine, plus a penalty equal to 20 percent of any wages owed. The Commissioner of the NJDOL can also, in addition or as an alternative to the other sanctions, impose administrative penalties up to $250 for a first violation and up to $500 for each subsequent violation. The Commissioner will also “prominently” make public on the NJDOL’s website the identities of all employers who have violated the law, along with the nature of the violations.
Furthermore, once the NJDOL determines that an employer has violated the Wage Theft Law, the NJDOL will conduct a compliance audit within 12 months. If the audit reveals additional violations, including a failure to maintain wage records, the NJDOL can initiate wage claims on behalf of employees and impose additional fines and penalties. The NJDOL has the authority to permanently revoke an employer’s operating license or issue a stop-work order for repeated violations.
The NJDOL will publish a notice of employee rights with an explanation on how to file claims under the Wage Theft Law. Employers will be required to post the notice in the workplace and provide a copy of the notice to both new and existing employees.
What This Means for New Jersey Employers
As employers make to-do lists for 2020, they have added reasons to confer with counsel about wage and hour compliance given the enactment of the Wage Theft Law. The Wage Theft Law expands employer exposure significantly, particularly because the look-back period is now six years and each week a violation occurs is a separate and distinct offense. Employers should review their internal policies and procedures to ensure appropriate avenues are available for employees to report concerns about wages and benefits. Employers must timely investigate and address such concerns.
Although the Wage Theft Law does not create new recordkeeping requirements, it raises the stakes for noncompliance. If an employer does not have records to prove payment of wages, the employer will be unable to refute the rebuttable presumption that an employee’s wage complaint is true. Any employer who lacks detailed wage and hour records will face an uphill battle defending claims under the Wage Theft Law.
Employers should apprise all payroll, human resources, accounting and benefits personnel of the expanded legal obligations under the Wage Theft Law, with an emphasis on maintaining detailed records as to hours worked for nonexempt personnel and wages paid to all employees. Employers should train managers on the anti-retaliation protections afforded under Wage Theft Law, particularly because any adverse actions taken within 90 days of a covered complaint will be presumed to be retaliation. Due diligence during any merger or acquisition will also need to include a comprehensive review of all wage records, and employers will have to keep a close eye on staffing firms and other labor suppliers to ensure proper payment of wages. These recommended measures will help employers reduce their exposure to the panoply of civil and criminal consequences associated with violations of the Wage Theft Law.