The New Jersey Wage Theft Act (WTA) is the most recent legislation following on the heels of several other laws significantly impacting New Jersey employers. The legislation was passed on August 6, 2019 and will toughen penalties for an employer’s failure to pay wages owed to workers. The law applies to traditional wage and hour violations such as the failure to pay minimum wage, failure to pay overtime, etc., and it also extends to employee benefits.
In addition, the WTA extends the Statute of Limitations from two (2) years to six (6) years for all wage claims, and broadens damages to include treble damages for unpaid wages (the unpaid wages plus liquidated damages of 200%). Further, like the other employment-related laws most recently passed in 2019, the WTA adds protections for employees against retaliation, increases potential fines, provides for jail time for repeat offenders, and allows for the recovery of attorneys’ fees and costs.
Given the foregoing, employers must be mindful of not only properly labeling exempt and non-exempt employees for purposes of overtime, but also of the liability that will be imposed as a result of improperly labeling an employee as an independent contractor. Failure to correctly identify employees will raise the stakes and create potential liability for wages, overtime, employee benefits, health insurance premiums, retirement, vacation, holiday and sick pay, not to mention stock options and fringe benefits.
Moreover, the WTA also broadens the protection for employees who complain about unpaid wages, and legislatively overturns the New Jersey common law that upheld an employer’s right to fire an employee for bringing an action over non-statutory salary disputes, including alleged unpaid commissions. Finally, the law establishes the presumption of retaliation if an employer has taken an adverse employment action against an employee within 90 days of the employee filing a complaint with the NJDOL or filing a lawsuit for unpaid wages.
Employers now must, more than ever, conduct an audit in order to ensure that non-exempt employees have not been misclassified as exempt employees, and that non-exempt employees have not been misclassified as independent contractors.
Employers should also establish a procedure through which employees may complain about potential wage or benefit underpayments and add the procedure to employee handbooks for employee reference.
Employee handbooks should also be reviewed in order to ensure that they contain strong contract disclaimers that prevent handbook provisions from creating contracts for potential compensation or benefits. Finally, severance agreements must include an acknowledgment that all wages owed have been paid.
If you are an employer who needs assistance in interpreting or implementing these new laws, please feel free to contact me.
Leslie A. Parikh, Esq., is a partner with Gebhardt & Kiefer, PC. She practices primarily in the areas of employment law, civil rights litigation, municipal law, insurance defense, and the representation of public entities in both State and Federal Court. Contact Ms. Parikh at 908-735-5161 or via email.
If you have a suggestion for a future blog topic, please feel free to submit it via the Contact Us form.