New Jersey Enacts Tougher Wage Theft Law

On August 6, 2019, New Jersey enacted an anti-wage theft law that takes aggressive steps toward enforcement of an employer’s failure to pay wages, including an increase in damages and tougher penalties, with criminal exposure. The new law has implications on class actions and individual lawsuits, and increases the statute of limitations for wage law violations.

Who is Protected?

The new law protects employees “suffered or permitted to work.” It does not protect workers properly classified as independent contractors and subcontractors or employees working in the construction industry under the provisions of a collective bargaining agreement.

Who is at Risk?

The new law applies to “any individual, partnership, association, joint stock company, trust, corporation, the administrator or executor of the estate of a deceased individual, or the receiver, trustee, or successor of any of the same, employing any person in this State.” However, workers in the construction industry working under the provisions of a collective bargaining agreement are excluded. Additionally, the law imposes liability as an “employer” to any officer of a corporation or any agent having the management of that corporation.

Increased Employer Liability for Wage Law Violations & Anti-Retaliation

Under the new law, employers are liable who fail to pay wages, compensation, or benefits required by law (including State wage, benefit, and tax laws) or under an employment contract within 30 days after due. Compensation or benefits include health benefits, pensions, medical treatment, disability compensation and workers compensation, including death benefits to dependents or workers who have died as a result of their employment.

Employers that fail to pay wages will be liable to the employee for the unpaid wages as well as liquidated damages up to 200% of the wages owed and reasonable costs of the action. Additionally, these violations are deemed to be disorderly person offenses that can result in the imposition of fines and penalties by the State, including suspension or revocation of the employer’s license to operate, and even imprisonment for repeated offenses. A “pattern of non-wage payment” can be treated as a crime of the third degree.

Aside from straight violations of wage laws, retaliation against an employee for filing a complaint against the employer under this statute carries additional fines and penalties. Employers violating the law through retaliation are liable for unpaid wages plus liquidated damages up to 200% of the wages lost as a result of the retaliation, reasonable costs of the action to the employee, as well as other fines and penalties. Also, if the employee was discharged, the law requires the employer to offer reinstatement unless such reinstatement is prohibited by law. Adverse action taken against an employee within 90 days of the employee’s filing of a court action or a complaint with the Department of Labor shall be considered presumptive evidence of retaliation.

Individual Lawsuits & Class Actions Allowed

Under the new legislation, employees are permitted to file individual lawsuits or class action claims for wage law violations. Employers cannot protect themselves from such suits based on employee or independent contractor agreements.

Notice Requirements

To make employees aware of their rights, all New Jersey employers will now be required to provide all employees and new hires with a written statement to be produced by the Department of Labor setting forth the terms of the new law.

Increased Statute of Limitations Period & Liability

In addition to an increase in liability, the new law also expands the statute of limitations for these claims from two years to six years. It also creates joint and several liability for employers that use subcontractors.

The majority of the new provisions take effect immediately. However, violations pertaining to a “pattern of non-wage payment” will be effective November 1, 2019.

What this Means to Employers

Employers need to be even more diligent about complying with New Jersey wage laws. Although the law excludes properly designated independent contractors and subcontractors, employers that misclassify employees as exempt who should be paid hourly and overtimes wages and employers that misclassify employees as independent contractors now face even greater liability than before, including tougher civil and criminal repercussions. Employers who outsource their business functions to subcontractors can still be subject to joint and several liability if the subcontractors fail to comply with the law.

It is advisable that Employers review the status of their employees to ensure they are properly classified. Counsel should be consulted for specific legal advice.

This summary is for informational purposes only and is not intended to constitute legal advice. This information should not be reused without permission.