United States: New Jersey's New Wage Theft Act Imposes

On Aug. 6, New Jersey Acting Gov. Sheila Oliver signed the Wage Theft Act (WTA), which amends the New Jersey Wage Payment Law, the New Jersey Wage and Hour Law and the New Jersey Wage Collection Law. The WTA provides for stiffer penalties for employers and lower thresholds for employees to provide violations, such as extending the time for employees to bring wage violations from two years to six. Most of the WTA's provisions were effective immediately.

Perhaps most heartburn-inducing for employers is that the WTA provides that any termination, demotion or other action taken against an employee within 90 days of his or her filing a state wage complaint either via agency or lawsuit will presumptively be retaliation, unless the employer can prove by "clear and convincing evidence" that the adverse action was not motivated by the complaint. Additionally, the New Jersey Department of Labor & Workforce Development (NJDOL) has the power to investigate retaliation claims, even those based on internal wage complaints or conversations regarding wages with other employees. Adverse actions following internal wage complaints do not, however, become presumptively retaliatory. Retaliation will result in the employer having to pay the employee triple the pay that the adverse action cost the worker, attorneys' fees and costs. Additionally, employers will be required to offer reinstatement (or take other remedial actions to reverse any retaliation) to employees retaliated against.

The WTA also provides for a rebuttable presumption that an employee's claim for unpaid wages is accurate, unless the employer has records to show that the wages were paid. This makes the necessity of keeping accurate records even more imperative. The WTA also provides for treble damages, attorneys' fees and costs for failing to pay an employee wages, unless an employer is able to establish a good faith defense, the employer is able to 7 demonstrate that the violation was a first, the employer's actions were taken in good faith with reasonable grounds for believing that the action was not a violation, or the employer admits the violations and pays the amount owed within 30 days.

In addition to damages that would be required to be paid to a complainant, the WTA also provides potential fines and imprisonment for knowingly failing to pay wages to an employee or retaliating against an employee.

In addition to damages that would be required to be paid to a complainant, the WTA also provides potential fines and imprisonment for knowingly failing to pay wages to an employee or retaliating against an employee.

The NJDOL has increased power under the WTA. In addition to being able to hear retaliation claims, the NJDOL's jurisdictional limit is increased from $30,000 to $50,000, it may investigate claims dating back six years, and it may order liquidated damages. The WTA also specifically calls for an increase in NJDOL audits and mandates that when an employer is found to owe more than $5,000 in wages, the NJDOL is to inform the employer of the NJDOL's right to audit the employer or successor entities and notify the Division of Taxation and recommend the Division of Taxation perform its own audit of payroll withholdings and other taxes. The NJDOL will also now have the power to direct other agencies to suspend licenses held by an employer or successor entity if it fails to pay wages and/or damages owed pursuant to an NJDOL determination or court order within 10 days of such determination/order. The NJDOL is also empowered to issue stop work orders against an employer until a violation has been corrected. If this occurs, an employer will be placed on probation and may be required to file periodic compliance reports. The WTA also expressly permits the NJDOL to publicly post the details of any wage violations and enforcement actions, which means that the names and addresses of employers that violate the wage and hour law, the nature of the claims, the number of affected employees, the amount of wages owed, penalties, and license suspensions may all become public information.

The WTA also will expand the entities that can be sued. The definition of employer now includes any successor entity or successor firm of the employer, and when employees do not receive pay pursuant to a contract, both the client employer and the labor contractor providing the worker to the client employer will be jointly and severally liable.

As always, employers should ensure they're following all federal and state wage laws. To do so, we recommend conducting an internal, privileged audit. And on that note, as a reminder, New Jersey's minimum wage increased to $10 per hour for most employees on July 1 – employers should ensure that they made any necessary adjustments. Additionally, employers should immediately revise their policies to include an employee's statement of rights as required by the WTA (which will be provide by the NJDOL) and strengthen their timekeeping policies and requirements. They should also reassess their recordkeeping to ensure that all timekeeping and pay records are accurate and train supervisors to ensure that all employees are following timekeeping policies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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