On the heels of the broadest pay equity law in the country, New Jersey has just passed the broadest wage theft law in the country, which is certain to lead to increased litigation. Unwary employers may not only be facing insurmountable fines and penalties, but potentially jail time for even minor violations of the new law. The new law establishes treble damages and criminal penalties for non-payment of wages to New Jersey employees. More importantly, there is a presumption of retaliation for any adverse employment action that occurs for months after an employee complains about their wages. The presumption is rebuttable, but only if the employer produces clear and convincing evidence. The law further extends the statute of limitations to six years and allows for reinstatement of employees.
Employers face treble damages and six-year statute of limitations
Under New Jersey’s Wage Theft Act (the ‘Act’), employees who prevail in proving their employer owes them wages or engaged in retaliation can recover the wages owed plus liquidated damages in an additional amount equal to up to 200% of the unpaid wages, in addition to reasonable costs and the employee’s attorneys’ fees. The Act also increases the statute of limitations from two years to six years.
The Act also creates a cause of action for employees who are discharged or otherwise subjected to an adverse employment action in retaliation for making a wage theft claim. Employers must offer reinstatement to the discharged employee or take other action as needed to remediate the retaliation. A rebuttable presumption is created where the adverse action occurs within ninety days of the employee filing a complaint with the New Jersey Department of Labor and Workforce Development or bringing a claim or action for violation of wage payment laws. The presumption can only be rebutted by clear and convincing evidence that the adverse action was taken for other non-retaliatory reasons.
The Act establishes harsher penalties for employers who violate the New Jersey Wage Payment Law. Employers who knowingly fail to pay an employee the full amount of wages agreed to or required by law, or who retaliate against an employee for making an internal or external complaint, participating in a proceeding relating to wage payment laws, or because the employee has informed another employee about wage and hour rights under state law, violate the Wage Payment Law and face penalties as follows:
Employers may also face criminal penalties for violations of the wage theft law. Under the Act, an employer’s failure to pay compensation as agreed within thirty days of the date due is a disorderly persons offence and carries a USD 500 fine and 20% penalty. Subsequent offenses carry penalties of USD 1000 plus 20% of wages owed. Effective 1 November 2019, employers who have been convicted of violating the law on two or more occasions are guilty of the crime of a ‘pattern of wage nonpayment’, which is a third-degree offence.
Employers’ Bottom Line
New Jersey employers should brace for an increase in wage claims and legal actions, and potentially more litigation in state court. Because the Act provides litigants a more favourable statute of limitations and liquidated damages award under state law, plaintiffs may forego a federal Fair Labor Standards Act claim in order to strategically proceed in state court, which is a much more employee-friendly venue than federal court. Employers with operations in New Jersey should review compensation, timekeeping, and wage and hour classification policies and procedures carefully to identify areas of risk and in order to determine how to ensure compliance going forward.