Earlier this month, New Jersey enacted the toughest and most comprehensive “wage theft” law in the United States, opening the floodgates for wage and hour cases to be brought in New Jersey courts. The New Jersey Wage Theft Act (S1790) enhances employee protections and penalizes employers for failing to pay an employee’s salary, wages, overtime or benefits by imposing treble damages, fines and potential criminal penalties, including jail time for repeat offenders.
New Jersey employers should review the Act carefully and note the many significant changes to New Jersey law, including the following:
- Civil Penalties and Fines. Employers who fail to pay salary, wages, overtime or benefits are subject to triple damages, i.e., unpaid wages plus liquidated damages of 200% of such wages, in addition to fines that increase for subsequent offenses and administrative penalties.
- Criminal Penalties. Violations of the Act constitute a disorderly person’s offense and subject employers to criminal penalties, including fines and/or jail time based on the number of violations.
- Recovery of Attorneys’ Fees. Employees who prevail in a civil action are entitled to recover attorneys’ fees and costs, providing added incentive for employees (and their counsel) to sue under the Act.
- Enhanced Scope of Collective Actions. The Act makes collective actions available for any form of unpaid compensation (not just typical minimum wage and overtime claims), and includes a more lenient standard that allows a plaintiff to bring collective actions on behalf of all “similarly situated” employees instead of the stricter standard for class actions under state and federal law.
- Increased Limitations Period. The statute of limitations for claims under the Act has tripled, increasing from two to six years.
- Exposure Exceeds Traditional “Wage and Hour” Claims. The Act applies to an employer’s failure to pay compensation or provide benefits under an employment agreement (in addition to traditional wage and hour claims, i.e., non-payment of minimum wage and/or overtime). This enhanced protection subjects employers to triple damages (plus fines, attorneys’ fees and potential criminal liability) if the employer breaches a contract with the CEO or any other employee by failing to pay compensation due under the contract. For example, breach of a contractual obligation to pay an auto allowance, commission or bonus, or equity under an equity plan may subject an employer to liability under the Act.
- Joint and Several Liability for Employers and “Labor Contractors.” The Act subjects New Jersey employers and “labor contractors” (such as an outside staffing agency) to joint and several liability for violation of state wage and hour and anti-retaliation laws. The Act restricts companies from “contracting out of” joint and several liability by declaring that a waiver of such provisions are unenforceable.
- Expanded Protection Against Retaliation. Employers have long been prohibited from retaliating against employees who pursue legal action for unpaid wages or overtime, but the Act expands employee protections by prohibiting retaliation against employees who complain about or take legal action regarding non-statutory compensation disputes, including unpaid commission or bonus.
The civil provisions of the Act became effective on August 6, 2019 and the criminal provisions will take effect on December 1, 2019. New Jersey employees should review and consider auditing their pay practices and employment classifications to ensure that they and their subcontracted labor providers are in compliance with all state wage and hour laws, recordkeeping laws, and employment contracts and other agreements that promise to pay commissions, bonuses, equity and other benefits.
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