On August 6, 2019, Acting Governor Sheila Oliver signed a bill (S-1790) imposing tougher penalties for “wage theft.” The law significantly increases penalties for employers, including potential imprisonment for employers who run afoul of its provisions, and provides added protections for employee retaliation claims. The law imposes a new joint and several liability provision for client-employers and labor contractors, specifically, it declares any waiver of joint and several liability as “void and unenforceable.”  Employers need to understand the implications of the new law and ensure compliance with the State Wage and Hour Laws.    

Increased Fines and Penalties:

The new law states that employers who violate the law can be punished with fines and criminal penalties. Employers that are found to owe wages will have to pay the wages owed and liquidated damages equal to up to 200 percent of the wages owed, shall be fined penalties for each separate and additional offense, and importantly, will be found guilty of a disorderly persons offense for the first two violations, and may be imprisoned for 10 to 90 days for the first offense, and imprisoned for 10 to 100 days for the second violation. The payment of liquidated damages will not be required for a first violation if the employer shows that it made an inadvertent error in good faith, and the employer acknowledges it violated the law and pays the amount owed within 30 days of notice of such violation. However, after a third violation of the new law, the employer will be found to have committed the crime of wage nonpayment, a crime of the third degree, and will have to pay significant fines and may be imprisoned for up to eighteen months. The bill also extends the statute of limitations to six years for employees to file claims, and allows for joint employer liability where firms use contractors or client employers. 

Anti-Retaliation Provisions:

Significantly, the law also strengthens its anti-retaliation provision by specifically noting that employers may not take any retaliatory actions “by discharging or in any other manner discriminating against the employee” if an employee complains, testifies, serves on a wage board, or if the employee has informed other employees about their wage rights. Further, the law states that if an employer takes an adverse action within 90 days of the employee filing a complaint, then there is a presumption that the action was taken in retaliation against the employee. Consistent with the new law’s theme of penalties, it imposes additional fines and penalties to protect employees who speak out against wage and hour violations. Notably, employers that have retaliated will be found to have committed a disorderly persons offense and will be fined upon conviction, liable for all wages lost and liquidated damages equal to 200 percent, and required to pay reasonable costs of the action. Further, in cases where an employee is terminated, the employee will be required to offer reinstatement in employment to the discharged employee and take other actions as needed to correct the retaliatory action.

Increased Actions by the New Jersey Department of Labor and Workforce Development:

The law provides the New Jersey Department of Labor and Workforce Developments Wage Collection Section with expanded authority.  It can now investigate claims up to $50,000, up from the previous limit of $30,000.  It can now also hear claims regarding retaliation, instead of being limited to only claims for wages.  The new law also provides for two rebuttable presumptions that could create liability for employers.  First, if the employer fails to provide sufficient records as required to be maintained pursuant to State Wage and Hour Law, there is a rebuttable presumption “that the employee worked for the employer for a period of time and for the amount of wages as alleged in the wage claim … ”  Thus, record keeping takes on a new level of significance for employers. Second, there is now a rebuttable presumption of successor liability where “an employer has established a successor entity” if the predecessor and the alleged successor share certain specified circumstances, including, among other things, occupying the same premises, employing substantially the same work force, and utilizing the same tools, facilities or equipment. In addition to likely increased enforcement by the State, employees may also file lawsuits for alleged violations. 

Given the immense consequences employers may face if they are found to violate the law, employers should be vigilant in informing and training those involved with wage payments and decisions regarding pay, and consider conducting a self-audit to ensure compliance. Should you have any questions, or if you would like to discuss how this new law may impact your company’s wage payment practices, please contact your regular Saul Ewing Arnstein & Lehr labor and employment attorney.