New Jersey Employers Beware of New “Wage Theft Act” with Stiff Civil and Criminal Penalties

New Jersey Employers need to be aware of a new “Wage Theft Act” that will go into effect on November 1, 2019. Starting on that date, if an Employer fails to timely pay all wages due, an employee may recover not only what is due, but also, treble damages (i.e., what is owed plus two times that amount.) The employee’s costs and attorneys’ fees get added to the bill as well. The penalty, but not costs and attorneys’ fees, may be avoided if the Employer can demonstrate that it had reasonable grounds to believe the amount not timely paid was not due, acknowledges that it violated the law, and pays what is owed within 30 days after a Notice of Violation. The statute imposes fines between $500 and $1,000.

In addition to civil fines and damages, the law also creates criminal liability. A corporate employee responsible for a wage payment violation commits a disorderly persons offense. A first violation may result in a fine of $500 to $1,000, imprisonment for 10 to 90 days, or both. Subsequent violations may result in fines between $1,000 and $2,000, imprisonment between 10 and 100 days, or both. A third or subsequent violation can result in a conviction for a third-degree crime called “pattern of wage nonpayment.” Employers may also be required to undergo an audit as an alternative to or in addition to, any other sanctions. If an audit reveals additional violations, the Employer and employee(s) responsible may be subject to additional fines, penalties, damages, and imprisonment. An Employer’s operating license can be revoked for repeated violations. Importantly, each week constitutes a separate violation, and it appears that a separate violation would also exist as to each employee that is not paid what is owed. Accordingly, Employers very quickly can run up multiple violations.

Employers who retaliate against an employee who files a charge are subject to fines and penalties and there is a rebuttable presumption that an employer retaliated if it takes an adverse employment action against an employee within 90 days after a wage complaint is filed. The presumption is rebuttable only by clear and convincing evidence. (Given that the Act imposes criminal sanctions there is a Constitutional question of whether this presumption violates the presumption of innocence that is that bedrock of our criminal justice system. The presumption of retaliation is more likely enforceable as to civil penalties). The Employer must offer reinstatement to an employee whose employment was terminated within that 90 day period, or take whatever other action is required to remediate the retaliation.

 

The Act also increases penalties under New Jersey’s Wage Payment law, if the Employer knowingly fails to pay all wages agreed to or required by law, or who retaliates against an employee who makes an internal or external complaint, participates in a wage payment proceeding or has informed another employee about wage and hour rights under state law. These penalties include disorderly person convictions (first or second offenses) with fines of $500 to $1,000 ($1,000-$2,000 for a second offense) and imprisonment for 10 to 100 days, or both, and a conviction of a crime of the 4th degree and fines between $2,000 and $10,000 for subsequent offenses with imprisonment of up to 18 months.

 

The Act creates a six-year statute of limitations.

 

Given the severity of the sanctions under the Act, Employers should begin to audit their procedures for timely paying all wages due including, but certainly not limited to, calculation of overtime. This audit should include a review of policies related to who may work overtime, under what circumstances, and what authorization is required to work overtime. It is imperative that Employers understand that they must pay employees for even unauthorized overtime. Discipline for working unauthorized overtime is permitted, but that discipline cannot include withholding the wages earned for the work done.