Articles Posted in Wage and Hour Disputes

New Jersey employment laws protect workers from wage theft. This may occur when an employer requires unpaid work from an employee, and the rate of pay that the employee receives for the total amount of hours worked falls below the state minimum wage. It also often happens when an employer does not pay the time-and-a-half rate required by state law for overtime. Employers that engage in wage theft are liable to employees for unpaid wages and additional damages. A law that took effect in 2019 expanded the “lookback” period for wage theft claims. This is the length of time before the date of an employee’s claim for which they may recover unpaid wages and damages. In May 2024, the New Jersey Supreme Court resolved a dispute over whether this lookback period extends before the date the 2019 law took effect. The court held that it does not.

Before the 2019 law, the lookback period for wage theft claims under both the Wage and Hour Law (WHL) and the Wage Payment Law (WPL) was two years. Suppose an employer begins engaging in wage theft against an employee in July 2014. If that employee filed a wage theft claim on July 1, 2018, they would only be able to recover damages for the period beginning on July 1, 2016.

The new law, enacted as Chapter 212, took effect as soon as the governor signed it on August 6, 2019. It expanded the lookback period from two to six years. It also added new damage provisions, including liquidated damages of up to 200% of the unpaid wage amount. Disputes soon arose about whether the expanded lookback period could include employer conduct that occurred before the law’s effective date. A claim filed on August 5, 2019 could recover damages back to August 5, 2017. The question was whether a claim filed on August 7, 2019 could reach back to August 7, 2013. One such dispute made its way to the state supreme court.
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Employee paychecks are subject to some quite complicated regulations, particularly when it comes to what employers may, may not, and must withhold from employee pay. Perhaps the most well-known form of withholding is for Social Security and Medicare, commonly known as payroll taxes, and federal income tax. States that maintain their own income tax may require employers to withhold that as well. New Jersey is among those states. When employment relationships cross state lines, withholding requirements can get even more confusing. New Jersey employment laws give workers some remedies for unlawful paycheck deductions, but this does not necessarily cover errors involving tax withholding. A new law passed by the state legislature addresses New Jersey income tax withholding for out-of-state remote workers based on a rule known as the “convenience of the employer.”

New Jersey employers may withhold money from employee paychecks when required to do so by state or federal law, such as for federal income tax. They may withhold funds from paychecks for any other purpose only when the employee has authorized it in writing. Authorization can come from an individual employee or a collective bargaining agreement with an authorized representative.

Unauthorized deductions from employee paychecks can result in penalties that include fines and jail time. Employees may also bring a civil lawsuit to recover the amounts unlawfully withheld, plus three times that amount as liquidated damages, court costs, and attorney’s fees. This provision of New Jersey law does not apply to tax withholding errors made by an employer. An employee whose employer fails to withhold the correct amount of income tax will be liable to pay the correct amount. It might, however, be possible to raise the employer’s error as a defense to the assessment of late payment penalties.
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The federal Davis-Bacon Act (DBA) of 1931 requires contractors to pay prevailing wages to all “mechanics or laborers” employed on certain federal public works projects. New Jersey employment law addresses prevailing wages for state projects. Failure to meet the prevailing wage requirements could result in termination of the contract and civil liability to workers. The Wage and Hour Division (WHD) of the U.S. Department of Labor is responsible for determining the prevailing wage for specific types of work in specified geographic areas. The current rule governing this process has been in place since 1983. The WHD published a new final rule in August 2023, which will replace the current rule on October 23. Among other changes, it expands the criteria that the WHD may consider when calculating prevailing wages.

The DBA defines “wages” to include hourly pay, medical benefits, worker’s compensation, pensions or retirement benefits, disability insurance, unemployment benefits, and other forms of compensation. “Prevailing wages” are based on several factors:
– The “class[] of laborers and mechanics” working on a project;
– The type of project; and
– The “civil subdivision of the State” — meaning the county — where the project is located.
Contractors and subcontractors working on federal contracts must pay workers every week at the worksite and post the wage scale somewhere where workers can see it.

Federal agencies may cancel a contract if the contracting officer discovers that the contractor is paying workers less than the applicable prevailing wage. The contractor may be liable for the costs incurred by the federal agency to complete the project. Since workers may find themselves out of a job in this situation, the DBA allows federal agencies to pay workers any wages owed to them directly out of withheld payments. If the agency does not have enough in the withheld funds to pay workers what they are owed, the DBA states that workers may file civil lawsuits against the contractor and its sureties.
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Federal and New Jersey employment laws require employers to pay minimum wage and overtime compensation to workers, subject to numerous exemptions. This includes employees who work in an “executive” capacity. While the federal Fair Labor Standards Act (FLSA) does not define this term, regulations provide a working definition that includes a baseline weekly rate of pay. The U.S. Supreme Court recently ruled on a dispute between an employer and an employee who earned significantly more than this amount. The parties disagreed over whether the exemption for executives applied to him. The court ruled in the employee’s favor in Helix Energy Solutions Group, Inc. v. Hewitt, finding that he is entitled to overtime compensation.

Section 7 of the FLSA requires employers to pay non-exempt employees one-and-a-half times their regular wage for hours worked over forty in a week. Section 13(a)(1), however, exempts employees who work “in a bona fide executive…capacity.” Regulations issued by the Wage and Hour Division (WHD) of the U.S. Department of Labor provide a four-part definition of an “employee employed in a bona fide executive capacity”:
1. Weekly pay of at least $684 per week on a “salary basis”;
2. Management as a “primary duty”;
3. Authority to “direct[] the work of two or more other employees”; and
4. Authority or influence over decisions regarding hiring and firing.

The regulations define “salary basis,” in essence, as payment of a predetermined amount no more frequently than once a week. At the time of the events at issue in Helix Energy, the minimum weekly pay amount was $455. The WHD amended the regulation in 2019 to raise it to $684.
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The Fair Labor Standards Act (FLSA) establishes a minimum wage for the entire country, requires employers to pay overtime when employees work more than forty hours during a week, and provides other protections for workers’ rights. A significant increase in the number of people working remotely over the past few years has raised questions about what constitutes “work time” away from the workplace. Non-exempt employees are entitled to pay for short break periods under the FLSA and New Jersey employment laws. Court decisions and administrative cases addressing this issue, however, have mostly involved time that non-exempt employees have spent in the workplace. The U.S. Department of Labor’s Wage and Hour Division (WHD) issued a Field Assistance Bulletin (FAB) in February 2023 that discusses break time for remote workers under the FLSA. Its conclusions are favorable towards the employees. While the FAB does not have the force of law, courts may be able to rely on it should this issue reach them.

FLSA regulations generally require employers to pay employees for job duties that they have performed, even if the employer did not specifically request it. For example, an employer must pay an employee who continues to work past the end of their shift in order to finish an assignment. This also applies when the employee performs the work off-site, including at the employee’s home.

An employee’s compensable time is not necessarily limited to the time they are actively engaged in their job duties. As a general rule, employees are entitled under the FLSA to get paid for rest breaks, but not meal breaks. Regulations define a rest break as a break lasting no more than twenty minutes that serves to “promote the efficiency of the employee.” “Bona fide meal periods,” as defined by the regulations, typically last at least thirty minutes. They are not considered compensable work time as long as the employee is relieved of all work responsibilities. The question for the WHD involves how these rules apply to remote workers.
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Pay disparities among employees are a common form of employment discrimination. Wage gaps exist based on sex, race, and other categories that are protected by New Jersey employment laws. Addressing the problem can be difficult because the evidence is often hidden from view. Many employers have tried, for example, to prevent employees from discussing their wages. State and federal laws now protect employees’ ability to talk about how much they get paid, but a great deal of information remains concealed. A new pay transparency law in New York City requires employers to disclose pay ranges when they advertise job openings. So far, only one city in New Jersey has this type of law. Advocates for pay transparency laws say that they will help address wage gaps among employees.

Several laws address wage disparities and discrimination in New Jersey. These include the following issues:
– Pay equity;
– Attempts by employers to prevent employees from discussing their rates of pay; and
– Pay transparency.

Pay Equity

The federal Equal Pay Act (EPA), found at 29 U.S.C. § 206(d), prohibits wage discrimination based on sex or gender. Generally speaking, employers must pay employees of any gender the same amount for work that “requires equal skill, effort, and responsibility,” and that employees “perform[] under similar working conditions.” Exceptions include systems based on merit, seniority, “quantity or quality of production,” or “any other factor other than sex.”
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