The New Jersey Wage Theft Act: What New Jersey Employers and Employees Should Know

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By Prema Roddam, Dilawar Fazal, and Simran Ahuja

The New Jersey Wage Theft Act (WTA), effective since August 2019, has transformed New Jersey’s wage and hour claims laws into some of the most stringent in the country. The WTA expands employer liability and provides enhanced legal remedies for employees. Employers should meet with their attorneys to protect against WTA-related litigation.

Financial Penalties for Offenses

There are many potential costs for employers who violate the WTA. Notably, employees can recover up to 200% in liquidated damages from their offending employers equal to wages due, costs, and attorneys’ fees. These liquidated damages are due in addition to the unpaid wage claim amount, overtime wages, back wages, and related costs.

First-time accused employers cannot avoid paying liquidated damages under WTA, unless they can prove that they:

  • Unintentionally underpaid their employee in good faith, and
  • Reasonably believed that this did not violate New Jersey law.

In addition to liquidated damages, the WTA also issues fines to employers to deter repeated wage law violations. For their first offense, employers are fined $500 to $1,000 plus 20% of the wages owed. For any subsequent offenses, the employer will be fined $1,000 to $2,000 per offense plus a 20% penalty. In the case of a third or subsequent violation, employers are charged with the third-degree crime of pattern of wage nonpayment. An employer charged with this crime can be punished with imprisonment for three to five years and/or a fine of up to $15,000.

Employees also have more time to recover unpaid wages and file complaints against retaliations under the WTA. The act triples the statute of limitations for New Jersey wage and hour claims from two years to six years, including for claims alleging retaliation. This means that employees have up to six years after an alleged offense occurred to initiate legal proceedings.

Presumption of Retaliation

The WTA protects employees against retaliation when they make wage law complaints. If employers take any action against such employees within 90 days of their complaint, employers must demonstrate with “clear and convincing evidence” that their motives were not retaliatory. Permissible motives include actions taken due to an employee’s unprofessionalism or poor work performance.

Joint Liability

The WTA initiated joint liability for staffing agencies, mid-vendors, and client employers. This means that all parties are equally liable for any wage violations, but each can recover costs they incur due to another party’s violation. Employers in this type of relationship should consult with one another to ensure wage compliance and avoid potential litigation.

Employer Disclosures Required

There is an emphasis on employee access to wage and hour information under the WTA. To ensure that employees are aware of their rights under the law, employers must provide an employee wage rights brochure to their employees and new hires.

Further, employers are required to provide employees with their wage and hour records if they file a wage complaint. If the employer fails to do this, the WTA triggers a rebuttable presumption that the employee’s wage law violation claims are true. Employers in this case must prove that there were no such violations, and the wage claims are baseless.

Employers are also subject to public disclosures under the WTA. The New Jersey Department of Labor lists wage law violations publicly on its website, including a claim description, the number of employees affected, the value of wages owed, and any additional penalties, license suspensions, or annulments resulting from the claims.

Conclusion

The WTA increases the burden for employers to comply with wage laws. Even well-intentioned employers can face potential liabilities for inadvertent violations. Employers should closely examine their employees’ classifications and any internal wage complaints and act quickly to resolve any errors they discover. Work closely with your trusted Chugh, LLP attorney to ensure compliance with New Jersey labor laws, including the WTA.

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