Articles Posted in New Jersey Labor Law

New Jersey labor laws protect workers’ rights to a minimum wage, overtime pay, unemployment insurance, a workplace free of discrimination and harassment, and other matters. These laws regulate the relationship between employers and employees. Unfortunately, some employers try to evade their responsibilities by classifying employees as independent contractors. Employee misclassification is a violation of state law. New Jersey employment law places most of the burden of proof on employers to establish that an individual is not an employee. Legislation signed by the Governor in January 2020 assesses penalties for misclassification and requires employers to post notices of workers’ rights. In late 2019, the New Jersey Department of Labor and Workforce Development (LWD) demanded almost $650 million in unpaid employment taxes and interest from a rideshare company that has frequently been the subject of misclassification complaints.

Employees in New Jersey are covered by a rather vast array of federal, state, and local employment laws. They cover issues ranging from wages and hours to workplace safety. Some statutes only apply to employers with a minimum number of employees, while others apply to all employers. Independent contractors are not covered by these laws. Their legal protections are largely limited to the terms of their contracts and contract law. Many statutes do not provide a particularly helpful definition of an “employee.” The federal Fair Labor Standards Act, for example, defines an employee as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1).

State law fills in gaps left by federal statutes. In 2015, the New Jersey Supreme Court adopted a definition of “employee” known as the “ABC test,” based on §§ 43:21-19(i)(6)(A) through (C) of the New Jersey Revised Statutes. An individual is presumed to be an employee unless the employer can establish three elements:

1. The employer does not exercise control over how the individual performs their job, both in the text of the contract and in actual practice;
2. The individual’s job is outside the scope of the employer’s regular business, or the individual performs their job away from the employer’s business premises; and
3. The individual works in their own separate business or trade.

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Employers in New Jersey may no longer ask job applicants how much they made at their last job, thanks to a new law passed by the Legislature in June 2019 and signed by the Governor in July. The bill amends several provisions of New Jersey employment discrimination laws to prohibit employers from “screen[ing] a job applicant based on the applicant’s salary history.” Inquiries about salary history can offer employers a way around laws against pay discrimination, such as the federal Equal Pay Act (EPA). When an employer bases hiring or salary decisions on how much an applicant made at their previous job, it tends to perpetuate existing wage imbalances. As of December 2019, sixteen states, the District of Columbia, Puerto Rico, and multiple local governments have enacted laws prohibiting salary history inquiries to various degrees.

The EPA prohibits discrimination in pay on the basis of gender, meaning that employers must pay male and female employees the same for work that “requires equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d)(1). It makes exceptions for different rates of pay based on seniority, merit, “quantity or quality of production,” or “a differential based on any other factor other than sex.” Id. Bans on salary history inquiries are partly motivated by concerns that past salary could fit into that last category. The status quo in the United States in late 2019 is that multiple wage gaps exist. People can argue over what causes these gaps, but their existence is difficult to dispute. Employment decisions based on salary history, regardless of an employer’s intent, can serve to entrench the disparities.

State laws governing salary history inquiries vary widely in what they prohibit and allow. Alabama, for example, passed a law around the same time as New Jersey that bars employers from making an adverse employment decision based solely on an applicant’s refusal to provide information on their salary history. It does not expressly prohibit employers from asking for such information. California’s law, enacted in 2017, bars employers from asking, and goes much further. Employers in California may not “rely on the salary history information of an applicant for employment” in either hiring or salary decisions, unless the applicant voluntarily discloses the information.

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New Jersey employment law protects workers in this state by requiring payment of a minimum wage and overtime, prohibiting discrimination and harassment, and setting standards for workplace safety, among many other measures. As with anything, there is always room for improvement. Recent developments in New Jersey’s warehousing industry may demonstrate an area where improvement is needed. E-commerce has vastly increased the demand for warehouse space and workers to operate fulfillment centers. New Jersey is reportedly home to over one billion square feet of warehouses, which employ tens of thousands of people. An incident at one fulfillment center in late 2018, which sent two dozen employees to the hospital, has led to demands for improvements in working conditions. A report from the labor organization Warehouse Workers Stand Up (WWSU) calls on New Jersey lawmakers to help push companies operating warehouse distribution centers to adopt a ten-point “code of conduct.”

The WWSU’s proposed code of conduct covers numerous areas of employment law, including wage and hour laws, workplace safety, medical leave, and labor organizing. State and federal laws address many of these areas to some extent, although many gaps and loopholes exist. According to the WWSU’s report, many distribution centers employ people on a temporary or part-time basis. Different definitions of “employee” in different statutes mean that not all legal protections may apply to people who do not have full-time, permanent employment, or who are employed in certain capacities. The National Labor Relations Act (NLRA), for example, protects employees’ right to organize for the purpose of collective bargaining, but it defines “employee” in a way that might exclude some people, such as those considered to be an “independent contractor” or “supervisor.” 29 U.S.C. § 152(3).

In early December 2018, multiple employees at a distribution center in New Jersey were injured when a can of bear repellant, an aerosol product similar to pepper spray, fell off of a shelf. An automated machine reportedly punctured the can, causing its contents to disperse. About two dozen people went to the hospital, including one person who had to go to the intensive care unit. This incident appears to have been what led workers to rally in support of the WWSU’s proposed code of conduct.
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Organized labor is arguably responsible for many features of employment that are often taken for granted today. Union membership has decreased considerably over the past few decades for a variety of reasons. Employees in New Jersey are union members at a higher rate than the national average, but union members still only account for less than twenty percent of New Jersey’s workforce. Public sector unions tend to receive a great deal of media attention today, and the most popular historical images of union membership probably involve trades like manufacturing and mining. Recent news coverage, however, has pointed to itself as an important sector for union organizing. Newsrooms at print and digital publications around the country have elected to organize for the purpose of collective bargaining. While it is not clear if employees at any New Jersey-based publications have taken this step, it has happened at many publications that reach New Jersey readers.

New Jersey remains generally favorable to labor unions. Federal law protects workers’ rights to organize and engage in “concerted activities” related to organizing, and prohibits employers from interfering with those rights. See 29 U.S.C. §§ 157, 158. It does not, however, prevent states from enacting so-called “right-to-work” laws. At least twenty-six states, not including New Jersey, have enacted such laws. Right-to-work laws prohibit “union security clauses” in collective bargaining agreements (CBAs) between employers and labor unions. A union security clause requires all employees to contribute to the union, either by becoming a member or paying a fee. Without a union security agreement, employees who contribute nothing to the union still benefit from the union’s efforts.

Despite offering a relatively favorable environment for labor unions, not many New Jersey workers are union members. According to the Bureau of Labor Statistics, part of the U.S. Department of Labor, New Jersey had 630,000 union members in 2017. This accounted for 16.2 percent of all employees in the state. New York had 2,017,000 union members in 2017, or 23.8 percent. Both states saw a decline in union membership since 2007. New York’s number of union members fell by 38,000, while New Jersey’s fell by 118,000.
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The New Jersey minimum wage was increased on January 1, 2019 from $8.60 to $8.85 per hour. This is more than a dollar above the federal minimum wage of $7.25 per hour, but it is lower than numerous other states. Massachusetts, California, and Washington, for example, currently set their minimum at $12.00 per hour. New York’s state-level minimum wage is around $11.00 per hour. New Jersey’s governor has stated that he would like to see a $15 minimum wage statewide. A recent deal with state legislators has increased the likelihood of that happening, although the increase would be gradual. Seattle raised its minimum wage to $15 per hour several years ago, and some observers note that the dire predictions of critics have not materialized.

The U.S. Congress last raised the federal minimum wage in the Fair Minimum Wage Act of 2007. Pub. L. 110-28 § 8102. That bill raised the federal rate to $5.85 after sixty days, with two additional increases. It has remained at $7.25 per hour since July 2010. 29 U.S.C. § 206(a)(1). New Jersey voters approved an amendment to the state constitution in 2013, which set the statewide minimum wage at $8.25 per hour starting on January 1, 2014. N.J. Const. Art. I, ¶ 23. It further directed the state to increase the minimum wage every year based on the increase in “the consumer price index for all urban wage earners and clerical workers (CPI-W) as calculated by the federal government.” Id. This process resulted in the $8.85 per hour rate that took effect at the beginning of January 2019. N.J.A.C. § 12:56-3.1(a).

A bill pending in the New Jersey Legislature, A15/S15, was reported out of both the Assembly and Senate Appropriations Committees in late January 2019. The the bill includes the CPI-W provisions of the 2013 constitutional amendment, but also sets increases in the minimum wage beginning in mid-2019. The minimum wage would increase by the greater of the amounts set by the bill or the increase in the CPI-W. The current rate of $8.85 per hour would increase to $10.00 per hour on July 1, 2019, and to $11.00 per hour on January 1, 2020. Each January 1 afterwards, the state minimum wage would increase by $1.00 until 2024, when it would be $15.00. If the U.S. Congress increases the federal minimum wage at any time to an amount greater than the state minimum wage rate, the federal rate would apply.
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Workers at major airports in New Jersey and New York City will see their minimum wage increased over the next few years to $19, the highest in the country, after a unanimous vote by the Board of Commissioners of the Port Authority of New York and New Jersey (PANYNJ). The federal minimum wage has remained at $7.25 per hour for almost a decade, while New Jersey and New York have enacted higher state-level minimum wages. Despite these laws, New Jersey wage and hour law claims routinely allege failure by employers to pay their workers at or above the minimum rate. The PANYNJ’s wage increase, while only binding on employers at certain airport facilities, will hopefully lead to increases elsewhere.

Congress last amended the minimum wage provisions of the Fair Labor Standard Act (FLSA) in 2007. The minimum wage increased to $5.85 per hour on July 24, 2007; to $6.55 an hour on July 24, 2008; and to $7.25 an hour on July 24, 2010. 29 U.S.C. § 206(a)(1). New Jersey’s minimum wage has been set at $8.60 per hour since the beginning of 2018. N.J. Rev. Stat. § 34:11-56a4, N.J.A.C. § 12:56-3.1. The minimum wage in New York varies by location. As of December 31, 2017, employers in New York City with eleven or more employees must pay at least $13.00 per hour, while employers with ten or fewer employees must pay $12.00 per hour. N.Y. Lab. L. § 652(1)(a).

The PANYNJ is a government organization created by a compact between the states of New Jersey and New York, with the approval of Congress. It was formally established in 1921, although the two states first agreed to work together in 1834 to manage the port area, which now covers an area of about 1,500 square miles. The governors of the two states appoint the members of the Board of Commissioners. The PANYNJ manages multiple seaports, the PATH train system and numerous bus lines, multiple bridges and tunnels, and six airports. Its authority includes the ability to set a minimum wage for workers employed at its sites.
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New Jersey employment laws, as well as laws around the country, must balance the rights and interests of employees with those of employers. Employees’ protected rights include fair wages, reasonable hours, and a workplace that is reasonably safe and free of harassment and discrimination. Employers need to be able to pursue their business activities, to the extent that they do not violate the rights of their employees and others. Sometimes, businesses may determine that they need to lay off a significant portion of their workforce. This is within an employer’s rights, but laws at the federal level and in many states, including New Jersey, set strict limits. A recently-filed lawsuit alleges that a video game company violated the federal Worker Adjustment and Retraining Notification (WARN) Act of 1988 when it laid off all but twenty-five employees several months ago. Roberts, et al v. Telltale Games, Inc., No. 3:18-cv-05850, complaint (N.D. Cal., Sep. 24, 2018).

The federal WARN Act generally applies to employers with at least one hundred full-time employees. The statute’s requirements are triggered by two events: a “plant closing” or a “mass layoff.” The former refers to any closure of a facility that results in fifty or more employees at a single site losing their jobs within a period of thirty days; while the latter refers to any other incident that, in a thirty-day period, results in layoffs of (1) at least five hundred employees, or (2) at least fifty employees when that number accounts for one-third of all employees. 29 U.S.C. §§ 2101(a)(2), (3). New Jersey’s equivalent law is formally known as the Millville Dallas Airmotive Plant Job Loss Notification Act of 2007, and informally known as the NJ WARN Act. It uses the same definition of “mass layoff,” and uses the term “termination of operations” to refer to the same type of incident as a “plant closing.” N.J. Rev. Stat. § 34:21-1.

Both the federal and NJ WARN Acts require covered employers to provide written notice to employees or their representatives at least sixty days prior to a plant closing or mass layoff. 29 U.S.C. § 2102(a)(1), N.J. Rev. Stat. § 34:21-2(a). If an employer fails to provide the required notice under either statute, aggrieved employees may bring a civil action for damages. Federal law allows back pay, along with benefits subject to the Employee Retirement Income Security Act of 1974 (ERISA), for up to sixty days. 29 U.S.C. § 2104(a). The NJ WARN Act allows courts to award “lost wages, benefits and other remuneration” in an amount up to “one week of pay for each full year of employment.” N.J. Rev. Stat. §§ 34:21-2(b), 34:21-6.
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A new law protecting New Jersey public sector unions, which was signed into law by Governor Phil Murphy in May 2018, faces a legal challenge based on a U.S. Supreme Court decision one month later. The law, entitled the Workplace Democracy Enhancement Act (WDEA), establishes standards for interactions between public-sector unions and government employers, and addresses several controversial issues. The Supreme Court’s ruling in Janus v. AFSCME, 585 U.S. ___ (2018), however, could represent a significant reduction in the power of public-sector unions. A lawsuit filed by several union members against their union and various state government officials argues that Janus invalidates certain provisions of the WDEA. Thulen, et al v. AFSCME, et al, No. 1:18-cv-14584, complaint (D.N.J., Oct. 3, 2018). The lawsuit is among the first to test how Janus will impact New Jersey employees’ rights.

Federal and state laws protect workers’ rights to organize for the purpose of collective bargaining, and either to form a union or to join an existing union that can negotiate with management on their behalf. The WDEA declares that any public sector union chosen as “the exclusive representatives of employees in a collective negotiations unit” must “hav[e] access to and be[] able to communicate with the employees it represents.” P.L. 2018, c. 15 § 2 (N.J. Rev. Stat. § 34:13A-5.12). The law requires public employers to allow union representatives to have reasonable access to employees, and to provide certain employee information to the union within a specified time frame.

Public-sector union members may authorize their employer to deduct union membership dues from their paychecks. The WDEA provision at issue in Thulen involves a restriction on employees’ ability to withdraw authorization for this payroll deduction. An employee may only withdraw authorization by giving written notice to the employer “during the 10 days following each anniversary date of their employment.” Id. at § 6, amending N.J. Rev. Stat. § 52:14-15.9e.

The role of labor unions in the modern economy is often a controversial issue. It is exceedingly difficult to deny, however, that they have improved working conditions for employees in New Jersey and around the country. Today’s unions are arguably victims of their own success, as many people no longer see them as necessary. Workers nevertheless still benefit from the ability to bargain collectively with their employers. Federal and state laws protect workers’ ability to organize for purposes of collective bargaining, but many states have enacted laws that limit unions in important ways. A recent decision by the U.S. Supreme Court, Janus v. AFSCME, 585 U.S. ___ (2018), specifically impacts public sector unions and their ability to collect fees to support their collective bargaining activities. If you have a question about your union, contact a New Jersey labor law attorney.

The National Labor Relations Act (NLRA) of 1935 allows workers to organize in order to engage in collective bargaining with their employer regarding pay, working conditions, and other features of employment. See 29 U.S.C. § 157. Union members support these activities by paying membership fees. Workers who do not become dues-paying members often still benefit from the union’s efforts. This is commonly known as the “free rider problem.” Some unions dealt with this by negotiating “closed shop” agreements, by which the employer could only hire union members; or “union shop” agreements, which required all employees to join the union or pay an “agency fee” once they had been hired.

The Taft-Hartley Act of 1947 banned closed shop agreements, and only allowed union shop agreements or agency fees to the extent that they do not conflict with state law. Id. at § 164(b). Many states have enacted “right to work” laws, which prohibit unions from charging agency fees to non-members.
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The term “gig economy” has entered common usage in recent years. It broadly refers to alternatives, of sorts, to having a single 9-to-5 employer. This includes rideshare or delivery services, and services ranging from childcare to odd jobs through online platforms. It also includes selling goods through online marketplaces, and most kinds of freelance work. One supposed advantage of the gig economy is that it provides greater flexibility for workers than the traditional workplace. It also comes with certain disadvantages, including a lack of legal protections when compared to the traditional definition of “employment.” This summer, the New York Times reported on several studies examining the gig economy. While most of the workforce still holds traditional jobs, the gig economy is growing. The studies provide nationwide information, not figures on employment in New Jersey or any other specific state. As this type of work arrangement becomes more common, our system of employment laws may have to catch up. Speak to a New Jersey employment lawyer to discuss any questions you might have.

Minimum wage and overtime laws are among workers’ most important legal protections, but state and federal laws only apply to people who meet a specific definition of an “employee.” The federal Fair Labor Standards Act (FLSA) establishes a national minimum wage, overtime requirements, and limits on child labor. Its definition of an “employee” is simply “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). Gig economy workers are often considered to be independent contractors instead of employees, for FLSA purposes. The extent to which the FLSA’s minimum wage and overtime requirements apply to gig economy workers is a matter of ongoing dispute, with courts deciding cases in both directions and the U.S. Department of Labor (DOL) recently changing its position on the issue.

New Jersey’s Wage Payment Law expressly states that it only applies to “employees,” which it defines as “any person suffered or permitted to work by an employer.” N.J. Rev. Stat. § 34:11-4.1. The statute specifically excludes independent contractors from that definition. The state’s Wage and Hour Law has a similar definition of “employee,” but without the specific exclusion of independent contractors. Id. at § 34:11-56a1(h). State regulations establish a test for determining whether an employee has been misclassified as an independent contractor. N.J.A.C. § 12:56-16.1. See also Hargrove v. Sleepy’s, LLC, 106 A.3d 449 (N.J. 2015).
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