Articles Posted in Wage and Hour Disputes

employment contractThe 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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financial accountingFederal law prohibits employers from engaging in practices that have an adverse effect on competition. This includes practices that harm consumers and those that harm employees. For example, employers engaged in the same business, who would ordinarily compete among each other for employees, may not enter into agreements with one another that diminish employment opportunities or set artificial limits on wages. Agreements not to solicit or hire one another’s employees, for example, can prevent those employees from advancing in their chosen careers. Agreements on wage limits impact employees’ ability to negotiate higher wages. The Federal Trade Commission (FTC), which enforces various federal consumer laws, may also investigate anticompetitive practices. It recently announced a settlement with a group of staffing companies, which it alleged violated federal law by colluding to limit pay rates. In the Matter of Your Therapy Source, LLC, et al, No. C-1710134, complaint (FTC, Jul. 31, 2018). Although the case did not involve events in New Jersey, federal antitrust and anticompetition laws have nationwide application. A New Jersey employment law attorney can help guide you in the right direction based on the unique facts of your situation.

The FTC was created by the Federal Trade Commission Act (FTCA) of 1914, 15 U.S.C. § 41 et seq. The statute prohibits “unfair methods of competition in or affecting commerce,” and authorizes the FTC “to prevent persons, partnerships, or corporations…from using unfair methods of competition in or affecting commerce.” Id. at §§ 45(a)(1), (2). It also specifically states that a finding of liability under the FTC Act does not preclude additional findings of liability under other antitrust statutes, such as the Sherman Antitrust Act of 1890. Id. at §§ 44, 45(e).

The respondents in the Your Therapy Source case operated staffing services that, according to the FTC’s complaint, provided therapists to “treat[] home health agency patients in the Dallas/Fort Worth, Texas area.” Your Therapy Source, complaint at 1. Although the companies competed with one another in the same market, the FTC alleged that they “agree[d], and invit[ed] other therapist staffing companies to agree, on rates paid to therapists.” Id. Ordinarily, therapists could “contract with multiple therapist staffing companies and choose among them based on pay rate” and other factors. Id. at 3. The agreement alleged by the FTC, however, prevented therapists from obtaining competitive pay rates.
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equal payA new law, entitled the Diane B. Allen Equal Pay Act (DAEPA), went into effect in New Jersey on July 1, 2018. Described by the media as “the strongest equal pay law in America,” the law amends the New Jersey Law Against Discrimination (NJLAD) to address disparities in pay based on all protected categories. If a covered business pays workers at different rates, it must justify the difference based on factors like education or experience. The state recently issued reporting forms for businesses that enter into certain contracts with the state, which they must submit to the New Jersey Department of Labor and Workforce Development.

The federal Equal Pay Act (EPA) of 1963 prohibits paying employees at different rates “on the basis of sex” in jobs that “require[] equal skill, effort, and responsibility, and…are performed under similar working conditions.” 29 U.S.C. § 206(d)(1). The statute allows exceptions where the disparity is based on seniority, merit, “quantity or quality of production,” or other non-sex-based factors. Id. The EPA amended the Fair Labor Standards Act (FLSA), and allows complainants to recover damages through the same process for minimum wage and overtime violations. Id. at § 206(d)(3). The law has a two-year statute of limitations, meaning that complainants cannot recover damages for more than two years of New Jersey equal pay violations. Id. at §§ 216(c), 255(a).

The DAEPA was introduced in the New Jersey Legislature as Senate Bill 104 on January 9, 2018, and as Assembly Bill 1 on March 22. It passed both houses on March 26, and was signed into law by the governor on April 24, with an effective date of July 1. According to media analyses of federal labor statistics, female workers are paid eighty-two cents for every dollar paid to male workers in New Jersey. This number includes all women throughout the state. For women of color, the pay disparity is much greater. The DAEPA goes further than equal pay statutes that focus on sex or gender. It prohibits pay discrimination on the basis of any protected class identified by the NJLAD, such as race, religion, nationality, sexual orientation, etc.
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Legal News GavelFederal and state employment laws in New Jersey protect workers’ right to overtime compensation. Employers can violate employees’ rights under these statutes in a variety of ways, the most obvious of which involves a requirement to work extra, unpaid hours. Violations can occur whenever an employee’s total compensation for a pay period does not include the overtime rate of time-and-a-half. Some employees work at multiple locations, which might be owned and operated by different companies. If the two companies have sufficient ties to one another, they could be deemed “joint employers,” who must collectively provide overtime compensation to that employee. A collective action currently pending against a New Jersey hospital and other defendants includes this allegation. Layer v. Trinity Health Corp. et al, No. 2:18-cv-02358, complaint (E.D. Pa., Jun. 6, 2018).

The federal Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to non-exempt employees, at a rate of one-and-a-half times their regular wage for any hours in a week over forty. 29 U.S.C. § 207(a)(1). The statute identifies numerous exemptions, including people who work “in a bona fide executive, administrative, or professional capacity.” Id. at § 213(a)(1). Non-exempt employees are, very broadly speaking, hourly workers who do not hold a managerial position. Employees may file suit against their employers for alleged violations of overtime rules on their own behalf, or on behalf of “themselves and other employees similarly situated.” Id. at § 216(b). A claim brought on behalf of other employees is known as a “collective action,” and is similar in many ways to a class action.

Employees can work for more than one employer. For many people, holding down more than one job is an unfortunate necessity. In most cases, the two employers are legally separate from one another, and are only obligated to pay an employee overtime if their total time working for that employer exceeds forty hours. Two or more employers may, however, be deemed “joint employers,” meaning that they are jointly liable for overtime compensation when an employee’s total work time at any of their locations exceeds forty hours in a week. The determination of whether employers are “joint” or not “depends upon all the facts in the particular case.” 29 C.F.R. § 791.2(a). If an employee’s work for one employer “is not completely disassociated” from their work for another employer, all of their work for the two employers could be “considered as one employment for purposes of the [FLSA].” Id.
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Legal News GavelBusiness laws in New Jersey and around the country protect corporate directors and officers from personal liability for most actions undertaken by the business. Courts will only “pierce the corporate veil” and allow suits against individual directors or officers in limited situations, such as illegal conduct by those individuals. In the context of employment, some statutes allow claims against individuals, while others do not. A putative class action alleging violations of a New Jersey wage law sought to hold individual directors liable along with the employers. A federal court, while allowing the lawsuit to proceed against the business entity defendants, ruled that New Jersey’s Prevailing Wage Act (PWA) “does not impute personal liability.” Palmisano, et al v. Crowdergulf, LLC, et al, No. 3:17-cv-09371, mem. order at 1 (D.N.J., May 29, 2018).

The PWA “establish[es] a prevailing wage level for workmen engaged in public works.” N.J. Rev. Stat. § 34:11-56.25. “Public works,” as defined by the statute, includes most construction and maintenance work performed under government contract, or performed on government-owned property. Id. at § 34:11-56.26(5). The “prevailing wage” is the rate paid in accordance with collective bargaining agreements in force in the geographic area of the public work. Id. at § 34:11-56.26(9). Workers must be paid, at minimum, the current prevailing wage, which may vary based on location, type of work, and other factors. If an employer pays a worker less than the prevailing wage rate, the worker may file a private cause of action to recover amounts owed to them. Id. at § 34:11-56.40.

The defendants in the Palmisano case include corporations and limited liability companies that entered into contracts with the State of New Jersey for cleanup work after Hurricane Sandy. The hurricane caused extensive damage to the mid-Atlantic region in late October 2012. It made landfall in New Jersey on October 29, killing thirty-seven people, damaging or destroying nearly 350,000 homes, and causing an estimated $30 billion in damage. The state entered into contracts with companies from all over the country to repair the damage.

Legal News GavelA group of baggage handlers employed by a major airline at Newark Liberty International Airport enjoyed a victory in their wage lawsuit recently, when a federal judge granted their request for class certification. Ferreras, et al. v. American Airlines, Inc., No. 2:16-cv-02427, opinion (D.N.J., Mar. 5, 2018). The plaintiffs allege that the defendant violated the New Jersey Wage and Hour Law (NJWHL) by requiring them to work during times when they were “off the clock.” The lawsuit originally asserted causes of action under both the NJWHL and the federal Fair Labor Standards Act (FLSA). Airline employees are specifically exempted from the FLSA’s minimum wage provisions, but they are covered by the NJWHL.

Both federal and state laws require employers to pay overtime compensation to non-exempt employees for work performed in excess of 40 hours in a week, at one-and-a-half times the regular hourly rate. See 29 U.S.C. § 207(a)(1), N.J. Rev. Stat. § 34:11-56a4. Ideally, employees submit time sheets showing the total amount of time worked, and for any time worked over 40 hours per week, the employer pays them time-and-a-half. In reality, however, some employers require “off the clock” work, meaning employees must perform job-related services during time that is not included on their time sheets. If the total compensation received does not reflect the total amount of time actually worked, the employer could be liable under the FLSA or the NJWHL.

A wide range of jobs are exempt from the FLSA’s minimum wage and overtime provisions. Perhaps the best-known of these exemptions is for those who work “in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). Some jobs are only exempt from the overtime requirement. This includes “any employee of a carrier by air subject to” federal legislation. Id. at § 213(b)(3). The NJWHL only exempts “employee[s] of a common carrier of passengers by motor bus.” N.J. Rev. Stat. § 34:11-56a4. While the statute does not define “motor bus,” it has been construed not to include airplanes.

Legal News GavelProfessional football presents multiple legal issues related to employment. New Jersey officially has no team in the National Football League. That said, both of the New York-based NFL teams, the Giants and the Jets, have used stadiums in Northern New Jersey as their home fields since the early 1980s. Issues affecting players in the NFL, particularly the lasting effects of concussions and other injuries, have received media attention in recent years. NFL cheerleaders have also made a variety of complaints regarding wages, working conditions, and sexual harassment. In 2016, the New York Jets settled a New Jersey wage and hour lawsuit filed on behalf of a class of NFL cheerleaders. In 2018, a former cheerleader, who had recently been fired by another team, filed a sex discrimination complaint with the Equal Employment Opportunity Commission (EEOC).

While NFL players usually receive generous salaries under contracts with their teams, cheerleaders are often paid far less and do not have the protection of a defined term of employment. NFL cheerleaders have recently made several successful wage claims. A lawsuit filed in New Jersey in 2014, Krystal C. v. New York Jets LLC, alleged that the compensation received by members of the Jets’ cheerleading squad, when compared to the number of hours they were required to work, was often substantially less than minimum wage. Cheerleaders were paid $150 per game and $100 for appearances at team-sponsored events, but not for other required activities like practices and rehearsals. The parties entered into a settlement agreement in 2016, in which the team agreed to pay $325,000 to the class of plaintiffs.

Claims of sex discrimination involving NFL cheerleaders have not received as much attention in the court system as wage claims. Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination prohibit discrimination on the basis of sex. Cheerleading, as an occupation, presents some challenges in this area. Technical skill, including proficiency in dance, is not the only requirement for the job of cheerleader. To put it bluntly, cheerleaders are expected to meet a particular standard of physical attractiveness.

Legal News GavelThe Fair Labor Standards Act (FLSA) establishes a nationwide minimum wage, which has been $7.25 per hour since 2010. This does not apply to all workers, however. The minimum wage that employers of tipped employees, such as restaurant servers, must pay is considerably less than $7.25 per hour, with the understanding that tips received from customers will at least make up the difference. In late 2017, the U.S. Department of Labor (DOL) proposed a rule that would give employers more control over the distribution of tips, which met with considerable criticism. In March 2018, a member of the House of Representatives from Connecticut introduced the Tip Income Protection (TIP) Act of 2018. While this bill has not advanced, a similar measure made it into the Consolidated Appropriations Act (CAA) of 2018, which was signed into law on March 23. This effectively rendered the proposed DOL rule moot.

A “tipped employee,” under the FLSA, is someone who, in the course of their job, “customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Employers are obligated to pay tipped employees a base rate of $2.13 per hour. Id. at § 203(m)(1), 29 C.F.R. § 531.50(a). If the amount of tips received by a tipped employee, when added to this base income amount, is less than $7.25 per hour, the employer must pay the employee the difference. 29 U.S.C. § 203(m)(2). The statute allows tipped employees to pool their tips, but employers may not require them to do so. A New Jersey wage and hour lawyer can help you bring a claim if your employer instituted an improper tip pooling program.

In December 2017, the DOL published a proposed rule that would remove restrictions on employers’ control over tips paid by customers, essentially allowing them to require tip pooling. 82 Fed. Reg. 57395 (Dec. 5, 2017). The DOL claimed that this would allow a more fair allocation of tip income among employees, including cooks and dishwashers who do not ordinarily receive tip income. Since the proposed rule would only apply to employers that already pay tipped employees at or above the minimum wage, critics alleged that the rule would allow employers to pocket any tip income above the minimum wage threshold. The proposed rule received more than 218,000 comments from the public.

Legal News GavelInternships often allow students to gain “real world” experience before entering the job market, but they have been a subject of controversy in the area of employment law. New Jersey labor law provides a statutory test for determining when an individual may be considered an intern, who is not necessarily protected by state wage and hour laws, and when they are an employee who should receive a paycheck. N.J.A.C. § 12:56-2.1. The federal Fair Labor Standards Act (FLSA) does not expressly define the difference between an intern and an employee, so the job of interpreting the statute goes to the Wage and Hour Division (WHD) of the U.S. Department of Labor. In January 2018, the WHD issued Field Assistance Bulletin No. 2018-2, which sets forth a new test for determining, in claims involving federal law, when an intern is actually an employee.

The FLSA governs the payment of wages to employees and the hours they may be expected to work, including provisions for minimum wage and overtime compensation. It defines an “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The statute’s equally unhelpful definition of “employ” is “to suffer or permit to work.” Id. at § 203(g). It does not provide a definition for “intern” or “internship.” The commonly accepted definition of an internship is a temporary position that allows a student to gain experience in a particular field. The actual job description of an internship varies widely from one industry and one company to another. Interns in one company might spend much of their days getting coffee and running other errands, while interns in another company might gain hands-on experience in the profession of their dreams. Internships are often unpaid, based on the rationale that interns gain experience and connections that will help them start their careers.

The WHD established a six-part test for determining whether an individual is an employee under the FLSA in 2010 in a document entitled Fact Sheet No. 71. While the WHD has since updated that sheet on its website to reflect the new test, some court decisions evaluating the old test include its original text. The test considered whether the internship (1) was similar to instruction the intern would receive at school, (2) primarily benefited the intern rather than the employer, (3) did not displace existing workers, (4) provided “no immediate advantage” to the employer from the intern’s activities, (5) included no promise of a permanent job, and (6) involved an understanding between both parties that no wages were to be paid. Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 534-35 (2d Cir. 2016). An intern is not an employee if all six questions are answered in the affirmative.

Legal News GavelEmployment statutes at the federal and state levels require New Jersey employers to pay a minimum wage to their employees, and to pay overtime to many employees for work performed in excess of 40 hours per week. The federal Fair Labor Standards Act (FLSA) sets a nationwide minimum wage and rules for employees who are entitled to overtime pay. The New Jersey Wage and Hour Law (NJWHL) establishes similar standards within the state. If an employer fails to meet its legal obligations to pay regular and overtime wages, these statutes allow employees to bring lawsuits to recover back pay and other damages. Two recently filed New Jersey overtime lawsuits allege non-payment of wages by a major retail company. Baccicheti v. Urban Outfitters, Inc., No. 2:17-cv-10919, complaint (D.N.J., Nov. 3, 2017); Trapp v. Urban Outfitters, Inc., No. 2:17-cv-11067, complaint (D.N.J., Nov. 3, 2017).

As a general rule, the FLSA requires employers to pay non-exempt employees a rate of one-and-half times their regular wage for any hours worked in a week beyond the usual 40 hours. 29 U.S.C. § 207(a)(1). The statute includes numerous exceptions and exemptions from the overtime requirement, including anyone “employed in a bona fide executive, administrative, or professional capacity,” outside salespeople, certain agricultural employees, newspaper employees, and others. Id. at § 213(a). While it is impossible to generalize, it is probably fair to say that most “non-exempt” employees who are entitled to overtime pay are paid by the hour and work in a position that is subordinate to management.

Employers are prohibited from violating the overtime rules established by the FLSA. Id. at § 215(a)(2). The statute allows for fines of up to $10,000 and up to six months’ imprisonment for wage and hour violations, id. at § 216(a), although employees are often more interested in getting paid by their employers than punishing them. In addition to imposing administrative penalties, the FLSA allows employees to recover unpaid wages, liquidated damages in an equal amount, and equitable relief such as reinstatement or promotion. Id. at § 216(b).

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