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Articles Posted in Wage and Hour Disputes

The Fair Labor Standards Act (FLSA) establishes a national minimum wage and sets standards for overtime compensation. While New Jersey has set a higher minimum wage than the federal rate, the FLSA still plays a critical role in many New Jersey wage and hour disputes. It allows workers to file “collective actions,” which are similar in many ways to class actions. A petition for certiorari is currently pending before the U.S. Supreme Court and asks the justices to address ambiguity in the FLSA’s provision on collective actions. The employer in the case filed the petition in August 2020, but both parties have asked the court to defer consideration of the petition while they engage in settlement negotiations. If they reach a settlement, the employer has indicated that it will withdraw the petition, meaning that the court will not hear the case.

The federal minimum wage has been at its current level, $7.25 per hour, since July 2010. See 29 U.S.C. § 206(a)(1)(C). The provisions regarding overtime have remained largely unchanged since Congress first enacted the statute in 1938. Employers must pay non-exempt employees at one-and-a-half times their regular rate for work time during a week that exceeds forty hours. Id. at § 207(a)(1).

Employers who violate the minimum wage or overtime provisions of the FLSA may be liable for the amount of unpaid wages, plus an equal amount as unliquidated damages. If, for example, an employer withholds $1,000 in overtime compensation from an employee, a court may order them to pay that employee $2,000 in damages. The FLSA allows an employee to file suit on their own behalf and for other “similarly situated” employees who have consented in writing to inclusion in the lawsuit. Id. at § 216(b). The statute does not define “similarly situated.”

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The federal Fair Labor Standards Act (FLSA) sets a nationwide minimum wage and a standard for overtime compensation. While some states, including New Jersey, have enacted their own minimum wage laws, both federal and New Jersey overtime laws require employers to pay non-exempt workers at one-and-a-half times their regular rate of pay when they work more than forty hours in a week. This applies to workers who receive an hourly wage and those who are salaried, as long as they are not exempted by the FLSA. The Wage and Hour Division (WHD) of the U.S. Department of Labor has developed rules for determining the regular rate of pay of salaried employees. In August 2020, it issued an opinion letter, designated FLSA2020-14, which answers questions about the “fluctuating workweek” (FWW) method of calculating overtime. Workers in a dispute with their employer about overtime rules would be wise to consult with a New Jersey employment lawyer as soon as possible.

The overtime provisions of the FLSA state that employers must pay overtime “at a rate not less than one and one-half times the regular rate at which [an employee] is employed.” 29 U.S.C. § 207(a)(1). These provisions do not apply to employees deemed “exempt” by the FLSA. This includes individuals “employed in a bona fide executive, administrative, or professional capacity,” certain employees in the fishing and agriculture industries, and others. Id. at § 213(a).

Calculating overtime pay is rather straightforward for workers who receive an hourly wage. If an employee receives $12 per hour for a forty-hour workweek, their overtime rate of pay would be $18 per hour. When a non-exempt employee receives a fixed salary, the WHD has developed different systems for those who work a fixed number of hours and those whose hours vary from one week to the next. An employee’s regular rate of pay is equal to their weekly salary divided by the number of hours they work, which is easy to do if they always work the same number of hours. See 29 C.F.R. § 778.113(a).

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The number of people working remotely — meaning away from their employer’s place of business — in New Jersey and around the country grew considerably after the pandemic began earlier this year. Many people continue to work remotely or virtually, while others have returned to something resembling their earlier workplace. It is probably too early to tell how the pandemic has changed, and will change, the workplace for people who are able to do their jobs at home. In August 2020, the Wage and Hour Division (WHD) of the U.S. Department of Labor issued a bulletin addressing questions about overtime laws and regulations. Field Assistance Bulletin No. 2020-5 (FAB 2020-5) advises employers on how to track remote employees’ time. It also offers useful guidance for remote non-exempt workers about what constitutes “work time” when they are not at an office or worksite.

Compensable Overtime

The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at a higher rate for any work performed beyond forty hours in a week. 29 U.S.C. § 207(a)(1). The overtime rate of pay is one-and-a-half times an employee’s usual wage. If an employee makes $20 per hour, and works fifty hours in a week, they should receive $30 per hour for their ten hours of overtime. The FLSA allows employees to file suit for damages if an employer violates the overtime provisions.

Certain employees are exempt from the FLSA’s overtime provisions. Workers in many exempted categories are unlikely to be able to do their jobs remotely, such as people employed in agriculture or fishing, amusement park employees, and seamen on foreign vessels. See id. at §§ 213(a)(3), (5), (6), (8). People who work “in a bona fide executive, administrative, or professional capacity,” however, might be able to telecommute, and are also exempt from overtime laws. Id. at § 213(a)(1).

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New Jersey remains in a public health emergency because of the global coronavirus pandemic. “Stay at home” orders appear to have slowed the spread of the virus, but they have also led to widespread economic problems. S2304, a bill expanding earned sick leave (ESL) and family leave benefits in New Jersey, became law on March 25, 2020. The bill addresses the availability of these benefits during a state of emergency or when public health officials or healthcare providers have ordered someone into quarantine or isolation.

Public Health Emergency

The governor first declared a state of emergency on March 9, 2020. He extended the public health emergency on April 7, and again on May 6. A declaration gives the governor authority to direct resources towards dealing with the emergency. This can include ordering businesses to close and ordering individuals to remain at home.

New Jersey’s Earned Sick Leave and Family Leave Laws

The ESL law took effect in November 2018, six months after the governor signed the bill. It provides workers with one hour of paid sick leave for every thirty hours that they work, at the same rate of pay as if they were at work. Employees may carry up to forty unused hours over from one year to the next.

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Federal and New Jersey wage and hour laws require employers to pay overtime rates to their non-exempt employees for any time they spend working over forty hours in a week. The amount of overtime pay is based on the employee’s “regular rate” of pay. Under federal law, some payments and perks are not included in employees’ regular rate for the purpose of calculating overtime pay. The U.S. Department of Labor (DOL) issued updated rules clarifying what is included in and excluded from an employee’s regular rate. They took effect in January 2020. The purpose of these updates, according to the DOL, is to “encourage employers to provide additional and innovative benefits” to their employees while complying with federal overtime law. 84 Fed. Reg. 68736 (Dec. 16, 2019). Employees should also be aware of what is counted in their regular rate of pay.

Overtime Rate of Pay

The federal Fair Labor Standards Act (FLSA) states that employers must pay overtime to non-exempt workers for time spent working in excess of forty hours in a week. 29 U.S.C. § 207(a). The statute sets the overtime rate at one-and-a-half times an employee’s “regular rate.” An employee with a regular hourly rate of $15 per hour would therefore be entitled to $22.50 per hour for overtime work.

Exclusions from “Regular Rate”

An employee’s regular rate, according to the FLSA, is anything paid to the employee that is not specifically excluded by the statute. Exclusions include various payments and other things of value provided to employees. Some exclusions do not provide any credits to offset an employer’s responsibility to pay overtime:
– Bonuses for special occasions, such as Christmas bonuses, that are not tied to performance in any way;
– Payments for periods when the employee is not working, such as vacation or sick time;
– Additional payments made in the employer’s sole discretion, not as part of an employment contract, “in recognition of services performed during a given period”;
– Employer contributions to a retirement plan, health insurance policy, or other benefit; or
– The value or income from a stock option or stock appreciation plan.
Id. at §§ 207(e)(1) – (4), (8).

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New Jersey passed significant legislation in 2019 taking on wage theft by employers. The new law provides not only civil and administrative penalties, but also criminal consequences for employers that fail to pay their employees what they are owed. A series of bills passed in early 2020 addresses New Jersey employee misclassification, a related issue that deprives employees of their legal rights. Misclassification can also cause underfunding of important state programs, including the unemployment and disability insurance funds. One of these bills amends the wage theft law to add new means of holding employers liable for violations of state employment tax laws due to misclassification. This new law does not provide employees with a cause of action, but it benefits them by allowing state regulators to ensure employers are paying their share of employment taxes.

Employee Misclassification

Employee misclassification effectively strips workers of legal protections. Multiple statutes at the federal, state, and local levels protect employees by, to name only a few, guaranteeing a minimum wage and overtime compensation, regulating workplace safety, and prohibiting workplace discrimination and harassment. Legal protections for independent contractors are limited to the rights enumerated in their contracts and the general principles of contract law. Some employers see an incentive to classify workers as independent contractors when they are actually employees, since they owe fewer legal duties to independent contractors.

Employers contribute to multiple programs that benefit employees through the payment of employment taxes. At the federal level, this includes a share of payroll taxes that go to the Social Security and Medicare programs. State employment taxes fund unemployment insurance, disability insurance, and workers’ compensation. Misclassification results in employers not contributing to these programs, potentially leaving them without adequate funding. Since independent contractors are considered “self-employed,” it can also result in misclassified workers having to shoulder their employers’ share of those taxes themselves.

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On July 7, 2019, the U.S. Women’s National Soccer Team (USWNT) won its fourth Women’s World Cup title, defeating the Netherlands 2-0. This victory also brought attention to the controversy regarding the players’ wages. Twenty-eight members of the USWNT filed suit in March 2019 against the United States Soccer Federation (USSF), the governing body for both the men’s and women’s national teams. The lawsuit alleges violations of the Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964. It seeks certification as a collective action under the EPA and a class action under Title VII. While the suit is pending in the Central District of California, one of the plaintiffs resides in New Jersey and plays for the Piscataway-based professional soccer team Skye Blue FC. Another plaintiff resides in New York.

Title VII prohibits employers from discriminating on the basis of sex. 42 U.S.C. § 2000e-2(a)(1). This includes disparate salaries for substantially similar work. The EPA addresses this issue more directly, barring employers from paying employees at different rates based on sex, when the jobs “require[] equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d).

Congress enacted the EPA as an amendment to the Fair Labor Standards Act (FLSA), which governs minimum wage, overtime, and other pay-related issues. An employee may assert claims under the FLSA for themselves and on behalf of “other employees similarly situated,” provided that those employees consent in writing. Id. at § 216(b). For Title VII claims, a group of plaintiffs can ask a court to certify their case as a class action if they can establish four elements: numerosity of claimants, commonality of claims, typicality of the representatives’ claims, and ability of the representatives to represent the other class members. Fed. R. Civ. P. 23(a).
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The days of wage theft in New Jersey are coming to an end, thanks in large part to S1790, a bill passed by the Legislature in June 2019 and signed by the governor on August 6. “Wage theft” refers to the wrongful failure by an employer to pay wages or other compensation owed to an employee. New Jersey law makes it a disorderly persons offense—the equivalent of a misdemeanor—for an employer to fail to pay wages when they are due. An employer may also be civilly liable to the employee for unpaid wages and additional damages The new bill amends the state’s wage laws and the New Jersey Code of Criminal Justice. New provisions in the wage laws increase the amount of damages that employees can recover, and significantly increase the statute of limitations to file suit.

Any failure by an employer to pay employees what they are owed can be described as “wage theft.” The term therefore encompasses a wide range of conduct by employers. Some wage theft is deliberate and intended to deprive employees of compensation. In other cases, it is more a result of carelessness or negligence. The end result is the same for the employees who are not getting paid as much as they should. The Economic Policy Institute (EPI) reported that, in 2012, regulatory agencies and private lawyers recovered nearly $1 billion in wrongfully withheld wages. This amount almost certainly represents a fraction of the total amount of wage theft that occurs in the U.S. In contrast to this number, the EPI reported that the total amount of property lost to the crime of robbery in 2012 was about $341 million.

S1790 became effective immediately after the governor signed it into law. Employees in New Jersey could previously assert causes of action for wage theft going back two years. The lookback period for wage theft claims is now six years. This applies to claims for unpaid minimum wage and overtime compensation, and also for retaliation and discrimination against employees who report wage theft. If you feel you are the victim of wage theft, you should discuss the matter with a New Jersey employment attorney at your earliest convenience.

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The Fair Labor Standards Act (FLSA) requires employers in New Jersey and around the country to pay overtime to non-exempt workers when they work more than forty hours in a week. Employers are not obligated to pay overtime to individuals who work “in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) has developed a definition of executive, administrative, and professional (EAP) jobs. It includes a requirement that a worker receive a minimum salary amount, currently set at $455 per week, or $23,660 per year. In 2016, the WHD sought to increase this minimum threshold, but a federal judge struck that rule down. A new proposal from the WHD, published in March 2019, would increase the minimum amount, but not nearly as much as the 2016 proposed rule. 84 Fed. Reg. 10900 (Mar. 22, 2019).

Employers must pay overtime to non-exempt workers at a rate of at least one-and-a half times their regular hourly rate. See 29 U.S.C. § 207(a)(1). The FLSA itself does not define the terms “executive,” “administrative,” or “professional.” The WHD has established guidelines for determining when an individual could legitimately be deemed to hold an EAP position that is exempt from the FLSA’s overtime rule. The guidelines are intended to prevent employers from labeling a job as an “executive” position for the sole purpose of avoiding overtime. The regulations specify that job titles are “insufficient to establish the exempt status of an employee.” 29 C.F.R. § 541.2. Among other criteria, a position must have a salary of at least $455 per week. Id. at §§ 541.100, 541.200, 541.300. The WHD set this minimum salary rate in 2004. 69 Fed. Reg. 22121 (Apr. 23, 2004).

The WHD sought to increase the minimum salary rate for EAP employees to $913 per week, or $47,476 per year, in 2016. 81 Fed. Reg. 32391 (May 23, 2016). This would be slightly more than double the existing rate. The previous increase in 2004 more than tripled the then-existing rate of $155 per week, which had been in place since 1975. 69 Fed. Reg. 22122. A group of state governments and business organizations filed suit against the DOL, which was part of the Obama administration at the time, seeking to block the new rule. A federal district court granted a preliminary injunction in Nevada, et al v. U.S. Dept. of Labor, et al, 218 F.Supp.3d 520 (E.D. Tex. 2016). In August 2017, the court granted summary judgment to the defendants, finding the rule invalid.
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Federal and state law require New Jersey employers to pay a minimum wage to non-exempt employees, and to compensate them for overtime at a rate of time-and-a-half. Employers who fail to do so may be liable to their employees for back wages and other damages. They may also be liable for civil penalties to federal or state regulatory agencies. The U.S. Department of Labor (DOL) announced late last year that it had recovered more than $350,000 in damages from a New Jersey employer. The DOL’s Wage and Hour Division (WHD) reportedly found that the company paid its employees a flat salary, and that this amount was less than minimum wage when compared to the actual number of hours worked.

Under the federal Fair Labor Standards Act (FLSA), the minimum wage is currently $7.25 per hour nationwide. 29 U.S.C. § 206(a)(1)(C). Non-exempt employees are entitled to compensation of at least “one and one-half times the regular rate” for time worked over forty hours in a week. Id. at § 207(a)(1). New Jersey has the same rule regarding overtime. As of January 1, 2019, the minimum wage in New Jersey is $8.85 per hour. N.J. Rev. Stat. § 34:11-56a4, N.J.A.C. § 12:56-3.1.

Employers commonly find themselves in violation of minimum wage and/or overtime laws when they require employees to perform job-related duties before they clock in, or after they clock out. For example, an employer might require workers to change into and out of uniform while they are not “on the clock.” The employees do not get paid for the time spent performing those tasks, which are considered to be a requirement of their job.
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