Articles Posted in Wage and Hour Disputes

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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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The federal Fair Labor Standards Act (FLSA) requires employers nationwide to pay a minimum wage of $7.25 per hour, although many states, including New Jersey, have set a higher minimum wage. Workers who customarily receive tips are not subject to the same federal minimum wage rules. The FLSA sets a much lower base wage for tipped employees and allows employers to take a “tip credit” when the employee receives an amount of tips that puts their total compensation at or above $7.25 per hour. The U.S. Department of Labor (DOL) has developed rules for determining when an employer may take a tip credit for employees who do both tipped and untipped work. The Wage and Hour Division’s (WHD) Field Operations Handbook (FOH) established the “80/20 rule,” which proved to be unpopular among many employers. An opinion letter issued by the DOL in November 2018 disavowed that rule. In February 2019, the DOL updated the FOH to make rescission of the 80/20 rule official.

Employers are obligated to pay tipped employees a base rate of $2.13 per hour, plus any amount needed to bring the employee’s total hourly compensation, including tips, to $7.25. 29 U.S.C. §§ 203(m), 206(a)(1)(C). The FLSA defines a “tipped employee” as anyone who “customarily and regularly receives more than $30 a month in tips” in the course of their job. Id. at § 203(t). Tipped employees therefore often rely on tips for any income over minimum wage.

The 80/20 rule arose from the DOL’s rule regarding dual jobs, which states that employers cannot take tip credits for hours that are not spent on tipped work. The rule gives an example of “a maintenance man in a hotel [who] also serves as a waiter.” 29 C.F.R. § 531.56(e). It draws a distinction, however, between that and workers in tipped occupations who occasionally perform “related duties,” such as “a waitress who spends part of her time cleaning and setting tables.” Id.
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Advocates for increasing minimum wage rates around the country argue that the current federal rate is insufficient to cover expenses in many American cities. A campaign known as the “Fight for $15” seeks to raise the minimum wage to $15 nationwide. Under newly-enacted legislation, the New Jersey minimum wage will gradually increase to $15 per hour over several years. As advocates succeed in this effort, however, the workforce is undergoing changes that could lessen the impact of their success. Workers in the “gig economy” are often classified as independent contractors rather than employees, or they only work part-time. Either way, many are excluded from a wide range of protections under federal and state employment laws, including minimum wage. Recent news reports have shown, however, that workers and their advocates are fighting for better terms.

The federal minimum wage last increased on July 24, 2010, from $6.55 to $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). New Jersey’s minimum wage has been higher than that for some time. A new law signed by the governor in February 2019 will increase the minimum wage for many New Jersey workers to $10 per hour on July 1. On the first day of 2020, it will increase to $11 per hour. A $1 increase will follow on January 1 of each following year until the rate reaches $15 per hour in 2024. See N.J. Rev. Stat. § 34:11-56a4, as amended by P.L.2019, c.32. The definitions provided by state wage laws, however, continue to omit many gig economy workers. An “employee” is still simply “any individual employed by an employer.” Id. at § 34:11-56a1(h).

The term “gig economy” has no distinct definition, but generally refers to individuals who work for companies on a job-by-job basis. This includes people who provide freelance services to multiple clients, but also people who provide services to customers of companies like Uber or Instacart. Driving for a ridesharing company might look like a full-time job. On paper, the relationship between the two parties is not employer/employee, but employer/independent contractor.
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Wage disparity is an important—and controversial—topic in American politics. Women, on average, tend to make less than men. The same is often true for people of color as compared to White employees. Some lawmakers and officials at the local and state level are looking at ways that employers, intentionally or not, may perpetuate wage gaps through inquiries into job applicants’ salary histories. Such inquiries may make it difficult for job applicants to negotiate salaries that break from historical patterns of wage disparity. Bans on employer salary history inquiries are becoming more common around the country. Statutes focused on New Jersey employment law do not prohibit such inquiries by private employers, but a 2018 executive order prohibits them among state offices and agencies. Earlier this year, Suffolk County, New York became the latest local government to enact a salary history ban. A few states, such as Wisconsin and Michigan, have gone in a different direction by barring local governments from enacting bans of their own.

New Jersey Governor Phil Murphy signed Executive Order #1 on January 16, 2018, in his first official act after he took the oath of office. The text of the order notes that women in New Jersey receive wages of eighty-two cents for every dollar paid to men in full-time jobs, and that this gap appears regardless of industry or education level. These disparities are even more pronounced when the full-time wages of African-American and Latina women are compared to those of White men in New Jersey—fifty-eight cents and forty-three cents, respectively. The order declares that New Jersey workers “should be compensated based on the nature of the work and services they provide.”

The order took effect on February 1 of last year. It prohibits state entities from inquiring about salary history, including both direct inquiries to job applicants and independent investigations, until a conditional offer of employment has been made. Applicants may voluntarily provide information, but may not be required to do so. If a state entity already has information about an applicant’s salary history, it may not consider that information when making a hiring decision, unless a statute or collective bargaining agreement requires it to do so. The executive order does not create a private cause of action for aggrieved job applicants, but does empower the governor’s office to investigate claims “and take appropriate remedial measures.”
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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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New Jersey employees are entitled by law to receive overtime compensation, at a rate equal to one-and-a-half times their usual wage, for time worked in excess of forty hours in a week. Although state and federal law identify various groups of employees who are exempt from this requirement, nonexempt employees may recover damages in court if their employer fails to pay them at the overtime rate. Employers are also prohibited under federal law from retaliating against employees who report alleged wage violations. A lawsuit filed last month in a New Jersey federal court alleges that a company failed to pay overtime to the plaintiff, and then fired him in retaliation for reporting the matter to the human resources department. Buchspies v. Pfizer, Inc., No. 2:18-cv-16083, complaint (D.N.J., Nov. 13, 2018). The complaint asserts causes of action under both federal and state law.

The federal Fair Labor Standards Act (FLSA) requires employers to pay nonexempt workers “at a rate not less than one and one-half times the regular rate” for any amount of time over forty hours in a week. 29 U.S.C. § 207(a)(1). The statute provides a lengthy list of exempt employees, such as “bona fide executive, administrative, or professional” employees, certain agricultural workers, employees of small newspapers, certain individuals informally employed as domestic caregivers, and border patrol agents. Id. at §§ 213(a)(1), (6), (8), (15), (18). New Jersey wage law requires overtime pay at the same rate. It includes an exemption for “executive, administrative, or professional” employees, as well as other groups. N.J. Rev. Stat. § 34:11-56a4. The FLSA also states that employers may not take adverse action against employees who make a complaint alleging violations of the statute. 29 U.S.C. § 215(a)(3).

The plaintiff in Buchspies, according to his complaint, began working for the defendant in 2013 “as a chemical analyst in a pharmaceutical laboratory.” Buchspies, complaint at 2. He claims that the defendant’s payroll system identified him as an “overtime eligible employee.” Id. He states that he received a base pay rate of $34.00 per hour. Although he allegedly worked more than forty hours during some weeks, he claims that the defendant only paid him at the rate of $34/hour, instead of the $51/hour that would be payable for overtime hours under the FLSA and state law. The plaintiff states that he complained about the overtime issue to human resources in May 2018, and alleges that he was fired two weeks later, with no reason given.
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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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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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Federal 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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