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Articles Posted in Wage and Hour Disputes

Cryptocurrency has been in the news lately. Its advocates point to features like transparency, decentralization, and a lack of connection to any nation’s laws or banking systems. They tout its potential for replacing national currencies like the dollar or the euro. Critics note that cryptocurrency transactions require tremendous amounts of energy and that it often functions more as a form of investment property than currency. For New Jersey employees, this raises a question that has not received a great deal of attention in the legal world yet. Can employers pay their employees in cryptocurrency? New Jersey’s wage and hour laws seem to suggest that employers cannot, or should not, do this at the present time.

What Is Cryptocurrency?

Cryptocurrency is a type of digital or virtual money. It uses a technology known as “blockchain” to record transactions. A blockchain is an open-source ledger that records every cryptocurrency transaction. It also records the creation of new cryptocurrency, which is a process known as “mining.” These processes are distributed across computers all over the world. The first cryptocurrency, Bitcoin, first appeared in 2008 and remains the largest and most famous example.

In principle, people can use cryptocurrency as a medium of exchange. Few businesses accept cryptocurrency as payment, though. Many people buy and sell cryptocurrency as investments, somewhat similar to the way investors buy and sell stocks and other securities.
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New Jersey’s wage and hour laws protect workers’ rights to earn a minimum wage and receive overtime compensation. While these are perhaps the most well-known rights under state law, New Jersey protects other rights regarding workers’ compensation. New Jersey does not require employers to provide most workers with breaks for meals or rest, except for paid meal breaks for employees under the age of eighteen. Other workers could be entitled to pay during their meal breaks if their employer requires them to remain at work during that time.

When “Hours Worked” May Include Meal Breaks

A state regulation requires employers to include “[a]ll the time the employee is required to be at his or her place of work or on duty” in the computation of how many hours that employee has worked. If employees are free to take a meal break anywhere they want, that time is likely to be unpaid. An employer that requires employees to remain at their desks or workstations during meal breaks, however, might be required to pay them for that time.

New Jersey courts have noted that the regulation does not define “place of work.” In an unpublished decision from June 2020, a New Jersey federal court considered whether mandatory security screenings at the end of the workday should count as paid time under New Jersey law. The court applied a two-part test to determine whether a location counts as a “place of work”: (1) the employer controls or mandates activity in that area, and (2) the activity mainly benefits the employer. It ruled that the security screenings satisfied the test. In another ruling in the same case, issued in 2021, the court ruled that mandatory COVID tests administered at the beginning of the workday might also satisfy the “place of work” test.

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Federal and New Jersey employment laws protect employees against a variety of actions by their employers, such as discrimination, retaliation, and failure to pay minimum wage or overtime. The Fair Labor Standards Act (FLSA) sets a nationwide minimum wage and establishes overtime compensation rules. For the FLSA and other statutes to apply, an employment relationship must exist between a worker and a business. When multiple individuals or businesses exercise authority over a worker, the “joint employer” rule states that each employer could be liable for wage and hour claims and other employment law violations. The U.S. Department of Labor (DOL) changed its rule regarding joint employment under the FLSA in 2020. This year, new management at the DOL rescinded the new rule and reverted to the old joint-employer rule.

What Is a Joint-Employer?

Joint employers each have control over the terms of an employee’s job, such as job duties, hours, and wages or salary. Examples of joint employment include:
– Business A contracts with Business B to provide services at Business B’s worksite. The contract states that Business B may determine the hours of work and other conditions for employees sent by Business A. Although Business A writes the paychecks, they may both be considered an individual’s “employers.”
– Business 1 operates a franchise under a contract with Business 2, the franchise owner. The franchise agreement gives Business 2 control over many or most of the terms and conditions of employment, while making Business 1 responsible for day-to-day HR matters.

What Is the Joint-Employer Rule?

The joint-employer rule states that the employers are jointly and severally liable for employment law violations. No single rule exists regarding joint employment. Instead, statutes or regulations establish a joint-employer rule for different laws. For the FLSA, the DOL established a rule holding that joint employment existed when:
– Employers have agreed to “share [an] employee’s services”;
– One employer is “acting directly or indirectly in the interest of” another employer regarding the employee; or
– One employer controls the other employer, or they are under “common control,” and they are “deemed to share control of the employee, directly or indirectly.”
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As the COVID-19 pandemic shows signs of winding down, and New Jersey lifts many of the restrictions that have been in place for over a year, employers across the state report that they cannot find enough workers for their businesses. Some employers, rather predictably, blame expanded unemployment benefits. That might be one possible explanation, but it alone does not explain the reported worker shortage. Many of the industries reporting problems finding enough employees, to be blunt, do not have the best track records when it comes to fair wages, workplace safety, and other things that workers should be able to expect from their employers. Federal and New Jersey employment laws guarantee various protections for workers, and the fact that people are not hurrying to return to certain workplaces might serve as a reminder that maintaining these legal protections is an ongoing struggle.

Workers’ Rights Under Federal and New Jersey Law

Statutes at the state and federal level guarantee many New Jersey workers a minimum wage. They also protect workers’ right to a workplace free of discrimination, harassment, and unreasonable danger.

Minimum Wage

The Fair Labor Standards Act (FLSA) has set the federal minimum wage at $7.25 per hour since 2010. 29 U.S.C. § 206(a)(1)(C). For tipped employees, which include many restaurant workers, employers must pay a base wage of $2.13 per hour. Id. at § 203(m)(2), 29 C.F.R. § 531.59.
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The minimum wage is the lowest amount that an employer can pay to an employee under federal and state law in New Jersey, provided that employee is not exempted from laws governing wages and hours of work. The New Jersey Legislature has established a minimum wage for the state that is greater than the federal rate. Employee advocates have sought amendments to federal law that would raise the minimum wage from its current level of $7.25 per hour to $15 per hour. These efforts have not been successful, but there is good news for some workers in New Jersey. The White House issued an executive order (EO) that will raise the minimum wage for federal government contractors to $15 per hour. The EO will take effect in early 2022. If you are concerned that your employer is not paying you the minimum wage, reach out to a New Jersey employment attorney to learn more about your rights.

Federal Minimum Wage

Congress first established a nationwide minimum wage in June 1938, when it passed the Fair Labor Standards Act (FLSA). The first minimum wage was $0.25 per hour. Congress has amended the FLSA multiple times to raise the minimum wage. The last time this happened was the Fair Minimum Wage Act of 2007, which raised the minimum wage to $7.25 per hour by 2010. See 29 U.S.C. § 206(a)(1)(C).

Based solely on inflation, the original minimum wage of $0.25 per hour would equal about $4.73 today. The overall cost of living has increased more than that, though, and critics of the federal minimum wage argue that $7.25 per hour is not enough to support most individuals, let alone families.
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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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