Categories: Wage & Hour
September 30, 2019
While not a new issue, the next wave of employment claims will likely be led by state and federal departments of labor pursuing claims against employers for misclassifying as independent contractors workers who meet the test for being employees.By classifying employees as independent contractors employers are able to avoid paying various benefits to these workers, ignore the minimum wage and overtime laws, deprive them of state and federal Family Leave laws and social security, and avoid unemployment claims. Misclassification denies states and the federal government many millions of dollars in revenues each year. States and the federal government have attempted to crack down on these abuses in the past, but now, with so much revenue at stake, their efforts are likely to take hold to many employers’ financial detriment.
September 26, 2019
This past Tuesday, the U.S. Department of Labor (“DOL”) issued its final rule updating the commonly referred to “white collar” exemptions to the Fair Labor Standard Act’s (“FLSA”) overtime requirements. These updates include a long-anticipated second attempt at raising the “standard salary level” threshold for the exemptions. A similar increase was published in 2016, however, it was ultimately invalidated by a District Court in Texas. Now, three years later, the DOL is issuing a broader final rule with four key provisions that will require employers to take immediate action to have their current workforce assessed for possible reclassification.
The “standard salary level” provision previously mentioned raises the threshold weekly salary from $455 (or $23,660 per year) to $684 (or $35,568 per year). In other words, for a worker to qualify for the existing “Executive, Administrative, or Professional Employee” (“EAPE”) exemption, they must receive a weekly salary no less than $684. Similarly, a second provision adjusts the annual compensation requirement to classify employees as exempt as “Highly Compensated Employees” (“HCE”). Now, in addition to satisfying the traditional HCE test, employees must receive a total annual compensation of $107,432 (up from $100,000) to be exempt from the FLSA’s overtime requirements.
Of note, but likely less of a concern, the third provision supplants the new “standard salary level” for workers in the U.S. Territories and/or in the motion picture producing industry, who will instead be subject to “special salary levels” (e.g., $380/week for American Samoa; $455/week for Puerto Rico, Virgin Islands, Guam, and Northern Mariana Islands; and $1,043/week for motion picture industry workers).
Due to these significant changes, employers face legal exposure if they fail to reassess their employees’ status for the possibility of reclassification. Where a previously exempt employee no longer meets the thresholds, employers will need to weigh the costs and benefits of adjusting the employee’s weekly and annual compensation (which may be significant compared to the expected overtime worked by the employee). However, this is where the fourth and final key provision becomes critically important. In recognition of “evolving pay practices,” the DOL will allow employers to consider “nondiscretionary bonuses and incentive payments” to satisfy up to ten (10%) percent of the standard salary level. Obviously, this may be the make-or-break factor in some reassessments.
These new provisions become effective on January 1, 2020. Employers are encouraged to take the next three months to assess their current workforce for possible reclassifications. As part of the process, employers would be wise to seek legal consultation to ensure that the non-salary requirements of the exemption are understood and well-established for each exempt employee, in order to avoid the costly results of misclassification under the FLSA.
August 27, 2019
This summer has been a very active regulatory period for employers in New Jersey. On July 1, 2019, the minimum wage was increased by $.50. Beginning with January 1, 2020, the minimum wage will increase each January 1st by $1.00 per hour until reaching $15.00 per hour in 2024. After 2024, the wage rate will continue to increase based on increases in the federal consumer price index for all urban wage earners and clerical workers.
In July, New Jersey passed another new law that prohibits employers from asking job applicants about past wages or salaries or screening applicants on the basis of wage history unless such information is voluntarily offered by the applicant. The law is intended to curb workplace discrimination and wage inequality for women and minorities.
On August 6, 2019, the Anti-Wage Theft bill was passed, creating one of the strongest wage protection laws in the country. Under this new law, employers who violate New Jersey’s wage and hour laws could be sued to recover back wages, treble damages and attorneys’ fees. The law aims to protect employees whose pay may not properly reflect all hours worked, minimum wage, overtime or other wage payments as required by law. The law also extends the timeframe for employees to file a claim from two years to six years.
Employers should understand that the law makes no distinction between documented and undocumented employees. Any attempt to avoid the minimum requirements of the wage & hour law will be punished without regard to the employee’s immigration law status. The law also holds employers and labor contractors jointly and severally liable for any violations, meaning an employer will be held liable for wage theft violations perpetrated by the labor contractor it hires. The law defines an employee as “any person suffered or permitted to work by an employer” thereby seeking that the law applies to every person working in the state.
Employees now have a rebuttable presumption in their favor if their employer fails to keep records of all hours worked in accordance who the New Jersey State Wage and Hour Laws. Additionally, an employer cannot escape liability from present or past employees by forming a new entity if the facts prove it to be a successor entity.
Business owners must become fully aware of these new employment requirements. It is important to confirm your employees’ classifications (i.e. exempt, non-exempt, independent contractor), ensure that complete records are being kept in accordance with state law requirements, update all Federal and State postings and employee notices and ensure that the company’s hiring practices, wage payment and sick leave policies are in full compliance.
With the passage of these laws, it is clear that New Jersey legislators are aiming to be leaders in advancing employee rights. Please speak to an Employment Lawyer at Mandelbaum Salsburg to be sure that your company is now doing what these new laws require.
August 9, 2019
On July 25th, New Jersey Bill A1094 was signed into law and will be effective on January 1, 2020. The new law prohibits employers from asking job applicants about past wages or salaries or to screen applicants based upon wage or salary history unless such information is voluntarily offered by the applicant. The law is intended to curb workplace discrimination and wage inequality for women and minorities. It is recognized that women make roughly $10,000 less per year than men. The act of acquiring knowledge of past wages has been found to taint the hiring process by perpetuating prior discrimination. Violations of the new law carry heavy consequences: $1,000 for a first violation, $5,000 for the second and $10,000 per violation after that. Such violations are also violations of the New Jersey Law Against Discrimination and expose employers to lawsuits.
How does this prohibition change the dynamic of the interview process for New Jersey employers? Employers must be cautious about the information that they request. Even oblique wage inquiries can be illegal. Questions on the application such as “applicant’s desired salary” or “applicant’s desired hourly rate” may seem to be directed at the employee’s desire but now might be found to be prohibited as pre-employment offer questions.
Employers may consider salary history in determining salary, benefits, and other compensation, and may verify an applicant’s salary history, if the applicant voluntarily, without employer prompting or coercion, provides salary history. Employers may also, after making an offer of employment which includes an explanation of the overall compensation package to the applicant, request the applicant to provide a written authorization to confirm salary history. However, the applicant may refuse to provide such information without adverse consequence.
Questions regarding wages, salaries, or benefits must be deferred until after the offer of employment has been accepted. These prohibitions do not apply to applications for internal transfer or promotion or knowledge obtained from prior employment with that employer. The prohibition also does not apply to employers acting pursuant to any federal law or regulation expressly requiring disclosure or verification of salary history for employment purposes. Employers may verify disclosures of non-salary information when conducting a background check provided the employer stipulates that salary information is not to be disclosed. Where the application is for a position involving incentive or commission plans, an applicant’s previous experience with incentive and commission plans and the terms and conditions of those plans may be solicited, provided there is no disclosure of the applicant’s prior earnings.
Business owners should now begin preparations for 2020 compliance by reviewing their hiring process, including application forms and questions to be asked during a job interview. This would be an excellent opportunity to critically review the hiring process and to weed out all illegal inquiries that may have remained due to inertia or other forms of inaction. Asking the wrong things, including past wage history, is dangerous and can be costly.
June 17, 2019
Remember the long lines at polling sites last midterm? New York State has mitigated one obstacle to exercising the right to vote – unavoidably impacting employers.
On April 1, 2019, New York amended Election Law §3-110, effective immediately, and now requires employers to permit employees to “take off so much working time as will enable him or her to vote at any election”, including up to three-hours of paid leave.
What are the rules?
Although the law limits the paid portion of “voting leave” to three hours, it is silent on whether any portion of the leave may be charged against an employee’s general paid time off (“PTO”) bank.
Other rules include:
Employees must provide at least two (2) days advance notice and be registered to vote. (The law is silent on whether written, advance notice is required, or whether an employer may require proof of voter registration).
The time off must be taken “at the beginning or end” of the employee’s “working shift, as the employer may designate,” unless the employer and employee “otherwise mutually agree.”
As under the prior version of §3-110, at least “ten working days before every election,” employers must post notice of the law in a “conspicuous place” until “the close of the polls on election day.”
The current posting requirement is available here.
March 11, 2019
We have written a number of times in this blog about recent changes in New Jersey to the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”) relating to equal pay. See our blog from November 21, 2018 concerning the passage of the Diane B. Allen Equal Pay Act amending the NJLAD. See also our February 4, 2019 article on conducting Pay Equity Studies. We also predicted in other publications that lawsuits involving gender equality in terms of pay and working conditions would become more prevalent. Our prediction was prescient.
On March 8, 2019 the U.S. Women’s Soccer Team filed a class action lawsuit in federal court in California under the federal Equal Pay Act (“EPA”) and under Title VII of the Civil Rights Act of 1964 for gender discrimination. It follows a wage discrimination charge of discrimination filed with the United States Equal Employment Opportunity Commission (“EEOC”) in 2016 by five of the U.S. players. In February, the EEOC issued the players a right-to-sue letter.
In the lawsuit, the women complain about unequal pay and disparate treatment from the US Men’s Team in terms of travel arrangements and being required to play on turf fields. This suit is on the heels of a number of suits filed by the US Women’s Hockey Team and Norway’s women’s team‘s successful suit to be paid equally to its men’s counterpart.
The US women allege better results and higher TV ratings than the US Men’s team. However, there are some complicating factors at play here. The US Women’s Team and the US Men’s Team have different collective bargaining agreements. While the men receive higher game bonuses, they are paid only if they make the team, while the women receive guaranteed salaries supplemented by smaller match bonuses. Additionally, FIFA (soccer’s world governing body) pays men’s teams significantly more than women’s teams. In any event, stay tuned. We expect other, similar suits alleging discrimination in pay and working conditions.
March 11, 2019
The federal Fair Labor Standards Act (“FLSA”) requires employers to pay at least minimum wage for all hours worked and overtime at one and one-half times employees’ regular hourly rates of pay for all hours over forty (40) in a workweek. However, Section 13(a)(1) of the FLSA provides an exemption from both the minimum wage and overtime for employees employed in bona fide executive, administrative, professional (the “white collar exemptions”) and outside sales positions. Sections 13(a)(1) and 13(a)(17) also exempts certain computer employees. Certain “Highly Compensated Employees” earning $100,000 or more per year also are deemed exempt.
On March 7, 2019, the United States Department of Labor (“USDOL”) issued a Notice of Proposed Rulemaking (“NPRM”) that would make more than one million more workers eligible for overtime pay. Previously, employees coming under the white collar exemptions also needed to earn $455/week ($23,660/year) to be exempt. The NPRM proposes increasing the amount to $679/week ($35,308), which would result in employers needing to pay more employees overtime. The proposal does not call for automatically updating of the salary threshold. In addition, the USDOL proposal would raise the bar for Highly Compensated Employees from $100,000 to $147,414. Finally, for the first time, it is proposed that employers be allowed to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent (10%) of the standard salary level.
The federal and state wage and hour laws are some of the most misunderstood and misapplied employment statutes. If your Company has questions concerning any employee’s eligibility for overtime or whether your workers are independent contractors or employees, we are here to help.
February 4, 2019
Background on the Need for a Pay Equity Study
The recent passage of the Diane B. Allen Equal Pay Act (the “Act”) amended the New Jersey Law Against Discrimination (“LAD”) to strengthen protections against employment discrimination and to promote equal pay for women and employees in other protected categories. The Act became effective on July 1, 2018. Being proactive under these new strict protections is of the utmost importance. As such, If you are a New Jersey employer, we urge you to engage in a “pay equity study.” The goal of which would be to develop an understanding of the Company’s current pay structures, and to either explain differences in pay among comparable employees or to correct pay differences that cannot be justified. Mandelbaum Salsburg's employment law attorneys stand ready to assist in this capacity.
It is now an unlawful employment practice under the LAD for an employer to pay any employee who is a member of a protected class less than the rate paid to other employees not members of that protected class for “substantially similar work when viewed as a composite of skill, effort and responsibility.” The Act does much more than just advocating gender pay equity. It expands equal pay on the basis of membership in the protected classes of the LAD, to include race, creed, color, national origin, ancestry, age, marital status, civil union status, domestic partnership status, affectional or sexual orientation, genetic information, pregnancy or breastfeeding, sex, gender identity or expression, disability or atypical hereditary cellular or blood trait of any individual, or liability for service in the armed forces.
There are very limited exceptions where an employer may pay a different rate of compensation to members of the protected class, including where a pay differential is due to seniority or a merit system. In all pay discrepancies, the employer must demonstrate each of the following:
What Exactly is Unlawful?
The Act provides that an unlawful employment practice occurs each time pay practices discriminate against an employee, and the employee can seek back pay for up to six (6) years. In this way the Act substantially lengthens the statute of limitations for claims based on pay equity to beyond the LAD’s normal, two (2) year statute of limitations.
If an employer is found guilty of violating the equal pay practices required by the Act, a judge or jury can award treble damages for the violation. Treble damages are also available to an employee who proves that the employer retaliated against her/him for requesting, discussing, or disclosing to (i) any other employee or former employee of the employer, (ii) a lawyer from whom the employee seeks legal advice, or (iii) any government agency, information regarding employee compensation/pay practices. Likewise, treble damages are available to an employee or prospective employee who is asked by the employer to sign a waiver regarding discussing or disclosing pay practices or rates.
A successful claimant will also be entitled to attorneys’ fees in a practice called “fee shifting.”
For all of these reasons, it is necessary to carefully review Company hiring and compensation practices to insure there is pay equity for employees who perform “substantially similar work” –the so-called pay equity study.
Advantages of a Pay Equity Study
A pay equity study will help your company reduce its potential liability by addressing three questions:
Ultimately, Employers will need in-depth information to effectively explain and defend pay differences. Information that can be collected and analyzed through a pay equity study and maintained at the ready include:
Two caveats: first, the above factors must be dealt with as objectively as possible and, if capable of measurement, must not be tainted by cognitive bias; second, the law specifically does not permit the perpetuation of past discrimination. Thus, basing a hiring pay offer on previous pay, where such previous pay could be tainted, would only propel discrimination into the future. Employees must be placed into the pay scale in a manner that is rational and disciplined.
Ultimately, the adoption and maintenance of job descriptions is an integral part of a transparent, fair pay system. Having accurate job descriptions makes it much easier to evaluate and grade different jobs – and ensure that employees doing equal work receive equal pay. Job descriptions should follow job evaluation scheme factors. This will make jobs easier to evaluate and help avoid aspects of jobs more commonly performed by women being omitted or undervalued in the evaluation process, compared to those of jobs more commonly carried out by men. To the extent that current job descriptions exist, they should be reviewed as part of the preliminary review.
In addition to job descriptions, the second part of this comprehensive analysis involves the development of Salary Guides for all identified positions. One of the required Affirmative Action Plan reports, the Workforce Analysis, requests that the Company sort the jobs in each Department by wage or salary. Salary Guides are used by many businesses to help managers manage the compensation of new employees and to establish appropriate pay increases for existing employees while maintaining equity among the jobs in the company. Salary Guides provide a structure and logic for fairly compensating employees and managing the Company’s payroll costs.
Mandelbaum Salsburg’s Employment Law Practice can provide assistance and advice and help companies conduct this important survey. Involvement of legal counsel will provide you with necessary expertise and the protection of attorney-client privilege. If engaged, we would be prepared to work with one or more Company executives to review personnel information and compensation data. While it is clear that this process is no easy task; to do nothing (our usual default option) can lead to some very serious consequences. If you wish to learn more or to engage in this process, please contact Gary S. Young at email@example.com.
December 7, 2018
Company holiday parties are often great for camaraderie and employee morale but are fraught with danger, whether it be harassment, religious discrimination or drinking and driving.
We don’t want to be accused of being the Grinch that stole Christmas. We are all in favor of holiday parties, so long as they are done right. Here are our top ten (10) tips:
Remind employees in advance of the Company's anti-harassment policy;
Consider no alcohol or using drink tickets
Designate a member of management to monitor employees
Have rides home available or remind employees to consider Uber/Lyft, etc.
Consider day-time parties
No slow dancing;
No unsupervised speeches or skits;
Avoid religious symbols and religious music;
If during off hours, do not require attendance or there may be exposure to wage and hour claims;
If exchanging gifts, instruct employees as to what is appropriate and no gag-gifts;
When selecting a menu, make sure it is inclusive to accommodate religious needs, i.e. Kosher meals; and
If all else fails, promptly investigate any claims!
June 13, 2018
New Jersey’s Sick Leave Law (the “Law”) takes effect on October 29, 2018. It establishes a uniform, state-wide law that pre-empts all municipal sick leave laws and prohibits the passage of similar, local laws.
Who is Covered?
The Law applies to all NJ employees (full and part-time) and any business with NJ-based employees (regardless of size). The only exclusion are construction industry employees covered by a collective bargaining agreement, per diem healthcare workers, and public employees who already receive this benefit.
How is Time Accrued?
Employees accrue one (1) hour of paid sick leave for every thirty (30) hours worked, up to forty (40) hours (five days) in a benefit year. Alternatively, an employer may "frontload" the entire forty (40) hours on the first day of a benefit year (as well as implement a more generous program).
A “benefit year” is any 12 consecutive months designated by the employer. Once established, an employer may only change the “benefit year” by first notifying the NJ DOL.
Sick leave benefits begin to accrue for:
Employers must either (a) allow up to 40 hours to carry over from one benefit year to the next or (b) pay employees for that time. It is the employee’s choice which alternative to accept.
Employers may comply with the Law if they already offer employees paid sick leave or paid time off (“PTO”) that accrues at a rate equal to or greater than one (1) hour of leave per 30 hours worked, and the policy is otherwise consistent with the Law.
“Sick Leave” Uses?
Earned sick leave may be used for:
“Family members” is broadly defined to include an employee’s child, spouse, domestic partner, civil union partner, parent (including adoptive, foster or step-parent, or legal guardian), sibling (including foster or adoptive siblings), grandparent or grandchild, and the parent, grandparent or sibling of the employee’s spouse, domestic partner or civil union partner. Indeed, an employee may also use their sick leave for the care of a non-related individual whose close association with the employee is the “equivalent” of a family relationship.
What May Employers Do?
Employers are subject to private claims, and the penalties and remedies contained in the New Jersey Wage and Hour Law, including fines and possible imprisonment.
Employers with NJ-based employees should review and adjust their current paid time off policies to ensure compliance with the New Jersey Sick Leave Law prior to October 29, 2018.
May 7, 2018
On May 3rd Governor Phil Murphy continued his efforts to protect workers in New Jersey by signing an Executive Order establishing a Task Force on Employee Misclassification. The Executive Order estimates that misclassification of workers may deprive New Jersey of over $500 million annually in tax revenue and deprive workers of employment related benefits and protections.
Employers have a duty to withhold social security, Medicare and unemployment taxes from employees’ paychecks. Failing to do so could result in significant liability, including penalties and interest.
Courts in New Jersey now apply the ABC Test when deciding whether workers are independent contractors under the New Jersey Wage Payment Law and the Wage and Hour Law. Employers must show each of the following:
Similarly, the Internal Revenue Service now uses an eleven factor test that is a refinement of its previous twenty (20) factor test. Its test looks at the extent of behavioral and financial control over the worker as well as the type of relationship (including whether benefits are provided and the permanency of the relationship.)
The Take-away for Employers: Promptly review your relationship with all consultants and workers you treat as independent contractors using these stringent tests.
April 23, 2018
The Governor is now about to sign legislation amending the New Jersey Law Against Discrimination (“NJLAD”) that will ban employers from paying women and other employees in a protected category less for “substantially similar work.” Rather than a two year statute of limitations, like other types of discrimination, this amendment provides for a six year statute of limitations for these pay disparity claims. It also calls for treble (triple) damages. The law also provides that employers cannot preclude employees from discussing their compensation. Finally, it precludes employers from requiring employees to agree to a shorter statute of limitations for any claims under the NJLAD or to waive any other protections provided by that law. A copy of the Bill is attached here.