Wage and hour litigation, specifically disputes over unpaid overtime, is on the rise as a result of many employers’ misunderstanding (or ignorance) of the law and the plaintiff-friendly penalties and fee-shifting sanctions imposed on employers for violating the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a, et seq. (“NJWHL”) and the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”).
As of January 1, 2018, the NJ minimum wage rate is $8.60 per hour. Non-exempt employees who work in excess of 40 hours in any seven-day work week are entitled to overtime pay at the rate of time and one half for each hour worked in excess of forty. Employees exempt from receiving overtime include, but are not limited to, any individual employed in a bona fide executive, administrative, or professional capacity who earn an annual salary in excess of $23,660 ($455 per week).
The most common and difficult question to answer is whether an employee is exempt from overtime. Employers frequently label someone as a “manager” and think that is sufficient to remove the employee from overtime eligibility under the executive or administrative exemptions. But the FLSA makes it clear that job title alone does not determine overtime eligibility. Paying an employee above the salary threshold does not definitively exempt the employee from overtime either.
Rather, the NJWHL, by way of reference to the FLSA, sets forth a multi-pronged analysis of the employee’s essential job functions and qualifications to determine whether an employee falls within one of the exempt categories. Each of the categories has a different test (to be discussed in future articles), but they all require that the employee earn above the $23,660 annual salary threshold. Thus, if an employee fits the description of an “executive” but is paid less than $23,660 per year, then she may still be entitled to overtime. Conversely, if an employee does not fall within any of the exempt categories but is paid more than $23,660 per year, then she too may be entitled to overtime.
The Obama Administration attempted to double the salary threshold to $47,476 ($913 per week) effective December 1, 2016, but shortly before the law was set to take effect, a federal district court judge in Texas issued a temporary nationwide injunction. Had the law taken effect, millions of previously exempt Americans would have been eligible for OT, with estimates of over 130,000 workers in New Jersey alone. As it stands today, the salary threshold remains at $23,660, but many employees benefitted from the proposed increase because their employers raised salaries above the threshold in anticipation of the change in law.
Wage and hour litigation can be extremely risky for the employer because the NJWHL and FLSA allow an employee to collect backpay for up to 2 years (3 years for a willful violation) which is then doubled as liquidated damages intended to compensate the employee for the delay in payment. The prevailing employee is also entitled to collect reasonable attorneys’ fees, interest, and costs.
A recent 3rd Circuit decision indicates a potential shift in the judiciary to balance out the plaintiff-friendly language of the FLSA. In Souryavong v. Lackwanna County, D.C. No. 3-13-cv-01534 (Sept 20, 2017), the 3rd Circuit affirmed the district court’s finding that an employer’s violation of the FLSA was not willful because no evidence was presented that the employer was specifically aware of the conduct prohibited by the FLSA at the time of the violation. The Court also affirmed the district court’s decision to slash plaintiff’s attorney’s fees by 67%. The judiciary may be sending a signal to plaintiff’s attorneys that they cannot charge disproportionately high fees in a wage and hour case based on the expectation that the defendant will be forced to foot the bill at the end of the case.
At the Law Office of Craig Rothenberg, we represent aggrieved employees seeking recovery under the NJWHL/FLSA as well as provide defense and/or advice to employers in need of counsel on statutory compliance. If you have any questions concerning you or your employees’ eligibility for overtime wages, please contact our office.