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Business Groups, Worker Advocates At Odds Over Local ‘Wage-Theft’ Laws

Ordinances in five towns threaten loss of licenses; businesses say rules could backfire, resulting in loss of jobs and hurting economy

wage theft money

Business leaders are criticizing local ordinances tying commercial licenses to payment of wages following the passage of so-called wage-theft laws in the state’s two largest cities.

Jersey City and Newark approved their wage-theft ordinances earlier this month – Jersey City on July 15 and Newark on July 1. The ordinances give their city councils the ability to deny renewal of a license to any business found liable in a judicial or administrative court of not paying full wages to workers.

New Brunswick, Princeton and Highland Park also have wage-theft laws on the books.

Critics of the laws, including the state’s major business advocacy groups, say they are unnecessary and can hurt workers unintentionally. They also say that the local laws result in a patchwork of rules that create administrative problems for businesses.

Supporters, including groups like New Jersey Working Families and New Labor, say wage-theft ordinances make it easier for workers to collect back wages while leveling the playing field for low-income employees who otherwise have to rely on Byzantine state rules and processes.

Passage of the ordinancs in Jersey City and Newark was part of a statewide effort by pro-worker groups who say they expect other towns to follow suit. They also are endorsing a bill, A-1317, sponsored by Assemblywoman Annette Quijano (D-Union), that would impose fines on employers who are found to have not paid wages or other benefits to their employees. The bill calls for repayment of wages, damages equal to back pay, and a fine of $1,000 plus 20 percent of the wages owed for a first offense and a fine of $2,500 plus 20 percent of wages owed for subsequent offenses.

The bill was introduced in January 2014 and referred to the Assembly Labor Committee. It has not been posted for a hearing.

Business groups are critical of both the local efforts and the specifics of the Quijano’s legislation.

Stefanie Riehl, vice president of employment policy with the New Jersey Business & Industry Association, said the state has some of toughest wage and hour standards in the nation and that the business-license provision could hurt other workers at companies that are being sanctioned.

“I question if this is a case of needing more stringent laws or better enforcement,” she said.

“One of the more curious points to me,” she added, “is that upon conviction professional licenses can be revoked, even for a first offense. It is detrimental to all of the company’s employees since it would not be able to pay any of its employees if it loses its business license.”

Marilou Halvorson, president of the New Jersey Restaurant & Hospitality Association, agreed. She said employees could lose out and that local tax bases could suffer if businesses were forced to close.

“I would stick with fines and fees for the business owner and not touch the license,” he said. “Otherwise you are hurting the municipality and the employee.”

Michael Egenton, senior vice president for governmental relations with the New Jersey Chamber of Commerce, said issues like wage theft, sick leave and the minimum wage should be handled at the state level.

“If you want to tackle and debate (issues like wage theft and sick leave), you need to do it on a state level because you need to have a level playing field where all 565 jurisdictions are on the same level,” he said.

He said that savvy businesses would look at municipalities like Newark and Jersey City, which are passing local rules that their neighbors have not passed, and consider moving their businesses elsewhere.

“What’s to say that they don’t go to Hoboken or Weehauken?” he said. “The worst-case scenario is if they throw their hands up in the air and close up shop completely because they can’t compete.”

Riehl also worried that a proliferation of local wage-theft rules would lead to a “patchwork of ordinances” that would make it difficult for businesses that operate in multiple jurisdictions.

It is possible, she said, that you could have two businesses on the same street but in different towns that would have follow different rules. That could create an unfair advantage for one of the businesses, she said.

“I think it dangerous when we have this patchwork of regulations,” she said. “The reason why we have a state Legislature is to enact state policy. We have to mindful of that to make sure policies are uniform, so it is not hard to expand and not hard to open multiple offices in New Jersey.”

Worker advocates say the local ordinances are needed to give state sanctions extra teeth.

Newark Councilman Anibal Ramos said in a press release issued by New Jersey Working Families that businesses that engage in wage theft don’t just “harm their own workers, they undercut business owners that play by the rules and treat their employees with respect.”

“Because the state’s current powers to penalize bad actors are limited, there’s a real need for local governments to step in and protect the basic rights of their constituents,” he said.

Craig Garcia, political coordinator for New Jersey Working Families Alliance, said local officials are more receptive to complaints from workers who also are their neighbors. Wage-theft laws like those in Newark and Jersey are “something that municipalities can do and should do to make sure that employers in their towns are doing the right thing.”

He said the New Brunswick law, which has been in place the longest, has resulted in about $200,000 in recovered wages for workers, most of which were paid before any official complaints were filed with the city.

City spokeswoman Jennifer Bradshaw said two businesses faced the loss of license under the New Brunswick law but settled with their employees before they came before the City Council.

“The ordinances,” Garcia said, allow d for “meaningful enforcement against wage theft. There have been a number of cases where employees have gone through entire Department of Labor process and had determinations that wages were owed to them, but they were unable to recover them. When the ordinance was implemented, we found that employers with outstanding cases paid up.”

Garcia said the goal is not to revoke licenses, but to “have that threat to disincentivize employers from committing wage theft in the first place.”

Business groups agree that wage theft should be punished, but they say the focus should be on compliance with current state laws or strengthening of the current process.

“I would work on compliance, education, those things that make (business) operators better,” Halvorsen said.

The NJBIA says the state could improve wage and hour rules by increasing the maximum amount that an employee can seek in back wages before the employee has to file litigation. The state currently allows employees to file a complaint and seek an administrative remedy for back wages up to $30,000. This would allow workers to represent themselves and not have to hire attorneys, she said.

In addition, the NJBIA says rules should be put in place to ensure that businesses quickly comply with judgments. The organization is proposing that the writ requiring payment be returned to the court showing compliance within 60 days.

“We have to make it easer for employees to represent themselves in wage collection proceedings and we have to make sure that, when there is a judgment, that the worker is paid promptly,” Riehl said.

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