Taking a Bigger Bite Out of Wage Theft in the Garden State

Hank Kalet | July 17, 2014 | Social
Local ordinances let two NJ towns refuse to renew licenses of businesses found guilty of wage theft, while stronger state law is in the works

landscape laborer
Two central New Jersey towns are attempting to crack down on employers who illegally withhold wages from workers — tying local business licenses to compliance with state wage laws.

The new rules, adopted by New Brunswick in December and Princeton on Monday, give the towns the ability to refuse to renew the license of businesses that have been found guilty either in court or by the state Department of Labor of wage theft — not paying for all hours worked, not paying at least the minimum wage, or not paying overtime.

Activists who helped craft the local ordinances say they could be a model for other communities and are reaching out to expand the wage-theft provisions to other towns. They also hope the local efforts can spur action on a state bill — A1317 — that would make it easier for workers to file wage-theft claims and would increase penalties on those convicted of wage theft.

The state Chamber of Commerce opposes the local ordinances, because it believes they would create a patchwork of rules that could damage companies that do business in more than one community. It prefers a statewide standard, but has not taken a position on the state bill. Chamber officials want to see “empirical data” demonstrating that wage theft is a problem and to include businesses in the discussion about a solution.

The local ordinances were spearheaded by New Labor, which organizes low-wage workers in New Brunswick, Newark, and Lakewood, and the New Brunswick-based Unity Square community group. The organizations conducted a survey in 2013 of households in low-wage neighborhoods in New Brunswick and found that one in six reported being the victim of wage theft during the previous two years, with 85 percent saying they were unable to reclaim lost wages.

“Wage theft is a very widespread problem,” said Jason Rowe, director of Unity Square. “One of the challenges is that employers can pretty much engage in the practice with impunity and it creates a perverse incentive to engage in wage theft.”

New Labor says it recovered about $240,000 in unpaid wages in 2013, about $60,000 of it owed to workers in New Brunswick. That figure, the organization says, is a fraction of the wages lost throughout the state.

Scratching the Surface

“We know there is a real problem,” said Craig Garcia, an organizer with New Labor who worked on both the New Brunswick and Princeton ordinances. “The $240,000 is just scratching the surface.”

Garcia said lost wages can mean an inability to pay rent, buy food, or cover utilities cost.

“Often, you are not talking about very much money for an employer, but you are talking about being kicked out of your house or not being able to feed your family on the workers end,” he said.

The New Brunswick City Council passed a resolution in November calling for state action on the issue and then passed a city ordinance in December. The New Brunswick ordinance covers restaurants and retail establishments, which are required to register with the city.

The Princeton ordinance grew out of outreach to the Latino community by the local Human Services Commission and has been tied to the revision of the town’s ordinances in the wake of the consolidation of Princeton Borough and Princeton Township. The new wage rules were attached to rules governing registration of landscaping companies. Princeton plans to include similar wage provisions in restaurant and construction ordinances later this year.

The local ordinances are designed to add an extra penalty to what local officials and activists see as relatively weak state laws. Garcia said that under current state law “employers get a zero-interest loan from the workers,” because the fines are minimal and businesses generally are forced to pay only what they owed workers.”

Rowe said the current process makes it “unlikely that employees will file a complaint and, even if they do, the judgment in New Jersey is only that the employer has to pay the sum they had to pay in the first place.

John Heilner, who chairs the Princeton Human Services Commission’s Immigration Issues Subcommittee, said “What this does is add a local enforcement mechanism, which is revocation of landscapers registration to do business in Princeton.”

“The leverage is the fact that you can’t do business in Princeton,” he added.
By linking wage-and-hour compliance to business licenses, it creates real consequences for employers. The goal is not to shut businesses, Garcia said, but to stop wage theft from happening in the first place.

“The idea is not to shut the business down, but to disincentivize the ripping off workers,” he said. “We show employers that it is better to pay their employees now rather than go through the headaches of hiring a lawyer and trying to prevent their business from being shut down.”

Assessing the State Law

The proposed state law also includes a license provision, along with expanded access to the complaint process for workers and stiffer penalties. The bill is sponsored by Assembly members Annette Quijano (D-Union) and Gordon Johnson (D-Bergen). It was referred to the Assembly Labor Committee in January, but has not been scheduled for a hearing. It has not been introduced in the Senate.

The bill would allow the state to suspend business and other licenses for convicted firms, and would require an audit of offending employers within a year. If audits show a continued failure to pay full wages or if there are subsequent violations, licenses can be permanently revoked.

The bill also would allow workers to file complaints in municipal court, rather than directly with the state Department of Labor, and makes it easier to file an anonymous complaint. It would allow workers to file two copies of their complaints: One, which could be filed under a pseudonym if the employee feared retaliation or is a minor, would be a public document; the other would contain the worker’s real name and address and would be on file only with the court. Workers can file anonymous complaints under current law, but cannot monitor a complaint’s progress.

Penalties would be enhanced under the bill, as well. Employers convicted of wage theft would be required to pay the wages owed to the employee, damages equal to the wages, and a penalty of $1,000 plus 20 percent of the back wages. Fines for subsequent offenses would increase to $2,500 plus 20 percent. Employers found to have retaliated against employees could face disorderly persons charges.


Current law calls for payment of back wages and a fine of between $100 and $1,000 and/or between 10 and 90 days in jail if convicted on a first offense. Fines for subsequent offenses could be between $500 and $1,000 with up to 100 days in jail. Administrative penalties also could be assessed, according to the Department of Labor, of up to $250 for a first offense and up to $500 for subsequent offenses. Activists say businesses rarely face the stricter penalties.

Quijano first introduced her bill in 2011 in response to a report from the Immigrant’s Rights/International Human Rights Clinic at the Seton Hall University School of Law

The report documented what it called a “significant level of wage theft” by businesses that used day laborers, with 54 percent of those interviewed reporting being paid less than promised at least once in 2010, and 94 percent reporting not being paid overtime despite working more than 40 hours in a week, and 48 percent reporting not being paid at all at least once in the year. Wage loss, according to the report, exceeded $1,000 for the year for 14 percent of those interviewed and between $100 and $1,000 for 43 percent.

Quijano said she was disturbed by the report and sought to protect workers from being exploited. The bill does that not only by strengthening sanctions, she said, but also by making the process less intimidating by relying on community groups and local courts. The system, as it stands now, she said, “creates a whole underground market.”

“If you can get laborers to work for free, it is all profit,” she said. “The Legislature has to make sure we protect the most vulnerable of our society.”

More Data Needed

Michael Egenton, legislative director for the Chamber of Commerce, said that it is unclear that there is a widespread problem that requires changes to state or local laws. He said more data is needed and that surveys like those conducted by New Labor and the Seton Hall clinic are not adequate.

“I could do similar surveys and find this is a concern,” he said. “We need practical empirical data that says ‘here is what we are running up against and how we have to improve upon the current law and enhance the sanctions against employers.’”

He said legislative and local efforts like this create the wrong impression of employers in the state.

“The majority of them are good actors and want to be responsible employers and are doing the right thing,” he said. “I’m not oblivious and blind to the fact that there are people out there — sure, there are there bad apples out there.

“But let’s take a look at the data statewide and see if this is really an ongoing pressing issue that needs to be addressed by our policy.”

And if there is a problem, he said, it needs to be addressed at the state level.

“I would rather see it on a statewide basis, so there is a level playing field, so that all municipalities, all jurisdictions are following the same standard,” he said.

Quijano, while applauding the local efforts, agrees that the issue must be addressed at the state level and that the discussion must include all of the stakeholders, including the business community.

“I applaud what New Brunswick and Princeton are doing in addressing something that is not being addressed by the state yet,” she said. “But it shouldn’t be patchwork. We have to make sure we are thorough and cast a broad net to make sure every individual (worker) has the ability and the safeguards in place to protect them.”

Local officials agree that state action is needed, but they also believe they have a responsibility to local residents and they are hoping that local action will in turn spur the state.

Rebecca Escobar, city council president in New Brunswick, said she hopes that the New Brunswick ordinance will be used as a model elsewhere and that “it does have a ripple effect,” especially because local ordinances cannot cover all employees. Temporary agencies, for instance, which employ many New Brunswick residents in warehouses along the NJ Turnpike, can only be regulated at the state level.

Rowe agreed.

“We need state legislation to really stamp out wage theft,” he said. “But our best attempt to do something with teeth is to do it at the municipal level while we wait for the state to do something on the state bill.”

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