Imposing Stronger Penalties on Employers for Wage Theft — It’s Christie’s Call

John Reitmeyer | December 12, 2017 | Politics
Lawmakers want to increase the sanctions for not paying workers their due, business community believes measure is ‘well-intentioned, but overly punitive’

Senate Majority Leader Loretta Weinberg (D-Bergen)
Known as wage theft, it’s already illegal in New Jersey for an employer to shortchange a worker’s paycheck or to not compensate them for putting in overtime. But lawmakers who’ve compared the practice to robbing a bank are now looking to Gov. Chris Christie to sign off on legislation that would increase the state’s wage-theft penalties and make it easier for workers to be made whole.

Under a bill that was sent to Christie late last week, New Jersey companies would have to fully reimburse workers who are the victims of wage theft, and also pay damages worth double the amount of the shortchanged wages.

The measure would also expose the employer to a disorderly person’s charge if they retaliated against a worker who reports wage theft, and it would give state officials more power to conduct audits and suspend business licenses in wage-theft cases.

While the legislation has faced some resistance from the state’s business community, sponsors say the tougher penalties are needed to discourage unscrupulous employers that prey on immigrants and other minority groups, knowing the victims generally live paycheck to paycheck.

“We hear that in some cases those who violate the law consider the risk of getting caught and accepting the penalty the ‘cost of doing business,’” said Senate Majority Leader Loretta Weinberg (D-Bergen).

State law too weak?

“Strengthening our laws will better ensure that companies are not taking advantage of workers, and that employees are paid the wages they are owed,” said Weinberg, a primary sponsor of the bill.

A study released earlier this year by the Economic Policy Institute that looked at working conditions in 10 states, including neighboring New York and Pennsylvania, found minimum-wage workers had been shortchanged more than $8 billion annually by their employers. Those results led the group’s researchers to conclude that the problem likely totals more than $15 billion nationally.

A report on wage theft, that the Seton Hall University School of Law released in 2011, found that more than half of those surveyed said they were paid less than they were owed during the prior year, primarily for working uncompensated overtime hours. One in six low-wage workers in New Brunswick reported wage theft in a household survey conducted in 2013 by the New Labor organization, and NJ Spotlight has previously reported on efforts to enact wage-theft ordinances in five New Jersey municipalities amid concerns that state law was too weak.

Under current New Jersey law, employees who lodge wage-theft complaints against their bosses must do so within two or three years of the alleged offense, depending on the circumstances. Cases involving losses worth $30,000 or less are handled by the state Department of Labor and Workforce Development, with victims only eligible to receive the amount of wages that were lost. Cases worth more than $30,000 must go to the courts unless the worker is willing to forfeit the lost wages above the $30,000 threshold.

But under the measure that was sent to Christie’s desk last week, the statute of limitations for wage-theft cases would be increased to six years. The workers would also be eligible to receive up to 300 percent of their lost wages, including penalties worth double the amount that was unpaid. The measure would also permit the state labor commissioner to hear cases involving lost wages that exceed the $30,000 threshold, and it would give the commissioner the power to suspend an employer’s business license or issue a stop-work order if they do not comply with a wage-theft ruling.

Stop employers from retaliating

Employers who retaliate against a worker for filing a wage-theft complaint would face a disorderly person’s charge, and fines of up to $1,000.

The full Assembly passed the bill earlier this year. During a news conference that was held with worker advocates before a committee hearing last year, Weinberg compared employers who engage in wage theft to criminals who rob a bank or hold up a convenience store.

“The bad employer who does this is guilty of stealing, and even worse, from employees who have put in the required number of hours,” Weinberg said.

After the bill cleared the full Senate in a 24-13 vote last week, another sponsor, Sen. Linda Greenstein (D-Mercer), said the victims of wage theft often feel like they have few resources to go against their employers. In addition to the other changes, the legislation would provide new ways to make claims and get legal representation.

“This bill will strengthen enforcement of the law and penalties for violations, but it will also give victims of wage theft improved options to recoup lost wages and benefits,” Greenstein said.

But the state’s business community raised several concerns about the wage-theft measure as it advanced through the Legislature in recent months. Those concerns include language related to what the state considers to be negligent wage theft, versus willful and knowing wage theft. Another concern is the liability that a contracting company would face for wage-theft violations committed by a subcontractor.

In a statement issued last week, the New Jersey Business & Industry Association called the bill “well-intentioned, but overly punitive.” The statement also said the bill’s provisions could end up putting a business “out of business” for inadvertent violations.

It’s now up to Christie to make a final decision on the legislation. The second-term Republican will only have a few weeks to do so as the current lame-duck session is coming to an end — and as he is due to leave office in mid-January.