Wage-Theft Law in the Cards — with Lighter Penalties For ‘Honest’ Mistakes

Colleen O'Dea | January 29, 2019 | Politics
New Jersey businesspeople and advocates worry that simple mistakes could end up costing them big, and some lawmakers share their concerns

wage theft money
Legislation that would make it harder on New Jersey employers who fail to pay workers full salary and benefits has cleared committees in both houses. Considered a companion to the $15 minimum wage bill, the measure’s get-tough tone may need some softening in order to gain full passage.

The Senate version of the bill, S-1790, passed the Senate Budget and Appropriations Committee on Monday, positioning it for final passage by the full Senate. The Assembly Labor Committee passed that house’s bill, A-2903, which also sets it up for a vote by the lower house.

But several lawmakers who voted to release the bill from committee or abstained said it needs to be tweaked to ensure its tougher fines would not penalize businesses that made a clerical error in payment. A first violation for wage theft carries a fine of between $500 and $1,000 or between 10 days and 90 days in jail or both.

Stopping employers from retaliating

Proponents of the measure say it’s necessary to increase penalties to ensure that employers do not take advantage of workers or retaliate against them for filing a wage-theft complaint with state officials.

“Every individual employed in New Jersey is entitled to the legal wages their employer has agreed to pay them, including overtime,” said Assemblywoman Pamela Lampitt (D-Camden and Burlington), after the bill she is co-sponsoring passed the Assembly Labor Committee. “It is critical that New Jersey take additional steps to protect our working men and women from unscrupulous business practices. We must put New Jersey workers first.”

A 2017 report by the Economic Policy Institute stated that millions of workers are victims of wage theft nationally each year and the practice leads to billions in lost wages. That includes refusing to pay promised salaries, paying less than the legally mandated minimum, failing to pay for all hours worked, and not paying overtime premiums. There are also instances of restaurant management paying a low tipped wage for doing nontipped work, such as rolling silverware or polishing glassware, and skimming workers’ tips and keeping a portion for themselves. Pooling tips with people earning a nontipped wage, such as dishwashers and cooks, is illegal in New jersey.

Long push to tougher penalties

Democrats have been trying to strengthen penalties for seven years. They were able to pass a measure at the end of December 2017, but former Gov. Chris Christie conditionally vetoed it shortly before leaving office in early 2018. With a Democratic governor sympathetic to workers’ causes, the effort is more likely to succeed.

Currently, state labor laws call for a fine of $100 for a first violation of nonpayment of wages. The new legislation would increase that to a minimum of $500. Penalties for a third and subsequent violations would range between $2,000 and $10,000 or up to 18 months in prison or both. A worker could also sue in small claims court and win treble damages — the salary owed plus 200 percent of that amount. Additionally, the measure would make it a disorderly-persons offense to retaliate against a worker who files a complaint, and would also entitle the worker to treble damages. What’s more, the state labor commissioner would be able to more easily audit employers found to have engaged in wage theft — when they owe a worker at least $5,000.

Not paying for mistakes

Some business representatives complained about the higher penalties at last week’s Assembly hearing. Sal Risalvato, executive director of the New Jersey Gasoline, C-Store and Automotive Association, said his organization would support the bill, but only if it includes some provision to differentiate between employers that willfully shortchange workers and those that have made a clerical error. He said small business owners can easily get overwhelmed and make inadvertent mistakes.

“I don’t think this body would want to have harsh penalties for an employer who did not intend to cheat an employee,” he said.

Sen. Paul Sarlo (D-Bergen), chair of the Senate Budget and Appropriations Committee, did not allow testimony on the measure Monday, saying its supporters and opponents would likely make remarks similar to those cited about the minimum wage, which the committee approved earlier in the day. But he said that the sponsors were working on amending the bill to give employers some relief for a first offense.

That made some members who would have voted “no” abstain instead, and others say they were voting “yes” to advance the bill, but only with the understanding that it would include the amendment for employers who make a mistake. Even two Republicans who abstained, Sen. Declan O’Scanlon (Monmouth) and Sen. Sam Thompson (Middlesex), said they would vote for the measure on the floor of the Senate if it is amended.

Increasing the minimum wage, as both the Assembly and Senate are on a pace to do, could make more employers more willing to try to underpay workers.

“Wage theft of any kind is unacceptable,” said Senate Majority Leader Loretta Weinberg (D-Bergen), sponsor of the bill in the upper house. “We can raise the minimum wage, but if we don’t double our efforts and ensure New Jersey employees receive their rightful wage, we will fail those we are trying to help. As usual, it will be those with the least and therefore those set to benefit the most by a wage increase who will be victimized by dubious employers. We should do everything we can to make sure everyone is rightfully paid for the work they have done.”