Capping Seven-year Battle, ‘Wage-theft’ Law Is Signed By Lt. Governor

Colleen O'Dea | August 7, 2019 | More Issues
An employer who fails to pay all wages due to a worker now faces stiffened fines and the possibility of jail time

Credit: DCA
Acting Gov. Sheila Oliver, center, celebrates with supporters after signing new law on wage theft on Tuesday.
It just got more costly for New Jersey employers who fail to pay workers their full salary and benefits, as Lt. Gov. Sheila Oliver signed a law toughening penalties for so-called wage theft, including potential jail time for the worst offenders.

The bill Oliver signed (S-1790) is considered a critical adjunct to the state’s new minimum-wage law, to discourage employers from failing to provide the annual pay bumps that will bring the state’s guaranteed hourly wage to $15 for most workers in 2024. But it will cover all workers in the state and allow anyone who is not paid what they are owed in salary, benefits or overtime to file a complaint with the state or in civil court.

“Today we are sending a strong message to employers who choose to steal wages: They will no longer be able to get away with these unfair and unethical practices in this state,” said Oliver, addressing a boisterous crowd gathered to celebrate the signing at the Elizabeth office of Make the Road New Jersey, which advocates for immigrants and working-class people. “And if they choose to conduct themselves in this manner, you know what? They are no longer welcome to do business in the state of New Jersey.”

Assemblywoman Annette Quijano (D-Union), a prime sponsor of the new law, said the U.S. Department of Labor recovered $304 million nationally in 2018 for workers who were not paid their full wages or benefits. The average amount lost was $1,150, she said.

“That’s five weeks of food, a month of rent, three months of utilities, five weeks of child care,” she said, calling wage theft “a routine business practice across many industries and companies, large and small.”

Penalties include fines and jail time

Reynalda Cruz, an organizer with New Labor, said through an interpreter that her worker-advocacy organization successfully lobbied for similar worker protections in cities like New Brunswick, Newark and Jersey City and helped get $1 million in unpaid wages for workers prior to the passage of the bill in late June. One woman who was helped by New Labor to recover some $18,000 attended the bill signing.

“Wage theft is an epidemic,” Cruz said. “This law is the way to fight that epidemic … A day worked must be a day paid.”

Under the new law, an employer that does not pay all wages owed can be fined between $500 and $1,000 — previously, the fine was $100 — or face between 10 and 90 days in jail, or both. Penalties get steeper for multiple offenses and a “pattern of wage non-payment” is now a third-degree crime punishable by three- to five-years imprisonment, a fine of up to $15,000, or both. An employer who owes a worker $5,000 will be subject to state audits, as well. Quijano called the new law “the strongest law in the country.”

The New Jersey Business & Industry Association opposed the measure and continues to do so, saying it is concerned that employers will be penalized for making mistakes that are not willful wage theft.

“NJBIA fully supports the strong penalization of employers who knowingly and willfully cheat their employees,” said Michael Wallace, the association’s vice president of government affairs. “This law, as signed, however, criminalizes inadvertent wage-and-hour violations and will also hold New Jersey businesses responsible for the actions of their contractors. Navigating the complexities of wage and hour laws is often a challenge for employers, whether new or experienced. As a result of this law, employers acting in good faith will now be threatened with excessive civil and criminal penalties for unintended mistakes.”

Wallace noted that the law provides that workers can receive up to three times the amount owed from an employer if they win a case in court, and that businesses can be held responsible for violations committed by contractors they hire.

Allowances for ‘honest mistakes’

Quijano said the law makes allowances for employers who make “honest mistakes,” provided they pay workers all amounts owed.

But the penalties were a sticking point for some lawmakers who did not support the bill.

It took seven years for the measure to become law, a history that includes a veto by former Gov. Chris Christie in early 2018 shortly before the Republican left office. Still, it barely passed both houses last June, getting 22 votes in the Senate and 41 in the Assembly. No Republicans voted for it and a number of Democrats in districts considered competitive either abstained or also voted no. The full Assembly is up for election in November.

“We’ve been wanted to do wage theft a long time,” said Oliver, a former Assembly speaker, noting Christie’s opposition.

Credit: DCA
Reynalda Cruz, an organizer with New Labor, speaks at the signing yesterday of new law on wage theft.
Oliver said the wage-theft law is the latest in a string of pro-worker laws enacted by Gov. Phil Murphy, who is currently on vacation out of the country. In addition to the increased minimum wage, Oliver noted the first-term Democrat has also signed laws guaranteeing workers equal pay regardless of sex, race or other factors, requiring companies to give employees five days of paid sick leave and expanded disability and family leave benefits.

Quijano said the push for the wage-theft law began with a study done by a Seton Hall University law student that showed it was an issue for workers in Elizabeth. Then the lawmaker found out that it was a widespread problem that impacted people around the state, across the nation and even her mother.

“The state that she lives in doesn’t have a law like this,” Quijano said of her mother. “When your own mother has that problem, you know that you have to protect everyone else’s mother.”

In tandem with minimum-wage law

Tying the new law to the change in the minimum wage, Sen. Majority Leader Loretta Weinberg (D-Bergen), prime sponsor in the upper house, said that it is often lower-paid workers who are victims of wage theft.

“It falls on us, therefore, to defend those who don’t generally have the means to defend themselves,” she said. “In July, we took our first step to a $15 minimum wage, but if we didn’t take care to ensure New Jersey employees receive their rightful wage, we would fail many of those we are trying to lift up.”

The new law also shields workers from retaliation by employers, a protection Cruz said is especially important.

“For too long, workers were too scared to report wage theft for fear of being fired,” she said. “We must hold these bad actors accountable.”

Wallace of the Business & Industry Association said he hopes that the state will take steps to see that honest employers are not punished for simple mistakes.

“We look forward to working with the Legislature and the Administration to ensure employers that operate honestly and in good faith are protected from punitive damages for inadvertent errors,” he said.