Articles Posted in Wage and Hour Law

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After two years of litigation in federal court, U.S. District Court Judge Peter Sheridan ordered Wawa, Inc. (Wawa) to pay $1.4 million in order to settle a class action lawsuit filed against it by assistant store managers called “Assistant General Managers” (AGMs) who alleged violations of the Fair Labor Standards Act (FLSA). In January 2018, Plaintiffs moved to conditionally certify a collective action based on allegations that Wawa misclassified them along with other similarly situated AGMs as being exempt under FLSA i.e., not eligible for overtime pay, and by doing so, failed to pay them overtime for hours worked in excess of 40 hours per week. Gervasio v. Wawa, Inc., 2018 U.S. Dist. LEXIS 4899 (D.N.J. January 11, 2018).

In filing their 2017 complaint against Wawa, plaintiffs alleged they were deliberately “mislabeled” as managers under the FLSA when their duties did not actually reflect managerial duties and their duties were more akin to the duties of other hourly wage employees working at the stores. Id. at *2. However, because they were labeled as managers by Wawa, they were classified as exempt employees and therefore not entitled to overtime wages they would have otherwise earned under the FLSA. Id. Although Wawa eventually re-classified its AGMs as nonexempt employees in December 2015, plaintiffs continued to seek recovery of backpay for the unpaid overtime hours they worked prior to this reclassification. Plaintiffs claimed they worked between 50-55 hours during weeks in which they worked five or more shifts but did not get paid for any time worked exceeding 40 hours. Id.

While nonexempt employees, i.e., employees eligible to receiver overtime pay, are covered by the overtime protections of the FLSA, exempt employees are not. Exempt versus nonexempt employee status depends on three factors: (1) how much the employee is paid, (2) how the employee is paid, and (3) the type of work that the employee performs for his or her employer. Generally, an employee is exempt if he or she is paid at least $23,600 per year, is paid on a salary basis, and (3) performs exempt job duties, namely executive, professional, or administrative duties for the employer. To fall within the “executive exemption,” an employee must meet the following criteria: “(1) the employee receives compensation on a salary basis, (2) [his or] her primary duty is management of a recognized department, (3) [he or] she customarily and regularly directs the work of two or more employees, and (4) [he or] she has authority to hire or fire employees.” Id. at *7 (quoting Essex v. Children’s Place, Inc., 2016 U.S. Dist. LEXIS 108853 at *9 (D.N.J. Aug. 16, 2016)).

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Plaintiffs attempting to sue Strategic Delivery Solutions LLC (SDS) in a class action suit over a myriad of violations of the New Jersey Wage Payment Law (WPL) and New Jersey Wage and Hour Law (WHL) must bring their claims individually through opaque private arbitration rather than as a class in open court before a jury of their peers according to an Appellate Division opinion published on June 4, 2019. Colon et. al. v. Strategic Delivery Solutions, LLC., 2019 N.J. Super. LEXIS 78. This is an unfortunate outcome for plaintiffs, who otherwise had strong claims for New Jersey wage law violations. When hired by SDS, plaintiffs entered into independent vendor agreements, which contained clear and unambiguous arbitration provisions. According to this appellate court, by signing these agreements plaintiffs gave up their rights to bring class actions claims, waived a jury trial, and agreed to binding arbitration. Colon at 4. Moreover, the appellate court concluded that even if the Federal Arbitration Act (FAA) does not apply, the New Jersey Arbitration Act (NJAA) does, and arbitration is required to settle these wage disputes.

In their initial suit filed in December 2016, plaintiffs alleged that from February 2015 to March 2016, they were working out of an SDS facility in Elizabeth performing truck driving and delivery functions for the company. They claim that SDS made unlawful deductions from their compensation in violation of the New Jersey Wage Payment Law during this time. N.J.S.A., 34:11-4.1 to 4.14. Additionally, plaintiffs allege that SDS misclassified them as independent contractors rather than employees and in doing so failed to pay them one-and-a-half hourly rate for any time they worked over forty hours per week in violation of the overtime provisions contained within the WHL. N.J.S.A., 34:11-56a to 56a38. Withholding wages and failing to pay employees the required one-and-a-half-hour overtime rate for excess hours worked are both serious abuses against New Jersey wage laws. Id. However, the Appellate Division agreed that plaintiffs must arbitrate their claims based on this arbitration provision, so sadly plaintiffs will not have their day in court.

Had the plaintiffs not entered into such agreements with the company, they would have had strong claims for a class action lawsuit against SDS for violating the New Jersey employment law statutes. The WHL was enacted to protect employees from unfair wage practices, such as giving employees excessive hours of work. N.J.S.A. 34:11-56a. Therefore, the distinction between independent contractor and employee, which is what plaintiffs are disputing in this case, is not a minor one in terms of application of the wage laws applicable to the employee-employer relationship. The WPL, which governs the time and mode of payment of wages due to employees, excludes independent contractors from its definition of “employee.” Hargrove’s v. Sleepy’s, LLC, 220 N.J. 289 (2015). Similarly, the WHL, which establishes a minimum wage or overtime rate payable to employees, does not do so for independent contractors. Neither the WPL nor its regulations differentiate between an employee and an independent contractor, however the New Jersey Supreme Court held that in distinguishing the two, courts may apply the ABC Test, which is taken from the New Jersey Unemployment Compensation Act. Id.

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The federal Fair Labor Standards Act (“FLSA”) and the New Jersey Wage and Hour Law (“NJWHL”) protect the wages of New Jersey’s hourly workers. They do this by requiring employers to compensate hourly wage employees for each hour worked at a minimum wage rate (in New Jersey the minimum wage rate in 2017 is $8.44/hour), and to pay overtime wages at 1.5 times an employee’s regular hourly rate for each hour worked in excess of 40 hours in a workweek. This means that an employee is not permitted to work any time “off the clock” without pay even if the employee does so willingly.

Any time an employee is working for the employer he or she is required to be paid even when the employer did not ask the employee to work that time. For example, if the employer asks an employee to do a job and it takes the employee an extra hour to finish the job properly, the employee is entitled to overtime pay for that hour – even if the employer has a policy forbidding overtime pay. And if that hour means that employee has worked 41 hours in the workweek, the employee is entitled to 1.5 times her regular hourly rate for working that extra hour even if the employer has a policy forbidding overtime.

If an employee’s job requires him or her to wait around for an assignment, they must be paid for that time spent waiting. Indeed, even if the job is not to wait but merely to be “on call,” the time the employee is on call is to be considered work time warranting compensation. For example, if a job requires an employee to be available to respond to a security call, the time spent being on call must be compensated by the employer and can be calculated as part of work.

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New Brunswick, N.J., November 1, 2016 – Brent Carter, Robert Haynes and Kenneth Cuoco, filed a class action lawsuit in Middlesex County Superior Court against Bed Bath & Beyond, Inc. (BBB) on behalf of themselves and all similarly situated current and former employees who worked in BBB stores located in New Jersey to recover for BBB’s failure to pay overtime wages in violation of The New Jersey Wage and Hour Law (NJWHL). The proposed Class consists of all persons employed by Defendant BBB in New Jersey who worked as either a Department Manager, Customer Service Representative, or Assistant Store Manager at any time two years prior to the filing of the lawsuit who worked over 40 hours per week and were not paid overtime pay at a rate of one and one-half times their regular rate for hours worked more than 40 hours during a workweek.

Carter, Haynes and Cuoco specifically complain that rather than Defendant BBB paying Plaintiffs and all other members of the proposed Class overtime pay at a rate of one and one-half times their regular rate for hours worked in excess of 40 hours during a workweek as required by the NJWHL, BBB instead unlawfully paid them and proposed Class members overtime pay based on a calculation which divided an employee’s base weekly salary by all hours worked in the week divided by 2 multiplied by all hours worked over 40 in the week.  The Complaint alleges that BBB unlawfully applied this Fluctuating OT formula to avoid paying their Department Managers, Customer Service Representatives and Assistant Store Managers overtime compensation at a rate required by law.  Indeed, the Complaint goes on to claim that by using its Fluctuating OT formula, Defendant BBB often paid Class members for hours worked over 40 hours in a week less than the State’s mandated minimum wage rate.

Plaintiffs’ attorney, Stephan T. Mashel, Esquire of the law firm of Mashel Law, L.L.C., located in Marlboro Township, New Jersey, said that his clients seek class certification and an award of money damages because BBB unjustly enriched itself by failing to pay its workers overtime pay at the legal overtime pay rate required under state law. As Mashel explains, “The overtime wage rate requirements contained in New Jersey’s Wage and Hour Laws benefits workers by dissuading employers from forcing employees to work excessively long hours. Such a disincentive has the salutary effect of promoting the health and quality of life of workers who value leisure and family time.  Conversely, these same overtime pay requirements afford workers the right to earn extra pay at a time when lower and middle class workers wages have remained stubbornly stagnant. BBB used its Fluctuating OT formula to defeat these public policy goals.”