November 29, 2012
State Legislature Scrambles to Enact Pro-Employee Wage and Hour Legislation as 2012 Draws to a Close
With year-end fast approaching, we continue to monitor proposed wage and hour legislation which stands to place additional burdens on NJ employers. NJ Minimum Wage To Increase? Today, the NJ Senate passed a bill increasing New Jersey’s minimum wage from $7.25 to $8.50 per hour beginning in 2013. Under the bill, future increases would be tied to increases in the Consumer Price Index. If implemented, NJ would become the eleventh state in the U.S. to tie minimum wage increases directly to the Consumer Price Index. The bill, which already passed in the Assembly, will soon head to Governor Christie’s desk for his signature. The Governor has expressed opposition to an increase to NJ’s minimum wage, and it is very possible he will veto the legislation. Anticipating a veto, Senate and Assembly leaders have discussed the possibility of placing the minimum wage increase question on the ballot next November to let voters decide. There are, of course, serious risks with this approach, for example the risk of having the issue decided by uninformed voters who are unaware of the economic risks and risks to the business community associated with a hike. In light of potential imminent action impacting minimum wage in the state, all NJ employers should assess how a raise in minimum wage will impact operations. Employers are well advised to work with counsel to evaluate current pay practices to ensure compliance with federal and NJ minimum wage and overtime requirements. Counsel may also assist employers in determining whether any exceptions to minimum wage requirements are available. Legislature Cracking Down on Pay Practices for New Jersey Trucking Employees In an effort to combat financial incentives for employers who misclassify truck drivers as independent contractors, the NJ Legislature is also advancing a bill which would impose criminal penalties on employers who purposefully misclassify drivers as independent contractors and not employees. The bill would create a presumption that most work arrangements for truck drivers are employer-employee relationships. Employers will bear the difficult burden of convincing the NJDOL that they do not maintain enough control over the truck driver’s services to justify employer status. Under federal and NJ law, employers generally are required to pay non-exempt employees at least minimum wage for all hours up to 40 in a workweek, and one and one-half times the employee’s regular rate of pay for each hour over 40. There are certain exemptions from overtime laws both at the federal level and in NJ. For example, federal law does not obligate certain trucking industry employers to pay overtime. However, under NJ law, trucking industry employers must pay drivers, helpers, loaders and mechanics an overtime rate of at least one and one-half times minimum wage (currently $7.25 in NJ) for each hour of work over 40 in a workweek. NJ law defines a “trucking industry employer” as “any business or establishment primarily operating for the purpose of conveying property from one place to another by road or highway, and includes the storage and warehousing of goods and property.” The proposed bill follows a recent NJ Appellate Division decision finding that retailers are not entitled to NJ’s trucking employee exemption. In deciding so, the court distinguished between entities whose primary business is delivery, moving or storage, and entities for which delivery is an incidental function, such as a furniture retailer that provides home delivery service. In advance of the bill passing and to avoid costly NJDOL wage and hour investigations and lawsuits, NJ employers using truck driver services should assess pay practices and work with counsel to determine the applicability of the “trucking industry employer” exemption and whether they appropriately designate workers as independent contractors. For more information on the potential increase to NJ minimum wage, appropriately classifying independent contractors and our firm’s wage and hour compliance audit services, please contact John R. Vreeland, Esq., Director of the firm’s Wage & Hour Compliance Practice Group, firstname.lastname@example.org, or Douglas J. Klein, Esq., email@example.com, or call (973) 533-0777.