By Zev Singer
Business owners are often concerned about the new and aggressive pro-employee laws in places like California and New York (like the new laws in response to the #MeToo movement). The laws in those two states are among the most employee-friendly in the country.
Unfortunately for Garden State employers, New Jersey is not far behind. During the past few years, New Jersey has been passing new employment laws that are more and more restrictive on companies. It has become extremely difficult for state employers to stay in compliance with these laws. And here’s the rub: If a company falls behind on these laws, or fails to comply (even by mistake) it can be subject to exorbitantly expensive and sometimes even indefensible lawsuits, including the risk of class actions by groups of employees or audits by the state department of labor (this happens more frequently than you would think).
Here are of some of things employers can do to stay complaint with the relatively new employment laws in New Jersey that you may not have heard about:
Don’t Ask for Applicants’ Salary Histories
The days of the standard interview question that asks a job applicant what their salary (or benefits) was at a previous or current job, are over. Effective Jan. 1 of this year, New Jersey has banned employers from asking applicants about their prior salaries and benefits. You may ask – what if I get that information from a middle-person like a headhunter or from the prior employer themselves? The state has prohibited actively doing this except in some limited circumstances. The employee can volunteer that information if it is provided on a voluntary basis, but employers must be careful not to prompt them, or even have questions on employment applications that ask for prior wages (those automatically violate this new law). This law allows applicants to bring a private lawsuit for violations, and provides for penalties from $1,000 to $10,000 per violation depending on the circumstances.
Don’t Discriminate Based on…Hairstyle?
You read that correctly. New Jersey is now the third state (California and New York being the other two) that has added hair texture and hairstyles as a protected category under the anti-discrimination laws. The law is intended to relate to race-based claims, as it specifically mentions “traits historically associated with race,” for example hairstyles that include twists, braids or cornrows. Companies should review dress code and personal appearance policies to ensure they do not inadvertently violate this new law. This is just one example of how the anti-discrimination laws are expanding, as more and more categories are now becoming “protected.”
Offer Paid Sick Leave
While not new this year (it has been in effect since the fall of 2018), many New Jersey companies still do not realize that the state requires almost all employers (no matter how many) to provide employees with up to 40 hours of paid sick time per year. The employee can either accrue sick time at a rate of one hour for every 30 hours worked, or the 40 sick time hours can be front-loaded to the employee at the beginning of the relevant year. Employees may use this time for their own qualifying need or for that of a “family member,” which is very broadly defined. There are very specific requirements regarding the policies, use and management of these sick hours.
Take a Closer Look at Your Independent Contractors
For employers who use independent contractors as opposed to classifying some workers as actual employees, New Jersey has been aggressively clamping down on this practice, which includes making it significantly more difficult to pass the legal test as to whether a worker can be classified as a proper independent contractor. The state has also recently passed laws that provide extremely large penalties for misclassification of workers. Now owners, directors, officers and managers may be held individually liable for their role in misclassifying a worker. Most scary for businesses, the state can now also issue a “stop work” order on any company that violates wage or tax laws, including misclassification of contractors, and the company would have to immediately stop all work at that specific location.
It’s Not Just What You Pay…It’s How You Pay
Even if you pay your employees well, you still may be at risk for wage lawsuits and audits. The wage laws are brutally unforgiving when it comes to form over substance. If you do not pay your employees in the right way (for example, overtime pay for employees who are entitled—which includes many more employees than you would think, and paying a salary does not necessarily exempt an employee from overtime pay), you can face severe penalties and lawsuits. Technical mistakes can literally result in hundreds of thousands of dollars of civil liability. This past August, New Jersey strengthened these wage laws even further, lengthening the statute of limitations for unpaid minimum wage and overtime claims from two to six years, and employees can also now obtain penalties of up to 200% of any wages owed ($3 would be owed back for every $1 deemed to be owed to the employee). The upshot here is to ensure you pay wages correctly to avoid these big risks under this new aggressive law.
This is just a sampling of some of the newer rules in New Jersey that employers need to contend with. Lawsuits and employee issues can impede productivity and present a costly and time-consuming distraction from running your business. Companies should consider a preventative and proactive approach to employment law compliance, instead of waiting to be served with a lawsuit or audit, when it already may be too late.
Disclaimer: The foregoing is a summary of the laws discussed above for the purpose of providing a general overview of these laws. These materials are not meant, nor should they be construed, to provide information that is specific to any law(s). The above is not legal advice and you should consult with counsel concerning the applicability of any law to your particular situation.
Zev Singer is a partner with Greenwald Doherty LLP, an Employment and Labor law firm, representing exclusively employers. Zev focuses his practice on preventive advice/counsel and employment litigation in New Jersey and New York. Zev welcomes questions and comments, and can be reached at 212-644-1310 or [email protected]