New Jersey Wage and Hour Decision Demonstrates Power of Recordkeeping – And the Perils of the Lack of It

New Jersey employment law requires that employees must be paid at regular intervals, at least twice per month.  The proposition that employees should be paid for the time that they work does not seem to be illogical.  However, litigation over non-payment of wages is all too common.  The New Jersey Appellate Division recently addressed one of the laws behind this issue in the case of Veronica Villalobos v. Beast Coast Moving Limited Liability Company.

 

Background

Veronica Vilalobos and Joe Esquijarosa brought suit against their employer, Beast Coast Moving Limited Liability Company, for violation of the New Jersey Wage Payment Law, in the Law Division of the Superior Court of New Jersey, sitting in Bergen County.

They were both employed by Beast Coast Moving Limited Liability Company.  They were both fired and then rehired, Veronica in February 2019, and Joel in April 2019.  Veronica testified that she was hired as a foreperson and responsible for inventory, packing and truck loading.  She was told that she would be paid $200 per day plus a fifteen percent markup on supplies sold to customers, and reimbursed for her long haul road expenses.  She testified that she was only paid $150 per day, or $15 per hour.

Joel testified that he was hired as a truck driver, working exclusively for Beast.  He did not own a truck.  He also wrapped furniture and loaded and maintained trucks.  He testified he was to normally be paid $200 per day, and $300 per day for long haul trips.  Veronica frequently accompanied the owners and/or Joel on hauls.

The owner testified that they were paid by the hour, and that Veronica was not working when she accompanied Joel, just voluntarily spending time with him and acting as his helper.  He testified that Joel was supposed to pay her out of his own pay.  He also testified that Joel was an independent contractor, not an employee.

Veronica presented evidence of $14,850 in unpaid wages, $1,818.13 in unpaid out-of-pocket expenses,  and $894 in unpaid commissions.  The owner said she was not entitled to any wages because he never hired her.

Joel presented evidence of $22,500 in unpaid wages.  Joel acknowledged that he probably owed Joel “some” money, but he couldn’t pay him because Joel “interrupted” him from doing so.

Joel and Veronica’s calculations were backed up by receipts and emails and the trial judge therefore accepted them into evidence.  The company did not have any pay records, and the trial judge found the owner’s testimony to be “shockingly weak and not credible,” and his claim that Joel and Veronica were not actually employees to be “nonsense.”

The trial judge found that the company did not pay Veronica and Joel what they were owed, and tripled the amount owed under the New Jersey Wage Payment Law.  The trial judge would have ordered the employer to pay their counsel fees, but they did not submit the proper request.  The judge also found that the owners were personally liable for the judgment.

Beast Coast and its owners appealed to the Appellate Division of the Superior Court of New Jersey.

 

The Appellate Division Rejects Beast’s Claims

The Appellate Division roundly rejected all of Beast Coast’s arguments on appeal.

Before evaluating the case at bar, the Appellate Division explained the purpose of the New Jersey Wage Payment Law.

[The New Jersey] Legislature has enacted a series of statutes governing the payment of wages to employees, including the WPL, which is pertinent to the matter under review. The WPL governs the time and mode of payment of wages due to employees, and is designed to protect an employee’s wages and to assure timely and predictable payment. The WPL mandates an employer pay wages at certain regular intervals. Upon the termination of an employee’s employment, wages are to be paid not later than the regular payday for the pay period during which the employee’s termination, suspension or cessation of employment… took place.

Subject to exceptions inapplicable here, the WPL also prohibits an employer from ‘enter[ing] any agreement with an employee for the payment of wages except as provided by the statute….’

 

Employee Status

The trial court found applied the “ABC Test” which the New Jersey Supreme Court established for determining employment status under the New Jersey Wage Payment Law.  This test uses the following factors for revieing employment status.  Negative answers indicate that the worker is an employee.

(1) does the individual work independently of the employer’s control;

(2) does the individual maintain a place of business; and

(3) whether the individual normally provides this type of work as an independent business.

The trial court found that Joel and Veronica met none of these factors, and therefore that they were both employees, and on the evidence found that Beast Coast’s argument that Veronica wasn’t employed at all to be “nonsense.”  The Appellate Division affirmed that finding.

 

Amount of Unpaid Damages

Veronica and Joel documented their work and expenses.  Beast Coast was legally required to keep these records but did not, and therefore had no evidence to refute their claim, and the court therefore awarded them their full damages.  The Appellate Division affirmed this as well.

 

Liquidated Damages – Effectively Triple Damages

The New Jersey Wage Payment Law also provides for liquidated damages of double the amount found to be due, essentially tripling the award.  Thus, the wrongfully unpaid employee has the right to:

recover in a civil action the fully amount of any wages due, or any wages lost because of any retaliatory action taken in violation of [New Jersey Wage Payment Law]… plus an amount of liquidated damages equal to not more than 200 percent of the wages lost or of the wages due, together with costs and reasonable attorney’s fees.

Liquidated damages can be avoided for a first violation of the New Jersey Wage Payment Law if the employer admits liability and pays the employees within 30 days after notice of the violation.  Here, of course, the employer never paid the employees the back wages, and thus it was liable for the liquidated damages, thus tripling what it would otherwise have owed.

The New Jersey Wage Payment law also provides that successful employees can recover their attorneys fees and expenses from the employer, but in this case the Appellate Division affirmed the trial judge’s decision that they should not because they did not submit the required paperwork.

 

Personal Liability for Owner and Manager

The New Jersey Wage Payment law defines “employer” as:

any individual, partnership, association, joint stock company, trust, corporation, the administrator or executor of the estate of a deceased individual, or the receiver, trustee, or successor of any of the same, employing any person in this State. For the purposes of this act the officers of a corporation and any agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation.

Therefore, corporate officers may be obligated to pay employee wages when the corporation defaults.  The court thus found the owner personally liable.  Moreover, although the owner’s father had been an owner he no longer was, but he still had significant management duties and was defined as the “operations manager,” and the Appellate Division upheld his liability as well.

 

The Bottom Line

• For Employers. Obviously, employers need to pay their workers on time and in full, or both the business and its owners and officers may be liable.  Moreover, employers need to keep meticulous records of all hours and jobs worked by their workers, or the court will be left with nothing but their employees’ word.  Records that an employer properly paid their employees for all the time they worked is the best defense.
• For Employees. Just like employers, employees should document everything.  The employees in the case prevailed in large part because they had records and documentation of when they worked and what they are owed, and their employer did not.  And remember, if an employee has not been paid what she should have been, New Jersey employment law provides strong remedies.

 

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