Legal Blogs and Updates

The Supreme Court of New Jersey just issued an opinion holding that the New Jersey Wage Theft Act (“the Act”)—which penalizes employers for knowingly failing to pay compensation—may only be applied to conduct that occurred on or after August 6, 2019, the Act’s effective date.

The opinion, issued on May 15, 2024, in Christopher Maia v. IEW Construction Group, addresses the allegations contained in a class action complaint filed in April 2022 by Christopher Maia and Sean Howarth, who claimed that while they were employed as laborers for IEW Construction Group (“IEW”), they were not paid for “pre-shift” and “post-shift” duties they performed as required. Those duties included dropping off and picking up equipment at different worksites.

Maia and Howarth sought class certification for all current and other similarly non-exempt workers employed by IEW in New Jersey at any point within the past six years of the filing date of the action. Their complaint alleged that IEW violated New Jersey’s Wage and Hour Law and the Wage Payment Law, which, as we discussed in a prior alert, were amended by the Act on August 6, 2019, to penalize employers that engaged in a knowing pattern of non-payment of wages and other compensation. The Act—among other things—increased the civil and criminal penalties that apply to such employers, created a rebuttable presumption of retaliation, expanded the definition of "employer" to encompass any successor entity of the employer, and increased the statute of limitations that applies to wage claims brought pursuant to New Jersey law from two years to six years.

Reversing a 2023 Appellate Division opinion, the New Jersey Supreme Court in the Maia opinion held that claims brought under the Act are to be applied prospectively to conduct that occurred on or after August 6, 2019 and not retroactively to conduct that occurred before the Act’s effective date. The court reasoned that—because the Act added new legal consequences to conduct that occurred prior to its enactment—the Act affected employers’ duties and liabilities, and applying it to actions that employers took prior to the Act’s enactment would therefore amount to retroactive application.

The court distinguished the Maia case from W.S. v. Hildreth, a 2023 Supreme Court ruling relied upon by the Appellate Division, which retroactively applied the amendments of a statute for allegations of sexual assault. The court found the Appellate Division’s reliance on Hildreth was misguided because the statutory amendments in that case concerned procedural requirements, whereas the Act amended New Jersey’s Wage and Hour Law and Wage Payment Law to create new damages and change parties’ rights and responsibilities, as well as the claims and defenses available to them.

The court held that retroactive application of a statute is justified when one of three circumstances is present: (1) the Legislature explicitly or implicitly expressed an intent for the law to be retroactive; (2) the amendment was curative or ameliorative; or (3) the parties’ expectations warranted retroactive application. The court found that none of these circumstances existed in the present case and held claims for new damages or remedies added by the Act can only be brought as to conduct that took place on or after August 6, 2019.

Bottom line: The ruling by the Supreme Court does not invalidate the statutory amendments created by the Wage Theft Act but does limit its applicability to conduct occurring on or after August 6, 2019. Employers are well-served to conduct a self-assessment of their payroll and recordkeeping processes. Because the compensation due to workers is significantly affected by how they are classified, employers should also double-check the accuracy of their classification of workers as independent contractors or employees, and as exempt or non-exempt.  

Our team of employment law attorneys is available to assist New Jersey employers of all sizes with their wage and hour compliance efforts, including updating policies and record keeping procedures, and reviewing employee classification practices.