Wage Theft and Recovery in New Jersey
According to research, there are many instances where wages to employees popularly described as independent contractors are not paid to them, which amounts to billions of dollars annually in the State of New Jersey alone. A report produced by the Economic Policy Institute in 2014 found out that there is a widespread theft of wages, amounting to billions annually. This money is transferred from the earnings of low-income employees and into the pockets of rich business owners, further widening the income gap and hurting workers that deserve full pay for full services rendered. This, in turn degrades their sense of justice and fairness, which are two principles that are vital to the survival of any democracy.
In the report, three cities were studied with a particular focus on their low-wage industries. The study showed that for any week chosen at random, two-thirds of low income wage-earners had at least one wage-related complaint against their employer. These wage theft incidents added up to nearly $3 billion a year for just the three cities studied. General extrapolation of the same across the country would imply that low-income wage earners are losing over $50 billion annually, given that low-wage workers add up to about 30 million people.
How Does Wage Theft Occur in NJ?
There are thousands of employees in New Jersey wrongfully categorized as “independent contractors.” This step enables their employers to skip out on any of the payments that would be due them including health insurance, pensions, and overtime pay among others. Also, this categorization enables the employer to escape from paying taxes to the state and federal government as required.
In addition, there are millions of employees countrywide who are not paid overtime because their employers have unduly classified them as “supervisors” or “managers” when the reality is that no aspect of their job entails any supervisory or managerial work. There are even employees who are paid less than the mandatory minimum wage provided for in New Jersey state and federal laws.
Wage Theft Recovery Law in New Jersey
Fair remuneration for services rendered is provided by the Fair Labor Standards Act, which is a federal law that provides guidelines for payment of overtime. Under this law, there is one simple prevailing guideline: All employees are entitled to be paid 1.5 times their hourly rate for all hours rendered to employees in excess of 40 hours per week.
This means that overtime payment in New Jersey is not only given to employees who are paid on an hourly rate, but it includes a large percentage of salaried employees, including some drawing relatively high salaries.
However, there are exemptions for this rule, applicable to certain administrative employees, executive employees and professional employees.