New York State Launches Aggressive Campaign to Enforce The New Minimum Wage Law

On December 31, 2016, the new minimum wage law in New York State took effect.  New York’s minimum wage law is among the most complicated in the country. The minimum wage will gradually increase to $15.00 in the coming years, with annual increases to take effect on December 31st. However, how quickly the minimum wage reaches $15.00 depends on where your company is located, the type of business you are in, and whether you are a small or a large employer. For example, the minimum wage in NYC will increase as follows:

New York City 10 or fewer employees 11 or more employees
December 31, 2016 $10.50 $11.00
December 31, 2017 $12.00 $13.00
December 31, 2018 $13.50 $15.00
December 31, 2019 $15.00

For Nassau, Suffolk and Westchester counties, the increments began December 31, 2016 and will conclude on December 31, 2021, with the following increases annually on December 31 no matter the size of the workforce: $10.00, $11.00, $12.00, $13.00, $14.00 and $15.00.  For the rest of New York State, the increments began December 31, 2016 and will conclude on December 31, 2020, with the following increases annually on December 31 no matter the size of the workforce: $9.70, $10.40, $11.10, $11.80, $12.50 and $15.00.

There is a special carve out for fast food companies.  By December 31, 2018, fast food companies in NYC will reach the $15.00 and by July 1, 2021 the rest of NY State’s fast food companies will reach $15.00.

The New York Department of Labor (NYDOL) plans to aggressively enforce the new law and has created a 200-investigator unit to ensure employers are appropriately increasing employee pay to at least the minimum wage. The newly formed State Minimum Wage Enforcement and Outreach Unit’s mission is to inform workers of the new minimum wage law and to ensure they are properly paid.  The State has also established a hotline for workers to report violations of the new minimum wage law. Hotline calls will initiate a NYDOL compliance audit.  If violations are found, a company is subject to a $3.00 fine for each hour the company failed to pay the required minimum wage to an employee plus back wages and liquidated damages.

If you have any questions or would like to discuss the new NYS minimum wage law and its effect on your business, please contact John Vreeland, Esq., Chair of the Wage & Hour Compliance Practice Group and a Partner in the Labor Law Practice Group at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Nicole L. Leitner, Esq., a member of the Wage & Hour Compliance and Labor Law Practice Groups at (973) 387-7897 or nleitner@nullgenovaburns.com.

$15 Minimum Wage Bill Heads to Governor Christie’s Desk

In a close 21-18 vote the New Jersey State Senate passed bill S15, the $15 Minimum Wage Bill. The bill will now head to Governor Christie’s desk after its previous stamp of approval from the New Jersey State Assembly.  The vote proceeded along party lines with the 18 Republican legislators raising objections to the increased costs on businesses and the 21 Democratic legislators fighting to provide a living wage.

Governor Christie has not commented on whether he will veto the bill but it is highly unlikely he accepts the $15 wage increase. State Democratic leaders have promised to submit the $15 minimum wage to the voters in a constitutional referendum if Governor Christie vetoes the bill.

$15 minimum wage bills have already been signed into law in New York and California.  Massachusetts, Vermont and Connecticut are currently considering similar bills. In addition to the $15 minimum wage there are potential costs for insurance and payroll taxes.  Employers should continue to stay informed on the movement of this legislation with an eye on implementation in early 2018.

For more information regarding the potential impacts of Bill S15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

New Jersey Assembly Picks Up Fight For $15 Minimum Wage

The fight for a $15 minimum wage is gaining steam in the New Jersey Legislature. On May 26, 2016, the New Jersey Assembly passed Bill A15, which would raise the minimum wage to $15 an hour by 2021. Currently, the New Jersey State minimum wage is $8.38 per hour.

The $15 minimum wage would not get there all at once. Under the recently passed bill, the minimum wage first would increase to $10.10 per hour on January 1, 2017.  Then, between 2018 and 2021, the minimum wage would increase by the greater of $1.25 an hour or $1.00 an hour plus the CPI each year. An identical version of the Assembly’s bill has already passed the New Jersey Senate’s Labor Committee (Bill S15). If the full Senate passes the bill it will head to the Governor’s desk where it most likely will be vetoed.

But the Governor’s veto may not be the end of the bill. The Legislature is proposing that in the event of a Governor veto, the bill be put to a constitutional referendum for the voters to decide during the New Jersey General Election on November 7, 2017. This would not be the first time the Legislature managed to get around a veto to increase the minimum wage. The minimum wage was previously raised by constitutional referendum in 2013 when voters amended the State’s Constitution to increase the minimum wage to $8.25 per hour despite a Governor Christie veto.

While the proposed $15 minimum wage may seem a long way away, employers should start thinking now about how this would affect their business. Many employers are still struggling from the more than 15% increase in the minimum wage over the last two years. An increase to just $10.10 in 2018 (which is when the increase would take effect if the bill is vetoed but then approved through referendum) would reflect another 20% increase, or an almost 40% increase since 2013.  Such increased labor costs may be more than some employers can or are willing to absorb. For instance, Wendy’s recently stated it would replace some workers with automated machines in response to significant increases in minimum wage.

For more information regarding the potential impacts of Bill A15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

Second Circuit Outlines The Way for Employers to Hire Unpaid Interns

On July 2, 2015, in a matter of first impression, the Second Circuit issued a ruling in Glatt v. Fox Searchlight Pictures, Inc., Nos. 13-4478, 13-4481 (2d Cir. July 2, 2015), and provided a new test for whether a worker can be classified as an unpaid intern under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). and thus entitled to compensation, including minimum wage and overtime.  The ruling by the Second Circuit rejected both the Department of Labor (“DOL”)’s six-factor test to determine whether or not an intern should be classified as an employee, and the U.S. District Court for the Southern District of New York’s previous reliance on the DOL’s test.

In 2013, the U.S. District Court for the Southern District of New York followed the DOL’s 2010 guidance for whether unpaid interns working in the for-profit private sector should be classified as employees.  The DOL test lays out six factors, including, for example, whether the internship experience is for the benefit of the intern, whether the intern displaces regular employees, and whether the employer derives an immediate advantage from the intern’s work. The DOL test requires that each and every factor must apply in order for a position to be an unpaid internship.  The District Court held that since not all of the DOL’s six factors applied, the plaintiffs in Glatt should have been classified as employees under the FLSA and the NYLL.

The Second Circuit, however, held that a “primary beneficiary test” should be utilized when determining whether or not employers need to pay their interns.  In other words, it must be determined whether the employer, rather than the intern, is the primary beneficiary of the relationship.  The Second Circuit found that the DOL six factor test was “too rigid” and unpersuasive, and was not entitled to deference.

To aid in determining whether the worker or the employer is the primary beneficiary, the Second Circuit articulated a “non-exhaustive” list of seven factors that should be considered and balanced when deciding whether the employer or intern is the primary beneficiary of the relationship:

  • The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
  • The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutes;
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
  • The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship

The Second Circuit made clear that no one factor is dispositive and that every factor need not point in the same direction to conclude that the intern is not an employee. Thus, Courts are free to look to other factors, and the failure to satisfy any one factor is not dispositive.  While the Second Circuit’s list of factors only adopted three of the DOL’s factors, it retained the DOL’s requirement that the position provide an educational value, suggesting that it is crucial to include an educational aspect in an unpaid internship.  The Second Circuit opined that this new test takes into account the “relationship between the internship and the intern’s formal education…by focusing on the educational aspects of the internship our approach better reflects the role of internships in today’s economy.”

The Glatt decision signals positive news for employers in New York, Connecticut and Vermont when determining whether or not they need to pay interns.  Private sector for-profit companies with internship programs should evaluate their programs to ensure that they are in compliance with all state and federal laws.  As the Second Circuit explained, a bona fide internship must “integrate classroom learning with practical skill development in a real-world setting.” It will be interesting to see whether or not other Circuit Courts find this ruling persuasive.

For more information regarding this decision and to learn how your business can implement best practices when implementing internship programs, please contact John C. Petrella, Director of the firm’s Employment Litigation Practice Group at jpeteralla@nullgenovaburns.com or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com or 973-533-0777.

New York Minimum Wage Increase On Its Way

The New York Legislature and Governor Cuomo have reached a tentative agreement to increase the state’s hourly minimum wage. Final details of the deal are being fleshed out, but it appears New York will see minimum wage increase from $7.25 to around $8 per hour in 2014, $8.75 in 2015 and $9 by 2016.

If implemented, New York would become the nineteenth state with a minimum wage higher than the federal minimum of $7.25. The hike is slated to be passed together with the state’s new budget due before April 1.

New York employers should evaluate current pay practices to anticipate the impact a minimum wage increase will have on operations and to ensure compliance with federal and New York minimum wage and overtime requirements. Counsel may assist employers in determining whether any exceptions to minimum wage requirements are available.

For more information on the potential increase to minimum wage in New York 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, jvreeland@nullgenovaburns.com, or Douglas J. Klein, Esq., dklein@nullgenovaburns.com.

Governor Christie Vetoes NJ Minimum Wage Increase, Makes Counterproposal

As anticipated, Governor Chris Christie conditionally vetoed legislation yesterday that would have increased New Jersey’s minimum wage from $7.25 to $8.50 on March 1, and tied future increases to the Consumer Price Index. As we have written here, it is likely Democrats will now push forward with efforts to put the minimum wage question on the ballot for voters to decide in November.

While Governor Christie found the bill untenable in its current form because he believes it will jeopardize economic recovery, he did not reject a minimum wage increase outright. Instead, Governor Christie now proposes a smaller rate increase to be phased in over three years, with no link to CPI. Christie suggested an immediate $0.25 per hour increase, followed by $0.50 in 2014 and another $0.25 increase in 2015. Even these slight increases would propel New Jersey ahead of 22 other states whose minimum wage is $7.25, the same as the federal minimum.

We will continue to monitor New Jersey’s minimum wage debate and the impact on our business community. For more information on the potential increase to minimum wage in New Jersey 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, jvreeland@nullgenovaburns.com, or Douglas J. Klein, Esq., dklein@nullgenovaburns.com.

New Jersey and New York Trailing Other States In Increasing Minimum Wage

As we have written here and here, New Jersey recently passed legislation to increase the state’s minimum wage to $8.50. Governor Christie has not announced whether he will veto the bill, and there is still the possibility of voters deciding the issue when they cast ballots in November. In New York, Governor Cuomo recently voiced his support for raising New York’s minimum wage from $7.25 to $8.50.

New Jersey and New York, historically progressive when it comes to implementing legislation protecting workers’ rights, actually trail other states that have already taken action to increase minimum wage. Ten states – Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington – increased their minimum wage this month. Nine of these states also adopted an indexing model, which ties future increases in minimum wage to increases in the Consumer Price Index (“CPI”). New Jersey’s pending minimum wage legislation has the same tie in to the CPI, though, as many opponents of the legislation have pointed out, it does not provide for decreases in minimum wage if CPI falls.

The increases already enacted across the country affect nearly 1,000,000 workers who will now earn between $200 and $500 more annually. For employees, the increases are well welcomed, especially as the Social Security payroll tax holiday ended on December 31, 2012. For employers, these increases mean potential landmines. Increases in the minimum wage may reduce leverage at the bargaining table for unionized employers where unions will be less inclined to make concessions in other terms and conditions of employment to secure higher wages. Increases in the minimum wage may also reduce or eliminate a company’s profits under a multi-year service contract where the company’s bid was based on wages that are now below minimum wage. And, of course, DOL compliance audits will likely catch employers who are unaware that the wages they pay are now below the minimum wage, resulting in costly wage assessments and penalties.         

We will continue to monitor legislation affecting minimum wage and the impact on our business community. For more information on the potential increase to minimum wage in New Jersey and New York 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, jvreeland@nullgenovaburns.com, or Douglas J. Klein, Esq., dklein@nullgenovaburns.com.

Wage and Hour Issues in the Summer Camp Industry

Summer camps, typically a go-to option for many parents to send their kids when school lets out, are now faced with a myriad of other non-traditional competitors.  Specialty camps, teen tours, and other options have affected the entire industry and forced some traditional camps out of business.  To compensate for revenue losses, many camps have turned to alternative sources of income, such as bringing in outside groups and renting out their facilities during off-season months.  Camp administrators must be mindful, however, that their expanded operating season can have severe implications under federal wage and hour law.

Section 13(a)(3) of the Fair Labor Standards Act (“FLSA”) exempts “organized camps,” such as summer camps, from most of the FLSA’s minimum wage and overtime requirements.  However, to qualify for such exemptions, the camp must meet one of the following criteria:  (1) the camp must not operate for more than seven months in any calendar year, or (2) in the previous calendar year, the average receipts for any six months must not have been greater than one-third of the camp’s average receipts for the other six months of the year.  Determining whether the camp satisfies one of these criteria is not always clear.

In determining whether the camp has operated for more than seven months in the calendar year, not all activities count.  Maintenance completed in the offseason, for example, is not considered operations. Construction to build new facilities would be analyzed similarly.  However, renting the facility during the offseason may need to be counted in the equation, especially if the camp provides staff such as cooks, waiters, lifeguards, and maintenance workers.

Even if a camp does “operate” for more than seven months in a calendar year, it could still qualify for the FLSA exemptions if, in the previous calendar year, the average receipts for any six months were not greater than one-third of the average receipts for the other six months.  This calculation can be based on any six months in the year, which need not be consecutive.  For example, the six months with the highest average receipts might include the following:  (1) January:  $10,000; (2) May:  $10,000; (3) June:  $25,000; (4) July:  $50,000; (5) August: $50,000; (6) September:  $20,000.  The total revenue is $165,000 which averages $27,500 per month.  The six months with the lowest monthly receipts might include the following:  (1) February:  $5,000; (2) March:  $5,000; (3) April:  $5,000; (4) October:  $5,000; (5) November:  $5,000; (6) December:  $5,000.  The total revenue is $30,000, which averages $5,000 per month.  Because the average revenue for the lowest six revenue months ($5,000) is not greater than one-third of the average revenue of the other six months of the year (one-third of $27,500 is $9,167), this hypothetical camp would be exempt.  Obviously, camps with extended summer seasons and/or winterized facilities must be particularly mindful of this calculation.

Determining what constitutes a “receipt” and when it is received can also present challenges.  Certainly revenue from tuition, camp fees, and the camp store, would clearly be included in the average monthly receipt calculation.  Yet, for other types of revenue, such as vendor incentives and donations to the camp, the line is not as clear.  Similarly, if money is paid in January for a camper to attend in July, to which month should this “receipt” be applied?

The answers to these questions are not always clear; the analyses are fact-sensitive and require close attention to the particular details of each camp.  What is clear, however, is that camps forced to rely more heavily on outside income must be aware of these issues. The loss of the exemption in any given year requires full compliance with the FLSA’s minimum wage and overtime requirements and can lead to significant exposure for unpaid wages, including liquidated damages and fines in the event of a Department of Labor audit.

For more information, please contact John R. Vreeland, Esq., Director of the firm’s Wage & Hour Compliance Practice Group, jvreeland@nullgenovaburns.com, or Brett M. Pugach, Esq., bpugach@nullgenovaburns.com.

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, jvreeland@nullgenovaburns.com, or Douglas J. Klein, Esq., dklein@nullgenovaburns.com, or call (973) 533-0777.