Last year, the State legislature required employers to furnish new hires with information concerning their exempt status, pay information, vacation and holiday time granted, if any.  The new law expands that by requiring employers to notify their employees of how they are being paid, i.e. hourly, salary, commission, etc., and whether the employer will claim allowances, such as tips, meals or travelling expenses, against their wage.  Also new is that all employees on payroll, not just new hires, must receive this information by February 1, 2012, and each year thereafter.  The information must be provided in English and in the employee’s primary language if other than English.  Employees must sign an acknowledgement of receipt each year.

Non-exempt employees are required to receive wage statements each pay period setting forth their pay rate, basis, gross wages, deductions and net wages paid. 

An employee who does not receive this information within ten (10) business days of the date of hire may bring an action for $50 per workweek that the violation occurs, capped at $2,500. 

The penalties for violation of the Wage Theft Prevention Act have also increased significantly.  Wage violations had previously resulted in penalties of 25% of the wages due; that has increased to 100%, with the option to recover prejudgment interest and attorneys’ fees in a legal action.  Employers may be subject to penalties of up to $100 per week for failure to provide the mandatory wage statements, capped at $2,500 plus costs and attorney fees.

Lastly, an employer who is in violation of a wage law may be required to post a notice of violation, in a conspicuous place, for up to one (1) year.  If the violation was willful, the notice must be posted in an area visible to the general public for ninety (90) days.

This is a cautionary tale.  State government is poised to enhance penalties for violators of wage and hour laws ( See our entry entitled  “New Jersey Imposes Harsh Penalties on Repeat Wage and Hour Offenders” entry dated today) so it is very important that you review your workplace practices and policies to make sure you are in compliance.

If the Commissioner determines that en employer has violated wage and hour laws, the employer will be subject to an audit within twelve (12) months after that determination is made.  If, during that audit, the employer remains in violation, any number of licenses can be suspended at that time.  The timeframe of the suspension will be determined by a number of factors, such as the number of employees and amount of unpaid wages, taxes and/or benefits, and whether a good faith effort was made to correct the violations.  The employer will also be subject to a second audit, in the same timeframe.  If the violations continue, then their license may be permanently revoked.

Employers will be required to post notices of their obligations pursuant to the law and also to issue written notification to their employees of same.

The text of the law can be found at http://www.njleg.state.nj.us/2008/Bills/S3000/2773_U1.HTM.

The bill would require businesses that pay more than $600 annually to corporate service providers to file Forms 1099, and would significantly increase penalties for a company’s failure to do so.  It would also revise Section 530 of the Internal Revenue Code by limiting its safe harbor provisions for businesses that classify workers as independent contractors.

Under the proposed legislation, a business would have a reasonable basis for treating an employee as an independent contractor only if 1) no other classified employee held a similar position after 1978; or 2) the IRS did not conclude, in writing or by personal interview with the worker in question, that the worker is an independent contractor.

It is now more important than ever to classify your employees correctly.  It is tied to wage and hour laws, specifically payment of overtime, which is a fast-growing area of contention and litigation.  Non-compliance with the rules can lead to government fines, penalties and enhanced government presence in your workplace.

The text of the bill can be found at http://www.govtrack.us/congress/billtext.xpd?bill=s111-2882

An international plumbing fixture company is settling a gender discrimination suit for $175,000.  A female employee filed a complaint alleging that the company placed her on probation despite her performance record, and then fired her a month before she was to give birth.  The settlement agreement also includes provisions for training, reporting and postings.

The adopted changes include:

• Increasing the tipped minimum wage to $4.75/hour effective January 1, 2010 (or the effective date, whichever is later) and to $5.00/hour effective January 1, 2011;
• Employers must notify employees prior to taking tip allowances; and
• Clarifying tip sharing and tip pooling, and continuing to require employers to require tip sharing and setting the shares.

For more information, see http://www.jacksonlewis.com/legalupdates/article.cfm?aid=1908

The DOL has received an 18% budget increase for 2010. 

In addition, the IRS has instituted what they call “the National Research Program on employment tax compliance has focused their efforts on improper worker classification as well as “non-conforming benefits.”  These are benefits that could be considered wages and therefore subject to employment taxes, i.e. personal use of company vehicles, employee discounts, educational assistance, etc. 

The IRS will be looking at tax records for 2007 and 2008.