Published date: 04/07/2022

In a previous blog post, we discussed a few of the larger cases of wage and hour compliance violations that resulted in criminal prosecution last year in 2021. The fact of the matter is, that post was only covering cases in the state of Pennsylvania alone…  

This time, we’re going to take a look at couple more from New Jersey. And although these resulted in civil consequences, which are clearly less severe than criminal, it is apparent that the state is still cracking down. Which ultimately leads to another popular question that we’ll discuss farther down in conjunction with a few current events… Are harsher punishments for non-compliance becoming increasingly more common?

Civil Cases

New Jersey Orders Shutdown of Local Construction Company & Charges Them $300,000 In Fees

On April 30 last year, the New Jersey Department of Labor & Workforce Development (NJDLWD) ordered a Newark-based construction company to stop all statewide work after paying misclassified employees cash off the books and not providing workers’ compensation insurance. [5] This is the first time the state of New Jersey has used their power to issue stop-work orders to violators.

The Department also charged the construction company with violations related to failure to pay overtime and keep accurate records. As a result, they were ordered to pay nearly $300,000 in fines and back wages. [6]

In the past, work was usually stopped at sites where the violations were deemed to happen. However, in this case, the construction company had to stop all operations in the entire state of New Jersey. Worse yet, they would continue to incur additional fines for each day that business was conducted in New Jersey. They also faced a civil suit filed last May on behalf of roughly 200 workers.

New Jersey Issues Stop-Work Orders for Failing to Pay Workers Prevailing Wage

Not long after, the NJDLWD issued stop-work orders at a Ewing, New Jersey construction site due to subcontractors violating state labor laws. [7] A worker complaint triggered an audit and investigation conducted by the Wage and Hour Division of New Jersey’s Department of Labor. Ultimately, three subcontractors were issued stop-work orders, two of which allegedly failed to pay prevailing wage.

NJDLWD More Willing to Pursue Penalties

It’s clear from the above cases that New Jersey Department of Labor & Workforce Development is more than willing to pursue construction companies for civil penalties. Furthermore, they are willing to put a halt to a project because of just a few subcontractors’ mistakes. Prime contractors should take note: monitoring subcontractors’ wage compliance is absolutely paramount, since they may suffer consequences for any contractor violations “on their watch.”

Updates to New Jersey Laws

In addition to reviewing those cases, it should also be noted that New Jersey has amended their Wage Theft Act recently to increase criminal charges and penalties for wage theft, even going so far as to create a new crime entirely: Pattern of Wage Nonpayment, according to N.J. Stat. Section 34:11-58.6.

The state has also increased the statute of limitations, expanded audit rights, and increased liquidated damages for failure to pay wages. On a related note, other states and localities (along with New Jersey) have created “wage theft” task forces, including in Philadelphia, Virginia, and Illinois. [1][2][3][4]

Current Events and Latest Trends

These aren’t the only ongoings that have people speculating on the future of compliance. One of the wider-spread discussions in the industry is whether instances of harsher punishment for noncompliance are becoming increasingly more common. And if so, the question that naturally follows is: will that trend continue?

This talk has especially picked up steam in light of recent events, such as the US Department of Labor (USDOL) announcing they plan to hire an additional 100 Wage and Hour investigators. Similarly, California’s Department of Industrial Relations (DIR) announced plans to have their Labor Enforcement Task Force begin project site inspections. With these developments, it’s reasonable to expect an uptick in awarding bodies conducting employee interviews on project sites to ensure apprenticeship laws are being followed and that workers’ wages and classifications are accurately reflected on certified payroll.

Increased Risk

Let’s not forget that the announcements discussed above come at the heels of the Bipartisan Infrastructure Bill being passed which will pump an unprecedented $550 billion into the nation’s infrastructure over the next five years. And while there’s never been more opportunity for construction companies, some argue that it won’t come without increased compliance risk as well. And no one wants to be that next contractor that becomes an example of what not to do…

If you like to learn about solutions to help mitigate risk involved with Davis-Bacon and other state/local prevailing wage compliance, check out https://lcptracker.com/solutions/.

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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.

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Sources

1 Nigel Thompson, “Philadelphia City Council votes to make the Department of Labor permanent, expand its powers, Al Dia Politics” (Feb. 14, 2020);

2 Brittany E. Grierson, “ Murphy’s Task Force Takes Hard-Line Approach Against Employee Misclassification,” New Jersey Law Journal (Sept. 16, 2019);

3 New Jersey Gov. Phil Murphy, Press Release, “Governor Murphy Releases Report on Employee Misclassification” (Aug. 9, 2019);

4 Illinois Attorney General, Press Release, “IL: Attorney General Raoul Convenes First Meeting Of Worker Protection Task Force” (Jan. 23, 2020).

5 New Jersey Department of Labor, “NJDOL Issues Stop-Work Order Against Construction Contractor, Halting All Current and Future Work” (April 30, 2021).

6 Stephanie Loder, “N.J. Shuts Down Contractor Over Labor Violations at Two Sites,” Engineering News-Record (June 8, 2021).