Seyfarth Synopsis: The New Jersey Supreme Court held that amendments to New Jersey’s Wage and Hour Law and Wage Payment Law that increase employer wage-hour liability are not retroactive.

In Maia v. IEW Construction Group, the New Jersey Supreme Court decided a critical issue in employer’s favor regarding the “look-back” periods and availability of liquidated damages under New Jersey’s Wage and Hour Law (WHL) and Wage Payment Law (WPL).

Background

As background, the WHL requires covered employers to pay non-exempt employees overtime compensation and minimum wage. The WPL regulates the time, manner, and mode of wage payments.

Effective August 6, 2019, New Jersey passed the Wage Theft Act (the Act), which amended the WHL and WPL by adding enhanced damages to prevailing plaintiffs, such as liquidated damages “equal to not more than 200 percent of the wages lost or of the wages due.” The Act also amended the “look-back” period for the WHL from two years to six years.

The plaintiffs in Maia alleged that their employers violated the WHL and WPL by failing to pay them and similarly-situated individuals for pre- and post-shift work. The plaintiffs asserted that they were entitled to the six-year look-back period because they filed their complaint after August 6, 2019, the effective date of the Act. In other words, they argued that the longer statute of limitations, effective at the time they filed their lawsuit, should apply, instead of the shorter statute of limitations that was effective at the time the underlying conduct occurred. In turn, the longer statute of limitations would mean a longer time period for which potential damages could be alleged and more potential plaintiffs that could have been impacted.

The Wage Theft Act’s Amendments Are Not Retroactive

The issue before the New Jersey Supreme Court was whether the Act’s amendments are retroactive. The Court held that they are not. Consequentially, the plaintiffs’ wage-hour claims arising prior to August 6, 2019, were dismissed with prejudice.

The Court undertook a detailed analysis of the factors to be considered when weighing retroactivity. Ultimately, the Court reasoned that the Act’s amendments should only apply prospectively because the statute was silent on retroactivity and by adding liquidated damages and other remedies and extending the statute of limitations in the WHL, the Act “impose[d] new legal consequences to events that occurred prior to its enactment.”

Accordingly, “for claims based on conduct that occurred prior to August 6, 2019—[the Act’s] effective date—plaintiffs cannot rely on [the Act’s amendments]. Any claims for new damages or remedies added by [the Act] can be brought only as to conduct that took place on or after August 6, 2019.”

Takeaways

The immediate takeaway from Maia is that it provides New Jersey employers a defense to wage-hour allegations predating August 6, 2019 that were not brought within the then-existing two-year statute of limitations. This also means that employers will not face the full six-year potential liability period until August 6, 2025. It also provides powerful precedent that any subsequent amendments to New Jersey’s wage-hour and other employment laws, especially laws that increase penalties and potential damages, should also only apply prospectively unless the legislature specifies otherwise.