Federal Government Holding More than $7 Million in Unclaimed Back Pay Collected from New Jersey Businesses

By Ken Lund [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia CommonsManaging employment-related matters can be one of the trickiest, most difficult aspects of owning and running a business. A vast array of laws at the local, state, and federal levels affect the employer-employee relationship, including wages, hours of work, workplace safety, family and medical leave, non-discrimination, and reasonable accommodations for certain needs and conditions. While the vast majority of employment statutes and regulations have the best of intentions, maintaining full compliance with all applicable laws can be difficult for businesses with entire staffs devoted to the task. Small businesses may inadvertently run afoul of an employment law and face substantial penalties as a result. Recent news from the U.S. Department of Labor (DOL) illustrates the magnitude of the issue for New Jersey businesses. The DOL is holding more than $7 million collected from New Jersey employers in wage and hour claims, which remains unclaimed by employees.

The DOL’s Wage and Hour Division (WHD) enforces certain provisions of the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., the statute that sets the nationwide minimum wage. Since 2010, the federal minimum wage has been $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). The FLSA also establishes overtime pay of time-and-a-half for employees working over 40 hours in a week, with some exceptions. 29 U.S.C. § 207(a). The WHD can take legal action against employers for alleged violations of FLSA wage and hour provisions. The DOL maintains a website entitled “Workers Owed Wages,” or “WOW,” where people may search to see if their employer is listed, and then if they are included in any recovery of back wages.

New Jersey’s equivalent statute is the New Jersey Wage and Hour Law, N.J. Rev. Stat. § 34:11-56a et seq. It has similar provisions for overtime but sets a higher statewide minimum wage. As of January 1, 2015, New Jersey’s minimum wage is $8.38 per hour. N.J.A.C. § 12:56-3.1(a). The New Jersey Department of Labor and Workforce Development enforces state wage and hour laws.

The DOL announced in August 2015 that it was holding a substantial amount of unclaimed funds recovered in enforcement actions against employers around the country. This includes more than $7.1 million owed to 9,953 workers in New Jersey alone. In many cases, the DOL can notify workers directly that they are entitled to money recovered from their employer, but if a worker moves or is otherwise difficult to locate, the funds can remain unclaimed.

Violations of the FLSA’s overtime provisions accounted for a large part of the amounts recovered by the WHD, mostly through settlement agreements with the employers. According to the Jersey Journal, two of the largest settlement agreements were with two ship repair companies in Bayonne. The companies paid $720,000 to the WHD, about half of which was reimbursement for unpaid overtime wages owed to 224 employees. A WHD spokesman said that $240,000, roughly two-thirds of the unpaid wages from those settlements, remains unclaimed. After three years, the U.S. Treasury can keep unclaimed money.

Business law attorney Samuel C. Berger represents businesses and entrepreneurs in New York City and Northern New Jersey. We offer fixed-fee legal-service packages covering a wide range of matters, which help our clients understand their rights and duties as business owners, and which enable them to run their businesses smoothly and successfully. To schedule a confidential consultation with an experienced business law advocate, contact us today online or at (212) 380-8117.

More Blog Posts:

Employment Law for New Jersey Small Business Owners, New York & New Jersey Business Lawyer Blog, June 18, 2015

New Jersey Businesses Required to Provide Gender Equity Notice to Employees, New York & New Jersey Business Lawyer Blog, February 13, 2014

New Jersey Voters Approve Amendment to State Constitution Raising Minimum Wage, New York & New Jersey Business Lawyer Blog, November 12, 2013

Photo credit: By Ken Lund [CC BY-SA 2.0], via Wikimedia Commons.