Plaintiff Elmer Branch brought a putative class action against his employer, defendant Cream-O-Land Dairy, on behalf of himself and similarly situated truck drivers employed by defendant, for payment of overtime wages pursuant to the New Jersey Wage and Hour Law (WHL). In this appeal, the Court considers whether defendant could assert a defense to the action under N.J.S.A. 34:11-56a25.2 based on its good-faith reliance on certain determinations by employees of the Department of Labor and Workforce Development (Department) that defendant is a “trucking industry employer.”
Subject to exceptions enumerated in the statute, the WHL provides that an employer shall “pay each employee not less than 1 1⁄2 times such employee’s regular hourly rate for each hour of” overtime. N.J.S.A. 34:11-56a4(b)(1). The WHL, however, creates an exemption from that overtime compensation requirement for employees of a “trucking industry employer.” N.J.S.A. 34:11-56a4(f). For such employees, the WHL provides for “an overtime rate not less than 1 1⁄2 times the minimum wage.” Ibid.
!n response to plaintiff’s argument that defendant failed to pay truck drivers as mandated by N.J.S.A. 34:11-56a4(b)(1), defendant argued that it was exempt from that provision as a trucking industry employer under N.J.S.A. 34:11-56a4(f). Defendant also asserted that it was entitled to invoke the absolute defense set forth in N.J.S.A. 34:11- 56a25.2 because it had relied in good faith on three matters in which the Department had investigated its operations and concluded that it was a “trucking industry employer.” Those determinations were reached by a hearing and review officer, a senior investigator, and the Section Chief of the Division of Wage and Hour Compliance (Division), respectively, but not by the Commissioner of Labor or Director of the Division. None of those matters was appealed by the complainant driver, and no further proceedings occurred in the Department with respect to any of the three matters.
The trial court viewed those decisions to satisfy N.J.S.A. 34:11-56a25.2’s standard for the good-faith defense and granted summary judgment dismissing plaintiff’s claims. The court did not address whether defendant constituted a “trucking industry employer” within the meaning of N.J.S.A. 34:11-56a4(f).
The Appellate Division reversed, finding that none of the determinations on which defendant relied met the requirements of the good-faith defense under the plain language of N.J.S.A. 34:11-56a25.2. The Appellate Division also rejected defendant’s invocation of a 2006 Opinion Letter by the Director of the Division that for certain employees of trucking industry employers, N.J.S.A. 34:11-56a4 “establishes their overtime rate at 1 1⁄2 times the minimum wage” because defendant did not represent that it had relied on that letter when it determined its overtime compensation.
The Court granted certification. 240 N.J. 202 (2019).
HELD: None of the decisions identified by defendant satisfy the requirements of the good-faith defense under the plain language of N.J.S.A. 34:11-56a25.2. The Court acknowledges, however, the dilemma faced by an employer such as defendant, which repeatedly prevailed in overtime disputes before subordinate Department employees but was unable to seek a ruling that would satisfy that statute because each of those disputes was resolved without further review. The Court respectfully suggests that the Department would further the Legislature’s intent if it instituted a procedure by which an employer in defendant’s position could obtain an opinion letter or other ruling clarifying its obligations under the WHL’s overtime provisions. The Court remands this matter for consideration of defendant’s argument that it is a trucking-industry employer within the meaning of N.J.S.A. 34:11-56a4(f) and for determination of whether defendant complied with the applicable WHL overtime standards in compensating its employees.
1. The Legislature intended the WHL to protect employees from unfair wages and excessive hours. The WHL and its federal counterpart, the Fair Labor Standards Act of 1938 (FLSA), reflect similar policies but are not identical. The Court reviews the structure of the Department and notes that, under the applicable regulations, the Commissioner of Labor makes the final decision of the Department if a hearing follows the assessment of an administrative penalty against an employer but that, if amatter is resolved in the employer’s favor at an informal conference and the employee takesno further action, the Commissioner does not make a final decision. (pp. 17-20)
2. N.J.S.A. 34:11-56a25.2 provides an absolute defense in compensation matters under the WHL for employers who plead and prove that they have proceeded in good faith in conformity with and reliance on certain actions by the Department or the Division, specifically (1) “any written administrative regulation, order, ruling, approval or interpretation by the Commissioner . . . or the Director,” or (2) “any administrative practice or enforcement policy of such department or bureau with respect to the class of employers to which he belonged.” The WHL does not define most of the terms used in that statute and, to date, the Department has not promulgated regulations addressing N.J.S.A. 34:11-56a25.2’s good-faith defense. The Court reviews analogous provisions under federal law and notes that federal regulations clarify the meaning of core statutory terms as they appear in the FLSA’s good-faith defense provisions. (pp. 20-23)
3. In construing and applying N.J.S.A. 34:11-56a25.2, the Court stresses that the Legislature identified only two bases for the assertion of a good-faith defense by an employer under the WHL. Although the Legislature has empowered the Commissioner, the Director, “and their authorized representatives” to investigate potential violations of the WHL, the Legislature limited the first prong of the good-faith defense to determinations issued by the Commissioner and the Director themselves. The Court considers examples of determinations that would satisfy that first prong of N.J.S.A. 34:11-56a25.2. The statute’s second prong permits reliance on a Department practice or policy applying the WHL to a “class of employers” and their employees, not to adjudications of individual complaints against a given employer. N.J.S.A. 34:11- 56a25.2’s plain language requires that the employer plead and prove that at the time of its challenged act or omission, it relied on the cited authority. (pp. 24-28)
4. The Court concurs with the Appellate Division with respect to the application of N.J.S.A. 34:11-56a25.2’s plain language to this appeal. None of the decisions cited by defendant was issued by the Commissioner or the Director; nor did they constitute an administrative practice or enforcement policy addressing the class of employers to which defendant belonged. The 2006 Opinion Letter -- a written “interpretation” by the Director of the WHL’s application to overtime compensation in the trucking industry -- implicates both prongs of N.J.S.A. 34:11-56a25.2; however, it was not issued to defendant, and it apparently addressed a matter unrelated to this appeal. Defendant never asserted, let alone pled and proved, that it relied on that Opinion Letter. (pp. 28-30)
5. The Court recognizes that the plain language of N.J.S.A. 34:11-56a25.2 leaves an employer such as defendant in a difficult position. Having prevailed in three disputes that ended at an early stage, defendant had no procedural route to secure a ruling by the Commissioner or Director with respect to those determinations. The Court respectfully suggests that the Department develop a procedure whereby an employer can seek an opinion letter or other ruling from the Commissioner or Director regarding a claimed exemption from the WHL’s overtime requirements. The Court also suggests that the Legislature and the Department determine whether additional statutory and/or regulatory guidance should be provided regarding the good-faith defense in WHL proceedings. In that regard, the Legislature may consider the approach to the good-faith defense in certain FLSA proceedings adopted by Congress in 29 U.S.C. §§ 259 and 260. The Court also suggests that the Department consider adopting regulations clarifying the meaning of N.J.S.A. 34:11-56a25.2’s critical terms, as the United States Department of Labor defined the core terms of 29 U.S.C. § 259 in 29 C.F.R. §§ 790.13 to 790.19. (pp. 30-31)
AFFIRMED AS MODIFIED. The matter is REMANDED to the trial court.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, FERNANDEZ- VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE PATTERSON’s opinion.
Argued September 30, 2020 -- Decided January 13, 2021
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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 jon@gelmans.com has been representing injured workers and their families who have suffered occupational accidents and illnesses.
Blog: Workers ' Compensation
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Author: "Workers' Compensation Law" West-Thomson-Reuters
