Beware bigger penalties for wage-and-hour claims under N.J. whistle-blower law

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in Employment Law,Firing,Human Resources

Employees and their lawyers are always looking for more ways to wring money out of employers that make mistakes. The latest trend in wage-and-hour cases, for example, is to file a Fair Labor Standards Act (FLSA) lawsuit and then seek to collect additional damages by tacking on additional claims under New Jersey’s Conscientious Employee Protection Act (CEPA).

Here’s how: Assume an employee believes her employer isn’t paying her and her fellow employees for all the time they work. That’s a classic FLSA claim—if she sues or gets the U.S. Department of Labor (DOL) to pursue her case, she’ll be able to collect all the wages that are due, plus a penalty. Now assume she complained to her employer before she sued or went to the DOL. If her employer then retaliates against her (by, for example, cutting her hours or firing her), she can sue under the CEPA, too.

That makes her eligible for punitive damages, too—and suddenly the sky’s the limit.

Recent case: Tracy Kronich worked as the manager of a Bebe women’s clothing store. She claimed the company trained her how to shave time from employee time records in order to bring each employee’s time down to 40 hours of compensable work per week, no matter how many hours the employees actually worked.

Kronich also claimed that employees were required to clock out for breaks, then had to keep working, so that time records seemed to show they took the time off, when they really didn’t. Plus, she said, employees clocked out at the end of the day, but then cleaned up before actually leaving.

Kronich complained to her supervisors and company managers. That’s when she said she was punished and eventually fired.

She sued, alleging among other claims that the company terminated her in retaliation for reporting wrongdoing under the CEPA.

The company tried to argue that the FLSA alone covered her claims, and that she couldn’t add an additional claim under the CEPA. But the court disagreed and ordered a trial.

The court said that because the CEPA offers additional remedies such as punitive damages, Kronich wasn’t stuck with just the FLSA remedies. She could also go for punitive damages and other additional remedies allowed under state law. (Kronich v. Bebe Stores, No. 07-4514, DC NJ, 2008)

Final note: It is now more important than ever to make sure you understand the ins and outs of the federal FLSA and New Jersey’s wage-and-hour laws. Review your wage policies with your attorney to make sure you are in compliance. Pay employees for all work. And if an employee does file a complaint, make sure her supervisors don’t retaliate in any way. If you must discipline the employee for some legitimate reason, run the situation by your attorneys first.

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