New Jersey Court Rules that Liquidated Damages Available Retroactively for Pre-2019 Wage Payment Violations

Liquidated damages are a type of monetary compensation to which an injured party is entitled when a statute provides for this additional relief or when it is available under contract.  When liquidated damages are an available remedy under statutory law, the statute will generally provide guidelines to courts to help them determine the appropriate award. Under New Jersey’s Wage Payment Law, specifically the August 6, 2019 amendments also commonly known as the Wage Theft Act, an additional amount of liquidated damages of up to 200% of the unpaid wages due are available should the plaintiff succeed in his or her claim for unpaid wages. The Wage Theft Act also extended the time plaintiffs have to bring claims against their employers from two to six years.

IMG_0615-4-300x170-3-300x170One question that has been litigated in the year and a half since the passing of the Wage Theft Act is whether the amendments apply retroactively to claims that arose before August 6, 2019. The Superior Court for the State of New Jersey in the Essex County vicinage just refused to dismiss a putative class action complaint filed by Werny Castro on behalf of himself and other similarly situated truck drivers, against the defendant Linden Bulk Transportation, LLC, a for-profit motor freight carrier, under the New Jersey Wage Payment Law, including the wage theft amendments. Castro claims that the trucking company purposely misclassified him and other similarly situated drivers as independent contractors rather than employees in order to avoid paying them proper wages in violation of the Wage Payment Law.

Castro’s job required him to deliver cargo from Linden’s facility to various ports in New Jersey. He claims that since August 2013, the trucking company has misclassified him and other drivers, and unlawfully required them to pay certain expenses thereby depriving them of rightfully earned wages. Specifically, Linden required drivers to pay for fuel, taxes, tolls, truck parts, insurance policies and business-related phone calls, among other items. The trucking company classified the drivers as lessors of the trucks, and itself as lessee. Castro claims, however, that the drivers in fact leased the vehicles from an affiliate of Linden and that at least one of the vehicles was even registered under Linden’s Department of Transportation registration number. In addition to control and ownership of the vehicles, Castro claims that the trucking company also exercised control over the work performed by him and the other putative plaintiffs. For instance, Linden set work schedules and distributed assignments, required the use of Linden’s shipping invoices and time verification reports, and required that the trucks be returned to and stored at Linden’s facility at the end of each shift. Linden also had the ability to terminate Castro and the other drivers, which would have left them entirely unemployed without any clients or customers, because they all relied entirely upon Linden for their work.

Castro and the putative plaintiff class sought a declaration that he and the other plaintiffs have been mischaracterized as independent contractors in violation of the Wage Payment Law, as well as payment of all damages, including earned wages, repayment of all expenses incurred, liquidated damages under the wage theft amendments, treble damages and attorneys’ fees and costs. Linden moved to dismiss the complaint in part on the grounds that the plaintiffs are not entitled to liquidated damages as a matter of law. Linden asserts that the wage theft amendments do not apply to any claims arising before August 6, 2019. Castro contends that the amendments, including the right to liquidated damages, should be applied retroactively to all claims.

The Court agreed with Castro and refused to dismiss the Complaint. The Court noted that the wage theft provision is intended to provide “redress of a pre-existing actionable wrong” and that other remedial statutes, such as the New Jersey Spill Compensation and Control Act, have been applied retroactively for similar reasons. The Court found that the liquidated damages provision of the Wage Payment Law can be applied retroactively to violations that occurred before its effective date.

The decision in Castro’s putative class action claim is promising and could pave the way for victims of wage theft in New Jersey to be made whole through the court system. The state court is not the first to address the issue of the amendments’ retroactivity, however. In May 2020, the United States District Court for the District of New Jersey, a federal court interpreting state law, denied class action plaintiffs’ motion to amend their complaint to account for the newly extended six-year statute of limitations under the Wage Payment Law. Much like Castro, the plaintiffs in that case, Magee v. Francesca’s Holding Corp. (D.N.J. May 28, 2020), argued that the amendment should be applied retroactively to their claims. Regarding the extended statute of limitations, the federal court disagreed with plaintiffs’ argument. Specifically, the Court limited the circumstances under which a statutory amendment such as the wage theft law should be applied retroactively: (1) where the Legislature expressed that as its intent in passing the amendment; (2) where the amendment is designed to fix some imperfection or misapplication of the statute; and (3) where the parties relied on the amendment when they entered into their relationship.

Since the passage of the 2019 amendments, the District of New Jersey has refused four times to apply the six-year statute of limitations retroactively. The Magee Court in particular also used a different analysis than the Castro Court in making its determination. It is important to keep in mind that federal district court decisions are not binding upon state courts, although they are often persuasive. Additionally, the availability of an extended statute of limitations differs from the availability of monetary remedies, and therefore the federal analysis regarding the statute of limitations may never be used by state courts to analyze the retroactive applicability of liquidated damages.

Given the history of federal courts in New Jersey interpreting the wage theft amendments as proactive, Castro’s ability to advance his claim for liquidated damages arising from events that occurred before August 6, 2019 is a major win for victims of wage theft and other violations of the Wage Payment Law in New Jersey.

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