NJ Supreme Court to Address Good-faith Defense Wage Law

The Supreme Court of New Jersey recently agreed to consider Elmer Branch v. Cream-o-Land Dairy. The closely-watched employment case involves the good-faith defense under the New Jersey Wage and Hour Law (WHL).

Facts of Elmer Branch v. Cream-o-Land Dairy

On November 29, 2016, plaintiff Elmer Branch filed a putative class action complaint against Cream-O-Land Dairy (COL). The suit alleged that the class members worked approximately sixty to eighty hours per week without being paid one-and-one-half times their hourly rates for hours worked in excess of forty hours per week in violation of the WHL.

NJ Supreme Court to Address Good-faith Defense Wage Law

Defendant answered the complaint, denying the allegations and asserting, among other defenses, the WHL’s good-faith defense (N.J.S.A. 34:11-56a25.2). It provides:

In any action or proceeding commenced prior to or on or after the date of the enactment of this act based on any act or omission prior to or on or after the date of the enactment of this act, no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under this act, if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any written administrative regulation, order, ruling, approval or interpretation by the Commissioner of the [DOL] or the Director of the Wage and Hour Bureau, or any administrative practice or enforcement policy of such department or bureau with respect to the class of employers to which he belonged. Such a defense, if established, shall be a complete bar to the action or proceeding, notwithstanding, that after such act or omission, such administrative regulation, order, ruling, approval, interpretation, practice, or enforcement policy is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect.

After the parties exchanged some written discovery, COL moved for summary judgment on the grounds that it was immunized from liability under the good-faith defense. In support, COL cited three determinations made by the New Jersey Department of Labor and Workforce Development (DOL) officials in response to complaints brought by individual COL employees. In the determinations, the DOL concluded that COL falls under the federal trucking guidelines regarding overtime exemptions, and thus the company was only required to pay drivers 1.5 times the state minimum wage for overtime wages, which its drivers were receiving. The trial agreed that COL was entitled to the good-faith defense and ordered summary judgment in its favor.

Appellate Division’s Decision in Elmer Branch v. Cream-o-Land Dairy

The Appellate Division reversed. “[W]e hold that such discrete determinations by DOL officials, which are subject to further administrative appeal, do not constitute an ‘administrative practice or enforcement policy’ and are insufficient to invoke the good-faith defense,” the court wrote.

The court first addressed whether the three initial determinations relied on by COL could serve as a basis for the good-faith defense. It concluded that in terms of the DOL’s enforcement investigations, only either the Commissioner’s final agency decision rendered after an OAL hearing or a Wage Collection Referee’s final decision qualifies as a “written administrative regulation, order, ruling, approval or interpretation by the Commissioner of the [Department of Labor and Workforce Development] or the Director of the Wage and Hour Bureau[.]” As the court explained:

We agree with plaintiff and Attorney General that the three initial determinations do not constitute an “administrative practice or enforcement policy” because they do not carry the imprimatur of the agency head. The three initial determinations addressed discrete complaints by individual employees based on information received from the employer. They were not espousing a general policy that applied broadly to a class of employers. Furthermore, the determinations by lower-level representatives of the DOL were subject to further administrative appeal and thus are not comparable to the final agency decisions that would suffice under the first portion of N.J.S.A. 34:11-56a25.2.

The Appellate Division went on to find that a 2006 opinion letter from the Director of the Division of Wage and Hour Compliance could qualify as an “administrative practice or enforcement policy” sufficient to support a good-faith defense. However, it nonetheless concluded that COL may not avail itself of the good-faith defense based on a 2006 opinion letter.

“[D]efendant presented no evidence in support of its motion for summary judgment that it relied on the 2006 opinion letter in determining the appropriate compensation for its employees,” the court explained. “Because defendant failed to establish such reliance, it may not avail itself of the good-faith defense based on the 2006 opinion letter.”

Issues Before the New Jersey Supreme Court

On December 5, 2019, the New Jersey Supreme Court granted certification. It has agreed to consider the following question: “In this class action alleging a failure to pay overtime wages in violation of the New Jersey Wage and Hour Law, is the good-faith defense, N.J.S.A. 34:11-56a25.2, available to defendant based on determinations made by employees of the New Jersey Department of Labor and Workforce Development?”

Oral arguments have not yet been scheduled.

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