The New Jersey Supreme Court has decided to hear a class of truckers’ wage lawsuit that alleges the company they drove for deprived them of overtime wages. The trucking company is invoking the good-faith defense.
On Dec. 5, the New Jersey Supreme Court granted Cream-O-Land Dairy’s appeal to hear its case. In June, the appellate division of the Superior Court of New Jersey struck down a lower court’s ruling that dismissed a case against Cream-O-Land Dairy.
At the center of the case is New Jersey’s good-faith defense wage law, which states:
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 Department of Labor and Industry 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.
In other words, a company is exempt from a wage lawsuit if it can prove it was all a misunderstanding. Cream-O-Land relied on three investigations from the New Jersey Division of Wage and Hour Compliance to support its good-faith defense.
Cream-O-Land’s good-faith defense
In November 2016, truckers for Cream-O-Land Dairy filed a class-action lawsuit alleging that they worked anywhere from 60 to 80 hours per week without being paid 1.5 times their hourly rate for hours worked over 40 hours each week.
One determination was issued by a Department of Labor wage and hour compliance officer in July 2007. The employee who initiated the complaint claimed he was not paid overtime wages. The company was eventually fined $40,000 for failure to pay overtime wages.
After an appeal, the officer overturned the fine. He concluded that Cream-O-Land is considered a trucking industry employer rather than a dairy industry employer. Consequently, the company was only required to pay drivers 1.5 times the state minimum wage for overtime wages. The drivers already were receiving that pay based on their base wages. Cream-O-Land was therefore considered compliant with that requirement.
A similar decision was made in June 2014 in a separate overtime wage complaint by an individual employee. The Department of Labor concluded right away that Cream-O-Land falls under the federal trucking guidelines regarding overtime exemption.
Lastly, the third decision occurred in April 2017 for another overtime complaint. According to court records, a section chief of the Division of Wage and Hour Compliance wrote that “since the complainant consistently made above 1.5 times minimum wage – currently $8.44 – which equals $12.66 – per hour, we did not find the company to be in violation of the law at this time.”
Defending those decisions, the company provided documents showing it has a fleet of more than 200 trucks that deliver a variety of products, not just dairy. Furthermore, the company does not manufacture or produce any products or own any dairy farms. Therefore, Cream-O-Land drivers are exempt from overtime wages.
During court proceedings, the former director of the Division of Wage and Hour Compliance certified that the company has in good faith relied on the results of the three investigations. The trial court reasoned that the three investigations and determinations were enough to establish an enforcement policy with respect to the company’s industry, thereby entitling it to the good-faith defense.
The court also concluded that the class members were entitled to 1.5 times the minimum wage for each hour worked. However, Cream-O-Land met this requirement by compensating drivers with a flat rate of $180 per day.
Appellate court and attorney general deny good-faith defense
According to the appellate decision, since the three decisions were “discrete communications by a subordinate member of the department regarding investigations based on information received from the employer,” they were “clearly not intended to apply uniformly or automatically to a particular industry.”
A 2006 opinion letter by the former director of the Division of Wage and Hour Compliance was obtained by Cream-O-Land regarding acceptable methods of compensation for day rate employees.
The attorney general noted that the letter supports the department’s interpretation a decade ago. However, he refused to take a position on the letter present day. The attorney general also declined to determine whether or not Cream-O-Land can demonstrate it is in compliance.
“Although we are not bound by the attorney general’s interpretation of the (wage and hour law), it is nonetheless entitled to a degree of deference, in recognition of the attorney general’s special role as the sole legal adviser to most agencies of state government, including the DOL,” the court said.
The court also found that case law used to determine the trial court’s decision does not apply to Cream-O-Land’s case.
The appellate panel also agreed that only the commissioner’s final decision can be cited to invoke the good-faith defense.
Regarding the 2006 opinion letter, the court agreed that such a letter could be used to justify good faith. However, Cream-O-Land could not prove that the letter specifically addressed the company and its particular situation.
The state Supreme Court will determine whether or not the appellate court erred in its decision denying Cream-O-Land’s good-faith defense. The appellate court’s reversal effectively allows the drivers to proceed with their lawsuit.