July 19, 2013
JUAN RUIZ and LUIS PEREZ, Plaintiffs-Appellants,
SOUTH JERSEY PAINTING CO., INC., BURTON SPITZER and ERIC SPITZER, Defendants-Respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 22, 2013
On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-4456-11.
Alice Davis argued the cause for appellants (Legal Services of New Jersey, attorneys; Ms. Davis, Keith Talbot and Sarah Hymowitz, on the brief).
Respondents have not filed a brief.
Before Judges Graves and Espinosa.
In February 2008, plaintiffs Juan Ruiz and Luis Perez filed claim forms with the Department of Labor (DOL), in which they alleged they had been employed to paint houses and that unpaid wages were due to them. They identified their employer as "Rainer Painting Co. and South Jersey Painting Co., " but also named the "corporate officers/owner(s)" as "Sub-contractor – Ramasan [sic]." The claim forms were accompanied by a letter in which plaintiffs' counsel asked that the case be investigated as a "joint employer" case.
The ensuing investigation revealed that defendant South Jersey Painting Co., Inc. (South Jersey) had subcontracted the work to Ramazan Acikel Painting (Acikel). South Jersey produced records that showed it had paid Acikel for the work performed. In August 2008, DOL entered a final order, determining that Acikel (and Ramazan Acikel, individually) owed wages of $7806.78 to plaintiffs, and assessing an administrative fee and penalty of $3780.68. This order was docketed as a judgment against Acikel in December 2008.
Thereafter, plaintiffs requested a formal wage hearing for the same unpaid wage claim against defendants South Jersey, Burton Spitzer, and Eric Spitzer, the President and Operations Manager of South Jersey, respectively (the SJP defendants). Plaintiffs argued that the SJP defendants should be liable for the unpaid wages as joint employers. The DOL referee dismissed the claims against the SJP defendants.
Plaintiffs appealed this decision to the Superior Court. Following an evidentiary hearing, the Law Division judge found that plaintiffs were employed by and paid by Acikel, who was an independent contractor. The judge further found that the SJP defendants did not supervise or control the work performed on a daily basis. Accordingly, the court affirmed the judgment against Acikel and the dismissal of the claims against the SJP defendants.
Plaintiffs raise the following arguments in this appeal:
THE COURT BELOW USED THE INCORRECT TEST TO DETERMINE THE PLAINTIFFS' EMPLOYMENT STATUS SINCE THERE IS NO DISPUTE THAT THE PLAINTIFFS WERE EMPLOYEES RATHER THAN INDEPENDENT CONTRACTORS.
THE NJDOL AND THE COURT SHOULD HAVE INTERPRETED THE NJWHL UNDER ONE OF TWO TESTS TO FIND THAT THE DEFENDANTS WERE JOINT EMPLOYERS OF PLAINTIFFS, EITHER BECAUSE THE DEFENDANTS "SUFFERED AND PERMITTED" THE PLAINTIFFS TO WORK, OR, IN THE ALTERNATIVE, BECAUSE THE PLAINTIFFS WERE DEPENDENT ON THE DEFENDANTS AS A MATTER OF ECONOMIC REALITY.
A. THE STATUTORY DEFINITIONS UNDER THE NJWHL ARE EXTREMELY BROAD IN SCOPE AND EXTEND LIABILITY TO ANY ENTITY OR ENTITIES THAT SUFFER AND PERMIT THE EMPLOYEE TO WORK, INCLUDING JOINT EMPLOYERS.
B. THE WIDELY USED ECONOMIC REALITY TEST HOLD[S] ACCOUNTABLE ALL ENTITIES ON WHICH THE UNPAID WORKERS WERE DEPENDENT "AS A MATTER OF ECONOMIC REALITY."
THE NJDOL AND THE COURT SHOULD HAVE RECOGNIZED THE POSSIBILITY OF JOINT EMPLOYER LIABILITY IN THIS CASE, SINCE NEW JERSEY HAS EXTENDED LIABILITY TO ENCOMPASS MULTIPLE EMPLOYERS IN A WIDE RANGE OF CIRCUMSTANCES.
A. THE PRECEDENT OF SERRAINO v. MAR-D SUPPORTS THE FINDING OF JOINT EMPLOYER LIABILITY IN THIS CASE AND THE USE OF THE "SUFFER AND PERMIT" TEST TO HOLD THE DEFENDANTS LIABLE FOR THE PLAINTIFFS' UNPAID WAGES.
1. LIKE THE NEW JERSEY PREVAILING WAGE ACT, THE NEW JERSEY WAGE AND HOUR LAW SUPPORTS THE NOTION THAT A GENERAL CONTRACTOR MAY BE JOINTLY LIABLE FOR ITS SUBCONTRACTOR'S FAILURE TO PAY THE MINIMUM WAGE TO WORKERS.
2. THE PWA AND NJWHL'S MINIMUM WAGE PROVISIONS ARE SUBSTANTIALLY SIMILAR SINCE THE NJWHL CREATES A CONSTRUCTIVE CONTRACT BETWEEN THE GENERAL CONTRACTOR AND THE SUBCONTRACTOR THAT ALL WORKERS EMPLOYED TO PERFORM THE CONTRACT WILL BE PAID AT LEAST THE MINIMUM WAGE.
3. THE NJWHL'S ABSENCE OF THE TERMS CONTRACTORS AND SUBCONTRACTORS DOES NOT CHANGE THE LEGISLATIVE INTENT THAT ALL WORKERS BE PAID AT LEAST THE MINIMUM WAGE.
B. JOINT EMPLOYER LIABILITY SHOULD BE FOUND IN THIS CASE SINCE THE SUBCONTRACTOR FAILED TO PROPERLY CLASSIFY PLAINTIFFS AS EMPLOYEES, AND THE CONSTRUCTION INDUSTRY STATUTORY PROTECTIONS MANDATE A FINDING OF JOINT EMPLOYER LIABILITY IN THIS CIRCUMSTANCE.
C. THE STATUTORY LANGUAGE OF THE NEW JERSEY WAGE PAYMENT ACT SUPPORTS A FINDING OF JOINT EMPLOYERS.
THE COURT MUST INDICATE THE APPROPRIATE TEST FOR JOINT EMPLOYMENT LIABILITY SO THAT THE NJDOL CAN HOLD DEFENDANTS LIABLE FOR THE PLAINTIFFS' UNPAID WAGES AND PREVENT FUTURE WAGE THEFT.
PROCEDURAL DEFICIENCIES IN THIS MATTER REQUIRE REVERSAL AND REMAND.
A. THE NJDOL FAILED TO PROVIDE FACTUAL OR LEGAL SUPPORT FOR ITS REASONING, WHICH PREVENTED THE COURT FROM EVALUATING THE APPROPRIATE DEFERENCE TO BE GIVEN TO THE AGENCY DECISION.
B. THE NJDOL FAILED TO PROVIDE A STATUTORILY MANDATED TRANSCRIPT TO THE COURT TO EVALUATE THE RECORD AND THE COURT FAILED TO REQUIRE THE TRANSCRIPT FOR PURPOSES OF DEFERENCE.
Plaintiffs contend they were employed by both Acikel and the SJP defendants and that the SJP defendants should be held responsible for their unpaid wages pursuant to joint employer liability. We disagree.
It is undisputed that plaintiffs were employees entitled to the protection of the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a1 to -56a30. N.J.S.A. 34:11-4.1(a) defines "employer" as follows:
any individual, partnership, association, joint stock company, trust, corporation, the administrator or executor of the estate of a deceased individual, or the receiver, trustee, or successor of any of the same, employing any person in this State.
For the purposes of this act the officers of a corporation and any agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation.
N.J.S.A. 34:11-4.1(b) defines "employee" as:
any person suffered or permitted to work by an employer, except that independent contractors and subcontractors shall not be considered employees.
Plaintiffs state that the DOL does not recognize "multiple employer liability for unpaid wages, aside from cases involving the prevailing wage." They urge the adoption of a standard they claim is applied to the definition of "employer" in the Fair Labor Standards Act (FLSA), 29 U.S.C.A. § 201 to -219, to characterize the SJP defendants as their employer and hold them liable for their unpaid wages.
Plaintiffs cite Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947), to support their argument that the definition of "employer" should apply to the SJP defendants here. However, the issue in Rutherford concerned whether the workers in question were entitled to the protections of the FLSA as "employees" of Rutherford Food or not entitled to such protection because they were "independent contractors." The Supreme Court acknowledged, "There may be independent contractors who take part in production or distribution who would alone be responsible for the wages and hours of their own employees." Id. at 729, 67 S.Ct. at 1476, 91 L.Ed. at 1778. The Court concluded that, because the workers performed their task as "a part of the integrated unit of production" alongside employees of the establishment performing the same task, they were not independent contractors. Ibid. "Where the work done, in its essence, follows the usual path of an employee, putting on an 'independent contractor' label does not take the worker from the protection of the Act." Ibid.
Rutherford is therefore inapposite. Moreover, in Rutherford, unlike the case here, there was no separate employer who was liable to afford the workers the protections due them under the law.
It is also argued that liability should be imposed upon the SJP defendants because they knew that work was being paid for on their behalf and they had the ability to ensure that no violations of the applicable labor statutes occurred. Plaintiffs cite Serraino, supra, as support for this proposition. Their reliance is misplaced. In Serraino, the trial court ruled that a general contractor that enters into a contract with a public body is liable for the payment of prevailing wages to the employees of subcontractors. The general contractor's liability in Serraino was dictated by N.J.S.A. 34:11-56.25, which expresses a public policy regarding a prevailing wage level for "workmen engaged in public works[.]" That legislative directive and public policy is not applicable here.
We conclude that the Law Division and DOL did not err in their determination that the SJP defendants were not liable for the payment of the wages claimed by plaintiffs. We are further satisfied that plaintiffs' remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).