Cream-O-Land truckers score victory in New Jersey Supreme Court

New Jersey trucking company Cream-O-Land Dairy must face a class action wage lawsuit after the state Supreme Court ruled that its good faith defense based on lower level Department of Labor employees’ reports is not valid.

On Wednesday, Jan. 13, the New Jersey Supreme Court affirmed an appellate court’s decision to allow truckers for Cream-O-Land to proceed with a wage lawsuit based on overtime pay. The case has been sent back to the trial court where truckers can proceed with their claims.

Cream-O-Land argued that determinations by employees from the N.J. Department of Labor and Workplace Development regarding truckers’ complaints suggest it acted in good faith and was off the hook. However, plaintiffs argued that those reports were conducted by lower-level, unqualified employees and are null and void. This set off a debate about what legislatures intended with the language in the relevant statute.

Department of Labor decisions

The case was initially filed in 2016 when Cream-O-Land truckers allege that they worked anywhere from 60 to 80 hours per week without being paid 1½ times their hourly rate for hours worked over 40 hours each week.

Cream-O-Land moved to have the case dismissed under the grounds it was not held liable under the good-faith defense. The company cited three decisions from 2007 to 2017 by the Department of Labor regarding complaints from three individual employees.

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. Cream-O-Land was awarded summary judgment.

However, the appellate court disagreed. During appellate proceedings, the state 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.

The appellate court ruled that 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.”

Essentially, only the commissioner’s final decision can be cited to invoke a good-faith defense.

Intent of wage and hour good faith defense

Attorneys for Cream-O-Land disagreed with that interpretation. Their argument before the Supreme Court is that in no way did the legislature intend for only the commissioner or director to single-handedly deal with good faith defense claims. It is understood, attorneys argued, that commissioners and directors act through their authorized agents.

Representing the New Jersey Civil Justice Institute and the National Federation of Independent Business, Jeffery Jacobson argued that allowing only the commissioner or director to sign off on good faith defense claims would make it nearly impossible for employers to seek that protection.

“I think we can all agree that the legislature was trying to create a good faith defense,” Jacobson said. “They may not have been making it easy for an employer to rely on the good faith defense but they were not trying to make it impossible. The attorney general’s position here is contrary to the plain text of the law, and it simply can’t be right that an employer needs to wait for final agency decision, because that takes concept of good faith entirely out of the statute.”

On the other hand, Ravi Sattiraju, representing the class of truckers, argued that the high bar is intentional. Sattiraju argued that granting Cream-O-Land summary judgment would discourage workers from seeking action from the Department of Labor.

If a similar decision binds all coworkers to an unfavorable outcome, a potential whistleblower would not want to be the one who caused that to happen.

“This is very dangerous, what the defendants are asking us to do, because oftentimes people who file complaints with the Department of Labor don’t go in with attorneys,” Sattiraju said. “They’re not aware what their statutory rights are. They’re not aware what to pursue in discovery. It’s an unlevel playing field in many ways.”

Deputy Attorney General Caroline Jones argued that the legislature intended to keep the bar high for the good faith defense because of the high collateral consequences.

Ultimately, the state Supreme Court sided with the truckers while at the same time recognizing the merits of Cream-O-Lands arguments:

The court recognizes that the plain language of (the statute) leaves an employer such as defendant in a difficult position. Having prevailed in three disputes that ended at an early stage, defendant had no procedural route to secure a ruling by the Commissioner or Director with respect to those determinations. The court respectfully suggests that the Department (of Labor) develop a procedure whereby an employer can seek an opinion letter or other ruling from the Commissioner or Director regarding a claimed exemption from the (Wage and Hour Law’s) overtime requirements. The court also suggests that the Legislature and the Department determine whether additional statutory and/or regulatory guidance should be provided regarding the good-faith defense in (Wage and Hour Law) proceedings.

Cream-O-Land case forces legislative action

Last April, the state legislature responded directly to this case by amending the statue in question.

Bill A3926 expands the wage and hour good faith defense to state Department of Labor and Workforce Development employee interpretation. Since the bill was signed after the case, it does not apply to Cream-O-Land’s situation. However, it is designed to avoid in future disputes regarding who is qualified to make such determinations.

The updated statute adds “authorized representative” to the list of who can grant a good faith defense. An authorized representative is defined as “an employee of the Department of Labor and Workforce Development or the Division of Wage and Hour Compliance, as appropriate, operating within the scope of his or her normal responsibilities.”

“This bill is in response to the issues raised by Branch v. Cream-O-Land Dairy, concerning a violation of the law that was upheld as a violation because the corrective ruling which the violator sought regarding compliance was made by an employee of the Department of Labor and Workforce Development, and not the commissioner,” a statement in the bill reads. LL

Previous coverage:

• New Jersey Supreme Court hears trucking wage lawsuit case.
  
• New Jersey appeals court lets trucker wage lawsuit proceed.