New Jersey appeals court lets Cream-O-Land Dairy trucker wage lawsuit proceed
June 21, 2019
A New Jersey appeals court recently decided in favor of truckers for Florence, N.J.-based Cream-O-Land Dairy in a wage lawsuit, stating the company’s wage and hour law good-faith defense does not hold up.
On Wednesday, June 19, 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. A class of truckers for the company claim it failed to pay overtime wages based on the New Jersey wage and hour law.
A trial court found that based on three determinations from the N.J. Department of Labor and Workplace Development regarding complaints filed by individual employees, the company was entitled to the wage law’s good-faith defense.
Now that the appellate court has reversed that decision, truckers will get their day in court as the case has been sent back to the trial court for further proceedings.
Drivers v. Cream-O-Land
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 1½ times their hourly rate for hours worked over 40 hours each week.
Denying the allegations, Cream-O-Land moved to have the case dismissed under the grounds it was not held liable under the good-faith defense. Supporting that argument, the company cited three decisions by the Department of Labor regarding complaints from three individual employees.
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, concluding 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 1½ times the state minimum wage for overtime wages, which they already were 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 1½ 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 1½ times the minimum wage for each hour worked and that Cream-O-Land met this requirement by compensating drivers with a flat rate of $180 per day.
Attorney general weighs in
Invited to participate in the appeals case, the state attorney general submitted information as an impartial adviser to the court. The attorney general argued that the three DOL determinations that Cream-O-Land rely on do not meet the requirements for establishing the good-faith defense.
The attorney general noted that those determinations “are not high-level final determinations that carry the (guarantee) of the agency head, as is required to establish the good-faith defense,” court documents show. Only the commissioner’s final decisions, not an officer’s conclusions, are sufficient to invoke the good-faith defense.
According to the appellate decision, since the three decisions were “discrete communications by 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. During appellate court proceedings, the attorney general noted that although that letter supports the department’s interpretation a decade ago, 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, not that of an officer, 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 case has been sent back to the trial court for further discovery on whether Cream-O-Land meets the definition of a trucking industry employer and the actual hourly compensation received. After determining whether the company is a trucking industry employer, the trial court may determine whether the drivers’ actual compensation was sufficient to meet the regular overtime or trucking industry overtime requirements.