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Dealership Pay Plan Lawsuits and the New Jersey Wage Payment Act


The New Jersey Wage Payment Act was recently amended in August 2019 to provide significant rights to employees to collect wages and provide incentive for competent attorneys to litigate these cases and provide incentives for employers to pay their employees properly and pursuant to written agreements. The Wage Payment Act, prior to August 2019 existed, however it did not provide the payment of attorney's fees or did it provide punitive double damages. The new Wage Payment Act provides for the payment of the wages due to the employees plus double damages for wages improperly withheld. There are some exceptions for mistakes, however generally the statute is very demanding to assure employees are properly paid and correct mistakes quickly. The Wage Payment Act also requires any changes modifications or alterations in the pay, pay plan or wages to be on notice to the employee.

A large part of the law provides for individual liability for owners and management and those responsible for paying the wages. The legislature has determined that a corporate entity, also known as the corporate veil, will not protect owners and management who do not pay their employees. Those owners are liable pay the employees are individually responsible for violations of the Wage Payment Act.
By way of example if there were a large dealership chain who was not paying the wages to their employees the owner of the dealership chain would be individually responsible under the new law for the wages that are due including triple damages attorney’s fees and costs. This is a powerful modification and a change to the Wage Payment Act.
The implications of the Wage Payment Act and class actions is tremendous.

Like consumer class actions now wage class actions are subject to triple damages attorney’s fees and costs not just against the corporate entity but against the individuals and owners. This is a significant change in the law and a very firm statement by the legislature that the owners need to assure their employees are paid no matter what. If the employees are not paid there are serious consequences including double wages, attorney’s fees, and costs.
Let us look at an example in a typical commission class action against a large dealership. If the dealership is packing deals an extra $50-$100 per transaction. The damages would be $10-$25 per vehicle commission rate was 25% per this is typical. With the new law that would be to the damages which should be $30 to $75 per vehicle plus attorney’s fees and costs. Now multiply this by the number of vehicles that a single salesperson might itself over 2 or 3 years, and attorney’s fees and the cost of litigation and the impact is significant. In a class-action hypothetically, if there were 100 employees who sold 5,000 cars, while the dealer was packing these vehicles $500 extra a 25% commission the damages would be enormous. The damage per vehicle is $125 x 5,000 vehicle for the class is $625,000 X 3 for more than $1.8 million dollars for the class plus fees and costs. Dealership wage litigation and dealership class action wages is about determining the amount of the prior, increased cost and the amount of reduced commissions based on. This amount would be tripled under New Jersey law. Attorney’s fees can be added.

Dealer pay plan litigation and the Wage Payment Act has a significant impact on how the dealership runs their pay plans, disclose the pay plans, change the pay plans and implements the pavement. Impact the ownership is quite simple. The owner needs to make sure that the sales staff is paid properly. There are significant consequences in terms of and liability to those owners and managers at these dealerships both large and small. The Wage Payment Act cannot be ignored, the Wage Payment Act must be complied with and dealt with as part of daily dealership operations.

Another interesting issue in the context of dealership litigation and the Wage Payment Act is payment of spiffs from third parties. What extent and who is responsible payment expects. What if management disperses the “commissions” to the sales staff. What if vendor disburses the spiff directly employees? Who is responsible for wages, was responsible for the attorney’s fees, who is responsible for the triple damages and costs against the vendor and/or against the selling dealership?
Civil litigation is not required under the Wage Payment Act. The claimant can take the plaintiff the Division of Labor as the plaintiff knew the division of labor on the road. We commit to the division of labor for an attorney as well. At the conclusion of the matter, an appeal can be made to the Superior Court, in whichever county the file is plaintiff. The Wage Payment Act provides various diverse remedies for employees who have not been paid properly by the employers. New Jersey law provides for remedies to those employers of ownership who do not report the problem.
In addition, other numerous issues in the context of the benefits of pay that the address on the Wage Payment Act. Vacation pays, sick time, paid leave is but some of the issues that need to be potentially litigated under the Wage Payment Act. New Jersey has a strong legacy of protecting consumers and employees from over-wielding and unscrupulous employers and sellers of goods. We have the consumer fraud act and now he had a wage payment act is equal in power and scope of the consumer fraud act. One might refer to it as the employee consumer fraud act. It provides more powerful remedies because there is a Division of Wage and Labor which employees can seek remedies and then appeal it to Superior Court.
Any dealership employee, salesperson or management level personnel can suit their boss, their company and management for wages that  should have been properly paid to the employees.

The attorneys can get paid their fees and the cost of the litigation. If the implementation of the Consumer Fraud Act is any predictor of how the courts will interpret the Wage Payment Act it will go over very well for consumers, employees and will not go over very well for owners, management and corporations that do not pay their employees as agreed upon in writing and change the pay plans without notice, change the pay method without notice.
The interesting issue is going to be the implementation of Arbitration Agreements in the context of complaints that can be filed for the Division of Wage and Labor. Can an arbitration agreement force an employee to avoid filing a complaint with the state as permitted under the statute?

The Wage Payment Act has now been interpreted by the courts  as retroactive 6 years.