Under New Jersey law, “no employer” may be held liable for “failure to pay minimum wages or overtime compensation” if it did so “in good faith in conformity with a “regulation, order, ruling, approval or interpretation by the Commissioner of the Department of Labor [‘DOL’] or the Director of the Wage and Hour Bureau,” or with an “administrative practice or enforcement policy” of that Department.

Although that law has been on the books for decades, almost no cases have interpreted what kinds of communications from the DOL an employer can rely on or what an employer must show to prove it relied “in good faith.”  On September 30, the New Jersey Supreme Court heard oral argument in Branch v. Cream-O-Land Dairy and may provide key guidance on those questions.  NJCJI, joined by the National Federation of Independent Business, submitted a brief and participated in oral argument as friends of the Court.

The defendant, Cream-O-Land, received three separate communications from the DOL over the course of 10 years, each after a field investigation, advising the company that DOL considered it to be a “trucking industry employer” subject to special minimum wage rules, and that the company therefore had paid its employees appropriately.  None of those communications, however, came from the DOL Commissioner or the Director of its Wage and Hour Bureau.  Two questions to be answered in Branch are whether an employer may rely in good faith on communications from subordinate employees and, if so, how formal a communication has to be for reliance.

The New Jersey Attorney General, also participating as a friend of the Court, argued that only a “final agency decision,” formally communicated by the Commissioner, should qualify as an appropriate source for good faith reliance.  The Appellate Division accepted the Attorney General’s argument, but NJCJI argued that this reading of the law is too cramped and does not take account of words like “approval” and “interpretation,” which seem to contemplate communications less formal than a final agency decision.  Plus, the communications Cream-O-Land received from subordinate employees, which talked about how DOL classified companies as “trucking industry employers,” could qualify under the “enforcement policy” prong of the statute.

The Justices posed tough questions to both sides.  The questions recognized that if the Court interprets the statute literally to require communications from the Commissioner or Director, New Jersey employers would have to figure out how to cause those high officials to confirm statements by subordinates that employers were paying employees appropriately.  If the Court instead interprets the statute more practically, to include communications from subordinates communicating on behalf of the Commissioner or Director, the Justices asked how informal a communication could be and yet still provide enough foundation for good faith reliance.

The Court likely will issue its decision within the next few months.

Written by : Jeff Jacobson, Partner Faegre Drinker