The Perils of FLSA Misclassification and Limited Role of the Good Faith Defense

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In the absence of clear, direct guidance on whether a certain class of employee falls within an exemption to overtime laws, an employer takes a leap of faith in deciding to forego payment of overtime without seeking written clarification. The New Jersey Appellate Division has rendered an opinion in an area with sparse precedents to guide employers—how to apply the “good faith defense” in the context of an overtime claim by an auto mechanic where the employer’s practices had been reviewed during two separate New Jersey Department of Labor (“DOL”) audits. A failure to pay $9400 in overtime mushroomed to a total liability of $85,733.56 for the employer where the Appellate Division ruled that the employer could not point to the actions or statements of the DOL auditors as a bar to liability under the “good faith defense” set forth in N.J.S.A. § 34:11-56a25.2.

Reprinted with permission, copyrighted NJLJ, 12/17/12

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