New Jersey Wage Theft Act Is Not Retroactive: I Am Not Surprised

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Last year, in August, the State of New Jersey enacted the Wage Theft Act (“WTA”) which strengthened the wage hour protections for employees across the State, including expanding the statute of limitations from two years to six years.  As might be expected, almost immediately, an enterprising plaintiff lawyer sought to amend his lawsuit to extend the statute of limitations to the maximum allowed by the law.  That effort has failed; a decision has issued that emphatically and clearly held that the WTA is not retroactive.  The case is entitled Magee v. Francesca’s Holding Corp., and was filed in federal court in the District of New Jersey.

The Court started with the maxim that New Jersey courts have long followed a general rule of statutory construction that favors a prospective application of statutes.  The Court noted that it should look at and start with the legislative intent and then had to determine whether the retroactive application of the statute would be an unconstitutional interference with vested rights or a manifest injustice.

The Court noted that when the legislature dealt with the issue of whether a statute should apply retroactively, the expression of that intent must be given effect unless a compelling reason existed to not to do so.   The Court found nothing in the statutory language that suggested retroactivity.  The Court noted that the Supreme Court of New Jersey has held the phrase “take effect immediately” implies that the statute should not be given retroactive application.  The Court observed that the Supreme Court of New Jersey held that “had the Legislature intended an earlier date for the law to take effect, that intention could have been made plain in the very section directing when the law would become effective.”

The Court noted that the WTA amendments “shall take effect immediately, except that section 13 shall take effect on the first day of the third month following enactment.”  Thus, given the presumption that statutes are presumed to apply prospectively and the interpretation by the highest New Jersey court of laws that take effect “immediately,” the legislative intent was that the law was not retroactive.

The Court acknowledged that a law might be retroactive if it was “curative,” meaning that it was designed to “remedy a perceived imperfection in or misapplication of a statute.”  The Court again looked to the guidance from the New Jersey Supreme Court which has stated that an amendment is curative if it does “not alter the act in any substantial way, but merely clarified[s] the legislative intent behind the [previous] act.”  The Court noted that the amendment herein changed the statute of limitations from two years to six years.  The Court agreed with the Defendants who contended that the amendment was not curative given that it is a “300 percent expansion of the limitations period, likely implicating dozens of additional claims and a commensurate 300 percent increase in damages.”  Thus, the Court found the change was not a “curative” amendment as defined by the New Jersey Supreme Court.

The Takeaway

This is an eminently correct and logical decision.  This opinion was very well reasoned and hearkened back continually to pronouncements of the New Jersey Supreme Court as to when, or not, a statute should be given retroactivity.  Ironically, I almost feel sympathy for all the plaintiff lawyers out there who were gleefully looking to take advantage of this change in the law.

Too bad…

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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