Labor Laws! – transcript – Jennifer Meyer with Kurt Baker
Written by Kurtis Baker on July 8, 2018
Our host, Kurtis Baker, is joined by Labor and Employment Attorney Jennifer Meyer-Mahoney. Find out how to navigate through difficult situations businesses may find themselves in!
00:43 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a Certified Financial Planner Professional. Sunday mornings at 9:00 AM on 1077thebronc.com.
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01:08 Announcer: Planning your financial future does not have to be overwhelming. 107.7 The Bronc presents Master Your Finances with Kurt Baker, a Certified Financial Planner Professional with Certified Wealth Management and Investment. For the next 60 minutes Kurt and his expert team of financial guests will help to decipher financial terms, navigate market trends, interpret federal and state regulations, and more so you can make smart decisions with your money to increase your personal wealth. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Master Your Finances is underwritten by Certified Wealth Management and Investment, focusing on personal, financial and small business planning. For more information about all of Certified Wealth Management and Investment Services Online, it’s cwmi.us. Now here’s Kurt Baker with this week’s edition of Master Your Finances.
02:03 Kurt Baker: Good morning and welcome back to another edition of Master of Your Finances presented by Certified Wealth Management and Investment. I am Kurt Baker, a Certified Financial Planner Professional hosting your show today. Our office is located in Princeton, New Jersey and I can be reached through our website which is www.cwmi.us or you can call me directly at 609-716-4700.
02:28 Kurt Baker: This week we are pleased to have with us Jennifer Meyer-Mahoney, Esquire of the law office of Jennifer Meyer-Mahoney. And she has spent 25 years as a labor and employment attorney in New Jersey. She started her career as Deputy Attorney General with the New Jersey Office of the Attorney General and then went in-house with the New Jersey Department of Corrections as labor counsel then transferred to the State Parole Board as labor and employment counsel before starting her firm in 2011. She primarily represents small businesses, helping them to prevent or solve problems with their employees and representing them in state and federal court, and for all the various agencies that deal with labor and employment issues. So there’s a little bit been going on lately. We have some federal stuff going on as well as some state stuff going on. So I’m not sure where you wanna start, but I know we have some things happening here locally in New Jersey. Maybe we’ll start with kind of the local stuff that’s going on in New Jersey. So what kind of changes have kind of been happening in that area? I know it’s a little bit of a fluid area, so what do you think?
03:29 Jennifer Meyer Mahoney: Well, labor and employment law in New Jersey, the only thing constant about it is that it changes continually. This administration has passed two new laws this spring. One is the Diane Allen Equal Pay Act, the other is the Paid Sick Leave Act. And then they’ve started a task force within the Department of Labor looking for misclassified independent contractors and people who are classified as exempt who should not be. So, people who you’re paying on salary who should actually get minimum wage and overtime.
04:11 Kurt Baker: Oh, so that has to do with exempt employees who… Not the 1099 thing. I know that happened years ago, is that involved in that or is it…
04:17 Jennifer Meyer Mahoney: Well the 1099 is, whether it’s an independent contractor or an employee, that’s your 1099 versus W2 distinction.
04:27 Kurt Baker: Right.
04:27 Jennifer Meyer Mahoney: They’re looking for those.
04:29 Kurt Baker: I know that came up year… When I first moved to New Jersey that was something that came up with the industry I was in at the time and you almost immediately said, well based on their definition, just make everybody W2. Just keep your life simple.
04:42 Jennifer Meyer Mahoney: Well, and that’s really what you should be doing. But as, what they call the “gig economy” has grown, so everybody who is trying to be their own business or trying to do their own thing, whether it’s people who are working through TaskRabbit or folks who are driving for Uber or any of this they call “the gig economy”. All the independent contractors who do all of the…
05:16 Kurt Baker: ‘Cause the employers are constantly trying to push this off as you’re independent and the government agents are kind of pushing it back to say, “Hey, no, no, no.” Right. If you control what they say… You can tell the definition, right?
05:25 Jennifer Meyer Mahoney: Yeah. Well…
05:26 Kurt Baker: This kind of definition right?…
05:27 Jennifer Meyer Mahoney: New Jersey, it’s…
05:27 Kurt Baker: Yeah, yeah.
05:30 Jennifer Meyer Mahoney: If somebody does what is the core of your business.
05:35 Kurt Baker: Mm-hmm.
05:35 Jennifer Meyer Mahoney: So if you sell widgets, if they make widgets, sell widgets, buy the parts to produce widgets, that’s the core of your business. Your accountant, your bookkeeper, things like that are not the core of your business. So, if they work within the core of your business, you control what time they work, where they work, you provide the equipment, you provide direction as to how to get things done then they are an employee, no ifs, ands or buts. And there are certain industries where by statute you are not an employee. So all real estate agents are independent contractors, by statute.
06:27 Kurt Baker: Right.
06:28 Jennifer Meyer Mahoney: By definition, they would not fit the definition of independent contractor, but they have…
06:31 Kurt Baker: They have some political clout, I think. [chuckle]
06:33 Jennifer Meyer Mahoney: Yeah, they had some political clout and they got themselves a statutory exemption. Where it gets hazier is people like bookkeepers, accountants, HR professionals, marketing, website, advertising because that’s not the core of your business. Then they start looking at whether this person is in fact your employee. Do they have an LLC or a company that they work through? Do they have a website? Do they have business cards? Do they have other clients or are you paying all of the money they’re getting? So if you’re really the person’s only source of income and they’re working for you full-time, and whether they’re within the core of your business or not, the state is gonna tell you that they’re an employee not an independent contractor.
07:35 Kurt Baker: Yeah, that’s interesting, ’cause I remember years ago, and I don’t know if they still do this, but one of the major financial services companies around here used to take on employees, they would call them contract employees. They’d say, “Well, you’re only working for us for the next 90 days or 120 days.” And then they would decide whether or not to renew you. So they would say, “You’re contract,” but literally they were coming into the exact same office as the W2 employees and I believe they lost something, a case on that. Because they said exactly what you said, is that they, “Hey, you’re actually controlling everything that they do.” And I believe since then they’ve actually changed that because they thought, “Well, because you have a determined contract period then you’re not really our employee.”
08:11 Jennifer Meyer Mahoney: Yeah, that doesn’t work.
08:12 Kurt Baker: Right, and I think that didn’t work for them.
08:13 Jennifer Meyer Mahoney: It works for certain consultants.
08:15 Kurt Baker: Right.
08:17 Jennifer Meyer Mahoney: If you’re somebody who does project work you may only be working for this employer for 90 days, but you have your own website, you have your own LLC, on the 91st day you’re either gonna be out of work or looking for another contract with another employer. Those folks are a place where people fight about it.
08:43 Kurt Baker: Right.
08:45 Jennifer Meyer Mahoney: Because where’s the line? If they’re only working for you for 30 days, it’s very clear that they’re an independent contractor. Ninety days, and you’re still pretty clear they’re an independent contractor. You get to 180 or a year and the state’s really not believing that any more. [chuckle]
09:06 Kurt Baker: And it kinda makes sense, frankly. So I think that they kinda defined that a little closer.
09:11 Jennifer Meyer Mahoney: Yeah. So they have a task force that’s looking into finding people who are misclassifying people who are truly employees as independent contractors. They’re also looking at folks who are trying to pay people who really should be paid hourly with overtime as salaried employees.
09:38 Kurt Baker: And there’s a small incentive for that too, because salaried people tend to work extra hours, to get their job done in some cases?
09:43 Jennifer Meyer Mahoney: Well, salaried people you… If they are truly exempt employees, work as many hours as it takes to get the job done for a set salary. However an hourly employee has to be paid per hour, and then for every hour over 40 in the week you have to pay them time and a half. So this makes it interesting because the state’s looking at it as, “If these people are truly hourly and suppose they’re working an extra 10 hours every week, which is not all that unusual for somebody to have a 50-hour work week, not a 40. Well, then these people are losing out on basically 15 hours worth of straight pay and the state is losing out on the taxes on all of that.”
10:45 Kurt Baker: So the state does have an incentive?
10:47 Jennifer Meyer Mahoney: Yes.
10:47 Kurt Baker: They like it when you make more money ’cause they get more revenue too.
10:50 Jennifer Meyer Mahoney: That’s right.
10:53 Kurt Baker: How do they… ‘Cause I know there’s… I remember in the past it was kind of like income ranges and things. How do they define? Can you tell us a little about how they define that now or what are they looking at? Whether I’m hourly, whether I’m salaried? What… Is it the job classification? How do they determine what kind of…
11:08 Jennifer Meyer Mahoney: It’s what you do.
11:09 Kurt Baker: What you do. Okay.
11:12 Jennifer Meyer Mahoney: Title doesn’t matter so much. They’re really looking at, “What is it that you do?” The default is that everybody is hourly and entitled to overtime unless they fall within an exception. So obviously, managers fall within an exception. Educated professionals fall within an exception. Clerical and administrative don’t… Well, clerical do not fall within an exception, administrative do. And this is one of the areas where it’s really fuzzy and where businesses get caught, because they come up with the idea that if you work at a desk and you’re doing any kind of clerical or administrative work, you’re thus exempt. But that’s not true. In order to be an exempt administrative person you have to be able to make decisions, set policy, bind the employer through contract. It’s… The receptionist for the HR Department is not exempt, the manager or the director of Human Resources is.
12:34 Kurt Baker: Wow.
12:35 Jennifer Meyer Mahoney: And somewhere in the middle there are some really fuzzy titles.
12:38 Kurt Baker: It’s all about the middle, right? What kind of a flow there.
12:40 Jennifer Meyer Mahoney: Yeah.
12:41 Kurt Baker: Well, wow Jennifer, that’s a lot… That’s a lot going on as we said. So we got a little bit off, but it’s actually really important to understand the difference between salaried and hourly employees and how you define those. And then the 1099 as well, it’s whether you control them or not. We’ll come back. We have a lot to talk about. Be back in just a few minutes.
12:58 Announcer: We are talking finances so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up Master Your Finances.
13:12 Announcer: Now, back to Master Your Finances with Kurt Baker, a Certified Financial Planner Professional, with Certified Wealth Management and Investment, exclusively on 107.7 The Bronc and 1077thebronc.com.
13:24 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I am Kurt Baker, here with Jennifer Meyer-Mahoney of the law office of Jennifer Meyer-Mahoney. And we’ve been talking labor and employment law. And we’re gonna go over, I guess, some things that are changing here in New Jersey. We talked a little bit in the first segment about making sure you understand whether or not you actually have a W2 or a 1099 employee, whether you control what they do or whether they have control over it and how they’re set up, whether they have an LLC or you’re paying them directly. So there’s important factors as an employer or/and as an employee to understand what those rules are and how you should be getting compensated ’cause that could come back and bite you at some point in time when the IRS comes in or the state comes in and starts to analyze this thing just to make sure you’re doing it right from the beginning and really don’t play games. It’s just not worth it for that couple of percentage points, one way or the other. You can get… I don’t know. I just think it’s silly when people really start playing with this stuff. Just do it the right way and then you won’t have any problems, right? [chuckle]
14:17 Jennifer Meyer Mahoney: Yeah. Well, the fines and the penalties and the interest and the attorney’s fees to get you out of all of it. What they’re doing more of to catch this is actually unemployment insurance audits because they wanna make sure that the unemployment fund is getting all the money it should get. And it’s unemployment audits that catch a lot of folks. And I would not be surprised to see this new task force continue to do things that way.
14:54 Kurt Baker: Oh interesting. So do you know how they… What they look for and just like who’s being paid and how they’re being paid? ‘Cause I guess that’s where an independent contract… “Yeah, yeah yeah. Pay me… ” I mean hear this “No, pay me 1099, that way I get a bigger check.” But they don’t realize that they have to pay both halves of the taxes. There are some benefits you can take write offs and things like that, but you don’t get employee… You’re not gonna get unemployment benefits unless you purchase it.
15:16 Jennifer Meyer Mahoney: You don’t get unemployment benefits.
15:17 Kurt Baker: Insurance. [chuckle]
15:19 Jennifer Meyer Mahoney: You don’t get temporary disability through the state, you don’t get family leave insurance through the state, which are just very small deductions out of your paycheck. I don’t think any of them exceeds more than $150 a year. Yeah, so between the three programs they might… They’re pulling less than $500 a year out of your check.
15:43 Kurt Baker: And if you do need one of those benefits… They’re really important for most people.
15:47 Jennifer Meyer Mahoney: Yeah.
15:48 Kurt Baker: They really do help. It kinda bridges that gap if you are disabled for a period of time, or if you do have to go on family leave and things like that.
15:54 Jennifer Meyer Mahoney: Yeah.
15:55 Kurt Baker: Yeah. So people sometimes are very short-sighted. They don’t understand what all that is actually taking care of. So again, play by the rules. It actually works out better for everybody in the long run.
16:05 Jennifer Meyer Mahoney: Yep, and it’s much easier. Now, the one new piece that is gonna give people fits is this Diane Allen Equal Pay Act.
16:15 Kurt Baker: Diane Allen. So obviously that’s a person, I’m assuming. [chuckle]
16:18 Jennifer Meyer Mahoney: Yes. If you were from South Jersey, you would remember that Diane Allen had been a newscaster on Channel 10 News forever and then she left that to go into politics and became a state senator from Burlington County. And she just recently retired. And this was one of her pet projects and it was named after her because it took effect right after she retired.
16:48 Kurt Baker: Oh okay. So, it’s honoring her, so to speak.
16:50 Jennifer Meyer Mahoney: Yes.
16:50 Kurt Baker: And her advocacy for this area.
16:52 Jennifer Meyer Mahoney: Yep.
16:52 Kurt Baker: What is the Diane Allen… What does this law do?
16:55 Jennifer Meyer Mahoney: What this law does is that it says that it is now an unlawful employment practice to pay an employee who is a member of any protected class under the New Jersey Law Against Discrimination less compensation or benefits than employees outside the protected class for substantially similar work unless the employer can demonstrate a recognized justification. So now, to translate that into English.
17:25 Kurt Baker: Can we do that in English now? [chuckle] Thank you.
17:30 Jennifer Meyer Mahoney: The New Jersey Law Against Discrimination, the NJLAD, is New Jersey’s equivalent of the Title Seven. It protects a lot more classifications than Title Seven does. Title Seven, you’ve got age, handicap, gender, race and religion. There are 19 more. Yeah, there are a full 24 separate category protected classifications in New Jersey. So, what it boils down to is that we are all a minority of one. Because absolutely everybody fits into one of these from age and it’s any age, so it’s not…
18:17 Kurt Baker: Any age? That pretty much covers everybody then.
18:19 Jennifer Meyer Mahoney: Yeah, right. It’s familial status. So you prefer to hire people who don’t have kids because they can travel, or you prefer to hire people who do have kids, because they need the job more. It’s marital status, if you think that married people are more stable and make better employees or single people are more willing to work all the hours you want. So it’s a huge range of things. So, what it boils down to is that you need to take a look at what you’re paying people and unless you have good reason for paying them dramatically different amounts, you might need to fix it. And there are, there’s a whole group of recognized justifications in the law. So if you have a seniority system like a union, you come in at step one, and you step up through and you get your increment on your anniversary date every year, the civil service system does the same thing. So if you’re in a big company and you have something like that going on or if you’re a small contractor but you hire union help through the Union Hall then that takes care of that. A merit system. Again, this has to be a formal merit system, it’s got to be spelled out in the compensation plan, it has to apply to all the employees within a similar job classification, and it has to be objective standards. Not.
20:10 Jennifer Meyer Mahoney: Not, “Oh, I think you’ve been trying harder than him.” No, that doesn’t work. So I have one client who has a fantastic system that is absolutely… Anybody challenges him, and they’re gonna get laughed out of court because he hires everybody in at a set rate per hour. And then each week, each pay period rather, at the end of the pay period, they look at your sales numbers, and if you sold X then you get an additional 10 cents per hour, and if you sold Y then you get an additional 25 cents an hour, and if you sold… And as it goes up with the higher sales numbers, you get an additional bonus per hour, the following pay period. And it’s dependent on your sales numbers each pay period. And then at the end of the year, January 1, he sets a new rate for everybody, and that’s based on their sales figures throughout the entire prior year. So that’s a system that will stand up to anything because it’s absolutely objective black-and-white, and based on something that makes sense.
21:34 Kurt Baker: And I think employees like knowing what they’re being asked to do, right?
21:39 Jennifer Meyer Mahoney: Yes.
21:40 Kurt Baker: That’s one of the downsides to subjective things, and they talk about it just from a good employer standpoint, is if you define your goals and define exactly what you want your employees to do and how they’re gonna be compensated for their activities, then you’re gonna actually get them to do the actions that you really want them to do. So sales, if you wanted them to sell, you can pay them a little more for sales, great. ‘Cause I’ve seen things where people… They monitor like, I don’t know, surveys feedback. So, depending on how that feedback is, it’s like a constant feedback where they have almost like a score card system where they say, “Here’s the things we want you to do,” and then you get rated on each item, and then they constantly review this throughout the year, exactly based on all these metrics.
22:23 Jennifer Meyer Mahoney: You can pay somebody differently based on education, training, experience, the quantity of work they do or the quality of work that they do, but you have to apply each of these factors reasonably and when you look at all those factors put together, they have to account for the whole difference between how people are paid, and the factors have to be job-related. So, you can’t evaluate a warehouse guy on customer service because he never sees a customer.
23:07 Kurt Baker: Yeah, that would be a little unfair…
23:10 Jennifer Meyer Mahoney: Yeah.
23:10 Kurt Baker: Assuming they never see a customer which very few do, I’m sure.
23:13 Jennifer Meyer Mahoney: It’s similarly, you couldn’t set a clerical person’s wage lower because the clerical person couldn’t lift the 50 pounds required to get the higher level in the warehouse. The factors have to be based on what the person actually does.
23:32 Kurt Baker: So this makes job descriptions even more important nowadays, you have to be really, really, really careful. Can we get back that employee handbook? A lot of this could go back to the basics of the employee employed, define, define, define, it’s what everybody would be doing, right?
23:45 Jennifer Meyer Mahoney: Yes. Absolutely.
23:46 Kurt Baker: Wow.
23:48 Jennifer Meyer Mahoney: And then, none of the factors can perpetuate a difference based on a protected characteristic. Now where this is gonna get people in trouble, as you know every time you fill out a job application and they wanna know what your salary was at your last job. Well, now, there are all kinds of studies that SHRM has done that show that women and people of color are offered less, paid less than white men. So if you’re hiring somebody in with 10 years of experience and their prior salary is the result of this sort of unconscious bias, or for that matter, some of it’s conscious bias from the prior employer, then you are perpetuating a discriminatory basis. So you need to… I keep telling my clients, “Don’t ask people what their prior salary was. Tell them what the job is worth to you.”
25:12 Kurt Baker: That makes a lot of sense.
25:13 Jennifer Meyer Mahoney: So, if you’re hiring a receptionist and you’re willing to pay between $13 and $15 an hour for a receptionist, then when the person fills out the application and comes in for the interview, you say, “This job pays between $13 and $15 an hour. Are you still interested?” Rather then looking at what they made before and saying, “Well, this person was making $17 an hour and we only pay up to $15 so I’m not even gonna interview them.” A, you don’t know whether their life situation has changed and they would take the job at $15 an hour. Or if they’re only making $10, the job is not suddenly now only worth $10.50 an hour because you think you can get this cheap.
26:02 Kurt Baker: Right. Right, right.
26:03 Jennifer Meyer Mahoney: Because that’s where you’re perpetuating perhaps discriminatory behavior on the part of the prior employer.
26:10 Kurt Baker: Which is goal of the law, of course, right? [laughter] So that’s why it works.
26:11 Jennifer Meyer Mahoney: Right. [laughter] The goal of the law is to get everybody paid the same for doing the same work.
26:20 Kurt Baker: Which makes a lot of sense, that you say, there are a lot of unconscious things that go on when we hire people and when you have people in the workforce. So hopefully, this helps to alter that. We have a lot more to talk about then we’ll be back in just a few minutes.
26:29 Announcer: We are talking finances so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now back to Master Your Finances with Kurt Baker, a Certified Financial Planner Professional with Certified Wealth Management and Investments. Exclusively on 107.7 The Bronc and 1077thebronc.com.
26:53 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m Kurt Baker, Certified Financial Planner Professional, here with Jennifer Meyer-Mahoney, Esquire of the law office of Jennifer Meyer-Mahoney. And we’ve been talking about labor and employment, which I don’t know why, but I find this fascinating and interesting because I’ve dealt with people in different aspects of employer and I think they’ve spent too much time trying to offload this stuff. If they just focus on defining all these jobs I think, I think that the company is more productive as well. Because you’re incentivizing people based on what you really want them to do and it’s gonna take a lot of work up front, I think, but I think once you do it, I actually believe this is gonna be more productive, frankly, is what I believe. And the one thing that came to my mind when you were describing all these different ways you can’t discriminate against, in our industry I hear about things, well, I want to hire away this salesperson from this company. And so, they always ask you, anybody in our profession at least, if they’re hiring somebody away they wanna know, what’d you make? What’d you produce? What’d you do? And that’s gonna determine how much I’m gonna pay you. How does that play into all this structure when you get these highly compensated people out there?
28:07 Jennifer Meyer Mahoney: Asking what you produce, what did you bring in for your employer is absolutely legitimate. I mean, asking somebody what their sales numbers were in a similar or identical job? Absolutely, that’s a legitimate question.
28:24 Kurt Baker: That’s still okay?
28:25 Jennifer Meyer Mahoney: But asking them how much they were paid could get you in trouble because then you could be perpetuating a biased pay system that one of your competitors has and then that could turn around and bite you.
28:41 Kurt Baker: ‘Cause that’s an interesting differential, ’cause different companies will pay, especially people that are producing sales ’cause sales is always like that’s what runs the company. At some level, somebody’s got to sell something. Otherwise nothing happens. So, those people tend to be treated a little differently, frankly, because they’re always like, I really wanna get Joe or Susie or whoever over here. Let’s figure out a way we can bring in them. So when they do that process, they gotta be really cautious about what they’re asking Susie and then how they’re compensating. Because their comp plan might be different than the way they were done before. But ultimately, they have to figure out a way to pull them in. [chuckle]
29:17 Jennifer Meyer Mahoney: Well, yeah. If you’re trying to hire somebody away then you have to set up your compensation plan in such a way that it’s fair, but it rewards the people who produce. So a typical sales salary, if you set everybody’s base the same or you make their base dependent on the numbers they produce… Set the base the same for year one and then make their base dependent on what they produced last year going forward and then you have staggered tiers of commission going up. That’s a legitimate non-discriminatory plan.
30:00 Kurt Baker: I guess what I’m thinking out… I guess, you can defend ’cause a lot of this is transition because people… Sales is not like… Some of this has a long lead time like software sales, like the big companies that may take you two, three years to sell like a software structure to a large corporation. So in order for it to sustain that person during the “sales period,” it may take several years before they actually sell something. I guess as long as they’re not… They can add upfront money to them saying, “Hey, look, we believe in you. So we’re gonna give you kind of a sign-on bonus,” That’s what I think, of like some kind of sign-on compensation because nobody else is getting that obviously ’cause they’re already in the system, right?
30:39 Jennifer Meyer Mahoney: Right.
30:39 Kurt Baker: So as long as you somehow match that up with what they’re doing, that’s what you have to try to do, right?
30:44 Jennifer Meyer Mahoney: Yeah, you need to make sure that what you’re doing is based on something logical and reasonable and job specific. Sales people tend to be easy because you can measure exactly how much they’ve produced. Hiring an engineer, hiring a customer service person, that’s where things get fuzzier and that’s where companies are more likely to get in trouble is the fuzzy stuff and managers because…
31:26 Kurt Baker: Yeah, I get it. I’m thinking out loud. So I’m thinking engineering for a minute. An engineer is like, “Well, that person is a great engineer.” Well, now you have to define what is a great engineer, right?
31:33 Jennifer Meyer Mahoney: Right.
31:34 Kurt Baker: And you have to compensate based on, “I know that that person likes… Whatever.” So now you have to create the metrics in your pay system to say, “Well, I like the way that person, I don’t know, analyzes such and such.” Not just I think they’re a great person. So it’s very interesting ’cause again, you’re getting back to the job description and you’re actually just defining those characteristics of your employees that you really wanna see, and now you’re gonna pay them based on those actual characteristics. It can no longer be like, “Well, I feel good about this person.”
32:02 Jennifer Meyer Mahoney: Yeah, I mean, some of the stuff I have heard over the years, “Well, we’re gonna give him a bigger raise because he’s got a wife and kids at home to support and she’s okay.”
32:17 Kurt Baker: Oh, yeah that doesn’t sound good. [chuckle]
32:19 Jennifer Meyer Mahoney: But we all say, “Oh god, nobody said that. That doesn’t sound good.” But I’ve heard that within the last year.
32:27 Kurt Baker: Oh, wow, that’s a little… Yeah, I don’t like that.
32:28 Jennifer Meyer Mahoney: I mean, forget… So a lot of this stuff that most of us look at each other and say, “Oh, that doesn’t really happen, nobody needs a law about that.” Unfortunately, it does really happen still.
32:41 Kurt Baker: Oh, wow, yeah, that doesn’t sound good. I know we also wanna talk a little bit about, I guess some of the Paid Sick Leave stuff has changed, as well. Do you wanna?
32:48 Jennifer Meyer Mahoney: Yeah, yep.
32:48 Kurt Baker: We’ll talk a little bit about that and how’s that been changed.
32:52 Jennifer Meyer Mahoney: If you were in one of about 13 cities…
32:57 Kurt Baker: Thirteen cities? [chuckle]
32:58 Jennifer Meyer Mahoney: You already had Paid Sick Leave. The city of Trenton has Paid Sick Leave, city of New Brunswick has Paid Sick Leave. But the legislature passed this spring, and the Governor signed into law a Paid Sick Leave Law that will cover all employees in the state of New Jersey. Now this goes into effect on October 29th of this year and it covers all employers in New Jersey and all employees other than a few exceptions, people covered by collective bargaining agreements, public employees who already have sick leave and per diem healthcare employees. The hospitals must have a really good lobby.
33:46 Kurt Baker: Per diem? Okay.
33:48 Jennifer Meyer Mahoney: Yeah. Those are the only three exceptions, public employees who already have sick leave, people who are covered by collective bargaining agreement and thus already have sick leave and per diem healthcare employees. See you know that the hospital lobby had…
34:03 Kurt Baker: Yeah, that’s what that sounds like to me. [chuckle]
34:04 Jennifer Meyer Mahoney: Had their say on this. So people can earn up to 40 hours of Paid Sick Leave in a year. And they earn it at a rate of one hour for every 30 hours worked, as I said up to a maximum of 40. For those who didn’t already have Paid Sick Leave, the accrual starts on October 29th. Now people can’t use more than 40 hours a year, even if they earned more than 40 hours a year. The sick leave has to be paid at their normal rate with the same benefits that they usually get when you get to the… Oh, and you can’t force somebody to take sick leave if they miss a shift for a reason, other than being sick or if there’s a snow day and you’re gonna close the office or close the work site, you can’t make all of them take a sick day.
35:18 Kurt Baker: Yeah, that doesn’t sound very… Now you mentioned all… So if I’m an employer with two employees, still counts.
35:24 Jennifer Meyer Mahoney: That’s right.
35:24 Kurt Baker: Everybody.
35:24 Jennifer Meyer Mahoney: Everybody.
35:26 Kurt Baker: I just wanna confirm because that’s what I heard. I wanna make sure… Sometimes you’re exempt if you’re under certain number of employees. This is everybody.
35:30 Jennifer Meyer Mahoney: Well, many of the cities, you were partially exempt under 10 and fully exempt under five. But the state law, no. All employees.
35:43 Kurt Baker: Everybody now. That’s an important factor. So, wow, so there’s a lot going on. And we’ll talk about it a little bit more on the last segment. I know that there may be some changes on the federal level too, correct? Is that right or no?
35:56 Jennifer Meyer Mahoney: There are some changes happening at the federal level but taking away federal protections doesn’t get rid of the New Jersey laws.
36:10 Kurt Baker: Okay. We’ll talk about that when we come back. How they interact, the federal and the state rules so to speak in laws.
36:15 Announcer: We are talking finances so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up “Master Your Finances.” Now back to “Master Your Finances” with Kurt Baker. A Certified Financial Planner Professional with Certified Wealth Management and Investment. Exclusively on 107.7 The Bronc and 1077thebronc.com.
36:38 Kurt Baker: Welcome back. You’ve been listening to Master Your Finances. I am Kurt Baker, a Certified Financial Planner Professional here with Jennifer Meyer-Mahoney of The Law Office of Jennifer Meyer-Mahoney. We’ve been talking about labor and employment law. We’ve been touching on a lot of the changes happening here recently in New Jersey, The Diane Allen Equal Pay Act, which puts everybody in a protected class. So basically treat all employees fairly and you will probably be okay, right.
37:04 Jennifer Meyer Mahoney: And to fix any existing pay differentials. And you can’t fix them by taking money away from the higher paid employee.
37:12 Kurt Baker: Oh, that’s a good point to make.
37:14 Jennifer Meyer Mahoney: The law actually specifically says that. That you cannot fix unequal pay by taking…
37:20 Kurt Baker: Bring people up not push people down, is that it? Is that the goal?
37:23 Jennifer Meyer Mahoney: That’s right.
37:24 Kurt Baker: That’s interesting. I guess some of these legislators realize how an employer might respond. “Well, then I’ll just cut everybody down.
37:31 Jennifer Meyer Mahoney: Yeah.
37:32 Kurt Baker: So that’s interesting. So then also the Paid Sick Leave Act, which we talked about briefly just a minute ago and that covers like everybody now. Before it was 13 cities now everybody is covered under that, right? So even your smaller employers have to account for this correct? And they have to permit their employees to have Paid Sick Leave and I think you said up to 40 hours I believe, right.
37:52 Jennifer Meyer Mahoney: Up to 40 hours a year.
37:53 Kurt Baker: Alright. So that’s important and again if you haven’t done it already it’s coming up right, in October?
38:00 Jennifer Meyer Mahoney: That’s coming up in October. The Diane Allen Equal Pay Act went into effect Sunday, July 1st, so that’s already in effect. If you don’t have your posters up for any of these things you should be checking the New Jersey Department of Labor’s website. The Diane Allen posters are already out. The Sick Leave posters will be out by October.
38:20 Kurt Baker: So put those where everybody can see them, right. You can’t hide them in the closet.
38:23 Jennifer Meyer Mahoney: Can’t hide them in the closet and at least with the Sick Leave you’re going to have to actually give employees a copy of the Sick Leave poster and have them sign for it because it has to be personally distributed in addition to being posted.
38:44 Kurt Baker: Oh, well that’s actually a good idea. If they actually sign off that they’ve received it then they can’t say that they didn’t know about it. Then they’ll know about the benefits. That’s makes a lot of sense.
38:51 Jennifer Meyer Mahoney: Right.
38:52 Kurt Baker: Then they can take advantage of… If they need it. I think what… What I’ve seen in some cases, maybe I don’t know if this is happening here but you’ll see the federal laws may change and then the states kind of respond. So have we seen any of that going on? Is any of this a result of maybe the Feds doing anything or it’s just New Jersey saying hey, we need to help people out?
39:10 Jennifer Meyer Mahoney: Well, I think a lot of this is more of a reactions of the switch from Chris Christie to Phil Murphy than necessarily what’s happening at the federal level. There has been some stuff that has changed in response to the federal level. For example they dropped the requirement that everybody carry health insurance at the federal level and the State then promptly passed the law that requires everybody to carry at least minimal health insurance. So that does happen. New Jersey has at least with wage an hour gotten better. They have the exceptions or the definitions of exempt employees are now identical to the federal definitions, there in fact it’s just a site to the federal regulations that define it.
40:07 Kurt Baker: That makes it simple?
40:10 Jennifer Meyer Mahoney: So that you don’t have as much of a disconnect so that person is exempt under the federal law and not under the state law. You still have a disconnect when it comes to independent contractors because New Jersey’s rule about who is an independent contractor is more strict than just about anywhere other than California.
40:33 Kurt Baker: So when in doubt, you go with the stricter version I’m assuming. Right?
40:36 Jennifer Meyer Mahoney: Yeah. When in doubt, go with the stricter version, because better to stay out of trouble completely than to only be in trouble with one.
40:44 Kurt Baker: Right. So what are some of the steps you’re taking your clients through to make sure they’re actually being in compliance with some of these things? I know we touched on it, but I wanna kind of go over that again. What steps should they be taking right now?
40:56 Jennifer Meyer Mahoney: Okay. So the first thing that people need to do is sit down and figure out who you have working for you. Exactly what it is they do. And I recommend that my clients who have more than say four or five employees actually go ask the employee what it is they do because you’d be amazed how often people have a title that has nothing to do with what they actually do in the business because they’ve been there forever and what they know how to do or what they’ve been expected to do is changed over time. So you’ve got somebody whose title is office manager, who’s really your controller. Or you have somebody whose title is secretary who’s actually your HR manager.
41:52 Jennifer Meyer Mahoney: So you need to look at how titles have… What people actually do. Put together a job description. Figure out what you’re paying all these people and then look for places where you’ve got people doing the same or similar jobs, who are being paid considerably differently. Now, if there’s a $5,000 pay difference and one of them is making a $110,000 and the other one’s making a $115,000 a year, probably not that big a deal. If one of them’s making $30,000 a year and one of them’s making $35,000 it’s gonna be a big deal because now you’ve got almost a 20% difference in pay between two people who are doing very similar work, and unless there’s a really good reason why this is happening, you could have a plaintiff’s attorney get interested in this.
42:55 Kurt Baker: Yeah, I was gonna ask you, at what point is this a trigger, the differentials? ‘Cause I know everybody doesn’t make exactly the same based on all these factors we’re talking about.
43:05 Jennifer Meyer Mahoney: True but if you’ve got somebody who is… You know, alright I’ll use an extreme case. I got a call from somebody who is paying their only female minority manager, half of what they’re paying all the men.
43:20 Kurt Baker: That sounds like a problem.
43:22 Jennifer Meyer Mahoney: That sounds like a huge problem to me. She’s making $50,000 less a year. Now the damages on this Diane Allen Equal Pay Act, it’s three times the salary differential. It goes back six years or to the date the person was hired. So $50,000 times three is $150,000, times six, that’s $900,000.
43:48 Kurt Baker: That’s worth looking at, I guess, right?
43:51 Jennifer Meyer Mahoney: And now you’ve got attorney’s fees and punitive damages, potentially, on top of that. If you’ve got differentials of more than 10%, that you can’t explain, it might be a good idea to fix them.
44:10 Kurt Baker: And then it’s time to really to get down and to figure out what’s going on, right?
44:12 Jennifer Meyer Mahoney: Because, you know, I know everybody likes to put in their handbook that nobody is allowed to discuss what they’re paid, but that’s a violation of Section Seven of the National Labor Relations Act. So, the federal NLRB could actually come in on an unfair practice charge on that, or an employee can bring that into a lawsuit as well. So you can’t tell people that they cannot compare the terms and conditions of their employment.
44:45 Kurt Baker: It’ll be interesting to see if this leads to more transparency because some employers do expose all the salaries of everybody and they’re like, “Well, you know, we pay people as we feel they’re worth it, and this is what everybody makes.” And we may see more of that, right, because of this?
44:58 Jennifer Meyer Mahoney: I worked for state government for 19 plus years.
45:01 Kurt Baker: Everybody knew what you made.
45:02 Jennifer Meyer Mahoney: My salary was posted on the internet. [laughter]
45:05 Kurt Baker: Right. So we might start seeing more of that is what you’re saying, right?
45:08 Jennifer Meyer Mahoney: Through app.com and before that, it was published in the legislative handbook that was published every year.
45:13 Kurt Baker: Wow.
45:13 Jennifer Meyer Mahoney: People had to go to the state library to find one of those. But my salary, from the day I started in state government in 1991, was available to the public and the world didn’t end.
45:27 Kurt Baker: No, it doesn’t end.
45:28 Jennifer Meyer Mahoney: The world does not end if you let people know what’s going on and if you are a little more transparent.
45:34 Kurt Baker: Right, I agree.
45:34 Jennifer Meyer Mahoney: Unless you’re trying to do something wrong, and then it’s going to be a problem.
45:40 Kurt Baker: Right, which hopefully, you’re not trying to do. Well, thank you Jennifer. We appreciate you coming on again to talk about some of the updates here with the Diane Allen Equal Pay Act, as well as the Paid Sick Leave Act. So bottom line is, I think it’s time for you to really re-look at how you’re compensating people, updating your employee handbooks, and making sure you’re defining how you’re paying people, and making sure you could defend it if somebody comes in and feels they’re not being paid fairly. You’ve been listening to Master Your Finances. You can reach us at www.cwmi.us or call us directly at 609-716-4700. The Facebook page is facebook.com/masteryourfinances and you can subscribe to this, to our podcast at www.masteryourfinances.us. Remember, together we can master your finances so you can enjoy financial piece of mind.
46:32 Announcer: The financial views and information provided by Master Your Finances and its guests, are intended for general informational purposes only. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice. Always consult your financial planner for professional advice.
46:48 Announcer: You’ve been listening to Master Your Finances with Kurt Baker, a Certified Financial Planner Professional with Certified Wealth Management and Investment, exclusively on 107.7, the Bronc and 1077thebronc.com. Tune in every Sunday morning at 9:00 to learn everything you need to know about personal and small business financial planning, including investing, estate planning, insurance, employee benefits, 401k, 403b plans, retirement planning, and more. Missed an episode? Go to 107.7 the Bronc to download and listen to previous shows. Master Your Finances is underwritten by Certified Wealth Management and Investment, focusing on personal, financial and small business planning. For more information about all Certified Wealth Management and Investment Services online, it’s cwmi.us. Be sure to listen every Sunday at 9:00 to Master Your Finances, exclusively on 107.7 The Bronc and at 1077thebronc.com.