NJ Appellate Division Highlights Employer Risks for Unreimbursed Business Expenses
Oct 30, 2024 | Written by: | Share
In a recent decision, the New Jersey Appellate Division ruled that an employer may have violated the New Jersey Wage Payment Law (NJWPL) by requiring an employee to use his personal vehicle for work-related tasks without providing reimbursement. The case, Sands v. Board of Review, Department of Labor and Workforce Development, involved a worker whose job involved maintaining a large residential complex.
The plaintiff contended that, during the hiring process, the employer had promised to provide him with a golf cart to navigate the expansive property. However, instead of receiving the golf cart, he ended up utilizing his personal vehicle for work-related tasks without reimbursement, leading to out-of-pocket costs for gas and natural wear and tear on his vehicle.
Following a sick leave, the plaintiff did not return to his job and subsequently applied for unemployment benefits, citing the financial burden of using his personal vehicle as a primary reason for his resignation. Initially, the New Jersey Department of Labor approved the plaintiff’s claim for unemployment benefits, but his employer appealed, which lead to the disqualification of his benefits. The plaintiff thereafter appealed to the Appellate Division, arguing that the lack of reimbursement constituted good cause for his resignation and violated the NJWPL, which prohibits withholding wages without legal authorization.
The Appellate court found that if the plaintiff was, in fact, required to use his personal vehicle without reimbursement, it represented a diversion of his wages to cover the employer’s operational costs. The court remanded the case to the Board of Review for further investigation into several factors, including 1) whether the plaintiff had been required to use his personal vehicle or if it was merely a convenience; 2) the specific expenses incurred by the plaintiff; 3) whether these expenses justified his resignation; and 4) whether his employer’s actions constituted a violation of the NJWPL.
Although the Sands decision is unpublished and not legally binding, it serves as a cautionary reminder that even seemingly small business expenses, when transferred to employees, can carry significant legal risks for employers. It also underscores the need for New Jersey employers to carefully review their reimbursement policies for employee expenses. Consulting legal counsel may be necessary to ensure compliance with the NJWPL and to evaluate the risks associated with unreimbursed business costs. Employers who fail to reimburse such expenses could face serious consequences, including personal liability, liquidated damages, attorney fees, civil penalties, and even criminal charges.
If you have any questions or would like to ensure your reimbursement policies comply with the NJWPL, please don't hesitate to contact one of our firm’s employment lawyers.
Sharon M. Flynn, Esq., is a partner with Gebhardt & Kiefer, P.C., and practices primarily in the areas of general litigation, employment law, and insurance defense.
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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.