Are New Jersey employers legally required to reimburse employees for work-related expenses? While prior New Jersey federal court decisions have been inconsistent on the matter, a New Jersey state court recently weighed in and its decision does not bode well for New Jersey employers.
On April 5, 2024, the Superior Court of New Jersey, Appellate Division (“Appellate Division”) issued an unpublished opinion indicating that New Jersey employers may be legally obligated to reimburse employees for certain business-related expenses under the New Jersey Wage Payment Law (“WPL”). In Sands v. Board of Review, Department of Labor and Workforce Development, 2024 WL 1477415 (App. Div. April 5, 2024), the Appellate Division considered whether an employer’s failure to reimburse an employee for expenses incurred while using his personal vehicle for work constituted a violation of the WPL. In a matter of first impression by a New Jersey state court, the Appellate Division held that an employee may have a viable WPL claim if the employer required the use of a personal vehicle and failed to reimburse the employee for costs associated with the personal vehicle use.
Background
Petitioner Ronald Sands (“Sands”) was employed by RG Realty Investors, LLC (“RG”) from February 11, 2019 to January 14, 2020 as a maintenance technician at a large residential housing complex managed by RG. Sands’ job duties required him to travel throughout the complex while transporting tools and equipment necessary to perform his tasks. Sands claimed that RG promised to provide him with a golf cart to traverse the complex but never followed through on the promise, thereby “forcing” Sands to use his personal vehicle throughout his employment. As a result, Sands contends that he incurred out-of-pocket costs of $60 per week in gas and vehicle wear-and-tear, including new tires and brakes.
On January 15, 2020, Sands called out sick and never returned to work. Shortly thereafter, Sands applied for unemployment benefits, stating RG’s failure to comply with its promise of providing a golf cart forced him to leave his position due to unsustainable costs associated with his personal vehicle use. After the Division of Unemployment and Disability Insurance found Sands eligible for unemployment benefits, RG appealed the decision. The Appeal Tribunal of the Division (the “Appeal Tribunal”) reversed the initial decision and determined that Sands was disqualified from benefits because he voluntarily left his position without good cause.
Sands continued to appeal the decision until it reached the New Jersey Department of Labor’s Board of Review (the “Board”), which ultimately determined that Sands was disqualified from benefits because he was aware at hire that he would have to use his personal vehicle until RG could provide him with a golf cart, and that RG never provided a specific timeframe by which to provide the golf cart. The Board never addressed Sands’ argument that he was required to use his personal vehicle for work without reimbursement.
Thereafter, Sands appealed the Board’s decision to the Appellate Division, arguing (1) he had good cause to leave because RG violated the WPL by requiring him to use his personal vehicle for work without reimbursement, (2) he had good cause to leave because RG breached its promise to provide him with a golf cart, and (3) the Board’s determination that RG did not make such a commitment was arbitrary, capricious, and unreasonable. In response, the Board argued that (1) Sands left voluntarily without good cause, (2) RG did not violate the WPL because Sands was never required to use his personal vehicle, but rather chose to instead of walking, and (3) Sands was never promised a golf cart within a specific timeframe.
Analysis and Holding
On April 5, 2024, the Appellate Division issued its opinion, finding that the Appeal Tribunal and the Board improperly limited their inquiry to whether Sands was promised a golf cart within a specific timeframe and failed to consider relevant facts or address critical issues regarding Sands’ claim that he had good cause to leave because RG violated the WPL. In its holding, the Appellate Division explained that:
The plain language of the WPL prohibits an employer from diverting any portion of an employee’s wages except in certain situations that do not apply here. In this case, [Sands] set forth a viable claim that RG diverted a portion of his wages in violation of the WPL by requiring he use his personal vehicle and not reimbursing him for costs associated with that use. If [Sands] was, in fact, required to use his personal vehicle without reimbursement, RG effectively transferred its own operating expenses to [Sands] and diverted his wages to pay those costs.
Accordingly, the Appellate Division remanded the matter to the Board to consider the following: (1) whether Sands’ use of his personal vehicle was required or a matter of convenience, (2) if personal vehicle use was required, the amount of out-of-pocket expenses incurred for gas and vehicle wear-and-tear, (3) whether such expenses were sufficient to establish good cause to leave the position, and (4) whether RG violated the WPL and, if so, whether the violation separately established good cause to leave the position.
Takeaways
Although the opinion is unpublished and, therefore, not binding, the court’s decision indicates that the failure to reimburse certain work-related expenses could give rise to a WPL violation. Accordingly, employers should carefully consider the implications of this decision and its potential impact on employee business expense reimbursement policies. Employers should also reconsider asking employees to incur work-related expenses and assess any work-related expenses employees may have already incurred.
Please contact an NFC team member if you have any questions or seek further assistance.
