New Jersey Employers May Be Legally Required to Reimburse Certain Business Expenses

In a recent unpublished decision, the New Jersey Appellate Division considered whether employers are required to reimburse employees for business related expenses under the New Jersey Wage Payment Law (“NJWPL”) in Sands v. Board of Review, Department of Labor and Workforce Development, 2024 WL 1477415 (App. Div. April 5, 2024). Under the NJWPL, employers are prohibited from withholding or diverting wages unless expressly authorized by statute. Within the opinion, for the first time, the Appellate Division held that an employee may have a viable NJWPL claim if their employer requires use of their personal vehicle, yet does not reimburse the employee for such costs associated with that use.

Background

Ronald Sands (“Sands”) was employed by RG Realty Investors, LLC (“RG”) from February 11, 2019, to January 14, 2020. His role required him to maintain a large residential housing complex managed by RG. Sands claimed that during his hiring, RG promised it would provide him with a golf cart to traverse the expansive property. However, Sands ended up utilizing his personal vehicle for work-related tasks without reimbursement, which led to additional costs for gas and natural wear and tear on his car.

On January 15, 2020, Sands called out sick and never returned to work. Shortly after, he applied for unemployment benefits, arguing that he was forced to leave his job due to RG’s failure to provide the promised golf cart and the financial burden of using his own vehicle.

The New Jersey Department of Labor and Workforce Development (“NJDOL”), Division of Unemployment and Disability Insurance (the “Division”), initially found Sands eligible for unemployment compensation benefits. However, RG appealed this decision, and the Appeal Tribunal of the Division reversed the initial decision and disqualified Sands from benefits. Sands attempted to further appeal the disqualification to the NJDOL’s Board of Review (the “Board”), arguing that he left voluntarily, and each such appeal attempt failed. Importantly, the Board failed to consider Sands’ argument that he had good cause to leave his position based on his employer’s alleged violation of the NJWPL.

Sands then appealed matter to the Appellate Division, arguing that: (1) Sands had good reason to resign from his position because RG violated the NJWPL by requiring him to use his personal vehicle to do his job and failing to reimburse him for associated out-of-pocket expenses and (2) the Board’s determination that RG did not make a promise to provide Sands with a golf cart within a couple months of his start date was arbitrary and capricious.

The Court’s Analysis and Decision

In its April 5, 2024 opinion, the Appellate Division found that the Board did not properly address Sands’ arguments that, by requiring him to use his personal vehicle without reimbursement, RG unlawfully diverted a portion of his wages.

The Court remanded the matter to the Board for further fact-finding on several points including:

• Whether Sands was indeed required to use his personal vehicle or if it was a matter of convenience;
• The actual out-of-pocket expenses Sands incurred;
• Whether these expenses justified Sands leaving his job; and
• Whether RG violated the NJWPL and if this violation constituted good cause for Sands to leave.

Indeed, the Appellate Division noted that if Sands was required to use his personal vehicle without reimbursement, the employer “effectively transferred its own operating expenses to [Sands] and diverted his wages to pay those costs.”

The Appellate Division affirmed the Board’s finding that Sands was not promised a golf cart within a specific timeframe, as there was no credible evidence supporting this claim.

Takeaways

While the Sands opinion is unpublished and, therefore, not binding, employers should consult counsel regarding its legal implications and whether any changes should be made to their current employee business expense reimbursement policies. Indeed, the opinion underscores the possibility that unreimbursed business expenses could give rise to NJWPL violations, including individual liability, which may result in the employer paying liquidated damages and attorneys’ fees and costs to aggrieved employees, the imposition of hefty civil penalties, and could even give rise to criminal violations.