The New Jersey Department of Labor and Workforce Development (“NJDOL”) has adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained within the Federal Fair Labor Standards Act (“FLSA”). The adoption of these changes - which are considered by many to be long overdue - was announced in the New Jersey Register on September 6, 2011. The new regulations became effective immediately upon publication. As explained below, these changes will benefit employers and provide clarity and consistency to the wage and hour landscape in New Jersey.
Under both New Jersey and federal law, unless employees are “exempt” from such requirements, employers must pay them the minimum wage and overtime. In August 2004, the U.S. Department of Labor (“U.S. DOL”) broadened the scope of the exemptions under the FLSA for Executive, Administrative, Professional, Outside Sales, and Computer employees. Because of these employer-friendly changes, a larger number of employees have been found to be “exempt” from overtime and minimum wage requirements under federal law. Some of the critical changes to the federal regulations included:
- Increasing the Salary Basis threshold for Executive, Administrative, and Professional employees to $455 per week (or $26,660 per year) exclusive of board and lodging;
- Abandoning the antiquated long and short-form tests in favor of a single duties test for each exemption, which focuses on the primary character of an employee’s duties (as opposed to percentage of time spent);
- Creating a new exemption for certain “highly compensated” employees who earn in excess of $100,000 per year;
- Clarifying that certain occupations (e.g., public safety and health officers, licensed practical nurses, and paralegals) must be paid overtime in most cases;
- Specifically identifying dozens of job classifications that generally do or do not qualify as exempt under any of the white-collar exemptions; and
- Creating a “safe harbor” limiting liability for employers who take improper deductions from an exempt employee’s pay.
Upon the U.S. DOL’s implementation of the new regulations, many states followed suit by amending their corresponding state wage and hour exemptions to mirror the federal exemptions. Until now, New Jersey had not done so. Now, that New Jersey has adopted regulations akin to the federal rules, employers with any part of its workforce in New Jersey should review job classifications as they relate to Administrative, Executive, Professional, Outside Sales, and Computer employees. The newly adopted regulations may create opportunities for New Jersey employers to classify certain previously nonexempt employees as exempt. Employers, however, should still exercise caution when making these determinations.
The attorneys in the Gibbons Employment & Labor Law Department have been following these developments closely and would be happy to discuss with you the potential impact that these new regulations will have on your business. Please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department with any questions that you may have.
Peter J. Dugan is an Associate in the Gibbons Employment & Labor Law Department.