New Jersey Adopts The Federal Regulations Concerning Exemptions From Overtime Pay Laws

On September 6, 2011, the New Jersey Department of Labor and Workforce Development repealed its existing rules governing exemptions from overtime pay requirements for executive, administrative, professional and outside sales employees, and instead adopted by reference the analogous regulations issued under the federal Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the “FLSA”).   See here for a copy of the rule change.  New Jersey’s regulations concerning exemptions from overtime pay requirements for private-sector employees now parallel the federal regulations set forth at 29 C.F.R. §§ 541.0 – 29 C.F.R. 541.710.   See N.J.A.C. §§ 12:56-7.1 – 12:56-7.2.

Under both the federal FLSA and the New Jersey State Wage and Hour Law, N.J.S.A. §§ 34:11-56a – 34:11-56a30, covered, non-exempt employees must receive one and one-half times the regular rate of pay for all hours worked over forty in a workweek.

New Jersey’s adoption in the private sector, as of September 2011, of the federal exemptions from overtime pay for executive, administrative, professional and outside sales employees (also known as the ‘white collar’ exemptions) is a major victory for businesses in New Jersey.

The repealed New Jersey regulations had been based on the federal overtime exemptions that were in effect before August 23, 2004.  On August 23, 2004, the U.S. Department of Labor had significantly revised the federal overtime exemption rules.  However, before September 2011, New Jersey had not amended its rules to conform to the federal overtime exemption regulations put in effect in 2004.

As a result, there had existed subtle but important differences between federal and New Jersey regulations, such that some employees were exempt from overtime pay under federal law, but not under New Jersey law.

Because New Jersey has now adopted by reference the federal, white collar exemptions from overtime compensation laws, non-governmental employers in the State of New Jersey can be certain that, if a given employee falls within the executive, administrative, professional or outside sales employee exemption from overtime pay requirements under federal law, he or she likewise is exempt from overtime pay requirements under New Jersey law.

Some of the changes wrought by New Jersey’s adoption by reference of the federal rules concerning the overtime exemptions for individuals employed as bona fide executive, administrative, professional and outside sales employees are as follows:

• Under the repealed New Jersey regulations, to qualify for the executive exemption or the administrative exemption from overtime laws,  an employee was required to devote less than 20 percent of his or her workweek to nonexempt work or less than 40 percent if employed by a retail or service establishment.  That 20%/40% requirement no longer exists.  Rather, the employer merely must show that the employee’s “primary duty” consists of exempt work.
• Similarly, under the superseded New Jersey rules, to qualify for the professional exemption or the outside sales employee exemption from overtime laws, an employee had to devote less than 20 percent of his or her workweek to nonexempt work.  That 20% requirement has been eliminated.  Again, the employer need only show that the employee’s “primary duty” consists of exempt work.
• Federal law renders exempt from overtime pay  many “highly compensated” workers who are paid total annual compensation of $100,000 or more.   Specifically, under FLSA regulations, a highly compensated employee is exempt if (i) the employee earns total annual compensation of $100,000 or more, which includes at least $455 per week paid on a salary basis, (ii) the employee’s primary duty includes performing office or non-manual work, and (iii) the employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.
• In contrast, until September 2011, New Jersey did not recognize the highly compensated employee exemption.  Now New Jersey recognizes this exemption.

Call the Law Offices of David S. Rich, LLC at (347) 941-0760 to speak with a knowledgeable labor and employment lawyer about ensuring that your company complies with overtime pay and other wage and hour laws, or to retain a skilled overtime attorney to defend your company in unpaid overtime lawsuits or other wage and hour litigation.