New Jersey Adopts Federal White Collar Overtime Exemptions

Originally published on the Employer's Law Blog

On September 6, 2011, the New Jersey Department of Labor and Workforce Development (NJDOL) adopted the federal Fair Labor Standards Act's (FLSA) "white collar" overtime exemptions for executive, administrative, professional and outside sales employees.

Under both federal and New Jersey law, employers must pay employees minimum wage and overtime unless the employee falls within an exemption that deems the employee "exempt" from overtime. In August 2004, the United States Department of Labor amended the FLSA by expanding the class of employees who qualify for the overtime exemption. New Jersey, however, did not initially adopt those amendments. Consequently, New Jersey's exemption requirements differed from those under federal law.

To illustrate, under the FLSA, employees are deemed exempt from overtime if their "primary duty" is the performance of exempt work. Generally, employees must spend 50% of their time performing exempt work. In contrast, the New Jersey exemption was more narrow, only exempting those white collar workers that spent more than 80% of their time performing exempt work. The different white collar exemption standards made compliance with federal and New Jersey overtime regulations burdensome for employers.

New Jersey's adoption of the federal white collar exemptions is considered to be positive for employers, who will no longer need to use a two-tier approach for determining whether an employee is exempt from overtime. Further, more employees will likely fall within the overtime exemption. In light of this recent development, it is recommended that employers consider whether their employees are properly classified as exempt or non-exempt from the FLSA and New Jersey overtime requirements.

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