While non-exempt, statutory employees in New Jersey are entitled to receive overtime pay for the hours that they work above 40 in a workweek, exempt workers are not entitled to the overtime premium. While the Fair Labor Standards Act and New Jersey’s labor laws regulate the rules concerning worker pay, little guidance is provided for the number of hours an exempt worker can be required to work during the workweek. An attorney at Swartz Swidler can review your job duties to determine whether you have been properly classified as an exempt employee or if you have been misclassified and are entitled to overtime pay.
Requirements to be classified as an exempt employee
To get around overtime pay, some employers misclassify their workers as exempt when they should be classified as non-exempt workers. Salaried employees are normally exempt from the overtime requirements. It can be difficult to recognize the differences between exempt and non-exempt employees. However, the job duties and the salary control the classification of workers.
According to the U.S. Department of Labor, exempt employees include certain administrative, professional, executive, outside sales, and computer professionals. People in these types of positions are generally ineligible for overtime compensation.
A final rule was released by the Department of Labor that increased the minimum salary requirements for exempt workers under the FLSA. This rule took effect on Jan. 1, 2020.
FLSA requirements and background
Under the FLSA, employers are required to pay non-exempt workers the minimum wage or more for every hour worked. Workers who work more than 40 hours per week are entitled to receive overtime pay at a rate of one-and-one-half times their regular hourly rates.
Exempt employees are not entitled to overtime pay. To classify an employee as exempt, the worker must meet three tests. Under the salary test, employers are required to pay exempt workers a minimum weekly salary regardless of the number of hours worked in a week. Employers may not dock an employee’s pay for working under 40 hours a week. However, the employers are also not required to pay overtime for hours their exempt employees work beyond 40 during a week. Before Jan. 1, 2020, the minimum salary that employers had to pay exempt workers was $455 per week.
Employees must also meet the duties test to be classified as exempt. This means that their job duties must involve substantial supervisory or managerial duties, the ability to make independent decisions, and other factors. The job title is not relevant to this consideration. Highly compensated employees can also be classified as exempt when they routinely perform one of the exempt responsibilities of a professional, administrative, or executive employee. Before Jan. 1, 2020, highly-compensated employees must have earned at least $100,000 per year to qualify as exempt.
Changes to the law
Under the final rule that was effective on Jan. 1, the minimum salary requirement for exempt workers increased from $455 per week to $684 per week, which is equivalent to earning an annual salary of $35,568. To qualify as an exempt employee, you must be paid at least $684 per week and meet the duties tests. Exempt computer professionals may be paid on an hourly basis if they are paid at least $27.63 per hour.
Employers are now allowed to use nondiscretionary incentives, commissions, and bonuses to satisfy 10% of the minimum salary requirements. However, these types of compensation must be paid on at least an annual basis to satisfy the rule. Employers can make a catch-up payment at the end of the year to bring an exempt employee’s compensation up to the required salary level.
Highly compensated employees
The new rule increased the salary requirements for highly compensated employees to be considered exempt to $107,432 per year. Of that amount, a minimum of $684 must be paid every week. There is not a cap of 10% on the types of nondiscretionary compensation for highly compensated employees.
Simply having a job title with the word manager or supervisor in it does not automatically confer exempt status. Instead, the job duties control whether an employee should be considered exempt.
Maximum hours an exempt employee can be required to work
The law does not provide a maximum number of hours that an exempt worker can be required to work during a week. This means that an employer could require an exempt employee to work well beyond 40 hours a week without overtime compensation.
Some employers ask their exempt workers to track the number of hours that they work for a week. However, this can lead to the workers being viewed as hourly employees. If that happens, the employer will have to pay past overtime compensation to the worker.
Employees whose salaries fluctuate depending on the number of hours that they work in a week are generally considered to be non-exempt workers. Under the FLSA, an employer can pay an exempt employee additional compensation on top of his or her regular salary without affecting the employee’s status as an exempt employee.
When tracking hours is acceptable
Exempt employees can be required to track their hours as long as it is used for reasons unrelated to their pay. For example, an employer might ask an employee to track the billable hours that he or she worked for an individual client. Employers might also use hours tracking to track work attendance or to comply with recordkeeping rules.
Get help from the employment lawyers at Swartz Swidler
If you have been classified as an exempt employee by your employer but do not believe that your classification is correct, you should talk to an experienced employment lawyer at Swartz Swidler. We can review your salary and job duties to determine whether you have been misclassified. If you have, we can help you to seek the recovery of overtime compensation that you should have been paid. Contact us today by submitting your information through our online contact form or by calling us at 856.685.7420.