Professionals Who Are Paid On An Hourly Basis May No Longer Be Exempt From Overtime Under New Regulations
As we previously reported on September 6, 2011, the New Jersey Department of Labor and Workforce Development (NJDOL) adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained in the Federal Fair Labor Standards Act (“FLSA”). Employers are not required to pay overtime compensation (i.e. compensation at the rate of 1.5 percent of the employee’s regular hourly rate) to an employee who qualifies for one of these exemptions. The new regulations were intended to provide consistency between federal and New Jersey law. They leave open the possibility, however, that employees who previously qualified for an exemption under New Jersey law may now have to be reclassified as non-exempt. The issue is raised by the New Jersey Appellate Division’s recent decision in Anderson, et al. v. Phoenix Health Care, Inc., et al.
In Anderson the court affirmed summary judgment for the defendant employers and held that registered nurses, as “professionals,” are not entitled to overtime compensation even if paid on an hourly basis, as opposed to on a salary basis, so long as they are compensated in excess of the weekly minimum salary provided for in the New Jersey Administrative Code. The court endorsed one of the NJDOL’s longstanding interpretations of New Jersey’s Wage and Hour Law. Specifically, employees who meet all the criteria for the professional exemption from the overtime rate, will still qualify for that exemption despite being paid on an hourly basis as opposed to a salary basis. However, in a footnote, the Appellate Division referenced the NJDOL’s newly adopted regulations, and indicated that it was not opining on whether the result it had reached would be the same under the new regulations.
As noted, the new NJDOL regulations adopt the “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained within the Federal Fair Labor Standards Act (“FLSA”). Indeed, the new New Jersey regulations expressly declare that the “provisions of 29 CFR Part 541 are adopted herein by reference.” This presumably includes 29 CFR §§ 541.600(e) and 541.602 (a) . These regulations provide that nurses, as well as other “professionals” that service the medical profession are not exempt from the salary or fee requirement, and must be paid on a salary basis of not less than $455 per week in order to be exempt as professionals.
At this time it is unclear how New Jersey courts will interpret the new regulations with respect to employees who meet the duties test of a professional, but who are paid on an hourly basis, such as the plaintiffs in Anderson. If the Courts follow the FLSA regulations strictly, these individuals will likely no longer qualify for the professional exemption.
The attorneys in the Gibbons Employment & Labor Law Department have been following the recent developments in New Jersey Wage and Hour law closely and would be happy to discuss with you the potential impact that these developments 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.