Employers and management-side labor lawyers are praising a proposed rule change for overtime pay while labor unions are questioning the measure.
For seven years, New Jersey employers have had to apply a higher standard than the federal government and most other states in determining whether employees are entitled to overtime pay. Under a rule change proposed by the state Department of Labor, that difference will disappear as the state adopts the federal overtime standards.
“Everything is so overcomplicated, from the tax codes on down,” said Frank Wyckoff, president and CEO of Eatontown-based Snelling Staffing Services – The Wyckoff Group. “Trying to satisfy the state laws that are all different than the federal laws is quite a burden. The more uniform you make it, the better it is for businesses, for people, for jobs.”
State overtime rules were the same as the federal rules until 2004, when the federal government adopted a new standard of how to determine whether administrative workers are exempt from overtime pay. However, the state didn’t adopt the federal standard.
Currently, and under the old federal rules, employers must use a six-part test to determine whether workers spend 80 percent of their time on management duties to qualify as exempt from overtime. The federal rules require a two-part test to determine whether the worker’s “primary” duties are exempt from overtime, with 51 percent of their time generally qualifying.
“That’s always been a tricky kind of test here, as to who is determining who is exempt and not,” according to Jeri Kelly, senior vice president and human resources officer for Fair Lawn-based Columbia Bank. Kelly anticipates that the rule change will affect some employees at the 620-employee bank. “It would be beneficial for an employer to have more people exempt.”
That’s where labor unions object. The New Jersey AFL-CIO has expressed concern that the proposed rule will lead to fewer workers receiving overtime.
“It seems clear that New Jersey will substantially expand the scope of exceptions to overtime requirements in its minimum wage law,” according to an interpretation of the rule written by state labor federation legal staff.
Kathleen A. Davis, executive vice president of the Chamber of Commerce Southern New Jersey, pointed out that the rule change will be particularly beneficial for multistate employers.
“It’ll be easier, less costly hopefully, in terms of the administration” of overtime, by eliminating a separate set of regulations, Davis said.
Commerce & Industry Association of New Jersey President John Galandak told state officials that association members support the change.
“We believe the amendments will provide a clearer understanding of the regulations, which will result in greater compliance and reduce the likelihood of violations and penalties,” Galandak wrote in comments to the Labor Department.
Stefanie Riehl, New Jersey Business & Industry Association assistant vice president, also supports the measure. The current deviation from federal rules put New Jersey businesses “at an unnecessary competitive disadvantage” with those in other states.
Employment law attorney Marc Freedman, counsel for the New Jersey Staffing Alliance, said that the revisions will bring clarity for both employers and employees.
“I don’t think anybody could argue that on balance it’s employer friendly,” Freedman said of the overall federal law governing overtime. He is a partner at Freedman & Gersten LLP, in Hasbrouck Heights.
The rule requiring employers to determine whether workers spent 80 percent of their time in management activities that require independent judgment has been particularly difficult for employers, according to Randi Kochman, a partner with Cole, Schotz, Meisel, Forman & Leonard P.A., in Hackensack.
“A lot of time with some positions, it’s a tough call,” Kochman said, adding that the federal definition is more “user-friendly.”
The public comment period on the proposed regulation ends May 20. Like all regulations, it will become effective when it’s published in the New Jersey Register.
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