New Jersey Inadvertently Eliminates Long-Standing Exemption for Commissioned Sales People and Aligns Exemptions With Federal Law
In an effort to bring its definitions for white-collar employees exempt from the overtime pay regulations into line with the federal definitions, New Jersey inadvertently eliminated a long-standing exemption for commissioned sales people.
The New Jersey Department of Labor recently modified its wage and hour regulations to adopt certain provisions included in the federal overtime regulations. Specifically, New Jersey eliminated its state definitions of the executive, administrative, professional and outside sales positions and adopted the federal regulations defining these exemptions, which are found in 29 C.F.R. Part 541.
Prior to the modification, New Jersey employers had enjoyed an exemption for commissioned sales people (as distinct from “outside sales people”) which were defined as exempt as part of New Jersey’s administrative exemption. This exemption included employees whose “primary duty consists of sales activity and who receives at least 50 percent of his or her total compensation from commission and a total compensation of not less than . . . $400.00 per week.” This exemption was eliminated with the recent modifications—apparently inadvertently. Supposedly, the New Jersey Department of Labor and Workforce Development is working to reverse this unintended result. However, such a reversal could take months.
Given the broad sweep of the federal Fair Labor Standards Act, which contains only a narrow exemption for commissioned employees in certain retail sales capacities, it is unclear how many employees fell under only the New Jersey law and enjoyed the exemption in any event. New Jersey employers, however, now need not worry about stricter state overtime standards when determining how to properly classify executive, administrative, outside sales and professional (including computer) employees under the overtime regulations—although the federal regulations still provide employers with many challenges to ensure the business has sufficient arguments to support exemption classifications and other New Jersey overtime regulations (such as the stricter standard for the trucking industry) remain unchanged.