Are Inside Sales Persons Now Entitled To Overtime in New Jersey? They May be, at Least For Now

Last month, new overtime exemption rules of the New Jersey Department of Labor and Workforce Development (“NJDOL”) became effective.  These new rules are intended to bring overtime exemptions under the New Jersey Wage and Hour Law (“NJWHL”) in line with the 2004 revisions to the federal Fair Labor Standards Act rules, by repealing the existing state overtime exemption rules and replacing them with the analogous federal exemptions.  NJDOL accomplished this by revising N.J.A.C. 12:56-7.2 to remove the definitions of the various overtime exemptions and adopted by reference the counterpart in the Code of Federal Regulations (“CFR”), specifically 29 CFR 541.

However, in an apparent omission, by adopting 29 CFR 541, the NJDOL removed the state exemption for inside salespersons.  The NJWHL inside salesperson exemption had provided that salespeople who received at least 50% of their total compensation from commissions and earned more than $400 per week, fell under the administrative exemption to overtime.  Federal regulations provide a similar exemption, but that exemption is found in a different section of the regulations, not 29 CFR 541.

NJDOL has indicated that the removal of the inside salesperson exemption was not intended and that it is working on rectifying the situation.  In the meantime, however, certain employees who were previously exempt from overtime are, at least for the time being, apparently entitled to receive it.

New Jersey employers who have inside salespersons who were previously exempt from overtime should consult legal counsel to determine how best to handle overtime for such employees, until the state rules are revised.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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