Employees in New Jersey are entitled to fair compensation for their hard work as well as additional wages when they put in long hours with overtime under New Jersey’s labor laws.
This guide breaks down the specifications of New Jersey overtime laws, focusing on when overtime applies, how to calculate it for hourly, salaried, and complex pay employees, and how to stay compliant.
This Article Covers:
Understanding Overtime in New Jersey
- Which Overtime Laws Apply in New Jersey?
- How are Overtime Laws in New Jersey Different from Federal Laws?
- What is the Regular Rate of Pay in New Jersey?
- How Much is Overtime Pay in New Jersey?
- Who is Eligible for Overtime Pay in New Jersey?
- Who is Exempt from Overtime Pay in New Jersey?
Overtime for Hourly Rate and Salaried Employees in New Jersey
- How Do You Calculate Overtime for Hourly Employees in New Jersey?
- How is Overtime Calculated for Salaried Employees in New Jersey?
Overtime for Complex Pay Structures in New Jersey
- How Do You Calculate Overtime for Piece Rate or Commission Employees in New Jersey
- How Do You Calculate Overtime with Multiple Pay Rates in New Jersey?
Additional Considerations for New Jersey Overtime
- What are the recordkeeping requirements for overtime pay in New Jersey?
- What is the statute of limitations on unpaid overtime in New Jersey?
- Can an employee take comp time instead of overtime pay in New Jersey?
- Can New Jersey employers average work hours over two weeks to avoid overtime?
- How can Employers Ensure Compliance with New Jersey Overtime Laws?
Understanding Overtime in New Jersey
Which Overtime Laws Apply in New Jersey?
In New Jersey, overtime laws are governed by the New Jersey State Wage and Hour Law. The Act entitles covered employees to be paid overtime wages calculated at 1.5 times their regular hourly wage for all hours actually worked over 40 in a workweek.
This law is administered by the New Jersey Division of Wage and Hour Compliance.
How are Overtime Laws in New Jersey Different from Federal Laws?
New Jersey’s overtime laws mostly align with the federal Fair Labor Standards Act (FLSA). Overtime wages are paid at 1.5 times the employee’s regular hourly rate for each hour a non-exempt employee actually works over 40 in a workweek.
However, New Jersey offers greater minimum overtime wage protections than federal law. Minimum wage workers in the state can earn at least $23.235 per hour worked overtime, whereas federal law only entitles minimum wage employees to a rate of $10.88 per hour.
In addition, New Jersey’s overtime laws specifically require that all earned overtime wages be paid to an employee in cash. Federal law, on the other hand, allows employers to pay overtime wages in cash or through similar means, such as checks.
What is the Regular Rate of Pay in New Jersey?
In New Jersey, an employee’s hourly wage is their ‘regular rate of pay’. For example, if an hourly employee works for a fixed hourly wage rate, that rate is considered their regular rate of pay.
For employees paid by salary, piece rate, bonus, commissions, or others, the regular rate of pay is determined by dividing the employee’s total weekly pay — excluding overtime wages — by the total number of hours worked in that week.
However, an employee’s regular rate of pay cannot fall below the state minimum wage of $15.49 per hour.
As per New Jersey law, overtime wages are calculated from an employee’s regular rate of pay. For these calculations, an employee’s regular rate of pay does not include:
- Compensation given as gifts on holidays or service rewards — which are not tied to hours worked, output, or performance
- Non-work payments made during vacation, time off, or similar situations
- Reimbursements for travel or expenses incurred while performing work that benefits the employer
- Any additional, irregular payment an employer makes for a specific period without any prior agreement with the employee
- Payments made to recognize a employee services, provided they are determined solely by the employer and not under a contract, or they are part of a profit-sharing, thrift, savings, or trust plan and not based on employee hours or performance
- Permanent employer contributions to retirement, health insurance, or other employee benefit plans made to a third party or trustee
- Extra compensation for working beyond eight hours a day, on weekends, holidays, or regular days off
- Overtime pay
If an employee’s regular rate of pay cannot be determined from their weekly wage due to additional payments like allowances for food, tips, and lodging, overtime wages must be calculated using an hourly rate that is mutually agreed upon between the employer and employee. However, the calculated hourly overtime pay must not be less than the state minimum wage.
How Much is Overtime Pay in New Jersey?
In New Jersey, employees covered by the New Jersey State Wage and Hour Law are entitled to overtime wages calculated at 1.5 times their regular hourly rate for each hour they work over 40 in a workweek. Minimum wage workers in the state are entitled to earn at least $23.235 ($15.49 x 1.5) per hour in overtime pay.
State overtime laws do not require employers to pay overtime wages for working more than eight hours a day, weekends, holidays, or regular days off. However, employers may have an obligation to pay overtime wages if they’ve agreed to in an employment contract.
Additionally, employers must comply with any state or federal law that limits overtime hours or requires overtime pay that exceeds the minimum requirement set by the New Jersey State Wage and Hour Law.
Who is Eligible for Overtime Pay in New Jersey?
Employees covered by the New Jersey State Wage and Hour Law are eligible for overtime pay when they work more than 40 hours in a workweek.
This includes workers employed in the initial processing of farm products and hotels and motels — excluding summer camps and country clubs that are not part of a hotel or motel.
Furthermore, under specific conditions and if non-exempt , air carrier employees, food service workers, skilled mechanics, truck drivers, and minors are also eligible for overtime pay in New Jersey.
Check out our guide on your overtime rights in New Jersey.
Who is Exempt from Overtime Pay in New Jersey?
Certain employees are exempt from receiving overtime pay in New Jersey, including:
- Individuals employed in a bona fide executive, administrative, or professional capacity
- Employees engaged in farm labor
- Employees working in a hotel
- Employees of a common carrier of passengers by motor bus
- Limousine drivers employed by businesses operating limousines
- Employees involved in the raising or care of livestock
Learn more about employees exempt from overtime pay in New Jersey.
Overtime for Hourly Rate and Salaried Employees in New Jersey
How Do You Calculate Overtime for Hourly Employees in New Jersey?
In New Jersey, hourly employees covered by the New Jersey State Wage and Hour Law, who receive a single hourly rate, are entitled to overtime pay calculated at 1.5 times their hourly wage for all hours worked over 40 in a workweek.
This single hourly rate is the regular hourly wage considered for overtime calculations.
Calculating overtime pay for hourly employees in New Jersey as per federal law requires an employee’s regular hourly wage to first be multiplied by 1.5 to determine their hourly overtime wage. Then, the hourly overtime wage must be multiplied by all hours worked over 40 in a week to determine the total overtime wages owed to the employee.
For example, if an hourly employee earns $20 per hour and works 45 hours in a week, they must be compensated for 5 hours of overtime:
- Overtime Rate: $20 x 1.5 = $30
- Overtime Pay for 5 Hours: 5 × $30 = $150
- Regular Pay for 40 Hours: 40 × $20 = $800
- Total Weekly Pay: $800 + $150 = $950
Learn more about your rights as an hourly employee in New Jersey.
How is Overtime Calculated for Salaried Employees in New Jersey?
Non-exempt salaried employees in New Jersey who are covered by the New Jersey State Wage and Hour Law are entitled to overtime pay calculated at 1.5 times their regular hourly wage for all hours worked over 40 in a workweek.
A salaried employee can be paid weekly, monthly, or semi-monthly in New Jersey. To calculate overtime for each type of pay structure, federal rules apply, which are explained below:
Method 1: Calculating overtime wages for a weekly salary
To calculate overtime for salaried employees earning a weekly salary in New Jersey:
| 1. Determine the regular hourly rate: Divide the employee’s weekly salary by the number of hours the salary is paid for to find the regular hourly rate |
| 2. Calculate the overtime rate: Multiply the employee’s regular hourly rate by 1.5 to find the hourly overtime wage. |
| 3. Calculate overtime pay: Multiply the employee’s hourly overtime wage by the hours worked overtime. |
| 4. Total weekly pay: Add the employee’s regular weekly pay and overtime pay. |
Consider an employee who works a 40-hour workweek with a weekly salary of $800. If they work 45 hours in a certain workweek, overtime pay for the employee’s additional 5 hours will be calculated as follows:
- Regular Hourly Rate: $800 ÷ 40 = $20/hour
- Overtime Rate: $20 x 1.5 = $30/hour
- Overtime Pay: 5 x $30 = $150
- Total Pay: $800 (regular) + $150 (overtime) = $950
Method 2: Calculating overtime wages for a non-weekly salary
Steps to calculate overtime pay for employees paid on a monthly and semi-monthly basis in New Jersey are as follows:
| 1. Convert salary to weekly equivalent: For employees earning a monthly salary, multiply their salary by 12 to account for the entire year, and then divide the result by 52 to get its weekly equivalent. For employees earning a semi-monthly salary, multiply the salary by 24, and then divide the result by 52 to get its weekly equivalent. |
| 2. Determine the regular hourly rate: After converting the monthly or semimonthly salary to its weekly equivalent, divide the weekly salary by 40 hours to find the employee’s regular hourly rate. |
| 3. Calculate the overtime rate: Multiply the regular hourly rate by 1.5 to find the hourly overtime rate. |
| 4. Calculate overtime pay: Multiply the hourly overtime rate by all hours worked over 40 to find total overtime pay. |
| 5. Total weekly pay: Add the employee’s overtime pay to their weekly salary. |
Consider the following example to calculate overtime pay for an employee earning a monthly salary.
An employee earns $1,700 monthly with a regular 40-hour workweek. If the employee works 5 overtime hours in a certain workweek, their overtime pay can be calculated as follows:
- Convert Monthly Salary to Weekly Equivalent: ($1,700 x 12) / 52 = $392.31/week
- Determine Regular Hourly Rate: $392.31 / 40 = $9.81/hour
- Calculate Overtime Rate: $9.81 × 1.5 = $14.72/hour
- Overtime Weekly Pay = 5 × $14.72 = $73.6
- Total Weekly Pay = $392.31 (regular) + $73.6 (overtime) = $465.91
Learn more about your rights as a salaried employee in New Jersey.
Overtime for Complex Pay Structures in New Jersey
How Do You Calculate Overtime for Commission Employees in New Jersey?
In New Jersey, non-exempt employees who earn commissions on a weekly basis are entitled to overtime wages if they work more than 40 hours in a workweek.
To calculate overtime for employees earning commissions in New Jersey, federal rules apply. These rules require overtime wages for commission-earning employees to be calculated at 0.5 times their regular hourly wage, instead of the standard 1.5 times, because their regular hourly wage already includes commission earnings.
The steps to calculate overtime for commission employees are as follows:
| 1. Determine the regular hourly rate: Divide the employee’s total weekly earnings (including commissions) by the total hours worked by the employee in a week. Regular Hourly Rate = Total Weekly Earnings / Total Work Hours |
| 2. Find the hourly overtime rate: Multiply the regular hourly rate by 0.5 to determine the hourly overtime rate. |
| 3. Calculate total overtime pay: Multiply the hourly overtime rate by the total number of hours worked over 40 in the workweek to determine the total overtime pay. |
| 4. Calculate total wages: Add total overtime pay and weekly wages, including commissions, to find total wages owed. |
Consider an employee who earns $775 (including commissions) during a 45-hour workweek. Their overtime wage can be calculated as follows:
- Calculate the Regular Hourly Rate: $775 ÷ 45 = $17.22/hour
- Calculate the Overtime Rate: $17.22 × 0.5 = $8.61/hour
- Calculate Overtime Pay: 5 × $8.61 = $43.05
- Total Weekly Pay: $775 (commissions) + $43.05 (overtime pay) = $818.05
How Do You Calculate Overtime with Multiple Pay Rates in New Jersey?
In New Jersey, when an employee works two or more jobs with different hourly rates, overtime wages must be calculated at 0.5 times the employee’s averaged regular hourly rate for all hours worked over 40 using the weighted average method.
This method to calculate overtime ensures that the employee’s overtime pay reflects their actual earnings across all roles, rather than just applying overtime to one specific rate.
Steps to calculate overtime pay for employees working multiple pay rates — as per state law — include:
| 1. Find the employee’s gross wage: Combine all of the employee’s regular earnings from each pay rate for the week. |
| 2. Calculate regular rate of pay: Divide the employee’s weekly gross wages by their total weekly hours to determine the regular hourly wage. |
| 3. Calculate overtime pay: Multiply the regular hourly wage by 0.5 to find the hourly overtime wage. Then multiply the hourly overtime wage by all hours worked overtime to find weekly overtime pay. |
| 4. Calculate total wages: Add the total overtime pay to the employee’s weekly gross wages to determine total weekly pay. |
Consider an employee who works 15 hours as a cashier earning $16.00 per hour, and 32 hours as a stock associate at $18.00 per hour, totaling 47 hours for the week. Overtime pay for such an employee can be calculated as follows:
- Total Weekly Pay as Cashier: 15 × $16.00 = $240.00
- Total Weekly Pay as Stock Associate: 32 × $18.00 = $576.00
- Gross Weekly Earnings: $240.00 + $576.00 = $816.00
- Regular Rate of Pay: $816.00 ÷ 47 hours = $17.36/hour
Since the employee worked 7 hours of overtime (47 – 40), they are entitled to earn overtime at 0.5 times their regular rate of pay for these additional hours:
- Half-time Premium: $17.36 x 0.5 = $8.68
- Total Overtime Pay: 7 × $8.68 = $60.76
- Total Pay: $816.00 + $60.76 = $876.76
Additional Considerations for New Jersey Overtime
What are the recordkeeping requirements for overtime pay in New Jersey?
Under the New Jersey Wage Payment Law and Wage and Hour Law, employers must keep complete, true, and accurate records for each employee.
These records must include information such as:
- Full name and address of the employee
- Date of birth, if the employee is under 18
- Total hours the employee works each day and each workweek
- The employee’s regular hourly wage
- Gross wages earned, net wages paid, and a detailed list of all deductions
- The frequency of wage payments and the basis on which wages are paid (e.g., hourly, salary)
Employers must retain these records for a minimum of six years. The records should either be kept at the employee’s worksite or at a central office located in New Jersey.
Furthermore, employers may use any timekeeping system as long as it produces records that meet the state’s requirements for recordkeeping. These records are required to ensure proper calculation and payment of wages to employees, including any overtime pay they are entitled to.
What is the statute of limitations on unpaid overtime in New Jersey?
Employees in New Jersey have six years to file a complaint for unpaid overtime wages, according to the Wage & Hour Compliance state law. The six-year statute of limitations also applies to claims for unpaid minimum wage and other wage-related violations.
Can an employee take comp time instead of overtime pay in New Jersey?
Only public sector employees in New Jersey may take comp time instead of overtime pay, but only under very specific conditions outlined in the Public Employees’ Flexibility Act.
A public employee may voluntarily agree in writing to receive comp time at a rate of 1.5 hours for each hour of overtime worked, instead of monetary compensation. The agreement must be made before the overtime is performed and must comply with either a collective bargaining agreement or an individual written agreement.
There are also limits to how much comp time can be accrued: 240 hours per year, or 480 hours for employees involved in public safety, emergency response, or seasonal work.
Any unused comp time must be compensated in cash upon termination of employment or when the employee requests payment. Moreover, employers are prohibited from coercing employees into accepting or using comp time in lieu of overtime pay.
Can New Jersey employers average work hours over two weeks to avoid overtime?
No. Under New Jersey State Wage and Hour Laws and Regulations, employers must calculate an employee’s overtime wages based on each workweek separately. Hours worked cannot be averaged across two or more weeks to avoid paying the employee’s overtime wages.
How can Employers Ensure Compliance with New Jersey Overtime Laws?
Compliance with New Jersey’s overtime laws starts with accurate recordkeeping and timely wage payments.
Employers are required to track the exact number of hours each employee works daily and weekly, overtime hours, the employee’s earnings —- including regular hourly wage —- wage payment frequency, gross wages and net wages. These records must be retained for at least six years.
To stay compliant, employers may use a timekeeping system that captures all required information accurately. A time clock software like Jibble can help automate employee hour logging and generate accurate payroll reports to support New Jersey’s overtime laws.
Important Cautionary Note
This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.
