Law Offices of Mitchell Schley, LLC

New York and New Jersey Labor and Employment Lawyer

197 Route 18 South
South Tower – Suite 3000
East Brunswick, NJ 08816
Phone: (732) 325-0318
Fax: (732) 325-0317

245 Park Avenue, 39th Floor,
New York, NY 10167
Phone: (212) 672-1848
Fax: (212) 372-8798

mschley@schleylaw.com

Contact us for a free telephone consultation at

(732) 325-0318

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About Mitchell Schley, ESQ

Overtime I

Today’s topic concerns the rights of an employee to be paid overtime pay by the employer. This is one of the most common areas in which employees are losing money because of the illegal practices of their company. The reason for this is that most employees do not know what the law is with regard to overtime and employers take advantage of the employee’s lack of knowledge.

Every state, including New Jersey, the Wage and Hour Law states that if an employee works more than 40 hours in a week, he or she must be paid at a wage rate at one and a half times their regular hourly wage rate for every hour worked over 40 hours in a week. For example, if a factory worker works 45 hours in a week and their regular hourly wage rate is $10.00 per hour, they must be paid $15.00 per hour for the extra five hours. This is simple enough. But the area that represents the biggest problem is not for employees who are paid by the hour but rather people who are paid one salary for the whole week regardless of how many hours they work in the week. Most employees who are paid by salary believe that they are not entitled to extra overtime pay if they work more than 40 hours in a week. This is not true. Because of this common misunderstanding, many companies pay the employees the same amount even if they work more than 40 hours in a week. The company decides that because they pay you an annual salary, they can have you work some weeks 45 hours, some weeks 50 hours, or more, without paying anything extra. But the law says everyone must be paid extra for in any week they work more than 40 hours unless the worker’s job is exempt from the law. This is true whether you are paid on an hourly basis or a salary basis.

Let’s look at an example. You work in an office and you are paid a salary of 52,000 which is equal to $1,000 per week. You work 45 hours in a certain week. How do you determine how much overtime pay you should receive in that week? It is based on what your hourly rate would be when you divide your salary by 40 hours. Therefore, a salary of $1,000 per week is equal to an hourly wage rate of $25 per hour. Overtime pay is paid at one and a half times the hourly rate so the overtime rate is $25 plus $12.50 or $37.50 per hour. If you worked 45 hours in the week then you should receive an extra $187.50 (5 X $37.50). Therefore, your paycheck for that week should be 1,187.50, not $1000.

Some companies will do something different. They will pay a salaried employee more money if they work more than 40 hours in a week but they pay the wrong amount. Using the example above, they will pay you for the extra 5 hours in the week but will pay it at the regular hourly rate of $25 per hour so you receive an extra $125 (5 X $25). But this is wrong. The extra 5 hours has to be paid at one and a half times the hourly rate which totals $187.50, not $125.

There are some exceptions to the general overtime pay requirements of the law which apply to employees in certain types of jobs. If you fall into an exception it means that if you are a salaried employee, the company could have you work more than 40 hours in a week and not pay anything extra besides your regular salary. Sometimes a company will claim that an employee falls into an exception but the company may be wrong. The legal requirements for an exception are very strict and technical and sometimes when the employee’s job duties are analyzed by an expert, it is discovered that the salaried employee is entitled to overtime pay and should have been getting it since they started the job.

One exception to the overtime pay requirement is the “executive exception.” In order to be considered an “executive” under New Jersey law you have to be an employee who manages the company or a department and can hire and fire.

A second exception is called the “administrative exception.” In order to be considered an “administrative employee” under the law your work has to be related to the management policies or general business operations of the company. Also you have to regularly exercise discretion and independent judgment.

A third exception is called the “professional exception.” In order to fall into this exception under the law, work you perform must require knowledge in an advanced specialized field such as science and be intellectual in nature and involve discretion and judgment. A careful analysis of this exception is particularly important for employees in the Chinese community for the following reason. Sometimes an individual will come from China with advanced college credentials that would qualify them to do a job that would qualify for the professional exception, but they are unable to find a job that fully uses their advanced qualifications. Therefore, the person may take a job that may be related to their field but below their true level of expertise. The important point to understand is that you are exempted from receiving overtime pay based on the work that you actually do on the job, and not based on the academic degrees or qualifications you happen to have. For example, a person may have a PhD, but be hired to do a job that does not require a PhD and does not utilize the skills of a PhD. Just because the employee has a PhD does not necessarily mean that the company should not be paying them overtime pay if they work more than 40 hours in a week. Each job needs to be examined individually.

If an employee believes that they are not receiving overtime pay that they should be getting they could contact the New Jersey Department of Labor or discuss the issue with an employment law attorney who can determine if you may have a valid claim. If there is a valid claim, the company must pay the employee in a lump sum the overtime pay the employee should have received going back 2 or 3 years depending on the case. The company may also be responsible for paying for the employee’s attorney’s fees for making the claim. These claims are very common and many companies in New Jersey have recently been found to have failed to pay the proper overtime to large numbers of their workers.

Mitchell Schley is an attorney who practices labor law at the Law Offices of Mitchell Schley, LLC, in East Brunswick and New York City. Feel free to contact him if you have a question about this article or any other labor law issue. He can be reached at (732) 325-0318 or at www.schleylaw.com.

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Law Offices of Mitchell Schley, LLC
197 Route 18 South, South Tower – Suite 3000, East Brunswick, NJ 08816 • Phone: (732) 325-0318 • Fax: (732) 325-0317
245 Park Avenue, 39th Floor, New York, NY 10167 • Phone: (212) 672-1848 • Fax: (212) 372-8798
mschley@schleylaw.com
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