What Employee Benefits Must New Jersey Businesses Provide?

What Employee Benefits Must New Jersey Businesses Provide?

As most entrepreneurs quickly learn, launching a new business can be both an exciting and daunting adventure. Many new business owners are overwhelmed by the numerous legal obligations that come with running a business, particularly when it comes to employment laws. One of the most common areas of concern is employee wages and benefits.

Employee Wages

Federal and state laws establish the minimum wage every worker is entitled to receive. They also identify which workers are entitled to receive overtime pay for working longer hours. Those who must be paid overtime for all hours worked in excess of 40 in a workweek are referred to as being “non-exempt.” The U.S. Department of Labor has advised that workers are presumed to be employees and entitled to minimum wage and overtime. There are limited exceptions where overtime is not required (the “white collar” exemptions, for example), but the rules for exemptions must be studied carefully and properly applied.

At the federal level, the Fair Labor Standards Act (FLSA) prescribes the standards for wages and overtime pay that affect most private employers. Employers need to comply with federal AND state wage laws, it is imperative that new businesses also receive guidance on the requirements under their state law. For instance, New York employers must be aware of recent changes to the state’s minimum wage. Further, there is no such thing as an exemption for being “salaried” without meeting the “duties tests” that must be satisfied for the exemption.

Employers must establish the seven day “work week” during which all time worked must be measured and recorded and set the “rate of pay” for the first 40 hours and the “time and one-half” overtime rate. If an employer does not keep proper time and pay records, the law will credit whatever the employee claims.

Employee wage law mistakes to avoid

Common wage law mistakes that can lead to liability include:

• Failing to pay the correct minimum wage
• Not compensating for overtime hours and/or requiring employees work “off-the-clock” without compensation
• Misclassifying employees as exempt salaried employees or independent contractors
• Miscalculating tip deductions
• Failing to properly record hours worked
• Incorrectly paying supplemental time (break time, travel time, etc.)

Employee Benefits

While the decision to offer benefits is voluntary, employers should note that many of these benefits are subject to state and federal laws.

Other than worker’s compensation, unemployment compensation and disability under New Jersey law, the law does not generally require an employer to offer fringe benefits. Federal law mandates some employee benefits such as leave under the Family Medical Leave Act (New Jersey has a paid Family Leave benefit). Otherwise, it is the employer that determines whether to offer most other benefits, such as health insurance, dental insurance, retirement plans, etc. Paid time off such as holiday and vacation are also employee benefits determined by the employer.

While the decision to offer benefits is voluntary, employers should note that many of these benefits are subject to state and federal laws. For instance, the Employee Retirement Income Security Act of 1974 (ERISA) requires employers to provide plan participants with written notification of the most important facts they need to know about their retirement and health benefit plans including plan rules, financial information, and documents on the operation and management of the plan.

Tip for Employers

Mistakes made with respect to wages and benefit plans can lead to costly lawsuits. Therefore, it is important to consult with an experienced employment law attorney to ensure your new business is in compliance with all applicable laws.