New Jersey Wage and Payment Law
There are many people living in New Jersey who depend on tips and commissions to earn a living. Anyone in a service industry such as restaurant staff, hotel workers, movers, or workers who sell goods or services on a commission system know how significant tips and commissions are to their overall income. Employees who earn their living through tips and commissions should know their rights under the law to ensure they are being paid correctly. The experienced Red Bank employment lawyers at McOmber McOmber & Luber, P.C. provide clients with skilled counsel for all kinds of wage and payment issues.
All workers are guaranteed a minimum wage by federal, state, and sometimes local laws, and employers must pay by whichever standard is the most generous to the employee. In New Jersey, the state minimum wage is higher than the federal minimum wage so workers receive the state minimum wage. Hourly workers must be paid the minimum wage for all hours worked, not an average, and not more than minimum wage for some hours and less for the others.
Tips belong to the employee and not the employer. There are two exceptions to this rule. One is the tip credit. In New Jersey, employers may count part, or all of an employee’s tips toward the minimum wage requirement. This means the employer may pay less than the minimum hourly wage if the employee’s tips make up the difference. At the end of the workweek, if the tips are not enough to equal minimum wage for each hour worked, then the employer is responsible to pay the difference.
The other exception is the tip pool. With written notification employers may require employees who regularly receive tips to contribute a portion of the tips to a pool. The pooled tips are then divided evenly among the group of employees.
For employees working on a commission system, the minimum wage requirement must still be met. In other words, total pay divided by the number of hours worked must average out to minimum wage. Commissions are considered wages and not supplementary incentives or discretionary bonuses. The commission structure may not be changed without prior written notice to the employee.
Overtime for all hourly workers is one and a half times their hourly wage regardless of tips. Any hours worked over the standard 40-hour work week should be paid at the overtime scale. Some employers may try to avoid their overtime obligations by handing out “bonuses.” It sounds great, but the legal definition of a bonus is compensation paid out above wages owed, in return for loyal service or extra effort shown, or as a gift. Always carefully calculate whether wages have been correctly paid.
New Jersey Paid Sick Leave
Under the New Jersey Paid Sick Leave Law that took effect October 2018, nearly all employees working in the state are entitled to paid sick leave through their employers. The law applies to both full-time and part-time workers, regardless of whether they are paid hourly wages, salary, or via tips or commissions. Employees accrue one hour of sick leave for every 30 hours of work. They may accrue up to 40 hours of sick time within the benefit year, which is 12 consecutive months of work as designated by their employer. If the worker has not used the sick leave time accrued by the end of the benefit year, the employee may carry over up to 40 hours to the next 12-month period or calendar year or receive a payout for the unused time at the discretion of the employer.
Employers cannot refuse to offer paid sick leave to eligible employees. They are further prohibited from disciplining workers for asking about or using their earned sick leave. Those who believe their employers are in violation of the law, or those who have suffered harm for exercising their rights should contact a skilled New Jersey wage and hour lawyer to discuss their legal options.
Unpaid Wages and Commissions
An employer may not alter a commissions structure for pay without giving prior notice to the employee. Any attempt to retroactively do so may be compensate under the law.
Any New Jersey employee who feels their paycheck does not accurately reflect the work they are doing has the right to question their employer’s practices without fear of retaliation. The Conscientious Employee Protection Act (CEPA) provides general whistleblower protection to the employee who brings to light illegal, fraudulent, or criminal behavior of his/her employer.
Under this law, the employer may not retaliate against an employee for threatening to disclose or complain to a public body that they are owed unpaid wages or commissions. If there is any adverse employment action against that employee, the employer may be liable for any damages and legal fees incurred by the employee. The employee has the responsibility to first inform the employer in writing of the disclosure/complaint and give them time to correct it.
CEPA provides protection to those who have a reasonable belief or suspicion their employer is violating the law by withholding wages or commissions. Even if it cannot be proven or turns out not to be true, an employer may not engage in retaliatory actions against the employee.