Scott Eisland

Purchasing EPLI Insurance Coverage Can Protect You With Respect To NJ Wage and Payment Requirements

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When evaluating your insurance program an often overlooked coverage is Employee Practices Liability Insurance, or EPLI for short. Failure to properly pay a fair wage and calculate time worked including time off can land any unsuspecting business owner in trouble with the Department of Labor.

In New Jersey, for example, wage payment laws might not be exactly what you expect. Several federal laws regulate wage payments, including the Fair Labor Standards Act (FLSA), the Davis-Bacon Act, and the Service Contract Act. New Jersey law also imposes state wage payment requirements. When federal and state laws differ, the law that is more favorable to the employee will apply.

The New Jersey Department of Labor and Workforce Development (LWD) enforces wage payment requirements throughout the state.

Method of Payment  Purchasing EPLI Insurance Coverage Can Protect You With Respect To NJ Wage and Payment Requirements

New Jersey law requires employers to pay wages in lawful United States currency by:

  •         Cash;
  •         Check;
  •         Payroll debit card; or
  •         Direct deposit.

 

Employers may use payroll debit cards to pay their employee’s wages if they can ensure that each employee can make at least one withdrawal or transfer per pay period without incurring any costs to the amount contained on the card.

In addition, employers must secure each employee’s written authorization before using payroll debit cards. Employee consent must not be a condition of employment nor be obtained through duress, intimidation, or coercion.

Frequency of Payment

In general, employers must pay employee wages at least twice per month on established paydays, designated in advance by the employer. Employers can establish regular paydays once per month for executive, supervisory and other special classifications of employees. Railroad, express, car-loading, and car-forwarding employers must pay their employees at least once per week.

Regular paydays must generally take place within 10 calendar days after the end of the pay period. If a payday falls on a weekend, holiday or other non-working day, employers must pay wages on the working day immediately prior to the non-working day.

Collective bargaining agreements can override the frequency of employee wage payments.

Last Payment of Wages

Employees separated from their employers, whether by discharge, voluntary resignation, or any other reason are entitled to receive their unpaid wages by the next regular payday. If an employee’s wages are paid in part or in full on an incentive system (such as commission), the employer must pay a reasonable approximation of all wages due until the exact amount is computed.

However, when an employee departs because of a labor dispute which involved employees who processed payroll information, the employer has an additional 10 days to pay that employee’s last wages.

In the event of the death of an employee, all outstanding wages may be paid directly to the person who pays for the funeral expenses or to the decedent’s surviving spouse, children over the age of 18 (or their legal guardians, if they are under 18 years of age), parents or siblings.

Disputed Wages

In case of a dispute over the amount of wages due to an employee, an employer must pay any undisputed portion of the employee’s wages in accordance with the regulations described above. In doing so, the parties to the dispute do not waive their right to collect or dispute the remaining balance.

Withholdings and Deductions

Can an employer withhold pay in New Jersey? Yes, they may withhold or divert a portion of an employee’s wages when (1) required or allowed by law (state or federal), (2) necessary to correct a payroll error or (3) authorized by the employee or a collective bargaining agreement.

Payroll deductions authorized by employees or collective bargaining agreement must be in writing and for a lawful purpose accruing to the employee’s benefit, such as:

  •         Contributions to employee welfare, insurance, hospitalization, medical or surgical, pension, retirement and profit-sharing plans;
  •         Contributions to company-operated thrift plans;
  •         Purchase of security options and company stock;
  •         Payments into employee personal savings accounts;
  •         Payments for company products, employer loans to employees, work-safety equipment and replacing an employee identification;
  •         Installment payments to satisfy a financial obligation owed by the employee to the state;
  •         Payments for the purchase of U.S. government bonds;
  •         Donations to charitable institutions and political committees (certain conditions apply);
  •         Payments for the rental or cleaning of work clothing and uniforms;
  •         Labor organization dues, union initiation fees and other labor organization charges permitted by law;
  •         Payments for health club membership fees or child care services;
  •         Mass transportation commuter tickets or other employer-provided transportation, if available to all employees; and
  •         Any other deductions allowed by the LWD.

Employers must record each withholding accurately. Unless authorized by law, wage deductions and withholdings cannot reduce an employee’s gross wages below the minimum wage rate. Employers may not derive any financial gain from making wage deductions.

Statements

Employers that pay their employees through direct deposit or with a payroll debit card must provide each employee with a statement that shows all deductions taken from the employee’s wages at the time the wages are paid.

More Information

Need more information on how EPLI Insurance can protect your business? CLICK HERE or contact Metropolitan Risk Advisory at (914) 357-8444 for more information on wage payment and work hour laws in New Jersey.

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