The New Jersey Wage Payment Law seems like it should be rather simple, but it’s perhaps the most complicated employment law in the state. Full of traps for the unwary, the law can spell big trouble for even innocent mistakes, with fines of up to $1,000 per violation.
The state’s Division of Wage and Hour Compliance enforces the law, which covers all New Jersey private employers, even those with only one employee. It requires at least two paydays per calendar month unless the employer specifically sets another pay period. If a payday falls on a non-business day, you must dispense payroll on the last business day prior to the regularly scheduled payday.
The wage payment law stipulates the conditions under which an employer may withhold or divert any portion of an employee’s wages. In addition to all payroll taxes and other diversions required or authorized by the federal or state government, employers may withhold or divert (with employees’ written permission):
- Health or retirement benefits
- Company stock purchases
- Personal savings or Christmas club programs
- Payments for purchases of company products, such as safety equipment, or repayments of employer loans
- Charitable contributions
- Payments for rental and cleaning of uniforms
- Union dues
- Union-sponsored contributions to political committees
- Political contributions to specific candidates
- Employer-sponsored insurance or annuities
- Other deductions approved by the Commissioner of Labor
The New Jersey Wage Payment Law also covers procedures on payment of final wages upon termination. A final check must include all money due to the worker on the next regularly scheduled payday. When a commission or bonus whose value hasn’t yet been calculated is due, you must pay a reasonable estimate of it until the exact amount can be computed.
The law covers involuntary and voluntary :
- Involuntary partings, such as discharge, termination, layoff or a mutual agreement to leave in lieu of being fired, and death. In these situations, the employer has six days from the effective date of discharge to issue a final paycheck. (If the employer is closed on that day, the check is due the next business day.)
- Voluntary partings, such as employees who quit, walk off the job or retire. For them, the last paycheck is due on the next regularly scheduled payday following their last day of work.
In the case of a deceased employee, you should send the final paycheck to the designated beneficiary in the employee’s will. If no clear beneficiary is listed, employers must pay in the following order:
- Surviving spouse
- Children ages 18 years and over in equal shares, or to the guardian of children under age 18
- Father and mother or survivor
- Sisters and brothers, or to the person who pays the funeral expenses
Hiring: Medical exams and polygraphs
The wage payment law also governs certain hiring procedures. For example, employers who require applicants to undergo medical exams must incur the cost. It’s illegal to require an applicant or employee to pay for an employer-required physical.
Further, employers may not require employees to take polygraph tests unless:
- The employer is authorized to manufacture, distribute or dispense controlled dangerous substances pursuant to the New Jersey Controlled Dangerous Substances Act.
- The employee or applicant will be directly involved in manufacturing, distributing or dispensing legally distributed, controlled dangerous substances or have access to them.
- The polygraph test covers only events that occurred in the past five years, and it addresses only mishandling of controlled substances. Normal baseline establishing questions are permitted.
Additionally, the law prohibits discrimination in pay based on gender, race or any of the same protected classes listed in the New Jersey Law Against Discrimination.
Employers are required to give employees 30 days’ notice if they terminate their health coverage. If employers change health plans, they must notify employees immediately. Don’t miss these deadlines or you could face fines of up to $200 per employee.
Also, health insurance carriers must notify employers 60 days in advance of any premium increases. All notices covered by the law must be in writing.
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