TOPIC: PAYMENT OF WAGES AND BENEFITS

DEDUCTIONS FROM OR WITHHOLDING OF WAGES

The New Jersey Wage Payment Law forbids withholding or diverting any portion of an employee's wages,* despite any agreement to the contrary, except for the following: Sums which an employer is "required or empowered" to withhold or divert under State or federal law (such as taxes, union dues and initiation fees, garnishments). Contributions authorized either in writing by employees or under a collective bargaining agreement to the following: employee welfare plans; insurance plans; retirement and profit-sharing plans; plans establishing individual or group retirement annuities, as defined by the Internal Revenue Code, section 26 U.S.C. 408 (b); individual retirement accounts at any State or federally chartered bank, savings bank, or savings and loan association, as defined by 26 U.S.C. 408(a). Payments authorized by employees for employer-sponsored programs for the purchase of insurance or annuities on a group or individual basis. Contributions authorized either in writing by employees or under a collective bargaining agreement for payment into company-operated thrift plans or into security-option or security-purchase plans to buy securities of any corporation at or below market price, provided such securities are listed on a stock exchange or are marketable over the counter. Payments authorized by employees into personal savings accounts, such as to savings fund societies, savings and loan associations, credit unions; payments to banks for Christmas and vacation funds; payments for the purchase of U.S. Government bonds - provided all such deductions are approved by the employer. Contributions authorized by employees for organized and generally recognized charities, if the deductions are approved by the employer. Deductions to rectify payroll errors. Repayment of employer loans to employees, and payment for company products, made in accordance with a periodic payment schedule contained in the loan or purchase agreement. Recoupment of pay advances and advances of expense money.# Payments authorized by employees or their collective bargaining agent for the rental, laundering or dry-cleaning of work clothing or uniforms; payment for safety equipment - provided all such deductions are approved by the employer. Payments for mass transportation commuter tickets, if authorized by the employee in writing or in a collective bargaining agreement. Contributions (to a maximum of $5 per week) to certain political action committees organized to aid or oppose candidates for State or local office, or public questions, if authorized by the employee in a writing which includes the statement that his contribution is voluntary and in compliance with State law. Deductions may be made for only one committee at a time. Installment payments to satisfy financial obligations of an employee to the State of New Jersey in amounts expressly authorized by the employee, and pursuant to a system instituted by the employer. * The term "wages" is defined in the statute as direct monetary compensation, including commissions, but excluding any form of supplementary incentives and bonuses "which are calculated independently of regular wages and paid in addition thereto". By interpretation, vacation pay and holiday pay are "wages". # Deductions may not be made in amounts which reduce an employee's pay below the State or Federal minimum wage.

FREQUENCY AND METHOD OF PAYMENT OF WAGES

State law requires that the full amount of wages and salaries be paid to all employees at least twice during each calendar month, except that "executive, supervisory and other special classifications of employees"* need be paid only once each calendar month. The interpretation of the New Jersey Department of Labor is that the requirement of semi-monthly payment is not satisfied by monthly payment which includes prepayment for the balance of the month (e.g., payment on the 15th of a month of full salary for the entire month). Payment must be made on regularly occurring days designated in advance, which may be no later than 10 working days from the end of the pay period in which the money was earned. If the regular pay day falls on a non-work day, payment must be made on the immediately preceding work day. When an individual's employment is terminated for any reason, or is suspended because of layoff or labor dispute, payment must be made no later than on regular payday, except that if a labor dispute involves employees who prepare payrolls, the employer may have an additional 10 days in which to make payment. In the case of employees compensated in full or part on an incentive basis, payment at the time indicated of "reasonable approximation" of all wages due will suffice until the exact amounts can be computed. The payment may be made available in the customary manner or, if the employee so requests, by mail. Payment may be made by checks if "suitable arrangements" have been made for cashing them "without difficulty" and for the full amount for which they are drawn. Alternatively, with the employee's consent the amount of wages may be deposited in a bank account in the employee's name, subject to withdrawal by the employee. If the employee is required to pay a fee for the cashing of a check, the employer shall bear the burden of the fee. There is no specific statutory requirement that employees be allowed time off from work for the purpose of cashing paychecks. However, if the only place where a paycheck can be cashed is available only during an employee's working hours and it is not conveniently located, the Department of Labor might require that time off be granted (but without pay). * The Department of Labor interprets this phrase generally as applying to executive/supervisory type employees and others of equivalent rank who may or may not be "exempt" from overtime pay requirements. However, it concedes that because these terms are not defined in the statute itself, employers are free to determine the "special classifications."

WAGES OF DECEASED EMPLOYEES

Upon the death of an employee, in the absence of actual notice of the pendency of probate proceedings and after presentation of proof of relationship and "proper demand", an employer may make payment of all wages due to the deceased, in the following order of preference: spouse, children (or to the guardian of those under age 18), parents, brothers and sisters, or if there are none of the foregoing, to the person who pays the funeral expenses. As an alternative, payment may be made to the administrator of the estate of the deceased. Otherwise, payment shall be made to the executor.

PENALTIES FOR VIOLATION

An employer who “knowingly and willingly” violates any of the foregoing provisions 95 is subject to a fine of $100 to $1,000. Each day of violation is a separate offense. In addition, violators are subject to “administrative penalties” and “administrative fees”, assessed by the New Jersey Commissioner of Labor: from $250 to $500, and from 10% to 25% of amounts due but not paid to employees. Further, where the Commissioner makes an award of back pay, he or she may also award interest under circumstances.

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This document is intended for general information purposes only and should not be used or taken as legal advice or legal opinion on any specific facts or circumstances. For further information on the contents of this document, please contact John Sarno, President at (973) 758-6800 or e-mail john@eanj.org.

Employers Association of New Jersey 30 W. Mount Pleasant Ave., Suite 201, Livingston, NJ 07039 Phone: (973) 758-6800 or (609) 393-7100 * Fax: (973) 758-6900   Contact EANJ

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