Guide to New Jersey employee benefits and HR rules

Is your business compliant with New Jersey's employment laws?

If your organization is New Jersey-based or you employ New Jersey workers, you must know the ins and outs of benefits and HR compliance in New Jersey. This guide provides a comprehensive overview of New Jersey's regulations for small to medium-sized businesses.

Topics covered in this guide include:

• Employment laws in New Jersey
• What are employee rights in New Jersey?
• Required and non-required employee benefits in New Jersey
• Health insurance in New Jersey
• Wages laws in New Jersey

Employment laws in New Jersey

The federal government requires employers to follow basic employment laws for certain employee benefits and HR regulations. However, New Jersey has many employment laws that provide even greater protections to workers than federal laws alone. This is one reason why New Jersey is among the friendliest states for employees, especially for remote workers.

Below are state-specific employment laws for New Jersey:

• At-will employment
  • New Jersey is an “at-will” employment state. This means an employer can fire an employee at any time without notice and for any reason unless they have a specific contract stating otherwise. Employers aren’t legally required to provide an explanation for the termination of employment.
  • It’s illegal for New Jersey employers to fire employees based on discriminatory reasons, such as for their race, national origin, gender identity, sex, color, religion, sexual orientation, gender, age, medical reasons, etc.
• New Jersey Civil Rights Act
  • The New Jersey Civil Rights Act prohibits employers from violating an employee’s rights under the U.S. Constitution, the New Jersey Constitution, and other New Jersey laws.
• New Jersey Law Against Discrimination (LAD)
  • New Jersey employers can’t discriminate against employees because of their race, religion, national origin, disability, age, sex, or sexual orientation. It also covers other protected characteristics, like marital status, ancestry, or genetic characteristics.
  • This law provides broader and stronger protections than federal workplace discrimination laws, such as victims receiving compensation for emotional pain and suffering and punitive damages.
• New Jersey Equal Pay Act
  • This Act makes it unlawful for employers to compensate employees, including benefits, of a protected class less than the rate paid to employees outside the class for similar work when considering all factors, such as skill, effort, and responsibility.
  • An employer may pay a different compensation rate if they prove they made the decision using non-discriminatory reasons, such as seniority or merit.
• New Jersey Anti-Wage Theft Act
  • Victims of wage theft can receive unpaid wages plus damages equal to 200% of the unpaid wages. Wage theft in New Jersey includes paying an employee less than minimum wage or not paying overtime. The Act also covers wages lost because of retaliation and attorney’s fees.
  • Eligible employees can file for wage theft for up to six years.
• Opportunity to Compete Act
  • This Act prohibits employers with 15 or more employees from making any verbal or written inquiry about an applicant's criminal record during the initial employment application process until after the employer conducts the first interview.
  • Suppose inquiries or searches happen before the first interview. In that case, employers may be subject to a $1,000 fine for the first willful violation, $5,000 for the second violation, and $10,000 for each subsequent violation.
  • Employers can refuse to hire an applicant for employment based on the applicant’s criminal history.
• New Jersey Conscientious Employee Protection Act
  • This Act prohibits employer retaliation against employees who blow the whistle regarding their employer's improper, deceptive, or illegal conduct. It also includes conduct related to improper patient care by a healthcare provider.
  • It also prohibits retaliation if an employee provides information or testifies in a government agency hearing or investigation.
• Millville Dallas Airmotive Plant Job Loss Notification Act
  • Employers with 100 or more full-time employees who have been in business for longer than three years must provide at least 60 days' notice, or as much notice as is required by the federal Worker Adjustment and Retraining Notification (WARN) Act, in the event of a mass layoff.
  • Business owners must give notice to each terminated employee, the chief elected official of the municipality, and the Commissioner of Labor and Workforce Development.
• New Jersey Child Labor Law
  • All minors younger than 18 who work in New Jersey must have an employment certificate, also known as "working papers," or a special permit. The law requires employers to have a certificate for each minor that they employ.
• New Jersey Crew Leader Registration Act and Selected Farm Labor Laws
  • This Act requires employers to register agricultural crew leaders and outlines the minimum wage and wage payment schedule. It also authorizes the inspection of migrant farm labor camps, drinking water and toilet facilities, independent contractors, growers, and food processors operating within the state.
• New Jersey Industrial Home Work Law and Regulations
  • This law dictates that employers and home-based businesses involved in t manufacturing and distributing specific goods must have the proper licenses, permits, and certificates.
  • It is illegal for an individual working for an apparel manufacturer or contractor to manufacture apparel in the home.
• Background checks
  • An employer may obtain an applicant's credit report for employment purposes if they notify the applicant in writing beforehand and the applicant consents.
  • It’s illegal for employers to inquire about salary history, including screening applicants based on their salary history or requiring that an applicant's salary history meet any minimum or maximum criteria.
  • Employers may use salary history to determine the applicant's salary, fringe benefits, and other compensation. They can also verify salary history if the applicant voluntarily discloses it.
• Drug and lie detector testing
  • New Jersey doesn’t have any workplace drug testing requirements. However, employers can conduct pre-employment testing, reasonable suspicion testing, and random testing of employees in safety-sensitive positions.
  • Employers can’t request or require employees or applicants to submit to a lie detector test as a condition of employment or continued employment with limited exception.
• Social media privacy
  • It’s illegal for employers to require current or prospective employees to provide usernames and passwords for their personal social media accounts or force employees to provide access to these accounts.
  • Employers are subject to penalties for taking any adverse action against an employee for failing to provide such information.
• Unemployment discrimination in job advertisements
  • New Jersey law prohibits employers from publishing a job posting that states that current employment is a job qualification or that the employer won’t consider unemployed individuals for a position.
  • This doesn’t apply to setting specific qualifications for a job, such as holding a professional or occupational license or having a minimum level of training.

Now that we’ve reviewed the New Jersey-specific laws, we’ll review the state’s employee rights.

What are employee rights in New Jersey?

Employees in New Jersey have many rights under state and federal law. If you have or plan to hire employees in the state, you'll need to know what protected rights your employees have, no matter the size of your organization.

Some state rights include:

• Fair wages
  • Employers must pay at least the state minimum wage and overtime rates.
• Meal breaks and rest periods
  • New Jersey labor laws require employers to provide employees younger than 18 with a 30-minute meal period after five consecutive hours.
  • The state doesn’t require employers to provide meal periods or rest breaks for employees aged 18 or older. But, employers must pay for breaks lasting less than 20 minutes if they choose to offer them.
• Nursing mother breaks
  • Employers must allow nursing employees to take reasonable breaks daily to express breast milk unless the break would cause an undue hardship on the business.
• Safety in the workplace
  • The Occupational Safety and Health Act (OSHA) requires employers to provide a safe workplace free of known dangers. Employers must also provide safety equipment, training, and safe working conditions for their industry.
• Hostile working environment protections
  • The New Jersey Law Against Discrimination prohibits sexual harassment in the workplace. This includes unwelcome sexual advances, requests for sexual favors, or any other verbal or physical conduct of a sexual nature.
• Employee privacy
  • Employers may only listen to phone correspondences for specific purposes, such as quality assurance and training. Before the call, employers must notify employees that they will be monitoring their correspondence.
• Defamation of character
  • If a previous employer gives an employee a negative reference out of spite or exaggeration, the employee may file a defamation case.
• Discrimination against tobacco and cannabis users
  • It’s illegal for employers of all sizes to discriminate or take adverse actions against employees because they either do or don’t use tobacco or cannabis products.
  • This only applies to retaliation for using the products outside of work. Policies for a smoke-free or drug-free workplace are allowed.
• Discussion of wages
  • When investigating or taking legal action regarding discriminatory pay practices, employees can ask current or former coworkers about compensation.

Required and non-required employee benefits in New Jersey

Some employee benefits are mandatory under New Jersey labor laws and federal regulations. However, some required benefits in other states don’t apply in New Jersey. Many benefits are up to the individual businesses’ discretion.

Health insurance in New Jersey

The New Jersey Health Insurance Market Preservation Act requires all New Jersey residents to have a health insurance policy that meets minimum essential coverage (MEC) throughout the year. If an individual doesn’t qualify for a valid exemption, they must make a shared responsibility payment on their income tax return.

Designed to support the Affordable Care Act (ACA), this Act encourages more residents to get health coverage, stabilizes New Jersey’s insurance market, and reduces health insurance premiums.

While this may be the case for individuals, no state law requires employers with fewer than 50 employees to offer health insurance coverage. However, the ACA requires employers with 50 or more full-time equivalent employees (FTEs) to provide insurance with MEC.

However, employers with fewer than 50 employees shouldn’t miss the opportunity to provide health benefits to their employees. Offering health benefits to your employees is a great way to attract and retain top talent.

While traditional group health insurance is a popular option, rising premium costs have made it challenging for small to medium-sized businesses to offer the benefit.

There are some alternatives for small business owners who can't offer group coverage due to participation requirements or the high price of the premiums.

Health reimbursement arrangement (HRA)

An HRA is an IRS-approved, formal health benefit funded entirely by the employer. It allows you to reimburse your employees, tax-free, for their individual health plan premiums and qualifying medical expenses.

Your employees can use their HRA to choose and purchase the individual health insurance plan that meets their healthcare needs and budget. New Jersey employers save money by not buying a group health plan and instead setting a fixed monthly allowance. You only reimburse employees when they incur an eligible medical expense.

Some HRAs, such as the individual coverage HRA (ICHRA), can satisfy the ACA’s regulations for applicable large employers (ALEs), making an HRA a health benefit that can work for organizations of all sizes.

Wage laws in New Jersey

Various state laws impact wages and compensation in New Jersey. Below are the most essential requirements.

Minimum wages

New Jersey has a state minimum wage that exceeds the federal minimum wage. It will increase annually based on inflation.

Tipped wages

Employers must pay tipped employees a minimum wage of $5.62 per hour before tips. If the employee’s tips don’t equal the state’s minimum hourly wage, the employer must pay the difference to equal $15.49 per hour. If the employee makes more than minimum wage in tips, the employer doesn’t need to pay anything extra.

Subminimum wages

The law allows employers to pay individuals with disabilities at a subminimum wage. However, the employee can’t receive a wage less than 50% of the current minimum wage. Employers must have special permits detailing the duration, type of work performed, and payment of wages.

Wage laws for specific industries

The State Building Service Contracts Act sets forth the payment of federal wage and benefit rates for workers performing "building services" on state-owned or leased properties or premises.

For healthcare workers, the Wage and Hour Law defines the conditions under which medical care facilities may require certain hourly employees to work overtime hours.

Hours worked

Employers must count all the time an employee is at work or on duty as hours worked. An employee who reports for work at the employer’s request must receive at least one hour’s pay at their regular rate, except where the employer and employee have agreed on the minimum number of hours to work that day before the work day ends.

Business owners don’t need to count “on call” time toward hours worked when the employee isn’t required to remain on the job site and is free to do as they choose, as long as the employer knows where to reach them. If an employee goes on an on-call assignment, only the time spent making the call are hours worked.

Overtime pay

New Jersey’s overtime pay requirements are similar to the federal overtime standards. Employers must pay employees overtime of 1.5 times their regular pay for any hours they work more than 40 in a standard workweek. Certain exemptions include any individual employed in an executive, administrative, or professional capacity.

In the event of a dispute, the New Jersey Wage Collection Law allows aggrieved employees to demand and collect all “wages” due and owing to them, including commissions and bonus payments.

Prevailing wages

The New Jersey Prevailing Wage Act outlines the payment of prevailing wage rates for workers on construction projects and establishes fair bidding procedures for union and non-union workers.

Construction employees eligible for prevailing wages include those who work on federal or state government or government-funded construction projects or perform certain federal or state government services. Prevailing wage rates may be different from the state’s minimum wage.

Notice of pay rate

Employers must notify all employees of their pay rate and regular pay schedule at the time of hire and of any changes to their pay rates or pay schedule in enough time before the changes.

Employers may reduce an employee’s pay rate if they give the affected employee advance notice and the reduction doesn’t bring the pay rate below the state’s minimum wage.

Pay methods

Under New Jersey law, an employer may pay wages by:

• Cash
• Payable checks
  • Employees must be able to cash the check in full at banks without difficulty, and the employer must pay the bank’s check cashing fees.
• Direct deposit
• Payroll card

Paying by direct deposit or electronic paycards is only allowed if the employee provides written consent.

Pay frequency

Non-exempt employees must receive their full wages due at least twice a month and on regular paydays designated in advance. Employers must pay salaried employees in full at least once a month on a regularly established schedule.

If a regular payday falls on a day when the business is closed, employees must receive payment on the previous workday unless a collective bargaining agreement states otherwise.

Pay deductions

The New Jersey State Wage Payment Law stipulates the time, manner, and mode of payment. It also prohibits withholding wages for illegal deductions, such as damage or cash register shortages.

The following are allowable pay deductions under Pennsylvania law:

• Deductions required by local, state, or federal law.
  • This could include deductions for taxes, social security, FICA, Medicare, or any court-ordered deductions.
• Deductions detailed in written agreements between the employer and employee, such as employee benefits and programs, stock options, etc.

All employers must provide each employee with a statement of deductions made from their wages for each pay period.

Final pay

When an employee separates from employment—regardless of how they left the company—they must receive their final paycheck containing all their remaining wages by their next regularly scheduled payday. An employer has an extra ten days to pay if they suspend an employee due to a labor dispute.

An employer may pay all wages owed to a deceased employee in the following order:

• Surviving spouse
• Children age 18 and older in equal shares or to the guardian of children younger than age 18
• Father and mother, or survivor
• Siblings
• The person who pays the funeral expenses

Severance pay

New Jersey’s minimum wage laws don’t require employers to provide employees with severance pay. However, if an employer chooses to provide severance benefits, they must comply with the terms outlined in their company policy.