By Daniel R. Levy

On November 16, 2011, the New Jersey Appellate Division held that registered nurses are exempt from overtime compensation under the New Jersey Wage and Hour Law (“NJWHL”), N.J.S.A. 34:11-56a1 to 56a30, even if paid on an hourly basis, because they fall within the “professional” exemption. Anderson v. Phoenix Health Care, Inc., A-2607-10T2 (N.J. App. Div. Nov. 16, 2011). The Court further held that, even if registered nurses were not exempt, a claim for overtime compensation may nevertheless fail under the NJWHL’s good faith exception, N.J.S.A. 34:11-56a25.2, if the employer establishes that it conformed to the Division of Wage and Hour Compliance’s (“Division”) “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum” salary required for exemption.

The NJWHL requires that employees pay one-and-one-half times an employee’s hourly wage for each hour worked in excess of forty hours per week. Excepted from this general rule are individuals employed in a bona fide executive, administrative, professional or outside sales capacity. N.J.A.C. 12:56-7.1. Under N.J.A.C. 12:56-7.3(a), which was in effect until mid- 2011, a professional was defined as an employee whose primary duties consisted of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education, and who is compensated not less than $400.00 per week. The regulation, however, has since been superseded by regulations adopted on August 15, 2011 that adopted the federal regulations under the federal Fair Labor Standards Act (“FLSA”). N.J.A.C. 12:56-7.2(a); 43 N.J.R. 2353.

In Anderson, plaintiffs, registered nurses formerly employed by Phoenix Health Care, Inc., filed a putative class action seeking relief for overtime compensation under the NJWHL. Plaintiffs moved for class certification and defendants cross-moved for summary judgment, arguing that registered nurses are exempt from the NJWHL’s overtime requirements and asserting that plaintiffs’ claims were otherwise barred by the NJWHL’s good faith defense. The trial judge granted defendants’ cross-motion, and plaintiffs appealed.

On appeal, the Court affirmed dismissal of plaintiffs’ NJWHL claim despite plaintiffs’ argument that they were not exempt because they were paid on an hourly, not salaried, basis. The Court reasoned that although the applicable regulation did not expressly exempt professionals paid on an hourly basis, such as a majority of registered nurses, “the NJWHL was not intended to permit overtime to such employees when they are compensated at least as much as the weekly minimum referred to in N.J.A.C. 12:56-7.3(a)(5).” The Court also held that summary judgment was appropriate based upon the NJWHL’s good faith exception because defendants conformed to the Division’s “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum.”

In a footnote, the Court recognized that N.J.A.C. 12:56-7.3 was superseded by regulations adopting the federal regulations under the FLSA. Those federal regulations state, in pertinent part, that “[r]egistered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption but licensed practical nurses generally do not qualify as exempt learned professionals.” 29 C.F.R. 541.301(e)(2). The Court stated that it was not opining as to whether the result would be the same under the newly adopted regulations. 

Employers should proceed with caution as a result of the Court’s decision in Anderson, specifically because it construed regulations that have been superseded.  If New Jersey courts continue to follow this ruling under the newly promulgated regulations, it may lead to inconsistent results under the NJWHL and FLSA. It is clear that registered nurses paid on a salary basis will likely qualify under the professional exemption under both the NJWHL and the FLSA. 

It remains unclear, however, whether registered nurses paid on an hourly basis will be found exempt under the NJWHL. In order for a registered nurse to be exempt under the FLSA, the registered nurse must be paid on a salary basis. See 29 C.F.R. 541.600(e) (stating that the salary requirement applies to nurses); Anani v. CVS Rx Servs., 788 F.Supp.2d 55 (E.D.N.Y. 2011) (registered nurses perform exempt duties and question of whether they are, in fact, exempt turns on whether they are paid on a salary basis). If New Jersey courts follow the FLSA regulations, as the newly promulgated New Jersey regulations state they will, registered nurses paid on an hourly basis will not be found exempt under the NJWHL. If, however, the decision in Anderson is followed under the new regulations, then registered nurses paid on an hourly basis will likely be found to be exempt under the NJWHL.