Changes in New York Overtime Exemption Standards | Employment Law Update

Starting this new year, New York overtime exemption standards are changing. As of December 31, 2018, the minimum salary that New York employers must pay their employees to have overtime exemption status is increasing.

Under the Fair Labor Standards Act [Section 13(a)(1)], employees can be exempt from both minimum wage and overtime pay if they meet certain requirements such as: being paid on a salary basis at not less than the designated amount, being in a position of management, having the authority to hire, fire, or change the employment status of other employees, ect.

This year, the minimum salary employees must be paid to become or remain overtime exempt is increasing in New York. While New York City employers with 11 more more employees used to be required to pay overtime exempt employees a minimum of $975 per week ($50,700 annually), beginning on Dec. 31st of 2018, they will have to meet the minimum threshold of $1,125 per week ($58,500 annually). New York City employers with 10 or fewer employees will have to increase their employees’ salaries from a minimum of $900 per week ($46,800 annually) to $1,012.50 per week ($52,650 annually).

This increase warrants the examination into how employers should react: while some may instill pay raises to meet the new wage requirements, some employers may find that it makes more sense to reclassify some exempt employees as salaried-nonexempt. Another option would be to evaluate whether any current employees may meet the requirement for a “fluctuating workweek” method of compensation, which is permitted so long as there is an understanding between the employer an employee in regards to a fixed salary for the hours worked in any given workweek, the employee works fluctuating hours week to week, and the employee is paid for their overtime at a rate no less that ½ of the employee’s regular hourly pay.

Other alternatives for a company to consider include the “Belo” plan which exempts overtime pay requirements for employees with particular duties which may necessitate irregular work hours, or even hiring additional staff to supplement the work of employees who would otherwise have to stay overtime to complete it.

Evaluating these different alternatives will allow employers to maximize cost efficiency while complying with applicable wage and hour laws.