116: NY OT Exemption Rule Change and Other Updates

Had the U.S. Department of Labor’s rule change, increasing the federal minimum, not been stayed on November 22, 2016 by a Federal judge in Texas, the New York increase wouldn’t have mattered, at least not for calendar year 2017.
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New York increased their minimum salary requirement for the administrative employee overtime exemption, effective December 31, 2016.

In this episode we’ll learn about a New York State Department of Labor rule change effecting all employers in the Empire state.

I also want to let you know about a challenge to the City of Philadelphia’s Wage Equity ordinance.

I don’t know how I missed the fact that the state of New York increased their minimum salary requirement for the administrative employees overtime exemption, effective December 31, 2016.

Had the U.S. Department of Labor’s rule change, increasing the federal minimum, not been stayed on November 22, 2016 by a Federal judge in Texas, the New York increase wouldn’t have mattered, at least not for calendar year 2017.

New York State’s increase:

However, since the U.S. DOL’s increase from $23,660 to $47,476 didn’t happen, the New York minimums ended up impacting all employers in the state. Some we effected more than others because the new law is location specific. And, in New York City, there are two different minimums. One applies to employers with 1 to 10 employees and the other to employers with 11 or more.

As a quick refresher, employees who qualify as exempt under the Fair Labor Standards Act administrative exemption, are not entitled to overtime compensation.

To determine who qualifies for the exemption you have to look a three areas; their duties, how they are paid, or the basis, and how much they are paid, or the level.

It was back in October of 2016, when the New York State Department of Labor proposed an increase in the minimum salary required to qualify for the overtime exemption for administrative employees.

They ultimately finalized that rule and since the U.S. DOL’s increase was stayed, the NY DOL’s rule….rules.

What does that look like? 

As a New York employer, you fall into one of four categories. There are two categories for employers in NYC (one for employers with up to 10 employees and the other for everyone else). Then you have all employers in Nassau, Suffolk & Westchester counties. And finally, a category for all other employers in all other locations.

Plus, the minimum salary increase in each of the next two years in all four categories, and for the next two years after that, for all employers outside of New York City.

California may join New York:

There is an Assembly Bill on the table in California that would raise the minimum for the exemption to the same $47,472 that the U.S. DOL’s rule established. This Bill also says “or an amount no less than twice the state minimum wage for full-time employment, as defined, whichever amount is higher.”

The California state minimum wage is $10.50 for employers with 26 or more employees and $10.00 for employers with less than 26. Those rates are already set to increase every year so by 2019, the $47,472 will be LESS than 2 times the state minimum wage for employers with 26 or more employees and by 2020 it will less than 2 times the state minimum for employers with less than 26.

That means you’ll have to increase your administrative exemption employees salary in 2019 for 26+ employees and 2020 for the rest of you. And, every year after that as well.

Just remember that is 2 times the sate minimum wage not the county or city minimum wage.

Yeah, it just keeps getting more and more complicated to be an employer in the U.S.

Philadelphia Chamber of Commerce sues City of Philadelphia:

On episode 106 I told you about Philadelphia’s new wage equity ordinance that will take effect on May 23, 2017.

This law makes it an unlawful employment practice for an employer, employment agency or employee/agent of an employer/agency to:

    • Ask a job applicant, in writing or otherwise, about his or her wage history;
    • Require disclosure of wage history;
    • Condition employment or consideration for an interview on the disclosure of wage history;
    • Retaliate against a job applicant for failing to disclose his or her wage history; or,
    • Rely on a job applicant’s wage history from a current or former employer to determine the wages for that individual at any stage of the employment process.

Well, the Philadelphia Chamber of Commerce has filed a lawsuit challenging the constitutionality of the law claiming that it violates an employer’s right to free speech.

According to a philly.com post, the Chamber’s CEO also said that “…We think it’s a good venue to really signal that we would like to see a shift in the regulatory environment of our local government.”

Working Families Flexibility Act:

And finally, I wanted to mention that there’s a new bill in Congress – well, it’s actually a reintroduced bill called Working Families Flexibility Act.

This act would amend the Fair Labor Standards Act to allow you and your employees to enter into a voluntary agreement to give paid time off in lieu of overtime pay. You’ll have to provide 1.5 hours of paid time off for every hour worked in excess of 40 in a week but only up to a maximum of 160 hours.

So imagine that! You and your employees will be able to enter into a voluntary agreement! Too bad it takes a new law to allow it. Thank you so much oh benevolent rulers for permitting us to have a little freedom.

About the author, Thomas

I have 20 of years insurance industry experience in C-level management, focusing on all aspects of workers compensation, risk management, loss control, employee benefits, HR, payroll and professional employer organization (“PEO”) operations. Currently, I am the owner and CEO of Humanly HR, and founder and host of SmallBiz Brainiac; a podcast providing employer intelligence to small business owners.

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