NEW EXEMPT SALARY THRESHOLD – As the ball is dropping in Times Square, wage and hour regulations are changing for employers in New York.
The New York Department of Labor has made it clear that on December 31, 2016, at 12:01 am, – new DOL regulations that raise the salary threshold necessary for employees to be “exempt” from overtime pay requirements will rise significantly for most private employers in New York.
We previously covered in this blog the December decision by a Texas judge to enjoin the implementation of federal regulations which would have raised those salary thresholds for exempt employees. While that was unexpected good news for many employers, New York employers did not receive a similar holiday gift. Our state DOL is going to implement its new salary thresholds, so New York employers must take note and adjust salaries if they wish to maintain the exempt status of their employees.
To complicate matters, the salary threshold will be raised to different levels in different areas of the state, as explained in the chart below.
Schedule of Increases:
“Large” New York City employers (with 11 or more employees):
- On December 31, 2016: $825 per week ($42,900 annually)
- On December 31, 2017: $975 per week ($50,700 annually)
- On December 31, 2018: $1,125 per week ($58,500 annually)
Small New York City employers (with 10 or fewer employees):
- December 31, 2016: $787.50 per week ($40,950 per week)
- December 31, 2017: $900 per week ($46,800 per week)
- December 31, 2018: $1,012.50 per week ($52,650 annually)
- December 31, 2019: $1,125 per week ($58,500 annually)
Employers in Nassau, Suffolk, and Westchester employers:
- December 31, 2016: $750 per week ($39,000 annually)
- December 31, 2017: $825 per week ($42,900 annually)
- December 31, 2018: $900 per week ($46,800 annually)
- December 31, 2019: $975 per week ($50,700 annually)
- December 31, 2020: $1,050 per week ($54,600 annually)
- December 31, 2021: $1,125 per week ( $58,500 annually)
Employers elsewhere in New York State:
- December 31, 2016: $727.50 per week ($37,830 annually)
- December 31, 2017: $780 per week ($40,500 annually)
- December 31, 2018: $832 per week ($43,264 annually)
- December 31, 2019: $885 per week ($46,020 annually)
- December 31, 2020: $937.50 per week ($48,750 annually)
What Should New York Employers Do?
If they have not already done so, they should implement these salary changes by the next payroll cycle for any exempt employee who is not earning the minimum.
If an employer does not want to raise a salary, then that employee should become eligible for overtime.
While the rationale of setting different salaries based on location is understandable, this will present a challenge for employers with locations throughout the state. These employers will have to decide whether to pay employees different salaries based on the location where they work, as opposed to one salary scale for each job title.
Every employer must do what is right for its business. However my advice is – if possible – to not make those salary distinctions and to pay all exempt employees at the higher threshold. While this may cost a bit more, the differences in the salary thresholds are relatively small, and in my opinion, not worth the administrative headache, as well as the inevitable resentment and damage to morale that will likely occur if you have employees in one office making less than employees in another office.
Whatever you do, you should make sure that you are meeting the threshold set by the DOL for your location.
We will continue to monitor developments in this area and will provide updates via this blog as the law develops.