United States: NYS DOL New Rules For Minimum Wage Increases, Exempt Employee Threshold Take Effect 12/31/16

Effective December 31, 2016, employees in New York City who work for large employers and are classified as exempt from overtime under the executive and administrative exemptions must be paid at least $825 per week ($42,900 per year) or they will lose their exemption and will be entitled to overtime pay. Additionally, all persons employed in New York City by large employers must be paid a minimum wage of at least $11.00 per hour, regardless of whether or not they are exempt from overtime pay. The overtime exempt salary threshold and new minimum wage will also increase in varying amounts for employees of small New York City employers, employers in Long Island and Westchester, and employers in the remainder of New York State.

Introduction

On December 28, 2016, the New York Department of Labor adopted its October 19, 2016 proposed rules concerning scheduled increases to the State's minimum wage and salary threshold for the executive and administrative employee exemption.

The minimum wage will increase to $11.00 per hour for persons employed in New York City who work for "large employers" (employing eleven (11) or more people), with smaller increases for "small employers" in New York City, employers in Long Island and Westchester, and employers in the remainder of New York State.

Similarly, the exempt employee salary threshold will increase to $825 per week for New York City employers with eleven (11) or more employees, with smaller increases for small employers in New York City, employers in Long Island and Westchester, and employers in the remainder of New York State. The increases are scheduled to take effect on December 31, 2016, with a schedule of further increases to be implemented through 2021 as part of the final rules.

Employers with operations in New York should review the wages and schedules of current employees and consult legal counsel to ensure compliance with the new regulations. For your convenience, an overview of the scheduled increases can be found below. Please contact us for a more substantive analysis of how these increases may affect your company's policies.

Salary Threshold for Executive and Administrative Exemptions

For New York employees to be classified as exempt from overtime under New York's executive or administrative exemption,1 employees must meet three basic tests: (i) the employee must be paid on a salary basis (i.e. the employee's rate of pay cannot be calculated based on hours worked); (ii) the employee must be paid a minimum weekly salary (salary threshold); and (iii) the employee must perform the duties of an exempt administrative or executive employee. The New York State salary threshold for exempt administrative and executive employees prior to adoption of the new rule was $675 per week ($35,100) per year, which is higher than the $455 per week ($23,660) required by the Federal Labor Standards Act (FLSA).2

Effective on December 31, 2016, New York City employees employed by an employer with a minimum of eleven (11) employees must be paid a salary of at least $825 per week ($42,900 per year) to qualify as an executive or administrative employee exempt from overtime. The salary threshold for New York City employers with ten (10) employees or fewer will increase to $787.50 per week ($40,950 per year), while the salary thresholds in Long Island and Westchester, and for the rest of New York State, will increase to $750 per week ($39,000 per year) and $727.50 per week ($37,830 per year), respectively. New York employers may not use "bonus" income or any other form of "make up" payments to meet the test under New York law.

The new rule also includes a schedule of salary threshold increases through 2021, which are as follows:

Executive and Administrative Exemptions, Minimum Weekly Salary Required3
Location 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 2021*
NYC – Large Employers of 11 or more) $825.00 $975.00 $1,125.00 $1,125.00 $1,125.00 $1,125.00
NYC – Small Employers (10 or less) $787.50 $900.00 $1,012.50 $1,125.00 $1,125.00 $1,125.00
Long Island & Westchester $750.00 $825.00 $900.00 $975.00 $1,050.00 $1,125.00
Remainder of New York State $727.50 $780.00 $832.50 $11.80 $12.50 *

The increases apply to the employees covered by the Miscellaneous Industries, Hospitality Industry and Building Service Industry Wage Orders.

Employers in New York should be particularly mindful of these thresholds in contrast to proposed changes to these thresholds under the FLSA. Although the proposed increase to the salary threshold under the FLSA did not take effect on December 1, 2016 as scheduled, executive or administrative employees in New York must nevertheless meet thresholds set forth under New York law in order to be classified as exempt from overtime.4 Employers should also consider reviewing employees' exempt classification status and strategies for reclassification in light of the new rules.

Minimum Wage

On April 4, 2016 New York Governor Andrew Cuomo signed the $15 Minimum Wage Plan, which sets forth a schedule to increase the minimum wage in New York City, Long Island and Westchester to $15 per hour by the year 2021, and to $12.50 per hour in the remainder of New York State by that same year. Under the new law, New York's current minimum wage of $9.00 per hour will increase incrementally each year on a schedule through 2021, and after 2021 will increase as determined by the Director of the Division of Budget and based on economic indices including the Consumer Price Index. The new Minimum Wage Orders reflecting these scheduled increases were adopted by the New York State Department of Labor on December 28, 2016.

The new general minimum wage rate for New York employers with eleven (11) or more employees will be $11.00 per hour beginning on December 31, 2016. The minimum wage for New York employers with ten (10) or fewer employees will increase to $10.50 per hour. The minimum wage for employers in Long Island and Westchester, and the remainder of New York State, will increase to $10.00 per hour and $9.70 per hour, respectively.

The schedule for the subsequent general minimum wage rate increases are as follows:

General Minimum Wage Rate Schedule5
Location 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 2021*
NYC – Large Employers of 11 or more) $11.00 $13.00 $15.00 $15.00 $15.00 $15.00
NYC – Small Employers (10 or less) $10.50 $12.00 $13.50 $15.00 $15.00 $15.00
Long Island & Westchester $10.00 $11.00 $12.00 $13.00 $14.00 $15.00
Remainder of New York State $9.70 $10.40 $11.10 $11.80 $12.50 *

* The minimum wage in 2021 for New York State and beyond will be based on percentage increases based on economic indices, including the Consumer Price Index, as determined by the Director of the Department of Budget.

The general minimum wage rate is applicable to all of the Wage Orders. Effective December 31, 2016, the tipped minimum wage will also increase under the Hospitality Industry Wage Order.

Employers should review their current employees' wages and consult with legal counsel to ensure compliance. Employers should also review the new minimum wage orders for additional information on updates to available minimum wage allowances under the applicable industry Wage Order. Employers must also continue to keep accurate records of employees' wages and hours and make sure to update the Minimum Wage Information posters posted in their establishments by December 31, 2016. Copies of the posters are available here.

The new published Minimum Wage Orders (which include the exempt employee thresholds) can also be found on the New York State Department of Labor website:

The New York State Department of Labor provides additional guidance on its website.

Footnotes

1. New York law also has an exemption for professional employees. However, New York does not provide for a minimum salary threshold for such employees, other than that provided under the FLSA.

2. The United States Department of Labor adopted an increase to the federal exempt, administrative and professional salary threshold to $913 per week, which was to take effect on December 1, 2016. However, in November 2016, a U.S. Districtl Judge for the Eastern District of Texas enjoined the Department of Labor from implementing the final rule nationwide. While there is therefore no federal requirement at this time to increase the salary threshold to $913 per week, the injunction is being appealed and employers should be prepared to act in case the injunction is lifted.

3. Source.

4. While the proposed revisions to the FLSA remain enjoined, employers should continue to rely on the existing FLSA thresholds in addition to New York State law.

5. Source.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Fisher Phillips LLP
Smith Gambrell & Russell LLP
Lewis Brisbois Bisgaard & Smith LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Fisher Phillips LLP
Smith Gambrell & Russell LLP
Lewis Brisbois Bisgaard & Smith LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions