United States: Recent Developments In U.S. Department Of Labor Overtime Regulations And Impact For New York Employers


In late November 2016, Judge Mazzant of the U.S. District Court for the Eastern District of Texas issued a preliminary injunction preventing the U.S. Department of Labor ("DOL") from implementing new regulations which, among other things, would have increased the minimum salary level required to qualify to be exempt from overtime.1 These regulations would have extended overtime eligibility to an estimated 4.2 million workers or resulted in these employees receiving substantial salary increases.

Regardless of the outcome of the injunction, New York employers will still be required to raise salaries or reclassify certain employees as non-exempt. The New York State Department of Labor ("NYSDOL") recently adopted regulations, effective December 31, 2016, similar to those issued by the DOL, that raise the salary threshold for exempt status under the New York Labor Law.

Federal Regulation

The federal Fair Labor Standards Act ("FLSA") sets forth three tests, all of which generally must be satisfied for an employee to be exempt from the FLSA's minimum wage and overtime requirements: (1) a salary basis test; (2) a salary level test; and (3) a duties test. The currently enjoined regulations, explained in further detail in the May 19, 2016 Stroock Special Bulletin (available at www.stroock.com/siteFiles/Publications/FLSAOvertime.pdf), would have significantly increased the threshold for the salary level test from $455 per week to $913 per week ($47,476 annually).

In September 2016 and October 2016, over fifty business organizations and twenty-one states filed lawsuits challenging the new regulations and moved for an emergency motion for a preliminary injunction to halt implementation, asserting that the DOL exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years.2 Judge Mazzant agreed with the plaintiffs, concluding that they had "shown a likelihood of success on the merits because the Final Rule exceeds the Department's authority."3

On December 1, 2016, the DOL filed a notice of appeal in the U.S. Court of Appeals for the Fifth Circuit in New Orleans. Although the DOL has requested expedited treatment, it is unlikely that any key decisions regarding the regulation will be made prior to the change in administration on January 20, 2017.

New York Regulation

The NYSDOL has adopted similar regulations that incrementally increase the salary threshold for exempt employees in New York.4 Depending on the size and location of the employer within New York State, the NYSDOL regulations increase the threshold to as much as $1,125 per week ($58,500 annually) by 2021. Specifically, as of December 31, 2016, the new overtime exempt salary thresholds are as follows:

  • New York City Large Employer (11 or more): $825/per week ($42,900 annually)5
  • New York City Small Employer (10 or fewer): $787/per week ($40,924 annually)6
  • Nassau, Suffolk and Westchester Employers: $750/per week ($39,000 annually)7
  • All other New York Employers: $727.50/per week ($37,830 annually)8

In addition, beginning on December 31, 2016, the minimum wage for all employees in New York increased. This increase, described in further detail in the April 11, 2016 Stroock Special Bulletin (available at www.stroock.com/siteFiles/Publications/LeaveAndWage.pdf), varies depending on the size and location of the employer. As of December 31, 2016, the new minimum wage will be as follows:

  • New York City Large Employer (11 or more): $11.00/hr.
  • New York City Small Employer (10 or fewer): $10.50/hr.
  • Nassau, Suffolk and Westchester Employers: $10.00/hr.
  • All other New York Employers: $9.70/hr.

Impact for Employers

The threshold salary amounts in New York are now higher than those under the FLSA, at least for the time being. Those New York employers that have already announced and implemented salary changes in contemplation of the new federal regulations will be in compliance with the NYSDOL regulations. New York employers who have not yet put into effect salary changes will be required to increase salary levels to comply with the NYSDOL salary thresholds. In addition, New York employers who do business in different counties will have to apply different salary thresholds, depending on the location of their employees.


1 State of Nevada, et al. v. United States Department of Labor, et al., 2016 WL 6879615, Civ. Action No. 4:16-CV-00731 (E.D. Texas, Sherman Division, Nov. 22, 2016).

2 Id., at *2.

3 Id., at *7.

4 12 NYCRR §142-3.12(c)(2)(i)(e).

5 Increasing to $975/wk ($50,700 annually) as of 12/31/17 and again to $1,125/wk ($58,500 annually) as of 12/31/18.

6 Increasing to $900/wk ($46,800 annually) as of 12/31/17; $1,012.50/wk ($52,650 annually) as of 12/31/18; and $1,125/wk ($58,500 annually) as of 12/31/19.

7 Increasing to $825/wk ($42,900 annually) as of 12/31/17; $900/wk ($46,800 annually) as of 12/31/18; $975/wk ($50,700 annually) as of 12/31/19; $1050/wk ($54,600 annually) as of 12/31/20; and $1,125/wk ($58,500 annually) as of 12/31/21.

8 Increasing to $780/wk ($40,560 annually) as of 12/31/17; $832/wk ($43,264 annually) as of 12/31/18; $885/wk ($46,020 annually) as of 12/31/19; and $937.50/wk ($48,744.80 annually) as of 12/31/21.

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.

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