The December 1 effective date for the FLSA's revised overtime regulations is fast approaching, and employers are in high gear making the necessary preparations. However, while the new federal regulations substantially raise the salary threshold for would-be exempt "white collar" employees (from $455 to $913 per week, or $23,660 to $47,476 per year), employers must keep in mind that federal law merely sets a floor which states are free to exceed. It appears that New York is poised to do just that.
On October 19, 2016, the New York State Department of Labor proposed amendments to New York state law which would, for certain employers, raise the salary exemption threshold to a level even higher than that called for by the FLSA's new overtime regulations. If signed into law, these regulations could impose substantial additional costs on employers across New York State, and especially on those in New York City.
The Proposed Regulations
The proposed regulations contain differing salary requirements based on an employer's size and the employer's geographic location within New York State. For example, larger employers in New York City will be subject to a higher salary threshold for exempt employees, whereas smaller New York City employers will be subject to a lower threshold. (Employer size is not relevant to employers outside of New York City.) Further, employers in New York City would be subject to a higher exemption threshold than employers outside of New York City. Finally, the proposed regulations would be phased in incrementally over a number of years, with employers in New York City expected to phase in a higher exemption threshold most quickly. Below is a detailed summary of the proposed regulations.
Small Employers in New York City (10 or fewer employees)
- $787.50 / week ($40,950 / year) – Effective 12/31/16
- $900.00 / week ($46,800 / year) – Effective 12/31/17
- $1,012.50 / week ($52,650 / year) – Effective 12/31/18
- $1,125.00 / week ($58,500 / year) – Effective 12/31/19
Large Employers in New York City (11 or more employees)
- $825.00 / week ($42,900 / year) – Effective 12/31/16
- $975.00 / week ($50,700 / year) – Effective 12/31/17
- $1,125.00 / week ($58,500 / year) – Effective 12/31/18
Employers in Westchester, Nassau, and Suffolk Counties
- $750.00 / week ($39,000 / year) – Effective 12/31/16
- $825.00 / week ($42,900 / year) – Effective 12/31/17
- $900.00 / week ($46,800 / year) – Effective 12/31/18
- $975.00 / week ($50,700 / year) – Effective 12/31/19
- $1,050.00 / week ($54,600 / year) – Effective 12/31/20
- $1,125.00 / week ($58,500 / year) – Effective 12/31/21
Employers Outside of New York City, Westchester, Nassau, and Suffolk Counties
- $727.50 / week ($37,830 / year) – Effective 12/31/16
- $780.00 / week ($40,560 / year) – Effective 12/31/17
- $832.00 / week ($43,264 / year) – Effective 12/31/18
- $885.00 / week ($46,020 / year) – Effective 12/31/19
- $937.50 / week ($48,750 / year) – Effective 12/31/20
What This Means for Employers
New York's proposed regulations add additional, unforeseen considerations – and obligations – for employers still working to adapt to the U.S. Department of Labor's forthcoming revisions to the FLSA overtime regulations. The escalating nature of the scheme would require New York-based employers to constantly reassess the exemption status of their employees, and be ready to make changes on an annual basis. This is in addition to the fact that the new $913/week federal salary threshold will itself update automatically beginning in 2020. Thus, assessment and reassessment of exempt/non-exempt status must become an active and consistent practice for all employers.
The New York State Department of Labor will be seeking public comment on the proposed regulations until December 3, 2016. Given the targeted December 31, 2016 effective date of the first group of salary threshold increases, further developments are likely to materialize soon.