As the new year ushers in, it’s time to revisit The New York Department of Labor's amendments to increase the salary basis threshold for exempt employees. Those amendments went into effect last year on December 31, 2016.
If this all sounds confusing, it’s because it is. But don’t worry — Justworks is here to help. Read on to learn more on exempt vs non-exempt employee classifications, how the salary regulations will impact the year to come.
First, Let’s Review: Exempt and Non-Exempt
Before diving into the changes by the New York Department of Labor, let’s recap what ‘exempt’ and ‘non-exempt’ means.
All employees fall into one of these two categories: exempt and non-exempt.
Exempt Employees: Exempt employees are exempt from minimum wage and/or overtime requirements. The most common exemptions are called ‘white collar exemptions,’ and commonly refer to executive, administrative, and professional employees.
Non-Exempt Employees: Employees who qualify as non-exempt must receive at least the minimum wage and overtime pay for all hours worked over 40 in a workweek. Although non-exempt employees typically receive hourly pay, employers can pay them on a salary basis.
In 2016, the Department of Labor (DOL) issued a final rule that would increase the Fair Labor Standards Act (FLSA) minimum salary threshold for white collar exemptions. After a federal judge in Texas issued a preliminary injunction relating to this new overtime rule, it did not go into effect as initially planned. Despite the delay, the rule did ultimately go into effect at the end of the year.
Explain the basics of exempt and non-exempt employees with our PowerPoint slideshow.
What’s the New Change for NY?
Effective December 31, 2016, the New York Department of Labor’s amendments modified the state’s salary threshold for executive and administrative employees. The salary thresholds will increase on an annual basis, in some parts of the state, through December 31, 2021.
The new salary thresholds vary based on two factors:
- Where an employee performs work
- The size of the employer (for NYC only)
The amendments increase the thresholds from $675 per week to the following over the course of the next six years:
|Effective Date||NYC (11 or more employees)||NYC (10 or fewer employees)||Nassau, Suffolk, and Westchester Counties||Remainder of NY State|
|Dec. 31, 2017||$975.00||$900.00||$825.00||$780.00|
|Dec. 31, 2018||$1,125.00||$1,012.00||$900.00||$832.00|
|Dec. 31, 2019||—||$1,125.00||$975.00||$885.00|
|Dec. 31, 2020||—||—||$1,050.00||$937.50|
|Dec. 31, 2021||—||—||$1,125.00||—|
What Do I Need to Do?
Identify the employees who are affected by these changes.
Once you do that, you'll need to decide whether to increase their salaries to maintain their exempt status or reclassify them as non-exempt. As you get started, you can learn more about the requirements for determining exempt status here. Lastly, consider consulting an employment counsel to properly plan compliance with the scheduled increases.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.