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.
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, and how the salary regulations will impact the year to come.
First, Let’s Review: Exempt and Non-Exempt
The Fair Labor Standards Act (FLSA) and applicable state law generally requires employers to pay employees at least the minimum wage for all hours worked, and overtime pay at a rate of 1.5 times the employee’s regular rate of pay for hours worked over 40 in a workweek. Of course, some states have different overtime requirements.
Some employees are exempt from the FLSA and state minimum wage and overtime requirements (exempt employees) and others are subject to those requirements (non-exempt employees). The most common exemptions are called "white collar exemptions," which generally refer to executive, administrative, and professional employees.
Employers are required to classify employees as either exempt or non-exempt at the time of hire. This is based on certain criteria determined by the Department of Labor and applicable state agencies. Some states and local jurisdictions have their own wage and hour laws, which may provide greater protection for employees than what is provided under the FLSA. Generally, where federal, state, and local laws conflict, the law that is most beneficial to the employee prevails.
Explain the basics of exempt and non-exempt employees with this visual guide.
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 salary thresholds vary based on two factors:
- Where an employee performs work
- The size of the employer (for NYC only)
|Effective Date||NYC (11 or more employees)||NYC (10 or fewer employees)||Nassau, Suffolk, and Westchester Counties||Remainder of NY State|
|Dec. 31, 2018||$1,125.00||$1,012.50||$900.00||$832.00|
|Dec. 31, 2019||$1,125.00||$1,125.00||$975.00||$885.00|
|Dec. 31, 2020||$1,125.00||$1,125.00||$1,050.00||$937.50|
|Dec. 31, 2021||$1,125.00||$1,125.00||$1,125.00||TBD|
To be determined administratively prior to the date indicated.
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.