Decision Enjoining Federal Overtime Rule Changes Will Not Affect Proposed Increases Under New York State’s Overtime Laws

As we recently reported on our Wage & Hour Defense Blog, on November 22, 2016, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction enjoining the U.S. Department of Labor from implementing its new overtime exemption rule that would have more than doubled the current salary threshold for the executive, administrative, and professional exemptions and was scheduled to take effect on December 1, 2016. To the extent employers have not already increased exempt employees’ salaries or converted them to non-exempt positions, the injunction will, at the very least, appear to allow many employers to postpone those changes—but likely not in the case of employees who work in New York State.

On October 19, 2016, the New York State Department of Labor ("NYSDOL") announced proposed amendments to the state’s minimum wage orders (“Proposed Amendments”) to increase the salary basis threshold for executive and administrative employees under the state’s wage and hour laws (New York does not impose a minimum salary threshold for exempt “professional” employees).  The current salary threshold for the administrative and executive exemptions under New York law is $675 per week ($35,100 annually) throughout the state.  The NYSDOL has proposed the following increases to New York’s salary threshold for the executive and administrative exemptions:

Employers in New York City

Large employers (11 or more employees)

—$825.00 per week ($42,900 annually) on and after 12/31/16

—$975.00 per week ($50,700 annually) on and after 12/31/17

—$1,125.00 per week ($58,500 annually) on and after 12/31/18

Small employers (10 or fewer employees)

—$787.50 per week ($40,950 annually) on and after 12/31/16

—$900.00 per week ($46,800 annually) on and after 12/31/17

—$1,012.50 per week ($52,650 annually) on and after 12/31/18

—$1,125.00 per week ($58,500 annually) on and after 12/31/19

Employers in Nassau, Suffolk, and Westchester Counties

—$750.00 per week ($39,000 annually) on and after 12/31/16

—$825.00 per week ($42,900 annually) on and after 12/31/17

—$900.00 per week ($46,800 annually) on and after 12/31/18

—$975.00 per week ($50,700 annually) on and after 12/31/19

—$1,050.00 per week ($54,600 annually) on and after 12/31/20

—$1,125.00 per week ($58,500 annually) on and after 12/31/21

Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties

—$727.50 per week ($37,830 annually) on and after 12/31/16

—$780.00 per week ($40,560 annually) on and after 12/31/17

—$832.00 per week ($43,264  annually) on and after 12/31/18

—$885.00 per week ($46,020 annually) on and after 12/31/19

—$937.50 per week ($48,750 annually) on and after 12/31/20

The publication of the NYSDOL's Proposed Amendments opened a 45-day public comment period. During this period, the NYSDOL will accept comments on the Proposed Amendments until December 3, 2016. The NYSDOL will then review any comments and publish new wage orders. The Proposed Amendments, if finalized by the NYSDOL, would become effective on December 31, 2016.

While New York employers may not, at this moment, be required to increase exempt employees’ salaries to $913 under the currently enjoined federal rule, they would still be required to comply with NYSDOL regulations, which, in all likelihood, will result in an increase to the current $675 weekly salary threshold for exempt executive and administrative employees.  Employers should also keep in mind that the salary threshold for the executive and administrative exemptions under the NYSDOL’s regulations will, if the Proposed Amendments are adopted, increase on December 31 of each year until, at least for many counties, the threshold reaches $1,125 per week.  Employers should consider these systematic annual salary increases when deciding by how much to increase exempt executive and administrative employees’ salaries this year, and whether surpassing this year's proposed minimum threshold is economically and operationally prudent. Employers in other states should also examine whether there are similar state law requirements that will require changes such as these.