This article originally published in The Daily Record November 1, 2016.
I was wrong…there, I said it!
If there is one thing my loyal readers (yes, family pets count!) know about me, it’s that I’m not often surprised by the state and federal departments of labor when it comes to regulatory activities. So, for a rule change to catch me off guard is, well, astonishing to say the least. But I must admit, the NYS DOL got me! Could it be because I’ve been so focused on the federal overtime rule changes effective December 1? No, I think it’s because I made the mistake of thinking the state would be satisfied with the new federal minimum salary threshold and walk away from the challenge.
Well, I was wrong…so I hope my wife skips this month’s article, or I’ll have to repeat “I was wrong” several times while she pretends she didn’t hear me.
No longer willing to sit idly by and watch its federal counterpart get all the attention for increasing the salary threshold for the white-collar exemptions, on October 19 the NYS DOL published its proposed rule increasing the state’s minimum salary threshold for the executive and administrative exemptions in the New York State Register. Further, building on the framework established in setting regional minimum wage rates earlier this year, it’s complicated and creates additional compliance burdens for employers.
Under the current NY Wage Orders, the salary threshold for the executive and administrative exemption is $675.00 per week. This amount is 75 times the current minimum hourly wage of $9.00. Historically, multiplying the minimum hourly wage by 75 has been a simple, straightforward way to arrive at the state’s salary threshold.
However, the state DOL won’t allow the current threshold to quietly ride off into the sunset, with the federal rule taking its rightful place as the new minimum salary threshold throughout the land. Instead, the state DOL has proposed applying its standard formula to the complex, tiered minimum wage framework, resulting in the following web of salary thresholds for the executive and administrative exemptions:
New York City – Large employers of 11 or more employees:
- $825.00 per week on and after December 31, 2016;
- $975.00 per week on and after December 31, 2017;
- $1,125.00 per week on and after December 31, 2018;
New York City – Small employers of 10 or fewer employees:
- $787.50 per week on and after December 31, 2016;
- $900.00 per week on and after December 31, 2017;
- $1,012.50 per week on and after December 31, 2018;
- $1,125.00 per week on and after December 31, 2019;
Nassau, Suffolk, and Westchester counties:
- $750.00 per week on and after December 31, 2016;
- $825.00 per week on and after December 31, 2017;
- $900.00 per week on and after December 31, 2018;
- $975.00 per week on and after December 31, 2019;
- $1,050.00 per week on and after December 31, 2020;
- $1,125.00 per week on and after December 31, 2021;
Remainder of NY – outside New York City, Nassau, Suffolk, and Westchester counties
- $727.50 per week on and after December 31, 2016;
- $780.00 per week on and after December 31, 2017;
- $832.00 per week on and after December 31, 2018;
- $885.00 per week on and after December 31, 2019;
- $937.50 per week on and after December 31, 2020.
How it affects employers
The state’s proposed multiple salary thresholds mean at least two important things for employers: the single salary threshold applicable to all New York employers will become a thing of the past at the end of 2017, and the minimum salary for the executive and administrative exemptions will exceed that of the professional exemption. That’s because the New York Wage Orders do not set a minimum salary for professional employees. As an example, let’s look at Ellie and Blake, two of 15 employees working in their employer’s New York City office at the end of 2017, and both paid a salary of $913 per week. Ellie is classified as exempt under executive exemption, and Blake under the professional exemption. At the beginning of December, the company’s HR manager informs the management team that, to maintain Ellie’s status based on the executive exemption under the New York Wage Orders, they will need to increase her salary to $975 per week by December 31, 2017. When asked if it was also necessary to increase Blake’s salary, the HR manager explains that Blake’s salary meets the federal salary threshold. Because the state’s Wage Orders do not set a minimum salary for the professional exemption, no increase is necessary.
But, what about Becky, Ellie’s counterpart in the Rochester? Hired at the same time, Becky is also classified as exempt under the executive exemption, and paid a salary of $913 per week. Again, the HR manager explains that Becky’s salary meets the federal salary threshold. In this case, the state’s Wage Orders set the upstate salary threshold below the federal minimum for the executive and administrative exemptions, so no increase is necessary. At that point, the CEO walked out of the meeting shaking her head.
There is an opportunity for everyone to provide feedback on these proposed changes to the New York Department of Labor during the public comment period, which continues through December 3, 2016. However, although these proposals are not yet final, it’s all but a foregone conclusion that they will be finalized and incorporated into the Wage Orders on December 31, 2016. As if the new federal overtime rules weren’t challenging enough for New York employers, they now have a few more reasons to evaluate their exempt positions annually to ensure ongoing compliance with both state and federal overtime rules.
Please feel free to contact me at email@example.com, or 855-672-4142 with questions or for more information.
Disclaimer: This content is for informational purposes only, does not constitute a legal opinion, and is not legal advice. The facts of each situation should be considered and analyzed individually. Therefore, you should always consult with competent employment counsel regarding any issues discussed here.
Click HERE to learn more about Frank Cania, author of Employers’ HR Advisor.