At Miletti Law, the authoritative force in Employment and Labor Law, we endeavor to keep you, our unusually motivated® readers, informed about issues that affect you and your business. Because we are a firm of our word, here we are, yet again, to keep the promise we made from the last blog concerning what the New York City (NYC) Labor Law says about Compensation, Wage and Hour Issues.

With a particular emphasis on the NYC Labor Law, we are going to enlighten and keep you #InTheKnow about “exemptions for overtime pay under the Fair Labor Standards Act (FLSA),” “the New York City’s Fair Workweek Law,” “commuter benefits,” and “employee sick and leave time.” As we also promised, we shall also provide you, as an employer, with tips on how to remain compliant with the Fair Workweek Law and the Salary Threshold for New York City Employees.

Without further ado, let’s now dig in!

Overtime Pay Exemptions under the Fair Labor Standards Act (FLSA) and New York State Labor Law

Generally, the professional exemption, administrative exemption, and executive exemption are the most common exemptions under both the New York State Labor Law and FLSA. Under the latter, several positions have been exempted from overtime pay. However, it is important to note that the former has not scrapped off these positions from overtime pay.

As per the FLSA, it is compulsory for an employee to satisfy both the salary basis tests and the duties test. From January 1, 2020, the FLSA required that white collar exemptions (the professional exemption, administrative exemption, and executive exemption) to receive a minimum annual salary of $35,568 ($684 per week).

Another crucial thing to note is that as compared to the federal requirement, the Labor Department of New York State has adopted a higher salary threshold for the administrative exemption and executive exemption. However, the location where the employee works, regardless of the employer size, determines the exact amount to be paid.

Due to the higher threshold, employees in New York City should receive, as of December 31, 2019, an annual salary of $58,500 ($1,125 per week), regardless of the employer size.

Compensation, Wage and Hour Issues

The fact that NYC does not have local hour or wage laws is not an error in regulations concerning ‘worked’ hours and wages. This is because the New York State’s labor law called the New York Minimum Wage Act (NYMWA) and the federal FLSA (Fair Labor Standards Act) offer protections for NYC employees when it comes to these issues. We shall focus more on the NYMWA in this blog because while it contains several provisions that dictate salary thresholds for overtime exemptions and higher levels of minimum wage, it has more stringent demands for employers with regards to the hourly wage and compensation.

What should be the Minimum Wage Rate in New York City?

In line with the wage requirements and regulations of the New York State Department of Labor, the minimum wage in New York City is $15.00 per hour as of December 31, 2019. It is also crucial to note that as per the Minimum Wage Act of the NYMWA, all New York State employees were expected to start receiving a minimum wage of at least $12.50 per hour from December 31, 2020.

By way of backdrop, we would like our unusually motivated® readers to understand that the NYMWA also contains provisions that allow variations in minimum wage rate, particularly to specific regions and industries. Such variations in the minimum wage rate based on industry and industry are provided below;

Variations in Minimum Wage Rate by Industry

  1. Fast food industry workers (inside NYC) – $15.00.
  2. Fast food industry workers (outside NYC) – $14.50 until June 30, 2021; $15.00 as of July 1, 2021.

Variations in Minimum Wage Rate by Region

  1. All Employees within NYC – $15.00.
  2. Employees within Long Island & Westchester County – $14.00.
  3. Tipped workers (in NYC) – $10.00.
  4. Employees within the Remainder of New York State – $12.50.

Employee Leave, Sick, and Safe Time

Required to take effect from September 30, 2020, the State Budget was signed into law by the Governor, as introduced by the New York State Senate & Assembly. During the enactment of this law, the New York State labor law was amended such that many employers are required to provide their employees with paid sick leave. Although the law required the accrued leave not to be used until January 1, 2021, employees could start accruing leave as of September 30, 2020. However, employers and employees must understand that the amount of leave the latter must get, and whether it will be paid or not, is determined by amount of net income in the previous tax year and employer’s workforce in any calendar year.

Another crucial thing to note is that the NYC amended its Earned Safe and Sick Time Act (ESSTA) to align with the New York State paid sick leave law. At this point, it is worth looking into the ESSTA. Under the newly amended ESSTA, most employers, including private (small businesses and non-profits) must provide employers with paid sick leave. All full-time, part-time, and transitional jobs program employees living in NYC are entitled to sick leave. However, ESSTA also exempts some employees from these minimum sick leave guarantees. Examples of these individuals include government agencies’ employees, students on federal work-study, independent contractors, and other employees subject to collective bargaining agreements.

Commuter Benefits

Since January 1, 2016, employers have been required to provide all full-time employees in NYC with commuter benefits under the New York City Commuter Benefits Law (NYCCBL). Under the NYCCBL, employees can use pre-tax income to pay for the commute expenses. The NYCCBL covers many types of transit such as the regional mass transit (Long Island Railroad and Metropolitan Transportation Authority subway and bus) and water taxi and ferry services within NYC.

New York City’s Fair Workweek Law

The Fair Workweek Law provides covered employees with the right to make a temporary change to their work schedules for a personal event and seeks to protect retail and fast food workers from unpredictable and unfair work scheduling practices. Examples of covered employers include fast food industry and retail industry employers.

How to Remain Compliant with the Fair Workweek Law

NYC employers dealing with fast food and retail industries are required to remain compliant with the Fair Workweek Law. In order to do so, they should:

  • Provide compliance notices of scheduling;
  • Train their managers and supervisors;
  • Post a compliant notice;
  • Not retaliate;
  • Adopt a written policy.

How to Stay Compliant with the Higher Salary Threshold for New York City Employees

As we conclude looking into what the New York City Labor Law says about Compensation, Wage, and Hour Issues, one thing is clear – NYC employees are entitled to a higher salary threshold as compared to other regions within the New York State. Due to many reasons, many NYC employers might find it challenging to meet the minimum salary threshold. Furthermore, most of them might be ignorant of New York State Labor Law’s higher salary thresholds applicable to both executive and administrative exemptions. However, the law is a double-edged sword and adherence to it is mandatory. Thus, in order to be compliant with the salary threshold, NYC employers should make few, but critical steps. These include:

  • Self-auditing for compliance with exemptions;
  • Assessing whether any positions in their workforce are affected by increased salary requirements if they identify any positions falling below the salary threshold, but otherwise qualify, based on job duties, for the administrative or executive exemptions;
  • Selecting and making a decision regarding what to do with any positions impacted by the increased salary requirements. Two possible decisions include (1) implementing a salary increase sufficient to sustain the exemption by ensuring that the minimum salary requirement is met, and (2) Starting to pay overtime for the affected positions because the salary falls below the minimum threshold and reclassifying them from exempt to nonexempt.

As the authoritative force in Employment and Labor Law, we’ll continue enlightening you with more of such content. Stay Tuned!! In the interim, if there are any questions or comments, please let us know via the Contact Us page!