On March 22, 2019, the U.S. Department of Labor formally published proposed FLSA rules that would increase the salary level for key exemptions from federal minimum wage and overtime requirements. We discussed the DOL’s proposal in an earlier post when they were first publicized. The rules would require employers to pay employees at least $679 weekly ($35,308 per year) to preserve the exemptions. However, New York law already sets a higher salary threshold for similar exemptions. But that does not mean the federal proposal won’t have an impact in the Empire State.
In case you don’t want to read further to see whether these nuances affect your organization, here’s the quick summary:
- The proposed FLSA rules are more likely to affect governmental employers in New York than those in the private sector.
- Exempt “professionals” (other than doctors, lawyers, and teachers) would now have a higher salary requirement under the FLSA than under New York State law.
New York Has Its Own Rules
New York is among the states with the highest minimum wages in the U.S. The minimum wage now varies throughout New York State based on geographic location, among other factors.
For most occupations, the current New York minimum hourly wage ranges from $11.10 for Upstate workers to $15.00 for some employees in New York City.
In addition to the State minimum wage, New York also has overtime pay rules that are similar to those found in the FLSA. These include similar exemptions, such as the administrative, executive, and professional exemptions that the proposed FLSA rules would alter.
New York’s administrative and executive exemptions also require that employees receive a sufficient salary. In 2019, the weekly salary thresholds for these exemptions range from $832 to $1,125. Thus, New York’s requirements already exceed the $679/week level in the newly proposed FLSA rules.
But the State Rules Don’t Apply to All New York Employees
First, let’s be clear, most New York employers are subject to both the federal FLSA and the similar New York State laws. That is, employers must satisfy both. Neither trumps the other.
However, not every workplace comes under the coverage of both federal and state minimum wage and overtime laws. And the primary distinction is perhaps counterintuitive.
Generally speaking, the FLSA applies to all but the smallest employers across the United States, including New York. This includes both the private sector and the government.
By contrast, the New York minimum wage and overtime rules don’t apply to governmental entities in the State, with limited exceptions. In other words, New York villages, towns, counties, school districts, and public authorities, as well as the State itself, don’t have to follow the New York laws with respect to most employees. But they do have to comply with the FLSA. (One narrow exception, for example, is non-instructional employees of public school districts, who are subject to the State requirements as well as the FLSA.)
New York Public Employers Must Heed the Proposed FLSA Rules
New York State and its municipalities and other public entities could currently have exempt employees making less than the $35,308 per year the proposed FLSA rules would require. The current FLSA requirement is just $455 per week, or $23,660 annually.
So, public employers in New York will need to review the proposed FLSA rules to evaluate the potential impact on their workforces. Although most full-time public employees in New York probably already make at least $679 per week, some part-time exempt employees at least do not. And the FLSA salary requirement is not pro-rated for part-time employees. Preserving exemptions for part-time employees may or may not be important, depending on whether they ever work over 40 hours in a week, which would trigger FLSA overtime obligations.
The DOL’s current proposals also affect a special “highly-compensated employee” exemption. Right now, that exemption requires that the employee receive at least $100,000 in total compensation in a year. The proposed FLSA rules increase that almost to $147,414. Many New York public employers have exempt employees falling within that range. This does not mean that all of them must receive a raise, however. Many would probably also qualify for other exemptions with the lower $35,308 salary requirement.
Moreover, unlike the private sector, even supervisory employees working for public employers in New York can unionize. This increases the likelihood that exempt employees might be subject to collective bargaining agreements. If so, then changes to the terms and conditions of their employment, including compensation, might need to be negotiated with their union. Governmental entities in this situation should allow additional time to do what is necessary to come into compliance with the proposed FLSA rules by the time the DOL finalizes them–likely later this year.
The Peculiar Case of the Professional Exemptions
The proposed FLSA rules pertain to three of the so-called “white collar” exceptions to federal overtime laws: the administrative, executive, and professional exemptions. (Click the corresponding link in the previous sentence for more on these exemptions and their New York State counterparts.)
Under the FLSA, all three of these exemptions have salary components. Not so under New York law.
New York’s administrative and executive exemptions do have salary requirements. Its professional exemption does not.
Thus, New York employers only have to satisfy the FLSA salary level to exempt qualifying professional employees. This group includes both “learned” professionals like accountants and engineers and artistic professionals like painters and musicians. So, the proposed FLSA rules might require employers to pay some of these individuals more to preserve the professional exemption.
As one final caveat, the FLSA has a further special exception for doctors, lawyers, and teachers. The salary requirement does not apply to these professionals, assuming they’re working in their licensed fields. The proposed FLSA rules don’t make any changes applicable to those employees.
Proposed Rules Are Not Final Yet
Keep in mind that we’re still only talking about proposed changes to the FLSA overtime exemption rules. The public has until May 21, 2019, to submit comments on the proposals. Then the DOL will have to review them and prepare “final” rules. Though there is a reasonable chance the final rules will closely mirror the current proposals, something might change. And the impact on New York workplaces could differ from that described here.
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