U.S. Department of Labor Announces Final Overtime Rule

Today, more than 1.3 million Americans became eligible for overtime under the Federal Labor Standards Act (“FLSA”), with the increase of the salary threshold going from $455 per week (or $23,660 per year) to $684 per week (or $35,568 per year).  The new rule will be implemented on January 1, 2020.  This is the first time the salary threshold has been increased since 2004.

 

Generally, unless employees are exempt, they are required to be paid 1 ½ times their regular rate of pay under the FLSA and the New York Labor Law (“NYLL”).  If an employer classifies an employee as exempt, then they can be paid a salary without overtime pay so long as the employee passes both a salary and duties test.  The new rule, as it stands, only addresses the salary threshold by increasing it nearly $12,000 per year for exempt employees to remain eligible under an exemption (e.g. executive, administrative, professional, etc.).  In addition, the new rule increased the salary threshold from $100,000 to $107,432 per year for employees to qualify under the “highly compensated” exemption under the FLSA. 

 

Notably, in New York, the salary basis test for employees was already higher than the newly increased threshold under the FLSA, as in 2020, employees will have to be paid the following salary in order to qualify for an exemption:

 

Employees in New York City Employees in Nassau, Suffolk and Westchester Counties Employees in the Remainder of New York State (“Upstate”)
$1,125.00 per week

($58,500 annually)

$975.00 per week

($50,700 annually)

$885.00 per week

($46,020 annually)

 

With the upcoming changes, it is important to update policies and pay practices to stay in compliance.  For questions as an employer or employee in New York, please contact the Law Offices of Yale Pollack, P.C. at (516) 634-6340 or ypollack@yalepollacklaw.com

 

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