It’s that time of year again! New York State’s annual threshold increases for overtime exemption and minimum wage go into effect on December 31, 2018. On that date:
- The minimum salary for exemption as an “administrative” or “executive” employee increases from $975 per week ($50,700 annually) to $1,125 per week ($58,500 annually) for New York City employers with 11 or more employees;
- The minimum salary for exemption as an “administrative” or “executive” employee increases from $900 per week ($46,800 annually) to $1,012.50 per week ($52,650) for New York City employers with 10 or fewer employees;
- The minimum salary for exemption as an “administrative” or “executive” employee increases from $825 per week ($42,900 annually) to $900 per week ($46,800 annually) for employers in Nassau, Suffolk, and Westchester counties;
- The minimum salary for exemption as an “administrative” or “executive” employee increases from $780 per week ($40,560 annually) to $832 per week ($43,264 annually) for other counties in New York State; and
- The minimum wage increases to $15 per hour (NYC employers with eleven or more employees), $13.50 per hour (NYC employers with ten or fewer employee), $12 per hour (Nassau/Suffolk/Westchester), or $11.10 per hour (remainder of NYS).
New York State has no minimum salary for exempt “professional” employees, although most of those employees would still be subject to the federal salary minimum for exemption ($455 per week, or $23,660 annually). The U.S. Department of Labor has not raised the federal minimum salary for exemption since 2004, but increases could be announced as early as 2019.
Corresponding increases to the allowances for tips, meals, lodging, utilities, and uniform maintenance also take effect on December 31, 2018. Information on these increases can be found here (miscellaneous industries), here (hospitality industry), and here (building service industry).
Employers whose exempt “administrative” and “executive” employees are currently paid less than the new salary thresholds must either increase those salaries to the new minimums or start paying the affected employees overtime pay for time worked in excess of 40 hours in a workweek.
Because overtime exemption is analyzed on a workweek by workweek basis, salary increases to bring them in line with the new minimums should begin on the first day of workweek in which December 31, 2018 falls, or else the affected employees will lose the exemption for the workweek. So if, for example, your payroll workweek is Sunday to Saturday (e.g., for purposes of determining whether an overtime-eligible employee has worked more than 40 hours, you begin counting on Sunday and end on Saturday), you would need to make sure that the salary for the week of Sunday, December 30 through Saturday, January 5 is at or above the new minimum.
By contrast, minimum wage is an hourly wage, so there is no need to implement minimum wage increases prior to December 31. For salaried non-exempt employees, you would have to ensure that the average hourly pay for the workweek is at or above the new minimum wage.
If you plan to reclassify currently-exempt employees who earn less than the new salary threshold to non-exempt (i.e., overtime-eligible), that conversion should be effective—and you should begin tracking hours for overtime purposes—on the first day of the workweek in which December 31 falls (which could be as early as December 25). Remember that you can pay overtime-eligible employees on an hourly, salaried, or any other basis so long as you comply with both the minimum wage and overtime laws.