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.

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Photo of Allan Bloom Allan Bloom

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages…

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York TimesReutersBloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved hundreds of millions of dollars in potential damages.

Allan is regularly called on to advise boards of directors and senior leadership on highly sensitive matters such as executive transitions, internal investigations and strategic workforce planning. He also has particular expertise in the financial services industry, where he has litigated and arbitrated cases, including at FINRA and its predecessors, for more than 20 years.
A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA, Senior Editor), Employment Discrimination Law (ABA/Bloomberg BNA, Final Proof Editor), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR, Editor), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE, Chapter Author).

Allan is a member of the NYSBA’s House of Delegates, sits on the Executive Committee of the NYSBA’s Labor and Employment Law Section, and is a Fellow of the College of Labor and Employment Lawyers. He has been recognized as a leading practitioner by Chambers since 2011.

Photo of Rachel Philion Rachel Philion

Rachel S. Philion is a partner in the Labor & Employment Law Department, co-head of the Wage and Hour Practice Group and a member of the Employment Litigation & Arbitration and Class and Collective Actions Practice Groups.

Rachel represents management across all industries…

Rachel S. Philion is a partner in the Labor & Employment Law Department, co-head of the Wage and Hour Practice Group and a member of the Employment Litigation & Arbitration and Class and Collective Actions Practice Groups.

Rachel represents management across all industries in a broad array of employment matters, including wage-and-hour, discrimination, harassment, retaliation, as well as whistleblowing, wrongful discharge and breach of contract disputes.  In addition to jury trial experience, she has extensive experience litigating nationwide class and collective actions.

In addition to Rachel’s active employment litigation practice, she regularly advises clients on litigation avoidance strategies and compliance issues, conducts wage and hour audits and leads workplace investigations.

Rachel was selected as a “Rising Star” by The Legal 500 for 2019 and New York Super Lawyers for 2017-2019.  She is a current member of the Committee on Labor and Employment Law of the New York City Bar Association, and a past member of the Executive Committee of the Labor and Employment Law Section of the New York State Bar Association and former co-chair of the Section’s New Lawyers’ Committee.