NY Increases the Salary Threshold for Exemption from Overtime Pay

The New York State Department of Labor announced on Wednesday, Dec. 28th, that it would be increasing the salary threshold applicable to exempt executive and administrative employees in New York State.

This threshold divides the exempt from the nonexempt, demarcating which salaried employees are eligible to earn overtime based on their weekly salary. Currently, salaried employees earning at or under $675 per week receive overtime for hours they work above 40; those who earn above $675 do not.

Increased Salary Threshold

Employers in New York are now faced with complying with an increased salary threshold that takes effect on Dec. 31st, 2016, and will be updated annually over the next few years.

The increase means that salaried employees who were previously exempt from earning overtime may now qualify for earning overtime, ultimately reclassifying them as nonexempt. In order to keep employees exempt, employers must raise the newly affected employees above the limit. Without doing this, affected employees will become reclassified and will earn overtime pay.

The increase means that salaried employees who were previously exempt from earning overtime may now qualify for earning overtime, ultimately reclassifying them as nonexempt. In order to keep employees exempt, employers must raise the newly affected employees above the limit. Without doing this, affected employees will become reclassified and will earn overtime pay.

See the following table for the list of increases slated to take effect each year; salary thresholds are different based on geography, and also based on business size.

Employers outside of New York City, Nassau, Suffolk, and Westchester Counties

Employers in New York City  Large employers: 11 or more employees

Small employers: 10 or fewer employees

Employers in Nassau, Suffolk, and Westchester Counties

What does this mean?

If you have affected executive or administrative employees, their exemption status is in jeopardy. You have two options – either raise their salary above the new threshold or if no action is taken, these employees will all begin earning overtime pay, just like your hourly employees.

You will need to begin tracking their hours in order to know when they work more than forty hours in a workweek in order to pay them overtime. If you rely on these employees heavily and know that they regularly work over forty hours, it may be to your benefit to raise their salary above the new threshold to keep their pay rate stable.

If you decide to begin tracking the time these salaried employees work, a software solution that encompasses both time tracking and payroll is the ideal solution. Your administrative burden is decreased, your timesheet data becomes payroll data within seconds, and your costs are consolidated into one flat fee.

Our newly updated platform, FingerCheck360, offers a variety of clock-in options, automated time tracking, and syncing time data into payroll, so all the work is done for you. If your company is affected by this new overtime rule it’s a no-brainer to switch over to FingerCheck360.