The Complete Guide to Minimum Wage and Overtime Laws in NYC

The Complete Guide to Minimum Wage and Overtime Laws in NYC
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For most members of the workforce, a paycheck is the major motivating factor when it comes to finding a job. The levels and means of compensation also play a big role whenever an employee is choosing among different jobs, deciding between working and retiring, or selecting a place to live. Both federal and state governments realize the importance of wages and have enacted special laws and legislations to protect the workforce’s interest by ensuring a fair wage for their work.  

One such legislation is the Fair Labor Standards Act (FLSA). Enacted in 1938, this United States labor law has imposed the right to a minimum wage and overtime pay for certain employees working in excess of 40 hours per workweek. The law applies to all employees engaged in interstate commerce or who are employed by an enterprise that’s engaged in commerce or the production of goods for commerce. Unless the employer can claim an exemption from minimum wage and overtime coverage, all employees are guaranteed these rights under Federal Law. With certain exceptions, the FLSA also prohibits the employment of minors in “oppressive child labor.”

In addition to federal minimum wage and overtime law, individual states also have their own legislation that covers these issues. When it comes to New York City, we have the New York State Minimum Wage Orders. If there is a conflict between the two, NYC employers are required to follow the one that offers the most benefits to their employees. In this guide, we will be talking about the specifics of minimum wage and overtime laws in NYC, as well as any liquidated and compensatory damages in the event of employer violations.

Current New York State Minimum Wage Rates

As of December 31, 2019, the New York State minimum wage increased alongside the salary threshold for overtime exemptions. As a consequence, most employers will need to make sure that they pay the new NYS minimum wage and overtime rates and ensure that their employees are properly classified as exempt or nonexempt.

In general, employers are required to pay their nonexempt employees at least the minimum wage. Throughout New York, overtime wages vary based on the company size, industry, and geographical location. For example, there are different hourly rates for a fast-food worker than for those who receive tips. That said, the 2020 minimum wage in New York is as follows:

  • NYC (11 or more employees) – $15.00 per hour (not changed from 2019)
  • NYC (10 or fewer employees) – $15.00 per hour
  • Nassau, Suffolk, and Westchester counties – $13.00 per hour
  • The remainder of NYS –  $11.80 per hour

By the end of 2021, the minimum wage across the entire New York State is expected to increase gradually until it reaches $15.00 per hour, the same as in New York City.

Overtime is also known as “time and a half pay.” This means that once employees pass the 40 hours per week margin, they will receive 1.5 times their regular rate of pay. So, for employees working overtime in NYC at a minimum wage rate of $15.00, their overtime will be equal to $22.50 per hour for every hour of overtime per workweek.

The workweek is defined by the FLSA as seven consecutive workdays. Overtime needs to be paid to all nonexempt employees for any extra hours they work over a total of 40 during said workweek. While some states also have a daily overtime limit, meaning that employees need to be paid overtime if they work over 8 hours in any given day, NYS does not have such legislation. However, New York employers are still required to pay their staff overtime if they work more than 40 hours in a workweek. Domestic workers, on the other hand, are required to work 44 hours per week in order to incur overtime.

The Increased Salary Threshold for Overtime Exemptions

Both the Fair Labor Standards Act (FLSA) and the New York Minimum Wage Act will, generally, require that payment of overtime wages be made for any work performed after 40 hours per workweek. There are, however, some exceptions to these rules. Some salaried employees, for instance, are exempt from federal and state minimum wage and overtime pay requirements.

Aside from the minimum wage increase, the minimum salary paid to exempt employees under the New York State Labor Law’s administrative and executive exemptions has also increased in 2020. Again, these will also differ based on the employer’s geographical location as such:

  • NYC – $1,125.00 per week ($58,500 annually)
  • Nassau, Suffolk, and Westchester counties – $975.00 per week ($50,700 annually)
  • The remainder of NYS – $885.00 per week ($46,020 annually)

These figures provided above are in line with New York State law and are higher than the federal FLSA thresholds. As such, NYS employees also need to meet certain duties tests, aside from their earnings, in order to be exempt from overtime pay.

What Are Exempt and Nonexempt Employees?

For those of us who don’t know, jobs that are governed by the FLSA can be either exempt or nonexempt. There are precise regulations put in place about who can be classified as either. It is, however, important to keep in mind that these classifications are not based on the job title the employer provides, but by the primary duties that the job post implies.

According to the FLSA, a job’s primary duty refers to “the principal, main, major, or most important duty that the employee performs.” Several factors will influence whether an employee’s exempt duties are their principal duties. These will include:

  • The relative importance of the exempt duties by comparison to the nonexempt duties.
  • The total amount of time spent by the employee performing this type of exempt work.
  • The relative freedom an employee has to perform their duties without direct supervision.
  • The corresponding difference between an employee’s salary and the wages paid to other staff members for their nonexempt work.

Exempt Employees

Also known as salaried employees, exempt staff members are those who do not fall within the FLSA minimum wage and overtime requirements. Exempt positions need to be paid at or above the set minimum annual wage and, with several exceptions, they cover most “white collar” workers. In order for an employee to be considered exempt from overtime pay, they need to satisfy several criteria (tests).

  • The Salary Level Test As of January 2020, employers must compensate their employees with at least $684 per week ($35,568 per year), so they can also qualify for the executive, administrative, and professional exemptions under the Duties Test.  
  • The Salary Basis Test New York generally follows federal rules when it comes to the Salary Basis Test. To be qualified for both state and federal exemption, employees must receive their full salary for a week in which they performed any work. With several exceptions, such as full-day absences for personal reasons other than sickness or disability, if an employee takes an unpaid leave under the Family and Medical Leave Act (FMLA), and several others more, salary reductions aren’t permitted due to variations in the quality or quantity of work.
  • The Duties Test To be considered exempt, an employee must also perform certain duties that will qualify the position as either executive, administrative, or professional. 
    • Executive Overtime Exemptions – These include employees whose primary duty is to manage two or more full-time employees. They also need to have employment and disciplinary decision powers.
    • Professional Overtime Exemptions – These exemptions refer to employees that need advanced knowledge and education in the fields of science or learning. Professional exemptions imply that the output of their work cannot be standardized to any given time frame and is, therefore, exempt from overtime pay. Teachers, artists, computer professionals, etc. fall into this category.

Aside from these salary and duties tests, there are also several other exempt positions that, by their very nature, also need to be exempt. While these vary greatly, they include the following:

  • Farm workers
  • In-home care providers
  • Outside sales reps
  • Car mechanics
  • Commercial drivers
  • Delivery professionals
  • Movie theatre employees
  • Seasonal employees working at water parks, ski resorts, etc.

Nonexempt Employees

In the majority of cases, nonexempt employees are paid at an hourly rate. Yet, this can often lead to misconceptions, as the actual payment method does not directly influence whether or not an employee is eligible for overtime. So, even if an employee is paid a salary, this doesn’t automatically mean that they are exempt from minimum wage and overtime laws. Only when they meet the aforementioned tests and requirements will they be exempt from overtime. Other than that, anyone can earn overtime, regardless of whether they are paid on a yearly, hourly, piecemeal, or day rate basis. It’s also important to note that citizenship or legal status is not required to be entitled to overtime pay.

Those that are automatically classified as nonexempt employees by the FLSA include the following:

  • Most “Blue Collar” Workers With the few exceptions mentioned above, jobs that involve a lot of repetitive physical labor are generally classified as nonexempt and are, therefore, eligible for minimum pay and overtime. As such, non-management workers in the construction, production, maintenance, fast food industries, etc., are all eligible.
  • Special Jobs Covered by Federal Laws – There are a few exceptions made for certain job roles, even if they can be classified as exempt based on their salary and/or duties. These include police officers, firefighters, paramedics, practical nurses, and paralegals.
  • Tipped Employees in the Hospitality Industry – Workers whose revenue involves tips as part of their job, such as those working in restaurants, are also entitled to overtime pay. However, the minimum wage for tipped employees in NYS is $10.00 per hour. This sum represents the full minimum wage of $15.00, minus the $5.00 per hour “tip-credit.” Therefore, the overtime rate for tipped employees is $17.50 per hour, which is the full overtime rate of $22.50 minus the $5.00 tip credit.

The New York State Wage Theft Prevention Act

According to the New York Wage Theft Prevention Act (WTPA), employers need to notify their new employees at the moment of hiring of whether they are exempt or nonexempt from federal and state overtime requirements. The employer is also required to receive a written notice from the employee stating that they’ve received and understood the information.

This notice must also include the following information:

  • Rates of pay and, if applicable, the overtime rate.
  • The payment method: be it by the hour, shift, day, week, piecemeal, commission, etc.
  • The regular payday.
  • The official name of the employer, as well as any other names used for business (DBA).
  • The contact information of the employer’s main office or principal location (address and phone number).
  • Any allowances taken as part of the employee’s minimum wage (tips, meal, lodging deductions, etc.)

This notice needs to be given in both English as well as the employee’s primary language, granted the Labor Department offers a translation. Presently, the New York Department of Labor offers translations in Spanish, Chinese, Haitian Creole, Korean, Russian, and Polish. If this notice isn’t provided within 10 business days from the start of employment, the employee will be able to collect $50 for each workday, up to a maximum of $5,000, for each day the violation continues.

In addition, the WTPA also requires that employers present their employees with a full statement of their earnings at the end of each pay period. This statement needs to include the rate of pay, the basis for the pay, the amount of overtime given, any deductions, as well as the gross and net wages paid. If the employer fails to provide this statement, they are in violation of the law and could be liable for damages. Employees can collect $250 per day, for every day the violation continues, up to $5,000.

Also, the employer cannot announce that the overtime wage will not be paid, unless it’s previously authorized. This, however, will still obligate the employer to pay their workers for any hours they worked as overtime.

Employers also need to make sure that their nonexempt employees record all hours worked and do not perform any off-the-clock work. When it comes to their nonexempt employees covered by federal wage and hour provisions, employers need to maintain complete and accurate records on their time and payroll. Any unpaid overtime will open the employer up to liability charges.

Meal Break Protections Under New York’s Labor Laws

In Section 162 of the New York Labor Law code, it’s explicitly stated that employers need to provide at least 30-minute meal breaks to all of their employees who work more than six hours per day. All private and public sector employees are covered by this law. However, there is a difference between factory and non-factory workers when it comes to how long of a break they receive.

While factory workers are entitled to a 60-minute break between 11:00 a.m. and 2:00 p.m. (noon day meal period), they are also entitled to a 60-minute meal break at the midway point of a shift if that shift starts anywhere between 1:00 p.m. and 6:00 a.m. Factory workers can have their mealtimes shortened to no less than 30 minutes, but only if they do not face hardship as a result. Non-factory workers, on the other hand, are entitled to 30-minute lunch breaks for shifts longer than six hours, or 45-minute meal breaks for six-hour plus shifts that start between 1:00 p.m. and 6:00 a.m.

Employers are not required to compensate their employees for these lunch/meal breaks since they are not counted as “hours worked.”

Federal law does not require employers to provide any lunch or meal breaks to employees. However, if the employer decides to provide such breaks that last 20 minutes or less, the FLSA requires them to pay their employees for that time. Yet, if the meal break is 30 minutes or more, the employee doesn’t have to be paid. In New York State, employees are entitled to an additional 20-minute break between 5:00 p.m. and 7:00 p.m for long shifts that extend before 11:00 a.m. to after 7:00 p.m.

The Spread of Hours Rule

Some nonexempt employees working in the service and hospitality industry in NYS are also entitled to an extra hour of pay at the minimum hourly rate in their area in the event that their workday spans more than 10 hours. Known as the “Spread of Hours” Rule, this NYS legislation includes time spent off-duty, such as meals, rest periods, idle times between shifts, etc.

For instance, if a restaurant worker in NYC works a double shift from 11:00 a.m. to 2:00 p.m., and then again from 5:00 p.m. to 10:00 p.m., they are also entitled to an hour of pay in addition to the 8 hours worked. The extra hour will be paid at the minimum wage rate ($15.00 in NYC) regardless of their actual hourly rate. Some of the occupations that are covered by this rule include the following:

  • Waitstaff
  • Bartenders
  • Baristas
  • Foodservice employees
  • Hotel and cleaning staff
  • Social and healthcare service providers
  • Personal care and laundry employees
  • Automotive repairs and service employees
  • Entertainment and recreation employees

Misclassifying Employees

It’s not uncommon for employees to be misclassified. Either by accident or with intent, some employers will misclassify a nonexempt employee as exempt. There are also plenty of cases when an employee is classified as an independent contractor as a means for the employer to reduce their taxes and payroll costs. Regardless of the situation, these cases are against the law and can result in the employee missing out on overtime pay. It’s important to remember that independent contractors are not eligible for overtime pay, no matter the type of work they do.

Liquidated and Compensatory Damages for Employer Violations

If an employer has violated the law in regards to their employees’ minimum wage and/or overtime rights, they are liable for damages. The purpose of these damages is to put the employee back in the same place they would have been if it weren’t for the employer’s action or lack thereof. When it comes to these wage and employment laws, employers can be sued for either liquidated or compensatory damages.

  • Compensatory Damages – The purpose behind compensatory money damages is to make the employee “whole” again. There are two types of compensatory damages: general (non-monetary losses) and special. General damages often tackle issues that are harder to measure, such as pain, suffering, emotional distress, humiliation, scarring and disfigurement, lost opportunities, etc. Special damages, however, are in regard to verifiable losses and economic costs. In this case, “special damages” refers to lost wages.
  • Liquidated Damages – Also referred to as double damages, liquidated damages in the employment law context represent a statutory remedy for victims of either employment discrimination or wage violations. These represent a fixed amount, typically equal to the plaintiff’s back pay award, whenever the employer has willfully violated the FLSA regulations. These are generally awarded unless the employer is able to prove that it acted in good faith and had reasonable grounds to believe that their actions did not violate the law.

In other words, you will collect 100% of your unpaid wages as liquidated damages if you have a wage claim that includes violations of the minimum wage, overtime, meal breaks, spread of hours, or day of rest laws. For instance, if you are owed $1,300 in unpaid wages, you can collect an additional $1,300 in liquidated damages for a total of $2,600. In some cases, you can also collect interest on unpaid wages, attorneys’ fees, and legal costs.

Speak with an experienced wage attorney in New York City today

Cilenti & Cooper, PLLC provides strong, knowledgeable guidance and legal representation to workers in the New York Metropolitan area who are not being paid their legal wages or overtime compensation. If you have questions about whether your wages are being paid appropriately, contact us or call (718) 841-7474.

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