All employers that operate a business in New York City need to understand the New York Overtime Law and make sure that they pay their eligible employees fairly for all their work. Based on the Fair Labor Standard Act (FLSA), one of the factors that can influence whether or not an employer pays overtime is based on how the employee is paid. Employers have the option of paying their employees on an hourly rate, annual salary, piecemeal, day rate, or another such agreed-upon pay method.
But while it’s true that most employees who are exempted from overtime are also paid a fixed salary, not all salaried employees are exempt from overtime. In fact, the majority of employees, regardless of payment method, are eligible for overtime pay in the amount of 1.5 times their regular hourly rate for all hours worked over the usual 40-hour workweek.
Calculating Regular Hourly Rate Of Overtime Pay in New York City
According to the New York Labor Laws (NYLL), the minimum wage rates as of December 31, 2019, are between $11.80 to $15.00 per hour. These depend on the geographical location within the state as follows:
- NYC – Large and Small Employers: $15.00
- Long Island & Westchester County: $13.00
- The remainder of New York State: $11.80
As mentioned previously, the overtime rate is 1.5 times the regular rate of pay. For example, if an employee is working in New York City and receiving the $15.00 per hour minimum, he or she is also entitled to a $22.50 per hour overtime rate for every hour worked over the usual 40-hour workweek. The same principle applies to employees who receive tips as part of their job description, such as restaurant service employees. However, the New York State minimum wage rate for tipped restaurant service employees is $10.00 per hour. This reflects the full minimum wage ($15.00), minus the $5.00 per hour “tip-credit.” As such, the overtime rate for tipped employees is $17.50 per hour, which is 1.5 times the minimum overtime requirement of $22.50 per hour, minus the tip-credit.
When it comes to calculating an employee’s regular hourly rate for overtime, there are several payments that are not taken into consideration. These will include the following:
- Payments made for expenses incurred on the employer’s behalf.
- Any premium payments for overtime work or for working on weekends and holidays.
- Payments made for periods where work was not performed, such as vacations, holidays, or sick leave.
- Discretionary bonuses.
- Any other gifts or bonuses for special occasions.
As for the regular hourly rate of pay, this is calculated by dividing the total pay in any given workweek by the total hours worked. This calculation will exclude the examples above. If an employee works two different jobs for the same employer in the same week, then the regular rate for that workweek will be calculated by the weighted average of the different rates.
New York Overtime Law and Compensation
The rules and regulations regarding overtime in New York City are described in the New York State Minimum Wage Orders. These also come in addition to the Federal requirements that are laid out in the Fair Labor Standard Act. If there is a conflict between the two legislations, the employer is required to follow the one that will offer the most benefits to their employees.
The New York Overtime Law requires that all hours over the regular workweek be covered by overtime. This means that if an employee has worked more than 40 hours per week, they are eligible for overtime pay for every extra hour. The employer cannot average the hours of two or more weeks.
There is also a distinction made between nonexempt employees and residential (live-in) workers. Live-in employees are those who reside at the job site or in the home of the employer. While regular, nonexempt employees will be paid overtime in excess of 40 hours per workweek, residential employees receive 1.5 times their regular pay for all hours after 44 in the payroll week.
Contrary to some other states, New York does not have any restrictions on the exact number of hours per day or for working more than 5 days per week. In other words, an employee can be asked to work for more than 8 hours per day without being paid overtime, granted they do not exceed the total 40 hours worked in a week. In addition, the One Day Rest In Seven Act (ODRISA) of the New York State Labor Law requires certain employers to provide their staff members with a rest period of at least 24 consecutive hours in any given calendar week. As such, if an employee has already worked six consecutive days, their employer is required to give them a day off on the seventh.
To clarify, a workweek is classified as any seven consecutive 24-hour days. The workweek can start on any day of the week and lasts for seven consecutive days. It also needs to have a fixed schedule, meaning that the employer cannot change it from week to week. One exception to this rule applies to hospital and residential workers. Instead of the regular, 7-day workweeks, these types of employees may also have arrangements based on fortnightly periods of 14 days. In this arrangement, they will receive overtime pay for hours worked over the daily 8 or for over 80 hours in 14 days, whichever will result in more overtime hours.
Which Businesses Are Exempt From Paying Overtime?
The majority of businesses are covered by the FLSA and, therefore, are required to pay overtime. As long as the company engages in interstate commerce or is in the production of goods for commerce, they fall under the overtime laws in New York. But depending on certain circumstances, some businesses may be exempt from paying overtime to their employees. These can include the following:
- Business Size – Organizations that generally have fewer than 20 employees, such as family businesses, may be exempt from having to pay overtime wages.
- Annual Profits – The size of the business may not be taken into consideration if the annual profits of the organization exceed $500,000. Companies that do not meet these profit margins may be exempt from NY overtime laws.
- Industry – Certain industries, such as those in the agricultural sector or international shipping, are also exempt from paying overtime. These exemptions will be based on the employer’s wage structure and operating parameters.
Overtime Exemptions for Startups
Though many startup companies do not meet the revenue threshold to be exempt from paying overtime, they do, however, use the internet and/or other interstate communications to conduct business. This means that they are still required to pay overtime. Some employers will prohibit nonexempt staff members from working overtime unless they have some advance authorization, but this type of policy may not be realistic for startup companies.
Unfortunately, many startups operate under the false presumption that overtime laws do not apply to them. However, there is no catch-all exemption for startups, and some can be exposed to wage and hour liability. Therefore, all startups will need to consider wage and hour compliance as part of their business strategy. They need to properly classify their employees as exempt or nonexempt, notify them of their status, and adhere to all overtime laws that apply to their situation.
What Jobs Are Exempt From Overtime Pay?
Aside from certain types of businesses being exempt from overtime, there are also several categories of jobs that also fall in this classification. There are a few criteria that determine which positions are exempt. One of these is the Salary Basis Test, which dictates that exempt employees need to earn a minimum of $684 per week or $35,568 per year. Most computer employees are also exempt from overtime pay if they are paid at least $684 per week on a salary basis or a minimum of $27.63 on an hourly basis.
The Duties Tests, on the other hand, focus on the so-called “primary duties” of an employee. They are divided into three categories as follows:
- Executive Overtime Exemptions – This includes employees whose main responsibility (primary duty) is to manage two or more full-time employees, and they should be able to make disciplinary or employment decisions.
- Administrative Overtime Exemptions – Those in administrative positions don’t do any manual work, and their primary duties involve business operations, administrative training, and/or management policies.
- Professional Overtime Exemptions – The primary duties of these positions will require advanced knowledge and extensive education in science or learning. Artists, teachers, computer professionals, etc., fall into this category.
There are several other job positions that are still exempt from overtime, even if they do not fit the above-mentioned criteria. These vary greatly from one another but, by their nature, cannot be covered. These include:
- Farm workers.
- Sales professionals working on commission.
- Car mechanics and commercial drivers.
- Delivery professionals.
- Movie theatre employees.
- In-home care providers.
- Ski resort employees, water park personnel, and other such seasonal workers.
Just like with exempt employees, the FLSA also qualifies certain types of jobs for overtime pay. Aside from the several examples of jobs above, which, by their very nature, are exempt, most “blue-collar” workers are nonexempt and are, therefore, eligible to receive overtime pay. With the exemption of farm workers, car mechanics, seasonal workers, etc., most other jobs that involve repetitive and physical labor will have to receive overtime. Plumbers, electricians, factory workers, craftsmen, operating engineers, cashiers, laborers, non-management fast food workers, tipped service employees, and many others, are all nonexempt employees. It’s also important to note that citizenship or legal status is not required for someone to be entitled to overtime pay.
Here at Cilenti & Cooper, PLLC, we provide strong, knowledgeable guidance and legal representation to workers in the New York Metropolitan area who are not being paid their legal wages or their overtime compensation. If you have questions about whether your wages are being paid appropriately, contact us or call (718) 741-7474.