Understanding all the intricacies and complexities that go into state and federal overtime laws can often be difficult and overwhelming. This is particularly true when we are dealing with a large number of exemptions that are available for employers. While businesses that meet all the exemption requirements are not legally required to provide overtime pay to their staff, employees are often left wondering if they should be paid for the extra time spent on the job.
This article will answer some frequently asked questions on the topic, help you better understand the situation, and determine if you are entitled to overtime pay under the New York labor laws.
What Is New York’s Minimum Wage and Overtime Rate?
When it comes to the New York (NY) overtime pay rate, it’s important to note that most hourly employees are entitled to it, granted they’ve worked any extra hours over a total of 40 in a workweek. According to the Fair Labor Standards Act (FLSA), the workweek is defined as any seven consecutive workdays. It’s also important to note the fact that some states also have a daily overtime limit. This means that when an employee works for more than a certain number of hours on a given day, the employer must pay them overtime. However, New York City is not specific on this daily overtime requirement.
Also known as “time and a half pay,” overtime represents one and a half times their regular rate of pay. The New York state minimum wage is currently at $11.80 per hour. For Long Island and Westchester, however, minimum wage rates are $13.00, whereas, for New York City, it’s $15.00 for both large and small employers. So, for example, employees working in NYC at a $15.00 per hour minimum wage rate, who are also eligible for overtime, should receive overtime pay of $22.50 for each hour that exceeds the 40-hour workweek (or 44 hours for domestic workers), as defined by the Fair Labor Standards Act.
Additionally, New York state labor law requires employers to provide all of their new staff members with a written notice at the moment of hiring, which highlights the pay rates for both their overtime and regular hours. Employers also need to get a written notice back from their employees, stating that they’ve received and understood the information.
Exempt and Nonexempt Employees
You’ve most likely come across these two terms when you were filling out a job application. However, for the majority of people, the difference between them is not as immediately apparent. To put it simply, the Fair Labor Standards Act requires all employers to classify their jobs as either exempt or nonexempt. While nonexempt employees are covered by FLSA rules and regulations, exempt employees are not.
As their name would suggest, exempt positions are excluded from things like overtime regulations, minimum wages, and other certain rights, benefits, and protections. Typically, the employer pays exempt workers a fixed salary instead of an hourly wage. On the other hand, nonexempt employees need to be paid at least the federal minimum wage and will receive overtime for no less than one and a half times their regular hourly rates.
To put it another way, exempt employees are not paid extra for working more than 40 hours per week. They are paid for finishing the job, regardless of whether this takes them 30, 50, or however many hours per week. Most, but not all, salaried employees are exempt from mandatory overtime pay, depending on their exact duties and job requirements. That said, the payment method, be it hourly, salaried, day-rate, or piecemeal, does not directly influence whether an employee is entitled to overtime or not.
What Are the Exempt Positions?
Certain jobs that meet several specific and limited requirements (primary duties) are considered exempt positions. As such, those that work in these roles will be exempt from overtime pay. This, however, should not be confused with the job title given by the employer. The most common exemptions to the FLSA are often called “white-collar” exemptions and refer to certain administrative, executive, and professional positions.
Exempt employees also need to pass the Salary Basis Test, which means that they need to earn a minimum of $684 per week ($35,568 per year). These salary requirements are not applicable to teachers, outside sales employees, or employees practicing medicine or law. Also, some IT professionals may also be exempt, granted they are not paid less than $684 per week on a salary basis or less than $27.63 on an hourly basis.
The Duties Test, however, is where those white-collar exemptions come into play. They are divided into three categories as follows:
- Administrative Exemptions – These refer to positions that don’t involve manual labor and are directly related to management policies and/or business administration. Administrative employees need to regularly exercise independent judgment and discretion, while their work is typically performed under general supervision. In addition, they may also require some special training, knowledge, and experience to qualify.
- Executive Exemptions – The primary duties of these roles revolve around the management of a department or subdivision within an organization. They also need to exercise independent judgment and discretion, supervise at least two or more full-time employees, and have the ability to make disciplinary and employment decisions.
- Professional Exemptions – Employees in this category need to have an advanced degree that is usually creative or original in nature. Under the New York overtime law, the primary duty implies work that requires advanced knowledge in science or learning and is predominantly intellectual or varied in nature. As such, the output cannot be standardized based on a timeframe. Computer professionals generally fall in this category, granted they meet the minimum pay requirements mentioned above.
Other Exempt Roles
Aside from job roles that fall within the Salary Basis and Duties tests, there are also certain job positions that, by their nature, are not covered by overtime law. Though these roles vary greatly, they include some of the following:
- Sales reps working on commission
- Commercial drivers
- Car mechanics employed by dealerships
- Farm workers
- In-home care providers
- Seasonal employees like those working at ski resorts or water parks
- Delivery professionals
- Movie theater staff members
In these cases, it is up to the employers to create their own overtime policies.
Regular Employee or Independent Contractor?
Overtime exemption laws are pretty vague and open to interpretation, leading some employers to exploit the situation as a means of reducing their taxes and payroll costs. One of the most common ways of doing this is by misclassifying employees (exempt or nonexempt) as independent contractors. Independent contractors do not qualify for overtime, regardless of the work they do. While some employers will misclassify their workers by accident, some do so to avoid paying state and federal taxes. If the primary duties of the position are not executive, administrative, or professional in nature, then the employer is also avoiding paying overtime. The same thing can be said if the employer misclassifies a nonexempt employee as exempt.
Independent contractors are self-employed individuals who sell their services to clients. As such, the IRS will expect them to pay self-employment taxes while your employer will not take any taxes out of your paycheck. You will also receive an I-99 form at the end of the tax year, instead of the more common W-9.
In other words, an independent contractor will control everything, with the exception of the final work product. This means that if an employee is required to sit in a chair from 9-to-5, regardless of the workload, use the employer’s equipment, or if the employer dedicates how, when, and where they work, then that employee is NOT an independent contractor. This makes it all that more important for workers to review all the applicable laws and make sure that the statues have been applied properly. Otherwise, they can be misclassified and miss out on overtime pay.
Who Exactly Is Eligible for Overtime Pay in New York City?
Aside from not being classified as an exempt employee based on all the salary and duties requirements mentioned above, the FLSA also automatically qualifies certain types of workers for overtime pay. These include the following:
- All Blue-Collar Workers – While many “white-collar” employees meet the salary and duties tests to be classified as exempt, “blue-collar” workers do not. Since their work involves a lot of repetitive, physical labor, they are classified as nonexempt and are, therefore, entitled to overtime pay. Non-management employees in the construction, production, maintenance, fast food industries, etc. are all entitled to a minimum wage and overtime pay. As such, electricians, plumbers, factory workers, craftsmen, operating engineers, cashiers, laborers, and many others, are nonexempt employees.
- Special Jobs Covered by Federal Laws – First responders, like firefighters, police officers, and paramedics, are offered overtime protection under the FLSA. The same thing applies to practicing nurses and paralegals, who would otherwise fall in the exempt category.
- Tipped Service Employees – Employees who receive tips as part of their job, such as those working in restaurants, are also entitled to overtime pay. The minimum wage rate for tipped restaurant service employees in New York State is $10.00 per hour. This reflects the full minimum wage of $15.00, minus the $5.00 per hour “tip-credit.” The overtime rate for these employees is $17.50 per hour, which represents the full minimum overtime rate of $22.50, minus the $5.00 tip credit.
It’s also important to note that citizenship or legal status is not required to be entitled to overtime pay. As such, undocumented workers still have to receive overtime wages for hours worked over the normal 40 or 44-hour workweek. All hours during which employees are required to be onsite or at any other site designated by the employer are included in the overtime calculation.
Lastly, with the recent increases in salary requirements for eligible employees, millions of workers are now entitled to receive overtime pay, regardless of whether they are salaried employees. However, this side of the law is incredibly detailed, and it needs to be addressed on a case-by-case basis. If you think that you fall into this category and are not being compensated for overtime, you should consult an experienced employment attorney.
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 their overtime compensation. If you have questions about whether your wages are being paid appropriately, contact us or call (718) 741-7474.