What You Need to Know About Overtime and Salary Exemption Laws in New York City

Employers and employees in New York City must understand overtime and salary exemption laws. The city has specific regulations beyond federal standards, ensuring fair compensation and labor practices. This guide provides an overview of these laws, helping you stay compliant and informed.

Updates to Salary Thresholds in New York City

With the high cost of living, understanding overtime and salary exemption laws is crucial for employees seeking fair pay and employers aiming to comply with legal requirements. As of 2024, significant updates to salary thresholds and overtime regulations have been implemented, impacting many workers.

Overtime Eligibility

In New York, most employees are entitled to overtime pay for hours worked beyond 40 hours a week. The overtime rate is 1.5 times the regular hourly wage. However, several categories of employees are exempt from overtime pay, including executive, administrative, and professional employees, certain salespeople, and individuals working for government entities​​.

Non-Exempt Employees

• Eligible for overtime pay.
• Includes most hourly workers and salaried employees who do not meet exemption criteria.

Exempt Employees

• Executive, administrative, and professional roles often fall under this category.
• Must meet specific salary thresholds and job duty requirements.

Salary Thresholds for Exemption

New York has set higher salary thresholds for exempt employees than federal standards. As of January 1, 2024, the salary thresholds for exemption are as follows:

• New York City, Westchester, and Long Island:
  • $1,200 per week ($62,400 annually).
• Rest of New York State:
  • $1,124.20 per week ($58,458.40 annually).

These thresholds will increase annually until 2026, ensuring exempt employees earn a fair salary, reflecting these areas’ high cost of living.

Understanding Exemptions

Employees must meet both the salary basis test and the duties test to qualify as exempt under the Fair Labor Standards Act (FLSA) and New York State law.

Executive Exemption

• The primary duty must be managing the enterprise or a recognized department.
• Must regularly direct the work of at least two full-time employees.
• Authority to hire or fire employees.

Administrative Exemption

• Primary duty must be office or non-manual work related to management policies or general business operations.
• Must exercise discretion and independent judgment on significant matters.

Professional Exemption

• Primary duty must involve advanced knowledge in a field of science or learning.
• A prolonged course of specialized intellectual instruction must acquire knowledge​.

Compliance and Enforcement

Employers must ensure compliance with these laws to avoid penalties and legal issues. This includes appropriately classifying employees and adjusting salaries to meet the new thresholds. Failure to comply can result in significant fines and damage to the company’s reputation.

Steps for Employers

• Review and update employee classifications.
• Adjust salaries to meet new exemption thresholds.
• Keep detailed records of hours worked and wages paid.

Employee Rights

Employees should be aware of their classification and rights under the law. If they believe they are being underpaid, they can report violations to the New York State Department of Labor or seek legal advice.

The Bottom Line

Staying informed about NYC’s overtime and salary exemption laws is crucial for maintaining fair and legal labor practices. Employees and employers must understand these regulations to ensure compliance and protect their rights. For personalized legal advice and support, contact Lipsky Lowe.