Employees who work more than forty hours per week are entitled to overtime pay at a rate of 1.5 times their regular rate of pay unless the employee is exempt under both the federal Fair Labor Standards Act and state law (e.g., New York Labor Law) from this overtime pay requirement.
Just paying an employee a salary does not make them exempt.
Just making an employee a supervisor does not make them exempt.
The costs of misclassifying an employee as exempt are high. In addition to the back-wages owed, federal and New York State law provide for 100% liquidated damages, interest and attorneys’ fees. The New York State statute of limitations is six years. If you did not record the employees’ actual hours worked, there will be a presumption that whatever hours the employee claims to have worked are accurate. And the more you paid an employee, the higher their overtime rate will be!
So, getting an employee’s exemption status correct is critical. Here’s what you need to consider:
What is the employee’s salary?
For the most common overtime exemptions, employees must be paid on a salary basis. This means the employee will receive the same salary each week regardless of the number of hours actually worked. Currently, the minimum salary an employee can receive in New York and be exempt is:
| Location | Minimum Weekly Salary | Minimum Annualized Salary |
| New York City | $1125.00 | $58,500.00 |
| Long Island & Westchester | $1050.00 | $54,600.00 |
| Remainder of State | $937.50 | $48,750.00 |
An employee being paid less than the amount stated above is entitled to overtime pay pursuant to New York State law.
What are the employee’s responsibilities?
Just because you pay an employee more than the minimum salary per year does not make them exempt from the overtime pay requirements. Their specific duties and responsibilities must also fit them into one of the overtime exemptions. Two of the most common exemptions are the “executive” and “administrative” exemptions.
To qualify for the executive exemption, the employee’s primary duty must be management, the employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent, and the employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
To qualify for the administrative exemption, the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
Exemptions also exist for certain learned or creative professionals, computer employees, outside sales workers, and others. More information is available from the Federal Department of Labor at https://www.dol.gov/agencies/whd/overtime. Keep in mind that an employee must meet the exemption requirements under both federal and state law.
Have you conducted an individualized inquiry?
Whether an employee is exempt or not requires an individualized inquiry concerning both the employee’s compensation and their job responsibilities. Unfortunately, it’s not nearly as black and white as employers would hope and there are many regulations, opinion letters and court decisions concerning how these exemptions should be evaluated. For any employee who a company treats as exempt, the employer should be able to identify the nature of the overtime exemption and articulate specific factors that support the classification. Speak with your Human Resources support teams and/or your Employment Counsel for more information.
Contact Kula Law P.C. here with questions about overtime and other employment law issues.