New Overtime Rules Expand Coverage to Millions

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The Federal Labor Standards Act (FLSA) and New York Labor Law each provide sections entitling employees who make less than a certain threshold income to overtime pay—meaning for any hours they work in excess of 40 hours per week. The federal law, which becomes effective December 1, 2016, raises the cut-off from $23,660 to $47,476 per year for most salaried workers. This means that more workers would be entitled to overtime if they work more than 40 hours per week. There are certain exemptions, generally, for people who are employed in a bona fide executive, administrative, or professional capacity. However, these exemptions are narrowly construed.

Employers should not try to determine whether an employee fits within an exempt category by simply looking to the words used to describe the exemptions, and the tasks of the employee, as they may be understood in everyday usage. There is a tremendous amount of case law defining and describing the exempt categories and what they mean from a legal perspective.

In order to determine whether an exemption applies, the courts will look at the weightiest of the employee’s responsibilities.

An “executive employee” is someone who customarily and regularly directs the work of two or more other employees and has the authority to hire or fire other employees—or be someone whose suggestions and recommendations as to the hiring, firing, advancement and promotion of an employee is given particular weight.

With respect to “administrative employees,” the courts look to whether or not the performance of office or non-manual work by the employee directly relates to the management policies or general business operations of the employer, and importantly, whether or not the employee exercises discretion and independent judgement. One thing the courts look at is whether or not the employee, in performing her job specifically, services the company itself or the company’s clients.

The “professional employee” exemption includes a learned professional whose primary duty must be the performance of work requiring advanced knowledge in a specialized field of science, or learning customarily acquired by a prolonged course of specialized intellectual instruction. The artistic professional is one whose duty consists of the performance of work requiring invention, imagination or talent.

In the event that an employee who is entitled to overtime is not paid overtime, she may be entitled to:

  • – Damages, in the amount of the underpayment;
  • – Liquidated damages, which would in most circumstances be 100% of the amount of the underpayment;
  • – Attorney’s fees; and
  • – Interest.

Conversely, if an employee makes a claim against the company and the company prevails, the company would not be entitled to recover its attorney’s fees.

New York Labor Law also requires employers to provide employees with a wage notice at the beginning of their employment, and of any changes to the information required to be provided in the wage notice, unless such changes are reflected on the wage statement. The law provides for penalties, which accumulate for the amount of time that the worker was not provided the notice, and would apply to every worker at the company, to whom notice was required to have been given, who has not received the notice.

The risk that an employer takes by not complying with the federal and state labor laws can be enormous. Not only will they have to pay the employee or employees whatever amount of money they had originally been entitled to, but they may essentially have to pay twice that amount in damages, plus attorney’s fees and interest, as well as their own legal fees in defending a claim. It is suggested that an employer and their HR professional, if they have one, consult with their attorney and payroll provider to make sure they are in compliance with both federal and state regulations and that all appropriate notices are given and maintained.

Similarly, it is suggested that an employee who works more than 40 hours per week and is not paid overtime, or who doesn’t receive a wage notice, consult with her attorney to determine whether she was, in fact, entitled to overtime pay, or what her rights are as a result of having not received the wage notice.

Contact me today with questions or comments.


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