Up, Up and Away: Another Proposed Increase to the Salary Threshold For Exempt Employees In New York

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Just weeks before the United Stated Department of Labor (USDOL) regulations are set to increase the salary threshold for exempt employees throughout the country, the New York State Department of Labor is proposing an even higher threshold that will surpass the federal requirements for some New York employers as of December 31, 2017. On October 19, 2016, in addition to updating its regulations to match the minimum wage increases announced this past spring, the New York State Department of Labor proposed new changes to the salary basis minimums for exempt employees in New York.

Similar to the minimum wage increases, the proposed salary basis amendments would be different for “large employers” in New York City (i.e. those employers with eleven or more employees), for “small employers” in New York City (i.e. those employers with ten or fewer employees), “downstate” employers (i.e. those employers in Nassau, Suffolk and Westchester counties), and “remainder of state” employers (i.e. those employers outside of New York City, Nassau, Suffolk and Westchester counties). For large New York City employers, the New York State Department of Labor is proposing that in order to satisfy the salary basis requirements, exempt employees must be paid a salary $825 per week on or after December 31, 2016, $975 per week on or after December 31, 2017 and $1,125 per week on or after December 31, 2018. Thus, starting on December 31, 2017, the salary basis threshold for some New York employers will exceed the new federal threshold of $913 per week.

While these New York State Department of Labor proposals are still in proposal form, there is reason to believe that they will become final.  If they do, and if the challenge to the federal regulations on the salary basis test proves unsuccessful, employers in New York will need to re-evaluate their exempt population in December 2016, 2017, 2018 and 2019, including whether to reclassify exempt employees to overtime eligibility or increase salaries to satisfy the exemption. Additionally, the new USDOL regulations contain a mechanism for increasing the federal salary threshold beginning in 2020 and every three years thereafter, so affected New York employers will need to keep an eye on potential federal increases as well.