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Overtime Pay Requirements For New York Employers

If you own or operate a business in New York, you likely maintain a roster of employees. You may also regularly or periodically work with independent contractors such as consultants, freelance software developers, or providers of professional services on a "fractional" basis in order to keep your company running at peak efficiency. New York business owners who are committed to ensuring their companies' compliance with state and federal employment laws are already putting themselves on the path to success by researching applicable regulatory requirements, but a number of factors can combine to make navigating state and federal overtime pay requirements a complicated undertaking for many New York employers. To seek advice and perspective from an experienced New York business and employment law attorney, schedule a consultation with a member of the Schwab & Gasparini team. Our firm maintains offices in four convenient New York State locations, so you can reach us in Hudson Valley or White Plains at (914) 304-4353, in Syracuse at (315) 422-1333, or in Albany at (518) 591-4664 today.

What Is "Overtime" Pay? 

Overtime pay requirements at the federal level are governed by the Fair Labor Standards Act (FLSA), which is also responsible for establishing a federal minimum wage and various national provisions regarding such considerations as the maximum weekly work hours for child laborers. Generally speaking, under the FLSA employers throughout the United States and its associated territories are required to remunerate "non-exempt" employees at a rate of at least one-and-a-half times each employee's regular hourly rate for any work-hours beyond 40 within the employee's workweek. This rule may look simple on the surface, but in practice "regular rate," "non-exempt" and "workweek" are all items the employer will need to determine on a per-employee basis in order to ensure that their business is in full compliance with federal overtime pay requirements. 

Who Is Entitled to Overtime Pay? 

For purposes of determining the applicability of minimum wage and overtime pay requirements, the United States Department of Labor (DOL) draws a distinction between workers, in the sense of any individuals hired to perform work for a business or person, and employees – essentially, all employees are workers, but not all workers are employees. Federal requirements governing overtime specifications only apply to workers who meet the DOL's regulatory criteria for employee classification. There are two main groups of workers to whom the FLSA overtime pay requirements do not apply, although other forms of compensation for extended hours worked may be required by the terms of the contract the business has with that worker or, depending on the circumstances, the compensation guide laid out in the organization's comprehensive employee handbook. 

Independent Contractor Overtime 

Many New York businesses work with a number of parties who are instead classified as independent contractors; neither minimum wage nor overtime pay requirements will apply to these workers. Independent contractors are not generally eligible for FLSA protections, and because independent contractors are generally considered to be "self-employed," a business working with an independent contractor will not typically be required to pay taxes on that individual in the same way that they would on an employee within the organization. All of these factors can make it very tempting for businesses to list any individuals performing work for the company as independent contractors, but this is an area that demands caution and accuracy, as improperly classifying employees as independent contractors when in fact they meet the DOPL standards for employee status can lead to serious legal and financial repercussions. 

Exempt Employee Definition

While independent contractors are excluded from overtime pay requirements under the FLSA due to their non-employee status, a few workers are also excluded from these same requirements, even though they have undisputed employee status. Workers who are classified as employees but whose working hours are not subject to FLSA overtime wage calculations are known as "exempt" for most FLSA reporting purposes. As is also the case with independent contractor vs. employee classifications, businesses cannot simply decide at will whether a given employee will be considered "exempt." Instead, employers may only exclude specific employers fit their job duties and pay structures conform to certain criteria established by the DOL, including:

• The employee's primary job duties are administrative, professional, or executive in nature. 
• The employee is paid on a salaried basis, rather than by an hourly calculation. 
• The employee's weekly salary meets a certain standard established by the DOL (this standard is updated periodically to reflect contemporary cost of living and compensation norms). 

Implications for Employer Compliance 

Most employees will be entitled to overtime pay under the FLSA. Workers who are (accurately) classified as independent contractors will fall outside these guidelines because the overtime pay requirements only apply to employees and a small group of salaried employees in administrative and professional roles whose standard compensation exceeds the federally-mandated threshold may be classified as "exempt" for the purpose of determining overtime pay requirements. If you have questions about how to determine whether an employee may be exempt, consider speaking with an experienced business and FLSA compliance attorney with Schwab & Gasparini to discuss the particulars of your situation. 

What Is the Regulatory Minimum for Overtime Pay? 

Federal regulations and the State of New York both set the minimum required increase for overtime pay at one and a half times the employee's regular rate. The overarching rule in matters of FLSA compliance that have the potential to come into conflict with state-level laws and regulations is that businesses will need to follow whichever regulatory practice is most favorable to the employee – however, because one of the main areas for divergence between state and federal law in employee compensation lies in minimum wage calculations, and because overtime pay is calculated as a percentage above the "regular rate" of the employee who has worked overtime, for overtime pay requirements there is not usually much opportunity for conflict to emerge between state and federal regulatory guidance. 

Both New York and the Fair Labor Standards Act specify the minimum overtime pay for a given employee to be one and a half times the employee's regular hourly rate, regardless of what that rate is; employees working the minimum wage in New York may make significantly more per hour as their base pay than the statutory federal minimum wage, particularly in certain counties – but their overtime pay will still be 150% of their base pay rate. Overtime pay for an employee in a state that relied on the federal minimum wage rather than establishing its own might be lower in total dollars per hour, but that employee's overtime pay would nonetheless be calculated as one and a half times the same employee's regular rate. 

How Is a "Workweek" Determined? 

For the purposes of FLSA overtime pay calculations, a workweek is defined as any 168-hour period consisting of seven 24-hour days in a row. The workweek cycle does not have to begin on any particular day of the week (e.g., Monday), nor are weekends or any specific days "off" mandatory. The workweek also does not have to be the same for all employees associated with an organization. However, each employee's workweek must follow a stable and predictable schedule. 

This stability and predictability of scheduling can be especially important when it comes to calculating overtime pay requirements because FLSA overtime pay requirements specify that a non-exempt employee must be compensated at a rate of at least one and a half times their regular pay for every hour beyond 40 worked within a single workweek. The requirement for consistency in when each employee's workweek begins and ends helps to ensure that employees cannot "shift" the workweek in order to unfairly split an employee's hours across separate pay periods and thereby avoid the overtime pay requirements mandated by the FLSA. Both the Department of Labor and the New York Attorney General's office take any violations of the workweek definition seriously, so it is important to calculate fairly and keep detailed records. 

Discuss Overtime Pay Requirements With an Experienced New York Business and Employment Law Attorney 

If you are running a business in New York, you likely have questions about how the state's sometimes complex labor laws intersect with federal regulations like those outlined in the Fair Labor Standards Act. In particular, you may be struggling to navigate your company's compliance obligations with respect to important matters such as minimum wage and overtime pay requirements. The potential consequences of even an unintended violation of any of the FLSA provisions can be damaging, so it is important for companies to perform their due diligence and maintain strong internal compliance procedures. If you have questions about how to establish or implement those procedures, or if you are already facing allegations of violating FLSA overtime pay requirements, consider speaking with an experienced New York attorney familiar with these matters. Contact Schwab & Gasparini at any of our four conveniently-located offices to book a consultation. Reach us today in Albany at (518) 591-4664, in Syracuse at (315) 422-1333, or in White Plains and the Hudson Valley at (914) 304-4353.

Sun Oct 27 2024, 12:00am