Federal Court Blocks Changes to FLSA Overtime Salary Threshold

Federal Threshold for Overtime Blocked By Court

The National Law Review in their 2017 web-edition of Hot Topics in Employment Law states, “It’s old news that, at the eleventh hour, a federal district court in Texas temporarily blocked the changes to the Fair Labor Standards Act (FLSA) overtime exemptions expected to be implemented by the United States Department of Labor (DOL) effective December 1, 2016.”

The FLSA requires that employees be paid time and a half for all hours over 40 they work in a given workweek. There are narrow exemptions to the overtime rules that can be confusing and difficult to determine. For example, administrators, executives, and professionals may be exempt from overtime if they earn a certain salary and perform specific duties. The salary threshold has long been the subject of debate and the changes that were supposed to go into effect marked the first significant alteration to the overtime exemptions in many years.

The rules that were sidelined in November outline an increase in the salary threshold that would give many more employees an opportunity to earn overtime. The DOL raised the salary threshold to meet the 40th percentile of weekly earnings for the lowest paid region in the country, the South. The long-standing weekly salary of $455 was to increase to $913 (and automatically rise in increments over time).

Translation: A full-time worker, earning a salary below $47,476 per year, would be eligible to receive overtime pay. Formerly, this amount was approximate $23,000 annually. The changes would create overtime eligibility (based on salary alone) for 35 percent of all workers. Millions of employees would have benefited from the changes.

For now, the court-issued block remains in place, and many employers continue to operate in a state of flux. Some already made changes to their business and salary structures in anticipation of the DOL rules taking effect. For example, several companies raised workers’ salaries above $47,476 to avoid having to pay overtime. Others, reduced staff to help cover the inevitable increase in costs associated with overtime or other wages. Still, other companies no longer allow workers to put in more than 40 hours per week. With the future of the rules being uncertain, planning may become more and more difficult for many businesses.

New York State Overtime Changes Take Effect

The National Law Review reminds business owners that “(a) the injunction blocking the USDOL’s changes is a temporary order that may be overturned, and (b) states may take matters into their own hands.” New York is one such state that did exactly that.

Effective December 31, 2016, the New York Department of Labor adopted wage orders increasing the state salary threshold for overtime exemptions. New York employers must raise the salaries of administrative and executive employees if they want to avoid paying them overtime when they work more than 40 hours. As with the minimum wage in New York, the amount of the salary threshold differs depending on the region and the number employees.

In New York City, an employer with 11 or more employees must pay workers a weekly salary of at least $825.00 to avoid overtime obligations. An employer with less than 11 employees must pay at least $787.50.

In Nassau, Suffolk, and Westchester counties, regardless of the size of the business, the salary threshold is $750.00 per week. In the rest of New York State, $727.50 is the magic number. Employees earning less, are not exempt from overtime based on salary.

What Happens Next?

The new federal rules and their enforcement are on hold. But the New York changes remain unaffected by the federal court’s decision. You should understand the changes and how they may affect your employment and your wages. When new regulations are introduced there may be a period where violations occur just as part of the adjustment process. However, if you are an employee entitled to overtime, make sure you take steps to recover wages which are legally owed to you.

Contact Us

Leeds Brown Law, P.C. is a full-service wage and hour firm representing clients in New York. We have a thorough understanding of overtime rules, exemptions, and the process by which to recover your unpaid wages. Call us with any questions you may have about your right to overtime pay. For a free consultation dial 1-800-585-4658.

 

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