While the Fair Labor Standards Act (FLSA) sets minimum wage payment requirements at the federal level, states are free to enact their own minimum wage requirements. A state may not, however, set its minimum wage below the federal standard. In New York, for example, the minimum wage rate is higher than the federal minimum wage rate.
Pursuant to the New York Minimum Wage Act, the minimum wage in New York differs depending on the employer’s location and industry, as well as the employee’s duties. However, in all locations, the New York State minimum wage is higher than that of the FLSA and is among the highest in the country. In New York City and Nassau, Suffolk, and Westchester Counties the minimum wage is $15.00 per hour. In the rest of the state the minimum wage is $14.20 per hour but is scheduled for annual increases until it reaches $15.00 per hour.
New York law generally incorporates the FLSA overtime pay requirements for calculating overtime payments for nonexempt—i.e., hourly—employees. A nonexempt employee who does not live in his or her employer’s facilities must receive overtime if he or she works more than forty (40) hours in any workweek.[1] New York law generally defines a workday as eight (8) hours and a workweek as Sunday to Saturday. Overtime pay is calculated at one and a half (1.5) times the employee’s regular rate of pay per hour. So, for example, if a nonexempt employee works forty-eight (48) hours in one workweek and his regular rate of pay is $15.00 per hour, the employee’s pay for that week should be calculated as follows: ($15.00 x 40) + ($22.50 [overtime rate] x 8 [overtime hours]) = $780.
Certain categories of employees are exempt from New York’s overtime requirements. In other words, certain employees are not eligible for overtime pay even if they work more than forty (40) hours in one workweek. The primary exemption categories are the Executive and Administrative exemption categories (also known as “white-collar” exemptions). In order to qualify for the executive or administrative exemptions, employees must meet a minimum salary threshold, which in NYC and Nassau, Suffolk, and Westchester Counties is $1,125 per week, and in all other counties is $1,064.25 per week.[2] The following are examples of other employment categories exempt from the New York Minimum Wage Act’s overtime requirements: government employees; part-time babysitters; taxicab drivers; volunteers, learners, or apprentices for non-profit institutions; counselors in a children’s camp; newspaper deliverers; and students doing non-profit work in a college or university fraternity, sorority, student association, or faculty association.
Failure to comply with the New York State Minimum Wage Act can lead to serious consequences for employers. First, violating the Act’s minimum wage and/or overtime requirements can lead to an employee, or group of employees, filing a civil lawsuit against the employer. As a result of such a lawsuit, an employer may be held liable for all unpaid wages, liquidated damages of up to 100% of the unpaid wages, interest on the unpaid wages at a 9% annual rate, and attorneys’ fees and costs. On top that, wage and hour litigation can be timely, expensive, and detrimental to the employer’s reputation.
Secondly, the New York State Department of Labor may bring an administrative action on behalf of employees – a/k/a “NYS Department of Labor audit”. The potential consequences of an administrative action by the NYDOL are identical to those of a civil lawsuit brought by an employee, except for the annual interest requirement on unpaid wages.
Thirdly, the NYDOL can also issue a compliance order, which directs employers to make various payments within a certain time period. The compliance order can direct the employer to make the following payments: (1) all unpaid wages; (2) liquidated damages equal to 100% of the unpaid wages; (3) interest on the unpaid wages at a 16% annual rate; (4) at the discretion of the NYDOL, an additional 15% in damages if the employer does not comply with the compliance order within ninety (90) days; and (5) a civil penalty of up to 200% of the unpaid wages, if the employer previously violated minimum wage or overtime laws, or willfully or egregiously fails to pay wages.
Finally, an employer who fails to pay minimum wage or overtime may also be subject to criminal penalties. For an initial failure to pay, employers can be charged with a misdemeanor and sentenced to imprisonment for up to one year and a fine between $500 and $20,000. For a subsequent failure to pay within six (6) years of a prior failure, employers can be charged with a felony and sentenced to imprisonment up to one year and one day as well as a fine between $500 and $20,000.
At KI Legal, our experienced Labor and Employment Division is dedicated to helping businesses comply with the complex wage and hour laws in New York State. It is crucial for employers to ensure they are compliant to avoid potential legal, financial, and reputational consequences. Our team of legal experts is here to provide guidance and support to help your business avoid costly litigation and maintain a positive reputation. Don't risk the consequences of non-compliance, contact KI Legal today to ensure your business is meeting all its obligations. Call (212) 404-8644 or email info@kilegal.com for a free consultation today.
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[1] A nonexempt employee who lives on his or her employer’s premises must receive overtime if he or she works more than forty-four (44) hours in any workweek. Furthermore, farm laborers must be paid at an overtime rate for hours worked over sixty (60) in one calendar week and is entitled to at least twenty-four (24) consecutive hours of rest each calendar week. If, however, the farm laborer chooses to work during this rest period, he or she is entitled to paid at the overtime rate.
[2] Federal law also has a Professional exemption, which has a minimum weekly salary threshold of $684. Since New York law does not have this exemption, employers must ensure they meet this federal threshold for exempt “professional” employees.