Employers should be aware of several important changes to federal and New York wage and hour laws, effective December 31, 2015 and January 1, 2016. Additionally, the New York Wage and Deduction Law has been extended to November 6, 2018. Changes to federal and state laws include:
- Updates to the FLSA adjusting the annual salary levels required for employees to be eligible for exemption;
- Federal laws requiring minimum wage and overtime protection for home care workers;
- Increases to New York State’s minimum wage;
- Increases to the minimum wage of hospitality workers in New York State and New York City;
- New detailed requirements for employers who pay employee’s wages using payroll debit cards; and
- Notice updates to the New York Wage Theft Prevention Act.
More information on these changes can be found below.
I. Proposed Updates to the FLSA
The U.S. Department of Labor is amending the Fair Labor Standards Act (FLSA) in order to take into account wage changes and inflation since the 2004 update. The Notice of Proposed Rulemaking focuses on compensation levels needed for employees to be exempt. Currently, the standard annual salary level required for exemption is $23,660, or $455 per week. The proposed changes would more than double this, requiring annual compensation of $50,440, or $970 per week. For highly compensated employees, the annual salary requirement for an exemption would increase from $100,000 to $122,148. If enacted, these proposed increases would exceed the minimum salary required by New York Labor Law’s administrative and executive exemptions, which are currently set at $656.25 per week. The DOL is also proposing to establish a mechanism to automatically update the standard salary and highly compensated employee scales to ensure that they remain meaningful tests for distinguishing between bona fide executive, administrative, and professional workers who are not entitled to overtime and overtime-protected white collar workers.
Employers are advised to prepare for these FLSA updates, as the final rule is expected as early as January 1, 2016. More information can be found here.
II. Upholding Federal Regulations that Provide Protections to Homecare Workers
On August 21, 2015, the D.C. Circuit upheld regulations issued by the U.S. Department of Labor applying the federal minimum wage and overtime protections of the FLSA to the approximately 2 million workers who provide home care for the elderly and disabled. Home care workers will be entitled to overtime pay (time-and-a-half of their regular hourly wage) when they work over 40 hours in a week; compensation for time spent traveling between clients’ homes; and compensation when they care for clients on overnight shifts.
III. Increasing the Minimum Wage
Effective December 31, 2015, the state minimum wage in New York will increase to $9.00 per hour. Accordingly, employers must make any necessary adjustments to their payroll prior to that date. Employers should also be aware that provisions of the minimum wage law called wage orders may modify the $9.00 per hour rate. These wage orders provide guidance on the minimum wage rates and overtime rates for covered jobs in the farming industry, building services industry, hospitality industry, and other miscellaneous industries and occupations. A listing of wage orders for each industry can be found here.
IV. Hospitality Wage Order Updates
Effective December 31, 2015, all New York hospitality employers must pay their tipped employees at least $7.50 an hour. The overtime rate for tipped workers will increase to $12.00 per hour. The rate for spread of hours will match the minimum wage rate of $9.00 per hour. For employers that require employees to wear uniforms, the uniform maintenance rates will also increase based on how many hours employees work per week: $11.20 per week for work weeks of more than 30 hours; $8.85 for work weeks of more than 20 hours, but less than 30 hours; and $5.35 per week for work weeks of 20 hours or less.
Effective December 31, 2015, employers will be permitted to take only a $1.50 per hour tip credit towards the minimum hourly rate of tipped employees. Previously, employers were able to take tip credits between $3.10 and $3.85 per hour.
Further, effective December 31, 2015, the minimum wage for fast food workers in New York City will be $10.50 per hour. The minimum wage will be $9.75 per hour for fast food workers in the rest of New York State. These rates apply to fast food restaurants that have 30 or more establishments nationwide, either through an integrated enterprise or franchisor-franchisee relationships.
V. Requirements for Employers who Pay Employees by Check, Direct Deposit, Payroll Debit Cards
On May 27, 2015, Governor Cuomo announced that the New York State Department of Labor published draft regulations outlining requirements for employers who pay their employees by check, through direct deposit, or through the use of payroll debit cards. The proposed regulations prohibit employers from charging employees a fee for reissuing employee paychecks. The regulations further emphasize that employees have a choice as to whether to receive their pay through direct deposit and cannot be required to do so.
The regulations also outline consent, notice, and document retention requirements for employers who elect to pay employees through payroll debit cards. For example, employers are required to obtain written authorization from employees and are not permitted to charge employees undue fees for accessing wages through payroll debit cards. Employers who pay employees using payroll debit cards are advised to strictly adhere to the Department of Labor’s proposed regulations.
VI. Amending New York’s Wage Theft Prevention Act (WTPA)
New York’s Wage Theft Prevention Act requires employers to provide a written notice of wage rates to every newly hired employee within 10 days of hire. The notice must be provided in English and in the employee’s primary language. On December 29, 2014, Governor Cuomo signed into law amendments to the WTPA that eliminate the annual wage notice requirement (previously, employers were required not only to provide wage notices to new hires, but also to provide annual wage notices to employees between January 1 and February 1 of each year). These amendments also increase penalties for violations of the WTPA. Failure to provide wage notices now incurs a $50 penalty per each day that the notice is not provided, up to a maximum of $5,000 per employee.
Under the WTPA, wage notices must include:
- Rate or rates of pay, including overtime rate of pay (if applicable);
- How the employee is paid (e.g. by the hour, shift, day, week, commission);
- Regular payday;
- Official name of the employer and any other names used for business;
- Address and phone number of the employer's main office or principal location; and
- Allowances taken as part of the minimum wage (e.g. tips, meal and lodging deductions).
Importantly, as the WTPA’s document retention policies remain unchanged, employers must retain all notices and signed certifications from newly hired employees for 6 years.
VII. Extending New York Wage Deduction Regulations
On October 26, 2015, Governor Andrew Cuomo signed into law amendments that extend the New York Wage Deduction Law until November 6, 2018. The New York Wage Deduction Law allows an employer to make limited deductions from an employee’s wages to recover wage overpayments due to mathematical and clerical errors, and for repayments of wage advances. Employers may also make deductions to provide for the payment of employee benefits such as gym memberships, transit passes, and daycare, with the written consent of the employee.
Prior to making any wage deductions, employers must obtain a written, informed authorization from the employee, either through a written agreement between the employer and employee or through a collective bargaining agreement. The written authorization must provide notice of all terms and conditions of the deduction, the purpose for the deduction, and the manner in which the deduction will be made. In addition, the employer must obtain the authorization prior to making a deduction, changing the amount of a deduction, or making any substantial changes in any authorized deduction.
In light of the updates to the laws and regulations discussed, employers are advised to:
- Make changes to their payroll prior to December 31, 2015 to reflect changes to the minimum wage;
- Reexamine policies associated with any deductions from employee wages; and
- Establish or adjust procedures as necessary to ensure continued compliance with New York’s amended WTPA and all other updated wage and hour laws.