While it is true that New Yorkers work longer than anywhere else in the United States, it doesn’t mean that all of these hours are automatically included in the salary. In fact, in many situations, employees are non-eligible for overtime exemptions and are entitled to overtime pay. Here is more on what you should know about white-collar exemptions in New York to make sure you get adequate compensation for your long hours.
Do You Qualify For White-Collar Overtime Exemptions In New York
There is a lot of misconception about white-collar overtime exemptions in New York. These misconceptions exist both on the side of employers, who often misclassify their employees, and on the side of employees, who consider working long hours in Big Apple as a matter of fact.
Types of Overtimes Exemptions
The core of white-color exemptions provided by the Federal Standards Labor Act includes executive, administrative and professional exemptions. The Act includes several tests to qualify for these exemptions, while New York Labor Laws come with their own tests.
To qualify for overtime exemptions in New York, an employee must meet the federal and state law requirements. These tests include the salary and duties tests as outlined below.
The white-color exemptions apply only to salaried employees who receive regular salaries as opposed to hourly employees who receive hourly pay. The salaried employees are those who regularly receive a predetermined amount constituting all their compensation, which is not subject to reduction because of the quality or quantity of their work.
In addition, to meet a salary test, an employee must receive a salary above a minimum threshold. New York sets its own minimum threshold for executive and administrative employees exceeding federal requirements. Under New York standards as of January 01, 2021, exempt executive and administrative employees should earn at least $1,125 per week ($58,500 per year) to qualify for overtime exemption in New York City, Nassau, Suffolk and Westchester Counties and $937.50 per week ($48,750 per year) outside of the NYC and said counties.
Meanwhile, New York state law doesn’t set a minimum salary requirement for professional exemption, so that the employees should only meet the federal test. As of the day of this report, the federal minimum salary threshold for professional exemption is $684.00 per week or $35,568 per year. It should also be noted that New York state law doesn’t recognize the exemption for highly compensated employees available under the FLSA Act.
The executive exemption, also known as the managerial exemption, is one of the most often misconstrued regulations. Oftentimes, someone might think that any employee with the job title of a “manager” automatically qualifies for the managerial exemption. In reality, it is far from the truth as both the federal law and New York labor laws include specific duties tests to qualify for the executive exemption.
Thus, an employee is exempt from minimum wage and overtime pay under the managerial exemption in New York, if:
their primary duty is managing the enterprise,
they customarily and regularly direct the work of at least 2 full-time employees or their equivalent (e.g., two part-time employees working 20 hours per week count as one full-time employee),
the manager has the authority to hire and fire other people or to make suggestions as to hiring, firing, advancement, promotion or any other change of status,
the manager also customarily exercises discretionary authority, for example, making independent decisions based on their own professional judgment.
The number of hours spent to manage the enterprise often becomes critical in determining whether the employee qualifies for the managerial exemption. In determining whether the manager fulfills the duties test, it is essential to answer the question if the employee performs management function as their primary duty or they are just ordinary employees who happen to fulfill management duties from time to time.
The administrative exemption is another frequently misconstrued exemption. It is not uncommon that an employee is viewed as exempt under administrative exemption just because they work in an office with the management.
Meanwhile, to fulfill the duties test under the administrative exemption in New York:
the administrator must perform non-manual work directly related to management policies or general business operations,
they should regularly assist the employer or another employee in executive or administrative capacity or perform work requiring special training, experience or knowledge,
the administrator should customarily and regularly exercise discretion and independent judgment.
The exercise of discretion and independent judgment is one of the most critical criteria in determining whether an employee qualifies under the administrative exemption. When the employee’s duties are carefully scrutinized and strictly regulated, they may not be considered as exercising discretion and independent judgment. So, for example, a bank employee working with loan applications might or might not be considered exempt depending on the scope of their authorities for loan approval.
The professional exemption is the last but not the least of the three primary white-collar exemptions available for two broadly defined categories of professionals, including learned professionals and creative professionals.
According to the New York state law, learned professionals are those whose work:
requires knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study,
requires consistent exercise of discretion and judgment in its performance,
is predominantly intellectual and varied in character,
results in an output that cannot be standardized in a given time period.
Lawyers and doctors are the most common examples of learned professionals who fall under the New York professional overtime exemption. Other examples include certified public accountants, healthcare professionals, and even funeral directors, as evidenced by the decision of the New York District Court in the Rowe v. Olthof Funeral Home, Inc. case.
Similarly to the duties test for the learned professionals, the creative professional exemption requires consistent exercise of discretion and judgment and predominantly intellectual and varied character of work resulting in an output that cannot be standardized in a given period of time.
Meanwhile, the creative professional duties must include the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
The New York white-color minimal wage and overtime exemptions include salary and duties tests which should be carefully applied to each individual situation to determine if an employee falls under one of these exemptions. There are also certain exemptions available with the federal law and not available with New York labor laws, such as computer professional exemption and highly compensated employee exemption.