New January 1, 2020 Exempt Salary Minimums

The United States Department of Labor issued a final regulation to take effect January 1, 2020, raising the minimum overtime salary threshold for exempt employees under federal law to $35,568. New York State employers, though, must be mindful that, also as of January 1, 2020, they must pay exempt employees substantially higher minimum salaries, or those employees may be eligible for overtime pay under New York State Law for all hours actually worked over 40 hours in any given workweek.

Specifically, the minimum annual salary for exempt employees for all New York City employers will be $58,500 as of January 1, 2020. Also, the minimum salary for exempt employees in Nassau, Suffolk and Westchester Counties will increase to $50,700 on that date. The minimum salary for exempt employees in all other New York counties effective January 1, 2020 will be $46,020.

In addition, the new federal regulation raises the salary threshold for highly compensated white-collar employees to $107,432 from $100,000. Further, nondiscretionary bonus payments, incentive payments and commissions may be used for up to 10% of the required minimum salary level if they are paid on an annual or more frequent basis.

In addition to these new minimum salary requirements, exempt employees must also meet certain duties tests, or they will otherwise be eligible for overtime pay. These duties tests to be exempt from overtime pay have changed in recent years, but the new regulation has not made any new changes to those tests. Unless exempt employees satisfy both salary tests and the duties tests, they will be considered non-exempt and eligible for overtime pay.

Additionally, the minimum hourly rates for most non-exempt employees will also increase on January 1, 2020. These minimum hourly rates vary based on the location of the work, number of employees who work for the employer, the type of industry and/or the type of job.

The minimum hourly wage in New York City effective January 1, 2020, increases to $15 per hour for all businesses. The minimum hourly wage for Nassau, Suffolk and Westchester is currently $12 per hour and will increase to $13 per hour on January 1, 2020; $14 per hour on January 1, 2021; and $15 per hour at the end of 2021. The minimum wage for other counties in New York State is currently $11.10 per hour and increases to $11.80 per hour on January 1, 2020, and $12.50 per hour on January 1, 2021. There are also different minimum hourly rates for employees in the fast-food industry and employees who receive tip

Employers should review and/or audit their compensation arrangements and agreements for each of their employees and/or any individuals who provide services directly for them in order to ensure that they are complying with all applicable overtime, minimum wage payments and benefits, and wage hour laws and regulations.