Wage and Hour

FAQs About Employee Travel Time -- Is It Compensable?

March 14, 2017

By Jessica C. Moller
There are few things more confusing to employers than the nitty-gritty rules of what is and is not compensable time for non-exempt employees under the Fair Labor Standards Act (FLSA).  There are also few things more costly to employers than when a mistake is made and a non-exempt employee is not paid for time he/she should have been paid for.  With the continuous onslaught of FLSA lawsuits being filed every day, it is important for employers to be familiar with the rules that affect their obligation to pay non-exempt employees. Here are some answers to common questions that are often asked with regard to the compensability of time non-exempt employees spend traveling in connection with work. 1.  Do employees have to be paid for the time they spend commuting to work? Ordinarily, travel from home to an employee’s regular place of work, or from work to home, does not count as “time worked.”  Once an employee’s work day ends, the time the employee spends traveling from his/her last job site to home is considered ordinary commuting time for which the employee will generally not be owed wages.  If an employee has a regular work site, but he/she is required to report to a different work site on occasion, the time spent traveling from home to the different job site (or from the job site back home at the end of the work day) is also not compensable, as long as the different job site is within the same general locality as where the employee regularly works.  For employees who do not have regular work sites and instead travel to different work sites each day, all home-to-work and work-to-home travel time is generally considered non-compensable commuting time, even if the distances traveled are long and the time spent commuting is substantial. 2.  What if the employee uses a company car -- do you have to pay for the employee’s commuting time then? Generally, no.  An employee’s home-to-work and work-to-home travel in a company-owned vehicle is not generally considered to be hours worked, as long as:  (1) it is a vehicle of a type normally used for commuting; (2) the employee is able to use his/her normal route for the commute; (3) the employee does not incur any additional costs using the company vehicle; (4) the home-to-work and work-to-home travel is within the company’s normal commuting area; and (5) the use of the vehicle is subject to an agreement between the company and the employee. 3.  Do you have to pay an employee for travel during the work day? Once an employee arrives at his/her regular work site and begins work for the day, the employee’s travel during the course of the work day is compensable.  For example, the time the employee spends traveling between two work sites will count as “time worked,” just as will the time an employee spends traveling between other places for work-related reasons during his/her work day.  Such travel time therefore is compensable as work time for both minimum wage and overtime purposes. 4.  Do you have to pay an employee for time spent traveling on an overnight trip? Whether or not travel in connection with overnight trips is compensable work time generally depends on when the travel occurs.  If an employee goes on an overnight trip for work and the travel occurs outside of the employee’s regularly scheduled work hours, generally the travel time will not be deemed work time.  If, however, the time the employee spends traveling is during his/her regular work hours, that travel time will generally count as "time worked" -- even if the travel occurs on a day that the employee would not ordinarily have worked!  For example, if an employee regularly works 9:00 a.m. to 5:00 p.m. Monday to Friday, but travels for work from 4:00 p.m. to 10:00 p.m. on Sunday, the employee would have to be paid for the hour from 4:00 p.m. to 5:00 p.m. because that time overlaps with the hours during the days that the employee regularly works, even though Sunday is not a regular work day for that employee.  The hours from 5:00 to 10:00 p.m. need not be paid because they are outside the hours that the employee regularly works.  This rule may seem counterintuitive, but it what is currently required under the law. 5.  Does it matter whether the employee uses public transportation or drives himself/herself for the overnight work trip? Yes.  If an employee uses public transportation to get to the distant location, whether or not the travel time is compensable will be determined as set forth in Question 4 above.  If the employee is not offered the option of using public transportation and is required to drive himself or herself, the entire time spent driving is compensable.  However, if an employee is offered the option of using public transportation and instead chooses to drive himself or herself to the distant location, the employer can count as compensable “work time” either the actual time spent driving or the hours that overlap with the employee’s regular work hours as set forth in Question 4 above. Take the following scenario, for example.  Employee A regularly works Monday to Friday from 9:00 a.m. to 5:00 p.m. and has to travel from New York City to Syracuse for an overnight trip.  The employer offers the employee the option of air travel, which would require the employee to take a flight departing New York City at 4:00 p.m. on Sunday and arriving in Syracuse at 5:05 p.m. that same day.  The employee instead opts to drive the 5 hours from New York City very early on Monday morning instead of flying to Syracuse on Sunday.  In this scenario, the employer has the option of paying the employee for either the one hour from 4:00 p.m. to 5:00 p.m. on Sunday since it overlaps with the employee’s regular work hours of 9:00 a.m. to 5:00 p.m., or the five hours the employee spends driving on Monday morning before his/her regular workday would otherwise begin. 6.  Do you have to pay an employee for the entire time he/she is away on an overnight work trip? If, while on an overnight trip for work, a non-exempt employee performs work outside of his/her regularly scheduled work hours, the time the employee spends doing that work will count as “time worked” and has to be compensated just as it would had the employee worked that time under ordinary circumstances.  But time that the employee spends idly or on personal activities will not count as “time worked” and will not have to be compensated. 7.  What about one-day work trips to a different city that do not require an overnight stay -- do you have to pay an employee for the entire day? Different rules apply when an employee usually works in a single location, but goes on a special one-day work trip to a different city than where he/she regularly works.  In that circumstance, if the employee uses public transportation to get to the destination city, the employee does not have to be paid for time he/she spends commuting from home to the train station or airport (whichever applies), because that is considered to be the employee’s ordinary commuting time.  But the employee does have to be paid for all of the time he/she spends at the airport or train station (yes, flight delays and the like will be deemed compensable), and actually traveling between the train station or airport to the other city, regardless of whether or not the travel occurs during the employee’s regular work hours.  If the employee instead drives himself/herself to the destination city instead of taking public transportation, the time spent driving would be compensable as work time.  If, however, the driving employee first drives to his/her regular work location before or after driving to the destination city, that home-to-work travel to the regular work location would be considered the employee’s ordinary commute and therefore non-compensable.  Regardless of whether public transportation is used or the employee drives to the destination city for a one-day work trip, the time the employee spends for meal breaks (assuming he/she is not working during those breaks) and any idle time (i.e., time spent neither working nor traveling) outside of his/her regular work hours is not compensable and does not count as “time worked.” 8.  Are these rules the same under the FLSA and any state-specific wage and hour laws? The wage and hour rules are not necessarily the same from state to state, so it is always important to be mindful of any state-specific laws that could affect an employer’s obligation to pay its non-exempt employees.  For employers with operations in New York State, the New York State Department of Labor has indicated that it interprets the relevant New York Labor Law provisions and accompanying state regulations “in line” with the FLSA’s “travel time” rules, but that is not a guarantee that the state and federal laws will always be in congruity.  It is always possible that the New York State Department of Labor could take an inconsistent position on a particular “travel time” issue, so it is important to always double check and not just assume that the federal rules apply.

NYSDOL Regulations Regarding Payment of Wages by Debit Card and Direct Deposit Have Been Revoked

February 17, 2017

By John M. Bagyi
In a decision issued yesterday, the New York State Industrial Board of Appeals (IBA) revoked the regulations regarding payment of wages by debit card and direct deposit.  While the full decision is available here, the upshot is that the IBA concluded that the Commissioner exceeded his “rulemaking authority and encroached upon the jurisdiction of the banking and financial services regulators.” Accordingly, the regulations governing the payment of wages by debit card and direct deposit, which were set to go into effect on March 7th, are revoked.  Employers need not act to come into compliance with those regulations. An appeal is possible.  Stay tuned.

NYSDOL Posts Draft Model Templates for Payroll Debit Cards and Direct Deposit Notice and Consent

January 24, 2017

By John M. Bagyi
Pursuant to new regulations that take effect on March 7, 2017, New York employers will be required to satisfy certain notice requirements and obtain employees' informed consent before paying wages by debit card or direct deposit.  (Additional information concerning those regulations can be found here.)  In connection with those regulations, this week the New York State Department of Labor posted model templates for written notice and consent for public comment and feedback. The notice and consent for payroll debit cards can be found here. The notice and consent for direct deposit can be found here. Comments and feedback can be submitted to regulations@labor.ny.gov through February 10, 2017.  The Department indicates that after making any changes from such comment and feedback, it will post updated templates prior to the March 7 effective date of the rule, along with translations into additional languages specified during the rulemaking process.

It's Official -- New York's Salary Threshold for the Executive and Administrative Exemptions Is Increasing -- THIS WEEK

December 27, 2016

By John M. Bagyi

As expected, this morning, the New York State Department of Labor published its final rule increasing the salary threshold applicable to exempt executive and administrative employees in New York State. While the ultimate fate of the USDOL’s regulations remains unclear, New York employers now know that the salary threshold applicable to exempt executive and administrative employees will increase effective December 31st. As previously reported, under New York’s Labor Law, the salary threshold for executive and administrative employees (NY law does not set a salary threshold for professional employees and thus the federal salary of $455 applies) is currently $675 per week -- 75 times the current minimum wage of $9.00 per hour.  With the minimum wage set to gradually increase in coming years (at different rates depending on geography), the New York State Department of Labor has implemented corresponding increases in the applicable salary threshold.  The first of these increases will take effect in just three days. Specifically, the increases to New York's salary threshold for executive and administrative employees are as follows: Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties

  • $727.50 per week on and after 12/31/16;
  • $780.00 per week on and after 12/31/17;
  • $832.50 per week on and after 12/31/18;
  • $885.00 per week on and after 12/31/19;
  • $937.50 per week on and after 12/31/20

Employers in New York City "Large" employers (11 or more employees)

  • $825.00 per week on and after 12/31/16;
  • $975.00 per week on and after 12/31/17;
  • $1,125.00 per week on and after 12/31/18

"Small" employers  (10 or fewer employees)

  • $787.50 per week on and after 12/31/16;
  • $900.00 per week on and after 12/31/17;
  • $1,012.50 per week on and after 12/31/18;
  • $1,125.00 per week on and after 12/31/19

Employers in Nassau, Suffolk, and Westchester Counties

  • $750.00 per week on and after 12/31/16;
  • $825.00 per week on and after 12/31/17;
  • $900.00 per week on and after 12/31/18;
  • $975.00 per week on and after 12/31/19;
  • $1,050.00 per week on and after 12/31/20
  • $1,125.00 per week on and after 12/31/21

A chart summarizing these thresholds is available on the NYS DOL website. What does this mean?  It means that if you have any exempt executive or administrative employees who are currently paid less than the applicable salary threshold set forth above, you must increase their salary to at or above that threshold or reclassify them as nonexempt.  But fear not -- you have three days. What a perfect way to end the year -- a significant change imposed on New York employers with virtually no notice. Happy New Year everyone!

Fifth Circuit Court of Appeals Grants USDOL\'s Request to Expedite the Appeal

December 9, 2016

By Subhash Viswanathan
Yesterday, the U.S. Court of Appeals for the Fifth Circuit granted the USDOL's request to expedite its appeal from the preliminary injunction order issued by the U.S. District Court for the Eastern District of Texas, preventing the new white collar exemption regulations from being implemented.  Under the Fifth Circuit's schedule for the appeal, the USDOL is required to file its appeal brief by December 16, 2016.  The responding brief of the 21 states that obtained the preliminary injunction is due by January 17, 2017.  The USDOL's reply brief is due by January 31, 2017.  Amicus briefs in support of the USDOL are due by December 23, 2016, and amicus briefs in support of the 21 states are due by January 24, 2017.  The oral argument before a panel of Fifth Circuit judges will be scheduled on the first available date after the close of briefing, and the Court will issue an expedited ruling on the appeal after oral argument is conducted. Although the Fifth Circuit agreed to expedite the appeal, the briefing schedule issued by the Court confirms that the appeal will still not be decided before Donald Trump is inaugurated as the next President of the United States on January 20, 2017.  Trump's announced intent to nominate Andrew Puzder as his Secretary of Labor sends a fairly clear signal that the Trump Administration will not support the new regulations as they are currently written and may even withdraw the pending appeal before a decision is issued by the Court.  Puzder is the CEO of a chain of fast-food restaurants who has been a vocal opponent of the USDOL's increase to the minimum salary to qualify for the white collar overtime exemptions.  On May 18, 2016, the same day that the USDOL issued its final regulations, Puzder wrote an opinion piece for Forbes soundly criticizing the regulations as counterproductive to the goal of increasing the wages of the middle class.  In that article, Puzder wrote:  "This new rule will simply add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.  In practice, this means reduced opportunities, bonuses, benefits, perks and promotions." It remains likely that the New York increases in the minimum salary levels to qualify for the executive and administrative exemptions will be adopted.  The 45-day comment period after the issuance of the proposed New York State Department of Labor regulations recently ended, and it is expected that the regulations will be adopted as final before the end of the year. We will continue to provide updates as further developments occur.

U.S. District Court in Texas Issues Nationwide Injunction Preventing New Overtime Rule From Taking Effect

November 22, 2016

By Subhash Viswanathan
Today, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction preventing the U.S. Department of Labor from implementing its regulations revising the white collar exemptions.  Therefore, the increase in the minimum salary level to $913.00 per week that was expected to go into effect on December 1 will not occur on that date. In granting the injunction, the Court held that Congress intended the executive, administrative, and professional exemptions to be based on an employee's duties -- not on an employee's salary level.  Specifically, the Court stated:  "After reading the plain meanings together with the statute, it is clear Congress intended the EAP [executive, administrative, professional] exemption to apply to employees doing actual executive, administrative, and professional duties.  In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level."  Although the USDOL has imposed a minimum salary level requirement to qualify for the white collar exemptions since the 1940s, the Court nevertheless determined that the increase in the minimum salary level from $455.00 per week to $913.00 per week was so large that "it supplants the duties test."  The Court stated:  "If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change." So, what does this mean for the future of these regulations?  Although this is only a preliminary injunction that prevents the implementation of the regulations until a final determination is made, this could very well be a permanent end to the regulations.  A final determination is unlikely to be issued before the inauguration of President Trump, and it seems less likely that the USDOL under the Trump administration will be inclined to continue to vigorously defend the regulations in this litigation.  A more likely outcome is that the USDOL may rescind and reissue the regulations with a less drastic salary increase, or perhaps even not reissue the regulations at all. This development leaves many employers wondering what to do about the employees who have already been told that they will be reclassified from exempt status to non-exempt status beginning next week and the employees who have been told that they will receive salary increases beginning next week in order to maintain their exempt status.  The employees who have been told that they will be reclassified from exempt to non-exempt status can certainly be told at this point that they will remain exempt employees (assuming, of course, that their duties continue to qualify them for one of the white collar exemptions).  In addition, from a legal standpoint, nothing would preclude an employer from rescinding the salary increases that were scheduled to go into effect next week for employees who were told that they would receive a salary increase to maintain their exempt status (unless the employer has entered into an employment contract that binds the employer to providing the salary increase).  Obviously, from a human resources standpoint, this will require clear and prompt communication regarding the reason why the salary increase is being rescinded. Employers in New York should also keep in mind that the New York State Department of Labor has proposed a gradual increase to the minimum salary levels to qualify for the executive and administrative exemptions.  If these proposed regulations are adopted, the first salary increase will occur on December 31, 2016.  Employers outside of New York City, Nassau, Suffolk, and Westchester Counties will be required to pay a minimum salary of $727.50 per week to executive and administrative employees.  Employers in New York City who employ 11 or more employees will be required to pay a minimum salary of $825.00 per week to executive and administrative employees.  Employers in New York City who employ 10 or fewer employees will be required to pay a minimum salary of $787.50 per week to executive and administrative employees.  Employers in Nassau, Suffolk, and Westchester Counties will be required to pay a minimum salary of $750.00 per week to executive and administrative employees.  These amounts will increase each year.  There is still no minimum salary under New York law to qualify for the professional exemption even under the new proposed regulations.  We will provide an update regarding whether these proposed regulations become final regulations.

A Quick Update Regarding the Lawsuits Challenging the USDOL's White Collar Exemption Regulations

November 15, 2016

By Subhash Viswanathan

As we previously reported, 21 states filed a lawsuit on September 20 against the U.S. Department of Labor in the U.S. District Court for the Eastern District of Texas, challenging the USDOL’s revisions to the white collar exemptions under the Fair Labor Standards Act.  On that same day, several business groups filed their own lawsuit in the same Court, also challenging the USDOL's white collar exemption regulations.  As we quickly approach the effective date of the new regulations (December 1), many employers are wondering:  what is the status of those lawsuits and how do those lawsuits affect our plans to communicate with our employees about changes that will be made? The short answer to the first question -- the status of the lawsuits -- is that the Court has not issued a decision yet.  On October 12, the 21 states filed a motion for a preliminary injunction, and on October 14, the business groups filed a motion for summary judgment.  On October 19, because of the similarities in the allegations and the common underlying purpose of the two complaints, the Court consolidated the two cases.  This morning, November 16, the court held oral argument with respect to the states' motion for a preliminary injunction.  The U.S. District Judge, Amos L. Mazzant, III, stated at the end of oral argument that the Court hopes that a ruling on the motion for a preliminary injunction will be issued on Tuesday, November 22.  The USDOL's deadline to file a response to the business groups' motion for summary judgment is November 18, and the business groups will have until November 21 to file a reply.  So, a decision on the motion for summary judgment is also not expected at least until November 22 at the earliest. The answer to the second question -- what effect the lawsuits will have on a New York employer's plans to communicate changes to its employees -- is that it may not be feasible for employers to wait and see whether the Court issues an injunction before communicating with their employees.  Employers will need to comply with the new regulations (assuming there is no injunction) effective at the beginning of the work week that encompasses December 1.  For employers that have Monday through Sunday work weeks, that date will be Monday, November 28 -- right after Thanksgiving weekend.  Therefore, employers that want to provide their employees with as much advance notice as possible may find it difficult to wait and see whether the Court issues a decision on November 22 before letting their employees know that they will be converted from exempt to non-exempt status effective November 28. Employers may want to consider including some language in their communications to employees to let them know that the changes in classification will occur unless there are developments prior to the effective date of the changes that either delay or prevent the new regulations from being implemented.  However, even in the absence of such language, nothing would preclude an employer from restoring the status quo if a preliminary injunction is issued by the Court.

New York's Salary Threshold for Exempt Employees Set to Exceed $913.00 Per Week

October 26, 2016

By John M. Bagyi

You read that right -- not to be outdone by its federal counterpart -- the New York Department of Labor recently proposed significant changes to the salary threshold applicable to exempt executive and administrative employees in New York State -- changes all New York employers should be aware of. As you know, both state and federal law regulate exempt status and, to be exempt, an employee must satisfy the requisite tests under both.  While employers are preparing for changes at the federal level that will go into effect on December 1st -- raising the salary threshold for most executive, administrative and professional employees to $913.00 per week -- the New York State Department of Labor has taken the opportunity to propose significant increases to New York's salary threshold. Currently, the salary threshold for executive and administrative employees (NY law does not set a salary threshold for professional employees) is set at $675.00 per week -- 75 times the current minimum wage of $9.00 per hour.  With the minimum wage set to gradually increase in coming years (at different rates depending on geography), the Department of Labor has proposed corresponding increases in the applicable salary threshold.  As a result of these proposed increases, New York's salary threshold will overtake the federal threshold in coming years.  (Note:  because the $913.00 per week federal salary threshold will be indexed, it will be adjusted every three years with the first such adjustment occurring in 2020.) Specifically, the Department of Labor has proposed the following increases to New York's salary threshold for the executive and administrative exemptions: Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties

  • $727.50 per week on and after 12/31/16;
  • $780.00 per week on and after 12/31/17;
  • $832.00 per week on and after 12/31/18;
  • $885.00 per week on and after 12/31/19;
  • $937.50 per week on and after 12/31/20

Employers in New York City     "Large" employers (11 or more employees)

  • $825.00 per week on and after 12/31/16;
  • $975.00 per week on and after 12/31/17;
  • $1,125.00 per week on and after 12/31/18;

"Small" employers  (10 or fewer employees)

  • $787.50 per week on and after 12/31/16;
  • $900.00 per week on and after 12/31/17;
  • $1,012.50 per week on and after 12/31/18;
  • $1,125.00 per week on and after 12/31/19;

Employers in Nassau, Suffolk, and Westchester Counties

  • $750.00 per week on and after 12/31/16;
  • $825.00 per week on and after 12/31/17;
  • $900.00 per week on and after 12/31/18;
  • $975.00 per week on and after 12/31/19;
  • $1,050.00 per week on and after 12/31/20;
  • $1,125.00 per week on and after 12/31/21;

After a 45-day public comment period, the Department of Labor will likely move toward finalizing these proposed changes. As if business owners, executives, and human resource professionals did not have enough to deal with.

21 States File a Lawsuit Challenging the USDOL's Revisions to the White Collar Exemptions

September 27, 2016

By Subhash Viswanathan

On September 20, 21 states filed a lawsuit against the U.S. Department of Labor in the U.S. District Court for the Eastern District of Texas, challenging the USDOL's revisions to the white collar exemptions under the Fair Labor Standards Act.  In the lawsuit, the states are seeking a declaratory judgment that the USDOL violated the Administrative Procedure Act and the Tenth Amendment to the U.S. Constitution by promulgating the new regulations, and an injunction preventing the USDOL from implementing the new regulations. The first claim for relief is that the application of the new regulations to state employers violates the Tenth Amendment to the U.S. Constitution.  The Tenth Amendment provides that "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or the people."  According to the complaint, enforcing the new regulations against the states "infringes upon state sovereignty and federalism by dictating the wage that states must pay to those whom they employ in order to carry out their governmental functions, what hours those persons will work, and what compensation will be provided where these employees may be called upon to work overtime."  The states allege that they will be forced to eliminate or alter employment relationships and cut or reduce services and programs as a result of the increased cost associated with compliance with the new regulations. Although the first claim for relief appears to relate only to the application of the new regulations to state employers, the other claims for relief under the Administrative Procedure Act are asserted not only on behalf of state employers, but also on behalf of private employers.  The second claim for relief is that the issuance of the new regulations exceeds the USDOL's statutory jurisdiction and authority under the FLSA, because Congress intended that an employee's duties -- not salary -- be determinative of exempt status and because there is no Congressional authorization for automatic increases to the minimum salary level every three years.  The third claim for relief is that the USDOL circumvented the required rulemaking procedures by mandating automatic increases every three years instead of going through the appropriate notice and comment procedures each time the salary level will be increased.  The fourth claim for relief is that the USDOL's issuance of the new regulations was arbitrary and capricious, and the fifth claim for relief is that the USDOL's issuance of the new regulations was an improper delegation of legislative power. As of now, employers should continue to plan as if the new regulations will become effective on December 1.  Many employers will have significant decisions to make about whether to increase certain employees' salaries to retain the employees' exempt status and whether to reclassify certain employees from exempt to non-exempt.  Those decisions should be made soon, and employers should plan on moving forward with those decisions beginning with the pay period that encompasses December 1.  If an injunction is issued between now and late November that delays or prohibits the implementation of the new regulations, employers can always put their plans on hold pending a final outcome of the lawsuit.

When Reclassifying Employees from Exempt to Non-Exempt, Don't Forget the Wage Theft Prevention Act Notices

July 21, 2016

Employers in New York are familiar with the requirement, imposed by the Wage Theft Prevention Act, that every new hire must be provided with notice of their rate of pay (including overtime rate of pay if applicable), how the employee will be paid (i.e., by the hour, shift, day, etc.), the regular payday, and information regarding the employer.  Employers are obligated to provide an additional written notice anytime that information changes, unless the employee's wage rate is increased and the next pay stub reflects the increase.  Each time notice is given, the employer is required to obtain a signed acknowledgment from the employee, and must keep that signed acknowledgement on record for six years.  Upcoming changes to the white collar exemptions under the Fair Labor Standards Act may implicate a need to issue new notices if employees are reclassified from exempt to non-exempt. As the law currently stands, employees must earn a minimum salary of $455.00 per week ($23,660 per year) to qualify for one of the white collar exemptions (administrative, executive, or professional) under the FLSA.  New York currently has a higher salary threshold of $675.00 per week ($35,100 per year) for an employee to qualify for the administrative or executive exemptions.  The current threshold for employees to meet the "highly compensated employee" exemption under the FLSA is $100,000 per year. Starting on December 1, 2016, however, these thresholds will rise substantially.  The increased salary threshold for the administrative, professional, and executive exemptions will be $913.00 per week ($47,476 per year).  The new threshold for the highly compensated employee exception will be $134,004 per year.  These thresholds are set to increase every three years after that, with the first increase taking effect on January 1, 2020. This change will force many employers to reclassify employees who are currently exempt, but do not meet the new salary threshold, as non-exempt.  Any such reclassification will affect the rates those employees are paid, how they are paid, and their eligibility for overtime pay.  Given this impact, what legal obligation will the reclassification trigger?  You guessed it -- the WTPA’s notice requirement. Accordingly, employers should be mindful of this notice requirement when reclassifying employees in order to comply with the updated regulations, or when making any other changes to employee’s rates or method of payment.  Although the "pay stub exemption" may apply in some limited instances, the best practice is to provide employees with formal written notice that complies with the WTPA when making any such changes.

New York State DOL (Yet Again) Issues Draft Regulations on Payroll Debit Cards and Other Wage Payment Issues

July 12, 2016

By Andrew D. Bobrek
After a nearly eight-month delay, the New York State Department of Labor once again published draft Regulations governing the payment of employee wages via payroll debit cards, direct deposit, and other means.  As we previously reported, these proposed Regulations would impose several new requirements for New York employers, even for those who merely pay employees by direct deposit.  These proposed Regulations – now NYSDOL’s third version – are currently open for public comment. The most recent version is almost identical to the version last proposed in October 2015, with NYSDOL making only two substantive changes:  (1) the newly-proposed Regulations make clear that the requirement to provide employees with a “list of locations” -- where they can access and withdraw their wages -- only applies to the use of payroll debit cards; and (2) the newly-proposed Regulations remove language included in the October 2015 version, which provided that, when paid by check, employees must have at least one means of no-cost local access to the full amount of wages through check cashing or deposit of a check at a financial institution (but NYSDOL nevertheless stated that employers must still “ensure that employees are able to access their wages in order for payment to be effective in accordance with the requirements of Section 191 of the Labor Law”).  Notably, NYSDOL reiterated that the proposed Regulations will not be effective until six months after they are published and adopted in final form. The reason for the eight-month delay on the part of the NYSDOL in issuing these revised draft Regulations is unclear, but it is expected that final rule-making will now proceed in a timely manner.

USDOL Issues Final Regulations Revising the FLSA White Collar Exemptions

May 19, 2016

By Subhash Viswanathan
The U.S. Department of Labor recently issued its final regulations revising the white collar exemptions under the Fair Labor Standards Act.  Although the final regulations significantly raise the salary threshold for the administrative, professional, executive, and computer employee exemptions, employers can take some solace in the fact that the increase is actually lower than the one proposed by the USDOL last summer.  In addition, employers who still have extensive work to do in order to prepare for the implementation of the final regulations will have more time to do so than expected.  The final regulations will not become effective until December 1, 2016, which gives employers more than six months to make decisions regarding whether to increase salaries to retain the exemptions or reclassify formerly exempt employees as non-exempt. The USDOL's proposed regulations issued last summer set the minimum salary to qualify for the white collar exemptions at the salary level equal to the 40th percentile of earnings for full-time salaried workers in the United States.  The final regulations set the minimum salary to qualify for the white collar exemptions at the salary level equal to the 40th percentile of earnings for full-time salaried workers in the lowest-wage Census Region of the United States.  So, instead of the salary threshold increasing to approximately $970.00 per week as anticipated, the salary threshold for the administrative, professional, executive, and computer employee exemptions will increase to $913.00 per week (which amounts to $47,476 per year) effective December 1, 2016.  Although this salary increase is slightly more palatable to employers than the proposed salary increase, it is still a significant increase from the current federal minimum salary level of $455.00 per week to qualify for the white collar exemptions and the current New York minimum salary level of $675.00 per week to qualify for the administrative and executive exemptions.  Teachers, lawyers, and doctors will continue to not be subject to this minimum salary requirement. The USDOL's proposed regulations set the minimum salary to qualify for the highly compensated employee exemption at the salary level equal to the 90th percentile of earnings for full-time salaried workers in the United States.  This did not change in the final regulations.  Effective December 1, 2016, the minimum salary to qualify for the highly compensated employee exemption will be increased from $100,000 per year to $134,004 per year. The USDOL's proposed regulations included a provision that would have automatically raised the minimum salary levels to qualify for the white collar exemptions from year to year without further rulemaking.  The USDOL's final regulations still provide for automatic increases, but instead of occurring every year, these automatic increases will occur every three years beginning on January 1, 2020.  The automatic increases will continue to be based on the 40th percentile of earnings for full-time salaried workers in the lowest-wage Census Region of the United States to qualify for the executive, administrative, professional, and computer employee exemptions, and the 90th percentile of earnings for full-time salaried workers in the entire United States to qualify for the highly compensated employee exemption.  Although this will still force employers to evaluate their exempt workforces on a periodic basis to determine whether to reclassify employees as non-exempt, going through this process every three years instead of every single year will ease this burden slightly. Currently, employers are not permitted to count commissions, bonuses, and other forms of incentive compensation toward the minimum weekly salary for an employee to qualify for the executive, administrative, professional, and computer employee exemptions.  However, the USDOL's final regulations allow employers to satisfy up to 10% of the new salary threshold by the payment of non-discretionary bonuses, incentives, and commissions that are paid quarterly or more frequently.  Employers should take this into consideration when deciding how to restructure the compensation of exempt employees in order to retain the white collar exemptions. The final rule does not include any revisions to the outside sales exemption, so employees who are engaged in the primary duty of making sales outside the workplace will continue to not be subject to a minimum salary requirement to qualify for the exemption.  In addition, although the USDOL solicited comments about whether revisions should be made to the duties tests for the white collar exemptions, the final rule leaves the duties requirements untouched. Employers should keep in mind that they have many options when evaluating compliance with the new white collar exemption regulations.  One of those options is to convert salaried exempt employees to hourly non-exempt employees and do so at an hourly rate that will not raise the total personnel expense for their business.  Of course, that means that the hourly rate will need to be set low enough to account for straight time pay for the first 40 hours per work week and overtime pay for hours worked in excess of 40 hours per work week, without raising an employee’s total average weekly earnings above the current salary.  In other words, many of the 4.2 million employees who will potentially now be eligible for overtime pay may find that they will not earn any more than they did when they were exempt employees who were ineligible for overtime pay.