by Lisa Scibetta, on Feb 23, 2023 9:45:00 AM
New York employers need to fully understand the requirements regarding New York overtime, in order to avoid legal and financial penalties.
New York Overtime Overview
According to New York Overtime Law, employers must typically pay employees 1.5 times their regular rate of pay for all work over 40 hours in a week. Some residential employees must receive overtime pay at the rate of 1.5 times their regular rate of pay for all hours worked over 44 in a workweek.
If an employee’s rate of pay differs at times, then use the average as the regular rate of pay.
While some occupations are exempt from overtime requirements under the FLSA, New York overtime may require otherwise.
New York Overtime Compensation & Pay
Employees in New York who are covered under the state or federal overtime requirements are typically entitled to 1.5 times their regular rate of pay for all hours worked over 40.
40 Regular Rate Hours
X $10 Per Hour Regular Rate
$10 Per Hour Regular rate
+ 1 ½ Overtime Premium
$15.00 Per Hour Overtime Rate
10 Overtime hours
$400 Regular Rate Time or "Straight Time"
+ 150 Overtime
$550 Total Pay
An employee’s regular rate of pay is their normal hourly wage. If an employee’s rate of pay differs at times, then use the average as the regular rate of pay.
Payments that are not part of an employee’s regular rate of pay include:
- Pay for expenses incurred on the employer's behalf
- Premium payments for overtime work
- True premiums paid for work on Saturdays, Sundays, and holidays
- Discretionary bonuses
- Payments in the nature of gifts on special occasions
- Payments for occasional periods when no work is performed due to vacation, holidays, or illness
New York Overtime Eligibility
New York Overtime covers all individuals that fall under the definition of the word “employee”. An employee is defined as "any individual employed or permitted to work by an employer in any occupation”.
However, neither FLSA requirements or New York Overtime requirements apply to the following types of workers:
- Executive Employees
- Administrative Employees
- Professional Employees
- Outside Salespeople
- Individuals Working for a Federal, State, or Municipal Government*
- Farm Laborers
- Certain Volunteers, Interns, and Apprentices
- Taxicab drivers
- Members of Religious Orders
- Certain Individuals Working for Religious or Charitable institutions
- Camp Counselors
- Individuals Working for a Fraternity, Sorority, Student or Faculty Association
- Part-time Baby Sitters
Important to note is while overtime requirements do not apply to individuals working for a Federal, State, or Municipal Government, the law does cover:
- Charter schools
- Private schools
- Not-for-profit corporations
- Non-teachers working for school districts
*It is also important to understand that employers may decide to pay overtime to exempt employees at their own discretion, with the exception of “elective officers and those officers otherwise excluded by law and to any or all public employees under their jurisdiction” under General Municipal Law 90.
Rules for Salaried Employees
Although executive, administrative, and professional employees are not covered by overtime requirements, some salaried employees are still entitled to overtime pay for hours worked over 40 hours. The number of hours included in the employee’s regular work week only affects the rate of overtime pay.
Example: An employee may be hired to work a 45-hour workweek (called “straight time”) for a weekly salary of $405. In this instance the regular rate is obtained by dividing the $405 straight-time salary by 45 hours, resulting in a regular hourly rate of $9.00. The employee’s overtime rate is then calculated as $13.50 per hour ($9.00 straight time hourly rate and $4.50 extra hourly pay) and the employee should get $13.50 for 5 hours a week.
What Are Executive, Administrative, and Professional Employees?
Executive, administrative, and professional employees are exempt from overtime requirements under New York Overtime law. In order to determine if an employee falls into one of these categories, they must meet a salary level test, as well as certain requirements.
In order to qualify for an executive exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of either:
- Managing a business/company
- Managing a customarily recognized department or subdivision of a business/company
- Customarily and regularly direct the work of at least two or more other full-time employees
- Have the authority to hire and/or fire other employees, or their thoughts on similar decisions are given particular weight and consideration
If an employee meets the previous three requirements as well as the Salary Level Test, then they are considered an Executive Exempt Employee and are not subject to FLSA minimum wage and overtime law.
In order to qualify for an administrative exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of office or non-manual work that is directly related to the management, or general business operations of either the employer or the employer’s customers
- Have a primary duty that includes the exercise of discretion and independent judgment in regard to important matters
If an employee meets the previous two requirements as well as the Salary Level Test, then they are considered an Administrative Exempt Employee and are not subject to FLSA minimum wage and overtime law.
In order to qualify for a professional exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of work requiring advanced knowledge
- Defined as work that is predominantly intellectual and requires the consistent exercise of discretion and judgment
- The advanced knowledge must be in a field of science or learning and must be obtained by a prolonged course of specialized intellectual instruction (such as college)
- Have a primary duty of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor (Musicians, Composers, Engineers, etc.)
If an employee meets one of the previous two requirements as well as the Salary Level Test, then they are considered a Professional Exempt Employee and are not subject to FLSA minimum wage and overtime law.
Get Help With New York Overtime Requirements
To learn more about processing payroll in New York or maintaining compliance with New York overtime requirements, contact a New York Payroll Company. By leveraging experts for payroll outsourcing, companies can avoid non-compliance fines and potential hefty legal penalties.