New York labor law regulates employers of all sizes. However, while large employers typically have experienced HR managers or in-house attorneys to keep them informed of these rules, smaller businesses often lack those resources. The result is that small businesses may run afoul of employment laws and face significant liability. Many situations which commonly arise in smaller businesses don’t seem like they would require a consultation with counsel, but in fact they are governed by regulations and formalities that owners need to know. Some of the top areas which owners should give special attention to include the following:
Most employers are aware of “overtime” wages, but many small business employers do not know when overtime wages are required, whether exemptions apply and how overtime wages are calculated.
Certain occupations are exempt from overtime wage requirements such as professional, administrative and executive employees. For other employees, effective December 1, 2016, the Department of Labor regulations will further expand the number of employees who will be entitled to receive overtime. Previously, employers were able to avoid paying overtime for all employees who made in excess of $23,660/year. Now, that figure will more than double – that is, only employees earning in excess of $47,476 will be exempt.
“Overtime” is defined as any hours over 40 hours per week. Hours may not be averaged over several weeks. A workweek is not limited to a calendar week, but any period of 7 consecutive days. For example, an employee who works a 45 hour workweek from Tuesday through Monday will have 5 hours of overtime. Employees must be paid time and a half (1.5 times the regular rate) for hours above 40 hours in the workweek. It doesn’t matter if employees receive a set weekly salary (for example, they earn $500 a week). The salary is divided by total hours worked in the workweek to determine the employees’ regular hourly rate.
There are exceptions and additional rules for certain types of employees. For example, if your employees work shifts longer than 10 hours (or split shifts that “spread” over longer than a 10 hour period), you must pay them an additional hour of payment at the minimum wage. This is called “spread of hours” pay.
Employers who fail to pay overtime are subject to interest and penalties. In New York, interest alone may be as high as 16%. Employers should speak with an experienced attorney to get appropriate guidance if they are unsure how to apply overtime rules to their employees.
During March 2016, New York State adopted an increased minimum wage, which will eventually increase minimum wage to $15.00/hour in the New York metropolitan area and $12.50 throughout New York State. The increase will occur annually over several years and depends on the location and number of employees.
In an upcoming post, we will cover additional rules small business owners should know, including those involving distinctions between employees and independent contractors and wage deductions.
If you have questions about how these regulations apply to your business, contact us for a consultation. You can also read more about our business representation practice here.
This post does not constitute legal advice or establish an attorney-client relationship.