The federal Department of Labor’s new rule on overtime will make many more New York and New Jersey workers eligible for higher pay.
By way of background, both the Fair Labor Standards Act and state laws allow companies to claim some of their employees as exempt from overtime pay so long as the company pays a flat salary instead. These exempt employees often have managerial or administrative roles, but there are many other exemptions as well.
To claim an exemption, employers must be able to show how their employee’s job functions make them exempt from overtime. In other words, a company cannot automatically make an employee exempt from overtime simply by saying so.
Importantly, companies must also pay a minimum salary to their employees to claim the exemption. As of June 2024, that annual salary is $35,568. However, the Department of Labor’s new rule will raise this requirement to $43,888 a year on July 1 and then, in January 2025, to $58,656 a year.
Several businesses and organizations have challenged this rule in court, so its July 1, 2024, effective date could easily be delayed. Employers and employees alike should watch for additional developments.
Assuming the rules do go into effect, companies will have the following options:
- They will need to raise the pay of their salaried employees if they want to keep the exemption.
- They will need to make sure their salaried employees who no longer fall within the exemption work no more than 40 hours a week, or
- They will need to pay overtime at the 150% rate of a person’s regular salary.
Employees who do not get paid overtime as required by law have options
Employees in the New York City area who do not believe they are getting paid the overtime they deserve also have legal options available to them. One option is to sue their employer to recover their missing pay and other damages.