1. Employee Classification & Overtime Rules
Healthcare Financial Management Association
Northeastern New York Chapter
Sanjeeve K. DeSoyza, Esq.
April 13, 2016

2. to USDOL Overtime Regulations
Proposed Changes
to USDOL Overtime Regulations

3. Sept. 4, 2015 Comment Period Ended (247,064 comments )
The Timeline
Sept. 4, 2015 Comment Period Ended (247,064 comments )
June 30, 2015 NPRM
March 2016 Proposed Rules sent for OMB Approval
March 13, 2014
President’s Directive to Update Rule
July 6, Rule
Published
DOL Review
June 2016? Final Rule Issued

4. “White-Collar” Exemptions
Executive
Administrative
Professional
Outside Sales
Three tests:
Salary Basis
Salary Level
Duties

5. “White-Collar” Exemptions
A brief look back:
Last revised in 2004
Eliminated long/short duties test
Increased minimum salary level to $455 per week
USDOL received over 75,000 comments and spent 13 months reviewing

6. Proposed FLSA Regulations
USDOL issued new “proposed” regulations on June 30, 2015
Significant changes to FLSA’s minimum salary levels

7. Proposed Salary Threshold Increase
FLSA Minimum Salary Level
NOW: $455 per week ($23,660 per year)
PROPOSED: $970 per week ($50,440 per year)
Compare with New York Labor Law
NOW: $675 per week ($35,100 per year)
* Remember: There is no New York Labor Law salary minimum for “professional” employees.

8. Highly Compensated Employees
“Highly Compensated Employee” Threshold
Now: $100,000 per year
Proposed: $122,148 per year
No specific New York Labor Law counterpart

9. “Duties” Test No changes proposed, but….
USDOL sought comments about whether changes are necessary
What, if any, changes should be made?
Should employees be required to spend a minimum amount of time performing work that is their primary duty? What minimum?
Looking to follow California’s model?
What will happen?

10. What Could It Mean?
Potential loss of exemption for front-line managers, particularly in smaller establishments
Limits opportunities for exempt employees to engage in non-exempt work for training purposes and to assist in “all-hands-on-deck” situations 

11. Annual Indexing & Automatic Increases
Automatic annual updating based on either:
Percentile of earnings (40th percentile of weekly earnings for full-time salaried workers); or
Inflation as measured by consumer price index
Would require employers to perform annual assessment and adjustment to preserve exempt status of workers

12. Non-discretionary Bonuses
USDOL sought comments on whether to allow nondiscretionary bonuses, such as certain production or performance bonuses, to satisfy a portion of the standard salary test requirement

13. Proactive Risk Management and Transition Strategies

14. Proactive Risk Management
Step 1: Self Audit
Consider benefits of attorney-client privilege
Consider applicable state laws
Review salary levels and duties
Review CBA(s)
Identify and evaluate part-time “exempt” employees
Document reclassification decisions

15. Proactive Risk Management
Step 2: Roll-Out Changes
Determine timing of changes/re-classification
Develop action plan and employee communications
Educate supervisors
Anticipate and be prepared to answer questions and complaints

16. Proactive Risk Management
Step 3: Training & Compliance
Recordkeeping
Meal periods (New York Labor Law)
Restrictions on working outside of normal work hours
Overtime restrictions

17. Concerns Associated with Maintaining Exempt Status
Must satisfy whatever duties test is adopted
Additional oversight necessary if “percentage-of-time- rule” adopted
Salary must meet applicable new threshold
Increased costs
Threshold will escalate year after year

18. Concerns Associated with Maintaining Exempt Status
Budgeting annual automatic increases and planning for implementation
May have very short notice!
Negative morale:
On supervisors
On other employees
May be required to provide poor performing employees with raises to preserve exempt status
* Do not forget to issue Wage Theft Protection Act notices when necessary!

19. Concerns Associated with Reclassification to Non-Exempt
Setting the “new” pay rate
Potential for significantly higher costs (overtime) if standard workweek exceeds 40 hours
Morale concerns
Less autonomy and scheduling flexibility for re- classified employees
Limiting overtime and avoiding off-the-clock work
Is this even practicable given the worker’s duties and responsibilities?

20. Transition Considerations
Convert salary to hourly
Transition to “fluctuating workweek” salary
Transition to “salaried non-exempt”
* Do not forget to issue Wage Theft Protection Act notices when necessary!

21. NY Minimum Wage Increase and
Paid Family Leave

22. New Minimum Wage Increases
Budget deal reached March 31, 2016
NYC large employers (11 or more employees):
$11.00 on 12/31/16
$13.00 on 12/31/17
$15.00 on 12/31/18
NYC small employers (10 or fewer employees):
$10.50 on 12/31/16
$12.00 on 12/31/17
$13.50 on 12/31/18
$15.00 on 12/31/19

23. New Minimum Wage Increases
Employers in Nassau, Suffolk, and Westchester Counties:
$10.00 on 12/31/16
$11.00 on 12/31/17
$12.00 on 12/31/18
$13.00 on 12/31/19
$14.00 on 12/31/20
$15.00 on 12/31/21
(cont’d)

24. New Minimum Wage Increases
Employers in the remainder of the state:
$9.70 on 12/31/16
$10.40 on 12/31/17
$11.10 on 12/31/18
$11.80 on 12/31/19
$12.50 on 12/31/20
Thereafter, minimum wage will continue to rise toward $15.00 depending on its economic impact
Increases could be suspended if they are hurting the economy
Assess economy in upstate NY to determine rate of increase that is best suited to grow the upstate economy

25. Paid Family Leave in NY Included in March 31, 2016 budget deal
Effective January 1, 2018
Eligible after 6 months of employment
Up to 12 weeks of paid leave (phased in)
Qualifying reasons:
Bond with new child (birth, adoption, or foster)
Care for seriously ill family member
Address issues arising from a family member’s military service
Applies to all employers
Employee’s job must be held open
(cont’d)

26. Paid Family Leave in NY Weekly benefit amounts (% of employee’s AWW):
1/1/18: 50% (8 weeks)
1/1/19: 55% of AWW (10 weeks)
1/1/20: 60% of AWW (10 weeks)
1/1/21: 67% of AWW (12 weeks)
Maximum weekly benefit amounts:
1/1/18: 50% of SAWW
1/1/19: 55% of SAWW
1/1/20: 60% of SAWW
1/1/21: 67% of SAWW
**SAWW calculated by NYSDOL ($1,266.44)
(cont’d)

27. Paid Family Leave in NY Funded entirely by employees:
$0.70 to $1.40 per week (phased in)
No employer contribution

28. Questions?

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30. The information in this presentation is intended as general background information on labor and employment law. It is not to be considered as legal advice. Employment law changes often and information becomes rapidly outdated. All rights reserved. This presentation may not be reprinted or duplicated in any form, without the express written authorization of Sanjeeve K. DeSoyza, Esq.