2021 continues the trend of increasing regulation of the workplace by state and local governments. Although it is not possible to discuss all state and local laws, this update provides an overview of recent and upcoming legislative developments to help you and your organization stay compliant. (Please note that developments specifically related to minimum wage rates and COVID-19 are not included.)
The Fair Labor Standards Act and New York Labor Law include exemptions from overtime and minimum wage requirements for employees holding certain executive and administrative positions. In order to qualify for the executive or administrative exemption, an employee must, among other things, earn at least the minimum threshold salary. Under federal law, the current minimum threshold salary is $455 per week ($23,660 per year). However, the minimum threshold salary is higher under New York law and, as of December 31, 2018, is scheduled to rise even higher.
The new minimum thresholds vary depending on the size of the employer and the employee’s work location, as set forth below.
Recently, the California Supreme Court issued its decision in Alvarado v. Dart Container Corporation of California. The Court’s decision changes the manner in which an employer must calculate overtime for employees who earn a flat sum bonus during a single pay period. Accordingly, based on the Court’s decision, this is yet another area where the rules in California differ from the federal rules. This decision is significant because it applies retroactively subject to the applicable statute of limitations.
By way of background, both state and federal laws require that amounts awarded as bonuses be included in determining a non-exempt employee’s overtime rate, except in the case of discretionary bonuses. This means that when the employee works overtime hours and receives a non-discretionary bonus, this bonus program will increase the non-exempt employee’s hourly rate for calculating overtime.
One of the most significant wage and hour actions of the Obama administration—promulgating a new rule on overtime eligibility—remains frozen in legal limbo as the Trump administration decides whether to repeal and replace it or propose an alternative solution. With such uncertainty, what should employers do to ensure they are in compliance when the Trump administration finally takes action?
First, employers need to understand why the new overtime rule is not in effect. A federal district judge in Texas stayed the rule’s implementation on November 22, 2016, just nine days before it would have become effective nationwide. The judge held that the Department of Labor exceeded its regulatory authority by establishing a salary threshold under which employees were automatically overtime eligible regardless of their job duties. The Department of Justice appealed that decision, and the Texas AFL-CIO filed a pending motion to intervene in the event the Trump administration decides not to challenge the judge’s decision in the appeal’s court. After obtaining two filing extensions, the DOJ has until May 1 to file a brief stating its position on the appeal.