Since the Department of Labor announced the new overtime rule last May, we have been closely following its rocky implementation in a series of posts. Presently, the rule – which would render an estimated 4 million workers eligible for overtime by effectively doubling the salary threshold for exempt employees to $47,476 – remains stayed by a federal court in Texas.  Further, the new administration is widely expected to block the rule, either by allowing it to die in the courts or by taking affirmative action to repeal it.  Accordingly, it appears that the federal overtime rule is unlikely to ever take effect. 

Nevertheless, employers should not become complacent; as the new administration takes deregulatory action, states and cities may fill in the gaps. Indeed, a handful of states have recently implemented regulations that set a significantly higher salary threshold than the federal rule.

In New York, for instance, regulations went into effect on December 31, 2016 that increase the salary threshold for exempt workers based on employer size and geographic location within the state. Significantly, the salary threshold will increase annually, culminating in a new salary minimum of $58,500 for all employers in New York City by December 31, 2019.  Currently, the annual salary threshold applicable to New York employees is as follows:

  • Employers in New York City with 11 or more employees: $42,900
  • Employers in New York City with 10 or fewer employees: $40,950
  • Employers in Nassau, Suffolk, and Westchester counties: $39,000
  • All other employers within New York State: $37,830

Meanwhile, California also recently issued overtime regulations pursuant to which the statewide salary threshold will increase annually, reaching $62,400 for all employers by January 1, 2023. As of January 1, 2017, the annual salary threshold applicable to California employees is as follows:

  • Employers with 26 or more employees: $43,680
  • Employers with 25 or fewer employees: $41,600

Additionally, Maine, Colorado, and Oregon – which link the state minimum wage to certain overtime exemptions – have effectively increased their minimum salary thresholds by raising their minimum wages.

In light of these recent state-level changes, the likely demise of the federal overtime rule may prove inconsequential to many employers. Indeed, as the new administration continues with its deregulatory approach, it is clear that some states and cities will “pick up the slack.”  Accordingly, it will be especially important for employers to stay abreast of local developments in the law.  As always, Akerman attorneys are monitoring these trends closely and are available to provide counseling and advice on the latest developments in labor and employment law.