December 14, 2015 Labor /Human Resources Committee Update
Contact: Frank Kerbein
Minimum Wage Changes Take Effect 12/31/2015
- Reminder: the minimum wage in New York State is scheduled to increase to $9.00 per hour effective 12/31/2015. There will be a new required poster which will not be available from the Department of Labor until 12/31/2015. When those posters are available, you can get them here.
- In addition, in order to be considered “exempt” from the overtime provisions of the Fair Labor Standards Act, Administrative and Executive employees in NY must be paid at a rate of at least $656.25 per week. That amount will also increase in New York State on 12/31/2015 to $675 ($35,100 per year). Note: This increase is separate from the changes proposed to the FLSA at the federal level.
- The minimum wage for fast food workers - as defined by the Commissioner of Labor’s wage order - will also increase on 12/31/2015. In New York City the minimum wage will increase to $10.50 per hour. In the rest of the state the minimum wage will increase to $9.75 per hour. Additional information can be found here.
- The National Restaurant Association filed an appeal of the Commissioner’s Order with the Industrial Board of Appeals as is required by law. On December 10th the Board ruled to uphold the Labor Commissioner’s order. The Association is now free to appeal that decision to the New York Courts and has stated their intention to do so.
- Also, the minimum wage for tipped workers in the hospitality industry is scheduled to increase to $7.50 on 12/31/2015. Additional information can be found here.
Significant Increase in OSHA Penalties On the Way
On November 2nd, President Obama signed a budget deal approved by Congress. Hidden in that budget deal was the Federal Civil Penalties Inflation Adjustment Act which will allow OSHA to dramatically increase the amounts they can fine and penalize employers. OSHA’s penalties have been fixed and not adjusted for inflation since 1990. This Act will allow OSHA to “catch up” and increase fines accordingly.
OSHA’s current maximum penalties are $7,000 for other-than-serious and serious violations, and $70,000 for repeat and willful violations. Those amounts will projected to increase to about $12,500 and $125,000 - and then increase annually thereafter indexed to inflation. OSHA must implement an interim final rule by July 1 that will go into effect by August 1.
Update on Final Rule Regarding OT Exemptions
As you recall, in July 2015, the US Department of Labor issued a proposed rule that would significantly increase the minimum salary required for an employee to be considered exempt from the overtime provisions of the Fair Labor Standards Act. The rule proposed to increase the “salary level” test from its current Federal minimum of $455 per week ($23,660 per year) to an indexed number as high as $970 per week ($50,440 per year) with that number indexed to a formula the will ensure future annual increases. We don’t know for sure when the final rule will be announced and implemented.
There have been two developments on that front. First, the Solicitor of Labor, Patricia Smith, told a conference of the American Bar Association on November 5th not to expect the final rule until late 2016. Concerns are that such a late announcement will not leave employers much time to make changes before implementation.
However, the Department of Labor’s semiannual regulatory agenda indicates that the final rule may be published as soon as July 2016. It is widely believed that the Department is feeling pressure to release the final rule as soon as possible for political reasons. If the rule is released late in 2016, and should a Republican win the Presidency in 2016, the new President could revoke the rule before full implementation.
Claiming that the average “freelancer” loses more than $6,000 per year in wages owed, but not paid, by “deadbeat” companies, the Freelancers Union is proposing legislation to the New York City Council that would require all freelance relationships be committed to a written contract. This contract would be required for all work with a value greater than $200 and spell out the terms of the project and timing of payment. Violators would be subject to fines and criminal penalties.
A similar bill was introduced at the state level this past spring and was opposed by The Business Council. You can read our memo in opposition here. The Business Council strongly opposes any legislation that would dramatically and unfairly alter the relationship between a business and any sole proprietor that they contract with as an independent contractor.