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New York’s Proposed Overtime Overhaul Would Give Restaurant Workers Hefty Raises

Starting next month, salaried hospitality workers earning less than $42,900 will qualify for overtime

[Workers at Veselka in the East Village]
[Workers at Veselka in the East Village]
Daniel Krieger

New York restaurant workers are about to get paid more. Less than two weeks after a federal judge blocked President Barack Obama’s plan to expand overtime eligibility to millions, New York is on the cusp of issuing its own, even more ambitious overtime law. It's a move that will increase compensation for hospitality industry employees and other salaried workers putting in long nights at the office or in the kitchen, and it's yet another case of New York championing worker’s rights when the U.S. government has been unable or unwilling to act.

(Update: New York has adopted the new overtime regulations; they will go into effect at the end of 2016)

Here’s the TL;DR: Salaried fast food supervisors, restaurant managers, food writers, and sous chefs could start earning overtime or see their legally-mandated base pay rise by 66 percent over the coming years, an increase that goes beyond Obama's stymied plan. Restaurant owners, in turn, will see their sky-high labor costs go up even further, and consumers will likely start paying more, too.

This is a big, big deal, and it comes during a year when Governor Andrew Cuomo signed into law both a $15 minimum wage and a groundbreaking paid family leave plan.

The plan would raise wages by thousands of dollars

New York’s Department of Labor quietly unveiled the overtime proposals in October — perhaps too quietly. Eater couldn’t find a single press release, tweet, or significant public mention of the amendments by Cuomo or the by the DOL. No mainstream media outlets appear to have covered the development, though the National Law Review, as well as the blogs of major law firms like Fox Rothschild and Sheppard Mullin, have reported on the amendments.

Precisely why overtime is being overhauled is a bit complicated, but here it goes: For over a decade, employers across the country have been able to withhold overtime for certain salaried workers earning over $23,660. That means a manager at a burger chain earning $25,000 might not see an extra cent for putting in an extra 15 hours every week, effectively bringing her wage down from $12 an hour to $9.

Obama tried to solve this problem by doubling the overtime limit to $47,476, ensuring that everyone earning less than that would qualify for time-and-a-half pay for 40-plus hour work weeks. But a Texas judge essentially declared that proposal illegal about a week before it was set to go into effect, leaving the president’s most sweeping plan to address middle class wage stagnation (and one of its most burdensome regulations for businesses), temporarily dead in the water — nationally, at least.

None of this deters the New York Department of Labor, nor should it. It’s pushing forward with a plan that would raise wages for employees by thousands of dollars.

It's a heck of a lot higher than the nationwide plan

If the draft proposals are adopted as they stand, restaurants in New York City that don’t want to pay overtime to salaried employees like sous chefs or floor managers would have to raise their yearly pay to $42,900 on December 31, up from the current threshold of $35,100. Yes, that’s a little bit lower Obama’s blocked proposal, but New York will continue to lift the city threshold every year until it hits $58,500 in 2018, which is a heck of a lot higher than the nationwide plan.

The state will raise the overtime cap at different rates based on geography and employer-size. NYC restaurants with 10 or fewer workers won’t have to reach the $58,500 mark until 2019, while establishments in Long Island and Westchester will have until 2021. Restaurants that don’t want to raise wages can also comply by paying employees like managers overtime, or by capping their hours to 40 per week. The full text of the proposal is published in a 93-page, hard-to-Google PDF, located in the legal counsel section of the Department of Labor website.

The public comment period for the overtime rules will end on December 3, and the regulations, if signed into law by Cuomo, are expected to go into effect on December 31. It's the same day that New York’s minimum wage hops up to $11. That is reasonably short notice for restaurants to deal with a major policy overhaul. "It gives restaurants almost no time to budget," says Carolyn Richmond, a Fox Rothschild partner who counsels the hospitality industry on labor compliance, in a phone interview.

But at least restaurants and chains that got their compliance regimes in order for the blocked Obama overtime regulations will already have their houses in order!

New York's Minimum Overtime Exemption Salaries

NYC Large Employers (11 or More Workers)

  • 12/31/2016 = $42,900
  • 12/31/2017 = $50,700
  • 12/31/2018 = $58,500
NYC Small Employers (10 or Fewer Workers)
  • 12/31/2016 = $40,950
  • 12/31/2017 = $46,800
  • 12/31/2018 = $52,650
  • 12/31/2019 = $58,500
Long Island and Westchester
  • 12/31/2016 = $39,000
  • 12/31/2017 = $42,900
  • 12/31/2018 = $46,800
  • 12/31/2019 = $50,700
  • 12/31/2020 = $54,600
  • 12/31/2021 = $58,500
Rest of New York
  • 12/31/2016 = $37,830
  • 12/31/2017 = $40,560
  • 12/31/2018 = $43,264
  • 12/31/2019 = $46,020
  • 12/31/2019 = $48,750
Source: New York State Department of Labor, calculated by multiplying weekly salaries by 52

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