Do I have to pay overtime?

Question:

Jennifer,

How do I know if I have to pay my practice employees overtime?

Thanks,
Dr. I

Answer:

Both New York State and Federal law require payment of overtime for all employees, except those employees who fall into a designated exemption category.  The exemption categories are where many practice owners start getting confused, because both NYS and Federal law have an “administrative” employee exemption category and an “executive” employee exemption category.  Each exemption category lists a number of factors an employee’s job must entail for that employee to qualify for the exemption.  Before providing the exemption categories and factors, I want to relay that because the exemption categories are a factor test, there is not bright-line rule as to whether an employee qualifies or does not.  So, if you are challenged by an employee that you are not paying proper overtime, the factor test will be invoked and you may find yourself in trouble if you have in your mind used the factors available in your favor to classify an employee as exempt when an argument may be made they are not exempt.  Also, let me take this opportunity to stress to benefits of EPLI insurance for those owners out there who do not have it in place.  Protect your practice through insurance against claims by employees.  Click here for prior newsletter on EPLI.

Below are the NY exemption categories referenced above and factors -

Administrative Exemption (New York Minimum Wage Act) –

The employee must meet all of these tests to qualify for the Administrative employee exemption:

• The Employee’s primary duty consists of the performance of office or non-manual field work directly related to management policies or general operations
• The Employee customarily and regularly exercises discretion and independent judgment
• The Employee regularly and directly assists an employer, or an employee employed in a bona fide executive or administrative capacity or who performs under general supervision, work along specialized or technical lines requiring special training, experience or knowledge
• The Employee is paid for their services on a salary basis of not less than $543.75 per week inclusive of board, lodging, or other allowances

http://www.labor.ny.gov/sites/legal/counsel/pdf/administrative-employee-overtime-exemption-frequently-asked-questions.pdf.
 
Executive Exemption (New York Minimum Wage Act) -

To qualify for the Executive employee exception, an individual must meet all of the following tests:

• The Employee’s primary duty consists of the management of the enterprise
• The Employee customarily and regularly directs the work of two or more other employees
• The Employee has the authority to hire or fire other employees
• The Employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees have particular weight
• The Employee customarily and regularly exercises discretionary powers
• The Employee is paid on a salary basis of not less than $543.75 per week inclusive of board, lodging, or other allowances

For more info click here - http://www.labor.ny.gov/sites/legal/counsel/pdf/executive-employee-overtime-exemption-frequently-asked-questions.pdf.
 
Have a practice located outside New York, the Federal Fair Labor Standards Act provisions related to fair pay are located here - http://www.dol.gov/whd/regs/compliance/fairpay/fs17a_overview.htm.  You will notice the requirements are familiar after having reviewed New York’s requirements.  If you are practicing in another state, be sure to have a review of your State’s requirements, as States have the option of imposing stricter regulations than Federal.