Ensure Compliance When Changing NYS Exempt Employees’ Pay and Work Hours

As we all continue to navigate the uncharted waters of the COVID-19 crisis together, those employer clients who have not yet received a response on their Payroll Protection Plan loan application and have sufficient cash flow have reduced the work hours and pay of employees as an alternative to furloughing them altogether.

For exempt employees in NYS, there are a few key compliance requirements to keep in mind:

• The minimum NYS exempt salary level for 2020 in upstate New York is $885.00 per week;
  • if an exempt employee’s weekly salary is reduced below $885.00 weekly, they should be converted to hourly nonexempt status (eligible for overtime).
  • Note: the minimum exempt salary level rises to $937.50 a week on December 31, 2020.

• Whenever you reduce the pay of an employee, you’re required to complete a Wage Theft Prevention Act (WTPA) form, ask the employee to sign it, and give a copy of the completed and signed form to the impacted employee.
  • In the above scenario, you would also complete the hourly nonexempt WTPA form.
  • Employers can be assessed charges by the Department of $250.00 per day per worker if proper wage statements are not given. Employers can also be sued for a maximum of $5,000 per employee.

• If you reduce the work hours of an exempt employee – for example, from 40 hours to 25 hours a week and reduce their weekly pay – the recommendation is to also convert the employee to hourly nonexempt, to ensure that the employee is compliantly compensated.
  • If you reduce the number of days a week an exempt salaried employee works – for example, from 5 days a week to 3 days a week – the recommendation is to also convert them to a nonexempt hourly employee. Also ensure that you complete a WTPA for the pay change as well.

How do you (and will you) ensure compliance when reducing the hours and/or pay of a NYS exempt employee?