Unpaid Minimum Wage and Overtime

MINIMUM WAGE RATES

The federal minimum wage rate is $7.25 per hour.  In states that do not have a higher minimum wage rate, this is the minimum that non-exempt employees must be paid.  Different rules may apply to employees who are classified as "exempt," independent contractors, and employees who receive tips. 

Employers are not permitted to take deductions from an employee’s wages or require an employee to pay for certain business expenses if such deductions or expenses effectively reduce the employee’s wages below the minimum wage or overtime requirements. Some states, including New York, are extremely specific about the types of deductions that employers may take from an employee’s wages.

Many states require payment of a minimum wage rate that is higher than the federal rate.  These rates may also vary depending upon industry, size of the employer, and specific city or geographic region within the state.  Many pro-employee states have set a goal of a $15 minimum wage, although the increases are typically gradual.

For example, minimum wage rates in New York are:

  • In 2014, the minimum wage rate was $8 per hour, which increased to $8.75 in 2015 and $9 in 2016.

  • Since 2017, the minimum wage rate has depended upon several factors, including geographic location, size of employer and industry.

  • New York City:

    • Fast Food Employees: increased from $12 in 2017 to $13.50 in 2018 and $15 in 2019.

    • Large Employers (11 or more employees): increased from $11 in 2017 to $13 in 2018 to $15 in 2019

    • Small Employer (10 or fewer employees): increased from $10.50 in 2017 to $12 in 2018, $13.50 in 2019 and will reach $15 in 2020.

 

  • Long Island and Westchester:

    • Fast food Employees: increased from $10.75 in 2017 to $11.75 in 2018, $12.75 in 2019, and will increase gradually to reach $15 on July 1, 2021.

    • Non-Fast Food Employees: increased from $10 in 2017 to $11 in 2018, $12 in 2019 and will increase gradually to reach $15 on July 1, 2021.

 

  • Remainder of New York State:

    • Fast food Employees: increased from $10.75 in 2017 to $11.75 in 2018, $12.75 in 2019, and will increase gradually to reach $15 on July 1, 2021.

    • Non-Fast Food Employees: increased from $9.70 in 2017 to $10.40 in 2018, $11.10 in 2019, $11.80 in 2010 and will increase gradually according to rates published by the Department of Labor to reach $15.

The following chart summarizes the minimum wage rates in California:

For more information on minimum wage rates in the state of California, please see here.

For information on minimum wage rates in cities and counties that have enacted minimum wage laws, please see here.

OVERTIME

Most employees who must receive minimum wage must also receive overtime pay.  Overtime pay is "time and a half," or one and one-half times an employee's regular hourly pay.  Even if you are paid on a salary or piece work basis, if you are non-exempt, you must receive overtime.

Overtime must be paid for all time worked in excess of 40 hours per week.  Even if you are paid bi-weekly, your overtime pay must still be calculated per 7 day week.  Your employer may determine when a workweek begins and ends but cannot change it week to week to avoid paying overtime.

In California, overtime must also be paid for all time worked in excess of 8 hours per day and for the first 8 hours of work on the 7th consecutive day of work.  For more information regarding California overtime laws, please see here.

For most private sector (non governmental) workers, you may not be compensated for overtime work with comp time.  In other words, you cannot choose to take time off at a later time in exchange for not receiving time and a half.

You cannot agree to forego overtime pay.  If you are non-exempt and you work any time beyond 40 hours per week, you must receive overtime pay.

EXEMPTIONS

The most common exemptions from minimum wage and overtime protection are executive, administrative, professional, computer and outside sales.  To qualify as "exempt," employees must both perform certain duties and be paid on a salary basis at no less than $455 per week.  Computer employees may be paid an hourly rate, but it cannot be less than $27.63 per week.  Employees who meet the salary test and the duties test are exempt from minimum wage and overtime requirements.

Please note that the minimum salary rate, often called the "salary threshold," is subject to change by executive order.

Executive employees are typically managers and similar high-ranking executives, but note that not all employees who have the title of "manager" or "supervisor" are exempt.  Federal law has very specific requirements for the types of duties and level of authority that must be present for an employee to be considered "exempt."

Administrative employees are somewhat difficult to define but often fall within administrative or business support departments.  They must exercise "discretion and independent judgment" as to "matters of significance." 

Professional employees, also called "learned professionals," perform predominantly intellectual duties and exercise discretion and judgment.  Learned professionals must possess "advanced knowledge" in a "field of science or learning," and such knowledge is typically "acquired by a prolonged course of specialized intellectual instruction."  This broad exemption includes attorneys, teachers and doctors.

Outside sales employees have a primary duty of making sales or obtaining orders or contracts from external clients, and these employees must "customarily and regularly" work outside the employer's place of business.

Although many "exempt" employees do not have minimum wage protections, New York state law provides that employees who fall within the executive and administrative exemptions must nevertheless receive a minimum weekly payment as follows:

  • New York City:

    • Large Employers (11 or more employees, or fast food workers): $975 per week ($1,125 per week on and after December 31, 2018);

    • Small Employer (10 or fewer employees): $900 per week ($1,012.50 per week on and after December 31, 2018; $1,125 per week on and after December 31, 2019).

 

  • Long Island and Westchester:

    • $825 per week ($900 per week on and after December 31, 2018; $975 per week on or after December 31, 2019; $1,050 per week on and after December 31, 2020; $1,125 per week on and after December 31, 2021).

 

  • Remainder of New York State:

    • $780 per week ($832 per week on and after December 31, 2018; $885 per week on and after December 31, 2019; $937.50 per week on and after December 31 2020).

Tipped Employees

Minimum wage and overtime laws also protect tipped employees. Employees who regularly receive tips may be paid a lower wage but (1) must earn at least the minimum wage through combined tips and wages and (2) be paid the "tipped minimum wage." The federal law sets the "tipped minimum wage" at $2.13 per hour, and many states have higher tipped minimum wage rates. 

An employer may not classify all people who sometimes receive tips or sometimes perform traditional tipped duties as tipped employees.  Only employees who perform traditional tipped duties and spend a strong majority of their time on such duties may be paid the lower "tipped minimum wage."  Managers who sometimes take orders, and back of the house employees are usually not considered "tipped employees."

In New York, the minimum wage for tipped employees who are service employees or food service workers are as follows:

  • Service Employees: 

    • New York City Large Employers (11 or more employees): $10.85 per hour ($12.50 per hour on and after December 31, 2018);

    • New York City Small Employers (10 or fewer employees): $10.00 per hour ($11.25 per hour on and after December 31, 2018, $12.50 per hour on and after December 31, 2019);

    • Long Island and Westchester: $9.15 per hour ($10.00 per hour on and after December 31, 2018, $10.85 per hour on and after December 31, 2019, $11.65 on and after December 31, 2020, $12.50 on and after December 31, 2021)

    • Remainder of New York State: $8.65 per hour ($9.25 per hour on and after December 31, 2018, $9.85 per hour on and after December 31, 2019, $10.40 per hour on and after December 31, 2020). 

  • Food Service Workers:

    • New York City Large Employers (11 or more employees): $8.65 per hour ($10.00 per hour on and after December 31, 2018);

    • New York City Small Employers (10 or fewer employees): $8.00 per hour ($9.00 per hour on and after December 31, 2018, $10.00 per hour on and after December 31, 2019);

    • Long Island and Westchester: $7.50 per hour ($8.00 per hour on and after December 31, 2018, $8.65 per hour on and after December 31, 2019, $9.35 on and after December 31, 2020, $10.00 on and after December 31, 2021)

    • Remainder of New York State: $7.50 per hour ($7.85 per hour on and after December 31, 2019, $8.35 per hour on and after December 31, 2020). 

  • Fast Food Employees: No tip credit is permitted for fast food employees. 

 

If you receive a significant portion of your income through tips and are paid no hourly wage or an hourly wage less than the above minimum wages, contact Pelton Graham today. You may be able to file a claim for lost wages.

Even if an employer “takes the tip credit,” the employer must pay overtime at a rate of 1.5 times the regular minimum wage, minus the tip credit (the difference between the regular minimum wage and the tipped minimum wage) for all hours worked beyond 40 per week. For example, for a food service employee in New York City at a large employer, the overtime rate must be $13 * 1.5 =  $19.50 minus the tip credit (which is $13 minus $8.65, or $4.35), or $15.15. 

Third, employers are permitted to institute a “tip pool,” meaning that tips are all pooled together and then redistributed according to a preset plan. However, a tip pool may not include managerial employees or back-of-house employees such as chefs, line cooks and dishwashers. If you believe that portions of your tips are being unlawfully distributed to managers or back-of-house employees, contact Pelton Graham today.

Finally, employers may not require tipped employees to forfeit some of their tips in order to receive their hourly wages. This practice, known as a “kickback,” is illegal under the New York Labor Law. If your employer forces you to forfeit some portion of your tips in order to receive the rest of your wages, contact Pelton Graham today. 

INDEPENDENT CONTRACTORS

Federal law states that independent contractors are not protected by wage and hour protections.  In other words, employees correctly classified as independent contractors may be paid less than minimum wage and do not need to be paid overtime.  Because independent contractors may legally be paid less than employees, employers often misclassify their workers as independent contractors even though under the law they should be considered employees.

A worker cannot agree to be classified as an independent contractor.  Receiving a 1099 form does not automatically mean a worker is an independent contractor.  The tests for classification depend on many aspects of a worker's duties, not on the classification made by an employer.

There is no single test or rule in place for determining whether a worker is an independent contractor.  Courts look at many factors that together make up the "economic reality" of the relationship between the worker and employer.

Some of these factors include:

  • How much the worker's duties are a central part of the business

  • Whether the relationship is long-term or temporary

  • How much the worker invests in work expenses and equipment

  • The amount of control exercised by the employer

  • The worker's opportunities for profit or loss depending on their own initiative

  • Whether the worker places their services on the open market or works just for one employer

  • Whether and how much the worker operates an independent business

Many states have more restrictive tests of independent contractors that may vary by industry.  There are many industries where workers are commonly misclassified as independent contractors in order for the employer to save money.  Just because a practice is widespread does not mean it is legal.

OUR EXPERIENCE

Pelton Graham is a leading firm that specializes in representing plaintiffs in unpaid minimum wage and overtime litigation. Our firm has brought hundreds of claims on behalf of individual employees and classes of employees to recover the unpaid overtime due to hardworking current and former employees. Our attorneys have successfully resolved claims brought on behalf of employees in the automobile, banking & financial services, construction, delivery, grocery store, home health services, hospitality, manufacturing, medical, restaurant & bar, retail, security, technology, and telecommunications industries.  

Contact us today at 888-975-5997 for a free consultation to determine if we can recover your unpaid minimum wages and/or overtime!

 
 
 
 
 
 

PELTON GRAHAM LLC

The attorneys at Pelton Graham LLC are admitted to practice in New York, New Jersey, California, Oregon, Illinois and Iowa, and may work with a network of other attorneys throughout the country.

 

Disclaimer - Lawyer Advertising. The material contained in this website is for informational purposes only and is not to be considered legal advice. A lawyer-client relationship is not created by visiting this website. Prior results do not guarantee a similar outcome.

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