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Additional Hour At Minimum Wage Not Owed Under New York's "Spread Of Hours" Requirement

For Employees Earning Sufficiently Above The Minimum Wage

An additional hour of pay at minimum wage  is not owed under New York's "spread of hours" requirement for employees earning sufficiently above the minimum wage, according to a recent federal court decision and opinion letters issued by the New York State Department of Labor.

In December 2005, a federal district court judge, to the surprise of many, held that under New York's "spread of hours" regulation, an employer is required to pay employees (with certain exemptions such as exempt administrative, executive, and professional employees) an additional hour at the minimum wage when the "spread of hours" an employee works exceeds ten, regardless of whether the employee's hourly wage is greater than the minimum wage. See Yang v. ACBL, 04 Civ. 8987 (S.D.N.Y. December 5, 2005). The court noted this holding was contrary to the position taken by the New York State Department of Labor, the agency responsible for enforcing the law. Nonetheless, the judge rejected the DOL's long-standing position. Then, in a case decided on March 31, 2006, another judge in the Southern District of New York rejected the Yang decision, and, instead adopted the approach taken by the DOL (i.e., not requiring such payments under certain conditions). Thus, there is a split of authority in the Southern District of New York. See Chan v. Triple 8 Palace, 03 Civ. 6048 (S.D.N.Y. March 31, 2006).

The "spread of hours" requirement is contained in a New York State regulation, 12 NYCRR § 142-2.4. It provides "an employee shall receive one hour's pay at the basic minimum hourly wage rate, in addition to the minimum wage required . . . in any day in which: (a) the spread of hours exceeds 10 hours; or (b) there is a split shift; or (c) both situations occur." Id. "Spread of hours" is defined as the interval between the beginning and end of an employee's workday, and includes working time, plus time off for meals, plus intervals of off-duty time. (12 NYCRR § 142-2.18).

The Department of Labor has weighed in on the debate, issuing two opinion letters on April 12, 2006, reaffirming its prior position. Relying on the Triple 8 decision, the DOL stated the Yang decision "has been cast into doubt" and that since two judges of the same court disagree on the proper interpretation of 12 NYCRR § 142-2.4, because the most recent decision from that court (Triple 8) agrees with the DOL's interpretation, "the Department of Labor will continue its present interpretation unless and until further guidance comes from the U.S. District Court, Southern District of New York or a higher court."

Pursuant to opinion letters issued by the DOL, so long as an employee is paid sufficiently above the minimum wage so that the wages cover this additional hour, an additional hour at the minimum wage is not due. For example, in one of the opinion letters issued on April 12, 2006, the DOL provides a situation where an employee is scheduled to work from 8:00 a.m. to 8:00 p.m. with a one hour unpaid break. The opinion letter provides that the employee must earn more than $81.00 in that day (eleven hours multiplied by the minimum wage (11 x $6.75) plus one hour at the minimum wage ($6.75) based on the spread of hours) to satisfy the spread of hours requirement. Thus, an employee earning at least $7.50 per hour would not be entitled to an additional hour of pay ($7.50 x 11 = $82.50).

To calculate whether an additional hour is due on a weekly basis under the DOL's approach, perform the following calculation:

Add:

40 hours at the basic minimum wage rate

+

Overtime paid at the particular employee's overtime rate

+

One hour at the minimum wage for each day the spread of hours exceeds 10

If the total weekly wages equal or exceed this amount, the additional hour at the minimum wage is not due.

In Triple 8, the court adopted this approach stating the DOL's interpretation "makes sense" since the regulation is concerned only with ensuring an additional amount above the minimum wage, and that it would not be expected that the provision would affect workers whose total weekly compensation is already sufficiently above the minimum wage.

The split of authority regarding the payment for spread of hours creates uncertainty for employers regarding their obligations because neither decision is binding on other parties. However, the court's recent decision in Triple 8, and the DOL's recent opinion letters reaffirming its prior position provide support for employers who decide not to change their pay practices. However, until a higher court decides the issue, uncertainty will remain and possible liability may exist.

For copies of the DOL's opinion letters, you may contact attorney Jeffrey Brecher in the Jackson Lewis Long Island office, (631) 247-4652; BrecherJ@jacksonlewis.com.