Originally published in the Employment, Labor and Benefits Alert, May 4, 2006
A recent New York federal district court decision and opinion letters issued by the New York State Department of Labor (DOL) clarify that employers are not required to pay the statutory "bonus" of one additional hour of pay at the minimum wage under New York’s little-known "spread of hours" pay regulation.
New York’s "spread of hours" regulation requires employers to pay non-exempt (hourly) employees one additional hour of "bonus" pay at the state minimum wage rate where the "spread of hours" that the employee works in a single day exceeds ten hours. The "spread of hours" is defined as the "interval between the beginning and end of the employee’s workday" and "includes working time plus time off for meals plus intervals off duty." 12 N.Y.C.R.R. § 142-2.18.1
A 2003 DOL opinion stated that employers who pay their employees a sufficiently high hourly rate above the state minimum wage are not required to pay the additional bonus hour. The 2003 opinion interpreted the "spread of hours" regulation to exempt employers from paying the additional hour where the weekly wages actually received by the employee equaled or exceeded the total minimum wages due to that employee.
In stark contrast to the DOL’s 2003 advisory opinion, a New York federal district court held in December 2005 that an employer’s obligation under the "spread of hours" regulation to pay a bonus of one additional hour of pay at minimum wage was absolute -- in other words, an employer must pay an additional hour of bonus pay where the employee works a "spread of hours" that exceeds ten hours a day, without regard to the employee’s hourly rate. Yang v. ACBL Corp., No. 04 Civ. 8987(LBS), 2005 WL 3312000 (S.D.N.Y. Dec. 5, 2005) (J. Sand).
Only a few months later, another decision from the New York federal district court rejected the Yang decision and followed the DOL’s 2003 advisory opinion. Chan v. Triple 8 Palace, Inc., No. 03 Civ. 6048(GEL), 2006 WL 851749 (S.D.N.Y. Mar. 30, 2006) (J. Lynch).
In an apparent effort to clarify this disparity, the DOL issued two advisory opinions on April 12, 2006, both of which reaffirm its earlier position and confirm that the DOL will continue to apply its earlier interpretation of the regulation until it receives further guidance from the federal district court or some higher court. In other words, provided an employee’s weekly wages exceed the total minimum wage, the employee will not be entitled to "spread of hours" pay.
Although the differing opinions in the New York federal district court have created some uncertainty regarding "spread of hours", the DOL’s April 2006 advisory opinions offer support for those employers who choose not to change their pay practices and do not offer "spread of hours" pay. However, it appears that until a higher court resolves the "spread of hours" issue some uncertainty will remain.
Footnote
1 The regulation also provides an additional hour’s pay for employees working "split shifts." An employee works a "split shift" if the employee works 10 non-consecutive work hours. Meal periods of one hour or less do not interrupt the continuity of a work shift, but any other split shift obligates the employer to provide an additional hour’s pay. If the employee works longer than a ten-hour work day and a split shift, the employer is required to provide two additional hours of pay at the minimum wage rate for a total of $13.50 of additional pay based on today’s minimum wage rate of $6.75 per hour.
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