On November 17th, David Colligan joined a panel of investors and entrepreneurs to discuss startup companies in Western New York.
The proposed U.S. Department of Labor regulations which would have increased the minimum salary for exempt employees to $913.00 weekly are still on hold because of the injunction issued by a Federal Judge in Texas. The Labor Department has appealed this ruling, but it is questionable whether this challenge to the injunction will continue after Donald Trump takes office.
However, New York employers will most likely face an increase in the minimum salary for exempt employees in New York on December 31, 2016. If the increase proposed by the NYS Labor Department is adopted the minimum salary for exempt executive and administrative employees in upstate New York will increase from $675.00 weekly to 727.50 weekly ($37,830 annually). The minimum exempt employee salary for New York City and Long Island is higher.
The public comment period for the proposed exempt salary increase expired on December 3, so we should know soon if this increase is finalized. It appears likely that it will be adopted.
Also, on December 31, 2016 the minimum wage for upstate New York will increase to $9.70 per hour, and the upstate fast food minimum wage will increase to $10.75 per hour.
By John A. Moscati, Jr. and David J. Colligan
As lawyers practicing in the startup space, our clients often come to us with less than perfect cap tables. Some don’t even know what a cap table is. A cap table is a spread sheet that shows the ownership of the company by class of owner, timing of investment and various rights held by owners of the capital stock of the company. To an experienced investor, a cap table tells the story of the company. Like all stories, it has a beginning, middle and end. By reading a cap table and asking questions based on its content, an investor can see when the company started, who the founders were, when significant pivots occurred, how much capital has been raised, and when. Unfortunately for many entrepreneurs, they have written the story of their companies by issuing equity and granting various rights to founders, friends, family, and early investors, without an appreciation of how potential future investors will “read” this story.
If a startup wants to create a cap table spreadsheet, we advise them to identify shareholder groups by class (i.e., founders, angel investors, friends and family, etc.); and to include number and class of shareholders or shares or units issued followed by percent of outstanding, and if applicable, percentage of ownership fully diluted. Where applicable, footnotes should disclose any conversion right or other preferences and any options, warrants, option pools or other rights to acquire equity should be disclosed (and included in the “fully diluted” calculations).
We are proud to announce the addition of Robert Townsley to Colligan Law LLP.
Rob is an associate pending admission at Colligan Law LLP—a boutique law firm providing legal services to entrepreneurs and cutting-edge businesses. Rob’s practice area relates primarily to environmental law and corporate law.
David Colligan will speak at the Buffalo Niagara Medical Campus Rotary Club’s meeting on Monday, December 5th at 5:00pm. The Buffalo Niagara Medical Campus Rotary Club is a service organization of medical, business and other professionals and community members committed to professional and ethical values, humanitarian service, and the motto of “Service Above Self.”
David will discuss the work of The Ralph C. Wilson, Jr. Foundation, a grant-making organization, dedicated primarily to sustained investment in the quality of life of the people of Western New York and Southeastern Michigan.
Yesterday a Federal Judge in Texas issued a nationwide preliminary injunction blocking the new overtime rules scheduled to take effect on December 1. These rules would have increased the minimum salary for most exempt employees to $47,476. As a result of this injunction, the minimum salary for exempt executive and administrative employees in New York will continue at $35,100.
The decision indicates that it is likely the Judge will ultimately issue a permanent injunction. The appeal from this action would be to the Fifth Circuit Court of Appeals. This is a traditionally conservative court, and it is highly probable the injunction would be affirmed. Any appeal from that decision would be to the Supreme Court. It remains to be seen whether the Trump administration would appeal this action.
We will keep you informed as to all further developments.
By Joseph F. Saeli, Jr.
We would like to remind our clients and friends that the new U.S. Department of Labor rules for determining whether employees are exempt employees take effect on December 1, 2016. If an employee is not exempt, they must be paid one and one half times their normal hourly rate for all hours worked above forty in a week.
The key parts of the new rules are:
- Exempt employees must be paid an annual salary of at least $47,476. (The current requirement in New York State for exempt executives and administrative employees in $35,100).
- The new minimum salary for Highly Compensated Employees is $134,004.
- Employers may use non-discretionary bonuses and incentive payments to satisfy up to 10% of the salary level. (This was not previously permitted).
- The salary levels will be automatically updated every three years.
- There is no change in the job duties tests for the exempt categories.
In addition to meeting these salary tests, exempt employees must also meet the job duties tests for one of the three exempt categories, professional, executive or administrative. Also, they must be salaried. An hourly employee can never be exempt.
If you have employees who are currently exempt, but do not meet the new salary requirements, you are faced with a difficult decision. The options some employers are considering include the following:
- Change the employee’s status to hourly, and pay overtime for all hours over forty in a week.
- Change the employee’s status to non-exempt salaried, and pay overtime for all hours over forty in a week. (This is possible, but the hourly rate calculation for determining overtime pay can be complicated).
- Increase the employee’s salary to meet the new requirements.
Please let us know if we can assist you in complying with these new rules.
This article is meant to convey general information, and not to provide any legal advice. Legal advice should be provided only by an attorney who is familiar with all the circumstances about which advice is requested.
Joseph F. Saeli, Jr. spoke to the New York State Dental Association members on the topic of buying and selling dental practices. The event was held on Wednesday, October 19th in Fayetteville, NY and Thursday, October 20th in Penfield, NY and Williamsville, NY.
The event was sponsored by the New York State Dental Association, Hudson Transition Partners, Inc. and Bank of America Practice Solutions.
LISTEN: Innovate Western New York podcast. Matthew Pelkey discusses legal advice for startups with Nate Benson http://www.wgrz.com/mb/news/local/innovate-wny/podcast-starting-up-is-hard-to-do/329873825 …
David Colligan will be a panelist at the Buffalo Conference on Sustainable Development & Collaborative Governance held Wednesday, September 7, 2016. David will discuss outer harbor transportation enhancements.
The conference will be the second in a series of conferences planned across New York State designed to bring together a broad spectrum of government, public and private sector groups with an interest in coordinated, sustainable development. The conferences will focus on the potential for planned, coordinated governance with an emphasis on economic development, transportation, housing and environmental preservation.