Minimum wages set to rise in New York at year's end

Salary threshold for employee exemptions also rising

New Minimum Wage

Update: This story originally ran earlier in December 2016. It has been updated to include the final salary threshold rules, formally adopted on 12/28/2016.

 
As HR One reported earlier this year, increases to the minimum wage were included as a part of this year's budget deal in April. The increases were a response by Governor Andrew Cuomo and others in Albany to the #FightForFifteen campaign, a national effort to increase the minimum wage to $15/hour. While embracing the end goal of the #FightforFifteen campaign, the governor and the legislators did compromise on a plan that in some ways reflects the differing economic environments within the state in an effort to soften the impact on businesses. Rather than the minimum wage increasing at the same rate statewide, there will be different rates of increase for New York City, Long Island and downstate counties, and the rest of the state. 

How it works
Covered employees must be paid not less than the specified minimum wage per hour for all hours worked.  In accordance with state regulations, any increase in the federal minimum wage to a rate that is higher than the NYS minimum wage will automatically result in the same increase in the state minimum wage. 

The Minimum Wage rates are scheduled to increase each year on 12/31 until they reach $15.00 per hour.

Location

12/31/16

12/31/17

12/31/18

12/31/19

12/31/20

2021*

NYC - Large Employers (11 or more employees)

$11.00

$13.00

$15.00

     

NYC - Small Employers (10 or fewer employees)

$10.50

$12.00

$13.50

$15.00

   

Nassau, Suffolk and Westchester Counties

$10.00

$11.00

$12.00

$13.00

$14.00

$15.00

Employers in the Remainder of New York State

$9.70

$10.40

$11.10

$11.80

$12.50

*

General Minimum Wage Rate Schedule


* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting 2021, the annual increases will be published by the Commissioner of Labor on or before October 1. They will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices, including the Consumer Price Index.

Minimum Wage – Fast Food* Workers

The basic minimum hourly rate for fast food employees shall be: 

Date

New York City

Rest of State

12/31/2015

$10.50

$9.75

12/31/2016

$12.00

$10.75

12/31/2017

$13.50

$11.75

12/31/2018

$15.00

$12.75

12/31/2019

$15.00

$13.75

12/31/2020

$15.00

$14.50

7/01/2021

$15.00

$15.00

* Fast Food Establishment is any business that meets the following criteria:

Primarily serves food or drinks, including coffee shops, juice bars, donut shops, and ice cream parlors; and offers limited service where customers order and pay before eating, including restaurants with tables but without full table service and places that only provide take-out service; and is part of a chain of 30 or more locations, including individually-owned establishments associated with a brand that has 30 or more locations nationally. For the full definition please refer to 12 NYCRR § 146-3.13.

Salary Threshold

New York's regulations would apply different requirements across the state based on geography and employer size as seen in the table below: 

  Employers outside NYC, Westchester,
Nassau & Suffolk Counties
Employers in New York City 
(over 11 employees/10 or under employees)
Employers in Westchester, 
Nassau & Suffolk Counties
12/31/2016      $727.50 per week $825 per week/$787.50 per week $750 per week
12/31/2017 $780 per week $975 per week/$900 per week $825 per week
12/31/2018 $832 per week $1,125 per week/1,012.50 per week $900 per week
12/31/2019 $885 per week No Change/$1,125 per week $975 per week
12/31/2020 $937.50 per week No Change/No Change $1,050 per week
12/31/2021 No Change No Change/No Change $1,125 per week


As HR One previously reported, New York had proposed changes to the salary threshold under state law, despite a court challenge that has, for the time being, prevented a similar federal rule. Those state rules have been adopted. Current rules state that certain employees are exempt from overtime regulations if they work more than forty hours per week (these include, but aren't limited to exemptions for administrative, executive, and professional employess). One important factor in determining who is and isn’t exempt from overtime is salary threshold. If an employer currently has employees who qualify as exempt from overtime under the administrative or executive exemptions but make less than the new threshold they would be considered non-exempt going forward and would become eligible for overtime.

 

What does this mean for employers?

Minimum Wage: For employers that are paying the current minimum wage of $9.00/hour it means they will need to increase that amount according to the schedules above. As a best practice employers should communicate to employees that they will see an increase, the reason for the increase, and offer them an opportunity to make any changes to their withholdings. 

Overtime Rule Explanation

Salary Threshold: Similarly for employees impacted by the changes to the salary threshold, they will either need to have their salaries increased to meet the threshold OR they will become eligible for overtime protections. Once those employees who are impacted are identified there are several steps one can take to determine how this proposed change could impact productivity and costs:

  • Can their work time be kept at or below 40 hours per week?
  • Would it save more over the long-term to increase certain employees’ salaries to meet the new threshold in order to maintain their exemption or to pay them time-and-a-half when they work more than 40 hours per week?


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