End of Year Round-Up

What's changing with the New Year

New Year New Rules

Beginning in 2020 there are going to be changes to things like the minimum wage, Paid Family Leave benefits, and more. HR One has put together the following summary to help employers review the changes before the New Year.

Minimum Wage
(Non-Exempt)
Minimum Wage
(Fast Food)
Salary Threshold Extra Pay Period
Salary History Ban HSA Contributions Paid Family Leave New W-4

 

MINIMUM WAGE AND SALARY THRESHOLDS GOING UP

When the New York State minimum wage increases on December 31, the minimum salary level an employee must be paid to be considered exempt will also increase. In some parts of the state, these increases continue annually until 2021. Eventually the minimum wage is set to go up to $15 per hour statewide.

Review your payroll records to determine if any employees are earning less than minimum wage so that the wages of these employees can be adjusted to at least the new minimum wage rate no later than December 31. 

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. 

There are different minimum wage rates for the fast food industry, Long Island, Westchester County, and large and small employers in New York City.  Below is a list of the current minimum wage and upcoming increases for each category. 

Minimum Wage -- Non-Exempt Employees 

Effective Date

NYC Large Employers (11 employees or more) 

NYC Small Employers (10 employees or fewer)

Employers in
Nassau, Suffolk and Westchester Counties

Employers in the Remainder of New York State

12/31/2019

$15.00/hour

$15.00/hour

$13.00/hour

$11.80/hour

12/31/2020

$15.00/hour

$15.00/hour

$14.00/hour

$12.50/hour

12/31/2021

$15.00/hour

$15.00/hour

$15.00/hour

TBD*

If you have questions regarding the minimum wage or salary threshold please contact HR One.

Minimum Wage – Fast Food** Workers

Date

New York City

Rest of State

12/31/2019

$15.00

$13.75

12/31/2020

$15.00

$14.50

7/01/2021

$15.00

$15.00

 Minimum Salary Threshold – Exempt Employees

Current rules are 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 employees). 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, executive, or professional exemptions but make less than the new threshold levels, they would be considered non-exempt going forward and would become eligible for overtime.

Because the salary level test under New York State regulations for the administrative and executive exemptions is higher than the federal salary test, New York State employers must meet this higher level to claim the exemption.

On January 1, 2020 the federal Department of Labor is increasing the minimum salary threshold for the Executive, Administrative, and Professional exemptions, while New York state is increasing the threshold for the executive and administrative exemptions on December 31, 2019 (and has additional scheduled increases in 2020).

Federal Department of Labor’s Exemption Increases

Effective Date

Exemption

Details

1/1/2020

Professional Exemption

$684 per week (equivalent to $35,568 per year for a full-year worker)

 

Same

Highly Compensated Employee

$107,432 annually (must include minimum salary of $684 per week, balance can be made up of commission, nondiscretionary bonus, or other incentives).


New York’s Executive and Administrative Threshold Increase (Based on geographic location in the state)

Effective Date

Employers outside NYC, Nassau, Suffolk and Westchester Counties

NYC Large Employers (11 employees or more) 

NYC Small Employers (10 employees or fewer)

Employers in
Nassau, Suffolk and Westchester Counties

12/31/2019

$885/week

$1,125/week

$1,125/week

$975/week

12/31/2020

$937.50/week

$1,125/week

$1,125/week

$1,050/week

12/31/2021

$937.50/week

$1,125/week

$1,125/week

$1,125/week

If you have questions regarding the minimum wage or salary threshold please contact HR One.

If you are operating outside of the state of New York you can use the form to contact us for any changes to the minimum wage in your state and/or municipality. 

EXTRA PAY PERIOD IN 2020

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Depending on how and when you pay your employees, you may be dealing with an extra pay period in the new year.

In a “normal” year, 6 days out of the week will occur 52 times and 1 day out of the week will occur 53 times, giving us 365 days. In a leap year, like 2020, 5 days of the week will occur 52 times and 2 days out of the week will occur 53 times, for 366 days. By the end of 2019 there will have been 53 Tuesdays. In 2020 there will be 53 Wednesdays and Thursdays. While a few people were impacted by this phenomenon this year, many more employees will see this change impacting the amount in each paycheck beginning in the New Year. If your check date is Wednesday or Thursday then you will be impacted.

This won’t impact non-exempt employees nearly as much, since they are paid based on actual hours worked. But for exempt employees who receive a salary, their salary is typically divided by either 52 or 26, and that’s their compensation for each pay period. But in a year with an extra payday employers need to make a decision between recalculating the salary by dividing it across 53 or 27 pay periods instead of 52/26 OR employers may choose to take no action. While the first option doesn’t impact an employee’s overall compensation, it will result in each check they receive in 2020 being a bit smaller than what they received in 2019.

EXAMPLE: John is paid a salary of $80,000 per year biweekly. In 2019 his paycheck is $3076.92 before taxes and other payroll deductions are made. In 2020 if we divide his salary by 27 (to accommodate an extra pay day) his paycheck before taxes/deductions will be $2962.96. That’s a difference of over $100 each period, even though his overall compensation has not changed. 

The second option will result in a higher overall payroll expense for the organization as employees receive an extra check. Employers should make sure that they identify employees who may be impacted by having an extra payday and communicate that while the change means each paycheck will be for a smaller amount than they’re used to, it’s due to having an extra pay period, not that their overall compensation has not changed.

HR One Payentry users whose check dates will be impacted can contact HR One to discuss how they want to deal with this issue.

SALARY HISTORY BAN REMINDER

As we reported earlier this year, New York state has effectively banned asking prospective employees about their salary history effective 1/6/2020, including on job applications. No employer should inquire about compensation history, it should be irrelevant.  An organization should set their own compensation structure for each position with a minimum, median, and maximum amount that considers profitability, industry averages, and internal equity.

HR One has updated the Job Applications in the “Forms” section of the Members Only area of our website to reflect this change. HR One can also assist with designing a wage and salary structure which is in line with an organization’s budget and goals.

HEALTH SAVINGS ACCOUNT

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The maximum contributions employees can make are increasing effective 1/1/2020 for individuals and families, by $50 and $100 respectively, bringing the total limits to $3,550 and $7,100.

PAID FAMILY LEAVE BENEFITS

Beginning in 2020 the maximum benefit rate employees are eligible for is increasing to 60% of an employee’s gross wages, up to the state average weekly wage (which will be $1401.17 for 2020) which means the maximum weekly benefit rate will be $840.70. The benefit period will remain at 10 weeks.

The maximum annual employee contribution is increasing to $196.72. 

NEW W-4 WITHHOLDING FORM

Starting January 1, 2020 employers should be using the new version of the W-4 withholding form for all new hires and any current employees wishing to modify their tax withholding. The new W-4 can be found in the “Forms” section of the Members Only area of our website


 * 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.

** 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.