In New York, a large number of wage and hour requirements are statutorily codified in the Labor Law. Many others requirements, however, are set forth in regulations known as wage orders, which are issued and updated from time-to-time by the New York State Department of Labor (NYSDOL). The NYSDOL publishes wage orders covering the hospitality, building service, nonprofit, agricultural, and miscellaneous industries. Adherence to the statutory Labor Law, but not the wage orders, can have disastrous consequences.
To that end, on October 19, the NYSDOL proposed amendments to each of the wage orders that, assuming they are adopted, will have a tremendous impact on how New York employers pay their workers.
Changes for Non-Exempt Employees
First, the NYSDOL updated the wage orders to reflect the minimum wage increases that were passed earlier this year. As readers may recall, the minimum wage increase announced by Governor Andrew Cuomo last spring presents perhaps the most complex wage scheme the state has ever seen. It accounts for regional differences and staggers implementation over as many as five years in parts of the state. Specifically:
- For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage will rise to $11/hour at the end of 2016, then another $2/hour each year after that, eventually reaching $15/hour on December 31, 2018.
- For workers in New York City employed by small businesses (those with 10 employees or fewer), the minimum wage will rise to $10.50/hour by the end of 2016, then another $1.50/hour each year after that, eventually reaching $15/hour on December 31, 2019.
- For workers in Nassau, Suffolk, and Westchester Counties, the minimum wage will increase to $10/hour at the end of 2016, then $1/hour each year after that, reaching $15/hour on December 31, 2021.
- For workers in the rest of the state, the minimum wage will increase to $9.70/hour at the end of 2016, then another $0.70/hour each year after until reaching $12.50/hour on December 31, 2020, after which it will continue to increase to $15/hour on an indexed schedule to be set by the Division of Budget in consultation with the NYSDOL.
- The minimum cash wage for food service workers receiving tips will be two-thirds of the minimum wage rates listed above, depending on the location where the employee works.
The proposed wage order amendments also address the increases to the tip credit, uniform maintenance pay, meal, lodging, and utilities allowances, and spread of hours pay resulting from the impending minimum wage changes, as well as the new minimum wage scheme for fast food workers that was adopted in September 2015.
Changes for Exempt Employees
Perhaps just as, if not more, important, the wage orders would also set new salary thresholds for exempt executive and administrative employees. As most employers know by now, the salary threshold for exempt – i.e., salaried – executive, administrative, and professional employees under the federal Fair Labor Standards Act is set to increase to $913/week on December 1. What has been less clear, until now, is whether the salary threshold for exempt executive and administrative employees would also increase under state law in the near future (unlike federal law, New York does not impose a salary minimum for exempt professionals). At present, the salary threshold for exempt executives and administrators is $675/week.
The proposed wage orders have finally answered this question. The NYSDOL’s proposal would substantially increase the existing, $675/week salary level and, like the minimum wage increase for non-exempt employees, would be region-specific and stagger implementation over as many as five years in certain areas. While a full summary of the amendments can be found here, the proposed New York salary thresholds for executive and administrative employees would exceed the looming $913/week federal level:
- On December 31, 2017, for large businesses (those with at least 11 employees) in NYC, and will eventually rise to $1,125/week by the end of 2018
- On December 31, 2018, for small businesses (those with 10 employees or fewer) in NYC, and will eventually rise to $1,125/week by the end of 2019
- On December 31, 2019, for employers in Nassau, Suffolk, and Westchester Counties, and will eventually rise to $1,125/week by the end of 2021
- On December 31, 2020, for all other New York employers (depending on the increase to the federal salary threshold scheduled to occur on January 1, 2020)
Although the NYSDOL is technically accepting public comments on the proposed wage order amendments until December 3, it is a good bet that they will be adopted in full. And regardless of their ultimate content, the new wage orders will take effect on December 31. We will therefore continue to monitor this issue and provide an update once the final wage orders are published.