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 (i.e., all other) industries. Adherence to the statutory Labor Law, but not to the wage orders, can have disastrous consequences.
To that end, on the morning of December 28, 2016, the NYSDOL finalized amendments to each of the wage orders that will have a tremendous impact on how New York employers pay their workers. The finalized wage orders, which are unchanged from the proposed orders published by the NYSDOL in mid-October, take effect in just three days, on December 31.
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 employers may recall, the minimum wage increase announced by Gov. 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 each year after that, eventually reaching $15 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 each year after that, eventually reaching $15 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 each year after that, reaching $15 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 each year after that until reaching $12.50 on December 31, 2020, after which it will continue to increase to $15 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 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 finalize new salary thresholds for exempt executive and administrative employees. As most employers know, the salary threshold for exempt – i.e., salaried – executive, administrative, and professional employees under the federal Fair Labor Standards Act was set to increase to $913/week on December 1, until a federal court judge blocked this at the end of November.
Since the NYSDOL published the proposed wage orders in October, and certainly since the federal overtime rule was preliminarily enjoined, New York employers having been waiting eagerly to learn by precisely how much the salary threshold for exempt executive and administrative employees would increase under state law (unlike federal law, New York does not impose a salary minimum for exempt professionals). The current salary threshold for exempt executives and administrators under New York law is $675/week.
The finalized wage orders answer this question. Mimicking the proposed wage orders in their entirety, the final wage orders substantially increase the existing, $675/week salary level and, like the minimum wage increase for non-exempt employees, are region-specific and stagger implementation over as many as five years in certain areas. The full list of New York pay thresholds is as follows:
Employers in NYC:
Large businesses (11 or more employees)
- $825.00/week on and after December 31, 2016
- $975.00/week on and after December 31, 2017
- $1,125.00/week on and after December 31, 2018
Small businesses (10 or fewer employees)
- $787.50/week on and after December 31, 2016
- $900.00/week on and after December 31, 2017
- $1,012.50/week on and after December 31, 2018
- $1,125.00/week on and after December 31, 2019
Employers in Nassau, Suffolk, and Westchester Counties:
- $750.00/week on and after December 31, 2016
- $825.00/week on and after December 31, 2017
- $900.00/week on and after December 31, 2018
- $975.00/week on and after December 31, 2019
- $1,050.00/week on and after December 31, 2020
- $1,125.00/week on and after December 31, 2021
Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties:
- $727.50/week on and after December 31, 2016
- $780.00/week on and after December 31, 2017
- $832.00/week on and after December 31, 2018
- $885.00/week on and after December 31, 2019
- $937.50/week on and after December 31, 2020
Because, as mentioned, New York does not set a salary threshold for “professional” employees, the federal salary requirement – currently $455/week pending the outcome of the federal court lawsuit referenced above – applies to such employees.
What Do I Do Now?
Copies of the wage orders can be found here. In addition, given these complex new requirements, the NYSDOL has developed a helpful set of questions and answers regarding the minimum wage and salary threshold increases that can be found here on the agency’s website, which also includes helpful summaries of the new Empire State wage rates and allowance premiums.
Employers must also ensure that employees who will be impacted by any of the changes taking effect on December 31 are given new notices and wage statements as required by the Wage Theft Prevention Act (and the Hospitality Industry wage order, if applicable). For employees who work in multiple New York regions, this may be a particularly complex undertaking. As the NYSDOL explains on its website, “Employees must be made aware of the pay rate applicable to the work they perform. Employers may provide separate notices for each region, job site, job title and pay rate, or the employer may include a listing of all rates on a single employee pay notice.” Employers should also be sure to display the new minimum wage posters, which, too, can be found on the NYSDOL’s website, by December 31.
In short, extensive wage-related changes are about to hit New York, and Empire State employers will need to comply in short order. Consult with counsel immediately to ensure proper implementation.