New York Minimum Wage: Scheduled Increases in New York and NYC

In April 2016 Governor Cuomo signed legislation as part of the 2016-2017 New York State budget that would call for yearly incremental increases of the New York minimum wage eventually leading to a rate of $15/hour in New York. With the new rates scheduled to take effect at the end of 2016, the plan is set up to provide varied rate increases for businesses operating in New York City, Long Island/Westchester County, and the rest of the greater New York State area. For those businesses in New York City there will also be a tiered wage rate increase for businesses designated as small companies (10 employees or fewer) and large companies (11 employees or more).

The legislation also includes a safety valve which will take action to slow down the wage rate increase if deemed necessary.  In 2019, the state Director of the Division of Budget will begin an annual analysis of the established regions and the impact these increases have had on their economies.  This examination will be used to determine the effectiveness of the current plan and determine if a temporary suspension of the minimum wage increase schedule is necessary.

What is the New York minimum wage going to be?

As of 12/31/2015 the Minimum Wage = $9.00/hour. The Minimum Wage rates are scheduled to increase each year on 12/31 until they reach $15.00/hour.

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New York Minimum Wage

*After 12/31/2020 this rate will increase to $15 on a TBD indexed schedule set by the Director of the Division of Budget.

Restaurant Payroll: What is the minimum wage going to be for tipped employees in New York?

The state minimum wage applies to tipped employees but an employer may take a credit of $1.50 as of 12/31/15. This results in a minimum cash wage of $7.50/hour for tipped employees. Tipped employees include food servers and delivery workers.

Under the new legislation, the new minimum wage for tipped employees is two thirds of the applicable minimum wage, rounded to the nearest five cents, or $7.50, whichever is higher*. Within each wage increase cycle there will also be an increase in the required tip credit to reflect the difference between the tipped minimum wage and the regular minimum wage of the corresponding region and date.  The minimum wage increases that are scheduled will have the following effect on the minimum cash wage an employer will pay their tipped employees:

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New York Minimum Wage – Tipped Employee Cash Wage

*After 12/31/2020, the Director of the Division of Budget will conduct a review on the effects of the minimum wage increase and determine actions to be taken going forward.

What is the minimum wage for fast food workers in New York going to be?

A schedule to increase the minimum wage for fast food workers in New York was initiated on Dec
ember 31, 2015 and will not be affected by the new rules regulating wages for regular and tipped employees.  The plan for these workers still exists as follows:

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Fast Food Workers New York Minimum Wage

*After 12/31/2020, the Director of the Division of Budget will conduct a review on the effects of the minimum wage increase and determine actions to be taken going forward.

New York City Minimum Wage: What to do if your NYC business typically hovers around the 10 employee threshold?

An employer in New York City, in theory, could make changes to their employee’s pay rates (both positive or negative) if its employee count changed from one threshold to another. These changes would need to be communicated to employees in advance of the change and with updated Wage Theft Prevention Act notices. In the event that a 10 person company grows to add an 11th employee, the minimum wage for all employees would have to be equal to or greater than the large group minimum wage rate. Presumably this new wage rate would be effective on the date of hire of the 11th employee. Specific guidance from the city or other agency that may enforce the wage ordinance has not yet been released. 

If an employee quit or was terminated and the number of employees were to fall back into the small business tier, then employers would have the option to apply the lower wage rate.  However, doing this would likely create an administrative burden and potentially a dip in employee morale. As a result, using the higher of the two rates may make sense for some NYC employers.