New York Minimum Wage Up to $15/hour

New York Minimum Wage Up to $15/hour

New York Governor Andrew Cuomo recently signed legislation enacting a statewide $15 minimum wage plan. The state joins California with the highest minimum wage in the nation. This increase is the second significant increase in wages within three months. As will be seen below, the increases are complicated and may be difficult for employers to implement.

As of December 31, 2015, the Minimum Wage Act (Article 19 of the New York State Labor Law) required that all employees in New York State receive at least $9.00 per hour, including domestic workers. 

Wage Orders

Additionally, Regulations known as “Wage Orders” set additional requirements that are industry specific:

• As of December 31, 2015, the Minimum Wage for individuals working in the ‘fast food industry’ is $10.50 per hour in New York City, and $9.75 per hour in the rest of the state.
• As of December 31, 2015, the Minimum Cash Wage for Tipped Workers in the Hospitality Industry is $7.50 per hour if they earn enough in tips.
• As of December 31, 2015, the Minimum Wage for other Tipped Workers is $7.65 per hour if they earn at least $1.35 per hour in tips, or $6.80 per hour if they earn at least $2.20 per hour in tips.
• As of December 31, 2015, the Minimum Wage for all other workers is $9.00 per hour.

Wages to be phased in over time

The recently increased New York minimum wages will be phased in over time and will vary geographically:

• For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage would rise to $11 at the end of 2016, then another $2 each year after, 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 would rise to $10.50 by the end of 2016, then another $1.50 each year after, reaching $15 on December 31, 2019.
• For workers in Nassau, Suffolk and Westchester Counties, the minimum wage would increase to $10 at the end of 2016, then $1 each year after, reaching $15 on December 31, 2021.
• For workers in the remaining counties of the state, the minimum wage would increase to $9.70 at the end of 2016, then another .70 each year after until reaching $12.50 on 12/31/2020. Thereafter, it will continue to increase to $15 on an indexed schedule to be set by the Director of the Division of Budget (DOB) in consultation with the Department of Labor.

What’s next?

Beginning in 2019, the State DOB Director will conduct an annual analysis of the economy in each region and the effect of the minimum wage increases statewide to determine whether a temporary suspension of the scheduled increases is necessary. That analysis will be submitted to the Department of Labor by the Division of Budget for possible further action.

In addition to the substantial economic burden that these increases pose for NY employers, the layering of rates and scenarios, as well as differing geographic impacts, will add to the complexity of compliance.

What about fast food chains?

The concept of “fast food chain” wage requirements is new. New York provides the following advice concerning the parameters applied to this targeted employer group:

Q: What is a Fast Food Establishment?

A: A 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.

The list above summarizes several definitions that are published in 12 NYCRR § 146-3.13, which should be consulted for the full and complete terms.”

The effects of these increases and whether these increases will truly benefit the workers to receive such increases, remains to be seen. Many employers that operate with thin profit margins may either close or find ways to reduce labor costs. The unfortunate result may be less employment and no net increase in the goal of providing workers with a “living wage.”