New York's Trailblazing Minimum Wage Legislation
Many New York employees will be getting another raise to kick off the New Year.
A few years ago, New York decided not to wait around any longer for the federal government to increase the federal minimum wage. Instead, it took matters into its own hands, and enacted legislation mandating substantial annual wage increases over the years. As of December 31, 2018, not only will there be another appreciable increase to the minimum wage, the minimum salary level for employees to be exempt from overtime pay will also rise again.
New York is just one of the states considering and enacting laws that are more protective of employees than federal law. Employers with multi-state operations will want to keep up with recent developments and this growing trend, which will be presented in a Quarles & Brady webinar on January 23, 2019. Please visit www.quarles.com/events/ for information on this upcoming webinar, "Attention Employers with Multi-State Operations - State Employment Laws Ripe for Change".
With the New Year quickly approaching, New York employers need to be proactive in reviewing the pay of their employees to ensure they do not start 2019 in violation of the increased minimum wage and salary minimums. Paying an employee a salary will no longer shield all claims for unpaid overtime, and many salaries currently in place will violate the new minimum wage law. Here is what we are about to see happen:
Minimum Wage
The size and location of the employer will dictate the minimum wage New York employers must pay their employees. The legislation annually increases the minimum wage until the entire state reaches $15.00.
[1] New York State's Minimum Wage. Some industry specific rules depart from the rates set forth in the chart.
As set forth in the chart above, as of December 31, 2018, employers in New York City with eleven or more employees will be required to compensate their employees at a minimum of $15.00 an hour. Those within New York City with ten or fewer employees will be required to compensate their employees at a minimum of $13.50 an hour. Those employees located in Long Island and Westchester will now earn a minimum rate of $12.00 an hour, with employees in the remainder of the state earning $11.40.
Salaries of some current employees may be in violation of the new minimum wage rates and need to be examined prior to the rates going into effect. For example, a large employer in New York City that is currently paying some employees a salary of $29,000 a year would be in violation of the minimum wage law as of December 31, 2018.
Minimum Salary to be Exempt from Overtime
Under both federal and New York state law, employees who work over 40 hours per workweek are entitled to overtime pay unless the employee is "exempt" from the requirement—determined by the duties of the job and the payment of a requisite salary. Under federal law (the Fair Labor Standards Act), an employee is exempt from overtime payment if he or she earns more than $455 a week or $23,660 annually.
As of December 31, 2018, New York raises the minimum salary exemption for "administrative" and "executive" employees. There is no minimum salary for "professional" employees to be deemed exempt other than that imposed by the Fair Labor Standards Act. As with the minimum wage, the size and location of the employer dictates the minimum salary for an employee to be deemed exempt from overtime.
Employers with employees who are currently exempt, but paid less than the new salary minimums must either increase their employees' salaries or begin paying overtime for hours worked in excess of 40 per workweek.
The Bottom Line
Understanding the new wage requirements is just the first step. New York employers throughout the state need to be reviewing and revising the pay of their employees before December 31, 2018 sneaks up on them or risk a flood of lawsuits come the New Year.
For more information on wage and salary law changes, please contact your local Quarles & Brady attorney or:
- Otto Immel: 239-659-5041 / otto.immel@quarles.com