New York Employers: Significant Wage Law Changes in 2017
1/5/2017 | By: David T. Azrin, Esq. | Wage Law Update
New Higher Minimum Wage
As we reported in our June 2016 newsletter, New York State has increased the state minimum wage effective December 31, 2016, from the prior $9 rate, instead to $11 for large New York City employers (11 or more employees), $10.50 for small New York City employers (10 or less employees), $10 for Long Island and Westchester employers, and $9.70 for the remainder of the State.
Last week, only days before the new law was set to go into effect, the New York State Department of Labor finalized its regulations and issued important guidance for businesses on how to comply with these new rules, in a series of answers to frequently asked questions posted on its website, as follows:
● The rate is based on where the work is performed, and not where the employer’s main office is located. This means that, if an employee works in regions with different rates, then the employer must keep track of the time worked in each region if the employer wants to pay different rates for the time worked in each region, or if that is not possible, then the employer must pay the higher rate.
● A New York City business is classified as a “large” New York City employer for wage law purposes (and therefore must pay the higher $11 rate to employees for work performed in New York City) if the business had at least one employee in New York City, and it employed more than 10 employees (full-time or part-time) at any location in the state, at any given time during the current or the prior calendar year.
New Higher Salary Requirements for Exempt Management Employees
In the regulations finalized last week, New York State also increased the minimum salary requirements for exempt administrative and executive employees (who do not receive extra overtime pay for working more than 40 hours per week), from the prior $35,200 annual ($675/week) requirement.
Effective December 31, 2016, the new minimum salary requirement for exempt administrative or executive New York employees is $42,900 annually ($825/week) for large New York City employers, $40,950 annually ($787.50 per week) for small New York City employers, $39,000 annually ($750/week) for employers on Long Island and in Westchester County, and $37,830 ($727.50/week) for the remainder of the state. (The new state regulations do not increase the minimum salary requirements for exempt professional employees).
In the guidance issued last week, the agency confirmed that employers who do not wish to pay the higher minimum salary have the option to convert their exempt employees from a fixed weekly salary instead to hourly pay, provided that the employer pays these employees overtime (time and a half) based on their regular hourly rate, for any hours worked in excess of 40 hours in a week.
At the federal level, the Obama administration’s Labor Department had adopted a federal rule last year that was scheduled to go into effect on December 1, 2016, which would have raised the federal minimum salary requirement nationwide for all exempt employees even higher, from the current $23,660 annual federal requirement ($455/week) to $47,476 annually ($913/week).
But on November 22, 2016, a federal judge entered a nationwide injunction blocking the enforcement of the federal government’s proposed new rule on the ground that the federal government had overstepped its authority under the federal Fair Labor Standards Act. Now that Donald Trump has been elected and the Republicans will be taking control of both Houses of Congress, it is widely expected that the proposed nationwide $47,476 requirement will never go into effect. This is because the federal judge’s ruling may be upheld on appeal, or if not, then Congress may exercise its right to rescind the rule with the President’s approval, or the Trump administration may propose a modified rule.
Nevertheless, despite the injunction against the federal rule, the New York State Department of Labor has gone ahead with issuing its own state regulations last week, which went into effect on December 31, 2016. These rules raise the minimum salary requirement for New York exempt executive and administrative employees.
The new rules provide for annual increases according to the following schedules:
New York State Minimum Wage
| Location | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 2021 |
|---|---|---|---|---|---|---|
| NYC - Big Employers (11 or more) | $11.00 | $13.00 | $15.00 | |||
| NYC - Small Employers (10 or less) | $10.50 | $12.00 | $13.50 | $15.00 | ||
| Long Island & Westchester | $10.00 | $11.00 | $12.00 | $13.00 | $14.00 | $15.00 |
| Greater New York State | $9.70 | $10.40 | $11.10 | $11.80 | $12.50 | * |
* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting 2021, the annual increases will be published by the Commissioner of Labor on or before October 1. They will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices, including the Consumer Price Index.
New York State Minimum Salary for Exempt Employees
| Location | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 2021 |
|---|---|---|---|---|---|---|
| NYC - Big Employers (11 or more) | $42,900 ($825/week) |
$50,700 ($975/week) |
$58,500 ($1,125/week) |
|||
| NYC - Small Employers (10 or less) | $40,950 ($787.50/week) |
$46,800 ($900/week) |
$53,650 ($1,012.50/week) |
$58,500 ($1,125/week) |
||
| Long Island & Westchester | $39,000 ($750/week) |
$42,900 ($825/week) |
$46,800 ($900/week) |
$50,700 ($975/week) |
$54,600 ($1,050/week) |
$58,500 ($1,125/week) |
| Greater New York State | $37,830 ($727.50/week) |
$40,560 ($780/week) |
$43,264 ($832/week) |
$46,020 ($885/week) |
$48,750 ($937.50/week) |