Wage Law Update:
New Higher Minimum Wage and Paid Family Medical Leave for all New York Employees, and New Higher Federal Salary Requirement for all Exempt Employees
6/27/2016 | By: David T. Azrin, Esq. | Summer 2016 Newsletter
New York State has recently adopted two new measures that will make significant changes in the workplace in the coming years. These measures include a steady increase in the minimum wage starting in 2017, and the establishment of a new government mandated insurance benefit program starting in 2018, which will be paid for by additional payroll deductions.
In addition, the U.S. Department of Labor recently enacted a new regulation, effective December 1, 2016, which increases the minimum salary requirement for any salaried employee to qualify as an exempt employee not entitled to overtime.
MINIMUM WAGE — NEW YORK
The minimum wage increases are based upon a schedule that depends on the geographic location of the employer and (for companies located in New York City) the size of the employer, as follows:
New York City
For next year (2017), the minimum wage will increase to $11 at large companies (with 11 or more employees) in New York City, and $10.50 at small companies (10 or fewer employees). Subsequently, the minimum wage in New York City at companies with 11 or more employees will increase to $13 in 2018 and then to $15 in 2019 and thereafter. For companies in New York City with fewer than 11 employees, the minimum wage will increase more gradually to $12 in 2018, $13.50 in 2019, and $15 in 2020.
Westchester, Nassau and Suffolk County
The minimum wage for companies in Westchester, Nassau and Suffolk counties, regardless of size, will increase to $10 in 2017, $11 in 2018, $12 in 2019, $13 in 2020, $14 in 2021, and $15 in 2022.
Remainder of New York State
The minimum wage for companies in the remainder of New York State, regardless of size, will increase to $9.70 in 2017, $10.40 in 2018, $11.10 in 2019, $11.80 in 2020, $12.50 in 2021, and will increase each year after 2021 based on the rate of inflation, personal income growth, and wage growth.
Tipped Food Service Workers
The new law increases the minimum hourly wage for tipped food service workers from the current $4.60 to $7.50 in 2017 or an amount equal to two thirds of the then-current minimum wage, whichever is higher.
PAID FAMILY MEDICAL LEAVE — NEW YORK
New York’s new “paid family benefits law,” which takes effect in 2018, requires all employers to permit employees, who have worked for the employer for at least six months, to take a period of family medical leave to care for a sick family member or to bond with a new child. The employee can take up to 8 weeks per calendar year in 2018, increasing to 10 weeks in 2019 and to 12 weeks in 2021. When the employee returns to work at the end of the allotted period, the employer has to restore the employee to his or her previous position or a similar position.
Notably, the law does not provide leave for an employee’s own health condition. Employees who need to take leave for their own health condition may be entitled to leave or benefits under other less generous existing programs, discussed below.
Under the new law, an employee taking family medical leave will not receive the full amount of their regular wages during such leave, rather only a percentage, subject to caps. Specifically, while an employee is on family medical leave, the employee will be paid a weekly family medical leave benefit payment equal to 50% of the employee’s regular weekly wage, capped at 50% of the state’s average weekly wage (meaning a cap of $648 based on the state’s current average weekly wage of $1,296.48). The benefit payment increases in 2019 to 55 percent, in 2020 to 60 percent, and in 2021 and thereafter to 67%. The payment caps are based on this specified percentage of the state’s then-current average weekly wage, so the caps will increase each year as the state’s average weekly wage increases.
The employer does not pay for the paid leave. Rather, the new law establishes a new government insurance program, starting in 2018, to be funded by payroll deductions. The amount to be deducted from employee payroll to pay for the program has not yet been established, and will be set by the superintendent of financial services on June 1, 2017.
Employers are prohibited from taking retaliatory action against employees for taking the leave. Employers are required to post a notice concerning the benefits and to give employees written notice of the benefits within five business days after the employee takes such leave.
The new law is a dramatic change from the current law for smaller companies (fewer than 50 employees) which are currently not required to provide any paid or unpaid family medical leave.
Under current law, New York employees who need to take family or medical leave are only entitled to the following:
1) Under the federal Family and Medical Leave Act, companies with 50 or more employees are required to allow employees (who have been working for the employer for at least one year, and have worked for the employer at least 1250 hours in that year) to take up to 12 weeks of unpaid medical leave, for their own or their family member’s serious health condition, and to restore the employee to the same position or a similar position at the end of such leave.
2) Under the state’s short-term disability insurance program paid by employers from payroll deductions, employees (who have worked for an employer for more than four weeks) who are unable to work due to a disability and who are not receiving any pay during their leave, are entitled, after a seven day waiting period, to a weekly payment equal to 50% of the employee’s weekly wage capped at $170 per week, during the period of disability, up to 26 weeks. Like the new state family medical leave program, the insurance is paid from deductions from employee payroll, in the amount of one half of one percent of the employee’s wages up to sixty cents per week. Unlike the new law, employers are not legally required to hold open an employee’s job during the period of disability, and disability benefits end four weeks after the employer terminates employment, even if the termination occurs during the disability. Pregnancy is considered a disability, but a woman claiming disability due to pregnancy for a period of more than four weeks before the anticipated birth date or after the actual birth date, must submit more detailed medical information substantiating the disability.
3) Under current law, if an employee is terminated or laid off due to absence from the job, the employee may be entitled to unemployment insurance benefits when the disability benefits end. Unemployment insurance benefits are paid for up to 26 weeks, and the amount is based on a percentage of the employee’s prior high quarterly earnings, currently capped at $425 per week.
4) Under New York City’s paid sick leave law, employees in New York City at companies with 15 or more employees are entitled to one hour of paid sick leave per 30 hours worked, up to five days per year.
The new law requires that all employers (regardless of size) must offer family medical leave.
The new law represents a dramatic change from the current law because it provides a benefit payment for individuals who are not disabled themselves but who simply want to take leave to care for a sick family member or to bond with a new child. In addition, the new benefit payment starts on the first day of such leave, in contrast to disability benefits, which start after a seven day waiting period.
NEW HIGHER FEDERAL SALARY REQUIREMENT TO QUALIFY AS AN EXEMPT EMPLOYEE
New federal regulations, effective December 1, 2016, increase the minimum salary requirement for a person to qualify as an “exempt” employee (meaning a salaried administrative, executive, and professional employee who is not entitled to overtime), from the current $23,660 to $47,476.
This new rule means that any salaried employee earning less than $47,476 must receive overtime for hours worked over 40 hours per week, even if the employee has a managerial or professional type position.
The new rule does not have as significant effect in New York as other states, because New York state law already imposed a higher minimum salary requirement, namely $35,100 since December 31, 2015, than the old federal requirement, which was $23,660, for exempt administrative and executive employees. As a result, the new federal regulations will only impact New York exempt salaried employees who were making between $35,100 and $47,476. Under the new regulations, effective December 1, 2016, these employees will be entitled to overtime for hours worked over 40 hours per week.