New York's Changing Wage Rates and Allowances Effective December 31st

  • December 9, 2014

Effective December 31, 2014, the New York State minimum wage increases to $8.75 per hour (from $8.00 per hour). 

This is the second in a series of scheduled increases based on legislation passed in 2013. (See our article, New York Minimum Wage to Increase in Stages.) New York state employers must comply with this change as well as the other, related changes listed below. Some of the changes are specific to the hospitality industry and its Wage Order. Further changes will be required on December 31, 2015, when the last of the phased minimum wage increase becomes effective and the rate increases to $9.00 per hour.

  • While the cash minimum wage that can be paid to tipped employees for non-overtime hours remains the same, the overtime rate will change. For example, for a food service worker, the overtime rate will increase from $9.00 per hour to $9.38 per hour. This amount is calculated by multiplying $8.75 by 1.5 and subtracting the new tip credit of $3.75 (formerly $3.00 per hour). A similar calculation applies to “service employees,” a separate category of workers, though the rates are different.
  • In all industries, the minimum salary that must be paid to qualify an employee for the executive or administrative exemption to overtime pay increases from $600.00 per week to $656.25 per week.
  • In all industries, the uniform maintenance pay increases as follows: 
    • for employees that work more than 30 hours per week, from $9.95 to $10.90;
    • for employees that work 20 to 30 hours per week, from $7.85 to $8.60; and
    • for employees that work fewer than 20 hours per week, from $4.75 to $5.20.
  • Outside the hospitality industry, the relevant wage orders provide that any amount paid in excess of the minimum wage to employees can satisfy the allowance. In the hospitality industry, the amount must be paid regardless of the applicable wage rates.
  • In all industries, the meal credit that can be taken for service workers increases from $2.50 to $3.00 per meal. However, the meal credit for food service workers in the hospitality industry remains capped at $2.50 per meal.
  • As the minimum wage increases, the rate for spread-of-hours increases to $8.75. In the hospitality industry, as spread-of-hours must be paid at the full minimum wage and paid to all overtime-eligible employees, an additional $8.75 per hour must be paid for any workdays in excess of 10 hours. Outside the hospitality industry, courts have interpreted the language of the relevant Wage Orders to provide that any amount paid in excess of the minimum wage can set off spread-of-hours liability. 
  • Call-in pay calculations, like spread-of-hours, differ for the hospitality industry and must be adjusted to reflect the new minimum wage rate.

The Hospitality Industry Wage Order requires that all employees be notified of any applicable change in writing prior to December 31st. In other industries, as long as the next paystub reflects the change, a change notice is not required, but is a best practice.

Finally, while there is pending legislation (see, With WTPA Amendments in Limbo, New York Employers Must Prepare for Another Round of ‘Those (Annual) Notices’), the annual notice requirement of New York Labor Law 195, enacted by 2011’s Wage Theft Prevention Act (see, New York Wage Theft Prevention Act Update: State DOL Issues Model Forms and Guidance) remains in effect. Accordingly, during the month of January, all employees in all industries must be given a stand-alone notice reiterating their basic wage and hour information, as well as key information on the identity of their employer, as delineated by the Act. Last year, when similar changes to rates also went into effect on December 31st, the New York State Department of Labor informally advised employers that a change notice issued on December 31st can also meet the annual notice requirement if the notice indicated it was being provided to meet both the change and annual notice requirements.

Jackson Lewis attorneys in the Wage and Hour practice are available to answer inquiries regarding this and other workplace issues and assist employers with their compliance obligations. 

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