Reminder: New York State Minimum Wage and Minimum Exempt Salary Increases Effective 12/31/18

Employers should be prepared for increases to the New York State minimum hourly wage for non-exempt employees and increases in the minimum salary for exempt administrative and executive employees effective December 31, 2018. The required minimum rate and salary varies depending upon the employer’s location and number of employees.

Non-Exempt Minimum Hourly Wage Rate

The NYS minimum hourly wage rate will increase as follows over the next several years:

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* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting in 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.

In addition, the minimum hourly wage for all fast food workers in New York City, regardless of the employer’s size, will be $15.00 per hour effective December 31, 2018. For fast food workers in the rest of the state, the minimum hourly rate will be $12.75 effective December 31, 2018.

Employers should be aware that the increased required minimum hourly rate for non-exempt employees cannot be satisfied by paying employees a bonus.

Minimum Salary for Exempt Administrative and Executive Employees

As previously reported here, the minimum weekly and annual salary that exempt administrative and executive employees in New York State must receive in order to remain exempt from overtime will also increase effective December 31, 2018, as follows:

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New York employers may not count an exempt administrative or executive employee’s nondiscretionary bonuses, incentive payments, or commissions to reach the exempt salary minimum level. However, rather than increasing an employee’s salary to the higher rate, an employer may choose to re-classify the employee as non-exempt, in which case the employee will be entitled to overtime pay (at time and one-half the employee’s regular hourly rate) for all hours worked in excess of forty per week.

The above salary increases for exempt employees are effective the first day of the workweek in which December 31, 2018, a Monday, falls. For example, if an employer’s workweek begins on Sunday and ends on Saturday, the above increases must go into effect for the week beginning on Sunday, December 30, 2018, and ending on Saturday, January 5, 2019.

Currently, New York State has no minimum salary for exempt “professional” employees, but in order to be exempt from the minimum wage under the federal Fair Labor Standards Act (FLSA), exempt professional employees must be paid $455 per week or $23,660 annually. 

According to information published by the federal Office of Information and Regulatory Affairs, available here, the U.S. Department of Labor (DOL) “intends to issue a Notice of Proposed Rulemaking (NPRM) to determine the appropriate salary level for exemption of executive, administrative and professional employees.” The NPRM is expected to be issued in March 2019.

Effective December 31, 2018, New York State will also increase the allowances for tips, meals, lodging, utilities, and uniform maintenance. See here for increases for miscellaneous industries, here for increases in the hospitality industry, and here for increases in the building service industry.

Please do not hesitate to contact our wage and hour lawyer if you have any questions regarding these changes.