United States: New York Employment Law Update For 2017: Minimum Wage Increases, Increases In Salary Threshold For Exempt Employees, And 2018 Paid Family Leave

New York State Minimum Wage Increase

Earlier this year, New York State Governor Andrew Cuomo signed into law a bill which gradually increases the minimum wage to $15.00 an hour under different schedules in three state regions: 1) New York City; 2) Nassau, Suffolk and Westchester counties; and 3) outside Nassau, Suffolk and Westchester counties. The legislation also sets a different schedule of increases for New York City businesses. 

New York City

New York City Businesses with 11 or More Employees

  • Effective December 31, 2016, the minimum wage increases to $11.00
  • Effective December 31, 2017, the minimum wage increases to $13.00
  • Effective December 31, 2018 - through December 31, 2021, the minimum wage increases to $15.00

New York City Businesses with 10 or Fewer Employees

  • Effective December 31, 2016, the minimum wage increases to $10.50
  • Effective December 31, 2017, the minimum wage increases to $12.00
  • Effective December 31, 2018, the minimum wage increases to $13.50
  • Effective December 31, 2019 - through December 31, 2021, the minimum wage increases to $15.00

Nassau, Suffolk and Westchester Counties

The minimum wage increases to $10.00 effective December 31, 2016, and then increases by $1 at the end of each of the next five years, reaching $15.00 on December 31, 2021.

Outside Nassau, Suffolk and Westchester Counties

The minimum wage increases to $9.70 effective December 31, 2016, and then increases by $.70 at the end of each of the next four years, reaching $12.50 on December 31, 2020. After 2020, the rate will increase to $15.00 on an indexed schedule to be set by the Director of the Division of Budget ("DOB") in consultation with the Department of Labor.

Earlier this week, Governor Cuomo announced the launch of a 200-member Enforcement Unit which will have members from the Labor Department and three other state agencies. The Enforcement Unit has been charged with helping businesses understand their responsibilities under the new wage regulations and ensuring compliance throughout the State.

New York State Department of Labor Increases Salary Threshold for Exempt Employees

As we previously reported, a nationwide injunction has halted the U.S. Department of Labor from implementing its new white collar overtime exemption regulations that would have increased the current salary threshold for the executive, administrative and professional exemptions under the Fair Labor Standards Act ("FLSA"). The new federal regulations were scheduled to take effect on December 1, 2016. 

However, the New York Department of Labor formally adopted new wage orders that increase the minimum salary requirements for executive and administrative employees from $675.00 per week to new levels based on the employer size and location. The new weekly salary thresholds do not apply to exempt professionals (learned or creative).

The new salary thresholds in New York effective December 31, 2016 are as follows:  

New York City

Large Employers (11 or more employees) in New York City:  $825.00 per week ($42,900 annually).
Small Employers (10 or fewer employees) in New York City: $787.50 per week ($40,950 annually).

Nassau, Suffolk and Westchester Counties: $750.00 per week ($39,000 annually).
Outside Nassau, Suffolk and Westchester Counties: $727.50 per week ($37,800 annually).

The weekly salary thresholds will gradually increase annually until the salary threshold reaches $1,125 per week ($58,500 annually) in New York City, Nassau, Suffolk, and Westchester counties and $937.50 per week ($48,750 annually) outside Nassau, Suffolk and Westchester counties. In New York City the minimum salary threshold will reach $1,125 per week for large employers first -- by the end of 2018.

What does this mean for you?

While the federal regulations are in limbo, employers in New York must comply with the New York State law.  

  • Employers whose exempt executive and administrative employees are currently paid less than the new salary threshold must increase those salaries beginning with the paycheck or direct deposit covering the day of December 31, 2016.
  • Alternatively, employers can reclassify employees earning less than the new salary threshold to non-exempt (i.e. eligible for overtime) beginning with the first day of the workweek beginning December 26, 2016.

New York State Paid Family Leave Benefits Law to Go Into Effect January 1, 2018

Employers are also reminded that New York's Paid Family Leave Benefits Law, which is codified in New York State's Worker's Compensation Law, will go into effect on January 1, 2018. Upon full implementation, New York employers will be required to provide all full-time and part-time employees who have been working for the employer for at least 6 months, up to 12 weeks of paid leave from work per year.

Eligible employees will be able to take paid leave to:

  • Bond with a new child (including an adopted or foster child) within the first 12 months after the birth, adoption, or placement;
  • Provide physical or psychological care for the serious health condition of the employee's child, spouse, domestic partner, parent (including step-parent or legal guardian), parent-in-law, sibling, grandchild, or grandparent; or
  • Address certain exigent needs when a spouse, domestic partner, child, or parent of the employee is called to active military service.

Paid leave time may be taken intermittently in increments of one full day. Paid leave under the law may run concurrently with any unpaid leave to which an employee is eligible under the federal Family and Medical Leave Act ("FMLA"). Notably, paid leave is not available for an employee's own serious health condition which will continue to be governed by NYS short term disability insurance program.

The law provides job protection guarantees for all employees taking leave. Employees are also entitled to the continuation of their health care benefits during the leave period.

Under the law, paid family leave will be administered and paid for by the state's disability benefits fund. Employers will not be responsible for paying employees for family leave directly, however, they will need to arrange for an additional payroll deduction. Employees will not be able to concurrently collect family leave benefits and short-term disability benefits from the state.

New York joins New Jersey, California, and Rhode Island on the list of states requiring paid family leave for eligible employees. 

What does this mean for you?

Employers are advised to take the following steps in anticipation for compliance with the new law: 

  • Provide training to human resources personnel regarding compliance with the family leave law, including leave entitlement, maintaining benefits for employees on leave, and reinstatement rights upon expiration of the leave in accordance with the provisions of the law;
  • Review and revise company policies and procedures regarding leave to ensure compliance with the family leave requirements by January 1, 2018; and
  • Ensure compliance with the payroll deduction requirements under the new law.

Special thanks to Daniella M. Muller, Senior Attorney in the Employment Practice Group, for her assistance preparing this alert.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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