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[New York employers should expect heightened scrutiny of their wage-and-hour policies in 2026.]
As we kick off 2026, it is an important reminder for employers that New York is a hotbed for wage-hour issues. The Eastern and Southern Districts of New York consistently see more cases asserting claims under the Fair Labor Standards Act (FLSA) than any other federal court. See here. In 2025 alone, more than 600 wage-and-hour cases were filed in New York State courts. While the New York Labor Law (NYLL) and its implementing regulations mirror the FLSA in certain respects, they differ in important ways. Below are some of the most frequent wage-and-hour issues employers should keep in mind.
Minimum Wage and Overtime Exemptions
Minimum wage is set at $7.25 per hour under the FLSA. As explained here, New York requires that non-exempt employees be paid at least $17.00 per hour for those based in New York City, Long Island, or Westchester, and $16.00 per hour for employees in the rest of the state.
The New York Department of Labor (NYDOL) has also set the salary threshold for the executive and administrative exemptions at $1,275 per week for employees in New York City, Long Island, or Westchester, and $1,199.10 per week for employees elsewhere in the state. Currently, New York does not impose a salary threshold for the professional exemption, leaving the FLSA's requirement of $684 per week in place.
While New York recognizes many of the FLSA's exemptions to overtime, there are important exceptions. For example, the Second Circuit has held that New York does not recognize the Motor Carrier Exemption, which provides an overtime exemption for certain employees who drive or operate motor vehicles weighing over 10,000 pounds.
Pay Frequency
New York also regulates how frequently employees must be paid—for example, "manual workers" must be paid weekly. As discussed here, New York has seen a surge of litigation seeking damages on behalf of classes of manual workers who were paid biweekly instead of weekly. In May 2025, New York amended the NYLL to sharply limit damages for these pay-frequency violations. Challenges to the constitutionality of this amendment are currently pending.
Overtime and Regular Rate of Pay
As under the FLSA, employers must pay overtime premiums to all non-exempt employees for hours worked beyond 40 in a workweek. Like the FLSA, New York calculates overtime pay at 1½ times the employee's "regular rate of pay."
For employers covered by New York's Miscellaneous Wage Order—the default Wage Order that applies to most employers—the regular rate of pay is determined by adding the employee's pay for the workweek and all other earnings (except certain statutory exclusions) and dividing that total by the number of hours worked during the week.
In contrast, under New York's Hospitality Industry Wage Order, which applies to restaurants and hotels, the regular rate is calculated by dividing the employee's total weekly compensation by the lesser of 40 hours or the actual hours worked (if fewer than 40). This method necessarily increases the regular rate of pay and, correspondingly, the overtime rate.
Tips and Gratuities
New York also deviates from the FLSA with respect to tips and gratuities. Generally, New York only permits employers in the hospitality industry to take a tip credit. As discussed here, New York eliminated the tip credit for employers subject to the Miscellaneous Wage Order, which includes workers in nail salons, car washes, and hairdressing establishments.
For employers that may take a tip credit, New York follows the 80/20 rule: employers of service employees and food service workers cannot take a tip credit for any day in which the employee spends more than 20 percent—or two hours, whichever is less—of the workday performing non-tipped duties.
Administrative fees for banquets and other special events are presumptively considered tips that must be paid to tipped employees. To rebut this presumption, the employer must provide customers with notice that complies with the Hospitality Wage Order requirements.
Spread of Hours and Split Shifts
The NYLL requires employers, in certain circumstances, to provide additional pay to employees whose workday exceeds ten hours or whose hours are "split" (non-consecutive). For employers covered by the Miscellaneous Wage Order, this means the employee must receive at least one additional hour of pay at the basic minimum hourly wage rate for each spread-of-hours or split shift worked during the workweek.
Courts and the NYDOL have held that this regulation does not apply if the employee's total daily compensation exceeds the New York State minimum wage multiplied by the number of hours worked, plus one additional hour at the minimum wage. In other words, these regulations do not apply if the employee is paid sufficiently above the minimum wage.
In contrast, under the Hospitality Industry Wage Order, covered employees who work a spread of hours exceeding ten hours or a split shift are entitled to an additional hour of pay at their regular rate of pay—even if they earn above the minimum wage.
Uniform Maintenance Pay
An increasing number of wage-and-hour lawsuits in New York have involved claims for uniform maintenance pay (UMP). New York requires employers to provide employees with an additional fixed weekly sum, depending on the size of the employer and the number of hours worked.
According to the NYDOL, this regulation applies to employers subject to the Miscellaneous Wage Order only if requiring employees to launder or maintain a uniform would reduce their hourly wage below the minimum wage.
Under the Hospitality Wage Order, UMP is not required when uniforms: (1) are made of "wash and wear" materials; (2) can be routinely washed and dried with other personal garments; (3) do not require ironing, dry cleaning, daily washing, commercial laundering, or other special treatment; and (4) are furnished to the employee in sufficient quantity to match the average number of days worked per week.
Independent Contractors
The New York State Freelance Isn't Free Act and the New York City Freelance Isn't Act provide protections to "freelance workers"—defined as any natural person or any organization composed of no more than one natural person that is hired as an independent contractor (i.e., sole proprietors)—including contractual requirements and a formal enforcement process for unpaid compensation.
In New York City, certain workers who perform delivery and couriers services through third-party applications, and who are classified as independent contractors, must be paid $21.44 per hour. For more information on this law, see here.
New York City also has several laws scheduled to take effect on January 26, 2026 (pending current legal challenges) that regulate the use of gig workers:
- Local Law 113 of 2025, which requires delivery services to pay their contracted delivery workers no later than 7 calendar days after the end of a pay period.
- Local Law 108 of 2025, which requires third-party food delivery services and third-party grocery delivery services that offer online ordering to solicit gratuities for food delivery workers and grocery delivery workers before or at the same time an online order is placed.
- Local Law 107 of 2025, which requires third-party food delivery services and third-party grocery delivery services to provide an option to pay gratuity that is at least 10 percent of the purchase price on each food or grocery delivery order.
NYC Mayor Zohran Mamdani has stated that his administration will target the alleged misclassification of app-based delivery workers as independent contractors. We therefore anticipate additional regulations governing the use of app-based workers.
The bottom line: New York employers should expect heightened scrutiny of their wage-and-hour policies in 2026.
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.
