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NYS Minimum Wage & Overtime Salary Thresholds

A quick, yet complete, reference guide for employers in New York State.

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    Introduction

    New York State has recently passed incremental increases to both its minimum wage and overtime salary thresholds - determining whether certain employees will be considered exempt and non-exempt. While these increases are state-wide, when and how much they'll change depends on the size and location of your business. So we've created this quick reference guide to help you understand exactly how and when your business will be impacted by these changes.

    Before You Begin

    This resource was initially published in March, 2018 (and will continue to be updated as needed). We want to point that out because some of the increases in both the minimum wage rate and overtime salary threshold have already begun. But as you can see, there are several additional increases scheduled over the next few years. So even though we won't be addressing increases from previous years, please rest assured that all this information is accurate and up-to-date. It will be updated should any additional changes be finalized.

    NYS Minimum Wage Increases

    Federal Rate

    Currently, the federal minimum wage is $7.25 per hour, set and enforced by the United States Department of Labor. Of course, the minimum wage rate in New York State has long been higher than the federal level.

    New York State Rate(s)

    For employers in most of New York State, the minimum wage at the time of this publication (early 2018) is $10.40 per hour. If you're an employer in Nassau, Suffolk or Westchester County, your minimum wage is currently $11.00 per hour. And if you're an employer in New York City, your minimum wage is $12.00 per hour if you employ 10 people or fewer and $13.00 per hour if you employ 11 people or more. However, as the table below shows, all of those hourly rates are set to gradually increase over the next several years, with the goal of the rate capping at $15.00 per hour for all state employers.

    Employers in New York City

    NYC employers with 11 employees or more are considered "large" employers and will see its minimum wage rate increase to $15.00 per hour on December 31, 2018. NYC employers with 10 or fewer employees are considered "small" employers and will see a slightly more gradual increase. Its minimum wage rate will increase to $13.50 at the end of 2018 and finally to $15.00 at the end of 2019.

    Employers in Nassau, Suffolk and Westchester Counties

    Like employers in New York City, businesses in Westchester County and Long Island are also scheduled to see its minimum wage rate increase to $15.00 per hour, although the change will be more gradual. These employers will see incremental increases of $1.00 per hour each year until the minimum wage reaches its desired maximum when it becomes $15.00 effective December 31, 2021.

    Employers in all other New York State counties

    As is the case with many other labor laws, New York State counties outside of the New York City metro area will see different standards when it comes to its minimum wage rate increases. At the end of each of the following years, these employers will see its minimum wage rate increase to $11.10, $11.80 and finally $12.50 effective December 31, 2020. However, while current projections only show the rate increasing to $12.50 per hour, lawmakers have stated their intention to increase the minimum wage rate to $15.00 per hour statewide. The Director of the Division of Budget is expected to determine a schedule of additional rate increases that lead to the $15.00 per hour target rate.

    Employers of fast food workers

    Adding another wrinkle to these statewide minimum wage increases is the separate fast food worker minimum wage schedule. Effective December 31, 2018, all fast food workers in New York City must be paid a minimum wage of $15.00 per hour. That same rate for fast food workers will be rolled out to the rest of the state a few years later, effective July 1, 2021. 

    The table below provides a simple, yet comprehensive review of the incremental increases in the minimum wage for all New York State employers. You'll notice the distinction between both large and small NYC employers, employers in Nassau, Suffolk and Westchester Counties, as well as employers throughout the rest of New York State.

    Effective Date

    NYC Large Employers (11 employees or more) NYC Small Employers (10 employees or fewer) Employers in Nassau, Suffolk and Westchester Employers in All Other NYS Counties
    12/31/16 $11.00 $10.50 $10.00 $9.70
    12/31/17 $13.00 $12.00 $11.00 $10.40
    12/31/18 $15.00 $13.50 $12.00 $11.10
    12/31/19   $15.00 $13.00 $11.80
    12/31/20     $14.00 $12.50
    12/31/21     $15.00 TBD*

    *The Director of the Division of Budget is expected to determine a schedule of additional rate increases that lead to the $15.00 per hour target rate, as the goal is to implement the $15.00 per hour minimum wage statewide.

    What does this mean for employers?

    As opposed to the overtime salary threshold increases (examined next) which are more complex in nature, the upcoming increases in the minimum wage present a much simpler proposition for employers in New York State. Employers must know which category they fall into and understand how their minimum wage rate will increase in the upcoming years. Beyond that, it's just a matter of planning for the increases and how they may impact cash flow, hiring and other administrative duties.

    NYS Overtime Salary Threshold Increases

    Federal Standards

    Currently, according to the FLSA, the federal overtime salary threshold is $23,660 annually, calculating to $455 per week. That means that any white-collar, salaried employees earning under $455 per week must be paid overtime wages for any hours worked over 40 in a given week. Back in 2016 a proposal was floated to more than double this threshold to an annual salary of $47,476, but that was struck down by a federal judge in Texas weeks before the changes were set to take effect.

    New York State Standards

    Shortly after the changes to the FLSA were struck down, New York State legislature introduced increases to its own overtime salary thresholds. Unlike the proposed FLSA changes, which were set to be implemented across the board and all at once, the increases in New York State are incremental and vary based on where the employer is located - and in the case of employers in New York City, number of employees as well.

    Employers in New York City

    NYC employers will see their overtime salary threshold increase to $1,125 per week, which calculates to an annual salary of $58,500, with the only distinction being between "small" and "large" employers. Businesses with 11 employees or more are considered large employers and will see its overtime salary threshold increase to $1,125 per week by December 31, 2019. Businesses with fewer than 11 employees are considered small employers and won't see its overtime salary threshold increase to the maximum amount of $1,125 per week until December 31, 2019.

    Employers in Nassau, Suffolk and Westchester counties

    Like employers in New York City, businesses in Westchester County and Long Island will also see its overtime salary threshold increase to $1,125 per week ($58,500 annually), but this will happen much more gradually. The overtime salary threshold will increase to $900, $975 and $1,050 each year before it finally increases to the maximum threshold of $1,125 on December 31, 2021.

    Employers in all other New York State counties

    As is the case with many other labor laws, New York State counties outside of the New York City metro area will see different standards when it comes to the overtime salary threshold increases. Employers in the remainder of the state will see gradual, incremental increases which finalize at a maximum of $937.50 per week (or an annual salary of $48,750), which will take effect on December 31, 2020.

    The table below provides a simple, yet comprehensive review of the incremental increases in the overtime salary threshold for all New York State employers. You'll notice the distinction between both large and small NYC employers, employers in Nassau, Suffolk and Westchester Counties, as well as employers throughout the rest of New York State.

    Effective Date

    NYC Large Employers (11 employees or more) NYC Small Employers (10 employees or fewer) Employers in Nassau, Suffolk and Westchester Employers in All Other NYS Counties
    12/31/16 $825/week $787/week $750/week $727.50/week
    12/31/17 $975/week $900/week $825/week $780/week
    12/31/18 $1,125/week $1,102.50/week $900/week $832/week
    12/31/19   $1,125/week $975/week $885/week
    12/31/20     $1,050/week $937.50/week
    12/31/21     $1,125/week  

    Overtime Salary Case Study

    What does this mean for employers?

    Many employers can look at the table above and quickly notice they're currently employing white-collar, salaried workers at a wage that's below what their overtime salary threshold is schedule to increase to. 

    Let's try an example... You're an advertising agency in Buffalo. Last summer you hired a junior copywriter out of college; let's call her Anna. Anna's salary is $40,000 per year, which calculates to $769.23 per week. Anna is currently a salaried employee, and she is exempt. Right now, everything works.

    However, on December 31, 2018, the overtime salary threshold will increase to $832 per week - $62.77 per week more than Anna's current weekly wages. That means, accordinding to the New York State Department of Labor, because her wages fall below the threshold, you're required to pay Anna overtime (1.5 times her hourly wage) for any hours worked over 40 in a given week. You also know that Anna probably works between 45 and 50 hours a week. For the purpose of this example, we'll take the average and assume Anna works 47.5 hours per week. What are your options?

    Option 1: Have Anna track her hours. Don't allow her to work more than 40 hours per week. 

    This could seem like the simplest fix, but at best this still requires implementing a new timekeeping process. Usually the most effective way to accomplish that is to adopt a workplace timekeeping system, allowing Anna to punch in and out. At worst, this could have major implications for your business if Anna's sudden reduction in hours makes it harder to complete projects for clients and has an overall negative impact on productivity.

    Option 2: Transition Anna to hourly and pay her overtime. 

    At Anna's wage of $769.23 per week, you're currently paying her $19.23 per hour. We calculate that simply by dividing her weekly wage by 40. (However, since Anna is actually working 47.5 hours per week, practically her hourly pay rate is $16.19 per hour. This is fine, as long as the calculated hourly rate remains below minimum wage.) At the standard overtime rate of 1.5 times the normal hourly rate, Anna's overtime pay rate calculates to $28.85 per hour. Assuming Anna continues to work 47.5 hours per week, that means you should expect to pay Anna an additional 7.5 hours per week at her overtime rate, bringing her average overtime pay to $216.35 per week. When you add that to her currently weekly (salaried) wage of $769.23 per week, suddenly you're paying Anna $985.58 per week. That calculates to $51,250 annually, so you've just given Anna a raise of $11,250 annually, more than 25%.

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    Option 3: Simply raise Anna's salary above the new overtime salary threshold. 

    When the overtime salary threshold in Buffalo (located in Erie County) increases from $780 per week to $832 per week on December 31, 2018, you could simply increase her weekly wage above the threshold, to $833 per week. This would give Anna a raise of $63.77 per week and $3,316.04 annually, bringing her annual salary up to $43,316.04. This would represent a fairly sizeable raise of about 8.2%, but it does present some upside. Not only is it less costly than Option 2, it would allow you to keep Anna as an exempt employee on salary, and prevent you from having to have Anna track her time and either cap her weekly hours at 40 and/or pay substantial overtime wages.

    Review

    In Anna's case, most employers are likely to choose option 3. But Anna is just one example. Options 1 and 2 can be more favorable for different employees with different circumstances. How much you're currently paying them, how many hours they're actually working and their likelihood to adopt a new process like tracking their time without much resistance all play into the decisions that employers must make. And this is just one example. The complexity of adjusting for the new overtime salary threshold increases is compounded when employers need to take several employees into consideration. Regardless, there are always solutions. And whether those solutions involve pay increases, adjustments in employee classifications and/or installing new timekeeping systems, Complete Payroll has the chops to help you get it done in the best way possible for your business.

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    Payroll isn't just about paying your employees the right amount, on time, every time. It's also about tax withholding, worker classification and labor law compliance. When you think about it, most of your critical employee data flows through payroll. So it's imperative that your payroll partner knows the laws in and out and is able to help you every step of the way.

    Over the last 26+ years, Complete Payroll has helped thousands of employers pay millions of employees properly and lawfully. So all you have to do is focus on what you do best. To learn more about our payroll processing services and to request a price quote or software demo, simply click the button below.

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