Comprehensive New York Minimum Wage Guide

Did you know that the New York minimum wage varies depending on location and industry? Not only that, but it also has tiers with scheduled increases to ensure that workers across the state have access to a fair and livable wage. In fact, many workers can expect to see a wage increase of 6.5% on January 1, 2024. As a result, employers in the Empire State need to stay up to date on the latest New York minimum wage laws to ensure they are in compliance.

This comprehensive guide will highlight everything you need to know about the New York minimum wage, providing valuable insights for small business employers and HR professionals. We will explore the current minimum wage rates, scheduled increases, and additional wage laws that employers need to be aware of. Additionally, we will share best practices to help businesses comply with these regulations and ensure they are providing fair and compliant compensation to their employees.

• How Does Minimum Wage Work In The US?
• Timeline: New York Minimum Wage
• New York Minimum Wage Rates
• Exemptions & Special Cases
• Wage Law Enforcement
• Additional New York State Wage Laws
• Wage Law Compliance Best Practices
• How Factorial Can Help You Comply With New York Wage Laws
• What Can You Do with Factorial’s Payroll Management Software?✅

How Does Minimum Wage Work In The US?

The United States operates a tiered minimum wage system, with varying rates set at the federal, state, and municipal levels. This creates a complex system for determining the minimum wage for workers across the United States.

• Federal Minimum Wage: The Baseline Standard. The federal minimum wage, established by the Fair Labor Standards Act (FLSA), serves as the baseline wage for covered nonexempt employees nationwide. The current federal minimum wage stands at $7.25 per hour.
• State Minimum Wage: Responding to Local Conditions. Twenty-five states and the District of Columbia have established their own minimum wage laws, which must be equal to or higher than the federal minimum wage. These state minimum wages often exceed the federal rate, aiming to align with the cost of living and labor market conditions within their respective jurisdictions.
• Municipal Minimum Wage: Adapting to Local Needs. A growing number of cities and counties have also implemented their own minimum wage limits, often higher than both state and federal minimum wage rates. These municipal-level minimum wages reflect the unique economic circumstances of specific localities. For example, the minimum wage in NYC is $15.20 per hour, and the minimum wage in Albany is $14.20 per hour.

In addition to these three tiers, the minimum wage that employers in the US must pay their employees can also be affected by other factors. This includes age, disability, and certain job exemptions and special cases. More on this below.

Timeline: New York Minimum Wage

New York State has a long and rich history of advocating for workers’ rights and ensuring fair compensation. This commitment is reflected in the state’s minimum wage history, which has undergone numerous increases over the years to keep pace with inflation and ensure that workers can afford basic necessities.

Here’s everything you need to know about the history of the New York minimum wage.

The Early Years (1960-1984)

In 1960, New York took a significant step towards ensuring fair compensation for its workers by establishing the first statewide minimum wage of $1.00 per hour. This marked a crucial turning point in labor relations, establishing a baseline pay standard for all employees.

Throughout the 1960s and 1970s, the NY minimum wage underwent several revisions, reflecting the changing economic landscape and the rising cost of living. In 1962, the minimum wage was raised to $1.15 per hour, followed by further increases in 1966, 1968, and 1970, reaching $1.60 per hour.

The 1970s witnessed continued growth in the minimum wage, with increases in 1972, 1974, and 1976, reaching $2.10 per hour. These New York minimum wage increases aimed to keep up with inflation and ensure that workers could afford basic necessities.

The Steady Rise (1986-2000)

The 1980s saw a steady rise in the New York minimum wage, with increases in 1980, 1981, 1983, and 1984, reaching $3.35 per hour. These increases reflected the evolving economic conditions and the need for workers to maintain a decent standard of living.

Continuing the upward trend, the 1990s witnessed further increases in the minimum wage, with adjustments in 1990, 1992, and 1994, reaching $5.50 per hour. These increases reflected the growing economic prosperity of the era and the continued need to ensure that workers’ wages were sufficient to cover their basic needs.

The Fast-Food Wage Hike (2016-2021)

In a landmark decision in 2016, New York became the first state to raise the minimum wage for fast food workers, recognizing the unique challenges and demands faced by this sector. This groundbreaking step aimed to provide fast food workers with a fair and livable wage.

The following years saw further advancements in the New York hourly wage for fast food workers, culminating in a $15.00 per hour minimum wage for fast food workers in 2021. These increases demonstrated New York’s commitment to ensuring fair compensation for all workers.

The Statewide Increase (2021-Present)

In 2021, New York took another historic step, raising the minimum wage to $15.20 per hour for all non-tipped employees in the state. This significant increase marked a broader commitment to ensuring fair compensation for all workers, regardless of their industry.

Looking towards the future, the minimum wage is scheduled to increase to $16.20 per hour for all non-tipped employees in the state in 2024. These ongoing adjustments reflect New York’s dedication to ensuring that its workers can afford a decent standard of living and participate fully in the economy.

New York Minimum Wage Rates

New York stands out for its commitment to ensuring fair compensation for its workforce. The state’s minimum wage structure reflects this commitment, with distinct rates for tipped and non-tipped employees.

So, what is the current minimum wage in New York?

The current New York minimum wage rate for non-tipped employees across New York stands at $15.20 per hour. This rate applies to all non-tipped workers, regardless of industry or location.

For tipped employees, the New York minimum wage is set at $2.13 per hour, with the expectation that tips will supplement their earnings to reach the equivalent of the non-tipped minimum wage. However, employers are required to pay tipped employees the full minimum wage if their combined hourly wage and tips fall below the non-tipped minimum wage.

Looking ahead, New York has scheduled increases in the minimum wage. For non-tipped employees, the minimum wage is set to increase to $16.20 per hour in 2024. For tipped employees, the cash wage will remain at $2.13 per hour, but the expected tip credit will increase to $5.17 per hour, bringing the effective minimum wage for tipped employees to $7.30 per hour.

These scheduled increases underscore New York’s unwavering commitment to ensuring fair and livable wages for all its workers, whether they are tipped or non-tipped. As the state navigates the ever-changing economic landscape, the minimum wage will continue to play a crucial role in upholding workers’ rights and promoting economic equity.

Exemptions & Special Cases

While the New York minimum wage applies to a broad range of employees, there are certain exemptions and special cases that are important to consider. Here’s an overview of these exceptions.

Exemptions to the Minimum Wage

Certain categories of employees are exempt from the New York minimum wage requirements.

These include:

• Salaried employees. Employees who meet certain criteria, such as earning a minimum weekly salary and performing duties that are executive, administrative, or professional.
• Farmworkers. Farmworkers, defined as individuals employed by a farm employer to engage in agricultural activities, are subject to a separate minimum wage, which is currently set at $13.20 per hour.
• Babysitters. Babysitters who provide occasional care for children in private residences are generally not subject to the minimum wage.
• Home carers. Carers and companions who provide personal care services to individuals in their homes are generally not subject to the minimum wage.

Special Cases

In addition to these exemptions, there are also special cases that affect the New York minimum wage for certain types of employees.

For instance:

• Tipped employees. As mentioned earlier, tipped employees have a lower direct hourly wage. However, they must earn tips to reach the equivalent of the non-tipped minimum wage.
• Fast food workers. Fast food workers in New York City are subject to a higher minimum wage than fast food workers in other parts of the state.
• Students. Students working part-time under certain conditions may be eligible for a lower minimum wage.

It’s important for employers to carefully review the exemptions and special cases to determine whether their employees are subject to the New York minimum wage and, if so, at what rate.

Wage Law Enforcement

Ensuring compliance with minimum wage laws is crucial for upholding workers’ rights and protecting them from exploitation. In New York, the Wage Enforcement Unit (WEU) within the New York State Department of Labor (NYSDOL) plays a critical role in enforcing minimum wage regulations and other wage laws in the state.

The WEU receives and investigates complaints from employees who believe they have been paid less than the minimum wage or otherwise underpaid. The WEU also conducts proactive investigations to identify potential violations.

When violations are found, the WEU can take various enforcement actions, including:

• Issuing wage orders requiring employers to pay back wages to affected employees.
• Imposing civil penalties on employers for non-compliance.
• Pursuing criminal charges for willful violations.

Employees who believe they have been underpaid can file a complaint with the WEU online, by phone, or in person. The WEU will investigate the complaint and, if warranted, take action against the employer.

In addition to the WEU, the New York Attorney General’s Office (NYAGO) also enforces minimum wage laws. The NYAGO has a Labor Bureau that investigates and prosecutes labor law violations, including minimum wage violations.

Employees can also file a private lawsuit against their employer for minimum wage violations. If successful, the employee may be awarded back wages, liquidated damages (double the amount of back wages), and attorneys’ fees.

These enforcement mechanisms work together to ensure that employers comply with New York minimum wage laws.

Related: Labor Laws for New York Employers

Additional New York State Wage Laws

In addition to the minimum wage, New York has several additional wage laws that employers need to be aware of.

These include:

• Overtime pay. Non-exempt employees must be paid overtime at a rate of 1.5 times their regular hourly rate for any hours worked beyond 40 in a workweek.
• Equal pay. In line with the federal Equal Pay Act (EPA), employers in New York are prohibited from paying employees of different sexes different wages for the same work. This includes wages, benefits, and other forms of payment. The aim is to promote pay parity and pay transparency.
• Prevailing wage. Employers on public works projects must pay their employees the prevailing wage for their trade or occupation.
  Spread pay. Employers must pay a spread premium if an employee works more than 10 hours in a workday.
• Meal breaks. Employers must provide employees with a 30-minute meal break for every five hours worked.
• Rest breaks. Employers must offer a 15-minute rest break for every two hours that an employee works.
• Vacation leave. Employers must offer employees paid vacation leave. In New York State, the accrual rate for vacation leave depends on the employee’s length of service:
  • Less than 1 year: 1 week of paid vacation
  • 1 year to 3 years: 2 weeks of paid vacation
  • 3 years to 5 years: 3 weeks of paid vacation
  • 5 years or more: 4 weeks of paid vacation
• Sick leave. In New York State, employers with 50 or more employees must provide employees with paid sick leave. Employers must also keep accurate records of employee sick leave usage.

Wage Law Compliance Best Practices

We are now going to share a list of essential wage law compliance best practices. By following these essential tips, employers can minimize the risk of wage law violations, protect themselves from potential lawsuits, and foster a positive and compliant work environment for their employees.

Understand the Minimum Wage

As an employer in New York, it’s crucial to stay updated on the current minimum wage rates. These vary based on employee status (tipped or non-tipped) and location. Familiarize yourself with the minimum wage requirements for your specific industry and location to ensure you’re paying your employees the correct amount.

Implement Accurate Payroll Practices

Maintain accurate and up-to-date payroll records to ensure proper compensation calculations. Regularly review payroll records to identify any inconsistencies or errors. Use payroll software to streamline payroll processes and minimize errors.

Classify Employees Correctly

Properly classify employees as either exempt or non-exempt under the minimum wage regulations. This classification determines whether an employer must pay overtime pay. Carefully review the duties and responsibilities of each employee to determine their exempt or non-exempt status.

Track Overtime Hours

Accurately track overtime hours worked by non-exempt employees. Implement a system for employees to report overtime hours, such as using timesheets or electronic timekeeping systems. Ensure that overtime pay is calculated and paid correctly at the appropriate rate.

Comply with Spread Pay Requirements

Employers must pay a spread premium to non-exempt employees who work more than 10 hours in a workday. Understand the spread pay requirements and ensure you’re compensating employees accordingly.

Provide Meal and Rest Breaks

Employers must provide non-exempt employees with meal and rest breaks. Ensure employees have access to designated break areas and take mandated breaks throughout their workday.

Offer Additional Benefits

Consider offering additional benefits beyond the minimum wage requirements, such as vacation leave, sick leave, and health insurance. These benefits can help attract and retain top talent and enhance employee morale.

How Factorial Can Help You Comply With New York Wage Laws

Ensuring compliance with New York wage laws is crucial for employers to avoid potential penalties and legal disputes. Factorial, a comprehensive HR software solution, can help you navigate the complexities of New York’s wage laws and streamline your payroll processes to maintain compliance.

• Automated Payroll Calculations. Firstly, Factorial’s automated payroll system eliminates manual calculations, reducing the risk of errors and ensuring accurate compensation for all employees. It automatically factors in New York minimum wage requirements, overtime pay (time and a half), holiday pay, and other relevant regulations to ensure compliance with New York wage laws.
• Real-Time Overtime Tracking. Secondly, Factorial’s time tracking feature enables real-time monitoring of overtime hours worked by non-exempt employees. This allows you to identify and address any overtime issues promptly, ensuring compliance with New York’s overtime pay regulations.
• Automated Spread Pay Calculations. Thirdly, Factorial automatically calculates and applies spread pay premiums for employees working more than 10 hours in a workday.
• Seamless Holiday Pay Management. In addition, Factorial’s payroll system automatically factors in New York state holidays and applies the appropriate holiday pay rules. That way, you can be sure that employees receive the correct compensation for holiday hours worked.
• On-Demand Pay. Moreover, Factorial’s on-demand pay feature allows employees to access their earned wages between pay periods, providing them with financial flexibility and enhancing employee satisfaction.
• Secure Payroll Processing. Factorial employs robust payroll security measures to safeguard sensitive employee data.
• Comprehensive Payroll Reporting. Finally, Factorial generates detailed payroll reports, providing valuable insights into employee compensation, overtime trends, and overall payroll expenses.

By leveraging Factorial’s comprehensive payroll solution, employers can effectively manage payroll, comply with New York wage laws, and ensure that their employees are compensated in line with New York minimum wage rates, fostering a positive and compliant work environment for all.