Key Points
- Minimum Wage Increase: Effective Jan. 1, 2026, New York’s minimum wage rises to $17/hour for downstate and $16/hour for upstate employees, impacting tip credits and overtime rates.
- Expanded Adjustments: Changes include meal credit amounts, uniform maintenance allowances, and salary thresholds for exempt employees, requiring updates to payroll and compliance practices.
- Annual CPI-Based Increases: Beginning in 2027, minimum wage will adjust annually based on the Consumer Price Index, with mandatory notice from the NY Department of Labor by Oct. 1 each year.
As we approach the start of a new year, New York employers should prepare for several wage-related changes that take effect on Jan. 1, 2026. Along with an increase to the state’s hourly minimum wage rates, there are scheduled changes to the tip credit, meal credit, uniform allowance and salary exemption thresholds.
Minimum Wage Rate Increases
The minimum wage rate in New York will increase to $17.00 per hour for downstate employees and to $16.00 per hour for upstate employees.
The increases to the minimum wage will also impact tip credits and cash wages paid to tipped employees. As a reminder, as defined in the New York Minimum Wage Act, a “food service worker” is any employee primarily engaged in the serving of food or beverages to guests, patrons or customers in the hotel and restaurant industries … who regularly receive tips from such guests, patrons or customers” and who satisfied New York’s 80/20 rule. Accordingly, in New York, the minimum wage and minimum cash wage for tipped food service workers will increase as follows:
New York City, Long Island & Westchester County
Remainder of New York State
If an employer maintains a written tip pool or tip sharing agreement, the above changes must be reflected in those agreements. Employers must revise any written tip pool or tip sharing agreements as well as any handbooks that reflect the prior minimum wage, cash wage, and tip credit to reflect the new rates above.
Beginning in 2027, the minimum wage will increase annually by the three-year moving average of the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Northeast Region. In the event the applicable consumer price index is flat or negative, there will be no change to the minimum wage for that year; there is no mechanism to decrease the minimum wage should there be deflation. Instead, any increase in the minimum wage will be paused when the prior year’s consumer price index is negative or when the state’s unemployment rate increases by 0.5% or more.
In the event of an increase, the New York State Department of Labor is required to post the adjusted rate no later than Oct. 1 of each year, thereby ensuring that employers will have at least three months to prepare for the new minimum wage to take effect (e.g., for 2027, the Department of Labor must publish the new minimum wage no later than Oct. 1, 2026).
Upcoming Changes to the Meal Credit
Under New York law, employers (other than those covered by Building Service Industry Wage Order) who provide meals to employees may lawfully take a “meal credit” against an employee’s wages for each shift that they furnish a meal to the employee.
Most employers may lawfully take a meal credit against an employee’s wages for each shift that they furnish a meal to the employee, provided the meal consists of at least one of the types of food from each of the four of the following groups:
- Fruits or vegetables.
- Grains or potatoes.
- Eggs, meat, fish, poultry, dairy or legumes.
- Tea, coffee, milk or juice.
Employers must keep records of the meals they provide employees and the actual cost of such meals.
Employees of certain nonprofits, as well as those covered by the Building Service Industry Wage Order (such as superintendents of residential buildings), may not have their wages deducted due to any employer-furnished meal.
The amount an applicable employer may take against the wages of employees is as follows:
New York City, Long Island & Westchester County
Remainder of New York State
“Food Service Employees” are defined above. “Service Employees” are any employee other than a food service worker who customarily receives tips. Service employees may include, but are not limited to, coat-check and bathroom attendants. “Non-Service Employees” are any nonexempt employees other than a food service worker or service employee, such as a line cook. Meal credits cannot be taken towards the wages of exempt employees.
Changes to the Uniform Allowance
Under New York law, if an employer requires an employee to wear a uniform, the employer can either launder and maintain the uniform itself, or pay the employee an allowance, also known as “Uniform Maintenance Pay,” on a weekly basis. The amount an employer must pay an employee as Uniform Maintenance Pay depends on the number of hours worked by the employee during the week. A “required uniform” is defined as “clothing required to be worn while working at the request of an employer” that may not be worn as part of an employee’s ordinary wardrobe outside of work. Uniforms may include, but are not limited to, branded apparel, chef’s coats and aprons.
Note that employers with employees covered under the Minimum Wage Order for Farm Workers, as well as certain nonprofits, are not required to pay any uniform maintenance pay.
Employers to which this applies can expect to see the following changes to Uniform Maintenance Pay:
New York City, Long Island & Westchester County
Remainder of New York State
Changes to the Exempt Salary Threshold
Depending on their job duties, certain employees may be exempt from overtime requirements under the law. This typically includes, but is not limited to, executive, managerial and administrative employees. To be exempt from overtime under New York law, these employees must also be paid a minimum amount per week, depending on the size and location of the employer.
The salary threshold for employment exempt status will increase, as set forth below:
New York Salary Exempt Thresholds
Please note, however, an employee’s salary is only one part of determining whether the employee is properly categorized as exempt from overtime requirements. To be exempt, an employer must also satisfy a job duties test. In short, an employer cannot categorize an employee as exempt simply based on their weekly salary.
Practical Implications & Next Steps
It is critical that employers plan for these upcoming changes. Employers are encouraged to work with their payroll team/providers to ensure that their rate of pay forms and pay stubs are compliant with the new rates. Failing to make the necessary changes (including issuing updated Notice of Pay Rate forms to all employees whose pay rates, tip credit or meal credit will be affected — the Department of Labor’s Notice of Pay Rate forms can be found here: Notice of Pay Rate | Department of Labor) poses a substantial risk of legal liability. Further, employers should consult with a qualified labor and employment attorney to ensure they are prepared for these wage-related adjustments, which will take effect on Jan 1, 2026. The failure to make the necessary modifications could subject employers to significant legal liability, including potential class and collective actions.
[View source.]
