The New York Department of Labor (NYDOL), on December 11, formally adopted amended regulations that modify important provisions of the New York Labor Law. Most notably, these modified regulations (i) implement increases in the minimum wage rate, (ii) increase the minimum weekly salary requirement for some of the state’s overtime exemptions, and (iii) increase tip credits and unit rates for employees in the building service and hospitality industries. Employers must update their current pay practices to comply with these new rates and changes by the end of 2013 and also must plan for the 2015 and 2016 increases.

Minimum Wage Rate

On March 29, 2013, Governor Andrew Cuomo signed into law incremental increases in the state’s minimum wage rate for the next three years. These increases, which were implemented by the NYDOL in its December 11 amended regulations, raise the current minimum wage rate of $7.25 per hour to the following rates:

• $8.00 per hour, effective December 31, 2013
• $8.75 per hour, effective December 31, 2014
• $9.00 per hour, effective December 31, 2015

Minimum Salary Requirements for Bona Fide Executive, Administrative, and Professional Employees

The NYDOL’s amended regulations also made corresponding increases to other important wage regulations, including the minimum weekly salary that must be paid, on a guaranteed basis, to an employee who is classified as “exempt” under the bona fide executive, administrative, and professional employee exemptions. This rate was raised from the current rate of $543.75 per week, inclusive of eligible wage allowances (i.e., board, lodging, facilities, etc.) to the following rates:

• $600.00 per week, effective December 31, 2013
• $656.25 per week, effective December 31, 2014
• $675.00 per week, effective December 31, 2015

Tip Credits for Employees in the Hospitality Industry

The amended regulations also affect tipped employees in the hospitality industry. The amount of credit that an employer may take toward the basic minimum wage that a food service employee receives for tips (i.e., the amount that an employer may pay the employee below the minimum wage to account for the employee’s tips received) will increase from the current maximum rate of $2.25 per hour to the following rates:

• $3.00 per hour, effective December 31, 2013
• $3.75 per hour, effective December 31, 2014
• $4.00 per hour, effective December 31, 2015

For other service employees in restaurants and hotels (excluding those who work in resort hotels), these “tip credits” will increase from the current maximum rate of $1.60 per hour to the following rates:

• $2.35 per hour, effective December 31, 2013
• $3.10 per hour, effective December 31, 2014
• $3.35 per hour, effective December 31, 2015

These changes coincide with the increases in the minimum wage rates; accordingly, the total amount of tips received by an employee plus his or her wages must equal or exceed the then-applicable minimum wage.

Service employees in resort hotels also must receive an hourly wage of at least $4.90 if the weekly average of their tips equals or exceeds the following:

• $4.50 per hour, effective December 31, 2013
• $4.90 per hour, effective December 31, 2014
• $5.05 per hour, effective December 31, 2015

Other changes that will become effective on December 31, 2013 include increases to uniform maintenance pay and to meal and lodging credits.

Wages for Building Service Industry Employees

Finally, the amended regulations affect employees in the building service industry. The minimum rate that janitors in residential buildings must be paid per unit per week will increase from the current rate of $4.85 per unit per week to the following rates:

• $5.35 per unit per week, effective December 31, 2013
• $5.85 per unit per week, effective December 31, 2014
• $6.00 per unit per week, effective December 31, 2015

Also, effective December 31, 2013, janitors who are paid at least $340.25 per week will be excluded from these unit rate requirements. The pay threshold for this exclusion will continue to increase as follows:

• $372.15 per week, effective December 31, 2014
• $382.80 per week, effective December 31, 2015

All other employees working in residential buildings will be subject to the new minimum wage rate of $8.00 per hour for 2014 and the scheduled increases for 2015 and 2016. Other changes affecting building service industry employees include increases to utility allowances and reimbursements for required uniforms.

Implications

The newly adopted regulations have important implications for employers. New York employers should take care to ensure that their wages for nonexempt employees meet or exceed the new effective minimum wage rates and that their salaries for overtime-exempt-classified employees meet or exceed the new effective minimum weekly salary by December 31, 2013. In addition to ensuring that employees’ pay meets the above requirements by December 31, 2013, employers should bear in mind New York’s “spread of hours” rules, which entitle certain workers to an extra hour’s wages at the minimum wage rate for workdays spanning 10 hours or more, regardless of breaks or shift splits. An increase in the minimum wage may mean that more employees qualify to receive these “spread of hours” payments.