Back in May, New York’s Governor Kathy Hochul signed budget legislation increasing the NY minimum wage beginning January 1, 2024, and continuing through 2026. Further, as part of the legislation, beginning in 2027, and each year thereafter, increases to the minimum wage will be indexed based on inflation by the U.S. Department of Labor consumer price index.
Below please find more information on the minimum wage increases and other considerations for employers.
Minimum Wage Increases
2024-2026
The minimum hourly wage rate for New York City, Westchester, Long Island, and the rest of New York State will increase annually for 2024 to 2026 as follows:
For NYC, Westchester, and Long Island:
- 2024 - $16.00
- 2025 - $16.50
- 2026 - $17.00
Rest of New York State:
- 2024 - $15.00
- 2025 - $16.50
- 2026 - $17.00
2027 and Beyond
New York’s minimum wage for all areas will be determined by the U.S. Department of Labor Consumer Price Index for Urban Wage Earners and Clerical Workers for the Northeast Region. The minimum wage will be published by the New York Department of Labor (NYDOL) October 1 each year for the rate to take effect that coming January 1 of the following year. However, there will be no increase for a given year if the inflation index is negative; the state’s unemployment rate increases by half a percentage point from its low during the preceding year or total non-farm state employees decreases over the last six months.
Salary Threshold for Exempt Employees and Other Applicable Rates
The budget legislation, notably, does not set increases for other applicable rates like the salary threshold for employees exempt under the executive and administrative exemptions (who must be paid on a salary basis to maintain their exemption). However, the law does provide that the rates set in the applicable Wage Orders are to increase at the same proportion as the applicable minimum wage increase. While the NYDOL has not published increases for 2024, historically, the threshold has been 75 times the hourly minimum wage per week. If those numbers hold true, the salary threshold for NYC, Westchester, and Long Island would increase from $1,125 weekly (or $58,500 annually) to $1,200 weekly (or $62,400 annually) in 2024, and for the remainder of New York State, the threshold will increase from $1,064.25 weekly (or $55,341 annually) to $1,124 weekly (or $58,500 annually) in 2024.
We do not yet know the changes that the NYDOL will make to the tip credit for food service employees.
NYS Labor Law Exclusion
The New York Labor Law provides an exclusion to many of its wage theft provisions (pay frequency, wage supplements, etc.) for employees employed as executive, administrative, or professional employees who meet a certain earnings requirement. Employers should keep an eye on a bill that just passed the NY Assembly (Bill S5572) that would increase the earning requirement to be excluded from coverage from $900 to $1,300 per week. This would allow a new crop of employees to bring claims for wage theft that were previously excluded.
Employers' Next Steps
Those employers who employ minimum wage employees should be prepared to comply with the yearly increases, update their payroll accordingly, and determine whether they are required to provide new Notices of Pay Rates to affected employees.
Employers should also be prepared to determine whether they are required to increase base salaries for employees classified as exempt to comply with the upcoming increase in the salary threshold for exempt employees or whether to reclassify such employees as non-exempt.
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