Governor Kathy Hochul signed into law in May increases to New York’s minimum wage that will occur over the next few years. The first increase is set to take effect on January 1, 2024. Additional increases to the minimum wage are also set for January 1 of 2025 and 2026. Employers must therefore work with their payroll providers to ensure that their rate of pay forms and paystubs are updated and comply with the upcoming minimum wage increase prior to the New Year or risk substantial legal liability.

This announcement left many employers wondering how these scheduled increases would affect the tip credit. Fortunately, on October 4, 2023 the New York State Department of Labor (NY DOL) issued proposed regulations (Proposed Regulations) that, if adopted, will adjust the tip credit for food service workers so that the cash wage remains at only 2/3 of the soon-to-be-increased minimum wage.

The Proposed Regulations also address, amongst other things, changes to meal credits, uniform allowances, and other payments and allowances required or permitted under New York law, also as a result of the impending minimum wage increase.

Employers should understand that these changes are not yet final. While it is very likely that these will be the final numbers, employers should look for a final announcement by the NY DOL later this fall. Once such an announcement is made, employers must ensure that they comply with the law.

Proposed Changes to the Tip Credit – Food Service Workers

The Proposed Regulations address increases to the tip credit for food service workers that will occur simultaneously with the minimum wage increases. As a reminder, a “food service worker” is any employee, other than a delivery employee, who is primarily engaged in the serving of food or beverages to guests, patrons or customers and who regularly receives tips from such guests, patrons or customers. Such employees typically include servers, bartenders, bussers and runners.

If the Proposed Regulations are adopted, the minimum wage and minimum cash wage for tipped food service workers will increase as follows:

NEW YORK CITY, LONG ISLAND & WESTCHESTER COUNTY

REST OF NEW YORK STATE

Proposed Changes to the Tip Credit – Service Employees

The Proposed Regulations also address increases to the tip credit for service employees, which are employees other than food service workers who customarily receive tips. Service employees may include, but are not limited to, coat check and bathroom attendants. To take a tip credit against the wages of a service employee, that employee must meet the “tip threshold,” which means that the employee’s average weekly tips must meet the minimum amount set forth below.

Employers that have service employees who are covered under the Miscellaneous Industries and Occupations Wage Order are reminded, however, that since January 1, 2021 they cannot take any tip credit against those employees’ wages.

If the Proposed Regulations are adopted, the minimum wage and minimum cash wage for service employees will increase as follows:

NEW YORK CITY, LONG ISLAND & WESTCHESTER COUNTY

REST OF NEW YORK STATE

Proposed Changes to the Meal Credit

Under New York Law, meals furnished by an employer to an employee may be considered part of the employee’s wages. In other words, most employers may lawfully take a “meal credit” against an employee’s wages for each shift that they furnish a meal to the employee.

Employees of certain non-profits, 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. Furthermore, those employers with employees covered by the Minimum Wage Order for Farm Workers will not experience a change in the meal credit. They may continue to take a meal credit of $1.70 against an employee’s wages.

If the Proposed Regulations are adopted, the amount an applicable employer may take against the wages of employees is as follows:

NEW YORK CITY, LONG ISLAND & WESTCHESTER COUNTY

REST OF NEW YORK STATE

“Food Service Employees” and “Service Employees” are defined above. “Non-Service Employees” are any non-exempt employees other than a food service worker or service employee, such as line cooks. Meal credits cannot be taken towards the wages of exempt employees.

*For Non-Service Employees who work in the rest of New York State and who are covered by Miscellaneous Industries and Occupations Wage Order, the meal credit is as follows: (i) January 1, 2024: $5.20 per meal; (ii) January 1, 2025: $5.35 per meal; and (iii) January 1, 2026: $5:50 per meal.

Proposed Changes to the Uniform Allowance

Under New York law, if an employer requires an employee to wear a uniform, the employer can either (i) launder and maintain the uniform itself; or (ii) pay the employee an allowance, also known as “Uniform Maintenance Pay,” on a weekly basis. The amount an employer must pay an employee in 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, chef’s coats and aprons.

Note that employers with employees covered under the Minimum Wage Order for Farm Workers, as well as certain non-profits, are not required to pay any uniform maintenance pay.

If the Proposed Regulations are adopted, then applicable employers can expect to see the following changes to Uniform Maintenance Pay:

NEW YORK CITY, LONG ISLAND & WESTCHESTER COUNTY

REST OF NEW YORK STATE

Proposed Changes to the Salary Exempt 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, these employees must also be paid a minimum amount per week, depending on the size and location of the employer.

The Proposed Regulations would set the salary threshold to the following amounts:

NEW YORK SALARY THRESHOLD (PER WEEK)

As explained above, the salary threshold is only one part in determining whether an employee is properly categorized as exempt from overtime requirements. These employees must also perform particular duties to also be exempt from overtime, depending on their position.

Takeaway

While these changes are not official, they are very likely to be adopted by the NY DOL.

It is strongly recommended that employers consult with a qualified labor and employment attorney to ensure they are ready. Once approved, employers must ensure that they comply with the increased minimum wage and salary threshold by January 1, 2024. They also must comply with the tip credit, meal credit and uniform maintenance pay, if applicable.

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