Effective December 31, 2021, employers in certain regions and industries throughout New York State once again saw changes to New York's wage and hour requirements. Below we summarize the new requirements employers must meet regarding increases in minimum wage rates, tip credits for tipped employees in the hospitality industry, and salary basis thresholds for overtime exemptions.
Standard Minimum Wage Rates
The New York State Minimum Wage Act provides for annual increases in the minimum wage rates throughout the State. These increases occur on December 31 of each year and will continue until a $15.00 per hour rate is reached. This year, employers in Nassau, Suffolk, and Westchester counties joined New York City and large fast-food employers throughout the State with a $15.00 per hour minimum wage rate—an increase from the $14.00 per hour rate that went into effect on December 31, 2020. The remainder of employers in New York also saw an increase, although not yet hitting the $15.00 mark, with a move from $12.50 per hour to $13.20 per hour.
Tipped Employees in the Hospitality Industry
New York hospitality employers (i.e., restaurants and hotels) also saw changes in minimum wage rates for two categories of tipped workers—"food service workers" and "service employees." New York's regulations governing the hospitality industry allow employers to satisfy minimum wage requirements for these employees by combining the wages paid by the employer (known as "cash wages") with a credit for tips earned by the employee (known as a "tip credit"). Hospitality employers should be aware of the following increases in minimum cash wages and maximum tip credit amounts.
For hospitality employers in Nassau, Suffolk, and Westchester counties, the minimum cash wages for food service workers increased to $10.00 per hour, with a new tip credit of $5.00. For service employees, the minimum cash wage is now $12.50 per hour, and the tip credit is now $2.50. These rates now match New York City's requirements. The remainder of New York hospitality employers saw an increase to $8.80 per hour for minimum cash wages and $4.40 for the tip credit for food service employees, and $11.00 per hour for minimum cash wages and $2.20 for the tip credit for service employees.
Changes to the minimum wage requirements for non-tipped hospitality workers in these regions follow the changes to the standard minimum wage rates detailed above.
Minimum Salary Thresholds for Overtime Exemptions
Employees are classified as either "exempt" or "non-exempt" for purposes of determining overtime pay eligibility. Two exemptions to New York's overtime requirements are the executive and administrative employee exemptions. To classify an employee as an exempt executive or administrative employee, employers must evaluate whether the employee meets the minimum salary requirement and certain duties test.
In addition to the December 31, 2021 minimum wage increases, the minimum salary level for the executive and administrative exemptions also increased. Now, for employees working in Nassau, Suffolk, or Westchester counties to retain their status as an exempt executive or administrative employee, they must receive a minimum salary of $1,125.00 per week, an increase from $1,050.00, bringing these counties to the same minimum salary threshold for exempt employees working in New York City. For the rest of the State, the minimum salary threshold increased to $990.00 per week, up from $937.50.
New York's professional employee exemption does not contain a minimum salary requirement. While the December 31, 2021 increases do not change this, employers must still satisfy the minimum salary threshold required for most professional employees under the federal Fair Labor Standards Act (FLSA).
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As 2021 wraps up and we prepare for what's to come in 2022, employers throughout New York State should make certain that they understand what these new requirements mean for their business. Employers should closely review their current compensation levels, pay practices, and the exempt statuses of employees and make the necessary adjustments to ensure compliance with these requirements. Employers are encouraged to contact the authors of this article or any other attorney in Venable's Labor and Employment Group with questions regarding changes to employees' hourly wages, salaries, or exempt status.