On Friday, April 1, as part of its 2016-2017 budget, the New York State Legislature passed laws mandating gradual increases in New York's minimum wage rate and, for the first time, requiring paid family leave for New York workers. These changes will have pervasive effects on the costs, obligations, and operations of New York employers for years to come.
Minimum Wage Increase
Amending Section 652 of the New York Labor Law, the minimum wage increases vary by geographic location. Specifically:
New York City
Business with Eleven or More Employees: Effective December 31, 2016, businesses with eleven (11) or more employees in New York City will be required to pay their employees no less than $11.00 per hour, an increase of $2.00 per hour over the current minimum wage. Effective December 31, 2017, the minimum wage will increase by another $2.00, to $13.00 per hour. Finally, effective December 31, 2018, the minimum wage in New York City will become $15.00 per hour.
Business with Fewer Than Eleven Employees: Effective December 31, 2016, the minimum wage for employees of businesses with fewer than eleven (11) employees in New York City will increase to $10.50 per hour. Each subsequent December 31, the minimum wage will then increase by $1.50 per hour. Effective December 31, 2019, the minimum wage for businesses with fewer than eleven employees will increase to $15.00 per hour.
Westchester, Nassau and Suffolk Counties
Employers on Long Island and in Westchester County must increase their hourly wage rates to a minimum of $15.00 per hour over the next six (6) years. Specifically, the first increase will raise the minimum hourly wage to $10.00, effective December 31, 2016. This increase will be followed by annual $1.00-per-hour increases until the minimum wage reaches $15.00 per hour, effective December 31, 2021.
North of Westchester
Pursuant to the new legislation, employers elsewhere in New York State will also be required to increase the minimum wage. For such employers, the minimum wage will rise to $9.70 by December 31, 2016, and then rise by $.70 per year until reaching a minimum rate of $12.50 per hour at the end of 2020. After that point, the minimum wage rate for upstate employers may continue to rise up to a maximum of $15.00 per hour pursuant to an indexing schedule set by the Division of Budget and Department of Labor.
Employers Governed by New York Home Care Wage Parity Law
For employers governed by New York's Home Care Wage Parity Law, it is important to note that the newly-passed minimum wage increases supplement, rather than replace, the required compensation levels under the Home Care Wage Parity Law. Specifically, the Home Care Wage Parity Law currently requires that home care aides in New York City receive at least $14.09 in total compensation per hour, with at least $10.00 of this $14.09 being paid as regular "monetary" wages. The remaining $4.09 may be satisfied through additional wages and benefits.
Under the new minimum wage law, however, the regular cash wage portion of a home care aide's compensation must be either $10.00 or the current minimum wage rate, whichever is greater. The additional wage/benefit portion then remains at $4.09, even if the cash wage portion rises above $10.00 per hour.
Ultimately, while the amendments specify that, beginning in 2019, the State will conduct a review of the impact of the newly-adopted increases to determine whether to continue or suspend them, the scheduled increases will undoubtedly have a profound effect on New York employers.
Paid Family Leave Benefits Law
Building on a burgeoning national trend, beginning in 2018, certain New York employees will become eligible to receive twelve (12) weeks of paid leave time per year. Specifically, commencing January 1, 2018, New York employees will become eligible for up to eight (8) weeks of paid family leave per year, paid at fifty percent (50%) of their annual wage rate, up to a maximum of one-half the State's average weekly wage. (The "average weekly wage" is calculated and then published by the New York State Department of Labor's Research and Statistics Division on an annual basis.) In 2019 and 2020, this leave allotment will increase to up to ten (10) weeks of paid family leave, and as of January 1, 2021, employees will receive up to twelve (12) weeks of paid family leave, paid at two-thirds of their annual wage rate, up to sixty-seven percent (67%) of the State's average weekly wage. The funding for these paid leave entitlements will come from deductions from employees' paychecks; no employer contribution is planned.
Unlike the federal Family and Medical Leave Act, which provides for twelve (12) weeks of unpaid leave for certain eligible employees of businesses with fifty or more employees, New York's paid family leave will apply to all full-time and part-time employees who have been employed by their employers for at least twenty-six (26) weeks. The law will apply to all employers, regardless of how many (or how few) employees they may have.
Pursuant to New York's law, eligible employees may take leave in order to: (1) bond with newborns and adopted or foster children during the first twelve months after birth or placement; (2) care for a family member with a serious health condition; or (3) deal with the active military service of a spouse, domestic partner, child, or parent. For purposes of the law, a "serious health condition" is defined as an illness, injury, impairment, or physical or mental condition that involves inpatient care, continuing treatment, or continuing supervision by a healthcare provider.
Employees who avail themselves of New York's Paid Family Leave Law will be entitled to return to work in the same positions in which they worked prior to the commencement of the leave, or a comparable position with comparable benefits, pay, and other terms and conditions of employment. Employers must continue employees' health benefit coverage during the period of leave.
New York's Paid Family Leave Law represents a marked departure from past practice – a departure that employers must account and plan for, including the creation (or revision) of paid leave policies that comport with New York's new laws.
If you have questions about navigating these major changes, please feel free to contact Brian Turoff, Allison Gotfried, David Katz, or another member of Venable's national Labor and Employment team.