Minimum Wage Increases

In 2023, New York State Governor Kathy Hochul signed legislation which would increase the minimum wage rates over a three-year period. 

Effective January 1, 2025, the minimum wage for New York City, Westchester and Long Island will increase to $16.50/hour.  In 2026, it will further increase to $17.00/hour.

For the rest of New York, effective January 1, 2025, the minimum wage will increase to $15.50/hour.  In 2026, it will further increase to $16.00/hour.

Beginning on January 1, 2027, increases to the minimum wage rates will be based on inflation using a three-year average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”).  The State labor commissioner is directed to publish the adjusted minimum wage rate no later than October 1st each year, with the new rates taking effect the following January 1st. 

Overtime Exemption Salary Threshold Increases

New York’s salary basis threshold for employees classified as exempt under the administrative and executive exemptions will also increase.  In New York City, Long Island, and Westchester the threshold increases to $1,237.50 per week or $64,350.00 per year (increased from $1,200.00 per week or $62,400.00 per year).

For the rest of New York state, the threshold will increase to $1,161.65 per week or $60,405.80 per year (increased from $1,124.20 per week or $58,458.40 per year).

Increases to the Tip Credit

The allowable “tip credit” for food service workers and service employees and the minimum cash wage also increased.

Tipped Food Service Workers

A food service worker is defined as any employee who is primarily engaged in the serving of food or beverages to guests, patrons, or customers in the hospitality industry, including but not limited to wait staff, bartenders, captains, and bussing personnel, and who regularly receives tips from such guests, patrons, or customers. The term food service worker does not include delivery workers.

Effective January 1, 2025, in New York City, Westchester and Long Island, the cash wages and tip credits increased for tipped food service workers, as follows: $11.00 cash wage and $5.50 tip credit/hour (increased from $10.65 cash wage and $5.35 tip credit/hour).

In the remainder of the state, the increases are as follows: $10.35 cash wage and $5.15 tip credit/hour (increased from $10.00 cash wage and $5.00 tip credit/hour).

Tipped Service Employees

A service employee is defined as an employee, other than a food service worker or fast food employee, who customarily receives tips.

Effective January 1, 2025, in New York City, Westchester and Long Island, the cash wage and tip credit for service employees increased as follows: $13.75 cash wage and $2.75 tip credit/hour (increased from $13.35 cash wage and $2.65 tip credit/hour).

In the remainder of the state, the increases are: $12.90 cash wage and $2.60 tip credit/hour
(increased from $12.50 cash wage and $2.50 tip credit/hour).

Key Takeaways

Employers should review their pay rates to ensure compliance with the wage and salary threshold increases.  In addition, employer who use third-party payroll vendors, should confirm that the vendors are aware of and complying with the new provisions of the minimum wage and overtime laws. 

Should you have any questions, please contact Ali Law Group.

HRtelligence was created by the team at Ali Law Group, LLC.  Should you have any questions or need assistance, please contact Ali Law Group.

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