On May 3, 2023, New York Governor, Kathy Hochul, signed the state budget legislation which will incrementally increase the state's minimum wage. The increases will maintain the state's tiered approach, whereby New York City, Long Island, and Westchester County will have a higher minimum wage than the rest of the state. Additionally, after incremental increases over the next three years, the minimum wage will be indexed to the consumer price index and will increase with inflation. Specifically, the increases are as follows:

By October 1 of each year, beginning in 2026, the New York Department of Labor must publish the new minimum wage for the upcoming year based on a three-year moving average of the Consumer Price Index for Urban Wage Earners and Clerical Workers in the Northeast region. Importantly, the minimum wage cannot decrease in accordance with this system. Currently, the minimum wage orders, including those that relate to salary exemptions, are unchanged, but the New York Department of Labor will amend them as the minimum wage increases take effect.

Employers should get out ahead of these wage increases by reviewing their headcount and identifying those employees who might be affected. As these increases take effect, businesses should review their budgets and consider whether to re-classify certain employees as being eligible for overtime or raise salaries to properly classify employees as exempt.

Employers throughout New York State should make certain that they understand the implications of these minimum wage increases. 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.