On April 4, 2016, Governor Andrew Cuomo signed legislation in connection with New York’s 2016-2017 budget that will impact employers large and small throughout the State.  In addition to annual increases to the minimum wage that will ultimately reach $15.00 per hour, the legislation also provides for up to 12 weeks of paid family leave for qualifying employees.

Minimum Wage Increases

The timeframe for the increased minimum wages is determined by both an employer’s geographic location and size.  Specifically, wages will increase under the following schedule:

• Employers Within New York City: On December 31, 2016, the minimum wage for “small” employers with 10 or fewer employees will increase to $10.50 per hour, while wages for “large” employers (11 or more employees) will rise to $11.00 per hour.  Small and large NYC employers will see minimum wages rise to $12.00 and $13.00 per hour by December 31, 2017, and then $13.50 and $15.00 per hour by December 31, 2018, respectively.  By December 31, 2019, however, all NYC employees will be entitled to $15.00 per hour in minimum wage.
• Employers in Westchester, Nassau and Suffolk Counties: Employers in these 3 counties will be subject to a $10.00 per hour minimum wage on December 31, 2016.  This amount will increase by $1.00 every year until it reaches the $15.00 threshold on December 31, 2021.
• All Other New York Employers: For employers outside of the noted high-density geographic region in and around NYC, the New York minimum wage will increase to $9.70 per hour on December 31, 2016.  It will then rise by increments of $0.70 every December 31 until the year 2020, by which time the minimum wage will have reached $12.50.  The New York Director of the Division of Budget and the Commissioner of Labor will establish a schedule for annual increases thereafter until the minimum wage reaches $15.00 per hour.

Tipped employees in the hospitality industry will have their minimum wage calculated by the greater of (1) two-thirds of the current minimum wage in their locality (rounded to the nearest $.05), or (2) $7.50.  Employers must ensure that these employees receive tips sufficient to bring their total wages (i.e., wages and tips) to meet or exceed the current minimum wage in effect for non-tipped employees in that geographic location.

Paid Family Leave

The April 4^th legislation also provides up to 12 weeks of paid family leave for eligible New York employees who are employed by “covered” employers (as defined under New York law).  To qualify, employees must have worked at least 26 calendar weeks with their current employer and seek leave for any of the following reasons:

• to provide care for a family member suffering a serious health condition;
• to bond with the employee’s child during the first 12 weeks after birth (or the first 12 weeks after a child is placed with the employee for adoption or foster care); or
• based upon a qualifying exigency under the federal Family and Medical Leave Act as a result of a qualifying family member’s “active duty” status with the United States military.

The amount of paid leave will increase each year starting January 1, 2018, where eligible employees will first be entitled to 8 weeks of paid leave, and ultimately 12 weeks by January 1, 2021.  Over that time, the amount of paid leave benefits will increase as follows:

• January 1, 2018: 8 weeks of paid leave at 50% of the employee’s average weekly wage (capped at 50% of the New York average weekly wage);
• January 1, 2019: 10 weeks of paid leave at 55% of the employee’s average weekly wage (capped at 55% of the New York average weekly wage);
• January 1, 2020: 10 weeks of paid leave at 60% of the employee’s average weekly wage (capped at 60% of the New York average weekly wage); and
• January 1, 2021: 12 weeks of paid leave at 67% of the employee’s average weekly wage (capped at 67% of the New York average weekly wage).

New York employers should begin preparing themselves now for these important changes to the minimum wage and paid family leave laws, including conducting a comprehensive review of their employee handbooks and policies and an internal audit of their compensation structures.  While the minimum wage and paid family leave requirements will take effect gradually over the next few years, New York employers must be ready to adopt them in order to avoid running afoul of their new statutory obligations.