On April 4, 2016, New York Governor Andrew Cuomo signed legislation to phase in an increased minimum wage and guarantee paid family leave to all eligible employees throughout New York State. The legislation was part of the 2016-2017 Executive Budget and represents a significant shift in New York’s employment laws. The increased minimum wage will begin rising as of December 31, 2016, and the paid family leave law will become effective on January 1, 2018.
The legislation sets out a schedule for phasing in wage increases to $15.00 per hour for each region of New York State. This schedule is as follows:
|New York City Large Employers (11 or more employees)||New York City Small Employers (10 or less employees)||Nassau, Suffolk, and Westchester Counties||Remainder of New York State|
|On and after December 31, 2016||$11.00 per hour||$10.50 per hour||$10.00 per hour||$9.70 per hour|
|On and after December 31, 2017||$13.00 per hour||$12.00 per hour||$11.00 per hour||$10.40 per hour|
|On and after December 31, 2018||$15.00 per hour||$13.50 per hour||$12.00 per hour||$11.10 per hour|
|On and after December 31, 2019||$15.00 per hour||$13.00 per hour||$11.80 per hour|
|On and after December 31, 2020||$14.00 per hour||$12.50 per hour|
|On and after December 31, 2021||$15.00 per hour||Published annually by the Commissioner of Labor on each December 31, totaling no more than $15.00 per hour|
Additionally, the legislation addresses the existing Fast Food Wage Order that Governor Cuomo’s administration established through regulatory action. Effective December 31, 2016, under the new minimum wage law, cash wages for food service workers receiving tips shall be at least two-thirds of the minimum wage rate in effect for the region. Further, although Governor Cuomo is now prohibited from using regulatory wage boards to implement a higher minimum wage, the New York State Department of Labor is authorized to modify the existing Fast Food Wage Order to conform with the new minimum wage schedule.
Paid Family Leave
Effective January 1, 2018, New York’s paid family leave law will require all private employers with at least one employee to provide significant paid leave and other benefits. Arguably, New York’s impending paid family leave law is as expansive—if not more expansive—than any similar paid leave law in the country.
To be eligible for paid leave, full-time employees must be employed for 26 or more consecutive weeks for the employer, and part-time employees must be employed for 175 or more days for the employer. Eligible leave activities include, among other things, caring for a serious health condition of the employee or his or her family member (defined as a child, parent, grandparent, spouse, or domestic partner), providing care for the birth or adoption of a child, bonding with a new child up to 12 months following birth or adoption, or a qualified military exigency as defined by the federal Family and Medical Leave Act.
Under the new law, paid leave benefits will phase in as follows:
- As of January 1, 2018, eligible employees will receive up to 8 weeks of leave at 50 percent of the employee’s average weekly wage, to a maximum of 50 percent of the state’s average weekly wage.
- As of January 1, 2019, eligible employees will receive up to 10 weeks of leave at 55 percent of the employee’s average weekly wage, to a maximum of 55 percent of the state’s average weekly wage.
- As of January 1, 2020, eligible employees will receive up to 10 weeks of leave at 60 percent of the employee’s average weekly wage, to a maximum of 60 percent of the state’s average weekly wage.
- As of January 1, 2021 and thereafter, eligible employees will receive up to 12 weeks of leave at 67 percent of the employee’s average weekly wage, to a maximum of 67 percent of the state’s average weekly wage.
Notably, the Superintendent of the New York State Department of Financial Services has the power to delay these increases if such increases would have a negative impact on New York’s economy. The superintendent also has regulatory authority to implement the new law, including the power to determine the maximum increases based on the state’s average weekly wages.
In addition, the paid family leave law requires employers to restore an employee who takes leave to the same or a comparable position without losing the benefits he or she would have accrued if he or she had not taken leave. Moreover, employers must continue providing health coverage as if the employee were not out on leave.
The law states that, when practicable, employees should provide 30 days’ notice of their intent to take paid leave. An employer may offer an employee who has unused vacation and/or personal leave to choose whether to charge all or part of the family leave time to this unused allotment of vacation and/or personal time and receive his or her full salary, or to not charge the benefit time and receive paid leave. An employee may not collect benefits for disability and paid family leave concurrently. Additionally, employees who are simultaneously eligible for disability benefits and paid family leave benefits may only receive a combined amount of 26 weeks of disability benefits and paid family leave benefits in a 52 consecutive calendar week period.
According to public statements from Governor Cuomo’s office, the paid leave law is to be funded through employee payroll deductions, such that the paid leave will not cost employers. Indeed, employers are authorized to deduct contributions from each employee’s pay toward a leave benefit fund. However, this authority is not absolute. As written, the Superintendent is authorized to set the maximum employee contribution and will have some flexibility in doing so. Moreover, the law does contain some caps on employee’s annual contribution for leave, including that it may not exceed the employee’s per capita share of the actual annual premium charged for the same year. Employers will therefore need to carefully monitor the Superintendent’s regulations each year to determine the rates of paid leave for their employees.
Employers may face significant penalties if they fail to comply with the paid family leave law, as employers are subject to the same penalties that exist for failure to pay disability benefits under New York law. Specifically, employers that fail to comply with the paid family leave law within 10 days of becoming covered may be guilty of a misdemeanor and, upon conviction, would be subject to fines ranging from $100.00 to $2,500.00, in addition to any other penalties under the law. Employers also are subject to further penalties equal to or less than one-half of a percent of his or her weekly payroll for the period of such failure to pay, and a further sum of not more than $500.00, which shall be paid into a benefit fund.
New York employers should begin reviewing their payroll and leave practices now to ensure compliance with the upcoming minimum wage and paid sick leave laws. We will continue monitoring both laws, including any regulatory guidance or clarification.