As New York employers prepare for the December 1, 2016, implementation of the revised Fair Labor Standards Act (FLSA) overtime regulations, they should be aware of proposed regulations by the New York State Department of Labor (NYSDOL) relating to the New York State Labor Law. On October 19, 2016, the NYSDOL submitted a proposal to amend various provisions of the existing minimum wage orders. Notably, under the proposal, the salary levels for some executive and administrative exempt employees would likely exceed the FLSA levels starting in 2018. In addition, the proposed amendments would significantly alter the permitted tip credits for New York hospitality employers (i.e., restaurants and hotels).

The public comments period for the proposed amendments will be open until December 3, 2016. Based upon proposed amendments in recent years, it is likely that the proposal will be adopted at some time prior to December 31, 2016—although the proposed amendments to the orders may be altered or withdrawn.

New York State Salary Threshold for Overtime Exempt Employees

Under the NYSDOL’s proposal, the New York state salary requirements for the executive and administrative exemptions would increase significantly from the current $675 per week requirement. As with the increased minimum wages that will begin on December 31, 2016, the increased salary thresholds for the New York executive and administrative exemptions are set forth in a schedule of changes based upon the employer’s location and size:

New York City

Large Employers

(11 or more employees)

New York City

Small Employers

(10 or fewer employees)

Nassau, Suffolk, and Westchester Counties

Remainder of New York State

On and After December 31, 2016

$825.00 per week

$787.50 per week

$750.00 per week

$727.50 per week

On and After December 31, 2017

$975.00 per week

$900.00 per week

$825.00 per week

$780.00 per week

On or After December 31, 2018

$1,125.00 per week

$1,012.50 per week

$900.00 per week

$832.00 per week

On or After December 31, 2019

$1,125.00 per week

$975.00 per week

$885.00 per week

On or After December 31, 2020

$1,050.00 per week

$937.50 per week

On or After December 31, 2021

$1,125.00 per week

Of course, on December 1, 2016, the federal minimum salary level for exempt employees will increase from $455 per week ($23,660 for a full-year worker) to $913 per week ($47,476 for a full-year worker). Notably, the proposed orders adopt the federal rate if it is higher than the applicable New York state rate. If the proposed orders are adopted, the New York minimum salary level for the executive and administrative exemptions would be higher than the federal levels as of December 31, 2017 for New York City employers with 11 or more employees. Thereafter, whether each of the New York thresholds exceeds the federal thresholds would depend upon FLSA salary level increases (which will be based on the 40th percentile of full-time salaried workers in the census region with the lowest salary level). Therefore, New York employers may want to carefully monitor the thresholds on an annual basis beginning in 2018.

Tip Credits and Other Deductions

The proposed revisions to the orders would also significantly alter the permitted tip credits and other deductions for hospitality industry and other employers. In addition to the schedules detailed below, the proposed amended orders also contain similar schedules for tip and other credits at resort hotels and all-year hotels. The proposed amendments would also change the permitted meal and lodging credits by restaurants and all-year hotels. For all tip credits and other deductions, New York employers are encouraged to refer to the proposed regulations.

A. Tip Credits for Hospitality Employers

The NYSDOL’s proposal significantly adjusts the amounts and types of tip credits that hospitality industry employers may deduct from an employee’s wages. Under the proposal, covered employees would need to receive at least the applicable hourly “Cash Wage” (i.e., wages paid excluding tips), and tip credits could not exceed the hourly “Credit” rate (as indicated in the schedule below), provided that (i) the weekly average of tips would need to meet the hourly “Tip Threshold” rate and (ii) the actual total of tips received plus wages were equal to or exceeded the basic minimum hourly rate in place at the time.

Table 1: Service Employees (Other Than at Resort Hotels)

New York City

Large Employers

(11 or more employees)

New York City

Small Employers

(10 or fewer employees)

Nassau, Suffolk, and Westchester Counties

Remainder of New York State

On and After December 31, 2016

$9.15 Cash Wage, $1.85 Credit, $2.40 Tip Threshold

$8.75 Cash Wage, $1.75 Credit, $2.30 Tip Threshold

$8.35 Cash Wage, $1.65 Credit, $2.15 Tip Threshold

$8.10 Cash Wage, $1.60 Credit, $2.10 Tip Threshold

On and After December 31, 2017

$10.85 Cash Wage, $2.15 Credit, $2.80 Tip Threshold

$10.00 Cash Wage, $2.00 Credit, $2.60 Tip Threshold

$9.15 Cash Wage, $1.85 Credit, $2.40 Tip Threshold

$8.65 Cash Wage, $1.75 Credit, $2.25 Tip Threshold

On or After December 31, 2018

$12.50 Cash Wage, $2.50 Credit, $3.25 Tip Threshold

$11.25 Cash Wage, $2.25 Credit, $2.95 Tip Threshold

$10.00 Cash Wage, $2.00 Credit, $2.60 Tip Threshold

$9.25 Cash Wage, $1.85 Credit, $2.40 Tip Threshold

On or After December 31, 2019

$12.50 Cash Wage, $2.50 Credit, $3.25 Tip Threshold

$10.85 Cash Wage, $2.15 Credit, $2.80 Tip Threshold

$9.85 Cash Wage, $1.95 Credit, $2.55 Tip Threshold

On or After December 31, 2020

$11.65 Cash Wage, $2.35 Credit, $3.05 Tip Threshold

$10.40 Cash Wage, $2.10 Credit, $2.70 Tip Threshold

On or After December 31, 2021

$12.50 Cash Wage, $2.50 Credit, $3.25 Tip Threshold

Table 2: Food Service Workers (Other Than Fast Food Employees)

New York City

Large Employers

(11 or more employees)

New York City

Small Employers

(10 or fewer employees)

Nassau, Suffolk, and Westchester Counties

Remainder of New York State

On and After December 31, 2016

$7.50 Cash Wage, $3.50 Credit, $11.00 Total

$7.50 Cash Wage, $3.00 Credit, $10.50 Total

$7.50 Cash Wage, $2.50 Credit, $10.00 Total

$7.50 Cash Wage, $2.20 Credit, $9.70 Total

On and After December 31, 2017

$8.65 Cash Wage, $4.35 Credit, $13.00 Total

$8.00 Cash Wage, $4.00 Credit, $12.00 Total

$7.50 Cash Wage, $3.50 Credit, $11.00 Total

$7.50 Cash Wage, $2.90 Credit, $10.40 Total

On or After December 31, 2018

$10.00 Cash Wage, $5.00 Credit, $15.00 Total

$9.00 Cash Wage, $4.50 Credit, $13.50 Total

$8.00 Cash Wage, $4.00 Credit, $12.00 Total

$7.50 Cash Wage, $3.60 Credit, $11.10 Total

On or After December 31, 2019

$10.00 Cash Wage, $5.00 Credit, $15.00 Total

$8.65 Cash Wage, $4.35 Credit, $13.00 Total

$7.85 Cash Wage, $3.95 Credit, $11.80 Total

On or After December 31, 2020

$9.35 Cash Wage, $4.65 Credit, $14.00 Total

$8.35 Cash Wage, $4.15 Credit, $12.50 Total

On or After December 31, 2021

$10.00 Cash Wage, $5.00 Credit, $15.00 Total

B. Uniform Maintenance Pay

The proposed orders also alter the allowable uniform maintenance pay, which is required if a New York employer does not maintain required uniforms for its employees. If the orders are adopted, the applicable rates would be based on the number of hours worked:

(2) Employees working more than 20 hours but less than 30 hours per week would be paid at the “Medium” rate.

(3) Employees working less than or equal to 20 hours per week would be paid at the “Low” rate.

Table 3: Uniform Maintenance Credits

New York City

Large Employers

(11 or more employees)

New York City

Small Employers

(10 or fewer employees)

Nassau, Suffolk, and Westchester Counties

Remainder of New York State

On and After December 31, 2016

$13.70 High, $10.80 Medium, $6.55 Low

$13.05 High, $10.35 Medium, $6.25 Low

$12.45 High, $9.85 Medium, $5.95 Low

$12.05 High, $9.55 Medium, $5.75 Low

On and After December 31, 2017

$16.20 High, $12.80 Medium, $7.75 Low

$14.95 High, $11.80 Medium, $7.15 Low

$13.70 High, $10.80 Medium, $6.55 Low

$12.95 High, $10.25 Medium, $6.20 Low

On or After December 31, 2018

$18.65 High, $14.75 Medium, $8.90 Low

$16.80 High, $13.30 Medium, $8.05 Low

$14.95 High, $11.80 Medium, $7.15 Low

$13.80 High, $10.90 Medium, $6.60 Low

On or After December 31, 2019

$18.65 High, $14.75 Medium, $8.90 Low

$16.20 High, $12.80 Medium, $7.75 Low

$14.70 High, $11.60 Medium, $7.00 Low

On or After December 31, 2020

$17.40 High, $13.75 Medium, $8.30 Low

$15.55 High, $12.30 Medium, $7.45 Low

On or After December 31, 2021

$18.65 High, $14.75 Medium, $8.90 Low