On April 4, 2016, New York Governor Andrew Cuomo signed a law which will significantly increase the minimum wage in New York State from the current rate of $9, to $15 by the end of 2018 for many businesses in New York City, and to $15 by the end of 2021 for the New York City commuter counties of Nassau, Suffolk and Westchester. The minimum wage for the remainder of the state will reach $12.50 by the end of 2020. In enacting this law, New York joins California as the only two states in the country which have instituted a $15 minimum wage.

The timing and scope of the minimum wage increase varies depending on which county in New York State an employee works, and the size of the business. For instance, for employees in New York City who are employed by a company that has 11 or more employees, the minimum wage will increase to $11 per hour at the end of 2016, $13 at the end of 2017, and $15 per hour at the end of 2018. However, for employees in New York City who are employed by a company with 10 or fewer employees, the minimum wage increases are smaller and are implemented over a longer time period, with the minimum wage rising to $10.50 at the end of 2016, $12 at the end of 2017, $13.50 at the end of 2018, and $15 at the end of 2019.

For employees who work in the New York City commuter counties of Nassau, Suffolk, and Westchester, the minimum wage will increase to $10 at the end of 2016, and then will increase in $1 increments at the end of each year, until the minimum wage reaches $15 at the end of 2021. For workers in the rest of New York State, the minimum wage will increase to $9.70 at the end of 2016, and then will increase in $0.70 increments at the end of each year, until the minimum wage reaches $12.50 at the end of 2020. After 2020, the minimum wage will increase to $15 in increments determined by the state Director of the Division of Budget in consultation with the state Department of Labor.

Finally, the law also contains a “safety valve” provision which provides that, beginning in 2019, the state Director of the Division of Budget will conduct an annual analysis of the economy in each region in the state, and the effect of the minimum wage increases, to determine whether a temporary suspension of the scheduled increases is necessary.

These minimum wage increases will require New York employers to closely monitor their payroll practices to ensure that they properly comport with the new minimum wage requirements and that they properly calculate the overtime pay of their nonexempt employees. Additionally, an employee’s eligibility to receive an extra hour’s pay pursuant to the “spread of hours” rules will be impacted by the changes in minimum wage.