NYS Minimum Wage & Overtime Salary Thresholds

Federal Rate

Currently, the federal minimum wage is $7.25 per hour, set and enforced by the United States Department of Labor. Of course, the minimum wage rate in New York State has long been higher than the federal level.

New York State Rate(s)

For employers in most of New York State, the minimum wage at the time of this update (January 2024) is $15 per hour.

Employers in New York City, Nassau, Suffolk and Westchester Counties

The minimum wage in these jurisdictions is $16.00 per hour, with a 50-cent increase scheduled each year in 2025 and 2026.

Employers in all other New York State counties

The statewide minimum wage is $15 per hour, with a $.50 increase scheduled each year in 2025 and 2026. This applies to employees outside of New York City and Nassau, Suffolk, and Westchester Counties, except for fast-food employees. 

Employers of fast-food workers

Adding another wrinkle to these statewide minimum wage increases is the separate fast-food worker minimum wage schedule.

Effective December 31, 2018, all fast-food workers in New York City must be paid a minimum wage of $15.00 per hour. That same rate for fast-food workers will be rolled out to the rest of the state a few years later, effective July 1, 2021. 

The table below provides a simple, yet comprehensive review of the incremental increases in the minimum wage for all New York State employers. You'll notice the distinction between both large and small NYC employers, employers in Nassau, Suffolk and Westchester Counties, as well as employers throughout the rest of New York State.

*Starting January 1, 2027, the state minimum wage rates will (1) be set annually by the New York State Department of Labor (NYS DOL) and (2) be published no later than October 1 of each year, with the new rate to take effect on January 1 of the following year. 

What does this mean for employers?

As opposed to the overtime salary threshold increases (examined next) which are more complex in nature, the upcoming increases in the minimum wage present a much simpler proposition for employers in New York State. Employers must know which category they fall into and understand how their minimum wage rate will increase in the upcoming years. Beyond that, it's just a matter of planning for the increases and how they may impact cash flow, hiring and other administrative duties.

Federal Standards

Currently, according to the FLSA, the federal overtime salary threshold is $23,660 annually, calculating to $455 per week. That means that any white-collar, salaried employees earning under $455 per week must be paid overtime wages for any hours worked over 40 in a given week. Back in 2016, a proposal was floated to more than double this threshold to an annual salary of $47,476, but that was struck down by a federal judge in Texas weeks before the changes were set to take effect.

New York State Standards

Shortly after the changes to the FLSA were struck down, New York State legislature introduced increases to its own overtime salary thresholds. Unlike the proposed FLSA changes, which were set to be implemented across the board and all at once, the increases in New York State are incremental and vary based on where the employer is located - and in the case of employers in New York City, the number of employees as well.

Employers in New York City

NYC employers will see their overtime salary threshold increase to $1,125 per week, which calculates to an annual salary of $58,500, with the only distinction being between "small" and "large" employers. Businesses with 11 employees or more are considered large employers and will see their overtime salary threshold increase to $1,125 per week by December 31, 2019. Businesses with fewer than 11 employees are considered small employers and won't see their overtime salary threshold increase to the maximum amount of $1,125 per week until December 31, 2019.

Employers in Nassau, Suffolk and Westchester counties

Like employers in New York City, businesses in Westchester County and Long Island will also see their overtime salary threshold increase to $1,125 per week ($58,500 annually), but this will happen much more gradually. The overtime salary threshold will increase to $900, $975 and $1,050 each year before it finally increases to the maximum threshold of $1,125 on December 31, 2021.

Employers in all other New York State counties

As is the case with many other labor laws, New York State counties outside of the New York City metro area will see different standards when it comes to the overtime salary threshold increases. Employers in the remainder of the state will see gradual, incremental increases which finalize at a maximum of $937.50 per week (or an annual salary of $48,750), which will take effect on December 31, 2020.

The table below provides a simple, yet comprehensive review of the incremental increases in the overtime salary threshold for all New York State employers. You'll notice the distinction between both large and small NYC employers, employers in Nassau, Suffolk and Westchester Counties, as well as employers throughout the rest of New York State.

What does this mean for employers?

Many employers can look at the table above and quickly notice they're currently employing white-collar, salaried workers at a wage that's below what their overtime salary threshold is scheduled to increase to. 

Let's try an example... You're an advertising agency in Buffalo. Last summer you hired a junior copywriter out of college; let's call her Anna. Anna's salary is $40,000 per year, which calculates to $769.23 per week. Anna is currently a salaried employee, and she is exempt. Right now, everything works.

However, on December 31, 2018, the overtime salary threshold will increase to $832 per week - $62.77 per week more than Anna's current weekly wages. That means, according to the New York State Department of Labor because her wages fall below the threshold, you're required to pay Anna overtime (1.5 times her hourly wage) for any hours worked over 40 in a given week. You also know that Anna probably works between 45 and 50 hours a week. For the purpose of this example, we'll take the average and assume Anna works 47.5 hours per week. What are your options?

Option 1: Have Anna track her hours. Don't allow her to work more than 40 hours per week. 

This could seem like the simplest fix, but at best this still requires implementing a new timekeeping process. Usually, the most effective way to accomplish that is to adopt a workplace timekeeping system, allowing Anna to punch in and out. At worst, this could have major implications for your business if Anna's sudden reduction in hours makes it harder to complete projects for clients and has an overall negative impact on productivity.

Option 2: Transition Anna to hourly and pay her overtime. 

At Anna's wage of $769.23 per week, you're currently paying her $19.23 per hour. We calculate that simply by dividing her weekly wage by 40. (However, since Anna is actually working 47.5 hours per week, practically her hourly pay rate is $16.19 per hour. This is fine, as long as the calculated hourly rate remains below minimum wage.) At the standard overtime rate of 1.5 times the normal hourly rate, Anna's overtime pay rate calculates to $28.85 per hour. Assuming Anna continues to work 47.5 hours per week, that means you should expect to pay Anna an additional 7.5 hours per week at her overtime rate, bringing her average overtime pay to $216.35 per week. When you add that to her currently weekly (salaried) wage of $769.23 per week, suddenly you're paying Anna $985.58 per week. That calculates to $51,250 annually, so you've just given Anna a raise of $11,250 annually, more than 25%.

Option 3: Simply raise Anna's salary above the new overtime salary threshold. 

When the overtime salary threshold in Buffalo (located in Erie County) increases from $780 per week to $832 per week on December 31, 2018, you could simply increase her weekly wage above the threshold, to $833 per week. This would give Anna a raise of $63.77 per week and $3,316.04 annually, bringing her annual salary up to $43,316.04. This would represent a fairly sizeable raise of about 8.2%, but it does present some upside. Not only is it less costly than Option 2, but it would also allow you to keep Anna as an exempt employee on salary, and prevent you from having to have Anna track her time and either cap her weekly hours at 40 and/or pay substantial overtime wages.

Review

In Anna's case, most employers are likely to choose option 3. But Anna is just one example. Options 1 and 2 can be more favorable for different employees with different circumstances. How much you're currently paying them, how many hours they're actually working and their likelihood to adopt a new process like tracking their time without much resistance all play into the decisions that employers must make. And this is just one example. The complexity of adjusting for the new overtime salary threshold increases is compounded when employers need to take several employees into consideration. Regardless, there are always solutions. And whether those solutions involve pay increases, adjustments in employee classifications, and/or installing new timekeeping systems, Complete Payroll has the chops to help you get it done in the best way possible for your business.

Over the last 26+ years, Complete Payroll has helped thousands of employers pay millions of employees properly and lawfully. So all you have to do is focus on what you do best. To learn more about our payroll processing services and to request a price quote or software demo, simply click the button below.