UPDATE: On May 3, 2023, Governor Hochul signed these changes into law. On October 4, 2023, the state proposed regulations with clarifications to proposed wage rates and salary thresholds. The wage rates and salary thresholds below have been updated to reflect those in the new regulations.

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New York Governor Kathy Hochul announced an agreement with legislative leaders for the FY2024 New York State Budget on April 27, 2023.  Notably, the deal includes legislation that would increase the state minimum wage rate for the next three years, and index the minimum wage to the consumer price index thereafter.

Minimum Wage Increases

Once adopted, the FY2024 Budget would establish a new statutory minimum wage rate schedule in Section 652 of the Labor Law as follows:

Downstate and Upstate Minimum Wage Increases

The minimum wage in New York is currently split into two state regions:

1. "Downstate," which includes New York City, Westchester, Nassau and Suffolk counties, and
2. "The remainder of the state," which includes the remainder of New York State and is often referred to as the “Upstate minimum wage rate.”

The legislation maintains these regional distinctions and sets different schedules of increases for both regions.  This legislation, unlike prior New York minimum wage increases, does not distinguish rates based upon employer size or downstate county.   

Indexing the Minimum Wage

Starting January 1, 2027, additional annual minimum wage increases would be implemented each year based on the Northeast region measure of consumer price increases for urban wage earners and clerical workers (CPI-W). There would be no increases to the minimum wage if over a period of the prior year, the calculations published by the United States Department of Labor show that:

• The CPI-W for Northeast Region Urban Wage Earners is negative.
• The statewide unemployment rate increases by one-half percentage point or more.
• Total non-farm employment decreases (measured seasonally).

Adjusted minimum wages are required to be published by the State Department of Labor no later than October 1^st of each year.

Adjustments to Salary Thresholds, Allowances, and Gratuities

It is worth noting that minimum wage orders in effect would remain in effect, including wage orders that address minimum salary levels for executive and administrative exemptions, gratuities, and allowances for meals, apparel, etc. As these minimum wage increases take effect, the State Department of Labor would amend the wage orders to increase all monetary amounts (i.e., salary levels and allowances) in the same proportion as the increase in the hourly minimum wage.  The state published the proposed amounts of these adjustments, which are as follows: 

The wage for food service workers who receive tips would remain lower than the regular minimum wage by one-third and rounded to the nearest five cents. While the state has not issued its official calculations, our unofficial calculations for tipped food service workers in the Hospitality Industry would be as follows:

Passage and Effective Date

As of the date of this article’s update, the bill containing the minimum wage provisions (S. 4006-c) has been signed by Governor Hochul, and the state released proposed regulations, which clarified the tipped wage rates and salary thresholds. The first scheduled increase will occur on January 1, 2024.

Littler will continue to monitor and track developments on this pending item.