CHANGES TO WAGE RATES FOR 2023

CHANGES TO WAGE RATES FOR 2023

Happy New Year to all!  In addition to taking down the holiday decorations and facing the onslaught of winter, the beginning of 2023 brings increases to New York State minimum wage rates.  Further, the new year heralds a rise in the overtime salary threshold (often referred to as the “salary basis”) which is used in determining whether certain employees are exempt from overtime. 

The federal weekly salary threshold for exempt employees is currently $684.00.  (However, there are significant rumblings that this will likely be increased sometime within the next year.)  As you’ll read below, this $684.00 federal threshold is irrelevant for New York employers claiming that their executives or administrative employees are exempt from overtime.  This is because Albany sets a higher threshold for us here in the Empire State for these types of employees.

Increased State Minimum Wage.  As of January 1, 2023, New York State boosted the minimum wages and hospitality tip credits for overtime-exempt employees.  The minimum hourly wage are now as follows:

• New York City, Nassau, Suffolk, and Westchester counties - the rate remains $15.00 per hour.

• Remainder of New York State –increased from $13.20 to $14.20 per hour.

Outside of NYC, along with Nassau, Suffolk, and Westchester counties, the minimum wage will continue increasing annually based on certain economic indicators until the rate tops out $15.00 for employees in the rest of the State.  Remember, these minimum hourly rates apply to all nonexempt employees regardless of whether they are paid hourly or by salary.

There is an exception for individuals working in certain industries.  For example, fast-food workers anywhere in the State must be paid $15.00 per hour.  On October 1, 2022, in New York City, Long Island and Westchester, the minimum hourly wage for home care workers increased to $17.00.  On January 1, 2023, the minimum wage for these workers in all other regions of New York State increased to $15.90 per hour.

The minimum hourly rates for tipped employees in the hospitality industry (that is, businesses running a food service operation of some sort or a hotel) are now as follows:

• New York City, Long Island and Westchester counties - food service workers remain at $10.00 in cash with a $5.00 tip credit per hour.

• Remainder of New York State:  food service workers increased from $8.80 in cash with a $4.40 tip credit per hour, to $9.45 in cash with a $4.75 tip credit per hour.

• New York City, Long Island and Westchester counties - service employees remain at $12.50 in cash with a $2.50 tip credit per hour.

• Remainder of New York State:  service employees increased from $11.00 in cash with a $2.20 tip credit per hour, to $11.85 in cash with a $2.35 tip credit per hour.

Increased State Salary Threshold to Exempt Executives or Administrative Employees from Overtime. 

All employees working more than 40 hours in a week must be paid overtime unless they both perform job duties falling within one of the categories of exempt occupations (that is, executives, administrative employees, computer employees, outside sales personnel or professional employees) and are paid at or above a minimum, gross salary threshold.  As mentioned above, Albany has increased the minimum salary which executives and administrative employees must be paid to be exempt from overtime.

As with the minimum wage, the salary basis, or threshold, applicable to a particular executive or administrative employee depends on where in the State the employee works.  As of January 1, 2023, to qualify for an exemption under the executive or administrative employee exception, an employee must make at least:

• New York City, Long Island and Westchester counties: is unchanged from the $1,125.00 weekly threshold.

• Remainder of New York State:  the weekly threshold for executives and administrative employees increased from $990.00 to $1,064.25.

New York sets no salary threshold for the professional employee exemption.  As such, employers classifying employees as exempt professionals (for example, doctors, engineers, lawyers, etc.) must comply with the federal salary threshold, currently set at $684.00 per week, unless an exemption from this salary requirement otherwise applies.

THE SKINNY:  You should review what your workers do and how much you pay them to do it.   Are your pay scales in compliance with the new wage rates and do your annual wage rate notifications reflect these rates?  This is also a good time for revisiting the work your “exempt” employees are actually performing and whether that work falls within one of the five categories of exempt occupations.  You should also verify that these “exempt” employees are still earning enough to meet or exceed the minimum salary thresholds.

Remember, it only takes one disgruntled or former staff member filing an overtime complaint with the Department of Labor to land you in the jaws of a wage and hour audit covering all your employees.  In such an audit, the DOL may claim that you owe your employees overtime wages, as well as challenge your classification of employees as exempt.  It’s not a good place to be.  As our grandparents taught us, an ounce of prevention is worth a pound of cure.  If not, the DOL may drop by for its pound of flesh (in the form of unpaid overtime, not to mention civil penalties, and interest).  Be forewarned, employers.

On second thought, before taking down your holiday decorations, you may want to review your employee’s job descriptions and salaries to avoid the frosty winds of a visit from your old Uncle Scrooge, er, rather, the DOL.

This article is intended to be used for informational purposes only.  Legal advice is neither implied by the author nor should be inferred by the reader.  If you have specific legal questions, you should consult with your attorney.

Jeffrey Sculley, who may be reached at jsculley@cmrlaw.com, is an attorney and counselor at law focusing his practice on representing commercial and residential landlords; providing backroom human resource and employment support to businesses and not-for-profits; appealing adverse trial-court and administrative decisions; counseling clients on logo and brand development and trademark protection; and representing clients in all types of administrative, regulatory and compliance matters, before governmental agencies and administrative hearing officers and law judges.