Minimum Wage Changes

It sounds great, and it is, but this will take time. It is not a pie in the sky. This increase in minimum wage will not be instant, nor the same amount in all areas of New York. Let’s look at some facts so we can understand exactly what is happening and why.

This rate is the lowest hourly pay that can be paid to an employee. It was created and is regulated by the Fair Labor Standard Act (FLSA), a Federal law created in 1938 to protect an employee. The FLSA determines wages in private and public sectors, in both Federal and State governments. FLSA law states that a non-exempt employee must be paid the minimum wage or higher. This law protects workers by setting standards for the wage itself, overtime pay, record keeping and youth labor. Employers must give overtime pay to non-exempt employees who work over 40 hours per week. They must pay these workers at a rate of at least time and half of their regular wage.

FLSA covers full-time and part-time workers and may apply to you because of the type of company or organization for which you work or the type of work you do. You are also covered by this law if you work for any government school, a government agency, or a hospital or a business that provides medical or nursing care for residents.

You may be wondering what an exempt employee is. Usually waitresses, bell boys, and basically any jobs that offer tips are considered exempt from this particular facet of the wage law. Tipped employees who regularly receive more than $30.00 per month in tips do get a minimum wage, it is just significantly less. Employers must pay them no less than $2.13 an hour, but they also get their tips and that can be significant. If tips aren’t coming in, there is security in a tip career thanks to the FLSA‘s requirement the employer to make up any monetary differences if the employee’s hourly wage plus tips do not equal the current non-exempt wage.

FLSA also protects underage employees, they do this with some added criteria. In the United States, the FLSA sets the minimum age for employment at 14. It also limits the number of hours minors who are under the age of 16 can work. In addition, the FLSA generally prohibits the employment of a minor in work declared hazardous by the US Secretary of Labor. Included in this type of prohibited work would be excavation, driving, and the operation of many types of power-driven equipment. The FLSA contains a number of requirements that apply only to particular types of jobs.

Now that we have a better understanding, let’s discuss NY. The timing and scope of the wage increase will vary depending on which county in New York State an employee works, and the size of the business. New York became the second state to pass a new law that would raise its wage in New York City to $15.00 per hour by the end of 2018. In the 2016-2017 budget approval process two pieces of legislation affecting employers were signed. The first was a minimum wage increase and the second was paid family leave. This dual-track legislation was named Victory for New York Families. New York’s wage rate depends on the geographic location of the workplace, the size of the employer’s workforce, and the calendar. The rationale is that more money will stay in the state and low-wage workers will enjoy a better standard of living.

Recent figures from the U.S. Bureau of Labor Statistics suggests that a proposed wage hike could affect some communities differently than others, which is likely why New York’s law has a phase-in schedule for New York City versus the rest of the state and Long Island.

Wage increases create many challenges for employers. Management will need to figure out how to pay for the increased cost of wages, how to operate on slimmer budgets and how to better utilize technology to automate simple jobs or repetitive tasks.

Many employers like restaurants, retailers, daycare centers, manufacturers, and contact centers providing customer service and tech support may find it particularly difficult employing and hiring as many workers as they need without passing the increased employee payroll cost onto their customers. It will be interesting to watch how employers will react. Some economists are predicting the short-term results will be decreased staffing and increased prices, only time will tell.

The Victory for New York Families legislation also contains a safety 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 wage increases, to determine whether a temporary suspension of the scheduled payroll increases is necessary.