2 Legislative Trends to Watch as New York Passes Historic Minimum Wage Increases and Paid Family Leave Laws

My colleague Jon Sider recently wrote about California becoming the first state to raise its minimum wage to $15 per hour. These historic changes to minimum wage laws are also continuing in New York City, where new paid family leave laws have also been implemented.

How New York employers can prepare for minimum wage increases
On April 5, 2016, New York Governor Andrew Cuomo signed a bill raising New York's minimum wage to $15 per hour as part of the 2016-2017 state budget. Governor Cuomo stated that this would benefit over 2 million New Yorkers. New York joins more than a dozen states to date that have signed bills to increase their minimum wage. This new bill means New York state’s minimum wage will inevitably increase by 67 percent over the current $9 per hour minimum wage.

The New York minimum wage increase will be phased in. The way it’s implemented will depend on the number of employees at each company and the company location:

• New York City businesses with at least 11 employees must pay their workers a minimum wage of $11 per hour by the end of 2016 and then another $2 per hour in each of the next two years - reaching $15 per hour on December 31, 2018.
• For New York City employers with 10 employees or fewer, the minimum wage increases to $10.50 per hour by the end of 2016 and then an additional $1.50 per year for the following three years - reaching $15 per hour on December 31, 2019.

• For workers in Nassau, Suffolk and Westchester counties, the minimum wage would increase to $10 per hour at the end of 2016, then increase $1 each year after, reaching $15 per hour on December 31, 2021.
• For workers in the rest of the state, the minimum wage would increase to $9.70 per hour at the end of 2016, then another $.70 each year after until reaching $12.50 per hour on December 31, 2020. After 2020, the minimum will continue to increase to $15 per hour on an indexed schedule to be set by the director of the Division of Budget, in consultation with the Department of Labor.

Beginning in 2019, the New York State Division of the Budget director will conduct an annual analysis to examine the economies in each region of New York and determine the impact the minimum wage increase has had on job and business growth. Then a determination will be made as to whether a temporary suspension of the scheduled increases is necessary.

Details of the new Paid Family Leave law
In addition to minimum wage increases, legislation was signed that will require all New York employers to provide 12 weeks of paid family leave benefits to eligible employees, as part of the state’s temporary disability insurance program. The aim of this new measure is to help workers maintain financial stability while caring for a new child or a sick relative, or when a family member is called to active military service. This means New York’s Paid Family Leave law is now one of the most generous such policies in the nation. These family leave benefits are currently designed to be funded entirely through employee contributions.

Beginning on January 1, 2018, New York employers will be required to provide eight weeks of paid family leave benefits to eligible employees. Eligible employees are defined as those caring for a new child or a sick relative, or who have had a family member called to active military service.

• Benefits will be phased-in at eight weeks of leave and 50 percent of an employee’s average weekly earnings, beginning in 2018. This will be capped at 50 percent of the state-wide minimum wage. Full implementation is slated for 2021, with 12 weeks of leave and 67 percent of the state-wide minimum wage.
• The new family leave program is to be funded entirely via a nominal employee payroll deduction, resulting in zero cost to businesses.
• Employees, whether full-time or part-time, are eligible to participate after having worked for their employer for six months.

New York’s Paid Family Leave law, coupled with historic new paternity leave laws recently passed in San Francisco, shows a turning tide toward the way states and other jurisdictions are handling employee family leave. TriNet is monitoring these ever-changing laws around the nation to help ensure our clients remain compliant.

If you have any questions on how minimum wage law or paid family leave changes will impact your business or how outsourcing your HR administrative functions can help your business grow, as well as retain and attract top talent, please contact me at steve.edney@trinet.com or 203.388.0932 to evaluate your options.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance

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