Minimum Wage: California and New York
Both California and New York have recently passed legislation raising the state minimum wage to $15 per hour.
In California, the increase will be phased in gradually, so that businesses with over 25 employees will be required to pay $15 a hour by January 1, 2022. Companies with 25 or fewer employees have an additional year, until January 1, 2023. Beginning with January 1, 2023, the minimum wage will be increased annually for some workers, based on the adjusted U.S. Consumer Price Index. The increase will be no more than 3.5% per year, and the resulting rate will be rounded to the nearest $0.10.
Meanwhile, in New York, the legislature passed (and Governor Cuomo signed) a bill that also gradually raises the minimum hourly wage in New York state to as much as $15 an hour. A tip credit wage is allowed for workers who are customarily tipped; it will be 2/3 of the minimum wage or $7.50 an hour, whichever is higher.
The wage increases are complex. First, the state has been divided into three “regions” — New York City; Long Island and Westchester county; and the rest of the state — and each region will have its own schedule for the increases. Further, there are two tiers of employers in New York City: those with 10 or fewer employees, and those will 11 or more, also with different implementation schedules for each.
Under the schedule, by December 31, 2021, all employers in New York City, Long Island and Westchester county will be subject to the $15 per hour minimum. At that time, employers in the rest of the state will be required to pay at least $12.50 an hour, possibly also eventually increasing to $15 an hour.
Employers with workers in New York and California should consult with their employment law advisor to ensure they’re up-to-date with these developments and that their payroll policies and pay rates conform to the new regulations.
Paid Family Leave in New York
As part of the same bill that increased the minimum wage, the New York legislature also mandated paid family leave. The new law provides up to 12 weeks of paid, job-protected leave for employees who need to take time off for any of these reasons:
- To care for a family member with a serious health condition;
- To bond with a new baby or child (including adoption or foster placement);
- To address family needs due to active military duty of a close family member.
Notably, as the law is written, all employers — regardless of size — are covered. So if you have even one employee, you must comply with the law (unless it’s amended at some point).
Additionally, the only qualification for the employee is that they need to have worked at least 26 consecutive weeks for a covered employer. There is no minimum number of hours worked, so the law applies to part-timers as well as full-time workers.
These new employee benefits will be phased in starting in January of 2018. Initially, employees will be eligible to receive 50% of their weekly pay, with a maximum of $1,296.48 per week (or 50% of the State Average Weekly Wage) for up to 8 weeks. The amount and number of weeks of leave will increase each year, topping out at 67% of their weekly pay (maximum of 67% of the State Average Weekly Wage) for 12 weeks as of January 1, 2021.
Employees can take intermittent paid family leave in increments as low as one full day. The law specifically prohibits retaliation against employees who take advantage of the leave.
The benefits will be paid for by the employees themselves, through payroll deductions, which at this point are estimated will work out to about $1 per employee per week.
If you thought the minimum wage provisions were complicated, wait until you try to figure out your options for making this new leave, regular paid time off, and FMLA leave work together! I strongly encourage New York employers to speak with your employment law advisor before you have an employee requesting this leave so you can understand your options and obligations.
Paid Parental Leave in San Francisco
The San Francisco Board of Supervisors unanimously approved local legislation requiring employers to provide up to six weeks of fully-paid parental leave for the birth or adoption of a child.
The ordinance goes into effect on January 1, 2017 for organizations with 50 or more employees. In July, 2017 businesses with 35 or more employees will be covered. Finally, in July, 2018 the law will cover businesses with 20 or more employees.
To be eligible, an employee must work for eight hours or more per week, spend at least 40% of their work week within San Francisco’s boundaries, and have worked for a company for at least 180 days.
Employees in California are already eligible to receive up to 55% of their salaries for up to 6 weeks to care for a new child through the California Paid Family Leave program. This program is funded by paycheck withholdings from employees. The new ordinance is intended to supplement this program, so as to bring the new parents’ compensation up to 100% of their weekly salary; the additional 45% of the worker’s pay will be covered by the employer.
Time for Employers to Prepare
In all these cases, lawmakers provided a phase-in period to give employers time to prepare. If you have employees who will be covered by these new rules, I urge you to contact your employment law advisor immediately to make sure you understand what you’re going to need to do to comply — and when. With this much advance warning, there’s not much excuse for waiting until the last minute.
It often happens that legal developments in states like New York and California eventually filter down to other states. Do you think your state is likely to pass a bit minimum wage increase any time soon?