By: Ty Hyderally, Esq., and Lorena Meza

January 5, 2024

As of January 1, 2024, there will be wage changes in New York that will be tiered.  Tier 1 is comprised of New York City, Westchester, and Long Island. Tier 2 makes up the rest of the State.  For Tier 1, the minimum wage is increased to $16.00 per hour. For Tier 2, the minimum wage will remain at $15.00 per hour. This rise is part of the state’s budget deal for 2023-2024 and is meant to give employees a better-starting salary. The change is part of numerous other bills aimed at improving the lives of workers in New York and change how workers are treated by their employers.

Governor Kathy Hochul signed the budget agreement and confirmed a two-tier minimum wage system in New York. The wage modifications in Tier 1 and Tier 2 takes into consideration the different economic realities facing people living and/or working in New York City, Westchester County, and Long Island, compared to other cities in New York.

The legislation requires employers in New York City, Long Island, and Westchester County to pay a minimum wage of $16.00 per hour, as noted above.  This will be increased to $16.50/hour in 2025 and to $17.00/hour in 2026.  With regard to the rest of New York, the minimum wage for 2024 will be $15.00/hour.  This will increase in 2025 to $15.50/hour and will again increase to $16.00/hour in 2026 (Grindlinger & Richmond, 2023). These increases are aimed to decrease income disparities and improve the living standards of the affected populations.

There will be a corresponding increased to the minimum wage for overtime. In New York City, overtime will be $24.00/hour in 2024, $24.75/hour in 2025 and $25.50/hour in 2026. A similar increase will occur for the rest of New York State. (Grindlinger & Richmond, 2023).

Additionally, the wages for food service workers paid with tips will also increase in both tiers. In 2024, food service workers will have to be paid a minimum of $10.70/hour in New York City, Long Island, and Westchester County. In 2025, their minimum hourly rate will be increased of $11.00 per hour, and in 2026 to $11.35 per hour (Grindlinger & Richmond, 2023). In Tier two, the minimum wage for food service workers is $10.00/hour and will increase to $10.35/hour in the following year.  The notorious Tip Credit is still alive and well. So, what is that?  The Tip Credit is a figure that is used in minimum wage calculations for food service workers who receive tips. The Tip Credit shows the government that an employee has made enough money in tips that they don’t need to be paid the full minimum wage.  In Tier One cities, the tip credit will be $5.30 in 2024, $5.50 in 2025 and $5.65 in 2026.  So what does this mean??? Let’s say that in 2024, you own a restaurant in Manhattan and employ a waiter, who gets tips, and pay that waiter a base hourly rate of $9.70/hour.  That is okay as long as the waiter is making at least $5.30/hour in tips.  If the waiter does not make at least $5.30/hour, then you have to increase their base hourly rate.

These wage increases are correlated to the State’s efforts to ensure that pay increases are linked to inflation as well as the Consumer Price Index for the Northeast Region Urban Wage Earned and Clerical Workers, to account for the changes in the cost of living.

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