New York State’s 2013-2014 budget — approved on March 29, 2013 — includes a three-stage increase in the state’s minimum wage. Effective December 31, 2013, the minimum wage will increase from $7.25 per hour to $8.00 per hour. Effective December 31, 2014, the minimum wage will increase to $8.75 per hour, and effective December 31, 2015, the minimum wage will increase to $9.00 per hour.
These minimum wage increases do not apply to tipped food service workers and service employees who are covered by the New York State Department of Labor’s Hospitality Industry Wage Order. However, the Commissioner of Labor is authorized under the legislation to promulgate a wage order increasing the hourly minimum wage for such tipped employees.
Employers are eligible for a minimum wage reimbursement credit for each employee who: (1) is between the ages of 16 and 19; (2) is paid at the applicable minimum wage rate; and (3) is a student during the period in which he or she is paid at the applicable minimum wage rate. During the period of time when the minimum wage is $8.00 per hour, the reimbursement credit is $0.75 per hour for each hour worked by an eligible employee (which is the entire amount of the increase from the current $7.25 per hour minimum wage). During the period of time when the minimum wage is $8.75 per hour, the reimbursement credit is $1.31 per hour for each hour worked by an eligible employee. During the period of time when the minimum wage is $9.00 per hour, the reimbursement credit is $1.35 per hour for each hour worked by an eligible employee. If the federal minimum wage is increased to above 85% of the state minimum wage, however, the reimbursement credit will be reduced to the difference between the federal minimum wage and the New York minimum wage.
The minimum wage reimbursement credit has been criticized because it may create an incentive for employers to hire teenage student employees over adult non-student employees. Although the legislation creating the reimbursement credit prohibits employers from discharging a non-eligible employee and hiring an eligible employee "solely for the purpose of qualifying for this credit," critics maintain that this provision will be difficult to enforce and point out that nothing in the legislation precludes employers from gradually replacing non-eligible employees with eligible employees through normal attrition rather than by discharging employees. The reimbursement credit may also create an incentive for employers to keep student employees between the ages of 16 and 19 exactly at the minimum wage because payment of those employees above the minimum wage may result in loss of the reimbursement credit under the language of the legislation.
Based on this criticism, a bill has been introduced in the State Senate to repeal the minimum wage reimbursement credit. The bill has been referred to the Senate Committee on Investigations and Government Operations.