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New York Approves $15 Minimum Wage, Paid Family Leave

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One of the country's highest hourly minimums will have a huge impact on the hospitality industry

Hours after California became the first state to approve a $15 minimum wage, New York Gov. Andrew Cuomo announced an agreement with Albany lawmakers for a $15 minimum as well — a change that means restaurants throughout the state will need to pay virtually all of their workers more and, in order to cope with the higher labor costs, push menu prices up. The budget deal, which the legislature will likely approve, also included Cuomo's twelve-week paid parental leave plan, the most comprehensive in the country.

It's all a spectacular victory for the national labor rights movement, which has been buoyed by striking fast food workers who first called for a $15 wage in 2012. Nearly half of the country's 50 states have raised their respective minimums in recent years as efforts to raise the national minimum past $7.25 foundered in Congress amid Republican opposition. San Francisco, Seattle, and Los Angeles have already approved $15 minimums. Washington D.C., which will reach $11.50 this summer, is considering moving up to the higher rate as well.

New York's new wage and leave policy means that hospitality industry workers throughout the state, assuming their hours remain the same (not a guarantee), will see their pay rise, while owners and operators pass along the increased labor costs to consumers.

Many of the city's most respected establishments, included Per Se, Masa Eleven Madison Park, and Le Bernardin, have already been increasing menu prices to offset the higher minimums that went into effect in January and to cope with the the Affordable Care act's employer mandate, which requires most businesses to provide healthcare for their employees.

It's not yet clear whether the $15 minimum, which many workers in New York City will reach as soon as 2018, will apply to waiters. The current state minimum is $9 per hour hour, with a lower $7.50 minimum for tipped workers. When Cuomo first announced his proposal last summer, he called for the $15 minimum to apply to all workers and industries – leading many to wonder whether the governor was planning on eliminating the tipped minimum and establishing a single wage for all employees, as is the case in California, Alaska, Washington, Oregon, Nevada, and Montana, and Minnesota.

If Cuomo does in fact eliminate the sub-minimum wage for waiters, it's likely more restaurants will follow in the footsteps of Danny Meyer, Will Guidara, Andrew Tarlow and others in ending tipping in order to help bridge the pay gap between front of the house-employees, who often earn more because they can collect gratuities, and back of the house staffers like chefs, who often earn less because they cannot [Update: waiters will continue to earn a separate, lower minimum under the the new law.]

Waiters in New York City on average make about $30,050 per year, or $14.44 per hour, though top-paid captains at the city's most celebrated fine dining establishments can clear $85,000-$100,000 or more. Restaurant cooks make $27,660, or $13.30 per hour, while dishwashers make about $11.03. The city's living wage is $14.30 per hour.

Here are the details of New York's minimum wage plan:

  • New York City workers employed by businesses with 11 or more employees will see the minimum rise to $11 by the end of 2016, then by another $2 each subsequent year until the minimum reaches $15 at the end of 2018. Those at businesses with 10 or fewer employees will see their minimums rise to $10.50 by the end of this year, increasing by $1.50 each year thereafter until hitting $15 at the end of 2019.
  • Long Island and Westchester workers will see their minimums rise to $10 by the end of 2016 and by $1 each subsequent year, reaching $15 at the end of 2021.
  • Upstate workers will see the minimum rise to $9.70 at the end of next year, then 70 cents each year thereafter until reaching $12.50 at the end of 2020. After that, the state will gradually raise the minimum toward the $15 goal on an "indexed schedule" determined by the state budget director, in consultation with the state labor department.

Here are the details of New York's family leave plan:

  • Employees will be eligible for up to 12 weeks of leave for the care of an infant, an ailing family member, or to relieve pressures when "someone is called to active military service."
  • Starting in 2018, workers will be eligible for 50 percent of an employees annual average wage, capped at half the state weekly average wage (currently set at $1,266.44, or $633.22 when divided by two).
  • By 2021, employees will be eligible for two-thirds of an employees annual average wage, capped at 67 percent of the state weekly average wage ($849 at today's levels).
  • The program will be funded by payroll deductions, costing workers about $1 per week.