As part of a phased plan, New York’s general minimum wage increased by $0.50 on January 1, 2026. For NYC, Long Island, and Westchester employers this means a rise from $16.50 to $17.00/hour, while the rest of New York State goes from $15.50 to $16.00/hour. This is the last scheduled flat increase before New York transitions to annual inflation-indexed wage adjustments in 2027. Businesses should budget for the immediate payroll hike and anticipate automatic yearly changes going forward tied to the Consumer Price Index.
Employers in the hospitality industry, i.e., restaurants, bars, etc., must ensure tipped employees still earn at least the full minimum wage. With the new rates, the cash wage for tipped hospitality service workers in NYC, Long Island, and Westchester rises from $11.00 to $11.35/hour and the maximum tip credit increases from $5.50 to $5.65, while for rest of New York State, the cash wage for servers raises from $10.35 to $10.70 and the maximum tip credit increase from $5.15 to $5.30. For non-food service tipped jobs, such as hotel workers, delivery, or coat check classified as “service employees”, in NYC, Long Island, and Westchester the cash wage rises from $13.75 to $14.15/hour and the maximum tip credit increases from $2.75 to $2.85, while for rest of New York State, the cash wage raises from $12.90 to $13.30 and the maximum tip credit increase from $2.60 to $2.70. Accordingly, employers should review their tip reporting and ensure tip allowances are applied correctly so that tipped staff’s hourly earnings meet or exceed $17/$16 as applicable.
Moreover, both hospitality and fast food employers should also be aware of their obligations under New York’s Wage Theft Prevention Act (WTPA) in connection with the 2026 wage increases. Before implementing any changes to hourly rates, tip credits, or pay schedules, employers must provide employees with updated written notices detailing their new rate of pay, applicable tip credit, if any, and designated payday. These notices must be delivered both in English and in the employee’s primary language, and employers must retain signed acknowledgements from each employee confirming receipt. Likewise, employers should double-check that their posted tip charts, point-of-sale systems, and wage statements are updated for 2026 rates – be sure to post current notices in break rooms and wherever employee notices are kept. Failure to comply with these notice requirements may result in penalties and legal exposure.
Along with the minimum wage, New York State is raising the salary required to classify employees as exempt from overtime. Effective January 1, 2026, the minimum salary for executive and administrative exempt employees will increase to $1,275 per week or approximately $66,300/year, in New York City, Long Island, and Westchester, while for the rest of the state, the threshold rises to about $1,199 per week or $62,353/year. Workers paid below these levels cannotbe treated as exempt and must receive overtime pay for hours worked over 40 per week whenever a salary threshold is required. Accordingly, employers should audit salaries of any currently exempt managers or professionals to ensure they meet the new weekly minimum; some raises or reclassification to non-exempt with overtime eligibility may be required to remain compliant.
Finally, employers in hospitality and other industries should also account for knock-on effects of the wage increase. For example, the “spread of hours” extra pay, i.e., one additional hour at minimum wage for workdays over 10 hours, will now be calculated at the higher 2026 rate. Moreover, state regulations adjusting meal credits and uniform maintenance allowances for 2026 mean slightly higher amounts that employers can credit or must pay for providing meals or requiring employee uniforms. Though these changes are modest, payroll departments should update any applicable credits and stipends, e.g. updated uniform cleaning allowance rates, to the new mandated figures for the New Year. Overall, the fast food and broader hospitality sector in New York should enter 2026 with a compliance checklist: update payroll for new wages/tip credits; refresh employee handbooks and posters, reflecting sick leave, scheduling, and anti-harassment rules; train managers on NYC’s just-cause firing restrictions; and audit your practices, e.g., timekeeping, tip distribution, etc., against the latest legal requirements.
Outside Legal Counsel LLP can help ensure that are in compliance and are fulfilling their obligations under the new minimum wage increases and other applicable laws. Reach out to us for a consultation about our services and this process.
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