New York State, and particularly New York City, is becoming one of the most expensive places in the nation to operate a small business. New legislation is affecting the bottom line of small businesses across the State including many franchisees trying to maximize the return on their business investment.
On April 4, 2016, New York Governor, Andrew M. Cuomo, signed legislation that will raise the minimum wage in New York State from $9 dollar per hour (the current rate) to $15 dollars per hour.
- For workers in New York City employed by businesses with at least 11 employees, the minimum wage will rise to $11 at the end of 2016, then another $2 each year after, reaching $15 on 12/31/2018.
- For workers in New York City employed by businesses with 10 employees or fewer, the minimum wage will rise to $10.50 by the end of 2016, then another $1.50 each year after, reaching $15 on 12/31/2019.
- For workers in Nassau, Suffolk and Westchester Counties, the minimum wage will increase to $10 at the end of 2016, then $1 each year after, reaching $15 on 12/31/2021.
- For workers in the rest of the state, the minimum wage will increase to $9.70 at the end of 2016, then another .70 each year after until reaching $12.50 on 12/31/2020 – after which it will continue to increase to $15 on an indexed schedule to be set by the Director of the Division of Budget in consultation with the Department of Labor.
At the same time that Governor Cuomo signed the Minimum Wage Bill he also signed into law legislation that will make New York State the state with most comprehensive paid family leave program in the nation. When fully phased-in, employees will be eligible for 12 weeks of paid family leave when caring for an infant, a family member with a serious health condition or to relieve family pressures when someone is called to active military service. Benefits will be phased-in beginning in 2018 at 50 percent of an employee’s average weekly wage, capped to 50 percent of the statewide average weekly wage, and fully implemented in 2021 at 67 percent of their average weekly wage, capped to 67 percent of the statewide average weekly wage. Employees will be eligible to participate after having worked for their employer for six months.
Although Governor Cuomo and other New York Legislators have argued that the increase in minimum wage will benefit workers, others believe that it may result in the failure of many small businesses and the elimination of many existing entry level jobs. The increase in the minimum wage threatens to heavily affect the bottom line of many New York small business and, for those operating on narrow margins, it could push them over the edge and into the red. In addition, a material increase in labor costs encourages many small businesses to look for cost lowering technological solutions that eliminate jobs, such as replacing counter employees with customer ordering kiosks. Small businesses in New York, including thousands of franchisees, need to begin to assess what steps they will need to take to mitigate the affect New York’s new labor-friendly legislation will have on their profitability.