The new year always brings changes in payroll, and 2026 is no exception. New York and New Jersey have both announced statewide minimum wage increases that take effect January 1, 2026 — and employers need to be ready.
Staying compliant isn’t just updating a number in your payroll system. These changes impact tipped employees, exempt-salary thresholds, home care workers, and pay notices. Getting it right now means avoiding surprises, retro pay, and headaches later.
Here’s a clear breakdown of what’s changing and how to prepare.
Beginning January 1, 2026, New York’s hourly minimum wage increases to:
$17.00/hour — NYC, Nassau, Suffolk & Westchester
$16.00/hour — Remainder of the state
But that’s just the starting point. Several related pay requirements are also adjusting.
New York’s hospitality and service rules remain some of the most detailed in the country. Employers must ensure that cash wages + tips equal at least the full minimum wage.
Food Service Workers (waitstaff, bartenders, bussers):
Downstate: $11.35 cash wage + $5.65 tip credit = $17.00
Rest of State: $10.70 cash wage + $5.30 tip credit = $16.00
Service Employees (non-food service):
Downstate: $14.15 cash wage + $2.85 tip credit = $17.00
Rest of State: $13.30 cash wage + $2.70 tip credit = $16.00
To claim the tip credit, employees must meet weekly tip-threshold averages:
$3.65/hour (downstate)
$3.40/hour (rest of NY)
If the weekly tip average falls below the threshold, you cannot apply a tip credit — the full minimum wage must be paid in cash wages.
Fast-food workers: still not eligible for tip credits.
These rates are increasing separately:
$19.65/hour — Downstate
$18.65/hour — Rest of NY
To be classified as executive or administrative exempt in 2026, employees must earn at least:
$1,275/week (≈ $66,300/year) — NYC, Nassau, Suffolk, Westchester
$1,199.10/week (≈ $62,395.20/year) — Rest of NY
If someone falls below these thresholds, they must be treated as non-exempt, which means overtime eligibility.
New Jersey’s minimum wage will rise on January 1, 2026 as follows:
$15.92/hour — Most employees
$15.23/hour — Seasonal employees & employers with fewer than 6 workers
Additional classifications:
Agricultural workers: $14.20/hour
Direct-care staff (long-term care): $18.92/hour
Tipped workers:
Cash wage: $6.05/hour
Maximum tip credit: $9.87
Combined wages + tips must reach $15.92/hour
A quick review in December saves a scramble in January. Here are the actions we recommend:
Verify that every employee’s hourly rate meets the new state minimums.
Confirm:
Cash wages meet the new rules
Weekly tips hit the required tip-threshold amounts
Combined earnings reach the full minimum wage
If exempt employees don’t meet the new weekly minimums, they must be reclassified or receive a salary adjustment.
New York requires written notice anytime an employee’s pay rate changes.
Payroll compliance is always easier to handle early. Waiting until the last minute increases the risk of errors, DOL issues, or missed deadlines.
Baron Payroll clients count on us to keep their business compliant — no guesswork, no stress, no last-minute scrambling. If you want help reviewing your pay rates, tipped-employee rules, or exempt thresholds, we’re here for you.
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