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Payroll in New York
New York employers have a lot to consider to comply with state and local payroll laws. It’s easy for business owners to get confused because laws can also vary by city, county, and industry.
From compensation to employee benefits, here are a few highlights every New York employer should keep in mind.
New York’s minimum wage is not consistent throughout the state, and there have been recent changes.
- In December 2019, New York City (NYC) raised the minimum wage to $15 per hour for all businesses.
- Nassau, Suffolk, and Westchester counties now have a minimum wage of $13 per hour, which will increase to $15 by 2021.
- Across the remainder of New York State, the minimum wage is $11.80 per hour but will increase to $12.50 on December 31, 2020.
But not all of New York’s compensation laws revolve around the minimum wage.
- Tipped workers and employees in the fast-food industry may be subject to different hourly rates. One NYC law requires fast-food companies to compensate employees $100 for every “clopening” shift worked—a closing shift followed by an opening shift.
- Farmworkers employed by farms of a certain size are entitled to overtime pay but only after working 60 hours in a calendar week.
- New York regulates the amount an employer can deduct for meals and lodging, based on its location and number of employees.
The Department of Labor enforces New York’s labor laws, and violations can result in criminal prosecution and penalties. Businesses found guilty of violating the minimum wage may be required to pay up to 200% of the unpaid wages, plus additional recompense.
New York income tax withholding
Most New York employers must withhold personal income taxes from their employees. Here is a list of qualifications to clarify which employees are included:
- New York State residents earning wages even when earned outside of the state.
- New York State nonresidents being paid wages for services performed within the state.
- New York City residents, even when services are performed outside New York City.
- Yonkers residents, even when services are performed outside Yonkers.
- Yonkers nonresidents on wages paid for services performed in Yonkers.
New York self-employed individuals, independent contractors, partnerships, and LLCs must file the Unincorporated Business Tax (UBT). The UBT is a 4% flat rate on all income attributable to NYC. Self-employed individuals who work full-time in NYC must pay a 4% tax on all income, with few exceptions.
Beyond the UBT, self-employed workers and contractors in NYC also have to pay the city’s personal income taxes, federal income tax, a self-employment tax, and the New York State income tax. While that’s considerable, some individuals may qualify for certain tax credits, including one that could deduct up to 100% of their UBT.
New York employee benefits
New York offers a diverse landscape of employers, many of whom must offer competitive benefits to attract and retain their employees. Here are some of the benefits the New York laws regulate.
Sick time: New York State labor laws do not require employers to pay for any “time not worked,” including sick time. That said, New York City takes a very different approach. The following conditions apply to businesses in NYC:
- All employers (including nonprofits) with five or more employees must provide paid sick leave.
- Businesses with four or fewer employees must also provide sick leave but are not required to pay for that time off.
- This law covers most employees, including full-time, part-time, temporary, per diem, transitional jobs program, and undocumented workers.
- Employees must earn or accrue at least one hour of sick leave for every 30 hours they work, up to 40 hours of sick leave per year.
- Employees can carry over any unused sick leave, up to 40 hours, into the next calendar year.
Vacation time: Again, New York State does not require employers to pay for “time not worked,” including vacations or holidays. However, if a business offers paid vacation time, they must pay out any earned hours when an employee leaves unless company policy explicitly states otherwise.
Time off to vote: Employees who are registered voters must be allowed to vote in elections. If their shift makes it difficult to vote, the employer must give them up to 2 hours of paid time off to vote.
Workers’ compensation: Virtually all employers in New York State must provide workers’ compensation coverage for their employees.
Paid family leave: In New York State, most private employers with one or more employees must obtain Paid Family Leave insurance. From there, they must collect employee contributions and complete their part of the Paid Family Leave request form when someone applies. Contractors and self-employed individuals may voluntarily opt into New York Paid Family Leave by purchasing an insurance policy.
Paid family leave provides job-protected and paid time off for these events:
- To bond with a newly born, adopted, or fostered child.
- To care for a family member with a serious health condition.
- To assist loved ones when a spouse, domestic partner, child, or parent is deployed abroad on active military service.
Full payroll packages
There are three QuickBooks Online Payroll products—Core, Premium, and Elite. These ensure there’s a solution for every New York business. Check out a few of our favorite features within each product, designed to make your payroll fully compliant with New York state laws.
- Federal and state payroll taxes—including year-end filings—are calculated, filed, and paid automatically.**
- Set up automatic payroll for salaried employees using direct deposit.**
- Your time tracking data automatically flows into your account. You can approve timesheets, pay your team, and create invoices all in the same place.**
- Free up your cash—automatically pay for workers’ comp when you run payroll. Our partner, AP Intego, can help you find the best policy for your business.**
- With tax penalty protection, we’ll pay up to $25,000 if you receive a payroll tax penalty. It doesn’t matter who made the error. We’ll make it right.
- Pay your team when you want with same-day direct deposit.** Funds are withdrawn the day your employees get paid.
New York’s official website, NY.gov, offers a variety of labor law resources on topics ranging from minimum wage to paid family leave to the state’s recordkeeping requirements. But other state resources can provide additional clarity:
- New York Department of Taxation and Finance
- New York Department of Labor
- Empire State Development’s Small Business Division
The U.S. Department of Labor will be most applicable for employers looking for federal information and assistance. Notable resources include:
The Small Business Administration (SBA) also has resources for new and existing businesses. Small Business Development Centers are located around the country. In 2020, the SBA was well known for its coronavirus relief programs, which provided loans to struggling businesses.
QuickBooks Payroll resources
The QuickBooks Resource Center has several resources geared toward answering small business owners’ payroll questions. Additional resources include: