Long Island Minimum Wage Hits $17: Hidden Payroll Costs

Long Island's minimum wage jumped to $17 per hour on January 1, 2026, but the base wage increase is just the beginning. According to the Long Island Business News, this change triggers a cascade of payroll adjustments that many Nassau and Suffolk County employers haven't calculated yet.

The ripple effects hit immediately: overtime rates now start at $25.50 per hour, spread-of-hours pay increased proportionally, and the exempt salary threshold jumped to $1,275 per week ($66,300 annually). If you classified employees as exempt at the old threshold, they may now qualify for overtime pay—retroactively.

New Leave Requirements Add Administrative Burden

Beyond payroll adjustments, New York employers must now provide 20 hours of paid prenatal leave annually, separate from existing sick leave policies. This isn't a reshuffling of existing PTO—it's additional paid time that requires separate tracking and coordination with other leave benefits.

For businesses with NYC locations, safe and sick leave expands further in February 2026, adding 32 hours of unpaid leave with broader qualifying reasons. The coordination challenge multiplies when you're managing state disability benefits, paid family leave, FMLA eligibility, and now multiple categories of sick and prenatal leave.

Benefits Administration Gets More Complex

These changes don't happen in isolation from your benefits program. Salary threshold adjustments may affect health insurance contribution calculations if you use percentage-based formulas. Employees newly eligible for overtime may see fluctuating paychecks that impact their benefits deductions and FSA contribution timing.

Managing New York's layered compliance requirements becomes exponentially more complex when wage laws intersect with benefits administration. The coordination between payroll changes and benefit eligibility requires systematic review of your current policies and employee classifications.

Immediate Action Items for Long Island Employers

Review every employee currently classified as exempt against the new $66,300 threshold. Employees who fall below this amount may be entitled to overtime pay, potentially retroactive to January 1. Update your payroll system for the new overtime calculations and spread-of-hours rates.

Audit your employee handbook and leave policies to incorporate the 20 hours of paid prenatal leave. This requires separate tracking from sick leave and coordination with your existing PTO policies to prevent double-dipping or administrative confusion.

Don't overlook the benefits implications. If salary increases push employees into different health insurance contribution tiers or affect their FSA election timing, you'll need to process mid-year changes that comply with IRS cafeteria plan rules.

Coordination Prevents Costly Mistakes

The biggest risk isn't the wage increase itself—it's the administrative complexity of coordinating multiple moving parts. When payroll changes intersect with benefits administration and multiple leave policies, small errors compound quickly into compliance violations and employee relations problems.

Benton Oakfield's HR consulting services help Long Island employers navigate these interconnected changes systematically. We review your current classifications, update handbook language, and coordinate the benefits administration changes that other providers miss. Rather than juggling multiple vendors and hoping nothing falls through the cracks, you get integrated support that addresses both the immediate payroll changes and the ongoing benefits coordination challenges.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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