On September 30, 2014, New York City Mayor Bill de Blasio signed an executive order (the “Executive Order”) that increases the living wage hourly rate under New York City’s Fair Wages for New Yorker’s Act. The wage increase covers workers employed at economic benefit projects that receive more than $1 million dollars in subsidies from the City and has expanded the law to cover additional employers. The law is effective immediately, however, it is not retroactive and does not apply to projects which were awarded subsidies prior to September 30, 2014.

Living Wage Rate Increase

Specifically, the Executive Order requires employers who employ individuals at economic benefit projects that receive more than $1 million dollars in subsidies from the City to pay their employees at least $11.50 per hour if the employer provides health insurance and at least $13.13 per hour if the employer does not provide health insurance. The living wage rate will be adjusted each year by the Commissioner of Consumer Affairs.

Commercial Tenants of Subsidy Recipients are Covered under the Law

The Executive Order applies to all “Subsidy Recipients” as well as all tenants, subtenants, leaseholders, subleaseholders, and concessionaires of the Subsidy Recipient that occupy property improved or developed as part of a New York City economic benefit project. The Executive Order defines “Subsidy Recipient” as any entity or person that receives financial assistance of $1 million dollars or more as part of an economic benefit project or any assigned or successor in interest of such real property.

Commercial tenants that lease space from a “Subsidy Recipient” are covered under the Executive Order and must pay their workers the living wage rate of at least $11.50 per hour if they provide health insurance, and at least $13.13 per hour if they do not provide health insurance.

However, since the Executive Order applies on a going forward basis it does not apply to commercial tenants that arecurrently leasing space in a City-subsidized project. Moreover, small businesses with gross income below $3 million are exempt from the law.

Tips on Lease Language

When entering into new leases, commercial tenants may want to protect themselves by adding certain provisions to their lease documents to clearly address the Executive Order as it applies to:

  • the building in which the leased premises are located,
  • the economic terms of the lease, and
  • required notifications in the event the landlord become a subsidy recipient