New York State Discusses Eliminating Tipped Wages

By Patti Mumford, Director, Compliance Counsel

Published on January 18, 2018

New York Governor Andrew Cuomo gave his 2018 State of the State Address Jan. 3, 2018, where he laid out the agenda for 2018, including, among other items, eliminating the minimum wage tip credit. 

Currently, employers are permitted to pay tipped workers less than minimum wage, if they earn the full minimum wage when tips are included. If the tip credit is eliminated, employers will be required to pay tipped employees the full minimum wage.

Governor Cuomo has directed the New York Commissioner of Labor to schedule public hearings to evaluate the possibility of ending minimum wage tip credits. The Department of Labor (DOL) will hold public hearings to solicit input from workers, businesses and others.

The same process was followed last year regarding New York’s predictive scheduling law. In September 2017, Governor Cuomo directed State Labor Commissioner Roberta Reardon and the DOL to hold public hearings on the issue of employee scheduling. Four hearings were held to take testimony from workers, advocates, industry experts and business owners. The result was proposed rulemaking from the DOL; the 45-day comment period for this proposed rule was recently extended to Jan.22, 2018.

However, this process deviates from the prior engagement of a “wage board” on similar topics. New York labor laws permit a wage board to be appointed by the Commissioner of Labor.  The board can suggest changes to the minimum wage in a specific industry or job classification if it finds wages are insufficient to provide for the life and health of workers within that industry or classification.

In 2014, Cuomo directed the New York Commissioner of Labor to empanel a wage board to review and recommend changes to food service workers and service employees.  They were tasked with making a similar recommendation on tipped wages, and when a motion to eliminate the tip credit was made, it was rejected by the board.

A wage board was also used in 2015, when New York State Commissioner of Labor Mario J. Musolino appointed one to “report and recommend adequate minimum wages and regulations for fast food workers,” which resulted in the DOL issuing an order that increased the minimum wage for certain fast food employees to $15 per hour.

If passed, New York would join seven other states that have eliminated lower tipped minimum wages — Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington.

Maine voters passed a ballot measure in November 2016 that would remove the state’s tip credit and require employers to pay all workers the minimum wage. However, Governor Paul LePage signed into law a bill, L.D. 673 (with a Jan. 1, 2018 effective date) that restored the tip credit and requires employers to make up the difference in tipped employee pay when their weekly tips are not equal to what they would earn under the minimum wage.

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