New York Tipped Workers to See Pay Increase

New York State simplified tipped worker classification and all tipped minimum wage workers will get a pay raise.

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Acting on the recommendations of the New York State Wage Board, acting Labor Commissioner Mario Musolino issued an order to raise the State’s tipped minimum wage to $7.50 per hour. The new tipped minimum wage will take effect on December 31, 2015, coinciding with the New York State minimum wage increase of $8.75 an hour to $9 an hour.

The Commissioner’s order also recommends consolidating three classifications of tipped workers (food service workers, service employees, and service employees in resort hotels) into a single classification. Previously the three classifications each received a different tipped minimum wage rate ($4.90, $5 and $5.65).

The decision came after a report was submitted by the Hospitality and Wage Board who studied and took input from employees in the restaurant and hotel industries.

Musolino wrote, “After receiving testimony divided between those in favor of eliminating the tip credit and those opposed to any change, I believe this recommendation strikes the proper balance. It increases wages for those who have been without a raise for far too long and completes the goal that was postponed in 2009 of establishing a single rate for all tipped workers.”

New York City Tipped Minimum Wage

New York Governor Andrew Cuomo is spearheading the “Fight for Fair Pay” campaign that would increase the State’s non-tipped minimum wage to $10.50 and to $11.50 in New York City. The New York State is considering legislation that would authorize New York City and other New York local governments to authorize their own City minimum wage of up to 30 percent above the statewide minimum wage.

The Commissioner’s order recommends that if such legislation should pass and New York City creates a minimum wage a dollar higher than the State’s minimum wage, then the tipped minimum wage workers in New York City would also receive an automatic increase of one dollar per hour to $8.50 per hour.

New York Minimum Wage Posting

Because the language of the existing New York Minimum Wage posting doesn’t specify a wage tip credit, GovDocs doesn’t anticipate a revision to the posting; however, we will monitor the New York Department of Labor for any updates.

Stress on New York Restaurant Owners

The increase has restaurant owners wondering how they’ll cope with increased wage costs. Some have said they will need to raise prices, charge customers a service charge, or reduce their staff while others fear they may be forced to close their doors.

What New York Employers Can Do

The National Law Review published some tips to help employers with this transition:

  • Speak with your payroll personnel or payroll service provider to ensure that all changes to the tip credit calculations and paystub detail will be updated by December 31, 2015.
  • Ensure that you remain in compliance with the New York Labor Law and Wage Theft Prevention Act requirements that employees must be provided with notice of the tip credit both upon hire and on the paystub detail that is distributed with each paycheck.
  • Consider ways to modify your budget or operating costs to accommodate the impending subminimum cash wage increase.

What is Tipped Minimum Wage?

The U. S. Department of Labor defines tipped minimum wage as:

“The Fair Labor Standards Act (FLSA) requires payment of at least the federal minimum wage to covered, nonexempt employees.  An employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions which provides the greater benefits.”

For more on tipping, read our other posts.

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