The New York State Department of Labor may soon eliminate the “tip credit.” This change would require restaurants and other employers to pay employees the full minimum wage, regardless of how much they make in tips. The full minimum wage will be up to $13.00 per hour in 2018, so this could be a hefty increase in pay for servers, bartenders, and other tipped employees in New York.
The impetus for the change has come from Gov. Andrew Cuomo, who recently issued his fifth proposal for 2018’s State of the State. The proposal calls for public hearings to gather information and views on the effect of eliminating the tip credit.
The tip credit, currently in place in New York and around the United States, allows an employer to pay less than the full minimum wage, with the understanding the employees’ tips will make up the difference. In New York, employers will be able to pay tipped employees as low as $7.50 per hour in 2018. Under federal law, an employer may pay a tipped employee only $2.13 per hour, unless a more protective state law applies.
Tipped employees should follow efforts at the state level to eliminate the tip credit. If Governor Cuomo’s proposal to eliminate the tip credit succeeds, employees in the New York service industry will see a large boost in their hourly rates, as well as numerous other protections offered to New York employees such as “call-in” pay, “spread-of-hours” pay (for workdays over 10 hours), as well as the strict pay statement requirements of the New York Wage Theft Prevention Act. New York is one of the world leaders in the restaurant industry, so other states may follow its lead on this issue.
Currently, employers in all states must adhere to the provisions of the Fair Labor Standards Act regarding tipped employees, which include:
- Employees cannot be required to contribute tips to “the house” or to management.
- Employees cannot be required to pool tips with employees whose job duties do not involve customer interaction.
- Employees cannot be required to spend over 20% of their shifts on duties unrelated to their position as a tipped employee.
- Employers must inform employees of the provisions of the Fair Labor Standards Act governing tipped employees (see if your employer has a wage poster).
- Employers must pay employees at least the “tip credit” minimum wage (currently $2.13 under federal law), as well as additional amounts if the employee does not receive enough tips in the workweek to cover the tip credit.
The attorneys at the Wage Authority Group have represented a variety of tipped workers in New York and other states, including servers, bartenders, car washers, and exotic dancers. Feel free to call in if you’re looking for tips on how to protect your rights as a tipped employee.
Image link: https://pixabay.com/en/working-women-bartender-oyster-house-2419549/