New York Proposes Changes to Pay Rates for Tipped Hospitality Workers

A Hospitality Industry Wage Board convened in September 2014 by the New York State Commissioner of Labor to consider changes to the minimum wages paid to tipped employees has just issued its recommendations to the Commissioner of Labor for review.  The public has until February 21, 2015 to submit comments to the Commissioner regarding the recommendations.

The Wage Board’s recommendations, released on January 30, 2015. consist of the following five proposals:

  • Uniform tip amounts and criteria for all tipped workers in the hospitality industry, which would result in the same rates for food service workers, service employees and service employees working in resort hotels.  (Currently the Hospitality Industry Wage Order provides varying tip credit and wage rates for these different categories of workers.)
  • An increase to the tipped cash wage, which has not increased since 2011, to $7.50 per hour, effective December 31, 2015.  For example, tipped food service workers must currently be paid at least an hourly wage of $5.00, with an employer taking a maximum $3.75 per hour tip credit.
  • To the extent that that the legislature establishes a separate minimum wage rate for New York City employees, the minimum wage for such workers would simultaneously be increased by one dollar per hour.
  • A review of whether the current system of cash wages and tip credits should be eliminated.
  • An increase of the tip credit by $1.00 per hour if an employer is able to show that the weekly average of cash wages and tips equals or exceeds the applicable hourly minimum wage rate by 150% in New York City or 120% in the rest of the state.

The Commissioner of Labor is able to accept, reject or revise the proposals prior to submitting them to Governor Cuomo, who has expressed support for the Wage Board’s recommendations.

Acceptance of these proposals would increase the tipped minimum wage for hospitality industry workers.  It would also require employers to, among other things, implement or modify systems  to ensure compliance with New York law, particularly if such employers seek to avail themselves of the $1.00 increase in the tip credit that would be permitted for employees whose combined wages and tips exceed the minimum wage rate by the percentages stated above.

We will continue to keep clients and friends of the firm updated on these developments.