New York: Possible End to Minimum Wage Tip Credits

New York Governor Andrew Cuomo has announced that he will instruct the New York Department of Labor (NYDOL) to “evaluate the possibility of ending minimum wage tip credits in the State”. Currently, New York employers are allowed to take a “credit” for some tips received by workers to “satisfy the difference between the cash wage paid and the full minimum wage”. If the permission is eliminated, employers must pay tipped employees the full minimum wage.

According to JDSupra, “if this change is made, tipped workers will have a big boost to their income and employers a big blow to their bottom line”. It continues:

Employers will be required to pay servers and other tipped employees the full minimum wage and such “front of the house” workers also will be entitled to keep the tips they receive on top of the direct wage.  Such a move will widen the already large gap between the front of the house workers (e.g. servers) and “back of the house” employees (e.g. cooks) who, under New York law, do not and cannot receive any tips.  Notably, the federal DOL has issued proposed regulations that would permit employers who do not take tip credit to share tips with employees in the kitchen to address the income inequality.  But without some other change to NY law expanding the group of employees permitted to share tips, service staff would get to keep it all, on top of their proposed wage increase, as the elimination of the credit is, in effect, a substantial wage increase.

For more on the potential change and its impact on both workers and employers, please click here.