In many states, service industry workers who rely on tips for substantial portions of their income face burdens other workers do not. Specifically, employers in states such as New York can take a “tip credit” and pay their employees less than the minimum wage as long as the amount in gratuities the employee earns makes up the difference between the wage they actually receive from their employer and the state’s standard minimum wage.
For 70,000 tipped workers in the Empire State, “tip credits” are now a thing of the past. Regardless of how much they earn in tips, these employees now must be paid the minimum wage under a directive issued in December 2019 by Gov. Andrew Cuomo. Pursuant to the governor’s direction, and after extensive hearings, testimony, and public comments, the New York State Department of Labor issued an order eliminating the tip credit for “miscellaneous” industries across the state by the end of 2020.
Notably, the list of “miscellaneous” industries that now must pay employees the full minimum wage does not include the hospitality sector. This means that workers such as restaurant waitstaff, bartenders, busboys, and other service employees who customarily receive gratuities can still be paid sub-minimum wage.
All other New York tipped employees, however, must receive at least the minimum wage in addition to any tips they may earn starting on January 1, 2021. Before then, the tip credit will go down by half, with employers needing to pay half the difference between the minimum wage and the current sub-minimum wage starting on June 30, 2020.
New York now joins several other states such as California, Washington, Minnesota, Alaska, Oregon, Nevada, and Montana that have already done away with tip credits for some or all of their tipped workforces. Many other states and municipalities continue to explore the possibility of requiring employers to pay the full minimum wage to tipped workers. As this trend continues, workers who receive tips need to remain vigilant to ensure that they receive the full wage to which they are entitled under any changes to the law where they work.
Contact the Overtime Pay Attorneys for a Free Consultation to Discuss Any Tip Credit and Minimum Wage Questions and Concerns
Tipped workers know that gratuities, and how employers and the law treat those gratuities, play an outsized role in determining how much money they take home. If you are one of these workers and have concerns about how your employer treats your tips or whether they owe you more than what you receive in wages, please call the Overtime Pay Attorneys at (833) 768-7924 or contact us online for your free consultation.