Minimum Wage to Increase for Tipped Employees of Restaurants and Hotels

Wait staff, hotel porters, bartenders and other employees in the hospitality industry are set to receive a raise.

The Acting Commissioner of the New York State Department of Labor has issued an Order that, among other things, will raise the minimum wage that an employer in the hospitality industry must pay to tipped employees to $7.50 per hour. The Acting Commissioner issued the Order in response to recommendations by the 2014 Hospitality Wage Board, which had been charged by the Governor with providing recommendations regarding tipping and other practices affecting employees in the hospitality industry.

Effective Wage Rate/Tip Credits

Pursuant to the Acting Commissioner’s Order, beginning on December 31, 2015, the effective minimum wage rate (i.e., the minimum wage rate paid by the employer after a tip credit is taken) for all tipped workers in the hospitality industry will increase to $7.50 per hour. Thus, effective on December 31, 2015, employers in the hospitality industry must (i) pay a base wage rate to tipped employees of at least $7.50 per hour, and (ii) continue to ensure that each tipped employee’s base wages plus tips meets or exceeds the state minimum wage of $9.00 per hour (the increased state-wide minimum wage that is also scheduled to take effect on December 31, 2015).

Under the current Hospitality Wage Order’s minimum wage requirements (which will remain in effect until the scheduled increase), tipped “food service workers” (e.g., wait staff, bartenders, bussing personnel, etc.) are required to receive a base wage of at least $5.00 per hour. Tipped “service employees” (non-food service workers who regularly receive tips) are required to receive a base wage of at least $5.65 per hour. Absent the Acting Commissioner’s new Order, these base wage rates were not scheduled to increase next year.

Other Issues Addressed in the Order

The Acting Commissioner’s Order also requires the (i) consolidation of tip amounts and criteria so that the same rates apply to food service workers, service employees, and service employees in resort hotels, and (ii) implementation of a $1.00 increase of the cash wage for tipped workers in New York City if New York State enacts a separate minimum wage rate for New York City. The Acting Commissioner also accepted a recommendation to establish a separate review of whether to eliminate the system of tip credits entirely.

We will provide additional information about the changes when the New York State Department of Labor issues additional regulations or guidance regarding these issues.

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