Not So Happy New Year For NY’s Tipped Workers

Minimum wage workers in New York State will be ringing in the new year with a raise.  Beginning today, the State’s minimum wage has increased from $8.00 to $8.75 per hour. 

The news is not so good for the tens of thousands of New York workers who survive on customer tips.

Under certain circumstances, employers can pay tipped workers less than the minimum wage by taking a credit against the tips that workers receive from customers.  

New York law provides for a separate tip credit for three categories of tipped workers: 1) food service workers; 2) service employees and 3) resort and hotel employees. 

While New York’s hourly minimum wage increased by $.75; the employer tip credit increased by the same amount for each category of tipped worker.

As a result, employers are not required to increase the minimum wages actually paid to qualifying tipped workers. 

The following tables explain how tipped workers are shut out of this year’s wage increase:

Moreover, absent legislative intervention, tipped workers will get stiffed on next year’s minimum wage increase as well.  While the regular minimum wage is scheduled to increase to $9.00 on December 31, 2015, the increase will be accompanied by  a  $.25 across the board increase to the tip credit.  Here’s how that breaks down:

If you think this is unfair, you are not alone. The Restaurant Opportunities Center of New York, a worker’s rights organization, has called for New York to abolish the subminimum wage for tipped workers. The organization notes that:

Millions of working American adults spend their careers in tipped jobs, yet tipped workers such as servers, bussers, bartenders, and barbacks face a poverty rate three times higher than the overall workforce. This is because the law allows employers to pay tipped workers less than the minimum wage, forcing workers to depend on unstable income from tips to support their families. This means restaurants are passing the obligation of paying wages onto their customers, even though tips are meant to be a gratuity that shows appreciation for good service.

Many states have raised their tipped minimum wages, and seven states have abolished the tipped minimum wage entirely and pay up to $9.19/hour to tipped workers. But New York’s minimum wage for tipped workers is only $5.00/hour – not nearly enough to support a family in the state with the highest cost of living in the continental U.S.

New York should be a leader in the fight for fair wages for tipped workers because abolishing the tipped minimum wage is a policy that is good for families, good for gender equality, and good for the restaurant industry and economy!

However, 2016 may turn out to be a good year for New York’s tipped workers after all.  In July 2014, New York Governor Andrew Cuomo directed the New York Department of Labor to convene a wage board to consider recommending a raise for tipped workers. 

We’ll keep you posted.