New York to Raise Minimum Cash Wage for Tipped Employees to $7.50

Author: Michael Cardman, XpertHR Legal Editor

February 26, 2015

Employers in New York will have to begin paying tipped employees a minimum cash wage of $7.50 at the end of this year.

Currently, tipped employees must be paid a minimum cash wage of between $4.90 and $5.65. The rates vary depending on whether the employees are food service workers, like wait staff, bartenders and bus boys, or other service employees, such as bellhops or delivery drivers.

A new order issued February 24 by Mario J. Musolino, the Acting Commissioner of the New York State Department of Labor, will eliminate these distinctions and establish a uniform minimum cash wage for all tipped employees of $7.50, effective December 31, 2015.

Musolino's order also requires that the minimum cash wage for tipped employees in New York City be increased by an additional dollar to $8.50 if the state legislature enacts a higher minimum wage for New York City, as New York Gov. Andrew Cuomo has proposed.

All other existing tip credit requirements will remain the same. Employers will be able to claim employees' tips as a credit against the minimum wage (which is currently $8.75 and is scheduled to increase to $9.00 on December 31, 2015) only if the employees:

• Receive enough tips to make up the difference between the minimum cash wage and the minimum wage;
• Have been notified in writing about the tip credit; and
• Spend no more than two hours or 20% of their shift, whichever is less, performing non-tipped work such as washing dishes.

Many employees had sought to eliminate the tip credit altogether, while a restaurant industry group had recommended maintaining the status quo, saying that an increase in the tip credit would "handcuff small businesses' ability to create jobs, decrease the pay of non-tipped employees, and reduce hours for tipped employees."

Musolino said the $7.50 rate "strikes the proper balance" between these two camps.