Tag: hospitality industry

Tip Credit

New York Eliminates Tip Credit for Most Industries

On January 22, 2020, the New York Department of Labor issued a proposed rule toward eliminating the tip credit for employees in most industries. The rule change follows a report in which the Commissioner of Labor recommended this approach. Governor Cuomo endorsed the report’s findings on December 31, 2019. The new rule will modify the State’s Minimum Wage Order for Miscellaneous Industries and Occupations.

The proposed rule is subject to a 60-day public comment period. However, it appears quite likely the Department of Labor will finalize this rule before the initial June 30, 2020 partial implementation date.

Affected Employees

The New York Minimum Wage Order for Miscellaneous Industries and Occupations covers most industries. Limited exceptions include the hospitality industry (restaurants and hotels), building services, and farmworkers.

This rule change does not affect tipped restaurant or hotel workers. But it does generally encompass the following types of positions where employees commonly receive tips:

  • car wash attendants
  • nail salon workers
  • tow truck drivers
  • dog groomers
  • wedding planners
  • tour guides
  • tennis instructors
  • valet parking attendants
  • hairdressers
  • aesthetician
  • golf instructors
  • door persons

Current Tip Credit Allowance

Employers have historically been able to pay such employees below the standard New York minimum wage by relying on a tip credit allowance. To apply a portion of the employee’s tips or gratuities toward satisfying the hourly minimum wage requirement:

  • The employee’s occupation must be one in which tips have customarily and usually constituted a part of the employee’s remuneration;
  • The employer must be able to show substantial evidence that the employee has earned at least the amount claimed for the tip credit allowance; and
  • Any tip credit allowance must be recorded on a weekly as a separate item in the wage record.

Where currently allowed, the amount of the tip credit available to employers depends on the level of tips earned by a particular employee. In each case, there is a “low” and “high” tip credit allowance based on the employee’s weekly average of tips received.

New Tip Credit Rule

Under the new rule the tip credit allowance under the New York Miscellaneous Industries and Occupations Wage Order would be cut in half effective June 30, 2020, Then, as of December 31, 2020, it would be eliminated. Thus, by year end, employers will have to pay full minimum wage without the benefit of any tip credit.

Commissioner of Labor Investigation and Report

The New York Commissioner of Labor has the authority to declare that a policy must be eliminated as rapidly as practicable without substantially curtailing opportunities for employment or earning power. Governor Andrew Cuomo had directed the Commissioner to examine the overall impact of the minimum wage tip credits on employees and employers.  The Department of Labor held seven public hearings resulting in approximately 40 hours of testimony, and the Commissioner issued an 11-page “New York State Subminimum Wage Hearing Report and Recommendations.”

The Commissioner’s Report addresses the overall intent behind the project, what action was taken by the Commissioner and his team to investigate the overall impact of the tip credit allowance, the data collected during the investigation, and his recommendations for changes moving forward.

Report Findings

The Commissioner’s Report includes the following findings:

  • There are at least 70,000 workers in the state of New York that fall under the Miscellaneous Wage Order who likely receive tips.
  • 62% of these employees are female, 41% are non-white, and 27% are Hispanic or Latino.
  • Tipped workers are twice as likely to be in poverty, with a below-poverty status of 13%–more than two times that of the broader workforce–and are more likely to rely on public assistance.
  • Tipped workers outside of the hospitality industry are often confused about whether they are entitled to earn minimum wage, leading to wage theft.
  • The testimony cited lower tipping rates in miscellaneous industries due to tip pooling and a lack of broad public awareness of tipping in these types of businesses.

Report Conclusions

The Commissioner concluded that the existing tip credit language in the Miscellaneous Industry Minimum Wage Order:

  • allows employers outside of the hospitality industry to employ workers “at wages that are insufficient to provide adequate maintenance for themselves and their families”;
  • threatens the health and well-being of the people of this state; and
  • injures the overall economy.

Minimum Wage for Tipped Employees (Non-Hospitality)

The charts below show the 2020 minimum wage requirements for employees covered by the Miscellaneous Industries Minimum Wage Order.

New York City
Effective DateMinimum WageLow Tips ($2.25 to $3.64)High Tips ($3.65+)
12/31/2019$15.00$12.75$11.05
6/30/2020$15.00$13.85$13.15
12/31/2020$15.00$15.00$15.00

 

Long Island & Westchester County
Effective DateMinimum WageLow Tips ($1.95 to $3.19)High Tips ($3.20+)
12/31/2019$13.00$11.05$9.80
6/30/2020$13.00$12.00$11.40
12/31/2020$14.00$14.00$12.50

 

Remainder of New York State
Effective DateMinimum WageLow Tips ($1.75 to $2.89)High Tips ($2.90+)
12/31/2019$11.80$10.05$8.90
6/30/2020$11.80$10.90$10.35
12/31/2020$12.50$12.50$12.50

In some parts of the State, the minimum wage will increase again on December 31, 2021. On that date, the minimum wage for Long Island and Westchester will rise to $15.00 per hour. Additional increases for other parts of the state are also likely, but not yet scheduled.

Click here for more details on New York State’s minimum wage rates.

Potential Changes to the Hospitality Tip Credit

This rule change does not apply to individuals employed in the hospitality industry. However, it remains possible that restaurants and hotels will face similar changes in the future.

Several years ago, the Labor Commissioner convened a Hospitality Wage Board to investigate modifications to the required cash wage rates and the allowable credits for tips, meals and lodging for employees in the hospitality industry. In February 2015, based on the Wage Board’s recommendations, the Department of Labor modified tip amounts and criteria for all tipped workers in the hospitality industry. These include food service workers and other restaurant and hotel service employees.

The Hospitality Wage Board found that the tipped employee minimum wage adversely affects “especially low-paid employees, women, and minorities.” It recommended “a complete elimination” of the “subminimum wage” in favor of “a single minimum wage [that] would simplify a complicated system.” However, both restaurants/hotels and their employees have expressed opposition to the elimination of the tip credit for hospitality workers.

Recommendations for Employers in Non-Hospitality Industries

Employers (other than restaurants and hotels) currently taking advantage of the tip wage credit must evaluate their current practices and determine how they intend to comply with the planned changes. In some cases, it may not even be clear whether the hospitality or miscellaneous wage order technically applies. Given the complexity of these regulations, it is critical to carefully review and modify your operations and pay practices as necessary.

 

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2020 New York Minimum Wage

2020 New York Minimum Wage

Do you know the 2020 New York minimum wage? Employers must be ready before the end of the year to meet the new requirements.

The 2020 New York minimum wage rates are shaded in blue in the tables below. Note that the changes take effect on the last day of the year, not January 1st.

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Standard New York Minimum Wage

The 2020 New York minimum wage varies by geographic location, employer size (where applicable), and sometimes by industry.

For most private employers, the 2019 New York minimum wage in the following chart applies. This chart also applies for non-teaching employees of public school districts or a BOCES. However, there is no New York minimum wage for other employees of public (governmental) employers (but the federal minimum wage of $7.25 does apply).

General Minimum Wage Rate Schedule
Location12/31/1812/31/1912/31/2012/31/21
NYC – Large Employers (of 11 or more)$15.00$15.00
NYC – Small Employers (10 or less)$13.50$15.00
Long Island & Westchester$12.00$13.00$14.00$15.00
Remainder of New York State$11.10$11.80$12.50TBD*

* Annual increases for the rest of the state will continue until the rate reaches a $15 minimum wage. Starting in 2021, the annual increases will be published by the Commissioner of Labor by October 1. They will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices, including the Consumer Price Index.

Minimum Wage for Tipped Employees in the Hospitality Industry

New York State has separate minimum wage rules for employees in the hospitality industry. These rules apply to businesses running a restaurant or hotel.

The minimum wage rates for most non-tipped employees in the hospitality industry are set as per the schedule above. However, employers may count a portion of certain tipped employees’ gratuities toward the minimum wage requirements. This is known as a “tip credit.”

New York State has two separate cash wage and tip credit schedules for tipped hospitality employees who qualify as “food service workers” and “service employees.”

Food Service Workers

A food service worker is any employee who is primarily engaged in serving food or beverages to guests, patrons, or customers in the hospitality industry who regularly receive tips. This includes wait staff, bartenders, captains, and busing personnel. It does not include delivery workers.

Hospitality Industry Tipped Minimum Wage Rate Schedule (Food Service Workers)
Location12/31/1812/31/1912/31/2012/31/21
NYC – Large Employers
(of 11 or more)
$10.00 Cash

$5.00 Tip

$10.00 Cash

$5.00 Tip

NYC – Small Employers
(10 or less)
$9.00 Cash

$4.50 Tip

$10.00 Cash

$5.00 Tip

Long Island & Westchester$8.00 Cash

$4.00 Tip

$8.65 Cash

$4.35 Tip

$9.35 Cash

$4.65 Tip

$10.00 Cash

$5.00 Tip

Remainder of New York State$7.50 Cash

$3.60 Tip

$7.85 Cash

$3.95 Tip

$8.35 Cash

$4.15 Tip

Service Employees

The next schedule applies to other service employees. A service employee is one who is not a food service worker or fast food employee who customarily receives tips above an applicable tip threshold (which also follows schedules, not shown here).

Hospitality Industry Tipped Minimum Wage Rate Schedule (Service Employees)
Location12/31/1812/31/1912/31/2012/31/21
NYC – Large Employers
(of 11 or more)
$12.50 Cash

$2.50 Tip

$12.50 Cash

$2.50 Tip

NYC – Small Employers
(10 or less)
$11.25 Cash

$2.25 Tip

$12.50 Cash

$2.50 Tip

Long Island & Westchester$10.00 Cash

$2.00 Tip

$10.85 Cash

$2.15 Tip

$11.65 Cash

$2.35 Tip

$12.50 Cash

$2.50 Tip

Remainder of New York State$9.25 Cash

$1.85 Tip

$9.85 Cash

$1.95 Tip

$10.40 Cash

$2.10 Tip

Fast Food Minimum Wage

Non-exempt employees at some “fast food” restaurants are subject to an alternative minimum wage schedule.

This schedule applies to employees who work in covered fast food restaurants whose job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.

These special New York minimum wage rates only apply to fast food restaurants that are part of a chain with at least 30 restaurants nationally.

Fast Food Minimum Wage Rate Schedule
Location12/31/1812/31/1912/31/207/1/2021
New York City$15.00 $15.00
Outside of New York City$12.75$13.75 $14.50 $15.00

Note: No tip credit is available for fast food employees.

Overtime Threshold

Along with increases to the 2019 New York minimum wage, the salary requirement to maintain some overtime exemptions will also increase.

The salary threshold for New York’s executive and administrative exemptions go up on December 31st. These amounts are all higher than the federal Fair Labor Standards Act (FLSA) threshold, which will increase from $455/week to $684/week on January 1, 2020. But most New York employers (other than governmental entities) must satisfy the higher New York threshold to ensure full overtime exemption.

There is no salary requirement for New York’s professional exemption. But employers must also satisfy the FLSA threshold for most professional employees. Doctors, lawyers, and teachers do not have a salary requirement for exemption.

Executive & Administrative Exemption Weekly Salary Threshold Schedule
Location12/31/1812/31/1912/31/2012/31/21
NYC – Large Employers (of 11 or more)$1,125.00$1,125.00
NYC – Small Employers (10 or less)$1,012.50$1,125.00
Long Island & Westchester$900.00$975.00$1,050.00$1,125.00
Remainder of New York State$832.00$885.00$937.50TBD*

Prepare Now for the 2020 New York Minimum Wage

New York employers should review their compensation levels and make necessary changes by December 31, 2019. This might result in increasing an employee’s hourly wage or salary or reclassifying exempt employees to non-exempt if they will no longer meet the exemption salary requirement.

And, remember, the 2020 New York minimum wage rates only last one year in many cases. Companies will have to review this again next year.

To keep up on New York and federal wage and hour requirements and other employment law topics, you can sign up for our email newsletter here or follow us on LinkedIn!

2019 New York Minimum Wage

2019 New York Minimum Wage

Do you know the 2019 New York minimum wage? Employers must be ready before the end of the year to meet the new requirements.

The 2019 New York minimum wage rates are shaded in blue in the tables below. Note that the changes take effect on the last day of the year, not January 1st.

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Standard New York Minimum Wage

The 2019 New York minimum wage varies by geographic location, employer size (where applicable), and sometimes by industry.

For most private employers, the 2019 New York minimum wage in the following chart applies. This chart also applies for non-teaching employees of public school districts or a BOCES. However, there is no New York minimum wage for other employees of public (governmental) employers (but the federal minimum wage of $7.25 does apply).

General Minimum Wage Rate Schedule
Location12/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers (of 11 or more)$13.00$15.00
NYC – Small Employers (10 or less)$12.00$13.50$15.00
Long Island & Westchester$11.00$12.00$13.00$14.00$15.00
Remainder of New York State$10.40$11.10$11.80$12.50TBD*

* Annual increases for the rest of the state will continue until the rate reaches a $15 minimum wage. Starting 2021, the annual increases will be published by the Commissioner of Labor by October 1. They will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices, including the Consumer Price Index.

Minimum Wage for Tipped Employees in the Hospitality Industry

New York State has separate minimum wage rules for employees in the hospitality industry. These rules apply to businesses running a restaurant or hotel.

The minimum wage rates for most non-tipped employees in the hospitality industry are set as per the schedule above. However, employers may count a portion of certain tipped employees’ gratuities toward the minimum wage requirements. This is known as a “tip credit.”

New York State has two separate cash wage and tip credit schedules for tipped hospitality employees who qualify as “food service workers” and “service employees.”

Food Service Workers

A food service worker is any employee who is primarily engaged in serving food or beverages to guests, patrons, or customers in the hospitality industry who regularly receive tips. This includes wait staff, bartenders, captains, and busing personnel. It does not include delivery workers.

Hospitality Industry Tipped Minimum Wage Rate Schedule (Food Service Workers)
Location12/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers
(of 11 or more)
$8.65 Cash

$4.35 Tip

$10.00 Cash

$5.00 Tip

NYC – Small Employers
(10 or less)
$8.00 Cash

$4.00 Tip

$9.00 Cash

$4.50 Tip

$10.00 Cash

$5.00 Tip

Long Island & Westchester$7.50 Cash

$3.50 Tip

$8.00 Cash

$4.00 Tip

$8.65 Cash

$4.35 Tip

$9.35 Cash

$4.65 Tip

$10.00 Cash

$5.00 Tip

Remainder of New York State$7.50 Cash

$2.90 Tip

$7.50 Cash

$3.60 Tip

$7.85 Cash

$3.95 Tip

$8.35 Cash

$4.15 Tip

Service Employees

The next schedule applies to other service employees. A service employee is one who is not a food service worker or fast food employee who customarily receives tips above an applicable tip threshold (which also follows schedules, not shown here).

Hospitality Industry Tipped Minimum Wage Rate Schedule (Service Employees)
Location12/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers
(of 11 or more)
$10.85 Cash

$2.15 Tip

$12.50 Cash

$2.50 Tip

NYC – Small Employers
(10 or less)
$10.00 Cash

$2.00 Tip

$11.25 Cash

$2.25 Tip

$12.50 Cash

$2.50 Tip

Long Island & Westchester$9.15 Cash

$1.85 Tip

$10.00 Cash

$2.00 Tip

$10.85 Cash

$2.15 Tip

$11.65 Cash

$2.35 Tip

$12.50 Cash

$2.50 Tip

Remainder of New York State$8.65 Cash

$1.75 Tip

$9.25 Cash

$1.85 Tip

$9.85 Cash

$1.95 Tip

$10.40 Cash

$2.10 Tip

Fast Food Minimum Wage

Non-exempt employees at some “fast food” restaurants are subject to an alternative minimum wage schedule.

This schedule applies to employees who work in covered fast food restaurants whose job duties include at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.

These special New York minimum wage rates only apply to fast food restaurants that are part of a chain with at least 30 restaurants nationally.

Fast Food Minimum Wage Rate Schedule
Location12/31/1712/31/1812/31/1912/31/207/1/2021
New York City$13.50$15.00
Outside of New York City$11.75$12.75$13.75 $14.50 $15.00

Note: No tip credit is available for fast food employees.

Overtime Threshold

Along with increases to the 2019 New York minimum wage, the salary requirement to maintain some overtime exemptions will also increase.

The salary threshold for New York’s executive and administrative exemptions go up on December 31st. These amounts are all higher than the federal Fair Labor Standards Act (FLSA) threshold, which remains at $455/week. But most New York employers (other than governmental entities) must satisfy the higher New York threshold to ensure full overtime exemption.

There is no salary requirement for New York’s professional exemption. But employers must also satisfy the $455/week FLSA threshold for most professional employees. Doctors, lawyers, and teachers do not have a salary requirement for exemption.

Executive & Administrative Exemption Weekly Salary Threshold Schedule
Location12/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers (of 11 or more)$975.00$1,125.00
NYC – Small Employers (10 or less)$900.00$1,012.50$1,125.00
Long Island & Westchester$825.00$900.00$975.00$1,050.00$1,125.00
Remainder of New York State$780.00$832.00$885.00$937.50TBD*

Prepare Now for the 2019 New York Minimum Wage

New York employers should review their compensation levels and make necessary changes by December 31, 2018. This might result in increasing an employee’s hourly wage or salary or reclassifying exempt employees to non-exempt if they will no longer meet the exemption salary requirement.

And, remember, the 2019 New York minimum wage rates only last one year in most cases. Companies will have to review this again next year.

To keep up on New York and federal wage and hour requirements and other employment law topics, you can sign up for the Horton Law email newsletter here!