Tag: restaurants

Tip Pooling

Navigating New York Tip Pooling and Tip Sharing Rules

Balancing company revenues and employee compensation is critical to the success of any hospitality business. As profit margins continue to tighten, restaurant and bar owners may need to revisit their tipping practices. Tip pooling and tip sharing are common practices that can benefit employees (and hence their employers). The legal requirements around these tipping topics can depend on both state and federal law. In New York, the state requirements are more restrictive than federal regulations would otherwise allow.

Tip Pooling and Tip Sharing

New York applies the following concepts to requirements related to these tipping issues.

Tip Pooling is the practice by which the tip earnings of directly tipped employees are intermingled in a common pool and then redistributed among directly and indirectly tipped employees.

Tip Sharing refers to a type of tip pool structure in which directly tipped employees keep a certain percentage of their tips, then tip out other indirectly tipped employees with the remaining percentage.

Directly Tipped Employees receive tips from patrons directly without any intermediary between the customer and the employee. Examples of directly tipped employees include servers and bartenders.

Indirectly Tipped Employees support service and are eligible to receive tips from a tip pool, such as bussers, barbacks, and hosts.

Eligible Employees

Back-of-house employees, such as cooks, dishwashers, porters, and other employees, whose primary job function does not involve direct interaction with customers, must be paid at least minimum wage for all hours worked. These employees are ineligible to receive tips or gratuities, and thus, cannot be part of a tip pool.

Front-of-house employees, such as servers, bartenders, barbacks, and bussers, who interact with customers or support the interaction indirectly are also paid at least the minimum wage for all hours worked. But they typically also receive tips and gratuities, and, accordingly, can be part of a tip pool. Hospitality industry employers may apply a tip credit towards their minimum wage obligations to these tipped employees.

Whether an employee is eligible to participate in a tip pooling arrangement depends on their duties and tasks assigned, not their title. To be eligible, the employee must regularly engage in duties that involve providing or helping to provide personal services to customers as an essential element of their job. Accordingly, directly tipped employees in New York restaurants cannot share tips with back-of-house employees, regardless of whether the employer takes a tip credit.

If an employer requires or allows ineligible employees (such as managers and supervisors or back-of-house employees) to share in pooled tip money, it loses the right to apply a tip credit toward the minimum wage requirement and could have to repay the money, with additional fines, to the front-of-house tipped employees.

Tip Credits & New Federal Regulations

When relying on a tip credit, the employer pays a cash wage and supplements that wage with the gratuities earned to reach the minimum wage for all hours worked. However, if the employee’s tips are insufficient to cover the difference between the cash wage paid and the minimum wage, the employer must pay the difference. New York City has a $12.50/hour cash wage with a $2.50/hour tip credit, while the remainder of the state currently has an $11.00/hour cash wage with a $2.20/hour tip credit for service employees.

As of March 1, 2021, new federal regulations under the FLSA permit customer-facing employees (front of house) to share their tips with non-facing employees (back of house) if: (1) the employer does not take a tip credit; and (2) no supervisory or managerial employees participate in the arrangement. These new federal regulations acknowledge that both front and back-of-house employees contribute to the guest experience. However, New York has not followed this expansion of tip pools. Thus, New York employers still must limit their tip pools to employees who regularly provide service to customers.

Review Your Tip Pooling Practices

If you haven’t done so lately, now would be a good time to review tipping procedures carefully. Violations of New York’s tip pooling or tip sharing requirements could be costly, both in terms of employee morale and potential financial penalties arising from wage payment claims.

 

Find out more about Horton Law’s representation of employers in the hospitality industry.

Reopening Restaurants

New York Phase 3: Reopening Restaurants

Phase 3 of New York’s reopening plan allows restaurants and food service businesses to expand or resume operations. Reopening restaurants encompasses most food service establishments, including food trucks and concessions.

In Phase 1, food service businesses could reopen for takeout and delivery only. In Phase 2, restaurants could host diners in open outdoor seating, with restrictions. Once in Phase 3, they may resume indoor customer seating under State guidelines.

The industry-specific guidelines have been divided into five categories: Physical Distancing; Protective Equipment; Hygiene, Cleaning, and Disinfection; Communication; and Screening. Summary Guidelines for food services include both Mandatory and Recommended Best Practices. The restaurant guidelines also indicate that businesses must follow other CDC and Department of Health recommendations to help protect workers and customers and prevent the spread of the coronavirus.

Interim Guidance for Outdoor and Take-Out/Deliver Food Services During the COVID-19 Public Health Emergency

Interim Guidance for Food Services During the COVID-19 Public Health Emergency

Physical Distancing

All food service establishments are subject to a 50% indoor occupancy limit in Phase 3. This restriction applies to both personnel and customers. To achieve this, employers should consider reducing on-site headcount, adjusting work hours and shifts, prioritizing tasks to focus on those that allow for social distancing, and posting signs that provide clear directions to staff.

Outdoor seating capacity is restricted to the number of tables and seats that can be safely arranged with proper social distancing. Indoor and outdoor tables must be placed at least 6 feet apart. When this is not practical, businesses can install physical barriers between tables that are a minimum of 5 feet in height.

Employees must wear acceptable face coverings at all times. Patrons must wear face coverings unless they are sitting at their table. Everyone at the table must be part of the same party, up to a maximum of 10 people. Customers can sit at a bar or communal tables only if they can maintain 6 feet between them.

Restaurants must post 6-foot social distancing markers to remind workers and customers to keep space between them. These markings are especially crucial in commonly used areas such as cash registers, places where employees clock in and out for their shift, where health screenings will occur, break rooms, restrooms, and take-out windows. Restaurants should mark exits and entries to avoid confusion, ideally reducing bi-directional foot traffic.

Additional Physical Distancing Suggestions

Servers should have specific work areas to avoid unnecessary crossover. Kitchen staff assigned to prepare food, cook during the shift, or clean should be designated to one area for the entire shift. Management should train these employees on ways to reduce physical contact with food, shared surfaces, or other coworkers. If asocial distancing is not practical, restaurants can use physical barriers where it would not negatively affect airflow or block emergency and fire exits.

As in earlier phases, reopening restaurants should continue to enable customers to place takeout orders online or by phone only. Customers should remain in their cars until the food is ready for pick-up and take advantage of contactless orders, delivery, payment, and pick-up procedures.

Protective Equipment

Except when seated at their table, all customers must wear face coverings unless they are under two years old or have a medical condition that restricts their ability to wear them. This requirement applies, for example, for trips to the bar, restroom, outside, or to pay.

Employees must wear face coverings whenever they come within 6 feet of a coworker or customer. Employers must provide face coverings to all employees at no cost and clean or replace them when necessary. However, employees may wear their own face coverings. Employers also must train employees on how to use face coverings properly while at work.

Food service businesses should reduce the sharing of objects or equipment. Where that is not possible, they must supply employees with disposable gloves to prevent the transmission of the coronavirus. Staff should wear disposable gloves when handling food and replace them before switching to a new task. Workers must practice proper hand hygiene when disposable gloves are not being used.

Additional Protective Equipment Suggestions

Operators of food trucks and concessions without running water must require staff to wear disposable gloves, use hand sanitizer, and follow proper federal, state, and local food handling and hygiene requirements.

Hygiene, Cleaning, and Disinfection

Businesses offering food services must adhere to hygiene and sanitation requirements set forth by the Centers for Disease Control and Prevention (CDC) and the Department of Health (DOH). These requirements cover areas of the kitchen where employees may handle food preparation and serve customers, high-touch surfaces and equipment, and indoor and outdoor seating areas.

Restaurants must arrange for frequent cleaning at least after every shift, daily, or more frequently. They should pay particular attention to shared objects and surfaces and high-traffic areas. This cleaning and disinfecting should be performed using the Department of Environmental Conservation (DEC) products recommended for COVID-19. Restaurants must maintain a log that documents the date, time, and scope of cleaning and disinfection.

Restaurants must perform a deep cleaning and sanitation as frequently as possible. They may need to engage the services of a third party specializing in cleaning and disinfecting buildings.

Where possible, restaurants should increase the circulation of outdoor air while maintaining safety precautions–hence, the preference for outdoor seating.

Staff must be provided with hand hygiene stations that include soap, running warm water, and disposable paper towels, as well as an alcohol-based hand sanitizer containing 60% or more alcohol for situations where handwashing is not feasible. Signs near hand sanitizer stations should direct employees to wash visibly soiled hands with soap and water. Restaurants also need to ensure that receptacles for proper disposal of soiled items, including face masks and disposable gloves, are available.

Additional Cleaning Suggestions

Owners of food service establishments should consider switching to disposable menus. Reopening restaurants should also try to reduce the distribution of electronics to customers. These include buzzers used to notify customers that their table is ready and tablets used for digital menus or entertainment during the visit. Hand sanitizer should be readily available to customers, especially in high-touch areas.

Establishments offering take-out and delivery must implement the following:

  • Provide hand hygiene stations for takeout customers.
  • Require all staff to practice proper hand hygiene and use disposable gloves when necessary.
  • Increase ventilation of indoor takeout areas through windows or some other means.
  • Use single-use condiments and sauces whenever feasible. If not, staff must clean condiment bottles and containers after each use.

Communication

Once a reopening restaurant has read and digested the guidelines, it must determine how to implement them. Each business must develop a COVID-19 safety plan. The State has created a safety plan template to use as a starting point. However, each company should have a plan that is consistent with its business and facilities.

Employers may include additional policies and procedures in their safety plan that will assist with slowing down or eliminating the virus’s transition. Once that is complete, the company must submit an affirmation confirming that they have read, understood, and intend to implement the guidelines.

All employees should be trained on the new protocols and educated on the importance of cleaning and sanitation, as well as the need to respect social distancing guidelines and wear face coverings, when appropriate.

Restaurants must have signs inside and outside of the building to remind staff and visitors of the importance:

  • Covering their nose and mouth with a face covering.
  • How to properly store and, when necessary, discard PPE.
  • Adhering to physical distancing instructions.
  • The need to report symptoms of or exposure to COVID-19, and how they should do so.
  • The need to follow hand hygiene and cleaning and disinfection guidelines.
  • Following appropriate respiratory hygiene and cough etiquette.

Many of the recommended signs can be found on the Centers For Disease Control and Prevention website, located here.

Screening & Tracking

A mandatory health screening assessment must be performed on all employees and vendors that visit the worksite. The screening should include questions about symptoms and an individual’s contact with COVID-19 patients. It can also include temperature checking, testing, and the collection of contact information. The guidelines encourage employers to screen staff before they report to work, if possible.

For situations involving positive cases or potential exposure, business operators must follow the DOH’s “Interim Guidance for Public and Private Employees Returning to Work Following COVID-19 Infection or Exposure”. The guidance, which is likely to change, includes instructions on how to properly clean and disinfect work areas after learning of a positive case and when employees may return to work after exposure.

Upon reopening, employers must keep a daily continuous log of all employees and vendors that enter the restaurant. The log should consist of contact information for anyone who had close contact with workers, unless they wore appropriate PPE. Businesses should attempt to collect contact information for customers, but they cannot mandate customers to provide it. Contact information will help facilitate proper contact tracing when necessary.

Food service establishments will be required to notify state and local health departments if a worker tests positive for COVID-19 or has had contact with an infected individual. In the event of a positive case, employers must cooperate with contact tracing efforts while maintaining confidentiality.

What Should New York Restaurants Do Next?

Restaurants and other food service establishments open in Phase 3 must review the industry-specific guidelines and affirm that they have read, understood, and intend to implement them before reopening. You must draft and post a safety plan and post appropriate signage. You also need a strategy to perform health screenings and assist in contact tracing when required.

Each food service business must designate a safety monitor responsible for ensuring the company’s compliance with the safety plan and reopening guidelines. Employers have to train individuals responsible for conducting the health screening, collecting contact information, performing contact tracing, and notifying the state and local health department of positive tests.

All reopening restaurants must also develop a plan for cleaning, disinfecting, and performing contact tracing if a positive case occurs. Minimum measures should include cleaning and disinfecting all heavy-transit areas and high-touch surfaces.

 

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New York Minimum Wage

New York Minimum Wage Increases on 12/31/17

Don’t forget that the New York minimum wage will increase for most employers on December 31, 2018.

Note that the change takes effect on the last day of 2017, not the first day of 2018.

Standard New York Minimum Wage

The chart below shows the current minimum wage and scheduled increases, by geographic location and employer size (where applicable), for most New York private employers. These also apply for non-teaching employees of public school districts or a BOCES. 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
Location12/31/1612/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers (of 11 or more)$11.00$13.00$15.00
NYC – Small Employers (10 or less)$10.50$12.00$13.50$15.00
Long Island & Westchester$10.00$11.00$12.00$13.00$14.00$15.00
Remainder of New York State$9.70$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.

New York Minimum Wage for Tipped Employees in the Hospitality Industry

New York State has separate minimum wage rules for employees in the hospitality industry.

The hospitality industry includes any restaurant or hotel.

The minimum wage 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)
Location12/31/1612/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers
(of 11 or more)
$7.50 Cash

$3.50 Tip

$8.65 Cash

$4.35 Tip

$10.00 Cash

$5.00 Tip

NYC – Small Employers
(10 or less)
$7.50 Cash

$3.00 Tip

$8.00 Cash

$4.00 Tip

$9.00 Cash

$4.50 Tip

$10.00 Cash

$5.00 Tip

Long Island & Westchester$7.50 Cash

$2.50 Tip

$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

$2.20 Tip

$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)
Location12/31/1612/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers
(of 11 or more)
$9.15 Cash

$1.85 Tip

$10.85 Cash

$2.15 Tip

$12.50 Cash

$2.50 Tip

NYC – Small Employers
(10 or less)
$8.75 Cash

$1.75 Tip

$10.00 Cash

$2.00 Tip

$11.25 Cash

$2.25 Tip

$12.50 Cash

$2.50 Tip

Long Island & Westchester$8.35 Cash

$1.65 Tip

$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$8.10 Cash

$1.60 Tip

$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
Location12/31/1612/31/1712/31/1812/31/1912/31/207/1/2021
New York City$12.00$13.50$15.00
Outside of New York City$10.75$11.75$12.75$13.75 $14.50 $15.00

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

Overtime Threshold

The salary threshold for New York’s executive and administrative exemptions will also increase 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) have to 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. There is no federal salary requirement to exempt doctors, lawyers, and teachers.

(For more on the FLSA salary threshold, read How Much Should Exempt Employees Get Paid.)

Executive & Administrative Exemption Weekly Salary Threshold Schedule
Location12/31/1612/31/1712/31/1812/31/1912/31/202021
NYC – Large Employers (of 11 or more)$825.00$975.00$1,125.00
NYC – Small Employers (10 or less)$787.50$900.00$1,012.50$1,125.00
Long Island & Westchester$750.00$825.00$900.00$975.00$1,050.00$1,125.00
Remainder of New York State$727.50$780.00$832.00$885.00$937.50TBD*

Review and Revise Now

New York employers should review their compensation levels and make necessary changes by December 31, 2017. This may mean 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.

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