New York restaurants must pay a minimum wage of $8.75 per hour, or at least $5.00 per hour for waitstaff if it takes a “tip credit.”
Minimum wage varies by state, but is $8.75 per hour in New York. In New York, restaurants are allowed to use a “tip credit” of $3.75 per hour to count towards the minimum wage that they must pay their tipped employees. In other words, they can pay their waitstaff less than minimum wage on the condition that the employees will make at least minimum wage after keeping their tips. In these cases, (1) the employees must be informed by the restaurant of the tip credit law (i.e. Section 3(m) of the Fair Labor Standards Act), and (2) all tips received by such employees must be retained by the employees (unless there is a valid tip pooling arrangement).
The minimum direct wage for a tipped restaurant employee in New York is $5.00 an hour, provided the employee is allowed to keep the tips received, and the sum of the direct wage and the tips must be equal to or greater than $8.75. If an employee’s tips combined with the employer’s direct wages do not equal the federal minimum hourly wage of $7.25 per hour, the restaurant must make up the difference.