Governor Cuomo Makes Proposal to Eliminate the Minimum Wage Tip Credit

Governor Cuomo Makes Proposal to Eliminate the Minimum Wage Tip Credit

January 8, 2018
April 9, 2018
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Governor Andrew M. Cuomo announced a proposal to schedule public hearings to evaluate the possibility of ending minimum wage tip credits in New York State. In certain workplaces, such as car washes and restaurants, where wages and tips are both generally low, workers' income can rely entirely upon tips. These tips, meant as a reward for good service, instead serve as a critical wage subsidy that brings workers' wages just up to the legally mandated minimum wage.

"At the end of day, this is a question of basic fairness. In New York, we believe in a fair day's pay for a fair day's work and that all workers deserve to be treated with dignity and respect," Governor Cuomo said. "There should be no exception to that fairness and decency. I have directed the Department of Labor to ensure that no workers are more susceptible to exploitation because they rely on tips to survive. I look forward to reviewing the findings of these hearings."

More than 70 percent of all tipped workers in New York are women. Further, studies have shown that African-American workers are often tipped less than their white counterparts. Tipped workers often report not being willing to come forward because they are reliant on their employers for shift scheduling, with certain shifts generally tipping more than others. In addition, tipping practices have been linked to higher rates of sexual harassment. Workers in states that require the full minimum wage be paid to tipped employees experience half the rate of sexual harassment compared to workers in states that pay lower wages to tipped employees, according to a 2014 study by the Restaurant Opportunities Center. The study's chief recommendation was to eliminate the sub-minimum wage for tipped workers to reduce the pressures that increase sexual harassment to create a safer and more equitable workplace. 

Furthermore, many employers find it difficult to keep track of employee tips properly, especially in industries where tips are not a steady and reliable source of income that can be depended upon by workers to meet their living expenses, and where daily and weekly fluctuations make it difficult for workers to know whether they are being underpaid. Complicated tip credit record-keeping can make it difficult for employers to know whether they are meeting their obligations, and can be a vehicle for wage theft when employers fail to pay workers properly. 

According to Governor Cuomo’s press release, anecdotal evidence suggests that tips do not always make their way into workers' hands, further reducing their income, and the "topping up" of tipped workers by their employers is difficult to enforce when records are not properly kept. This can also require the Department of Labor to expend extensive investigative resources to check records and calculations. This is not always intentional on the part of the employer, as it can be difficult to keep track of employee tips properly.  Some employers have voluntarily eliminated tips and increased base pay on a "service-included" system.

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