New York Increases Tip Credit and Tipped Minimum Wage for 2018

On December 31, 2017, the tipped minimum wage in New York City increased to $8.65 per hour for front of the house restaurant workers, including waiters, waitresses, bussers, runners, valets, and coat checkers.

A New York employer may only deduct a tip credit from an employee’s hourly pay if the employer provides written notice before paying them a tipped minimum wage. The notice should be in English or in the employee’s native language and must state that the employer is taking a tip credit, and the amount of the tip credit. The employer must also provide employees with notice of their regular rate of pay, overtime rate of pay, and their regular payday when they are first hired. 

Under the Fair Labor Standards Act (FLSA), a restaurant is allowed to take a “tip credit” towards its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13 under the FLSA) and the federal minimum wage of $7.25 per hour.  It is important to note that certain states provide a higher minimum wage rate than New York state, where the minimum wage rate and tip credit amounts depend on where the restaurant is located and, in New York City, the size of the restaurant:

NY City – Large restaurant (11 or more employees)

• Tip     credit of up to $4.35, with $8.65 per hour in house pay

NY City – Small restaurant (10 or less employees)

• Tip     credit of up to $4.00, with $8.00 per hour in house pay

Long Island and Westchester County

• Tip     credit of up to $3.50, with $7.50 per hour in house pay

Rest of New York State

• Tip     credit of up to $2.90, with $7.50 per hour in house pay

In related news, 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. According to Governor Cuomo, 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, shifting the responsibility from the employers to the customers to pay employees.