NYC Hospitality Alliance Comments on Proposals to Eliminate the Tip Credit 

The NYC Hospitality Alliance has presented a report highlighting why New York State lawmakers should protect and preserve the Hospitality Industry Tip Credit to provide insight into this complex matter as well as correct misinformation being spread by anti-Tip Credit lobbyists.  

The Hospitality Alliance’s findings are that:  

·            The Tip Credit is critical to the way restaurants and bars do business and their employees make their living.  

·            The costs of eliminating the tip credit TO New York restaurants, including how it will hurt minorities, immigrants, and women the most.  

·            How 97% of surveyed restaurants are concerned or extremely concerned with eliminating the Tip Credit, with 88% saying it would be a disaster.  

·            76% said they’d increase menu prices to offset the big increase in expenses to their small businesses, and 42% would also consider eliminating tipping to keep the overall cost down for consumers as much as possible-thus, eliminating the Tip Credit would result in more costly meals for consumers and the loss of tip income for workers.  

·            Tip credit jobs returned faster than non-Tip Credit jobs following the pandemic.  

·            The consequences of eliminating the Tip Credit in other jurisdictions.  

·            The lingering impact of the pandemic and COVID-19 restrictions

Restaurant employees in NYC may pay workers who customarily receive gratuities a base wage of $10.65 per hour if that wage combined with their tips equals or exceeds $16 per hour, the current minimum wage. The $5.35 differential is the “Tip Credit.” According to the NYC Hospitality Alliance, the Tip Credit compensation model has allowed countless workers to earn more than the minimum wage, and in many cases substantially more with some reports showing on average $20-$40 per hour.  

The Hospitality Alliance asserts if the Tip Credit is eliminated, it will cost $12,000 more to employ a full-time tipped employee per year, and this increase will hurt restaurants and jobs. This will cost a small restaurant employing only nine tipped employees more than $100,000 per year, and many hundreds of thousands of dollars to a bigger restaurant, and even millions of dollars of added expenses to a local independent restaurant group.  

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