In light of recent high-profile lawsuits in New York involving defendants such as Starbucks and Del Posto, employers must be aware of important new changes to New York labor laws that can significantly affect their business and profits.
Minimum Wage Increase for Tipped Employees
Minimum wages for tipped workers in the hospitality industry, such as restaurant and hotel workers, will increase as follows effective January 1, 2011:
- Tipped non-food service employees in the hospitality industry must now receive at least $5.65/hour (up from $4.90/hour)
- Tipped food service employees in the hospitality industry must now receive at least $5.00/hour (up from $4.65/hour)
- Service workers for resort hotels must now receive at least $4.95/hour (up from $4.35/hour)
Employers have until February 28, 2011 to make any necessary changes to their payroll systems, but must pay employees the new wage rates retroactive to January 1, 2011.
Employers May Mandate Tip Pooling
Under the new law, restaurants also may now mandate tip pooling, the distribution of tipped food service workers’ gratuities among tipped and nontipped workers. Restaurants using tip pooling must maintain a daily log of tips collected and handed out for at least six years. Tip sharing, when food service workers give a cut of their tips to nontipped employees, is also allowed. However, unlike the practice of tip pooling, employees conduct these transactions themselves.
Tips for Employers
- Maintain accurate payroll records
- Maintain accurate tip pooling records (if applicable)
- Know your employees’ current tipping practices and remediate as necessary
Reed Smith is ready to assist employers in complying with all New York and federal labor laws and regulations while minimizing the adverse impact and cost to the employer. Please feel free, at any time, to contact Cindy Minniti, Daniel Schleifstein or any Reed Smith lawyer you work with to discuss these important new changes.