New York state rang in 2020 with a sweeping change to its minimum wage and tip credit rules that is expected to impact roughly 70,000 workers. On December 31, 2019, the New York State Department of Labor (the NYSDOL) recommended to Governor Andrew Cuomo that the state eliminate the tip credit for all miscellaneous industry workers (don’t worry, we will explain what that means). Governor Cuomo has announced that he will implement the recommendation, which will go into effect later this year.
By way of background, both federal and New York state laws generally require that employers pay non-exempt – i.e., hourly – employees at least the applicable minimum wage rate. Both laws, however, contain an exception that permits employers to pay tipped employees less than the minimum wage, provided that the employees’ direct wages plus tips equal or exceed the minimum wage rate or overtime rate, as applicable. The difference between the minimum wage rate – which presently varies between $12.50 and $15 per hour in New York (depending on location within the state) – and the reduced wage for tipped employees is known as a “tip credit.” In practical terms, the tip credit means that certain employers are permitted to pay employees at a rate lower than the minimum wage so long as the employees receive sufficient tips in the course of their work.
Continue Reading New year, new changes to New York state’s minimum wage and tip credit rules