Press Release: Restaurant Association Urges Wage Board in NYC
Monday, October 20, 2014
FOR IMMEDIATE RELEASE: October 20, 2014
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RESTAURANT ASSOCIATION URGES WAGE BOARD IN NYC:
NO NEED TO CHANGE CURRENT WAGE RATE AND TIP CREDIT STRUCTURE
NEW YORK — Today, October 20, 2014 at 10:30 a.m. the New York State Department of Labor Wage Board will convene in New York City for a public hearing. At the hearing, the NYS Restaurant Association will present testimony on the cash wage rates for tipped employees in the food service industry.
Under current law, all workers are required to make at least minimum wage. Employers are allowed to pay tipped workers a “cash wage” of five dollars an hour, they then receive a three dollar “tip credit” towards satisfying minimum wage requirements. If an employee’s wages plus tips do not equal at least minimum wage, the employer must make up the difference.
The following information will be included in the Association’s testimony:
- The current wage rate and tip credit structure for tipped employee compensation does not need to change. All tipped workers earn at least minimum wage after tips and wages are combined. Under New York State law, if a tipped employee’s wages combined with their tips does not meet the state minimum wage, the employer must make up the difference.
- Restaurant owners will have less money to spend on non-tipped workers. There is only so much money to be spent on labor in a restaurant. It is the back of the house workers who will be most affected by any increase to the cash wage. Wait-staff, by and large, are already taking home much more than minimum wage.
- Small businesses will be hit hardest. With an increase in labor costs, businesses will be forced to find ways to cut corners to make up for the cost of labor. Small restaurants do not have the capacity to completely re-focus a business model, nor do they have the resources to absorb large increases.
- Restaurants will shift business models. To cope with labor costs, restaurant owners will change their business models to a digital interface. This will cause the loss of tipped front of the house positions in millions of restaurants. Not all will adopt such changes, obviously, but many mid-level, fast casual chain restaurants are moving toward digitization.
“Increasing the cash wage will hit small businesses hardest, and hurt the backbone of the restaurant industry, back of the house workers,” said Melissa Fleischut, President and CEO of the NYS Restaurant Association. “There’s only so much money a restaurant owner can spend on labor, increasing the wages of servers, the people who earn the most in a restaurant, leaves the owner with fewer resources for back of the house staff.”
View the full testimony submitted by the New York State Restaurant Association: http://www.nysra.org/news/news.asp?id=198530.
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