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News & Press: Laws & Regulations

Press Release: Tip Credit Elimination Vote Fails

Friday, January 09, 2015  
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FOR IMMEDIATE RELEASE: Friday, January 9, 2015

CONTACT: Jay Holland, jayH@nysra.org, 518.452.4222

                  

 

***Press Release***

Tip Credit Elimination Vote Fails

 

ALBANY — Yesterday, the New York State Department of Labor held a public meeting for the Wage Board to discuss possible changes to the way tipped employees are paid. At the meeting, the Wage Board voted on a motion to eliminate the tip credit, which is a credit for labor costs business owners use for tipped employees’ wages. The Wage Board could not reach a majority vote on any of their proposals, so they will hold another meeting for further discussion.

 

“It’s a major relief for the restaurant industry to know that Wage Board did not support eliminating the tip credit,” said Melissa Fleischut, President and CEO of the New York Restaurant Association. “Moving forward, we hope the Wage Board will recommend reasonable changes that are agreeable to all parties, not an extreme proposal such as eliminating the credit all together. We stand behind this Board and the Cuomo administration’s commitment to furthering the New York economy while being fair to workers.”

 

Under current law, all workers are guaranteed to make at least minimum wage including tipped employees. In an effort to keep thin margin businesses open, restaurant owners receive a “tip credit” towards satisfying the minimum wage requirements for their tipped employees. In the very rare case an employee’s wages plus tips do not equal at least the current minimum wage, the employer must make up the difference. At the meeting, representatives from the New York State Department of Labor said there were only “a handful of cases” where an employer had to make up the difference to get a tipped worker to minimum wage and did not.

 

Tip credit facts:

 

  • The tip credit for food service workers was established in 1940, and has historically been between 60-70% of the full minimum wage. 70% of the current minimum wage is $6.13.
  • In 2013, the average hourly income for servers and bartenders in New York was $111 and the economy has only improved since.
  • Eliminating the tip credit would constitute a 75% increase in front of the house labor costs for employers.

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