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Wage Board Decision A Major Blow To NY Restaurants

Friday, January 30, 2015  
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FROM THE OFFICES OF THE NYS RESTAURANT ASSOCIATION

 

FOR IMMEDIATE RELEASE: January 30, 2015

CONTACT: jayh@nysra.org, 518.452.4222

 

 

WAGE BOARD DECISION A MAJOR BLOW TO NY RESTAURANTS

Dramatic increase in cash wage will hurt the industry and its employees

 

ALBANY — The New York State Department of Labor Wage Board has recommended increasing the cash wage for tipped employees from $5.00 to $7.50 by the end of the year, a 50 percent increase. The Wage Board’s decision will have far-reaching negative effects on the restaurant industry in New York.

 

“This decision will handcuff small businesses’ ability to create jobs, decrease the pay of non-tipped employees, and reduce hours for tipped employees,” said Melissa Fleischut, President and CEO of the New York State Restaurant Association. “Nobody won today.”

 

The Wage Board’s recommendation now goes to the commissioner of the Dept. of Labor. He will either accept, reject, or modify the proposal.

 

“The commissioner of Labor would do well to reject this outrageous and unprecedented increase on small business owners,” Fleischut added.

 

In an effort to keep thin margin businesses open, restaurant owners receive a “tip credit,” which allows tips to be applied to minimum wage requirements. Since tips are tracked, taxed, and considered wages by the IRS, they are allowed to satisfy a portion of an employee’s wages. The larger the tip credit allowed by a state, the more workers they can hire and the better they can pay non-tipped employees. Forty-three states have a tip credit, and the vast majority are larger than New York’s.

 

The tip credit for food service workers was established in 1940, and has historically been between 60-70 percent of the full minimum wage. Seventy percent of the current minimum wage is $6.13. This increase raises the percentage to an unprecedented high of 83 percent.

Food service workers are not minimum wage employees. In 2013, the average hourly income for servers and bartenders in New York was $11,[1] and the economy has only improved since.

 

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[1] http://www.bls.gov/oes/current/oes_ny.htm#35-0000


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