On January 1, 2011, the Hospitality Minimum Wage Order issued by the New York State Department of Labor (“NYSDOL”) became effective. Among other things, the wage order does the following:

  • Increases the minimum wage for tipped employees and reduces tip credit. The minimum wage required to be paid to tipped food service employees has increased from $4.65 to $5.00. The tip credit that employers may take toward the state and federal minimum wage of $7.25 per hour has been reduced to $2.25 per hour (from $2.60 per hour). Employers have a grace period, until February 28, 2011, to implement the increases, but they must provide back pay retroactive to January 1.
  • Permits employers to require food service workers to participate in tip pool. The wage order permits employers to require food service workers to participate in a tip pool and may set the percentage to be distributed to each occupation from the tip pool. Only food service workers may receive distributions from the tip pool. Prior to the wage order, mandatory tip pooling was prohibited. Eligible employees must perform or assist in performing personal service to patrons at a level that is a principal and regular part of their duties. Examples of eligible employees include wait staff, counter personnel who service food or beverages, bus persons, bartenders, barbacks, food runners, hosts, and captains who provide direct food service to customers.  
  • Imposes new recordkeeping requirements on employers that operate a tip-sharing or tip-pooling system. Employers that operate a tip-sharing or tip-pooling system must establish, maintain, and preserve certain records for at least six years.  
  • Permits tip credits for overtime calculations. The regulations provide that when an employer is taking a credit toward the basic minimum hourly rate, the overtime will be the employee’s regular rate of pay before subtracting any tip credit, multiplied by 1½, minus the tip credit. It is a violation of the overtime requirement for an employer to subtract the tip credit first and then multiply the reduced rate by 1½.  

For a more detailed summary on the provisions of the Hospitality Minimum Wage Order, see EpsteinBeckerGreen’s Act Now Advisory entitled “New York Department of Labor Issues New Wage-Hour Regulations Covering the Hospitality Industry - Restaurants, Hotels and Clubs.”