New York Increases Minimum Wage for Tipped Employees and Approves Tip Pooling

The New York State Department of Labor has issued a new wage order that affects hospitality industry workers’ pay and tips. It also addresses a variety of other items that have been the topic of discussion or litigation, ranging from payment by the employer for uniform maintainance to the records an employer is required to keep.

Under the order, tipped employees (who receive significantly lower minimum wages than the $7.25 per hour minimum wage received by non-tipped employees) will see their hourly wages increase. As of January 1, 2011, tipped food service workers will receive $5  per hour rather than the $4.65 per hour they currently receive; tipped non-food service workers who work in the hospitality industry will receive an increase from $4.90 to $5.65 per hour; and service workers who work for resort hotels will receive an increase from $4.35 to $4.90 per hour.

The wage order permits “tip pooling,”a practice in which tipped employees  contribute their tips to a common pool that is shared with non-tipped employees. Tip pooling is allowed so long as the participants regularly provide, or help provide, personal service as a principal part pf their duties.  Waiters, bus persons, bartenders, bar backs, food runners, hosts and captains or other employees who regularly provide, or help provide, personal service, are eligible for tip pooling.

Under the wage order, tips can be pooled under two circumstances; when the tipped employees mututally agree and when an employer requires food service workers to participate in a tip pool. In the latter case, the employer  can set the percentage to be distributed to each occupation.  The employer is not required to compensate tip pool participants  when a someone fails to contribute. 

Employees in restaurants and year-round hotels will receive an additional hour of pay , at the minimum hourly rate, when they work a “spread of hours’ of more than 10. For example, if someone works from 8 a.m. to 11 a.m. and then from 7 p.m. to 10 p.m., they have actually worked for 6 hours with a 15 hour spread. In that situation, the worker is entitled to an additional hour of pay. Since the additional hour of pay is not considered payment for time worked, the wage order does not require that it be included when overtime pay is being calculated.

 For future posts regarding the new wage order and its impact on the hospitality industry, follow this blog.