New York’s Restaurant Tip Credit Law

Many states have minimum wage laws which  differ from the FLSA. The minimum wage in New York is $7.25 per hour.  Effective January 1, 2011, restaurants in New York are allowed to use a “tip credit” of $2.25 per hour to count towards the minimum wage that they must pay their tipped employees.

What this means is that restaurants in New York can pay their waiters and waitresses $5.00 per hour providing that they make at least $7.25 per hour after keeping their tips.

The tip credit allows employers to pay less than minimum wage on the assumption that tips will push the employee back over the minimum wage.   If employees don’t actually make enough in tips to bring them up to minimum wage, the employer must make up the shortfall.

If a restaurant chooses to use the “tip” credit it must:

  1. inform employees of the tip credit law; and
  2. all tips received by such employees must be retained by the employees (unless there is a valid tip pooling arrangement).

Are you a tipped employee (see our previous post for more information)?  Are you making minimum wage?  If you are considered a tipped employee you need to know your rights to make sure that your employer is paying you correctly.  If you think you are not getting what you deserve, please tell me your story.