The New York Department of Labor issued a new wage order that raises minimum wages for tipped hospitality industry workers and clarifies that hospitality industry employers may mandate tip pooling. This new wage order is effective 1 January 2011, though employers will have until 28 February 2011 to make the necessary changes in their payroll and recordkeeping systems. Despite this grace period, it is advisable for restaurants to begin implementing changes immediately to comply with this new wage order, as employers must pay workers wages retroactively to 1 January 2011. The most important wage and tip rule changes required by the order are highlighted below.
The wage order raises minimum wages for tipped food-service employees to $5.00 per hour, up from $4.65; it raises minimum wages for tipped non-food-service employees to $5.65 per hour, up from $4.90; and it raises minimum wages for tipped service employees working in resort hotels to $4.90 per hour, up from $4.35.
Additionally, this order clarifies that employers may mandate "tip pooling," where tip pooling is defined as the employer's distribution of tipped food service workers' gratuities among tipped and non-tipped workers. However, only "food service workers" can receive distributions from this tip pool. Food service workers include wait staff, bartenders or service bartenders, bus persons, barbacks, food runners, captains who serve food directly to customers, and hosts who greet and seat guests. Employers that mandate tip pooling must maintain for at least six years a daily log of tips collected, tips distributed, occupations of the employees receiving tip pool distributions, and percentage of tip pool distributions received by each occupation.
Similarly, this order allows tip sharing among employees, in which tipped workers give a cut of their tips to non-tipped employees, as long as the employees conduct these transactions themselves.
This order clarifies that employers must pay all employees for an extra hour if they work for ten or more hours a day, regardless of whether the pay rate for the first ten hours is above the minimum wage, which could leave employers less willing to offer flexible work schedules to employees.
Also, as a reminder, New York law as of 2009 requires restaurants to pay an employee who reports for duty on any given day at the request or permission of the employer, whether or not assigned to work, the applicable minimum wage rate for at least three hours.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
