In April of this year, New York's Governor Cuomo signed legislation that will increase the minimum wage rates in New York State over a three-year period. Presently, all non-exempt New York State employees must receive at least $7.25 per hour; however on December 31, 2013, the minimum wage in New York will increase by $0.75 to $8.00 per hour. On December 31, 2014, the minimum wage will rise another $0.75 to $8.75 per hour. Finally, on December 31, 2015, the minimum wage will increase to $9.00 per hour.
Until now, there has been no indication on how the minimum wage hike will affect employers in the hospitality industry that apply the "tip credit" towards food service workers' or service employees' wages. Presently, New York employers in the hospitality industry may pay food service workers (employees such as servers, bussers, runners and bartenders who are primarily engaged in serving food and beverages to guests) a direct minimum wage of $5.00 per hour and apply a tip credit of $2.25 towards the food service workers' wages (provided the food service worker earns at least $2.25 per hour in tip compensation). Similarly, employers in the hospitality industry may pay service employees (employees, such as delivery workers or bathroom attendants who customarily receive tips at the rate of $1.60 an hour) a direct wage of $5.65 per hour and apply a $1.60 tip credit towards the service employees' wages (provided the service employee earns at least $1.60 per hour in tip compensation).
The New York State Department of Labor (DOL) has just issued proposed changes to the Wage Order for the Hospitality Industry (Wage Order) that reflects the rise in minimum wage rates. In a rare flash of good news for the hospitality industry, the proposed changes increase the tip credit that employers may take toward the wages of food service and service employees' wages. Thus, hospitality employers will be permitted to continue to pay food service workers a direct wage of $5.00 an hour and service employees $5.65 an hour notwithstanding the increase to the minimum wage.
The chart below itemizes the applicable minimum wage rates and overtime rates applicable to food service workers and service employees.
| Year | NYS Minimum Wage | Regular NYS Overtime Rate | NYS Tip Credit for food service workers | NYS Direct Wage owed to food service workers | NYS Tipped Overtime Rate for food service workers | NYS Tip Credit for service employees | NYS Direct Wage owed to service employees such as a delivery person or bathroom attendant | NYS Tipped Overtime Rate for service employees such as a delivery person or bathroom attendant |
| 1/1/2011 | $7.25 | $10.88 | $2.25 | $5.00 | $8.63 | $1.60 | $5.65 | $9.28 |
| After 12/31/13 | $8.00 | $12.00 | $3.00 | $5.00 | $9.00 | $2.35 | $5.65 | $9.65 |
| After 12/31/14 | $8.75 | $13.13 | $3.75 | $5.00 | $9.38 | $3.10 | $5.65 | $10.03 |
| After 12/31/15 | $9.00 | $13.50 | $4.00 | $5.00 | $9.50 | $3.35 | $5.65 | $10.15 |
The DOL has also identified changes to uniform maintenance pay where an employer requires employees to wear uniforms that require either, washing, ironing, dry cleaning, alterations, repair or any other maintenance. After December 31, 2013, an employer will have to pay an employee an additional $9.95 per week if the employee works more than 30 hours, $7.85 per week if the employee works between 20 and 30 hours and $4.75 per week if the employee work 20 hours or less. After December 31, 2014, an employer will have to pay an employee an additional $10.90 per week if the employee works more than 30 hours, $8.60 per week if the employee works between 20 and 30 hours and $5.20 per week if the employee work 20 hours or less. After December 31, 2015, an employer will have to pay an employee an additional $11.20 per week if the employee works more than 30 hours, $8.85 per week if the employee works between 20 and 30 hours and $5.35 per week if the employee work 20 hours or less.
In addition, the DOL has proposed new meal credit rates for hospitality employers that provide meals to their employees. After December 31, 2013, an employer may take a $2.75 credit per meal. After December 31, 2014, an employer may take a $3.00 credit per meal, and after December 31, 2015, an employer may take a $3.10 credit per meal. Lodging credits in restaurants and in all-year hotels and meal and lodging credits in resort hotels have also been revised by the DOL.
Finally, the DOL increased the minimum weekly salaries that employers are required to pay exempt executive or administrative employees in order to ensure that such employees are exempt from overtime requirements. After December 31, 2013, an employer must pay such employees at least $600.00 per week inclusive of board, lodging and other allowances. After December 31, 2014, this salary threshold increases to $656.25 per week inclusive of board, lodging and other allowances, and after December 31, 2015, the amount increase to $675.00 per week inclusive of board, lodging and other allowances.
Of course, all of these numbers are preliminary and still may be adjusted. Fox Rothschild will continue to keep you advised of any additional changes.
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.
