Effective Dec. 31, 2018, important changes are coming to New York's wage and hour laws covering private employers in the hotel and restaurant industries. These changes may require employers to, among other things, change their pay rates and update their employment posters and other documentation.

Increased Minimum Wage for Nonexempt Employees

Nonexempt employees are those who are not exempt from the minimum wage and overtime requirements of federal and state wage and hour laws, and they make up the majority of the hospitality industry's workforce.

On Dec. 31, 2018, New York's minimum wage for nonexempt non-tipped employees in the hospitality industry increases as shown in the first table to the right.

For fast-food employees, New York's minimum wage increases as shown in the second table to the right.

Increased Tip Credit

A tipped employee is an employee who regularly receives more than $30 per month in tips. Effective Dec. 31, like any other nonexempt employee, a tipped employee must earn the minimum wage listed in the first table. However, unlike other nonexempt employees, tips paid by customers can be counted toward the minimum wage as a "tip credit." The tip credit is subtracted from the minimum wage, resulting in a lower hourly wage for tipped employees (cash wage). The cash wage is the minimum amount that employers are permitted to pay tipped employees.

And effective Dec. 31, the tip credits that employers may take against the wages of tipped employees are being increased. However, the amount of tip credit permitted in New York's hospitality industry depends on the employee's position. For food service workers (employees primarily engaged in serving food or beverages who regularly receive tips, such as wait staff, bartenders, captains, bussers), see the third table to the right.

For service employees (non-food service workers, such as coat check attendants, bathroom attendants), the maximum tip credit increases as as shown in the last table to the right.

No tip credit is permitted for fast-food employees.

Increased Overtime Rates for Tipped Employees

Employers must pay overtime to all nonexempt employees (including tipped employees) for all hours worked in excess 40 in a workweek. A tipped employee's overtime rate is calculated by multiplying the employee's regular rate of pay by 1.5 and then subtracting the tip credit. So, naturally, New York's increased minimum wage and tip credit also increase the overtime rate for tipped employees.

Increased Spread of Hours Pay

New York's increased minimum wage also increases the spread of hours pay rate to the relevant minimum wage. The spread of hours is the length of time between the beginning and end of an employee's workday. This includes the time worked, time off for meals and intervals off duty. For example, if an employee works from 1 to 4 p.m. and 6 p.m. to midnight, he or she only worked nine hours, but there is an 11-hour spread.

On each day when an employee's spread of hours exceeds 10, the employer must pay the employee one additional hour of pay at the applicable minimum wage rate, regardless of the employee's regular rate of pay. So, again, because the minimum wage rate increases as of Dec. 31, 2018, so does the spread of hours pay.

Increased Uniform Maintenance Pay

In the hospitality industry, employers must purchase or reimburse employees for required uniforms. Employers are also responsible for the costs associated with maintaining required uniforms. If an employer does not maintain employee uniforms, it must (unless it falls within the specific exemptions defined by applicable law) provide uniformmaintenance pay in addition to regular wages to cover employee costs associated with cleaning their required uniforms.

Effective Dec. 31, 2018, the weekly uniform maintenance pay is based on the number of hours worked, where employees who work over 30 hours per week are paid at the High rate, employees who work more than 20 hours but fewer than 30 hours are paid the medium rate, and employees who work 20 hours or less are paid the low rate for work performed as shown below.

Meal and Lodging Credit

Meals and/or lodging provided by a hospitality industry employer to an employee may be considered part of the wages paid to the employee, subject to applicable meal and lodging credit limitations. When an employer takes a meal and/or lodging credit against the wages of an employee, the employer may not charge the employee any additional money for the meal(s) and/or lodging.

Effective Dec. 31, restaurants and all-year hotels may credit the following amounts per meal against the wages of food service workers, service employees and other non-service workers.

Effective Dec. 31, restaurants may also credit the following against employee wages for lodging for food service workers, service employees and other non-service workers.

Effective Dec. 31, all-year hotels may credit the following against employee wages per hour for lodging:

Meal and lodging credits in resort hotels also increase as of Dec. 31.

Increased Minimum Salary for Exempt Employees

Exempt employees are exempt from the overtime requirements of federal and state wage and hour laws; therefore, such employees are not entitled to overtime pay. Exempt employees are classified as such if their job duties and responsibilities fit within the exemptions set forth under applicable laws and they are paid on a salaried basis. In the hospitality industry, high-level management positions are the most common exempt positions, although not all managers are exempt, and some nonmanagement positions can be exempt, depending on the employee's duties.

On Dec. 31, 2018, the minimum salary for an employee to qualify for the executive or administrative exemptions to overtime increase per week as shown in the table at right, inclusive of board, lodging, or other allowance and facilities.

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.