New York's rules for paying certain tipped employees will change beginning June 30, 2020.
Background:
Currently, under the Wage Order for Miscellaneous Industries and Occupations, covered employers may count tips that employees receive toward meeting the minimum wage, as long as the employee's direct cash wages and tips equals or exceeds the applicable state minimum wage. This is known as a tip credit.
The following tipped workers may be covered by the Miscellaneous Wage Order: nail salon workers, hairdressers, aestheticians, car wash workers, valet parking attendants, door-persons, tow truck drivers, dog groomers, and tour guides.
New York's current limits on tip credits under the Wage Order for Miscellaneous Industries and Occupations may be viewed here.
Changes Effective June 30, 2020:
The New York State Department of Labor has announced that the tip credit for employers covered by the Wage Order for Miscellaneous Industries and Occupations will be phased out this year. Effective June 30, 2020, the tip credit will be reduced by 50 percent.
Effective December 31, 2020, the ability to claim a tip credit for employers covered by the Wage Order for Miscellaneous Industries and Occupations will be eliminated completely. Covered employers will be required to pay all employees the full minimum wage directly, without any credit for tips these employees receive.
Note: The change does not impact the tip credit available to employees covered by the Hospitality Industry Wage Order (including restaurants and hotels).
Compliance Recommendation:
New York employers should review the applicable state wage orders and ensure that their policies and procedures properly compensate employees under the law. Please contact your dedicated service professional with any questions.