Despite some controversy, the minimum wage for tipped employees in New York State remains in place as of early 2025, with wage rates increasing from last year.
Beginning January 1, 2025, the minimum wage rate for tipped food-service workers increased from $10.65 to $11.00 per hour in New York City, Westchester, and Long Island, and from $10.00 to $10.35 per hour in the rest of the state. The new wage rates will apply through December 31, 2025.
The State continues to see push-back from lawmakers and restaurant workers advocating for an end to the tiered wage system for tipped workers in New York. Last month, a group of restaurant workers gathered at the State Capitol in Albany to campaign for “One Fair Wage” legislation, a bill that would require employers to pay tipped workers the full minimum wage. Proponents of the bill have expressed concern about workers’ reliance on unpredictable tips to support themselves and their families. Under the proposed legislation, any tips earned by employees would be earned in addition to full minimum wage.
Seven U.S. states currently require that tipped employees be paid full minimum wage before tips, while the others—including New York—maintain a tiered wage system.
Hospitality employers in New York State are able to pay less than the full state minimum wage because of tip credits. Employers can satisfy minimum wage requirements through a combination of employer-paid wages and a tip allowance, or tip credit.
For example, the current minimum wage for food service workers in New York State is $15.50 per hour. Employers can satisfy the minimum wage by combining a cash wage of at least $10.35 with a tip allowance of no more than $5.15 per hour.
Below is some important information about tips and tip credits in New York:
What is a tip?
Any amount of money a customer voluntarily leaves above the ticket price plus tax is considered a tip.
What is a tip credit?
A tip credit allows employers to pay food service workers a rate that’s lower than minimum wage by including tips or a portion of them in wage calculations. Foodservice workers’ combined wage plus tips must equal at least the full minimum wage; otherwise, the employer must make up the difference.
Who owns a tip?
A tip belongs to an employee–not an employer. An employer is not entitled to take any part of a tip, except for a percentage of tips for a valid tip pool.
Who is considered a tipped worker?
The Fair Labor Standards Act (FLSA) defines a tipped employee as “an employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.”
Are there tip recordkeeping and reporting requirements?
Yes, reporting requirements help ensure compliance with state and federal wage and hour laws and provide proof that employers are upholding minimum wage requirements. Under New York Labor Law Section 196-d, employers are required to maintain daily records of the tips received by employees, records which are subject to DOL inspections. Employee wage statements must also clearly show how much of an individual’s pay is comprised of tips and how much is comprised of employer-paid wages. In addition, written notice must be provided to new employees informing them of wage rates and tip credits. Accurate recordkeeping and reporting are crucial, as employers not complying with New York tip laws can face serious penalties.
Have questions?
As mentioned at the start of the article, the future of tip credits in New York is unknown—but as of right now they still exist, and accurate recordkeeping is imperative. More information can be found in the Department of Labor’s Tips and Gratuities Frequently Asked Questions. If you have any further questions about the laws governing tips in NYS, we encourage you to seek legal counsel.
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