by Charles H. Kaplan
Tipped workers in New York will see the minimum cash wage rise to $7.50 an hour on December 31, 2015, following a February 24 order by New York State Acting Commissioner of Labor Mario Musolino.
The order will reduce the tip credit to a $1.50 deduction from New York’s minimum wage of $9 per hour, effective at the end of the year. Governor Andrew M. Cuomo calls the increase necessary to keep full-time tipped workers from living in poverty. However, many employers view the rise in the minimum cash wage as counterproductive.
The order is a result of Cuomo’s creation of a wage board in 2014 to recommend changes to regulations for food-service workers and service employees, according to a statement from the New York State Department of Labor (NYSDOL). Currently, the state has three tipped minimum cash wages for various types of workers—$4.90, $5, and $5.65. The rates have not increased since 2011. They will be consolidated into a uniform $7.50 tipped minimum cash wage when the order takes effect on December 31.
The state’s minimum wage is now $8.75. Although the rate is scheduled to rise to $9 at the end of the year, Cuomo has called for an increase to $10.50 and for a minimum wage of $11.50 in New York City because of the high cost of living.
New York’s restaurant industry warns that the new tipped minimum cash wage will burden restaurants and result in job cuts.
Melissa Fleischut, president and CEO of the New York State Restaurant Association, released a statement calling the increase extreme. “It’s troubling that the Acting Commissioner ignored legislative precedent and the pleas of nearly 1,000 hospitality industry representatives who asked him for a moderate increase phased in over time. By rubber stamping an extreme, unprecedented 50 percent increase, it becomes hard to believe New York is really ‘Open for Business,’” she said.
The NYSDOL reports that the state has approximately 229,000 tipped workers, who are twice as likely to live in poverty as other employees.
Charles H. Kaplan is a member of Sills Cummis & Gross P.C. in New York, New York. He can be reached at ckaplan@sillscummis.com.