Servers and other tipped workers in the hospitality industry will continue receiving subminimum wage because they will not be affected by the state’s decision to eliminate the subminimum wage and tipped credit for many workers.
Employers in industries that involve workers who receive tips have previously been allowed to pay less than the state minimum wage, or a subminimum wage, so long as workers earned enough tips to cover the gap.
Gov. Andrew M. Cuomo announced early last year, however, that state officials would consider eliminating the subminimum wage, a consideration that drew ire from servers and restaurateurs.
After about two years of consideration, the governor announced Tuesday that the state Department of Labor would remove the subminimum wage and tipped credit by Dec. 21, 2020, for tipped workers in a variety of miscellaneous industries, including nail salon workers, hairdressers, aestheticians, car wash workers, valet parking attendants, door-persons, tow truck drivers, dog groomers and tour guides. The decision is expected to affect about 70,000 tipped workers, according to the governor’s office.
Richard Azzopardi, senior advisor to the governor, said the decision does not affect servers or other tipped workers in the hospitality industry, meaning they will continue receiving the subminimum wage.
“Any changes for those tipped workers would require further study,” from the state labor department, Mr. Azzopardi said.
The state will phase in the change with two steps. The subminimum wage will increase to $10.90 per hour for many low tip workers and $10.35 for many high tip workers by June 20, but then both workers will receive minimum wage by Dec. 31, 2020, which will equal $12.50 for upstate New York workers. The minimum wage has increased annually for the past several years.
The subminimum wage has been increasing over the years. Restaurateurs will pay tipped food service workers $7.85 per hour, so long as they receive at least another $3.95 per hour in tips, but will have to pay them $8.35 per hour by Dec. 31, 2020, so long as they earn at least another $4.15 per hour in tips, according to the labor department.
Gov. Cuomo announced his consideration to eliminate the subminimum wage and tip credit in December of 2017, when he claimed it was unfair to tipped workers, allowed tips to subsidize workers’ wages and opened the door for possible exploitation. Before making a decision, the state labor department held several public hearings across the state to accept feedback.
Advocates for the wage change claimed subminimum wages can lead to less overall pay for female and minority waitstaff. Studies from groups like the Restaurant Opportunities Center suggested a link between a reliance by staff on tips and sexual harassment. The state labor department recently released a report recommending the elimination of the subminimum wage and tipped credit for several industries.
“After an exhaustive investigation conducted by the Department of Labor, it’s clear the tip system in many situations is needlessly complicated, allowing unscrupulous businesses to flout our nation-leading minimum wage laws and robbing workers of the paycheck they earned,” the governor wrote in a statement. “That ends now.”
Many restaurant owners, managers and servers, including several from the north country, opposed eliminating the tipped wage credit subminimum wage. They claimed it would raise payroll costs for eateries and force owners to raise menu prices, cut positions, deny back of the house employees raises and possibly lead to closures. Maggie N. Raczynski, an Albany-area waitress, led a statewide effort to denounce the proposal.
Elizabeth “Buffy” Golden, owner of O’Brien’s Bar and Restaurant, Clayton, said she welcomed the state’s decision to allow restaurateurs to continue paying servers subminimum wage. On the other hand, she opposes the annual increase of the minimum wage, saying the increase in payroll inhibits eateries from hiring teen workers who not only earn pay, but work experience. “I’m very happy (Gov. Cuomo) made the smart decision not to take away the tipped credit,” for restaurants, she said.