On Gov. Cuomo Ordering New York State Labor Department to Review Eliminating ‘Tip Credit’ for Restaurant, Car Wash & Nail Salon Workers

Governor Andrew Cuomo announced today that he is instructing the New York State Department of Labor (NYS DOL) to review whether to eliminate “tip credit” regulations that allow employers to pay workers in restaurants, car washes, nail salons and industries less than the full minimum wage. In response, National Employment Law Project executive director Christine Owens said:

“We applaud Governor Cuomo’s historic announcement that New York will review eliminating the ‘tip credit’ that allows employers to pay workers in restaurants, car washes, nail salons and other sectors less than the minimum wage. Phasing out the unfair tip credit would improve the lives of hundreds of thousands of struggling New Yorkers, many of them women, workers of color and immigrants. Even with tips, most of these workers are barely scraping by. There’s no good reason not to require their employers to pay the full minimum wage like other employers do.

“Tackling this issue now is more important than ever in light of the #MeToo movement’s breaking the silence about pervasive sexual harassment in the workplace.  Forcing restaurant workers to rely largely on tips for their income has been linked with higher levels of sexual harassment in the industry.

“If New York eliminates the unfair tip credit, Governor Cuomo will be the break-through leader in the growing  One Fair Wage movement.  The governor’s action is a real testament to the Restaurant Opportunities Centers United (ROC-U) which has created that movement, and to the strong organizing of New York’s exploited tipped car wash workers by the Retail, Wholesale and Department Store Union (RWDSU).

Background

Governor Cuomo has been a national leader in championing reforms to improve low-wage jobs. In 2016, he made New York one of the first states to begin raising its minimum wage to $15 an hour, and to guarantee paid family leave. This latest reform could bring New York’s treatment of restaurant, car wash and nail salon workers into line with other states like California where they already receive the full minimum wage. Seven states – California, Washington, Oregon, Montana, Alaska, Nevada and Minnesota – currently guarantee all workers the full minimum wage, with tips on top of that. The national “One Fair Wage” campaign led by the Restaurant Opportunities Centers United is leading a national movement to eliminate the unfair and difficult to enforce tip credit in the rest of the states. Federally, more than 160 members of Congress and 32 U.S. Senators, including Chuck Schumer, Kirsten Gillibrand and all eighteen of the Democrats in the New York delegation, have co-sponsored the Raise the Wage Act, S.1242/H.R.15, which would gradually phase out the tip credit nationwide.

Previously in 2015, the Cuomo Administration reduced the tip credit for restaurant and other hospitality workers, and instructed NYS DOL to study the feasibility of eliminating it altogether.  As a result of the 2015 reform and New York’s 2016 minimum wage increase, New York’s current base wage for tipped workers is currently $7.50 an hour for restaurant workers, and ranges from $7.35 to $9.35 for other categories of tipped workers, depending on employer size and region of the state. It will increase to $10 an hour when New York’s minimum wage reaches $15 – which will happen in December 2018 in New York City.  The 2015 and 2016 reforms have made New York the state with strongest protections for tipped workers outside of the seven One Fair Wage states.