New York Tip Credit Law Changes

2020 Ushers in Significant Tip Credit Changes for Certain Industries

Queens New York Labor & Employment Lawyers

Tip credit law changes are part of a new law that the Governor of New York recently announced. By the end of 2020, certain “miscellaneous” industries will no longer be able to take tip credits.

Except for the agricultural, hospitality and building services industries, all New York employers in other industries will not be able to claim tip credits for their employees who receive tips.

What “Miscellaneous” Industries Do the Tip Credit Law Changes Affect?

Clearly the hospitality industry includes servers and hotel workers who customarily receive tips and employers can continue to claim tip credits in these industries.

However, tip credit law changes in miscellaneous industries apply to valet services, nail and hair salon employees, car wash attendants, dog groomers, tow truck drivers, tour guides, aestheticians, door-persons and golf and tennis instructors. Workers in these occupations often receive tips.

The Department of Labor estimates that eliminating tip credits will affect more than 70,000 employees throughout the State of New York.

Timelines for Implementation

The DOL is eliminating tip credits over the next year. Elimination will occur in two phases. As of June 30, 2020 it will cut tip credits by 50%.

Until then, industries that currently take tip credits may continue if they meet the following conditions:

  • The industry is one where employees’ tips customarily and usually constitute part of the employee’s remuneration.
  • The employee received enough tips for the amount of the claimed tip allowance.
  • The employer records the allowance on a weekly basis as a separate item in the wage record.

Different Requirements for Different Areas of New York

The minimum wage varies for New York City ($15.00), Long Island / Westchester ($13.00) and the rest of NY State ($11.00). There are also differences in what is considered a low tip credit, a high tip credit, low tipped cash wage and high tipped cash wage in these geographic areas.

Employers can take the high tip credit if the employee’s weekly average of tips received either equals or exceeds the high tip amounts.

By December 31, 2020, the law requires all employees in miscellaneous industries to be paid as follows:

  • New York City – $15.00 per hour
  • Westchester and Long Island — $14.00 per hour
  • Remainder of NY State — $12.50 per hour

Stephen Hans & Associates has extensive experience working with employers who deal with tip credits and can help you comply with employment and labor law.

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