If you are an employee who earns tips, your pay may be calculated differently to account for the tips you earn. New York State law allows employers in most industries to satisfy the minimum wage by combining a “cash wage” paid by the employer with a credit or allowance for tips you receive from customers. A tip credit is a certain amount of money your employer does NOT have to pay you if you make up the amount through the tips you earn. The only industry in New York that does not allow a tip credit to be used is the building services industry.
The amount of the tip credit varies, depending on the industry you work in and the nature of your job duties. Under New York law, your employer must inform you about the tip credit in writing and must keep track of your tips to make sure you earned at least the minimum amount of the tip credit. If you do not earn enough tips in a pay period to make up the difference between the tip minimum wage for your type of job and the regular employee minimum wage, your employer must pay you the difference.
The minimum wage for tipped employees also varies in New York State, depending on your geographic location and the size of the business you work for. For instance, the minimum wage in New York City is higher than Nassau, Suffolk and Westchester County, and the tipped minimum wage in those locations is higher than the rest of New York State. Also, the tipped minimum wage in New York City for larger businesses (11 or more employees) is higher than the tipped minimum wage for smaller businesses (less than 10 employees).
The minimum wage in most of New York State is $9.70 per hour. In Nassau, Suffolk and Westchester County, the minimum wage for tipped employees is $10.00 per hour. In New York City, there are two minimum wages for tipped employees, depending on the size of the business establishment. Smaller businesses in the hospitality industry in New York City (up to 10 employees) must pay a minimum wage of $10.50 per hour. Larger businesses (11 or more employees) must pay a minimum wage of $11.00 hour.
For instance, if you are a food service worker in a large establishment in New York City, your employer must pay you a cash wage of at least $7.50 and can take a tip credit of $3.50, for a total of $11.00 per hour. In a small food service establishment in New York City, your employer must pay you a cash wage of at least must be $7.50, and can take a tip credit of $3.00, for a total of $10.50 per hour. In the food service industry in Nassau, Suffolk and Westchester, your employer must pay you a cash wage of at least $8.35 and can take a tip credit of $1.65. In the rest of New York State, your employer must pay you a cash wage of at least $7.50 and can take a tip credit of $2.20. These minimum amounts are set to increase in December 2017, and every year thereafter, until the minimum wage reaches a certain amount.
It is important to remember that tips belong to you, and not to your employer or anyone else, unless all the tipped employees create a “tip pool” (putting their tips together and splitting them). However, even when tips are pooled, employees who are not tipped employees, like managers or business owners, may not share in the tip pool.
A wage violation may occur if your employer does not treat your tips as belonging to you and/or does not make sure your cash pay plus tip credit equals at least the required minimum wage. If you experience any of the situations set forth below, you should contact a lawyer to determine if a wage violation has occurred and if you are entitled to additional pay. For example:
- You put your tips into a tip pool and your employer is giving some of the money to non-tipped employees.
- A customer walks out on a bill without paying, and your employer takes that money out of your paycheck. Then at the end of a pay period, your combined minimum wage plus tips come out to less than the regular minimum wage.
- Your employer lets customers use credit cards but won’t pay you for credit card tips until the credit card company pays the bill, even though it is after your next, regularly scheduled pay check.
- Your employer deducts the 3% credit card fee from your credit card tips; this leaves your combined wage and tip income below the minimum wage. Your employer does not pay you the difference.
- Your employer makes you to spend a shift decorating the restaurant for the holidays; he pays you the minimum tip wage for this period and takes the full tip credit, even though you earned no tips during that shift.
- Your employer keeps an “error account,” where you have to put in a percentage of your tips to cover mistakes you might make.
Legal Editor: Steven Mitchell Sack, January 2015 (updated May 2017)
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.