New York wage hour laws can be difficult to understand, particularly when it comes to employees who rely on tips as a significant part of their income. Federal and state laws impose different sets of minimum wage guidelines on employers. Within New York State, there are different rules for employers in New York City, Long Island and Westchester, and the rest of the state.
For example, a food service worker in New York City who works for a restaurant with 11 or more employees is entitled to a federal minimum wage of $7.25 per hour and a state minimum wage of $7.50. If the worker earns tips from customers, the employer is allowed to “credit” a portion of that income against the minimum wage.
This credit is based on actual tips and capped. In the example above, the federal tip credit cannot exceed $5.12 per hour, while the state credit is capped at $3.50. In other words, the restaurant can actually pay the worker $4.00 per hour while applying $3.50 per hour in tips to equal the $7.50 state minimum wage.
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If an employer wishes to claim a tip credit, it must give notice to the employee. This notice is mandated by federal and state law, and it is strictly enforced by the courts. An employee may be forced to pay the full amount of the minimum wage, independent of any tips received, if it does not comply with the notice requirement.
Here is a recent example from New York City. Several delivery workers for a local restaurant filed a wage hour complaint, alleging their employer “improperly used” a tip credit to pay them less than the minimum wage. Indeed, the judge found the employer “offered no argument that they complied” with either the federal or state notice requirements. One of the employee-plaintiffs further testified he never knew what a “tip credit” was, much less received any formal notice from his employer.
Consequently, the judge said the plaintiffs were “entitled to unpaid minimum wages at the full minimum wage rate.” This also affected the plaintiffs' overtime pay. Federal and state laws require an employee receive one-and-one-half times their normal wage for each hour worked over 40 in a given week. While the plaintiffs in this case did receive overtime where applicable, it was based on the employer claiming the tip credit. Since the credit was invalid, the judge said the employer was “liable for the difference between the full overtime rate…and the amount plaintiffs actually received for their overtime hours worked.”
Need Help With an Overtime and Wage Matter?
Employers should not misuse the law to avoid paying the required minimum wage to their employees. If you are an employee who has been shortchanged due to an employer's illegal actions, you do not have to suffer in silence. An experienced New York employment law attorney can help. Call the Law Offices of Mahir S. Nisar at 800-496-3076 today if you need to speak with someone about your workplace situation.