NYS removes tipped wages from some industries

Car washes, nail salons, must now give workers minimum wage; Restaurants exempted

Mike Baggerman
January 03, 2020 - 4:26 am
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ALBANY, N.Y. (WBEN/AP) — Over 70,000 tipped workers will no longer receive below-minimum wages by the end of 2020 under an order announced by New York’s governor Tuesday.

The order applies to a vast array of workers, including hairdressers, nail salon employees, valet parking attendants, tow truck drivers and tour guides — but not restaurant workers, many of whom did not want the change.

"Our Department of Labor undercovered the fact that there were so many people being underpaid in violation of the law," Lieutenant Governor Kathy Hochul told WBEN. "They literally had an in-depth, three-year study that found many people in these tipped-wages industry...were not getting the wages they're supposed to get."

Currently, New York employers can pay tipped employees below the state minimum wage. But employers can only do so if employees earn enough tips on average to make up the difference.

Democratic Gov. Andrew Cuomo says New York will eliminate that system by Dec. 31, 2020 for tens of thousands of tipped workers, who will earn the minimum wage no matter how much they earn in tips. His administration says the timetable will help employees while also giving businesses time to adjust.

Labor groups celebrated Cuomo’s announcement Tuesday and said New York’s system for paying certain tipped workers is too confusing and leads to wage theft and exploitation.

“Being able to count on a fixed wage will benefit workers like us, who depend on tips,” said​ nail salon worker organizer Glenda Sefla of the New York Nail Salon Workers Association. ​“It will mean fairer work schedules, more time with family, and another step closer to a dignified life.”

A spokeswoman said the New York State Car Wash Association is “very disappointed” in the change.

“Although not all of our members take advantage of it, some do and do so lawfully,” said Executive Director Suzanne Stansbury. “Many of these operators may now need to change their business model and add automation, eliminating critical entry-level jobs.”

Meanwhile, Cuomo’s move to exclude tipped restaurant workers from his order drew praise from a restaurant workers group.

“Today is a huge win for tipped workers and the entire restaurant industry across New York state,” Joshua Chaisson, vice president of Restaurant Workers of America, said. Such groups argue that including tips in minimum wage calculations helps keep costs down and preserves jobs and wages.

Ellie Grenauer, the owner of the Glen Park Tavern in Williamsville and also a director at the New York State Restaurant's Association, was also among those relieved that the state exempted restaurants.

"The restaurant businesses has very little room for extra expenses," she said. "The profit margin runs from four to seven percent in the business, especially if you're a small operator. If they had eliminated that tipped credit and taken everyone to a minimum wage, we would have eliminated our bottom line."

Hochul said there are no immediate plans for the state to look at eliminating tipped wages for the restaurant industry again.

The minimum wage rose to $15 for workers in New York City on Tuesday. That wage will be phased in for the entire state eventually.

For workers who receive tips, there’s no single base wage that employers have to pay employees before tips. Instead, employers base the pre-tip wage on the average amount of tips received by employees.

Cuomo’s administration released a report Tuesday that said the current system is so confusing that it can lead to employers intentionally stealing wages or inadvertently pay workers below the minimum wage.

The report cites labor advocates who said workers often ask what they should be making.

“What is the minimum wage?” said Kathy Amiliategui, a Make the Road New York organizer, in the report. “It’s a simple question and yet for tipped workers, one with an unnecessarily complicated answer. It’s nearly impossible for workers to enforce their labor rights when the minimum wage is so convoluted.”

 

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