New Tip Law Goes Into Effect in New York

The New Year has already brought a number of changes for tipped workers in New York State, with new laws regarding the spreading of tips amongst workers. The law attempts to clarify how to deal with tips, replacing a patchwork of policies used by employers, many often in violation of wage and labor law.

The laws, issued two weeks ago and in effect as of January 1st, attempt to make sense of policies regarding tips and better protect tipped employees pay. Businesses have until February 1st to become compliant and develop policies in line with these new laws, but all changes must be retroactive to January 1st.

Among the changes is an increase in the mandatory minimum wage paid to tipped workers in food service, up to $5 from $4.65. This includes servers, bartenders, bussers and other front of house restaurant staff. Other service workers in the hospitality industry like hotel workers will now receive a minimum wage of $5.65, up from the previous $4.90.

Under the new laws, managers and restaurant owners are responsible for setting up the system under which tips are handled. For example, a restaurant can now pool tips under a system which splits tips based on percentages, or that an individual server can keep tips and give shares to supporting team members. Restaurants will be required to maintain records of how these tips are shared, and have an established and clear policy on how they are handled. Employers are liable for damages for the previous six years.

While the restaurants are able to set their own rules, tip pooling is limited to the workers on the main floor of the restaurant– servers, bussers, sommeliers etc., and not management, owners and other employees that do not interact with the customers in such a way.

Given the six year period, restaurants should pay careful attention to these new regulations to ensure compliance. For employees working under these new laws, make sure that your employer has a consistent policy and is in compliance with these new laws. If you believe your employer is or has illegally misappropriated tips, please contact the Harman Firm.