New York to begin tip-credit public hearings

New York State labor commissioner Roberta Reardon will conduct the first of seven public hearings to examine the state’s tip credit, which allows restaurants and other tipped businesses to make up minimum wages with tips.

The public hearings, which begin on Friday in Farmingdale, N.Y., come as advocacy groups push for the end of the tip credit in the District of Columbia. Other groups are lobbying to maintain the status quo, saying restaurants and other tipped retailers thrive under the current law.

Seven states currently bar tip credits: Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington.

Source: Wage and Hour Division/Department of Labor (as of Jan. 1, 2018)

In his 2018 “state of the state proposals,” New York Governor Andrew Cuomo called on Reardon to conduct the hearings to evaluate the tip credit in the state, saying tips were intended to be a reward for good service, not a subsidy to bring pay up to mandated minimum wages.

“At the end of day, this is a question of basic fairness,” Cuomo said at the time. “In New York, we believe in a fair day's pay for a fair day's work, and that all workers deserve to be treated with dignity and respect. There should be no exception to that fairness and decency.”

The first of the tip credit hearings is scheduled for Friday at 10 a.m., at the Roosevelt Little Theatre at the State University of New York at Farmingdale on Long Island. A hearing devoted solely to the hospitality industry will be held on June 27 in the Bronx, N.Y.

As of Dec. 31, 2017, employers with 11 or more workers in New York City must pay a general minimum wage of $13 an hour, of which $4.35 can be a credit for tips received. For employers with 10 or fewer workers in New York City, the general minimum wage is $12 an hour, of which $4 can be a credit for tips received. For Long Island and Westchester, the general minimum wage is $11 an hour, of which $3.50 can be a tip credit. For the rest of New York State, the general minimum wage is $10.40 an hour, of which $2.90 can be a tip credit.

The federal minimum wage is $7.25 an hour.

New York’s possible elimination of the tip credit has drawn opposition, including a full-page ad in the New York Post on Friday from the conservative Washington, D.C.-based Employment Policies Institute.

Michael Saltsman, managing directing of the Employment Policies Institute, said in an interview Friday that getting rid of the New York State tip credit “is going to be harmful to change the status quo.”

Many restaurateurs and customers remain happy with the current law, he said.

“There’s a bogus narrative that suggests there is a link between the tip credit and sexual harassment,” Saltsman said. “States like California, which doesn’t have a tip credit, actually have double the rate of sexual harassment in restaurant as New York does. You can make the case the sexual harassment in any industry is bad and is something that needs to be eliminated, but what you can’t do is make the case for a link between the tip credit and sexual harassment.”

However, in calling for the hearings, Cuomo said more than 70 percent of all tipped workers in New York are women, and that African-American workers are often tipped less than their white counterparts.

“Workers in states that require the full minimum wage be paid to tipped employees experience half the rate of sexual harassment compared to workers in states that pay lower wages to tipped employees, according to a 2014 study by the Restaurant Opportunities Center,” the governor said. “The study's chief recommendation was to eliminate the sub-minimum wage for tipped workers to reduce the pressures that increase sexual harassment to create a safer and more equitable workplace.”

The ROC study led EPI to publish its full-page ad Friday, Saltsman said. EPI receives support from restaurants, foundations and individuals. The group has also set up a microsite called BadTipNewYork.com.

Meanwhile, ROC-DC, a local Washington, D.C., branch of the organization, said it had joined with other coalitions and D.C. council member Mary Cheh to launch a “One Fair Wage DC” campaign in support of ballot initiative No. 77, which calls for the elimination of the tip credit in the district. The vote is scheduled for June 19.

Contact Ron Ruggless at [email protected]

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