Tuesday 27 June 2017

New York State Tip Law for Workers in the Restaurants and Hotel Industries

Tipping at restaurants is a more complex process that it appears on the surface. When a diner leaves a tip after a meal chances are the most thought goes into leaving a fair percentage. The question of who receives the tip doesn’t like occur to most diners, especially those that never worked in the food service industry. The way tips are shared can vary widely from restaurant to restaurant and can include a complex system. Most states, like Washington, don’t regulate sharing tips. New York recently changed its laws to include new regulations on tips.

The New York Department of labor issued new regulations on tipping that went into effect on Saturday (see NY Times Article). The regulations for the first time regulate the appropriation of tips and include a number of features. The regulations cover several issues, including who should pay for “laundering wash-and-wear uniforms”, raises the minimum wage for tipped employees to $5.65, and defines job categories that are eligible for shares in tips from the dining room (“food service workers only, including waiters, bartenders and bussers, as well as sommeliers and hosts, provided they are not managers”).

The new rules most notably provide rules on tip-pooling. Tip pooling is a little known back of the house process. It requires servers to pool all of their tips at the end of a shift and allocate a percentage to co-workers. The list of co-workers varies from restaurant to restaurant, but can include bussers to the bartender, even if a table didn’t order drinks!

The new rules in NY dictate both the system and the percentage allocated to each job category. The rules allow gratuities to be combined in a pool to be divided by all the staff members or collected by individual servers who in turn gives a portion to members of the team. The NY labor department requires employers to keep records of tip pools and shares, which can be examined during an investigation. The new regulations add both clarity and accountability to food service workers.

The Labor Department will require that employers keep records of tip pools and shares; the records could be examined during investigations undertaken by the department on its own or in response to complaints. The response to complaints can include payment of back wages and tips up to six years.

New York serves as a model for other States. Many states are like my home in Washington. Washington doesn’t regulate of how tips are divided at the end of the shift. The only requirement is that workers receive the state minimum wage of $8.67/hr. There may be a balance between regulating tip pooling and providing a higher minimum wage.

It’s important to note that tips and wages are governed by both state and federal law. To read more about the application of federal law, which at the moment doesn’t differ from WA state law, click here.

A lesson from New York is to take a moment to ask if there are regulations on tips where you operate.

 

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2 comments

  • Ben | July 11, 2011 at 12:27 pm | Reply

    I just have a question about owners and managers taking tips from the tip pool in restaurants in Washington State. I have heard some say it’s illegal and some that it’s just unethical. Whats the truth?

  • Marc Sanchez | July 11, 2011 at 12:44 pm | Reply

    Ben,

    Thank you for reading and for your comment! Please note this is not legal advice.

    The only regulation of tips in WA state that I’m aware of is that workers be paid the minimum wage. If an owner or manager attempts to share a tip it would likely be legal so long as all other workers were left with a minimum wage. In that case it falls under the unethical rather than illegal spectrum.

    I hope this helps!

    Marc

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