The New York Department of Labor is eliminating the subminimum wage in a variety of industries, with the exception of the hospitality industry.
"Subminimum wage” is payment made by an employer that is below the state minimum wage, but equals or exceeds it when bolstered by tips the employee received. The difference is a "tip credit," which could be up to $5.
For example, the minimum wage in New York City is $15 an hour. If a hairdresser was tipped on average $5 an hour by customers, the employer could legally pay the hairdresser $10 an hour to fulfill the minimum wage requirement.
As of June 30, 2020 the difference between the minimum wage and tip credit was cut in half. Meaning that the tip credit can amount up to $2.50 against the subminimum wage. (So, in the example above, the hairdresser would have to be paid $12.50.)
On December 31, 2020 the tip credit will be completely eliminated and workers in effected industries will be entitled to the full minimum wage, regardless of tips.
The elimination of the tip credit impacts over 70,000 employees in industries designated as "miscellaneous" statewide, including nail salon workers, hairdressers, aestheticians, car wash workers, valet parking attendants, door-persons, tow truck drivers, dog groomers and tour guides.
The order does not include employees in the hospitality industry, including hotels and restaurants.
The order is meant to end confusion and wage theft of rightfully earned employee wages.
While New York is gradually phasing in a uniform statewide minimum wage of $15, the new calculation of subminimum wage (relevant through Dec. 30, 2020) varies based on location and size of employer, which may be confusing. The calculation is as follows:
New York City | Long Island and Westchester County | Remainder of New York State |
$13.15 When tips are at least $1.85 per hour | $11.40 When tips are at least $1.60 per hour | $10.35 When tips are at least $1.45 per hour |
$13.85 When tips are at least $1.15 per hour, but less than $1.85 per hour | $12.00 When tips are at least $1.00 per hour, but less than $1.60 per hour | $10.90 When tips are at least $.90 per hour, but less than $1.45 per hour |
For any questions or assistance, contact us.
Andrew Kimler heads Vishnick McGovern Milizio LLP’s Employment Law and Alternative Dispute Resolution Practices and is a key member of the LGBTQ Representation Practice. He can be reached at akimler@vmmlegal.com and 516.437.4385 x122.
