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February 03, 2011
NYSDOL Revamps Hospitality Wage Rules

While the order leaves the hospitality minimum wage unchanged at $7.25 per hour, it makes significant changes to wage structures for tipped employees. For food service workers, the minimum wage increased from $4.65 with a maximum tip credit of $2.60 to $5.00 with a maximum tip credit of $2.25. For service employees in all establishments, the order eliminates the former two-tier system, bringing all employees under a uniform minimum wage of $5.65 with a maximum tip credit of $1.60.

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For service employees in resort hotels who receive at least $4.10 per hour in tips, the minimum wage increased from $4.35 to $4.90, leaving a new maximum tip credit of $2.35. That wage now also applies to chambermaids in resort hotels, who were formerly covered by a separate two-tier structure.

In addition, the order makes the following changes:

  • Requires all non-exempt workers to be paid on an hourly basis, expressly prohibiting salaries, weekly rates, day rates, or piece rates.
  • Requires overtime pay for all workers after 40 hours in a week, eliminating the former 44-hour threshold for residential employees.
  • Grants spread of hours, call-in, and uniform maintenance pay, formerly phased out as wages rose, to all non-exempt workers regardless of pay rate.
  • During shifts long enough to require meal breaks, requires employers to either allow employees to bring their own food or give employees meals at a cost of no more than $2.50.

In addition, the rule imposes new requirements on employers regarding tip pooling and sharing arrangements. First, the rule prohibits employers from appropriating employees’ tips. Tip sharing and pooling arrangements, both voluntary and employer-mandated, are still permitted, but tip policies must be communicated to all employees in writing. Employers may deduct credit card fees from tips charged to credit cards so long as the deductions are pro-rated to reflect the portion of fees generated by the gratuity.

In addition, the order imposes stringent new notice requirements regarding service charges and gratuities. The order presumes that any service charge on a guest menu or bill is a gratuity owed to staff unless a written statement is provided to the contrary. Any administrative charge that is not a gratuity must be clearly identified as such on all guest menus and bills that list prices. The notice must clearly state that the charge is not a gratuity and will not be distributed to staff who provided services. If a percentage of a service charge is a gratuity, the bill must specify what percentage of the charge is a gratuity to be passed on to staff.

Employers must notify all staff of these changes no later than February 28. To learn more about the changes, and to download a poster for notifying employees of the new rules, visit the NYSDOL's Hospitality Wage Order webpage.

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