Cuomo Considers Eliminating the Tipped Minimum for New York

As cities and states across the U.S. continue to raise their respective minimum wages in the face of federal inaction, New York Governor Andrew Cuomo is considering a more drastic step: Eliminating the lower tipped minimum wage that most waiters, bussers, and bartenders earn.

That tipped minimum for New York City employers with 11 or more staffers is currently $8.70 — one of the highest in the country — and will rise to $10 at the end of the year. That’s a heck of a lot higher than the federal tipped minimum of $2.13 per hour, but it will still be $5 less than New York’s full minimum of $15 by late 2018.

Seven states currently lack a tip credit, meaning that all workers must be paid a single wage. Those states are California, Alaska, Minnesota, Oregon, Washington, Wisconsin, and Nevada. New York would be the eighth. In all other states (and New York for now), employers are allowed to pay tipped workers a lower minimum wage provided that gratuities bring an individual worker’s pay up to the full minimum.

Cuomo first outlined his proposal last month, in advance of Wednesday’s State of the State address. While the governor did not mention tipping in his speech, the formal “book” that accompanied his remarks reiterated that the state labor commissioner will hold hearings to “evaluate the possibility” of eliminating the tipped minimum. There is no timetable for those hearings as of yet.

“Because tips can be difficult to track, they can be a vehicle for wage theft when employers fail to pay workers properly,” according to the State of the State book, which cited a labor advocacy group report in finding that tipping “disproportionately affects women and people of color in service industries and is linked to higher rates of sexual harassment.”

The potential downside is that at many (but not all) New York establishments, waiters earn more than cooks because of tips; eliminating the tip credit could exacerbate this wage disparity unless tipping is done away with as well.

Should Cuomo move ahead with eliminating the tip credit, it’s likely he would do so gradually. When he announced plans to raise the full minimum to $15 in spring of 2016, he established a schedule of three to six years (or longer, for parts of upstate) that depended on the geographic location of a given business and its size.

As I argued in a column last year, a single minimum wage would be a positive move for New York. It would free waiters and bussers from relying on fickle customers to bring their earnings up to the full minimum wage, as well as from relying on potentially unscrupulous employers to make up that difference when gratuities fall short — particularly since wage theft is prevalent in the hospitality industry.