Elimination of Tipped Wage Would Shake Restaurant Industry

NYSRA surcharge structure tariffs small business

Article contributed by the NYS Restaurant Association

It’s no secret, New York is expensive and the Big Apple especially so for businesses. Commercial rent is high, taxes are high, and the cost of labor keeps rising each year. These economic currents create an incredibly difficult business climate for those operating in and around New York City.

The weight of all of these factors can be crippling to the business community, in particular the restaurant industry which survives on small profit margins. The unfortunate news is that this climate can get worse and it may if the Department of Labor makes a determination to eliminate the tipped wage for food service workers later this year.

Governor Andrew Cuomo, in conjunction with the New York State Department of Labor, released a series of hearing dates that will examine the tipped wage and determine if it should remain intact. The hearings will take place through the spring all across the state, from Buffalo to Long Island, from New York City to Watertown and will be presided over by Labor Commissioner, Roberta Reardon.

In a press release that contained the dates of the hearing, Governor Cuomo said that he is “urging those impacted by this proposal to register, attend a hearing, and help us move this state one step closer toward a better, more just New York.” We agree with Governor Cuomo – those who are affected by the possibility of this change need to attend a hearing and testify. And when these servers tell their stories, we think the Governor will be surprised by what he hears.  Countless servers, bartenders and other tipped employees have shared stories with us on how they use money generated from tips to put themselves and their kids through school and how this money has given them the financial wherewithal to put a down payment on their first home.

Many advocates have consistently referred to the tipped wage as “subminimum”, which is patently false. Every single employee that works in a restaurant is guaranteed to make the minimum wage. Tipped employees in the front of the house universally are the highest paid workers in a restaurant. The tip credit allows owners to pay these employees at a lower rate ONLY if tips are bringing them at least to the minimum wage. The overwhelming majority of front of the house workers don’t want this system to change. They are making good money and have certainty with how much they can expect to bring home every week. By abolishing the tipped wage, the State of New York would be throwing the entire industry into flux and the results would be unpredictable. Some restaurants would be moved to do away with tipping all together to bring pay equity to both front and back of house workers. Others would be forced into letting employees go as they would no longer be able to meet these ever increasing labor costs. And unfortunately others would need to shut their doors forever, leaving an entire staff without jobs. 

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We are asking restaurant owners and managers throughout New York to discuss this issue with their staff and make sure they understand what is at stake in this fight. Without the tip credit, labor costs could jump by as much as 50 percent and would force restaurant owners into making some difficult decisions. We as an industry need to band together to fight back against this possible tip credit elimination. It is vitally important that restaurant owners and employees ensure their voices are heard.

The Governor and the Department of Labor are trying to fix a problem that simply doesn’t exist in the restaurant industry. Tipping works and servers don’t want this change. We hope that if enough people testify in opposition, the Governor and Commissioner Reardon will do the right thing and leave the tip credit in place.

For more information on NYSRA, visit our website at www.nysra.org.