The hospitality wage order allows covered employers to apply a tip credit, but standards differ depending on whether the employee is considered a service employee or a food service worker. For instance, employers must directly pay service employees and food service workers at least the tipped minimum wage and cannot claim a tip credit that exceeds the maximum tip credit. However, for service employees, the ability to claim a tip credit depends on whether the employee’s weekly tip average equals at least the hourly tip threshold and whether their direct wages plus tips equal or exceed the minimum wage. Hospitality industry employers may not apply a tip credit to management, salespeople or kitchen staff. In addition to tip credits, the hospitality wage order allows employers to take meal and lodging credits.

The hospitality wage order also permits voluntary tip sharing, voluntary tip pooling and redistribution of tips among directly and indirectly tipped service employees and food service workers. Employers may require a tip pool and may set the percentages to be distributed to employees, so long as records are maintained and regularly made available to employees.

In addition, the hospitality wage order requires that documents provided to customers or prospective customers pertaining to banquet events clearly state that any administrative charge kept by the business is not intended to be a gratuity and will not be distributed to individuals working the event. As with tip credits, this aspect of the wage order has been subject to extensive litigation in recent years.

Further, the hospitality wage order provides for uniform maintenance pay, which is intended to cover the cost to an employee of maintaining required uniforms worn on the job. To determine the amount of uniform maintenance pay, employers take the actual hours of work into account. The law does not, however, require that employers pay for uniform maintenance where the employer requires wash and wear uniforms or where the employee declines to use a free and readily available employer-provided laundry service (after receiving written notice that such a service is available to the employee).

Compliance with the hospitality wage order is imperative because non-compliance may result in steep damages. These include back pay, liquidated damages (in the total amount of any unpaid wages), attorneys’ fees and costs and interest. Because the hospitality wage order contains several unique rules pertaining to the operation of restaurants, hotels and bars in New York state, it is critical that employers in the hospitality industry understand these rules and implement wage practices that comply with them.