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New York is one of the few U.S. states to enact specific workplace rules for hospitality industry employers. To that end, the New York State Department of Labor has for decades used regulations known as “wage orders” to supplement employers’ statutory obligations under the New York Labor Law. These wage orders are industry-specific, covering everything from nonprofits to the building service industry. Among these regulations is one specific wage order that covers just the hospitality industry.
Employment Rules & Laws
This wage order creates workplace-related obligations unique to the hospitality industry, which includes restaurants, hotels, catering and banquet halls, fast-food establishments, camps and membership clubs. These regulations govern minimum and overtime wage rates within the industry, gratuities, uniform maintenance pay, reimbursement for purchase or maintenance of required uniforms, spread of hours pay and credits for meals and lodging, among other things.
Perhaps most critically, the hospitality wage order sets forth increased minimum wage rates for tipped employees, as well as regulations pertaining to the handling of gratuities. These include regulations concerning so-called “tip credits,” which have been the subject of substantial litigation over the past few years. Tip credits are essentially exceptions to the general wage-and-hour laws that permit hospitality industry employers to, under certain circumstances, pay tipped employees less than the minimum wage, so long as the employee’s direct wages plus tips equal or exceed the minimum wage or overtime rate.
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.
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