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Minimum Wage Increase Adopted…Tipped Wage Adjusted

The State Legislature approved an increase in the state minimum wage as part of the enacted state budget. The minimum wage will increase to $15 per hour in NYC by December 31, 2018, except for small businesses with 10 employees or less who will see the minimum wage increase to $15 per hour by December 31, 2019. In Nassau, Suffolk and Westchester Counties the minimum wage will increase to $15 per hour by December 31, 2021.

In upstate New York, the minimum wage will increase to $12.50 per hour by December 31, 2020 after which the minimum wage will increase to $15 per hour over a period of time based on an index designed to measure the strength of the upstate economy. It could go up quickly or slowly depending on economic conditions. There’s also a “safety valve” in place to evaluate ongoing economic conditions in the state and allows the Commissioner of Labor to “pause” the scheduled rate of the increase in the minimum wage if conditions warrant.

The new minimum wage law includes an adjustment in the cash wage for tipped food service workers. The law sets the cash wage at two-thirds the rate of the minimum wage. This is the historical relationship the cash wage has had to the minimum wage for the past thirty years. That was until the Wage Board acted last year to raise the cash wage by twice the rate the minimum wage was increased. This means that as the minimum wage increases over the next few years the cash wage will also increase so that it’s always two-thirds of the minimum wage. The cash wage will eventually get up to $10 per hour when the minimum wage in each region gets to $15 per hour. To understand the impact of this on the cash wage for tipped food service workers, this results in a one year freeze in the cash wage for employers in NYC and a two year freeze for employers in Nassau, Suffolk and Westchester counties. Employers in the rest of the state will have a freeze in the cash wage for four years. We’ve included a chart that shows the minimum wage and corresponding cash wage for tipped food service workers.

While no state mandated increase in your cost of operations is good news, the “Fight for $15” created a lot of pressure on the State Legislature. It was only through the strong advocacy of the NYS Senate Republican Majority and their coalition partners, the Independent Democratic Conference, did the damage get contained. Getting the cash wage rate set at two-thirds of the minimum wage is a great victory. It’s the way it’s been for the past 30 years so it’s fair to maintain it going forward. And it was set by the state legislature not an appointed body. This could not be achieved without the grassroots efforts of our members and the entire hospitality industry. While this will cause an increase in your operational costs, it’s a far better deal than the wage board or the deal struck in in California this week.