Department of Labor Preserves Tip Credit

Nearly two years after Governor Cuomo directed the State Department of Labor to study eliminating the tip credit, the Department has issued a report recommending eliminating the tip credit for miscellaneous industries but not the hospitality industry. During six months of public hearings the Department heard from nail salon and car wash workers about unfair treatment and wage theft, but restaurant owners and workers told a different story. It’s clear that the Labor Department heard us.

Governor Cuomo has accepted these recommendations and has directed the Department of Labor to eliminate the tip credit for miscellaneous industries in two steps – getting rid of half of it on July 1, 2020 and eliminating it entirely at the end of the year. The Department will now begin the regulatory process to put those changes into effect.

While the report is silent on any recommendations for the hospitality tip credit, in public statements from the Department since the report was issued they’ve said that any change in the hospitality tip credit “would require further study.” After two years of study we’re not anticipating further action from the Department of Labor on the hospitality industry tip credit anytime soon, but we’ll remain vigilant and on-guard for any sign of movement.

The advocates for eliminating the tip credit have already published an op-ed in the NY Daily News calling for further action. And since Governor Cuomo has not answered their call it’s likely they’ll take their case to the State Legislature. We were successful maintaining the tip credit through the active and vocal participation of members of the industry all across the state and we’ll push back against any legislative initiative using the same strategy.

We achieved this result with the help of a broad coalition of groups and organizations. Our appreciation goes out to our Association partners the New York State Restaurant Association, the New York State Hospitality & Tourism Association, the New York State Bowling Proprietors Association, and the New York City Hospitality Alliance. Their work, along with that of the groups representing servers (Supporters of the Tip Credit and the Restaurant Workers of America) combined to make it clear to policy makers that eliminating the hospitality tip credit was not welcome by owners and workers which led to this favorable outcome.