NY DOL Eliminates Tip Credit for Miscellaneous Industries by End of 2020

At a Glance

• New York Governor Cuomo announced on December 31, 2019 that the New York Department of Labor would issue an order eliminating the tip credit for miscellaneous industries.
• Per the Governor’s statement, this affects Nail Salon Workers, Hairdressers, Aestheticians, Car Wash Workers, Valet Parking Attendants, Door-persons, and Tow Truck Drivers.
• Employers with affected workers will have to make a change to the tip credit and minimum wage amounts beginning on June 30, 2020, reducing it by half, and will have to eliminate the tip credit by December 31, 2020.

Introduction

After the New York Department of Labor released a report on the current minimum wage impacts to workers in New York, Governor Cuomo announced the elimination of the miscellaneous tip credit. The tip credit permits employers to pay employees a subminimum wage by utilizing a tip credit for employees who traditionally receive tips/gratuities.

By June 30, 2020, employers who have employees covered under the miscellaneous wage order will be required to reduce the tip credit by half. By December 31, 2020, employers with employees covered under the miscellaneous wage order must begin paying the full minimum wage.

Per the statement by the governor miscellaneous tipped employees includes:

• Nail Salon Workers
• Hairdressers
• Aestheticians
• Car Wash Workers
• Valet Parking Attendants
• Door-persons
• Tow Truck Drivers

Next Steps

Employers should review their current pay practices and plan to make the change beginning on June 30, 2020 to the lower tip credit, as well as, plan to remove the tip credit entirely beginning December 31, 2020. If you need assistance updating your pay rates, please reach out to your account manager for additional guidance.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.

Date Posted: January 06, 2020