MINIMUM WAGE & OVERTIME FOR RESTAURANT WORKERS AND TIP’ED EMPLOYEES

Attorneys representing waiters, waitresses and all tipped employees throughout NY and NJ

New York Labor Law, New Jersey Wage and Hour Laws and The Federal Fair Labor Standards Act of 1938 (FLSA) all provide that “[e]very employer shall pay to each of his employees” a Minimum Wage as mandated by the law. In addition, these statutes provide that any employee that works in excess of 40 hours in a given work week must be paid no less than one-half times their regular earnings as Over-Time Pay. Anyone being paid less than the minimum wage (as explained below) or not being paid Overtime you should immediately contact the Akin Law Group.

In addition to the minimum wage and overtime wages set, there are special regulations with regard to those in the service sector where a part of their pay is deducted as “tip credits.”

TIP CREDIT CANNOT BE DEDUCTED UNLESS YOU HAVE BEEN NOTIFIED IN WRITING.

Under the FLSA, a tip credit may only be taken when (1) the employer has informed the tipped employee that a tip credit will be deducted from their wages (setting forth the exact amount deducted from the minimum wage and the amount paid); and (2) all the tips received by the employee is paid to the employee, (although some exceptions exist for pooling of tips among employees and/or splitting the tip with bussers (busboys / busgirls).  If your employer is deducting a tip credit from you without providing you the information in writing or using your tips to pay salaried employees (like the kitchen staff) you may have a claim and should contact an attorney immediately.

 

MINIMUM WAGE IN NEW YORK AND NEW JERSEY

New York has a very complicated minimum wage structure. Effective January 1, 2017 the minimum wage for those working in hospitality industry (a restaurant for example) ranges between $9.70 per hour for those working upstate, to $10.00 per hour in Nassau, Suffolk and Westchester Counties, to a rate of $10.50 per hour for those employed within the borders of New York City.  For most other workers (including many tipped employees) in New York State, the current minimum wage is usually $10.50 per hour with certain exceptions.

The minimum wage in most of upstate New York (including those in the hospitality industry like restaurants) is $9.70 per hour. In Nassau, Suffolk and Westchester County, the minimum wage is $10.00 per hour. In New York City, there are two minimum wages for employees, depending on the size of the business establishment; smaller businesses in the hospitality industry (up to 10 employees) must pay a minimum wage of $10.50 per hour while larger businesses (11 or more employees) must pay a minimum wage of $11.00 hour.

For instance, if you are waiter in a large restaurant in New York City, your employer must pay you a cash wage of at least $7.50 per hour; the employer can only take a tip credit of $3.50 (which would total $11.00 per hour). In a small Restaurant with fewer than 10 employees, your employer must pay you a cash wage of at least $7.50 and can only take a tip credit of $3.00 (which would total $10.50 per hour). The tip credit can only be taken provided you make more than the $3.50 / $3.00 per hour in tips. If you earn less than the amount of credit, the employer must make up the difference, but if you earn more, the earnings are yours to keep. The wage and hour laws in New York are complicated and require an employment attorney that is knowledgeable in this field of practice. If anyone believes they are being paid less than the minimum wage or are denied overtime pay in New York, our attorneys at the Akin Law Group are here to assist.

New Jersey is less complicated with the minimum wage rate being an even $8.44 per hour for all workers, which is governed by the New Jersey Wage and Hour Law. Tipped employees in New Jersey must make the same minimum wage as everyone else, ($8.44 per hour) but the payment can include tips totaling no more than $6.31 per hour. In other words, employees earning more than $6.31 in tips per hour, can be paid $2.13 per hour as their rate of pay. Again, the requirement is that the employee’s average hourly rate (tips and checks) not be less than $8.44 per hour (by way of an example, an employee working 8 hours must be paid no less than $$17.04 in checks and no less than $50.48 in tips for a total of $67.52. There is a minimum rate of pay, but not a maximum. Regardless of how much you make in tips, your employer is still required to pay you $2.13 per hour. In other words, even if you make $20 per hour in tips, you must still be paid $2.13 per hour in check.

 

ARE TIPPED EMPLOYEES ENTITLED TO OVERTIME ?

The answer is Yes. Both, New York and New Jersey require that all employees (with few exception) be paid overtime wage, which is an amount that is 1.5 times the regular rate for all hours worked in excess of 40 hours in a given week.  Whenever a tipped employee works in excess of 40 hours in an established work week, all hours worked in excess of 40 must be compensated at the overtime pay rate like any other non-tipped employee. Overtime must be paid at a rate of 1.5 times the minimum wage without an increase in the tip credit that is deducted from the employee.

For example, assume you already worked 40 hours within a work week in New Jersey, and you work an additional six-hour day, during which you make $30 in tips (including any cash you take home after that shift). This $30 is effectively $5 per hour. That’s below the minimum overtime wage of $12.66 ($8.44 x 1.5). We know your employer must pay you at least $2.13 per hour for all hours worked, and make up any shortfall under minimum wage. Your employer must make sure that you make at least $12.66 per hour in overtime. In this case, the $2.13 + $5 per hour (being only $7.13) would not satisfy the current overtime minimum wage of $12.66. In this case, your employer would be required to increase its contribution from $2.13 to $7.66 per hour to make sure that you make the same overtime minimum wage as everyone else: $5 per hour (tips) + $7.66 per hour = $12.66.

New York is a bit different. Tip credit is $3.00 for wages of $10.50. Although the overtime rate for such an employee would be $15.75 per hour, the tip credit does not change. As such, taking the same example as before, assume you already worked 40 hours within a work week in Manhattan, and you work an additional six-hour day, during which you make $30 in tips (including any cash you take home after that shift). This $30 is effectively $5 per hour. We know your employer can only take a tip credit of $3.00 per hour for all hours worked, and must pay you the overtime rate of $12.75 ($15.75 – $3.00). As such, your hourly overtime rate would become $12.75 + $5.00 for a total of $17.75.  Regardless of what you earned in tips, the tip credit cannot be more than the $3.00 allowed by law, even if your overtime rate ends up being significantly more.

While New Jersey sets a minimum amount for tipped workers, New York allows a minimum deduction for tipped employees. The law and the calculation is very different. If you are a tipped employee working in New York or New Jersey and you are not being paid the proper wage and proper overtime wage, you should contact a wage and hour attorney that is familiar with the law.

At the Akin Law Group, we are on your side. You and your family deserve every penny you earned (in salary and in tips) without being cheated.  If you, or anyone you know has been paid less than the Minimum Wage or was denied Over-Time pay despite working in excess of 40 weeks, or was paid less than the amount mandated by law because you receive tips, contact the Akin Law Group immediately at 212-825-1400 or at info@akinlaws.com and schedule your FREE initial consultation about any employment related matter.