Gov. Andrew M. Cuomo said Sunday he wants to evaluate and possibly end minimum wage tip credits in New York.
The governor announced he has ordered the state Department of Labor to hold public hearings next year to solicit input from workers and employers on the tipped wages credit, which allows owners of businesses such as restaurants, car washes and nail salons to pay workers less than the legal minimum wage.
The review of the state’s minimum wage tip credits will be included in Cuomo’s State of the State address on Jan. 3, the governor said Sunday on “The Cats Roundtable” radio show with supermarket magnate John Catsimatidis.
“Tipped wages are a lower minimum wage for employees who get tips because the theory is that tips will bring them up to the minimum wage,” Cuomo said. “If the tips don’t bring them up to the minimum wage, the employer is supposed to make up the difference.”
Food service workers on Long Island, for example, are currently supposed to receive at least $7.50 per hour. If their hourly compensation with tips is not at least $10 — the minimum wage on Long Island as set by the state — employers have to make up as much as $2.50 per hour to bring the combined wage to the minimum level. The minimum wage is scheduled to rise to $11 per hour on Dec. 31.
The state hearings also are to address minimum wage disparities in different industries. Long Island workers in tipped industries other than food service, such as car washes and nail salons, are paid $8.35 an hour plus a $1.65 tip credit — a different formula than for those working in restaurants.
Some employers refuse to pay the minimum wage tip credit while others refuse to distribute tips to their employees, and many tipped workers are often reluctant to report problems with their paychecks because they fear retribution from bosses, such as being blocked from more lucrative shifts, said Alfonso David, Cuomo’s general counsel.
A 2008 Department of Labor study found that nearly eight out of every 10 car washes in New York City and half of those across the state violated minimum wage and overtime laws, Cuomo said. Other employers may not compensate their workers properly because daily and weekly fluctuations in tips or shoddy bookkeeping make it difficult to keep track of employee tips, according to the governor’s office.
David said women and minorities are especially vulnerable to wage theft. More than 70 percent of the tipped workers in New York are women. Studies indicate that African-American workers are often tipped less than white peers.
Tipping is also a factor in sexual harassment, Cuomo said. Workers in states that require the full minimum wage be paid to tipped employees experience half the rate of sexual harassment compared to those in states that pay lower wages, according to a 2014 study by the Restaurant Opportunities Center, which recommended eliminating the subminimum wage for tipped workers to reduce pressures that increase harassment.
David said there are 400,000 tipped workers employed in New York State.
“No worker should earn below the minimum wage — ever,” said Stuart Applebaum, president of the Retail, Wholesale and Department Store Union. “We have been working for years to improve conditions for carwash workers. Today, Governor Cuomo recognized that this abhorrent loophole has left immigrant workers susceptible to wage theft.”