Restaurant Wage and Hour Laws in New York

September 16, 2015

There is a myriad of federal, state, and local laws that employers must comply with when operating their organizations. To add to the complexities of employment law, New York State Labor Law has carved out special rules that apply only to restaurants within the State.  These regulations differ from rules that other employers must follow, and complying with the incorrect law can be very costly. This Article highlights some of the special rules that restaurant employers should become familiar with.

  • The restaurant industry has its own minimum wage system. Employees are entitled to the New York State minimum wage of $8.75 per hour. However, the way the wages are to be paid is unique for restaurants. Food service workers need only be paid $5 per hour by the employer if the sum of their wages and tips equals or exceeds the minimum wage. If the employee does not earn $8.75 per hour, including tips, the employer would then be responsible for the difference. Food service workers are those that are regularly tipped and handle food or beverages, including waitstaff, bartenders, and bussing personnel. Employers must keep a record of any tips employees received and credits claimed for six years.
  • Employees who report for their shift may automatically be entitled to three hours of pay. If an employee is asked to report to work at a restaurant, but is sent home after arriving, the employee is to receive pay equal to three hours, or if the shift is regularly less than three hours, then the employee is to be paid for the number of hours of the scheduled shift. Employees scheduled for multiple shifts that day may be entitled to even more pay. “Call-in pay” applies to other types of employers as well, but the minimum number of hours to be paid varies across industries.
  • Employers may be responsible for purchasing and maintaining required uniforms. New York requires employers to provide its employees with enough required uniforms for a work week, or else reimburse the employee for purchasing them. If the uniform requires special care or is such that it cannot be washed with regular laundry, employers may be required to provide maintenance pay of up to $10.90 per week. Uniform maintenance pay is required only if the uniform is “wash and wear” material, and is not an item that employees would normally wear casually outside of work.
  • Restaurants may not deduct wages from an employee if customers fail to pay a bill. It is unlawful for employers to deduct wages if dishes are broken, food becomes spoiled, or an employee is missing money from a cash deposit, even if it is caused by the employee’s negligence.
  • Employees who perform both tipped and non-tipped jobs in a workday may not be subject to tip credits. If an employee works the lesser of two hours or 20% of his or her shift in a non-tipped position, the employee is then not subject to a tip credit. For example, a waitstaff member who prepped food for three hours of an eight hour shift would therefore not be subject to a tip credit.
  • Restaurants are not responsible for compensating employees who are wrongfully shorted by a tip pool. If directly tipped employees pool tips together and redistribute them later, any employee who did not receive a fair share of the tip pool would not have recourse to the employer. Employers are, however, required to keep a record of all tips received and distributed, and these records are to be maintained for six years.
  • Restaurants may never demand or accept an employee’s gratuities. If the employer wishes to charge any type of “administrative fee,” such as for a catering event, the employer must make it very clear to the customer that the fee is not a gratuity and that the service employees will not receive a share of it. 
  • Credit card company fees may be deducted from an employee’s tips. If a customer pays a $10 gratuity on credit card, but the credit card company charges a 5% fee for transactions, the employer may pay the employee $9.50, withholding the $.50 fee.

Restaurants need to be particularly vigilant about who they classify as an executive or administrator. New York Labor Law allows exemptions from restaurant regulations for certain executive or administrative employees. However, labeling an employee as a “manager” does not automatically exempt the employee under law. The exemption requires the employee be paid a salary of at least $656.25 per week. This threshold may rise to $970 per week under federal law by 2016.

A frequent error that employers make when classifying an employee is failing to understand the employee’s primary duty. To be eligible for an executive exemption, the employee’s primary duty must consist of managerial and supervisory tasks. Qualifying for the administrative exemption requires a primary duty of non-manual work in which independent discretion and judgment are exercised.

A restaurant may, for example, mistakenly misclassify an “assistant manager” as an exempt employee if that employee spends most of a shift operating a register, preparing food, and cleaning tables without exercising supervisory duties. 

Employers should always be mindful of the fact that unique wage and hour laws may apply to different industries. Restaurants particularly need to exercise extra diligence when managing tipped employees.

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