The proposal from the state Wage Board would go into effect Dec. 31 if approved by Gov. Andrew Cuomo’s labor commissioner. That looks likely to happen after Cuomo signaled his support Friday.
“For far too long, wages for tipped workers in New York State have been too low,” Cuomo said in a statement. “Today the Wage Board has recommended a course that begins to rectify that.”
State law allows restaurants, hotels and other hospitality businesses to pay tipped workers less than the minimum wage as long as gratuities make up the difference. Servers are now paid an hourly wage of $5.
The state’s minimum wage rose to $8.75 at the end of 2014 and is set to go to $9 at the end of the year.
Restaurant owners had warned that a sharp increase in the so-called tipped wage would significantly increase labor costs and force some to either cut positions or raise menu prices. On Friday Melissa Fleischut, president of the New York State Restaurant Association called the recommended increase “outrageous and unprecedented.”
“Nobody won today,” she said, predicting that restaurant owners would be forced to reduce pay for non-tipped workers and cut hours for servers in response.
To ease the burden of higher labor costs on employers, the Wage Board also voted to allow businesses to pay workers a dollar per hour less — or $6.50 — if they make significantly more than the minimum wage when tips are factored in.
Labor advocates wanted the tipped wage eliminated altogether so servers would make the standard minimum wage before tips.
“We would have been thrilled by the elimination, but this is a significant increase,” said Sara Niccoli, director of the Labor-Religion Coalition of New York State.
Niccoli and others pushing for higher wages are urging the Cuomo administration to reject the recommendation that businesses could pay higher-tipped workers $6.50 an hour. The group #OneFairWage, a coalition of servers and several labor advocacy groups, said the recommendation would be difficult to enforce.
Timothy Grippen, chairman of the three-member board, said the panel tried to listen to both sides before making a decision.
“It’s fair for employees and for employers both,” he said of the $7.50 recommendation. “It’s a compromise.”
Lawmakers are expected to debate another increase — and whether to give New York City authority to raise it even higher. The Wage Board recommendation includes a provision that would raise the tipped wage to $8.50 in New York City if the city is allowed to raise its wage higher than the state.