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NY RESTAURANT OWNERS SAY MESSING WITH RULES ON TIPPING WILL MEAN HIGHER MENU
PRICES, POSSIBLE LAYOFFS: SURVEY

By Carl Campanile

Published Jan. 28, 2024, 4:36 p.m. ET

New York restaurant owners have a tip for lawmakers: don’t change the rules
about wait staff gratuity.

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A whopping 95% of restaurateurs oppose a legislative campaign to eliminate the
tip credit system that allows owners to pay wait staff who earn tips less than
minimum wage, according to a new survey by the NYC Hospitality Alliance set to
be released Monday.

Some owners said the change could lead to higher menu prices, staff layoffs —
and could even threaten their businesses very existence.

“It’s clear New York’s restaurants and bars rely upon the tip credit,” said
Andrew Rigie, executive director of the NYC Hospitality Alliance.

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“There’s no reason for the state’s elected officials to upend the working model
of New York’s restaurant industry and put small businesses and jobs on the
chopping block, while making it much more expensive for New Yorkers and visitors
to dine out in the Empire State,” Rigie said.

The survey or 879 restaurants, conducted in December, found that 97% of
restaurants were extremely or somewhat concerned about eliminating the tip
credit, with 88% saying it would be a disaster for their business.

According to a new survey from the NYC Hospitality alliance, 95% of the city’s
restauranteurs oppose eliminating the tip credit system. Christopher Sadowski

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Some 76% of restauranteurs said they’d increase menu prices to offset the big
increase in expenses if they had to pay staff the $16 minimum wage and 42% would
also consider eliminating tipping altogether to keep the overall cost down for
customers as much as possible.


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 * THESE THINGS ARE THE TOP DINING OUT DEALBREAKERS FOR AMERICANS

Two-thirds of eatery owners said they’d have to slash the number of workers they
employ — as what  happened when the District of Columbia ended the tip credit.

More than half of the restaurateurs — 54% — said they consider closing shop.

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With the survey’s fundings, the Hospitality Alliance issued a report that said
eliminating the tip credit would raise costs for restaurants and bars just as
they’re starting to recover from the COVID-19 pandemic shutdowns and
restructions.

New York City restaurants are allowed to pay employees $10.65 per hour if their
wage combined with tips equals or exceeds $16 per hour. Christopher Sadowski

The report also notes that restaurants were hit by post-pandemic inflation and
remote work.

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If the tip credit is eliminated, it will cost about $12,000 more to employ a
full-time tipped employee per year, the report estimated.

Under current law, restaurant employers in NYC may pay workers who customarily
receive tips a base wage of $10.65 per hour if that wage combined with their
tips equals or exceeds $16 per hour, the current minimum wage.


SEE ALSO


MOST AMERICANS LEAVE EXCESSIVE ‘GUILT TIP’ WHEN PAYING DIGITALLY: SURVEY

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The $5.35 differential is the “tip credit” for the service industry.

If the $10.65 base wage and the combined tips equals less than $16 per hour, the
employer is required by law to pay the employee the difference.

Restaurant servers often make far more — upwards of $20 to $40 an hour with
tips, the report said.

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The Hospitality Alliance opposes legislation pushed by Assemblywoman Jessica
Gonzalez-Rojas (D-Queens) and Sen. Robert Jackson (D-Manhattan) that would
abolish the “tip credit” and have wait staff paid $17 an hour by 2026 if
employed in the city, Long Island and Westchester, and be paid the minimum wage
by 2027.

Gonzalez-Rojas said in her memo backing the bill, co-sponsored by 35
other Democrats, that current system creates inequities among workers.

“Reliance on tips has also created an environment where workers are victimized,
and in some cases, encouraged to turn a blind eye, to rampant discrimination and
sexual harassment by clientele and managers. This results in annual restaurant
employee sexual harassment claims to the EEOC at five times the rate of other
industries, ” the assemblywoman said.

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What do you think? Post a comment.

Employers would not be prohibited from allowing for restaurant gratuities, but
tip would no longer make up the difference between wages received from the
restaurant and the actual minimum wage, she said.

Her bill would also allow tip sharing between wait staff and “back of house”
roles, such as cooks and dishwashers, and those who do not receive tips.


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senate ,  restaurants ,  tipping ,  1/28/24
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