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Tip Credit Protected. Strong Support Among Employees

June 10, 2024

New York Restaurants applaud Legislature for protecting tip credit, release survey showing strong support among employees

Vast Majority of Tipped Workers – 84% – Agree that Current Tipping System Works Well For Them; Nearly Three-Quarters say They’re Earning $25 per Hour or More with Tips, According to Statewide Poll Released Today

88% of Tipped Workers Want to Keep Current System of Base Wage and Tips

86% of Tipped Workers Believe They’ll Earn Less if Tipped Wages Are Eliminated


June 10, 2024 –As another Legislative session is now in the books, New York State’s hospitality industry is commending the legislature for preserving the current wage structure and protecting the tip credit. This is especially important because it’s exactly what the employees want. 

A new poll released today of 752 tipped employees across New York State currently working in full-service restaurants showed the vast majority do not want changes to be made to the state’s tip credit rules, which legally requires that restaurant workers earn the minimum wage while also protecting their ability to earn much more than that with tips.

The poll, conducted in March and April for the NYC Hospitality Alliance and the New York State Restaurant Association (NYSRA), found that 84% of tipped workers agree that the current tipping system works well for them and 88% want to keep the current system of base wages and tips. Under this system, 72% – nearly three-quarters of tipped workers – said they earn $25 per hour or more with tips. In New York City specifically, 74% reported earning $25 per hour or more with tips, and 59% reported earning $30 per hour or more, far outpacing the $16 per hour minimum wage in New York City, and Suffolk, Nassau, and Westchester counties. Outside of those areas, the minimum wage is $15 per hour.

“Out-of-state advocates calling for the elimination of the tip credit are simply out of touch with the needs and wants of the tipped workers who are part of the backbone of our restaurant industry,” said Andrew Rigie, Executive Director of the NYC Hospitality Alliance. “Tipped workers appreciate a structure that guarantees they earn the minimum wage while enabling them to earn far more and there’s no reason for lawmakers in Albany to follow the bad advice of these outsiders and cause the loss of jobs and eateries that we’ve seen in other jurisdictions that have taken it.”

“Tipped restaurant workers could not have made it more clear—they do not want to see any changes to their current pay structure,”said Melissa Fleischut, President and CEO of NYSRA.“Right now, they are some of the highest earners in restaurants. They know the proposed changes would not only hurt their income, but harm the restaurants where they work. It is a lose-lose scenario. Lawmakers must see through political agendas and listen to the hardworking men and women who are the faces of the hospitality sector.”

"The New York State Latino Restaurant Bar & Lounge Association and our members deeply care about and support employees, many of whom hail from our same communities and backgrounds,”saidSandra Jaquez, President of the New York State Latino Restaurant Bar & Lounge Association. “The Association has long said that eliminating the tipped wage credit would be detrimental to employees' livelihoods, and now this study backs up that claim. This study allows us all to hear directly from those who would be most impacted by the elimination of the tipped wage credit and understand the critical role the credit has for both employees' income stability and restaurant operations."

“As a restaurant industry professional, I want New York’s elected officials to listen to my voice and many others like mine who urge them to keep the tip credit system in place,”saidRob Henriquez, Tipped Restaurant Worker in Red Hook, Brooklyn.“The tip credit system mandates that I never earn less than the minimum wage while allowing me to earn well above it, so I don’t want a misguided policy like eliminating the tip credit to hurt my income and job, which I rely on, and harm the restaurant I work at. Through the tip credit system, service industry workers like me can earn a well-deserved income through providing exceptional service. Opponents of the tip credit are overlooking the importance of the system and fail to recognize how critical it is for sustaining the livelihood of me and other service industry professionals.” 

Under current law, restaurant employers in New York City and surrounding counties may pay workers who customarily receive gratuities a base wage of $10.65 per hour if that wage combined with their tips equals or exceeds the current minimum wage. They’re allowed to pay $10 per hour elsewhere in the State under the same rules. The $5.35 and $6 differential, respectively, is the “tip credit.”

The law requires tipped employees to always earn at least the full minimum wage, although, through this model, restaurant workers have been able to earn far more, as today’s poll showed. Some lawmakers in Albany are proposing eliminating the restaurant tip credit, which would pose a massive financial burden on the backs of small businesses and undercut the earnings for workers. Simply put, no one wins.

But if tipped wages are eliminated, as some lawmakers propose, 86% of tipped workers surveyed said they’d expect to earn less, with 68% saying restaurants will reduce hours and 62% believing restaurants will reduce or consolidate jobs. That sentiment aligns with a survey of nearly 900 New York City restaurant owners released in January that found 67% would reduce the number of people they employ and 54% saying they’d consider closing a business in New York.

It also aligns with the lived experience in Washington, D.C. where U.S. Bureau of Labor Statistics data shows that full-service restaurants lost at least 3,700 jobs, about 12% of their workforce, since the tip credit began being phased out in May 2023. During the same period, jobs were added in sit-down restaurants in neighboring Virginia and Maryland, the data shows. On top of that, Maine recently eliminated the tip credit, but brought it back when the restaurant workers themselves revolted.