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NYSDOL Issues Proposed Adjustments to the Tip Credit in Accordance with the Upcoming Increase in Minimum Wage

October 10,2023

a close up of a sign

Governor Kathy Hochul signed into law in May increases to New York’s minimum wage that will occur over the next few years. The first increase is set to take effect on January 1, 2024. Additional increases to the minimum wage are also set for January 1 of 2025 and 2026. Employers must therefore work with their payroll providers to ensure that their rate of pay forms and paystubs are updated and comply with the upcoming minimum wage increase prior to the New Year or risk substantial legal liability.

This announcement left many employers wondering how these scheduled increases would affect the tip credit. Fortunately, on October 4, 2023 the New York State Department of Labor (NY DOL) issued proposed regulations (Proposed Regulations) that, if adopted, will adjust the tip credit for food service workers so that the cash wage remains at only 2/3 of the soon-to-be-increased minimum wage. 

The Proposed Regulations also address, amongst other things, changes to meal credits, uniform allowances, and other payments and allowances required or permitted under New York law, also as a result of the impending minimum wage increase.

Employers should understand that these changes are not yet final. While it is very likely that these will be the final numbers, employers should look for a final announcement by the NY DOL later this fall. Once such an announcement is made, employers must ensure that they comply with the law

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