Dive Brief:

• New York is eliminating subminimum wage for tipped employees in "miscellaneous" industries statewide, according to an announcement from Governor Cuomo's office. The change will be phased in, with the difference between minimum wage and current tip wages halved on June 30, 2020, and fully eliminated on December 31, 2020. 
• The change will affect over 70,000 people statewide in various jobs, including nail and hair salon workers, aestheticians, car wash workers, valets, doormen and doorwomen, dog groomers, wedding planners and tow truck drivers.
• According to a report recently conducted by the New York Department of Labor, eliminating the tip credit system will provide a more predictable wage floor for the tipped workers, reduce the risk of wage theft, and end confusion over which occupations are tipped. Business owners, however, were concerned about increased costs and possible loss of business as prices go up.

Dive Insight:

It's not just New York that's taking a hard look at wages for tipped workers. Back in October, the federal Department of Labor (DOL) proposed new rules that would allow employers that do not take a tip credit against the minimum wage to operate a tip pool that includes employees who don't generally receive tips. The rules, which are still pending, would also formalize the agency's position on when an employer may take a tip credit for times when an employee in a tipped occupation performs non-tipped work.

Currently, the Fair Labor Standards Act (FLSA) allows an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13 under federal law) and the federal minimum wage.

A Domino's franchise operator recently agreed to pay over $800,000 to settle claims brought by a class of delivery drivers. The drivers alleged, among other things, that the franchise operator failed to properly claim a tip credit for the drivers' wages, and that they were paid a tipped wage rate while working in a non-tipped capacity inside the restaurants.