Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

Yesterday, the New York State Department of Labor issued the final version of the new Hospitality Industry Wage Order, as previously discussed here and here. The final Wage Order, substantially revises various long-standing New York industry rules, including, the tip credit amount, permissibility of tip pooling, and spread of hours calculations. The Final Wage Order includes only a few changes from the NYSDOL’s Proposed Order, which was issued for notice and comment in October:

• Defining a “service employee” as an employee “who is primarily engaged in providing direct personal service to guests, patrons or customers and who regularly receives tips from such guests, patrons or customers.”; and

• Revising language industry employers are required to include in bills, contracts or other writings to customers in order to convey the precise nature of any mandatory gratuity or service charge. These regulations are an effort to provide clarity to service charge requirements in the wake of Samiento v World Yacht, 10 NY3d 70 (2008).

We will provide further detailed analysis of the new Wage Order – as well as information about upcoming Jackson Lewis seminars on its implications – on www.JacksonLewis.com shortly.

UPDATE:  On December 16, 2010, the Department announced that the final Wage Order issued on December 15, 2010 had been disseminated in error.  The Department also announced an “implementation period,” under which employers have until March 1, 2011 to reflect the changes required by the new Wage Order in the payroll systems.  However, employers availing themselves of this implementation period must, as of the first pay period after March 1, 2011, retroactively pay any additional wages owed under the new Wage Order for the period from January 1, 2011 until such payments are made. 

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As previously reported in detail here, in November 2009 then-New York Commissioner of Labor Patricia Smith issued an Order accepting the 2009 Restaurant and Hotel Industry Wage Board’s recommendation to consolidate and modify the Wage Orders currently in effect covering New York restaurant and hotel industry employers. The Department however has yet to issue the proposed text of the consolidated Order which, if enacted, would both impose additional obligations on covered New York employers, as well as provide such employers with additional rights and protections, such as:

• Requiring employers to notify affected employees when taking a “tip credit” under the New York Labor Law (the “Labor Law”);
   
• Requiring an additional hour of pay to be provided to all non-exempt employees whose workday is over 10 hours  (the “spread of hours” requirement) regardless of the hourly wage earned by such employees;
   
• Permitting employers to mandate “tip pooling” under the Labor Law – at present, employers may mandate “tip sharing” (where a tipped employees shares his or her tips with supporting customarily tipped employees, such as busboys) but a tip pool, wherein all tips received are pooled and redistributed amongst customarily tipped employees, must be voluntarily; and
   
• Providing a “wash and wear” exemption to an employer’s obligation to provide a laundry cleaning allowance for mandated “uniforms.”

The Department of Labor’s next step is to submit the proposed Order to the State Register for a 45-day public comment period.

Given this uncompleted, mandatory legislative step, and the potential for public comment leading to further discussion and/or revision, it is unclear when a consolidated Order will take effect. However, it is likely that practices will not need be modified until at the earliest well into Summer 2010. We will continue to monitor the status of the Order and provide updates.

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