The New York Department of Labor’s 2009 Restaurant and Hotel Industry Wage Board has submitted its Report and Recommendations to consolidate the individual wage orders for the restaurant and hotel industries into a single Hospitality Industry Wage Order. Commissioner of Labor M. Patricia Smith had convened the Wage Board to recommend changes in the wage and hour regulations that govern restaurant and hotel industry workers following recent modifications to wage rates, gratuities and allowances emanating from the latest increase to the New York minimum wage (see New York Employers Subject to Modified Wage Orders Effective Immediately.
If approved, the September 21, 2009 Wage Board Report and Recommendations would implement many significant changes to existing restaurant and hotel wage orders. Some of these recommendations are summarized after the jump.
New notice requirements regarding tip credit.
An employer would be prohibited from taking a tip credit against the minimum wage for a customarily tipped employee unless the employer informs such employees in writing that such a credit will be applied. Compliance with this requirement will be presumed if an employer provides to an employee a written copy of the following Wage Board form notice in the employee’s native language and the employee signs such notice:
Food Service Worker Notice: The current minimum wage is $7.25. You will be paid at a lower wage of ______ per hour because you receive tips. The legal minimum you can be paid is $4.65 per hour effective July 24, 2009, $4.75 per hour effective January 1, 2010, and $5.00 per hour effective January 1, 2011. If you do not earn an average of at least $7.25 per hour after tips are included over the course of a week, the law requires us to give you an additional wage that week to make up for the difference.
Service Worker Notice: The current minimum wage is $7.25. You will be paid at a lower wage of ______ per hour because you receive tips. The legal minimum you can be paid is $5.65 per hour effective July 24, 2009. If you do not earn an average of at least $7.25 per hour after tips are included over the course of a week, the law requires us to give you an additional wage that week to make up for the difference.
Mandatory tip pooling.
An employer would be permitted to require tip pooling among customarily tipped employees as long as the employer advises them in writing of the tip pooling system, does not set the percentages for pool participants and maintains all records of the tip pool. This would be a significant change from the current law prohibiting mandatory tip pooling. Further, included in the non-exhaustive list of customarily tipped employees are counterpersons who serve customers, captains who serve customers and food runners. Maitre d’s are now identified as employees who are not engaged in direct service and who may not participate in a tip pool. The proposed regulations also specify that if a tip pool includes individuals not regularly engaged in service, the tip credit may not be taken.
Spread of hours – set-off eliminated.
This existing requirement mandates that industry employers pay employees for an additional hour at the minimum wage for any workday in excess of 10 hours. Currently, however, any wages paid in excess of the minimum wage can be set off. Under the proposed Order, this set-off is eliminated. Regardless of the base wage paid, an additionalhour of pay at the basic minimum hourly wage rate is due for any day in which such employee’s workday is more than 10 hours. This means that every non-exempt employee engaged in the industry must be paid an additional hour at the minimum wage for each day in which that employee’s workday is longer than 10 hours. The spread of hours payment would now be required for more highly compensated kitchen staff, and must be included in the calculation of overtime.
Service charges or charges purported to be gratuities must be called “administrative fees”.
The industry has been struggling with the impact of the New York Court of Appeals decision in Samiento v. World Yacht as to what is required to ensure a reasonable consumer understands that a service charge is not a gratuity disbursed exclusively to service staff. The proposed Order provides that an employer could meet such standard by including the following notice in a contract or agreement with the customer or on any menu and bill listing prices: “This establishment charges an administrative fee to offset costs associated with the administration of your event. This administrative fee is not a gratuity and is not being directly distributed in its entirety to the employees who service your event.”
“Wash and wear” exemption from uniform maintenance pay.
Currently, employers are required to pay a weekly laundry allowance to employees if they are responsible for maintaining their uniforms, even if the uniform does not require dry-cleaning. While a set-off applies to the extent the employee is paid wages (excluding tips) in excess of the minimum wage, this is a significant financial obligation for industry employers, because most service employees are paid at the tip credit minimum wage. Under the proposed Order, employers would not be required to reimburse employees for uniform maintenance costs where uniforms: (a) are made of “wash and wear” materials, (b) may be routinely washed and dried with other personal garments, and (c) do not require ironing or any other special treatment, such as dry cleaning, daily washing, or commercial laundering. This exemption would not apply where an employee is required to wash his uniform daily and the employer does not provide a sufficient number of uniforms for the employee or reimburse the employee for the purchase of sufficient uniforms consistent with the average number of days generally worked by the employee.
It is important to note that even if a uniform cleaning allowance is inapplicable, the Wage Order also prohibits an employer from requiring an employee to purchase any “uniform.” While the Wage Order reiterates that ordinary basic street clothing selected by the employee is not a “uniform,” it specifically excludes “any specific type and style of clothing prescribed by the employer to be worn at work (e.g., where a restaurant or hotel requires a tuxedo or a skirt and blouse or jacket of a specific or distinctive style, color, or quality, such clothing would be considered uniforms.)” Employers who mandate specific types of clothing from specific shops would be required to pay the full purchase cost of such items.
The proposed Wage Order would increase the minimum cash wage for a customarily tipped food service worker from $4.65 to $4.75 on January 1, 2010 and to $5.00 on January 1, 2011. Similarly, the proposed Wage Order would increase the minimum cash wage for other customarily tipped employees from $4.90 to $5.65 on January 1, 2010.
The proposed Wage Order provides that if an employee is not informed in writing of his or her regular and overtime rates of pay, overtime is calculated by dividing the employee’s total weekly earnings by the lesser of 40 hours or the hours actually worked. In practice, this means that if an employee is misclassified as exempt and paid a salary, an employer will not be able to divide total earnings for the week by hours worked and just pay half-time for overtime hours.
The proposals identified above are not all of the recommendations made by the Wage Board. Industry employers should review carefully other changes contemplated by the Report and Recommendations.
The Commissioner of Labor will now file the proposed Wage Order and the Board’s report and publish them in at least ten newspapers of general circulation in the state. Objections to the Wage Board’s Report and Recommendations must be filed with the Commissioner within 15 days of such publication. Within 45 days of the filing of the report, the Commissioner of Labor must, through publication, adopt, modify, or reject the proposed Wage Order. The Order will become effective within 30 days after it is published. The Commissioner also may remand the matter to the Wage Board for further discussion.