New York employers have struggled with the New York State Department of Labor’s view that all gratuities must be distributed on a daily basis, regardless of whether they are collected in cash or via credit card and regardless of employee preference. Late last week, without notice, the NYSDOL modified this position. Effective immediately, New York employers may include credit card tips on an employee’s next paycheck, with or without consent of the employee, as long as the tips are provided by the next regular payday. In so stating, the Department also reaffirmed that an employer may subtract a pro-rated share of any fees imposed by the credit card company. Further, upon request of an employee, a New York employer may even include cash tips in the paycheck as long as the gratuities are specifically noted on the paystub, and the employer maintains the mandated records of gratuities received by employees. The full text of the NYSDOL’s posting is below.
Employers with any questions regarding interpretation of, or compliance with, this provision should consult with counsel, due to the significant potential damages arising out of wage and hour violations.
Payment of Tips Received By Credit Card & Cash
When tips are given by customers via credit card, the employer must pay the employee the amount due no later than the next regularly scheduled pay day. The employer may subtract from the employee’s tips the pro-rated share of the charge levied by the credit card company. An employer remitting tips to an employee must include a breakdown between the tips and the wages on the employee’s wage statement, which must meet all other requirements for wage statements. This position reflects a change in DOL policy as set forth in DOL opinion RO-08-0032 related to this issue. That opinion is hereby rescinded.
When customers pay tips in cash, employers may, as a service to their employees, allow employees to leave cash tips earned over the course of a pay period with the employer. The employer must issue a tip payment for the total amount of those cash tips along with any wage payment for the same pay period. A request by an employee for the employer to provide this service must be voluntary, and the agreement cannot be a pre-condition of employment or a condition of continued employment. The employer must still keep a daily record of the tips earned by each employee provided this service, and have those records available for inspection by the employee and/or the Department. The wage statement provided with the tip payment must contain a breakdown of tips and wages, and meet all other requirements for wage statements.