The fifth proposal of New York Governor Andrew Cuomo’s 2018 State of the State policy platform directed the Commissioner of Labor to schedule public hearings in order to canvas opinions regarding ending “tip credits” in the state. The majority of those affected by such a measure would be restaurant workers, whose income often consists almost entirely of tips, and 53% of whom are women. Currently, restaurants are permitted to pay tipped workers in NYC a low of $8.65 an hour, provided that gratuities bring take home pay up to the state minimum wage. As part of his 2016 2017 budget, Cuomo approved a gradual increase of that wage, currently $12 for small employers, going up to $15 on December 31, 2019. The difference between the official minimum wage and $8.65 is the tip credit, and eliminating it, the governor argued in a statement, addresses “a question of basic fairness. In New York, we believe in a fair day’s pay for a fair day’s work, and that all workers deserve to be treated with dignity and respect,” adding that “no workers [should be] more susceptible to exploitation because they rely on tips to survive.”
His office pointed specifically to a 2014 study by the Restaurant Opportunities Center indicating that workers in states that require full minimum wage for tipped employees have half the reported rate of sexual harassment compared to those that don’t. Seven states have eliminated the credit (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington), along with the United States territory of Guam. Maine eliminated the credit in 2016, but reversed that decision this past spring.

An Albany boosted rallying cry on behalf of workers might be expected to ring joyously among servers, but some of the most vocal voices fighting the proposal are actually bartenders, waitstaff, and bus people. The Restaurant Workers of America (RWA), launched in January on essentially a one issue platform of fighting tip credit removal, is soliciting opinions from servers in New York, Washington State, the District of Columbia, and Minnesota. A Portland, Maine resident and member of RWA’s board of directors, Joshua Chaisson, was a pivotal voice in the reversal process of the Maine ballot decision, and explained in an interview with restaurantbusinessonline.com that tip credit elimination wound up actually suppressing wages.
“We had guests come in and say, ‘Well, you get the full minimum wage now; Do I still need to tip you?’” Chaisson said. “ They thought we were getting $15 an hour, but we were actually only bumped up a buck and a quarter from what we were being paid beforehand. There was just a lot of misunderstanding. It would have cut my personal income off at the knees.”

Ron Mathews, New York City regional director for the New York State Restaurant Association, told us in an interview that he has found widespread agreement among Big Apple servers that such a change to income paradigms would ultimately harm workers’ bottom lines, roughly in parallel with how much it would cost restaurant owners.

“Put simply, owner margins are so thin, by and large, that they can’t take an increase of this size,” Mathews said. “If this measure were to go through, server minimum wage would go from $8.65 an hour to $15 an hour…a 73% increase. Do you know another industry that can take that?” He added that it would also compound an already 70 plus percent increase in worker wage expenses that New York City restaurants have incurred from 2015 to this year, and that they would be left with one or more of a number of dark choices in order to compensate.

“They will have to minimize margins…make cuts, reduce hours of labor and number of shifts, and raise menu prices,” he forecasted. “And in many instances, embrace non typical models. For example, should they automate and put iPads or kiosks up? is will change the entire restaurant payment structure, and is, frankly, as confusing to servers as it is to owners in its implications. Each restaurant will have to respond in its own way, including eliminating tipping entirely or simply closing… and then there are the customers, who will see their $12 hamburger become a $16 meal.”

Asked to respond to Gov. Cuomo’s assertion that the tip change would ameliorate sexual harassment in the workplace, Mathews drew a sharp line between the two issues.

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“The topics are simply disconnected,” he said. “ ere is sexual harassment in every industry, and should be addressed everywhere. It’s a vital topic, but it shouldn’t be mixed with a tip wage change, and for perfectly logical reasons. If tipping leads to sexual harassment, then removing the tip credit does nothing as long as tips remain in the equation.”

Marco Chirico, chef and co-owner of Brooklyn restaurants Enoteca on Court and Marco Polo Ristorante, detailed potential consequences to his operations.

“I’ve been in the restaurant business since I was 11 years old, my father’s been in it for nearly 45 years, and he tells me he’s never seen it this di cult to operate,” Chirico said. “Labor costs, recruiting, financing, taxes, rent…if this passes, it’s going to be impossible to keep all the employees we have now. One way of cutting costs might be to eliminate bus service and push that responsibility to the wait staff. That’s six jobs gone right there. And it seems the majority of workers don’t even support removing the credit. If the people they’re trying to help don’t want it, why change it?”