Restaurateurs and hoteliers urged a state board Tuesday to leave the current subminimum wage for tipped workers intact, while service workers called for an increase to the basic minimum wage paid to other employees.
The Wage Board is reviewing whether to eliminate the so-called tip wage of $5 an hour for food servers and $5.65 for hotel housekeepers.
New York law lets employers pay them less than the state's $8 standard minimum wage, set to rise to $8.75 in January and to $9 a year later, provided tips make up the difference.
After its Tuesday hearing, following others previously in Syracuse, Buffalo and New York City, the board was scheduled to meet Wednesday and begin considering recommendations for Labor Commissioner Peter Rivera. The Legislature authorized the review last year while raising the standard minimum.
Low-wage workers and their advocates said the tip law and rules are complicated and invite shortchanging and theft by employers. They also said that the seven states that have mandated standard minimums for tipped workers have had no trouble, and New York's minimums are altogether too low and keep people laboring in poverty. The seven states are Alaska, Washington, Oregon, California, Nevada, Minnesota and Montana, they said.
"A single simple law is easier to enforce," said Michael Kink, executive director of the Strong Economy for All Coalition.
A new study by the Eastern Research Group for the U.S. Labor Department estimated 399,000 monthly violations of minimum wage laws cost workers more than $20 million a week or more than $1 billion a year.
When tips fail to close the gap to New York's basic minimum wage, employers are supposed to make up the difference, as well as pay overtime wages of 1.5 times the basic minimum minus the same tip credit used to calculate standard hourly pay.
Manuel Antonio Romero Lopez, a 50-year-old emigre from Nicaragua, said he was working for a restaurant at Grand Central station as a prep cook and busboy for $5 an hour. Despite management promises otherwise, his tips amounted to about $80 for a 13-hour-per-day, six-day workweek, he said. "This wasn't enough to support myself," he said through an interpreter.
Hospitality industry groups said federal data show tipped workers average $11 an hour statewide, many service staff at higher-end restaurants make more and the current system works. The proposed raises would squeeze thin profit margins, staffing and money for paying back-of-house staff like cooks and dishwashers, they said.
"A reduction or elimination of the tip credit for tipped workers in the hospitality industry will cause job losses for our workers, price increases for our customers and business failures for our members," said Scott Wexler, executive director of the Empire State Restaurant and Tavern Association. He testified that while wage theft is a serious matter, more education and refined enforcement could address that. He also said a federal survey showed 90 percent of hospitality businesses are compliant.
Brad Rosenstein, owner of Jack's Oyster House, located a few blocks from the Capitol in Albany, said his staff who bus tables average $20 to $26 an hour, while servers make an average of $26 to $34. In high-tax New York, every payroll dollar already means another 20 cents in taxes, he said.
Labor Department data show New York's hospitality industry grew to 46,981 businesses with 677,538 employees last year, up almost 15 percent in three years.
The wage board is chaired by Timothy Grippen, retired Broome County executive. Other members are Heather Briccetti, president of the Business Council of New York State, and Peter Ward, president of the New York Hotel Trade Council.