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There are certain instances where employers can pay employees at a rate lower than the minimum hourly wage specified by the federal Fair Labor Standards Act. The most common instance pertains to an employee who earns tips. The employer can deduct the amount of the tips (but only up to a certain maximum amount) from the hourly wage.
New York’s Minimum Wage Order for Miscellaneous Industries and Occupations, Part 142-2.5(b) of Title 12, allows tip credit which varies depending on the industry the employee is working in and the amount of tips actually received.
In late 2019, however, the governor announced that the state Department of Labor would issue an order to eliminate the subminimum wage for miscellaneous industries. The change will reportedly impact over 70,000 tipped workers, such as hairdressers, dog groomers, valet parking attendants, and tour guides.
The change will be phased in over a one-year period to give businesses time to adjust. On June 30, 2020, the difference between the minimum wage and current tipped wages will be cut in half. On December 31, 2020 the tipped wage will be completely eliminated and workers in these industries will be making the required minimum wage.