Association Closely Following Minimum Wage Hike, Tip Credit Increases
By William Y. Crowell, III
Governor Cuomo’s 2013-2014 budget contained a minimum wage increase, which was enacted as Chapter 57 of 2013. The minimum wage increased in three steps from $7.25 to $8.00 on December 31, 2013, from $8.00 to $8.75 on December 31, 2014, and the last increase from $8.75 to $9.00 on December 31, 2015. The minimum wage issue continues to occupy a prominent place on the Albany political landscape despite the recent increases.
Governor Cuomo’s 2015-2016 budget proposal recommends another increase in the minimum wage to $11.50 per hour in New York City and $10.50 per hour for the rest of New York State, which would take effect on December 31, 2016. The memorandum in support justifies the increase by asserting that it would bring the minimum wage more in line with the cost of living and the wage required to lift a family out of poverty. The New York Daily News recently editorialized its support, characterizing its enactment as a must. Carwashes are specifically cited as a low-wage industry, which the editorial argues is effectively subsidized by public assistance such as food stamps or Medicaid.
This proposed increase represents a significant departure from previous increases by segregating New York City for an additional dollar increase. In the past, the minimum wage increases have applied statewide. There are currently seven states which have a minimum wage of $9.00 or more. No state has a minimum wage at $10.00.
Tip Credit Increases
On another front, Governor Cuomo previously directed the State Labor Commissioner to convene a Wage Board to recommend changes for food service workers and service employees. On January 30, 2015, the Wage Board recommended to increase the tipped cash wage from its current levels to $7.50 per hour effective December 31, 2015. The Wage Board also made the following recommendations:
- A review should be undertaken as to whether the system of cash wages and tip credits should be eliminated;
- If a separate wage increase of the minimum wage is enacted by the Legislature for New York City then the cash wage for New York City workers should be increased by $1;
- Uniform tip amounts for all tipped workers in the hospitality industry; and
- The tip allowance to be increased by $1 per hour when the weekly average of cash wages and tips equals or exceeds the applicable minimum wage rate by 150 percent in New York City or 120 percent in the rest of the state.
The Wage Board’s report and recommendations are submitted to the acting Commissioner of Labor, Mario Musolino, who is required to act on the recommendations. His affirmative action would make the cash wage increases effective.
The Wage Board recommendations are directed at tipped workers in the hospitality industry, not tipped workers in the carwash industry. The importance of these recommendations, however, is the precedent which is set for other tipped workers. Changes in the cash wage for tipped workers are administrative determinations by the Wage Board, with the Commissioner of Labor having the ultimate decision. The Wage Board heard testimony from the restaurant owners, waiters, waitresses, and others at various hearing locations before making recommendations.
Following the Wage Board’s recommendations, the New York Daily News editorialized that the simplest solution would be one minimum wage for all.
The New York State Department of Labor (DOL) could convene a Wage Board to address miscellaneous industries, including carwash employees, hairdressers, and others. The NYSCWA is monitoring any further actions by DOL and will keep the membership informed.
Irrespective of administrative actions, the Legislature must address the minimum wage increase recommended in the Governor’s budget. The New York State Car Wash Association will be opposing such an additional increase as premature based on the enactment of wage increases in 2013.
In addition to the budget legislation, Senator Jesse Hamilton (D-Brooklyn) has introduced legislation – S.2541 – which would require payment of the minimum wage to carwash workers exclusive of tip allowances. In his supporting memorandum, Senator Hamilton cites various news stories on carwash workers’ compensation levels to justify the elimination of tip allowances. Visit www.nyscwa.com for updates on these issues and others that pertain to carwashers in the state.
William Y. Crowell, III, is a partner with the Albany-based law firm of Whitman Osterman & Hanna LLC. You can reach him at 518/487-7677.