Employees who work primarily for tips, including restaurant servers, delivery workers and other service-based employees, have unique rights in New York. Unlike traditional forms of employment, wage and hour laws differ when it comes to tip-based employment. Federal law governs some of these rights, while New York has its own laws when it comes to such employment.

The basic federal rule of thumb with regard to tips is that this compensation belongs to the employee and the employer has no claim to this money. However, some states, New York included, allow employers to take what is known as a “tip credit.” This means that tips may count as part of the employee’s minimum wage. Although this does not mean that the employer can actually physically take any of the money, it does mean that, when offering its own compensation, it may provide less based on the worker’s take-home tip wages.

For instance, restaurant employers are required to pay their tip-based employees $8 an hour. However, if an employee earns more than that in tips per hour, the employer has the right to use those tips as its own compensation, thereby giving less or no compensation at all.
New York also allows for what is known as tip pooling or tipping out. This means that employees may have to pay a portion of their tips to other employees. Restaurant workers, for instance, may be required to chip in a portion of their tips to bartenders, bar backs, food runners and other restaurant employees. The only requirement is that these employees must have assisted with or contributed to the tipping employee’s duties. Therefore, for instance, it would be inappropriate (and illegal) to ask a tip-based employee to pay the company’s bookkeeper.

Tip laws can be complicated. If you would like legal assistance so that you fully understand your rights, contact the employment law attorneys with the law firm of Derek Smith Law Group, PLLC in New York