Employers in the state of New York in the hospitality industry have the option of combining an employee's wages with an hourly tip credit to satisfy the state's minimum wage requirements.
Here is everything you need to know about New York's 80/20 rule.
Minimum Wage for Tipped Workers
In New York, employers with hospitality businesses have the option of paying employees a combination of an hourly wage and tip credit.
The following table shows the minimum hourly wage and tip credit requirements in New York for service employees as well as food service workers (valid as of January 1st, 2024). The below values are combined to satisfy New York State minimum wage requirements.
| New York City | Long Island & Westchester County | Rest of New York State | |
| Service Employees | $13.35 Wage $2.65 Tip Credit |
$13.35 Wage $2.65 Tip Credit |
$12.50 Wage $2.50 Tip Credit |
| Food Service Workers | $10.65 Wage $5.35 Tip Credit |
$10.65 Wage $5.35 Tip Credit |
$10.00 Wage $5.00 Tip Credit |
It is important to be aware of requirements in New York, to avoid hefty New York Labor Law Penalties and Fines.
What Are Tip Credits in New York?
Tip Credits are credits or allowances for tips that the employee receives from customers.
Example: An employer in New York City could pay food service workers $12.00 an hour, even though the minimum is $16.00 an hour if they also ensure the worker receives $4.00 in tips per hour.
Limitations on Tip Credits in New York
Employers in New York State must follow the 80/20 rule, which prevents employers from using tip credits to satisfy New York minimum wage requirements if the employee spends more than two hours, or 20% of a shift, doing non-tipped work.
Additionally, employers can not use tip credits to satisfy New York minimum wage requirements when service employees receive tips that are less than the average tips per hour shown below:
| Service Employee Type |
New York City | Long Island & Westchester County | Rest of New York State |
| In Resort Hotels | $8.40 | $8.40 | $7.40 |
| In Restaurants & All-Year Hotels | $3.25 | $3.25 | $2.85 |
In recent developments, the Biden Administration reinstated and revised the Federal 80/20 Rule. The new revision has updated the ruling to become the 80/20/30 Rule. This has no impact on the New York State 80/20 Rule as the State’s minimum wage, with the tip credit, is greater than the Federal minimum wage. As a reminder, employers still need to follow and satisfy overtime requirements under the FLSA.
Get Help With New York Payroll
If your business is having trouble with tipped wage compliance or other areas of New York Payroll Processing, you may want to reach out to a New York Payroll Company for help.
Contact us today to see how we are helping other New York businesses with payroll processing, or take a look at our payroll demo video recording.
