NY Lawmakers Push to Curb Subminimum Wage for Tipped Workers

New York progressive lawmakers are ramping up their efforts to pass legislation next year that would eliminate the subminimum wage for tipped workers against opposition from the restaurant industry.

Many Empire State workers were left behind earlier this year by a state budget deal to boost the minimum wage statewide to $17 per hour by 2026 while leaving the subminimum level in place, said Assemblymember Jessica González-Rojas (D), who is sponsoring the bill (AB 7110).

State law allows employers to pay tipped workers at restaurants, hotels, and other businesses a few dollars below the regular minimum wage if gratuities cover the difference. The González-Rojas proposal wouldn’t affect the subminimum wage for people who are incarcerated or have disabilities.

Bill supporters argue state lawmakers and Gov. Kathy Hochul (D) should back a single minimum wage as a matter of basic fairness for female and minority workers who disproportionately make up the tipped workforce. The hospitality industry warns higher labor costs mean more restaurants going out of business given costs pressures.

“The cost to run a restaurant has skyrocketed between inflationary costs of goods, insurance, energy, real estate prices, and that list of expenses goes on and on and labor is already the largest expense for restaurants,” said Andrew Rigie, executive director of the New York City Hospitality Alliance.

Just under half of the Democratic lawmakers are co-sponsoring the bill, but key political players like Hochul (D), state Senate Majority Leader Andrea Stewart-Cousins (D), and Assembly Speaker Carl Heastie (D) have not publicly supported the measure.

‘Legacy of Slavery’

The campaign in New York is part of a national effort by the One Fair Wage coalition backing legislation in nine states and ballot initiatives in four more. The coalition includes the Retail, Wholesale and Department Store Union and Unite Here, the union that represents hotel and restaurant workers.

Tips are a legacy of slavery that allow employers to pay minority workers less, while giving customers leverage to sexually harass them, said Saru Jayaraman, an attorney who serves are president of the coalition. New York “could be left behind in a really bad way” if the bill does not pass next year, she added.

The pay gap between Black women and white men who work as tipped workers has been cut by 35% in the seven states that have already eliminated the tipped wage, according to a 2021 coalition study. Those states are California, Oregon, Washington, Nevada, Minnesota, Montana, and Alaska.

Subminimum wage levels differ in the Empire State based on geography and the type of job. Workers at the roughly 25,000 restaurants in New York City must receive at least $10 per hour from their employer.

Restaurants like the Lido in Harlem will struggle to keep the doors open if they have to cover $5 more per hour, said owner Susannah Koteen, and the situation will only get worse as the minimum wage increases in future years from its current $15 level in the five boroughs.

The legislation would make it so expensive that businesses might have to replace waitstaff with an iPad to stay in business—a counterproductive result for the workers the legislation aims to help, said Koteen, who argued the term “subminimum wage” is misleading considering how many tipped workers make much more than the $15 per hour minimum wage in New York City.

“People make careers out of it because you make decent money so this whole argument is crazy to me,” said Koteen.