Action Alert: Tell Governor Cuomo- Keep the Wage Tip Credit!

It’s not easy getting employers and workers to agree on labor issues — but the wage tip credit is one where they do. Governor Cuomo has proposed ending this credit. That would force restaurant owners to foot more of the bill and shrink wages for employees.

While celebrities like Sarah Jessica Parker have endorsed the idea, industry employees are staunchly against it. The Restaurant Workers of America oppose it, citing lower take-home pay for both tipped and non-tipped employees. When Maine eliminated their wage tip credit last year, tipped workers saw their wages plummet 20%, prompting the state to reinstate the credit.

The wage tip credit allows businesses to keep their prices low. If eliminated, business owners would need to cut staff and raise prices just to keep their doors open. Why raise costs for employers and lower wages for workers? The Department of Labor should reject the Governor’s proposal to eliminate the wage tip credit.

Here’s what you need to know:

1. Restaurant workers don’t want it- The Restaurant Workers of America unequivocally oppose the proposal. The group organized against the same proposal in Maine after tipped workers saw their wages cut by 20% following the elimination of the wage tip credit.

2. It’s bad for businesses- Ending the minimum wage tip credit will force restaurants to raise their prices and drive many successful businesses to close their doors. A $3 million business will net just 5 percent of revenues, leaving very little margin of error or incentive to stay open. Businesses that stay open will lay off employees just to survive.

3. Workers are already guaranteed at least minimum wage- The tip credit means that if an employee does not earn at least minimum wage after tips, the employer must make up the difference. Many workers make well above the minimum wage with tips. A New York City Hospitality Alliance survey of 486 city restaurants, which employ nearly 14,000 tipped workers found that those servers earn on average $25 per hour.