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In NY, Does an employer Have to pay $5/hour to an employee that earn an average of $300 tips for 40 hours working.

New York, NY |

I read some articles saying that i could pay $2.13 if the employee earned tips bring his hourly salary to $7.50/hours. But i am not sure if i understand well. Thank you for any advices. This payroll tax is getting unbearable for my company.

Attorney Answers 3


  1. It sounds like your company needs an accountant to prepare your payroll. Otherwise, you may wind up violalting the law and having to retain an attorney if the DOL investigates, which is much more expensive. Basically, tipped employes are entitled to $5 per hour plus tips up to 40 hours per week. If anyone works more than 40, I strongly recommend that you consult an accountant or employment lawyer.


  2. Under federal labor law, employers of "tipped employees" can take a tip credit of 5.12 if employees make a certain amount in tips. Therefore the federal minimum wage if all requirements are met is $2.13 per hour.

    Under New York labor law, however, employers are not allowed such a large tip credit. So, tipped employees in NY are entitled a higher minimum wage of $5.00 per hour.

    Tipped employees that work over 40 hours per week are entitled to overtime at time and a half.


  3. You should hire an experienced small business accountant. Be prepared to pay $1,500 per quarter because it will probably save you far more than that by the end of the year.

    This answer does not constitute legal advice and you should contact an attorney to confirm or research further any statements made in this answer. Any statements of fact or law I have made in this answer pertain solely to New York State and should not be relied upon in any way in any other jurisdiction. Additionally, we also encourage you to reach out to us via Twitter (https://twitter.com/#!/WhiteRoseMarks) or Facebook (http://www.facebook.com/WhiteRoseMarks) if you have follow up questions as we do not monitor questions after providing an initial answer.

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