LAB-40-15-00015-A Tipped Workers in the Hospitality Industry
12/23/15 N.Y. St. Reg. LAB-40-15-00015-A
NEW YORK STATE REGISTER
VOLUME XXXVII, ISSUE 51
December 23, 2015
RULE MAKING ACTIVITIES
DEPARTMENT OF LABOR
NOTICE OF ADOPTION
I.D No. LAB-40-15-00015-A
Filing No. 1029
Filing Date. Dec. 04, 2015
Effective Date. Dec. 31, 2015
Tipped Workers in the Hospitality Industry
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of section 146-1.3(a)(4), (b)(4); and addition of section 146-3.12 to Title 12 NYCRR.
Statutory authority:
Labor Law, sections 21(11), 652 and 656
Subject:
Tipped workers in the hospitality industry.
Purpose:
To implement changes to the wage rates for food service workers and service employees in the hospitality industry.
Text or summary was published
in the October 7, 2015 issue of the Register, I.D. No. LAB-40-15-00015-P.
Final rule as compared with last published rule:
No changes.
Text of rule and any required statements and analyses may be obtained from:
Michael Paglialonga, NYS Department of Labor, Building 12, State Office Campus, Room 509, Albany, NY 12240, (518) 457-4380, email: tippedhospitality@labor.ny.gov
Revised Regulatory Flexibility Analysis
Effect of Rule: All small businesses, but no local governments, are potentially affected by the changes in the regulations.
Compliance Requirements: There are no changes in the reporting or record-keeping requirements regarding the minimum wage. Small businesses in the hospitality industry, and small businesses in other industries that employ workers at rates that are near, or below, the new statutory minimum wage rates, will have to review their payrolls in light of the new statutory minimum wage rates and the proposed wage orders to determine whether they will need to increase the amount that they pay to their workers.
Professional Services: No professional services would be required to effectuate the purposes of this rule.
Compliance Costs: These rules do not impose any additional compliance costs separate and apart from the costs imposed under the current rule. Such compliance costs do not exceed the cost of reviewing rates of pay, issuing appropriate pay rate notices, and increasing pay rates consistent with the increases implemented by this rulemaking.
Economic and Technological Feasibility: Compliance with these regulations will be economically and technologically feasible because these regulations simply adjust existing rates, without imposing new, or altering existing, requirements or procedures for complying with minimum wage requirements.
Minimizing Adverse Impact: Employers who testified and provided comments to the wage board and the Commissioner indicated that if rates for tipped workers are increased, employers will not absorb those increased costs, but will, instead, pass them along to consumers in the form of higher prices, or offset them by identifying cost savings that will allow them to maintain their overall labor costs at desired levels.
Small Business and Local Government Participation: Opportunities to participate in the development of this rulemaking were provided through two stages of notice and comment. At the first stage, a wage board for the hospitality industry met nine times between September 15, 2014 and January 30, 2015, including four public hearings around the state at which 127 persons testified, with an additional 140 persons in attendance, and four deliberative meetings and received 135 written submissions. Each of these nine meetings was publicized in advance, open to the public, videotaped, and subsequently webcast. The notices, webcasts, written submissions, and other materials, including the Commissioner’s initial charge to the wage board, are posted on the Department of Labor’s website at www.labor.ny.gov/wageboard2014.
At the second stage, upon receipt and filing of the wage board’s report and recommendations, the Commissioner gave public notice of, and solicited public comment on, the wage board’s report and recommendations, and received over 6,000 submissions.
Revised Rural Area Flexibility Analysis
1. Types and estimated numbers of rural areas: These rules apply to all private employers in all areas of the state.
2. Reporting, recordkeeping and other compliance requirements: There are no changes in the reporting or record-keeping requirements regarding the minimum wage. Employers in the hospitality industry, and employers in other industries that employ workers at rates that are near, or below, the new statutory minimum wage rates, will have to review their payrolls in light of the new statutory minimum wage rates and the proposed wage orders to determine whether they will need to increase the amount that they pay to their workers.
3. Professional services: No professional services will be required to comply with this rule.
4. Costs: These rules do not impose any additional compliance costs separate and apart from the costs that exist under the current rule. Such compliance costs do not exceed the cost of reviewing rates of pay, issuing appropriate pay rate notices, and increasing pay rates consistent with the increases implemented by this rulemaking.
5. Minimizing adverse impact: Employers who testified and provided comments to the wage board and the Commissioner indicated that if rates for tipped workers are increased, employers will not absorb those increased costs, but will, instead, pass them along to consumers in the form of higher prices, or offset them by identifying cost savings that will allow them to maintain their overall labor costs at desired levels.
6. Rural area participation: Opportunities to participate in the development of this rulemaking were provided through two stages of notice and comment. At the first stage, a wage board for the hospitality industry met nine times between September 15, 2014 and January 30, 2015, including four public hearings around the state at which 127 persons testified, with an additional 140 persons in attendance, and four deliberative meetings and received 135 written submissions. Each of these nine meetings was publicized in advance, open to the public, videotaped, and subsequently webcast. The notices, webcasts, written submissions, and other materials, including the Commissioner’s initial charge to the wage board, are posted on the Department of Labor’s website at www.labor.ny.gov/wageboard2014.
At the second stage, upon receipt and filing of the wage board’s report and recommendations, the Commissioner gave public notice of, and solicited public comment on, the wage board’s report and recommendations, and received over 6,000 submissions.
Initial Review of Rule
As a rule that requires a RFA, RAFA or JIS, this rule will be initially reviewed in the calendar year 2018, which is no later than the 3rd year after the year in which this rule is being adopted.
Assessment of Public Comment
The Department received several comments following publication of the original rule in the October 7, 2015 edition of the NY Register. The following represents a summary and an analysis of such comments, the reasons why any significant alternatives were not incorporated into the rule, and a description of the changes made in the proposed rule as a result of such comments.
Specific comments, and responses to them, are contained below.
Comment 1:
Food service delivery drivers who receive tips should be within the coverage of the proposed rule.
Response 1:
The rule will apply to delivery drivers that are properly classified as service employees and that are covered by the Hospitality Industry Wage Order (12 NYCRR Part 146 and § 146-3.3).
Comment 2:
The proposed rule should not limit resort hotels to a $1.50 per hour tip credit where employees earn more than $5.05 per hour in tips, as it creates a different tip scale for tipped workers at resort hotels.
Response 2:
The rule sets a uniform $1.50 per hour limitation on the maximum tip allowance in the Hospitality Industry for all tipped employees because that is what Wage Board recommended and the Commissioner adopted.
Comment 3:
The significant cash wage increase will harm businesses in the hospitality industry.
Response 3:
As stated more fully in the previously published Regulatory Impact Statement, the Department anticipates that the cost to employers in the hospitality industry will be de minimis, and that employers will be able to pass along costs to consumers through price increases, or through identifying areas of cost savings that permits them to maintain appropriate levels of labor costs.
Comment 4:
This rulemaking should be enacted as soon as possible to give employers more time to prepare to comply with the requirements.
Response 4:
The effective date of this rule is December 31, 2015, and the provisions remain unchanged from those previously published in the October 7, 2015 edition of the State Register. To further notify the regulated community, the Department has provided information on the requirements of this rulemaking on its website.
Comment 5:
There will be increased compliance costs for this rulemaking due to employer’s need to provide employees with a new notice of pay in accordance with Section 195 of the Labor Law, and such is not reflected in the Regulatory Flexibility Analysis.
Response 5:
The Department has amended the Regulatory Flexibility Analysis and the Rural Area Flexibility Analysis to reflect this minimal cost.
