New York Overtime Rules for Tipped Employees

New York Overtime Rules for Tipped Employees: Key Takeaways

• Tipped employees receive overtime pay at 1.5 times the full minimum wage for hours worked over 40 weekly
• Employers can apply a tip credit to the overtime rate but must follow specific calculation rules and the “80/20 Rule”
• New York mandates “spread of hours” pay for shifts over 10 hours, regardless of tipped status

Understanding New York’s overtime rules for tipped employees is vital for fair pay compliance and protecting workers’ rights.

This guide explains overtime pay calculations, tip credit limits, and other employer obligations in New York State.

Staffing tipped roles in New York? Learn how to post jobs for tipped employees effectively.

1. Overtime Pay Calculation for Tipped Employees in New York

New York requires tipped employees to earn overtime pay equal to 1.5 times the full minimum wage for all hours worked beyond 40 in a single workweek.

This full minimum wage varies by location, for example, as of January 1, 2025, food service workers in New York City have a full minimum wage of $16.50 per hour. See server minimum wage for context.

The overtime rate is calculated by multiplying the full minimum wage by 1.5. In New York City, this means: $16.50 × 1.5 = $24.75 per hour for overtime.

Employers may apply a tip credit to this rate. For NYC food service workers, the tip credit is $5.50 per hour. Subtracting this tip credit from the overtime rate yields the cash wage owed per overtime hour: $24.75 - $5.50 = $19.25.

Therefore, for each overtime hour worked, the employee must receive at least $19.25 in cash wages, plus tips, ensuring total compensation meets or exceeds the overtime minimum wage.

2. Limitations on Tip Credits for Overtime in New York

New York enforces the “80/20 Rule” to prevent excessive tip credit usage for non-tipped work. This rule states:

• If a tipped employee spends more than two hours or over 20% of their shift performing non-tipped duties, the employer cannot take a tip credit for that day.

This ensures employees receive full minimum wages for significant amounts of non-tipped work rather than relying on tips to make up wages.

Additionally, employers cannot claim a tip credit if an employee’s weekly tips do not average the required hourly amounts designated by location and industry guidelines.

These limitations emphasize fair pay practices and protect employees from wage shortfalls when performing mixed duties.

Define duties clearly in your server job description to support 80/20 compliance.

3. Spread of Hours Pay for Tipped Employees in New York

Beyond overtime, New York law mandates payment of an extra hour’s basic minimum wage, called “spread of hours” pay, when an employee’s workday exceeds 10 hours.

This rule applies regardless of whether the employee is tipped or non-tipped and considers the entire span of the workday, including breaks.

For example, if a tipped employee works a 12-hour shift, the employer must pay an additional hour’s worth of the basic minimum wage for that day.

This requirement is distinct from overtime pay and aims to compensate employees for long workdays effectively.

Front-of-house teams benefit from a clear cocktail server job description that outlines breaks and shift expectations.

4. Recordkeeping Requirements for Tip-Sharing and Tip-Pooling Employers in New York

Employers operating tip-sharing or tip-pooling arrangements must maintain accurate records for at least six years as mandated by New York labor laws.

Required records include:

• Daily documentation of tips collected by each employee during each work shift
• Lists detailing which occupations qualify to participate in tip sharing or pooling
• Scheduled shares of tips allocated to each eligible occupation
• Actual amounts of tips distributed to each employee per date

These detailed records ensure transparency and compliance with wage laws, allowing audits and protecting employee rights.

Use this tip pooling template to standardize distributions and records.

For support roles, a concise busser job description helps prevent off-the-clock side work.

5. Best Practices for Compliance with New York Overtime Rules for Tipped Employees

Employers should regularly update their payroll systems to properly calculate overtime wages including tip credits according to current minimum wage rates by location.

It is crucial to track employee duties to determine whether the 80/20 Rule applies, documenting time spent on tipped versus non-tipped tasks daily.

Maintaining detailed tip records and transparent tip-pooling rules communicated to employees helps avoid legal disputes and fosters trust.

Training management and payroll staff on the nuances of New York’s tipped employee regulations can greatly reduce compliance risks and wage violations.

Set expectations in a detailed bartender job description to distinguish tipped from non-tipped tasks.

Avoid costly violations by addressing working off the clock in your policies and training.

6. Helpful Official Resources for New York Tipped Employee Wage Laws

For comprehensive and authoritative guidance on overtime rules and tip credit regulations, employers and employees can consult these official resources:

• New York State Department of Labor: Minimum Wage for Tipped Workers
• New York State Department of Labor: Wages and Hours Frequently Asked Questions
• New York State Attorney General: Wages and Pay

New York Overtime Rules for Tipped Employees: Conclusion

New York’s overtime rules for tipped employees ensure fair compensation by calculating overtime pay at 1.5 times the full minimum wage with allowable tip credits applied carefully.

Restrictions like the 80/20 Rule and spread of hours pay protect workers performing mixed duties and long shifts.

Employers must maintain detailed records and follow strict guidelines to remain compliant and safeguard employee rights.

Using official New York State resources and adopting best payroll practices will help employers meet their obligations while creating a transparent work environment for tipped employees.