Labor Department hears arguments in Buffalo for and against end of tip credit system
New York State is considering the end of the minimum wage tip credit system and requiring employers pay all tipped employees the same minimum wage as those who do not earn tips. Tuesday in Buffalo, representatives of the Labor Department heard testimonials from people who have sharply divided opinions about the system.
The Labor Department's hearing inside the Erie Community College City Campus was the fourth of seven scheduled statewide. Commissioner Roberta Reardon, in her opening remarks, stated that while the state is considering an end to the tip credit system, it is not looking to end all tipping.
"We fully support tipping and workers' rights to earn those tips here in New York State," Reardon said. "In fact, when the federal government looks to attack workers' tips in New York State, we will continue to protect your tips."
Prior to the hearing, two groups staged rival rallies along ECC's Ellicott Street side. One side argued to keep the tip credit intact. This group was made up of restaurant owners and employees, some traveling from as far away as Long Island to attend the hearing.
Maggie Raczynski, a bartender and founder of Supporters of the Tip Credit NY, says the raise that would result from eliminating the tip credit is one they actually do not want. Her explanation is that it would work against the restaurant owners, who would be forced to pass the added expense of higher wages to the customers. She suggested that the additional expense may also result in layoffs.
"You're going to have higher cost of food and lower service. What would then promote you to tip me?" she said. "If I literally can't take care of everyone the way I take care of you now, why would you tip me the same way?"
Supporters of eliminating the tip credit argue that tips have remained the same in states where tipped employees are earning the minimum wage. They also argue that ending the tip credit system will also eliminate much of the exploitation they suggest happens in the industry.
"I recently released a study that found that in Buffalo, 24 percent of tipped workers reported their tips had been taken or stolen by their employer," said Nicole Hallett, an Assistant Clinical Professor of Law at the University at Buffalo who spoke in favor of eliminating the tip credit. "Twenty percent of workers in my study reported they were making below the tipped minimum wage, which right now is $7.50 per hour. There is simply no reason to give this particular industry a privilege that other employers don't have."
At least one speaker who identified himself as a tipped worker doesn't come from the restaurant business. Peter Kazmierczak, who has worked at a Delta Sonic car wash since last year, says the tip credit system has actually served as an incentive for employees, his own self included.
"We employ a lot of people who work hard for those tips," he said. "For some, they consider it their motivation. It's a huge draw in terms of new hirings as well. I fear if the tips go away, the application flow that we see - and we get a lot of applications regularly - will see a major dropoff."
Kazmierczak suggests it will also lead many current employees to leave.
The next scheduled hearing is May 18 in Albany, followed by two next month in the Bronx.