New York City Proposes Bill That Sets Higher Minimum Wages and Eliminates Tip Credits

The New York City Council on March 10, 2026, introduced proposed legislation (Bill Int. No. 757, referred to as the “New York City Minimum Wage Act”) that would create a New York City minimum wage higher than the current state standard. If enacted, the New York City Minimum Wage Act would implement phased increases beginning in 2027–reaching $30 per hour by 2030–with automatic cost-of-living adjustments in future years. The bill also proposes a path to eliminate tip credits for food service workers, and imposes additional notice, recordkeeping and anti-retaliation requirements and penalties. 

Below is a high-level summary of the proposal. 

Phased Wage Increases Through 2032

The proposed minimum wage increases apply to all private employers that operate in New York City, and would set differing minimum wage amounts depending on whether the employer is a “large” or “small” employer. The proposed NYC wage schedule is as follows: 

• Large employers (over 500 employees nationwide)
  • $20.00/hour on January 1, 2027
  • $23.00/hour on January 1, 2028
  • $26.00/hour on January 1, 2029
  • $30.00/hour on January 1, 2030
  • Beginning January 1, 2031, wages would increase annually based on inflation.
• Small employers (500 or fewer employees nationwide)
  • $19.00/hour on January 1, 2027
  • $21.50/hour on January 1, 2028
  • $24.00/hour on January 1, 2029
  • $27.00/hour on January 1, 2030
  • $29.00/hour on January 1, 2031
  • Beginning January 1, 2032, wages would increase annually based on inflation. 

The Consumer Price Index (CPI) would be used to inform the inflation-based adjustments for large and small employers beginning in 2031 and 2032, respectively.

Significantly, these proposed wage increases would be separate and distinct from the state minimum wage rates. The current state minimum wage rate for New York City is $17.00 per hour. Starting January 1, 2027, New York State's minimum wage will increase annually based on inflation (relying on the CPI for the Northeast Region). The 2027 wage rate adjustments will be announced by October 1, 2026. 

Elimination of the Tipped Wage for Food Service Workers 

The New York City Minimum Wage Act would also eliminate tip credits for certain “food service workers” who are primarily engaged in the serving of food or beverages in the hospitality industry, and who regularly receive tips.¹ Currently, under state law, hospitality employers may take a tip credit against the minimum wage for tipped food service employees, provided they meet the statutory requirements.²

Under this bill proposal, eligible NYC tipped workers would initially be paid a lower cash wage equal to two-thirds of the applicable minimum wage—so long as tips bring total earnings up to the full minimum. This tip credit allowance could differ from state law tip credit allowance rate.³ Then, beginning January 1, 2032, the required cash wage for food service workers would increase by $1.50 per year until it fully matches the standard minimum wage. At that point, employers would no longer be allowed to apply a tip credit toward the minimum wage rate, effectively ending the tipped wage system in New York City.

Enforcement, Worker Protections and Penalties 

The New York City Minimum Wage Act authorizes administrative enforcement and a private right of action for violations of the law. Under this bill, the Department of Consumer and Worker Protection (DCWP) would be the agency tasked with enforcement of these provisions, including:

• Strong anti-retaliation protections, with presumptions in favor of workers who experience adverse actions shortly after asserting their rights under this proposed law;
• Robust recordkeeping requirements, including a six-year retention period and presumptions against employers that fail to produce the requisite wage notice and payroll records;
• Significant penalties, including back wages, liquidated damages equal to two times the amount of unpaid wages, daily fines, and civil penalties.

Private plaintiffs could recover unpaid wages, liquidated damages, and attorney’s fees, and could bring a lawsuit within six years of an alleged violation. 

The proposed bill also calls for annual public reporting on complaints, investigations, and enforcement outcomes, along with education and outreach efforts in partnership with community organizations.

Status of Proposed Legislation and Potential Challenges

As of the date of this article, the New York City Minimum Wage Act (Bill Int. No. 757) has not been signed into law. If this bill is signed into law, it could be subject to a preemption challenge, given longstanding case law in New York, which states that New York State law preempts localities in terms of setting a general minimum wage rate. See Wholesale Laundry Bd. of Trade v. City of New York, 17 A.D.2d 327, 329 (1st Dept. 1962), aff’d 12 N.Y.2d 998 (1963) (invalidating a NYC minimum wage law that set a higher minimum wage than the state had mandated because “it is entirely clear that the State [Labor] law indicates a purpose to occupy the entire field…free from interference by local authorities”).

Littler will continue to monitor and track developments on this pending item.