Beginning on May 5, 2011, employers in the hospitality industry who take a tip credit against their employees’ wages will be covered by three separate notice requirements, and compliance with all three is critical. Even if the employer does not take a tip credit against an employee’s wages, the first two notices discussed below are still required.

A.                 The New York State Regulations for the Hospitality Industry

1.                  What?

The New York State Regulations for the Hospitality Industry became effective January 1, 2011, and require that employers give employees written notice of their regular and overtime pay rates, the amount of any tip credit taken, if any, and the regular payday. 

This notice must also state that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly rate.

See our blog New York Hospitality Wage Orders Revised for more information concerning the requirements of the Hospitality regulations.

2.                  Who?

The notice required by the Hospitality regulations must be given to all non-exempt employees working in New York for an employer who is covered by the regulations, whether or not the employer takes a tip credit against the employee’s wages.

3.                  When?

This notice must be provided to employees prior to the start of their employment and prior to any change in an employee’s rates of pay.

4.                  How?

The employer must provide this written notice to employees in English and any other language spoken by the employee as his or her primary language. This primary language requirement only applies if the Commissioner of the New York Department of Labor has made such notices available to employees in such language on the Department’s website.

Employers must have employees sign an acknowledgment of receipt of the notice and keep the acknowledgment on file for six years.

B.                 New York Labor Law Section 195

1.                  What?

The most recent version of Labor Law Section 195 became effective April 9, 2011. Section 195 requires employers to distribute written notice to employees containing: (1) the employee’s regular and overtime rates of pay: (2) basis of payment (e.g., by the hour); (3) any allowances claimed; (4) the regular pay day; (5) the name of the employer; (6) any “doing business as” names used by the employer; (7) the physical address of the employer’s main office or principal place of business and a mailing address if different; (8) and the employer’s telephone number.

2.                  Who?

The notice required by Section 195 must be given to all exempt and non-exempt employees in New York. This includes managers and commissioned sales-people. 

3.                  When?

In addition to providing this notice at the time of hiring, Section 195 requires that employees be provided with the required notice on or before February first of each year. The notice must also be provided at least seven calendar days prior to the time of any change in information, unless such changes are reflected on the employee’s wage statement. Note that this “wage statement” exception is not included in the Hospitality Regulations.

4.                  How?

Like the notice required by the Hospitality Regulations, the Section 195 notice must be prepared in English and the employee’s primary language. However, if the Commissioner does not prepare a template in an employee’s primary language, an employer will comply with the law by providing an English-language notice and acknowledgment. Currently, the New York Department of Labor website provides templates for several common types of pay agreements in Chinese, Haitian-Creole, Korean, Polish, Russian and Spanish. 

See ASAP titled Lame Duck Reform: New York’s Wage Theft Prevention Act and our blog post NY Department of Labor Releases Wage Theft Prevention Act Notice Templates for more information about Section 195 requirements and potential concerns with the forms provided by the Department of Labor.

The employer must obtain from each employee a signed and dated written acknowledgment in English and in the primary language of the employee. The acknowledgment must be preserved for six years. Such acknowledgment must include an affirmation by the employee that the employee accurately identified his or her primary language to the employer, and that the notice provided by the employer to such employee was in the language so identified.

C.                 Fair Labor Standard Acts Regulations

1.                  What?

The U.S. Department of Labor, Wage and Hour Division, recently published final amendments to regulations interpreting the FLSA. In order for an employer to take a tip credit, the regulations now require the employer to notify the employee: (1) of the amount of the cash wage that is paid by the employer (i.e., at least $2.13 under federal law); (2) of the amount of tips credited as wages; (3) that all tips received by the employee must be retained by the employee except for tips contributed to a valid tip pool limited to employees who customarily and regularly receive tips; (4) any required tip pool contribution amount; and (5) that the tip credit shall not apply to any employee who has not been informed of the requirements of the FLSA’s tip credit requirements.

See our ASAP titled Final Amended FLSA Regulations Make Significant Changes to Tip Credit Processes and Proposed Fluctuating Work Week Rules for more information about the recent amendments to the FLSA.

2.                  Who?

The notice requirements set forth in the FLSA regulations apply to all employers who take a tip credit against any of their employees’ wages. The notice must be given to all employees for whom a tip credit is taken.

3.                  When?

The new regulations, including this notice requirement, go into effect on May 5, 2011. 

4.                  How?

The regulations do not require that this notice be provided in writing. However, a written notice, signed by each employee, will provide more definitive proof of compliance in cases where the adequacy of the notice is challenged. 

While the regulations do not require that the notice be provided in an employee’s primary language, at least one recent court decision in the Southern District of New York implies that an English-only notice to employees who are not proficient in English is insufficient to satisfy the notice requirement of the FLSA. To avoid this risk, it is recommended that notice be provided to employees in their primary language, at least to those employees who can reasonably assert that they do not read or write English.

Whether verbal, posted, or distributed, this notice must be put into effect by May 5. 

Employers may find it easier to incorporate the federal and state law requirements into one notice that is distributed: (1) to current employees by May 5, 2011; (2) to all new employees at hire; (3) at the time of any change in required information; and (4) every year by February 1. Although this may result in employees receiving more overall notice than is required, it will significantly reduce the administrative burden of providing separate notices and reduce the risk of noncompliance.