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Work & wages · Your right

Tips and the tip credit in New York: your tips are yours, and when a lower cash wage is allowed

Updated By The editorial teamNot reviewed by an attorney — based on the official sources below

In short

In New York, no employer or manager may take or keep any part of your tips, or of a charge presented as a tip (Labor Law § 196-d). Only hospitality employers (restaurants and hotels) may pay tipped workers a lower cash wage and count a 'tip credit' toward the minimum wage. In 2026, food service workers must get at least $11.35 an hour in cash in NYC, Long Island and Westchester ($10.70 elsewhere), with tips making up the rest. No tip credit is allowed on days you spend more than 2 hours or 20% of your shift on non-tipped work, or without written notice.

Read on for the details, the exceptions and the sources.

In plain words

Tip credit
The part of the minimum wage a hospitality employer may cover with your tips, paying you a lower 'cash wage'.
Food service worker
A restaurant or hotel worker mainly serving food or drinks who regularly gets tips: servers, bartenders, captains, bussers (not delivery workers).
Service employee
A hospitality worker other than a food service worker who customarily gets tips, such as a bellhop.
Tip pool
Tips combined and shared among workers who serve customers, directly or indirectly.

What is it?

Two rules. First, tips belong to the workers: Labor Law § 196-d bars an employer, its agents and officers from demanding, accepting or keeping any part of an employee's tips, or of any charge purported to be a tip. Federal law agrees: an employer may not keep employees' tips or let managers or supervisors keep any portion, whether or not it takes a tip credit (29 U.S.C. § 203(m)(2)(B)). Second, in hospitality only, the employer may pay a cash wage below the minimum wage if your tips make up the difference — the tip credit.

Who qualifies?

Every private-sector tipped worker is covered by the tip rules: restaurant and hotel staff, and also workers like car wash attendants, hairdressers not employed by hotels, valet attendants and doorpersons. Since December 31, 2020, tip credits aren't allowed in 'miscellaneous industries' (everything except hospitality, farm work and building service); building service has no tip credit; so outside hospitality, you must receive the full minimum wage in cash plus all your tips.

Exceptions

  • Tip sharing with bussers and similar workers is allowed (§ 196-d), and the hospitality wage order allows tip pools and tip shares among workers who serve customers.
  • At banquets and special functions, a fixed percentage added for gratuities and distributed to employees is allowed (§ 196-d). A charge that isn't a tip must be clearly labeled as not a gratuity, in at least 12-point type on the contract, menu and bill; otherwise it's presumed to be a tip.
  • Delivery fees: a restaurant must tell customers that a delivery fee is not a tip if it isn't giving the whole fee to the delivery worker.
  • Credit card tips: the employer must pay them by the next regular payday and may subtract only the tip's pro-rated share of the card processing fee.
  • Checking hats and coats is excluded from § 196-d.

How much?

2026 hospitality rates (Jan 1–Dec 31, 2026): food service workers — $11.35 cash wage + $5.65 tip credit in NYC, Long Island and Westchester; $10.70 + $5.30 in the rest of the state. Service employees — $14.15 + $2.85 in NYC, Long Island and Westchester; $13.30 + $2.70 elsewhere. Cash wage plus tips must reach the full minimum wage ($17.00 / $16.00).

Service employees: no tip credit in a week when tips average less than $3.65 an hour in restaurants and year-round hotels ($3.40 outside NYC, Long Island and Westchester), or $9.55 in resort hotels ($9.00 elsewhere).

How is it calculated?

Example: a server in Brooklyn works 30 hours. The employer must pay at least $11.35 × 30 = $340.50 in cash wages, and the server's tips must bring the total to at least $17.00 × 30 = $510. If tips fall short, the employer must make up the difference. The employer must prove you actually received the tips it credits.

Mixed duties: no tip credit for any day you spend more than two hours or 20% of your shift (whichever is less) doing non-tipped work, such as prep cooking or washing dishes when the dishwasher is out.

Overtime for tipped workers: 1.5 times the minimum wage minus the tip credit — for a NYC food service worker, $25.50 − $5.65 = $19.85 an hour in cash.

What documents do you need?

  • Your hiring pay notice — the employer must give written notice that it will take a tip credit, and state the allowance (§ 195(1); DOL tips FAQ)
  • Pay stubs showing hours, cash wage, the tip allowance claimed and tips paid through payroll (§ 195(3))
  • Your own daily record of tips, hours and non-tipped tasks
  • The employer must keep records of tip pools, tip credits and tips paid out — ask for them

How do you get it?

  1. Check your notice and stubs

    If you never got a written notice about the tip credit, or your stubs don't show the allowance, the tip credit may not be valid.

  2. Track non-tipped work

    Log days when you spend more than two hours or 20% of the shift on non-tipped tasks.

  3. Raise it, then claim it

    Ask the employer in writing to correct it. If not, file with the DOL's Division of Labor Standards, which enforces the ban on taking tips, or sue.

What if they refuse?

Tips taken are a wage claim under Article 6: in court you can recover them with 100% liquidated damages, interest and attorney's fees (§ 198(1-a)). An improper tip credit is a minimum wage underpayment under § 663. Federal law makes an employer that keeps tips liable for the tip credit taken plus the tips kept, and an equal amount in liquidated damages (29 U.S.C. § 216(b)). You can't waive these rights by agreement.

Deadlines

Generally six years in court under New York law (§ 198(3), § 663(3)); the DOL accepts claims for up to three years back; two or three years under federal law (29 U.S.C. § 255).

Figures that change

  • Food service workers — cash wage / tip credit, NYC, Long Island, Westchester: $11.35 / $5.65 an hour (as of 2026-10-30; Minimum Wage for Tipped Workers, 1/1/26–12/31/26 (Fact Sheet P717))
  • Food service workers — cash wage / tip credit, rest of state: $10.70 / $5.30 an hour (as of 2026-10-30; Minimum Wage for Tipped Workers, 1/1/26–12/31/26 (Fact Sheet P717))
  • Service employees — cash wage / tip credit, NYC, Long Island, Westchester: $14.15 / $2.85 an hour (as of 2026-10-30; Minimum Wage for Tipped Workers, 1/1/26–12/31/26 (Fact Sheet P717))
  • Service employees — cash wage / tip credit, rest of state: $13.30 / $2.70 an hour (as of 2026-10-30; Minimum Wage for Tipped Workers, 1/1/26–12/31/26 (Fact Sheet P717))

Frequently asked questions

Can my manager take part of the tip pool?

An employer or its agents can't take any part of employees' tips under § 196-d, and federal law specifically bars letting managers or supervisors keep any portion (29 U.S.C. § 203(m)(2)(B)).

The restaurant adds a 20% 'service charge'. Does it go to the staff?

The DOL says a charge that isn't for food or drink is presumed to be a tip that must go to the workers who served, unless the employer clearly told customers, in writing and in at least 12-point type, that it isn't a gratuity.

I work at a car wash. Can they pay me less because I get tips?

No. Tip credits aren't allowed outside hospitality since December 31, 2020; you must get the full minimum wage plus your tips.

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Official sources

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This page is general information based on the official sources listed, current as of the update date. It is not legal advice and does not replace a review of your own situation; if a case is already in court, a deadline is close, the amount is large, or there are criminal, immigration or family-law consequences, talk to a lawyer or legal aid.