New York tip credit, minimum wage and NYC Fair Workweek for restaurants

New York lets restaurants pay food service workers a lower cash wage and count tips toward the full minimum wage, up to a set tip credit. The amounts differ for New York City, Long Island and Westchester, and for the rest of the state. New York City also has a Fair Workweek law, but it covers fast food chains and large retailers, not independent table-service restaurants. This guide sets out the 2026 numbers as reported by the state Department of Labor and what they mean for payroll.

What is the minimum wage in New York in 2026?

The state minimum wage in 2026 is 17.00 dollars an hour in New York City, Long Island and Westchester, and 16.00 dollars an hour in the rest of the state. The State Department of Labor says there is no scheduled increase on January 1, 2027, because an off-ramp condition in the law was met, and the governor has proposed changing that off-ramp. Check the department's announcements each autumn so you can update payroll and menus in time.

What is the tip credit for food service workers?

The Department of Labor lists these rates for food service workers from January 1 through December 31, 2026:

Region	Cash wage	Tip credit	Full minimum
New York City, Long Island, Westchester	11.35 dollars	5.65 dollars	17.00 dollars
Rest of New York State	10.70 dollars	5.30 dollars	16.00 dollars

Some secondary sources print different upstate figures, so use the state's own page. The tip credit is the amount of the minimum wage that tips can cover. If a worker's tips do not bring the total up to the full minimum wage for the hours worked, the employer pays the difference.

Who counts as a food service worker?

The tip credit applies to food service workers, such as servers, bussers and bartenders, who regularly receive tips above a threshold set by the state. Other tipped occupations, such as service employees in other industries, have their own rules and rates, so do not assume the table above applies to a hotel or a salon. If you pay some staff a cash wage and others the full minimum, keep job titles and duties clear in your records.

What does the employer have to do to use the credit?

To pay the lower cash wage you must follow the Labor Department's rules, which include:

1. Give written notice of the tip credit to each worker when they are hired, and keep a signed copy.
2. Keep records of tips and hours for each pay period, with weekly totals.
3. Show the tip allowance on the pay statement, and make up any shortfall to the full minimum wage.
4. Let workers keep their tips. Owners and managers cannot take any part of the tips, and a mandatory charge that customers would reasonably think is a gratuity must be treated like one.

Failure to give notice or keep records can cost you the right to use the credit and expose the business to back pay. Ask the Labor Department or an employment lawyer if you are unsure.

Can you charge a service charge or fee?

Yes, but be clear. A service charge or administrative fee that is not a gratuity must be described so that the customer understands it is not a tip, and staff should not be told that it goes to them unless it does. State rules treat a charge as a gratuity if customers reasonably expect it to go to workers. If it is a gratuity, it belongs to the staff. If you keep it, label it as a fee on the menu and the check. See our guide to New York sales tax for how such charges are taxed.

Does NYC Fair Workweek apply to your restaurant?

New York City's Fair Workweek laws apply to two kinds of employer: fast food chains and retail. Fast food covers limited-service establishments where customers order and pay before eating that are part of a chain with 30 or more establishments, including franchisees whose brand reaches that number. Vendor guides differ on how the count is measured, so ask the city. The city's retail overview says retail covers businesses with 20 or more employees that mainly sell consumer goods in the city. Sit-down restaurants, independent restaurants and small chains generally fall outside the definitions. Check the Department of Consumer and Worker Protection before you rely on this, since definitions and enforcement may have changed.

For covered fast food employers, the main requirements are advance schedules (14 days, according to the city's worker-rights page), premium pay for changes and limits on scheduling workers with short rest between shifts. A covered employer should read the city's rules in full.

What should an independent do about scheduling?

Even if you are not covered, predictable schedules are a recruiting advantage. Publish schedules on a regular day, collect availability once, and handle shift swaps with a simple process. If you work in several cities or states, keep a short note of which scheduling laws apply to each location.

What are the common mistakes?

• Using the downstate cash wage for a restaurant upstate, or the reverse.
• Using last year's rate after January 1.
• Failing to give written tip credit notices to new hires.
• Letting a manager share in a tip pool.
• Taking a card processing fee out of a tip without checking the rules.
• Applying the food service rate to a role that is not covered.

What should you do now?

Confirm your region, check the 2026 rates against the state's page, and update payroll. Review your tip credit notice and your pay statement format. Write a short policy on service charges and tip pooling. And set a reminder for the autumn, to check the Department of Labor's announcement for 2027. This guide is general information, not legal advice.

More guides for your business:

• New York sales tax on restaurant meals, tips and service charges
• New York hospitality wage order: spread of hours, call-in pay and uniforms
• New York gift card rules for restaurants: the nine-year minimum

More in the US guides for food businesses.