21 States (and Dozens of Cities) Affected by 2017 Minimum Wage Increases: What Restaurants Can Do Now

Who is Impacted?

There is no doubt that the two industries with the most at risk over the impending minimum wage increases are retail and hospitality.  Especially, in hospitality, the increases are set to affect over 14 million Americans in the hospitality/ food & beverage industries - that's nearly 10 percent of the entire United States workforce.  Of course, the attempt to close the wage gap amongst restaurant employees is very important.  However, with these changes coming, restaurant owners and operators must prepare their staff.  Below are the 21 states, along with their cities/ counties where the new minimum wage increases are taking place:

States Affected:

  • Alaska - $9.80

  • Arizona - $10.00

  • Arkansas - $8.50

  • California - $10.00 for small employers; 10.50 for large employers

  • Colorado - $9.30

  • Connecticut - $10.10

  • Florida - $8.10

  • New York - Varies across state from $9.70 to $11 (as of 12/31/16)*

  • Ohio - $8.15

  • Oregon - $10.25 (as of July)

  • South Dakota - $8.65

  • Vermont - $10.00

  • Washington - $11.00

  • *The basic minimum wage is $9.70 in most of the state. But it's higher for the fast food industry; Long Island; Westchester County; and large and small employers in New York City.

Cities & Counties:

  • California:

    • Cupertino - $12.00

    • El Cerrito - $12.25

    • Los Altos - $12.00

    • Mountain View - $13.00

    • Oakland - $12.86

    • Palo Alto - $12.00

    • Richmond - $12.30

    • Sacramento - $10.50 (large employers)

    • San Diego - $11.50

    • San Mateo - $12.00

    •  San Jose - $10.50
    • Santa Clara - $11.10

    • Sunnyvale - $13.00

  • Hawaii - $9.25
  • Maine - $9.00

  • Maryland - $9.25 (as of July)

  • Massachusetts - $11.00

  • Michigan - $8.90
  • Missouri - $7.70

  • Montana - $8.15

  • New Jersey - $8.44

  • District of Columbia:

    • Washington, D.C. - $12.50 (as of July)
  • Iowa:

    • Johnson County - $10.10

    • Linn Country - $8.25

    • Wapello County - $8.20

  • Maine:

    • Portland - $10.68

  • New Mexico:

    • Albuquerque - $8.80

    • Bernalillo - $8.70

    • Las Cruces - $9.20

  • New York:

    • New York City - $11.00 (as of 12/31/16)

    • Long Island and Westchester, NY - $10.00 (as of 12/31/16)

  • Washington:

    • Seattle - $15.00

    • SeaTac - $15.35

    • Tacoma - $11.15

What Restaurants Can Do NOW …

Begin to Strategically Schedule Staff:  Get your schedules down to a science by analyzing your most crucial shifts and recognizing the strongest members of your staff.  If you’re short on time, the TeamLive tool on Harri is a great help to managers and operators, who need to align their schedules with real-time sales, better streamline their labor costs and control their overall staffing budget.

Take Your Restaurant/ Store Hours Into Consideration:  Making this work means, keeping track of your stores’ sales patterns   For example, if Monday - Friday @ 11:30 AM - 2:00 PM are very busy lunch-pops for you, yet there is a sharp dip between the hours of 5:00 PM - 10:00 PM, you may want to consider closing earlier during the week and drive all of your marketing efforts towards weekday lunch.  Your POS weekly and monthly reports should be a great indicator of these trends. If you have never done this before, contact your POS company rep for help.  

Think About Raising Menu Item Prices:  This is the last resort, so, be sure that every change made is absolutely necessary.  Go into this knowing that you may lose some guests at the expense of your menu changes. With the help of your culinary team analyze each menu item and break it down by cost.

Compare vendors on the pricing of specific ingredients (ie. if carrots cost more at Baldor than AFI than switching vendors could be effective in this case).  Do your best to communicate to your guests that your business has slightly increased menu prices to stay open, pay your employees fair wages, and most significantly to continue to have the great privilege of serving them.  

Minimum Wage Changes to New York’s Fast Food Industry

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As we previously discussed in May and July of this year, wage and hour requirements for the fast food industry in New York State are changing starting in the new year. These changes, which go into effect on December 31, 2015, result from recommendations made by the Fast Food Wage Board, which Governor Andrew Cuomo instructed Acting State Labor Commissioner Mario J. Musolino to empanel in May of 2015. The Wage Board announced its recommendations in July, and Acting Commissioner Musolino accepted those recommendations in September of 2015.

The new requirements apply to any employee working for a covered “Fast Food Establishment” if the employee’s job duties included at least one of the following: customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.

A covered “Fast Food Establishment” is any business that meets the following criteria:

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  • Primarily serves food or drinks, including coffee shops, juice bars, donut shops, and ice cream parlors; and
  • Offers limited service, where customers order and pay before eating, including restaurants with tables but without full table service, and places that only provide take-out service; and
  • Is part of a chain of 30 or more locations, including individually-owned establishments associated with a brand that has 30 or more locations nationally.

The higher minimum wage rates for covered employees are as follows:

New York City:

  • $10.50 per hour beginning December 31, 2015;
  • $12.00 per hour beginning December 31, 2016;
  • $13.50 per hour beginning December 31, 2017; and
  • $15.00 per hour beginning December 31, 2018.

New York State (excluding New York City):

  • $9.75 per hour beginning December 31, 2015;
  • $10.75 per hour beginning December 31, 2016;
  • $11.75 per hour beginning December 31, 2017;
  • $12.75 per hour beginning December 31, 2018;
  • $13.75 per hour beginning December 31, 2019;
  • $14.50 per hour beginning December 31, 2020; and
  • $15.00 per hour beginning July 1, 2021.

The New York State Department of Labor has now published a revised Hospitality Industry Wage Order codifying the new requirements in addition to a page addressing a number of frequently asked questions (FAQs) to assist employers with implementing the new requirements.

There are several points to note from the new wage order and the FAQs, which employers should watch as they implement changes to their policies in an effort to remain in compliance with the law:

  • Tip credits are not available for fast food employees. However, we note that a fast food establishment is one where patrons order and pay before eating and which offers limited service. So, if employees were previously receiving a tip credit wage because they were waiting on and regularly receiving tips from customers, it is very possible, if not likely, that the employees will not be considered fast food employees under the new requirements.
  • Although fast food workers do not regularly earn tips and an employer cannot take a tip credit for them, fast food employees must be allowed to keep any tips that they do earn.
  • With the increase in the minimum wage for fast food employees, employers must be sure to pay the higher rate for spread-of-hours pay and call-in pay, should those apply.
  • A “fast food establishment” need only have 30 locations nationally–not 30 locations in New York State–to qualify for coverage.
  • The 30 establishments need not be commonly owned and operated to trigger coverage as a “fast food establishment.” The 30 establishments can be operated as a franchise if the franchisor and franchisee own or operate 30 establishments.
  • A “chain” is defined as a set of establishments that share a common brand or that are characterized by standardized options for decor, marketing, packaging, products, and services.

(via JDSupra)

NY Board Upholds $15 Minimum Wage for Fast-Food Workers

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A state oversight board on Wednesday upheld the decision by New York Gov. Andrew Cuomo's administration to gradually raise the hourly minimum wage for many fast-food workers to $15.

The New York Industrial Board of Appeals rejected the National Restaurant Association's arguments that that the wage order was unconstitutional, arbitrary, unsupported by the evidence and focused improperly on fast-food chains with more than 30 locations.

The industrial board, whose members are appointed by the governor, said it's authorized only to determine whether the administration's actions were lawful under New York's labor statutes. A wage board heard testimony earlier this year and recommended the wage increases, which were approved by the state labor commissioner in July.

"We find nothing in the statute to prohibit (the labor commissioner) from issuing a minimum wage order that classifies employees based on the number of locations their employers are affiliated with," the industrial board ruled. The commissioner has authority under the law to investigate the adequacy of wages in any occupation, which can be done "for a subset of a segment of an industry" and requires a record establishing "a factual basis for doing so."

The wage board and commissioner concluded current wages were insufficient to meet workers' cost of living. They also concluded that fast-food chains with 30 or more restaurants nationally are "better equipped to absorb a wage increase due to greater operational and financial resources and brand recognition."

The restaurant association said it is "extremely disappointed" with the ruling and will go to court. "We are committed to helping the restaurant community continue to grow and create jobs across the state and plan to take legal action against this arbitrary mandate which is contrary to law," spokeswoman Christin Fernandez said.

New York's minimum wage will rise to $9 an hour on Dec. 31 for most workers under state law.

About 200,000 fast-food chain employees will see their minimums rise then to $10.50 an hour in New York City and $9.75 elsewhere under the commissioner's order.

Their wages will rise after that in three annual increments to $15 by the end of 2018 in New York City and in six increments to $15 by July 1, 2021 across the rest of the state.

(via ABC News)

 

New York 2016 Wage Increases & Reminders

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As 2015 winds down, it is important to keep in mind these important changes that will effect New York businesses the new year ahead. Failure to comply with these requirements could subject an uninformed employer to substantial liability.

Minimum Wage Increase

Effective December 31, 2015, New York State's minimum wage will increase a quarter from 8.75 to $9.00. Payroll changes must be made in advance, so this shall be a reminder for all employers.

Workers who are covered by New York's Hospitality Wage Order, their wages will now be raised to $7.50 an hour. The overtime rate for those receiving gratuities will be $12.00 per hour.

Please note that pursuant to the report and recommendations of the Hospitality Wage Board, food service workers (e.g., wait staff, bussers) and service employees (e.g., valets, bathroom attendants, coat check personnel) now are entitled to the same tipped minimum wage and overtime rate.

In addition, if an establishment is considered as a fast food provider, the minimum wage in New York City shall be $10.50, effective December 13, 2015. For employees in the rest of New York State, it will be $9.85 hourly.

New York is not the only region to increase minimum wages in 2016. See the chart below for the minimum wage increases for other states:

Notice of Rate of Pay

Pursuant to New York’s Wage Theft Prevention Act (WTPA), New York business owners must provide a “Notice of Pay” form to all employees upon a change in their rate of pay. For all employers outside of the hospitality industry, the New York State Department of Labor (NYDOL) has opined that it will not be necessary, as long as the new rate of pay is referenced in the employee’s next pay stub. Employers do not need to provide a new Notice of Pay as a result of the increase in the minimum wage.

However, hospitality employers are not so lucky. Because of the language of the Hospitality Industry Wage Order, hospitality employers must provide a Notice of Pay form to those employees who are affected by the increase to the minimum wage (including all tipped employees) on or prior to December 31, 2015. The notice must contain the following information:

  • The employee’s normal rate(s) of pay and the basis thereof (e.g., hourly, shift, weekly, salary);
  • If applicable, the employee’s overtime rate of pay;
  • The employee’s regular pay day;
  • Any allowances claimed against the minimum wage (e.g., tip credit, meal credit, lodging allowance, etc.);
  • The name of the employer (including any “doing business as” name);
  • The address of the employer’s main office and a mailing address (if different); and
  • The employer’s telephone number.

The notice must be written and signed by both parties (employer and employee) and retained by the employer for at least six years.

The NY Department of Labor has sample Notice of Pay forms that employers can use. It is not required to use the NYDOL forms, but it is recommended since it will ensure full compliance with the NY law. You can find all of the sample forms available on the NYDOL's website.

The notice must also be provided in both English and the employee's native language (if not English), contingent upon if the NYDOL has created the Notice of Pay form in the employee's native language. English, Spanish, Chinese, Haitian Creole, Korean, Polish and Russian are the languages currently available on the site.

(Information courtesy of the NYC Alliance)


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Automation: The Future of the Food Service Industry

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With the push for $15 minimum wage gaining traction across the nation, the restaurant industry is bracing to make big changes. One trend that is picking up in popularity is automation. Basically, restaurants are eliminating the need of workers, and replacing them with robots or other electronic devices. Customers make orders, pay and receive their food without ever having to interact with a human being.

A new San Francisco restaurant, Eatsa, is doing just that. The establishment is almost entirely automated. To start, they do not have a counter, so no front-of-house employees. Customers neither can see the back-of-house staff putting the meals together. There are talks to get rid of that labor force too, thus becoming an entirely computerized business.

Consumers see that there are pros and cons to this new concept. Some see it as being more efficient and less expensive. However, others say that it leads to less jobs being available on the market, and higher rates of unemployment.

David Friedberg, a software entrepreneur who started Eatsa states, "I would call it different than a restaurant. It's more like a food delivery system."

The process of placing and receiving an order is fairly easy. It consists of selecting a customized meal on an iPad, paying and then waiting until your name and a number shows up on a screen. The number is the storage unit where you will actually be picking up your order.

Friedberg continues, "Technology allows us to completely rethink how people get their food."

He explains how automation has been monumental across all industries, and not just the food service industry. For example, robots are doing complicated tasks such as performing surgeries and operations.

In addition, reducing costs is not something new. If a business is able to cut spending and pass it along to the consumers, it's a good thing for all parties. Friedberg claims, "We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things."

Although Eatsa is nearly entirely automated, Friedberg mentions how it doesn't necessarily take away jobs. It can create too, which include but are not limited to, developing the tools and systems for the restaurant to run, and producing food products.

(via The Bulletin)


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