Authorizes equitable tip pooling structures for counter service restaurants that pay all employees at or above minimum wage; authorizes tip pooling for service and non-service employees.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9008
SPONSOR: Santabarbara TITLE OF BILL:
An act to amend the labor law, in relation to authorizing equitable tip
pooling structures for counter service restaurants that pay all employ-
ees at or above minimum wage
PURPOSE:
To allow Counter Service Restaurants (CSRs) that meet specific criteria
to implement fair and inclusive tip pooling systems that recognize the
contributions of all hourly employees.
SUMMARY OF PROVISIONS:
This bill:
1.Defines Counter Service Restaurants (CSRs) as distinct from Tradi-
tional Sit-in Restaurants (TSRs), based on ordering model, staffing
structure, and service format.
2.Authorizes CSRs that pay all employees at or above the New York State
minimum wage to voluntarily implement a tip pooling system.
3.Allows tips to be distributed equitably among eligible nonmanagerial
hourly employees, based on the proportion of hours worked.
4.Prohibits owners and managerial staff with hiring or firing authority
from participating in tip distribution.
5.Permits inclusion of leads or operational managers in the tip pool
only if they have no authority over personnel decisions and their
responsibilities are limited to day-to-day operations.
JUSTIFICATION:
Current New York State labor law does not account for the operational
model of Counter Service Restaurants. These establishments typically
feature:
*Orders placed at a counter or kiosk,
*Limited or no table service,
*Smaller, team-based staffs, and
*Tips collected in a general pool, not directed to individual servers.
Because existing law was designed for full-service, server-based restau-
rants, CSRs face legal ambiguity when trying to share tips among hourly
staff-especially kitchen workers or support roles-despite paying all
employees above minimum wage.
This bill provides a framework for CSRs to implement equitable tip pool-
ing policies that reflect their business model and promote fairness
among employees. It does not apply to traditional sit-down restaurants,
where tipping structures are already well established.
Small businesses in New York State would benefit from this clarity,
helping them reward all staff fairly and stay compliant with labor laws.
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9008
2025-2026 Regular Sessions
IN ASSEMBLY
August 13, 2025
___________
Introduced by M. of A. SANTABARBARA -- read once and referred to the
Committee on Labor
AN ACT to amend the labor law, in relation to authorizing equitable tip
pooling structures for counter service restaurants that pay all
employees at or above minimum wage
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The labor law is amended by adding a new section 196-e to
2 read as follows:
3 § 196-e. Equitable tip pooling. 1. For the purposes of this section,
4 the following terms shall have the following meanings:
5 (a) "counter service restaurant" shall mean a food service establish-
6 ment that includes the following:
7 (i) orders placed at a counter or kiosk;
8 (ii) limited or no table service;
9 (iii) payment made by customers at the time of ordering and prior to
10 receiving food; and
11 (iv) tips collected in a common pool, not directed to any individual
12 server; and
13 (b) "tip pooling" shall mean the practice by which tip earnings are
14 intermingled in a common pool and then redistributed among employees.
15 2. A counter service restaurant may implement a tip pooling policy to
16 distribute any tips to hourly employees, in both service and non-service
17 positions, paid at or above the minimum wage required under article
18 nineteen of this chapter. An employer may require employees to partic-
19 ipate in a tip pool and shall set the percentage to be distributed to
20 employees based on the proportion of hours worked. No employer or mana-
21 gerial staff with authority over personnel decisions shall qualify for
22 participation in tip pooling.
23 3. (a) Any counter service restaurant that chooses to permit tip pool-
24 ing as authorized in this section is required to inform their employees
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13501-01-5
A. 9008 2
1 of such policy through a conspicuously posted notice or other effective
2 means of disclosure with as much advance notice as possible.
3 (b) If at any time such restaurant that was previously permitting tip
4 pooling as authorized in this section ceases to do so, that restaurant
5 shall inform their employees of such action through a conspicuously
6 posted notice or other effective means of disclosure at least seven days
7 prior to implementing such a policy or with as much advance notice as
8 possible.
9 § 2. This act shall take effect on the ninetieth day after it shall
10 have become a law. Effective immediately, the addition, amendment and/or
11 repeal of any rule or regulation necessary for the implementation of
12 this act on its effective date are authorized to be made and completed
13 on or before such date.
