New York City Proposes Minimum Wage Increase and Phasing Out of Tip Credit

On March 10, 2026, the New York City Council introduced Bill Int. No. 757, known as the “New York City Minimum Wage Act,” that could reshape wage requirements for employers across the city. If enacted, the proposal would establish a local minimum wage that exceeds New York State’s current rate and implement a series of increases through 2030, ultimately reaching $30 per hour.

The proposed law would apply to all private employers operating in New York City, with different wage schedules depending on employer size:

Large Employers (more than 500 employees nationwide)

• $20.00/hour – January 1, 2027
• $23.00/hour – January 1, 2028
• $26.00/hour – January 1, 2029
• $30.00/hour – January 1, 2030
• Annual increases tied to inflation beginning in 2031

Small Employers (500 or fewer employees nationwide)

• $19.00/hour – January 1, 2027
• $21.50/hour – January 1, 2028
• $24.00/hour – January 1, 2029
• $27.00/hour – January 1, 2030
• $29.00/hour – January 1, 2031
• Annual increases tied to inflation beginning in 2032

These proposed rates would operate independently from New York State’s minimum wage, which is currently $17.00 per hour in New York City and is also scheduled to increase annually based on inflation starting in 2027.

The bill also proposes a significant change for the hospitality industry by phasing out the tipped wage system for food service workers.

Initially, employers could continue to apply a modified tip credit, allowing payment of a cash wage equal to two-thirds of the applicable minimum wage, provided tips bring employees up to the full minimum. However, beginning January 1, 2032, the required cash wage would increase by $1.50 annually until it matches the full minimum wage, effectively eliminating the tip credit altogether.

The proposed legislation includes robust enforcement mechanisms and expanded worker protections, overseen by the New York City Department of Consumer and Worker Protection (DCWP) including anti-retaliation provisions with presumptions favoring employees who experience adverse action after asserting their rights; recordkeeping requirements mandating six years of wage and payroll records; and significant penalties, including back pay, liquidated damages of up to twice the unpaid wages, daily fines, and civil penalties. The bill also provides employees with a private right of action, allowing them to bring claims within six years of an alleged violation.