New York State's so-called "tip credit" allows restaurant and other business owners in the service industry to pay their employees below the minimum wage as long as the tips they earn make up the difference. In an effort to bring more equal wages to workers across the state, officials are considering doing away with the tip credit. Matt Hunter explains why some hope the change doesn't happen.

GLENS FALLS, N.Y. – For two decades, Rick Davidson watched as the pay gap between his employees who earned tips and those who did not grew and grew.

"That guy behind the line on a busy Friday night, working very hard, let’s say he is making even $15 an hour,” said Davidson, who co-owns Davidson Brothers Brewpub in Glens Falls. “The server that he is servicing is making twice that."

Hoping to even out wages among his staff members, he adopted a "no tipping" policy at the family business two years ago. Gratuity was added to the price of a meal, and he was able to pay his employees higher hourly wages. He thought it would make his business more competitive, but the plan backfired, as many customers decided to tip anyway.

"What is the use of trying to even the playing field when the customer would not accept that?” Davidson said Monday. “So we went back to tipping."

A full year after Davidson reversed course, Governor Andrew Cuomo announced last week that the New York State Department of Labor is now considering doing away with its tip credit, which allows restaurant owners to pay employees below the minimum wage as long as their tips more than make up the difference.

Wage structure varies by region, but in Upstate New York, the minimum wage for restaurant workers is $7.50 per hour, $2.90 below the regular minimum wage.

Supporters believe eliminating the tip credit will lead to more equal wages for minority and female workers, who statistically are tipped less.

"Tipping in and of itself was discriminatory,” Davidson said. “This was our biggest problem for many years."

"I feel like the intention of this proposal was good, but I think the impact of it is going to be a negative thing," said Kyle Woods, manager of the Outback Steakhouse in Queensbury.

Fearing it will lead to higher menu prices and ultimately lower or no tips for his staff, Woods was among the local restaurant workers who showed up at a regional State of the State presentation in Glens Falls on Monday to protest the proposal.

"This is a drastic change for no reason,” Woods said after the presentation, which was originally scheduled to be delivered by the state’s labor commissioner, but was changed to the Department of Motor Vehicles Commissioner at the last minute. “No one is asking for it, so why are we here?”

"We make good money on our tips,” said Lynette Potter, a hostess at Outback who earns tips. “If they take away the tip credit, we are probably going to end up making less money."

Having voluntarily been down the road himself, Davidson believes eliminating the tip credit is ill-advised.

“It will definitely hurt Davidson Brothers,” he said. "We will have to decrease staff, there is no doubt about it, because the cost will be far too high for the customer to support us in this competitive environment."