Employers in New York may legally deduct the cost of meals from an employee’s wages—but only if strict legal requirements are met. If a meal credit is improperly applied, it can lead to back wages, penalties under the Wage Theft Prevention Act (WTPA), and lawsuits.
This guide breaks down how meal credits work, when they can be applied, and what happens when employers get it wrong.
What Is a Meal Credit?
New York’s Hospitality Industry Wage Order allows employers to deduct a reasonable cost of meals provided to employees only if certain conditions are met:
The meal must be voluntary—employees cannot be forced to eat the employer-provided meal.
The meal must meet nutritional requirements: It must include protein, a starch, a vegetable or fruit, and a beverage (milk, coffee, or tea).
The employer must give written notice of the meal credit on the employee’s Wage Theft Prevention Act (WTPA) notice.
The meal cannot be charged at a profit—it must be provided at cost or lower.
📌 New Jersey Reference: Unlike NY, NJ does not have specific state-level meal credit rules, but federal FLSA standards apply.
📌 Practice Tip: When providing meals that meet the required nutritional standards, employers should keep protein, starches, and vegetables separate whenever possible. This helps accommodate employees with dietary restrictions, allergies, or religious preferences. For example, instead of serving a mixed dish like chicken and rice, employers should serve chicken, rice, beans, and vegetables separately so that vegetarian employees or those with dietary needs can opt out of certain meal components while still receiving a compliant meal. Ensuring clear meal separation can prevent disputes, complaints, and unnecessary meal credit deductions from employees who cannot consume all parts of the provided meal.
How Meal Credits Go Wrong
Scenario 1: Charging for Uneaten Meals
A diner automatically deducts meal credits from all employee paychecks, even if they don’t eat the meal. This triggers an employee complaint, leading to an audit. The employer is required to pay back all improperly deducted wages, plus double damages and WTPA penalties.
Example Calculation:
50 employees affected
Meal credit per employee per shift: $3.95
5 shifts per week per employee
Total weekly deduction per employee: $3.95 × 5 = $19.75
Total over 2 years: $19.75 × 52 weeks × 2 years = $2,053 per employee
Total back pay for 50 employees: $2,053 × 50 = $102,650
Liquidated damages (double the amount): $102,650
WTPA penalties: $5,000 per employee = $250,000
Additional WTPA liquidated damages: $250,000
✅ Final total cost: $705,300, plus attorney’s fees and additional penalties.
Scenario 2: The ‘Bare Minimum’ Meal
A fast-food franchise provides employees with only a slice of pizza and a soda but deducts the full meal credit amount. This does not meet NY’s nutritional standards, making the meal deduction illegal. Employees sue for wage theft, leading to settlement payments and attorney’s fees.
Example Calculation:
30 employees affected
Meal credit per employee per shift: $3.95
4 shifts per week per employee
Total weekly deduction per employee: $3.95 × 4 = $15.80
Total over 2 years: $15.80 × 52 weeks × 2 years = $1,643 per employee
Total back pay for 30 employees: $1,643 × 30 = $49,290
Liquidated damages (double the amount): $49,290
WTPA penalties: $5,000 per employee = $150,000
Additional WTPA liquidated damages: $150,000
✅ Final total cost: $398,580, plus attorney’s fees and additional penalties.
Scenario 3: Undisclosed Meal Deductions
A hotel restaurant provides meals to staff but never lists the meal deduction on WTPA wage notices. The NY Department of Labor orders the employer to refund all deductions, pay statutory penalties, and issue corrected wage notices.
Example Calculation:
20 employees affected
Meal credit per employee per shift: $3.95
3 shifts per week per employee
Total weekly deduction per employee: $3.95 × 3 = $11.85
Total over 2 years: $11.85 × 52 weeks × 2 years = $1,233 per employee
Total back pay for 20 employees: $1,233 × 20 = $24,660
Liquidated damages (double the amount): $24,660
WTPA penalties: $5,000 per employee = $100,000
Additional WTPA liquidated damages: $100,000
✅ Final total cost: $249,320, plus attorney’s fees and additional penalties.
📌 Practice Tip: If your payroll system automatically deducts meal credits from employee wages, you must ensure that employees who did not eat the provided meal on a given day are not improperly charged. Employers should implement a tracking system that verifies when an employee actually consumes the meal before applying the deduction. Trying to save just a few dollars per shift can lead to massive penalties, back pay liabilities, and WTPA fines if meal deductions are taken improperly. Establishing a verification process upfront can prevent audits, employee complaints, and expensive class action lawsuits.
Final Thoughts: Keep Fighting the Good Fight
At Jacobs & Associates, we believe that businesses can be both good and generous employers while also following the law and protecting their business interests. Ensuring compliance with meal credit laws is essential for preventing legal risks, avoiding costly penalties, and maintaining employee trust.
By implementing clear policies, proper documentation, and proactive compliance measures, businesses can avoid costly lawsuits and foster a culture of fairness and legal compliance.
If you need guidance on meal credit deductions, WTPA compliance, or wage audits, reach out for expert legal support.
Keep Fighting the Good Fight.
