ALBANY, N.Y. (CBSNewYork/AP) – Restaurant servers and other tipped workers in New York state would make $7.50 an hour before tips under a proposal recommended by a state wage board Friday

The proposal from the state Wage Board would go into effect Dec. 31 if approved by Gov. Andrew Cuomo’s labor commissioner. That looks likely to happen after Cuomo signaled his support Friday.

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“For far too long, wages for tipped workers in New York State have been too low,” Cuomo said in a statement. “Today the Wage Board has recommended a course that begins to rectify that.”

State law allows restaurants, hotels and other hospitality businesses to pay tipped workers less than the minimum wage as long as gratuities make up the difference. Servers are now paid an hourly wage of $5.

Michael Kink with the Strong Economy For All Coalition said the increase will help a quarter of a million workers.

“Tips are supposed to make up the difference between that and the statutory minimum wage. It doesn’t always happen depending on the volume of tips,” he told WCBS 880’s Monica Miller.

But Scott Wexler from the Empire State Restaurant and Tavern Association said a 50 percent increase in pay will hurt small businesses.

“Particularly in the suburban and upstate communities that are still struggling to dig their way out of the recession,” he said.

Restaurant owners had warned that a sharp increase in the so-called tipped wage would significantly increase labor costs and force some to either cut positions or raise menu prices. On Friday Melissa Fleischut, president of the New York State Restaurant Association called the recommended increase “outrageous and unprecedented.”

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“Nobody won today,” she said, predicting that restaurant owners would be forced to reduce pay for non-tipped workers and cut hours for servers in response.

To ease the burden of higher labor costs on employers, the Wage Board also voted to allow businesses to pay workers a dollar per hour less, or $6.50, if they make one-and-a-half times the minimum wage when tips are factored in.

Labor advocates wanted the tipped wage eliminated altogether so servers would make the standard minimum wage before tips.

“We would have been thrilled by the elimination, but this is a significant increase,” said Sara Niccoli, director of the Labor-Religion Coalition of New York State.

Timothy Grippen, chairman of the three-member board, said the panel took both views under consideration.

“It’s fair for employees and for employers both,” he said of the $7.50 recommendation. “It’s a compromise.”

The state’s minimum wage rose to $8.75 at the end of 2014 and is set to go to $9 at the end of the year.

Lawmakers are expected to debate another increase, and whether to give New York City authority to raise it even higher. The Wage Board recommendation includes a provision that would raise the tipped wage to $8.50 in New York City if the city is allowed to raise its wage higher than the state.

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