how does the minimum wage work when the job includes tips? Is it state or nationally mandated?
I saw another thread but it didn’t give a definitive answer.
Also, can an employer demand a kickback of a percentage of the tips? (not counting the percentage for the behind the scene staff)
it’s a state law. there are only a handful of states who will give minimum wage to servers (minnesota, oregon, and a couple others). here in denver, servers can make less than $2.50 an hour. as for tips, those are usually all yours. some stores do a “community-tip” sort of thing where you all pool your tips and get an equal cut.
its a state law? what are the restrictions on which jobs fit the minimum wage act? What am I missing here?
I’m not sure I understand your question, justinh. Are you asking, “If the minimum wage in South Patokah is $5.15/hr, and Joe Blow earns around $4/hr in tips, does that mean that the company can/will cut his hourly wage so he doesn’t exceed the minimum?” The answer: I don’t know. Naturally, some places can and do skirt the minimum wage requirement by telling their state labor board (or whoever oversees this type of thing) “Hey our employees make about $X per hour in tips, so we’re gonna cut their hourly to $2.15. They’ll still be making at least the minimum, all things considered, so don’t fine us…”
HOWEVER, I can’t say for certain how many employees who earn tips get their hourly wage cut to below the minimum because of it. I know that at my night job, delivering pizza for a major national chain, my hourly is minimum wage, no questions asked. Tips are all mine, no questions asked. When I clock out each night I have the option of reporting my tips for tax purposes. Yeah, right :rolleyes:. But nobody besides Uncle Sam gets a cut.
Whatever a state is allowed to allocate as a tip credit is mandated by the state. E.g., if the minimum is $5.15/hour, the state might legislate that certain tipped employees can be paid a less-than-minimum wage that shall not be lower than $2.63/hour. It doesn’t matter if the employees make $2.52/hour in tips or $200/hour - they cannot be paid any less than $2.63 per hour.
I highly doubt that any employer is legally allowed to demand or receive kickbacks of tips as a condition of employment. (And I mean kickbacks, not “tip-outs” to bartenders, busboys, etc.) What an employer demands and what employees are scared enough to agree to is another matter.
Minimum Wages are all state laws, except for the Federal minimum wage that mandates that interstate business stick to the Federal Minimum Wage (although a higher-wage state law, if any exist, would supercede that).
That makes me wonder, now, what’s specifically called an interstate business? McDonalds’ company stores would qualify, but what about locally owned franchises? They buy, per contract, all of their stuff from, say, Illinois, so Michigan locally-owned franchises would be subject to the Federal Minimum Wage assuming no state law exists (in Michigan, it does, though).
Or say I open Balthisars Pizza. The source of my olive oil is an importer in New York. I’m in Michigan. Am I an “interstate business” subject to the Federal Minimum Wage?
Oh, and Justinh, employers are ususally required to post in a “conspicuous spot” the big Federal Minumum Wage poster that explains what is and is not subject to the minimum wage. I would guess that many states mandate the same for their own posters. Michigan and Illinois, from personal experience, have mandatory posters very similar to the Federal poster that explain the state laws.
this sounds like fishy law to me.
i don’t understand how there can be a state law that allows an employer to pay below the federal minimum because “workers are tipped”. This sounds way too vague. Suddenly the state is somehow formalizing which are the tipping jobs & which are not.
the only way it would make sense would be if it was something like rastahomie says, worker receives $X/hr in tips, so employer can pay minimum - X.
But this would need to be some sort of monitoring to see that workers actually make at least the minimum wage. If there are a spate of bad tippers at the establishment, suddenly owner is paying out less than minimum for employees who are essentially not getting tipped.
Does anyone out there know any of the specifics of this minimum wage exemption? (Any particular state law will do, for an example)
Tip Credit – Employers of “tipped employees” must pay a cash wage of at least $2.13 per hour if they
claim a tip credit against their minimum wage obligation. If an employee’s tips combined with the
employer’s cash wage of at least $2.13 per hour do not equal the minimum hourly wage, the employer
must make up the difference. Certain other conditions must also be met. - U.S. Dept of Labor
http://www.dol.gov/dol/esa/public/regs/compliance/posters/pdf/minwageP.pdf
I think that answers the question.
audient: well, very generally, there are state laws that allow an employer to pay below minimum (the state’s minimum, not the federal minimum - the state’s might be higher) because workers are tipped. But it’s not like that one line of text makes up the entire law. The state, in conjunction with the U.S. DOL, decides for which jobs the state is allowed to use a tip credit. Whatever jobs are considered “tipped” is spelled out in the state’s Fair Wages & Standards laws. Not everyone who gets tips is automatically considered a tipped employee; the jobs have to meet certain requirements - such as, receiving tips must be a normal, regularly occurring benefit of the job; they must be direct tips from the customer to the worker; they must be linked to sales or some other quantifiable job function, etc. An employer can’t decide on his own what a tipped job is; nor can he say that the cashier who doesn’t normally get tips but last week had some crazy rich guy come in and give her a $50 bill was a “tipped” employee that night and therefore he doesn’t have to pay minimum.
There is monitoring to make sure that workers are actually making at least the minimum, in the form of tax returns, payroll records, workers’ compensation reports, unemployment insurance reports, quarterly tax statements, etc. Also, the law will state that the employees must receive enough tips over a certain period of time - usually at least a pay period, possibly as long as a month - to make at least the minimum. It’s not that a waiter can have a whole night of cheap people, make zero on every table, and thus expect the employer to pay minimum for that night. The situation would have to last a lot longer than one night. I’m not sure if this is the case in every state, but if a waiter comes in and has no sales - not one, not one single sale for the entire night - then the employer is supposed to pay minimum for that night only. This only works when the server’s sales are tracked specific to each server - through a register key-in, for example. If the tipped worker keeps his own very detailed and specific records on exactly how many hours were worked, what total sales were, total tips, total amount of required tip-outs (to busboys, etc.) and the figures don’t add up to his making at least minimum, then he can file a claim with the state, which will then audit the employer’s records and eventually make a ruling. This can takes months or years so most servers don’t bother because in the long run they almost always make the minimum (or more). Look at your state’s DOL Web site - you will probably be able to find out exactly which jobs the state is allowed to classify as tipped and what the employer is allowed to pay them.
Just as an aside…farm work is exempt from the minimum wage too.