Minimum Hourly Wage for Servers
The United States Department of Labor says a tipped employee is one who often receives more than $30 monthly in tips. Service employees, such as servers, wait staff and bellboys, rely on tips for a significant portion of their income. To ensure fair pay, employers are required to pay minimum hourly wages for tipped employees.
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Federal Rate
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The Fair Labor Standards Act (FLSA) sets the federal minimum wage, which the US Department of Labor administrates. Under the FLSA, a server is entitled to direct hourly wages of $2.13 if that amount plus his tips equal at least the federal minimum hourly wage, which was set at $7.25 on July 24, 2009. If not, the employer pays the employee the difference to ensure he receives at least the minimum wage.
State Rate
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The state may require higher direct hourly wages than federal law. In this case, the employer pays the employee at the higher rate. For example, the Massachusetts Labor and Workforce Development says a tipped employee receives more than $20 monthly in tips, and employers should pay direct hourly wages of no less than $2.63 per hour. The employer must pay the variance if the employee's tips and direct wages combined do not equal at least the state minimum wage of $8 per hour (in 2011).
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Tip Credit
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The FLSA and many states allow the employer to take a credit for a certain amount of tips that the employee earns and put it towards the employee's minimum wage payment. To take the tip credit, the FLSA requires the that the employer informs employees of the tip credit allowance before utilizing it; allows the employee to retain all of her tips except if she participates in a valid tip pooling arrangement; and be able to prove that the employee's wages and tips combined do not amount to less than the federal minimum wage. State tip credit law requirements vary. If the state does not permit tip credit, it requires the employer to pay minimum cash wages. For example, California does not allow tip credit, but requires minimum cash wages of $8 per hour, which equals the state minimum wage.
Overtime Calculation
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Under federal law, tipped employees are entitled to overtime pay if they work more than 40 hours for the workweek. For example, a server works overtime for a restaurant that abides by federal tip laws and takes the maximum tip credit of $5.12 (for 2011). To arrive at the employee's hourly overtime rate, the employer multiplies the federal minimum hourly wage of $7.25 by the federal overtime rate of 1.5. Then it subtracts the maximum tip credit. The result is the employee's overtime rate.
Unpaid Wages
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A server who does not receive appropriate wages can recover lost income by filing a wage claim with his state labor department, the U.S. Department of Labor, Wage and Hour Division, or a lawsuit in court.
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References
- U.S. Department of Labor: Tips
- California Department of Industrial Relations: Tips and Gratuities
- Massachusetts: Minimum Wage and Overtime FAQs
- Restaurantville: Minimum Wage and Overtime
- U.S. Department of Labor: Tipped Employees Under the Fair Labor Standards Act (FLSA)
- U.S. Department of Labor: Minimum Wages for Tipped Employees
- Photo Credit waiter with tray image by Arkady Chubykin from Fotolia.com
