"Tipped employees," such as restaurant servers and bartenders, are often paid a minimum wage of only $2.13 by their employer. The federal minimum wage is $7.25 an hour, but allows for a "tip credit" of up to $5.12 an hour for a tipped employee. As long as the tipped employee receives at least $7.25 an hour in combined wages and tips during the pay period, such an arrangement is generally lawful. But "generally" is a tricky word when it comes to the law and tipped employees. If fact, there are several exceptions to the general rule, and when any of those exceptions apply, employers frequently violate their employees' rights. Here are some common violations of the rights of tipped employees.
First, only employees who directly serve the public are allowed to be paid the lower tipped minimum wage. Thus, dish washers and cooks, for example, must be paid the full minimum wage from their employer. Also, only employees who directly serve the public may be included in a "tip pool." A tip pool is where tips received during a shift are pooled and then distributed to employees on a pro rata or some other basis. Paying out part of a tip pool to employees who don't directly serve the public nullifies the employer's right to the tip credit, entitling all employees participating in the tip pool to be paid $7.25 per hour by their employer. For example, some employers unlawfully include "expediters" in their tip pools. An expediter typically inspects plates of food just before they are delivered to customers to make sure that orders are filled correctly and presented in an appetizing way. Such expediters don't directly serve the public, and cannot lawfully be included in a tip pool.
Second, some states have a higher minimum wage for tipped employees than federal law. In Missouri, for example, an employer must pay tipped employees at least $3.63 an hour, $1.50 more than the federal requirement.
Third, in some circumstances, tipped employees must be paid the full minimum wage of $7.25 per hour for "side work." "Side work" is a restaurant industry term that refers to tipped employees doing work other than directly serving customers, such as rolling silverware in napkins, filling condiment bottles, and the like. Under Department of Labor regulations, if a tipped employee spends more than 20 percent of his or her time doing side work during a pay period, he or she must be paid the full minimum wage of $7.25 an hour for the time spent on such side work.
Fourth, if a tipped employee works more than 40 hours during a workweek, he or she must be paid the proper overtime rate by the employer. Some employers calculate that overtime rate as one and a half times $2.13, or $3.20 per hour. Actually, under federal law, the overtime rate for tipped employees who receive a base rate of $2.13 per hour is $5.76 per hour. The legal overtime rate is calculated at one and half times the regular minimum wage of $7.25, minus the tip credit of $5.12. (That is, the 50 percent overtime premium gets added to the full $7.25 minimum wage, before the tip credit is subtracted.) Thus, the overtime rate for a tipped employee with a base wage of $2.13 an hour is $5.76 an hour, a full $2.56 per hour higher than $3.20.
So, serve the public--serving most customers is enjoyable. But also serve yourself and your co-workers by knowing your rights and asserting them if your employer violates them.
