Restaurants, Tips, and Minimum Wage

Are you being paid correctly?

Businesses, particularly in the restaurant industry, can unknowingly violate the Fair Labor Standards Act through various infractions. These infractions encompass misapplications of tip credits, failure to meet minimum wage or overtime requirements, unauthorized deductions, and inaccurate record-keeping practices.

One common pitfall occurs when establishments make deductions for circumstances such as customers not paying their bills or uniform cleaning, potentially reducing a tipped employee’s earnings below the minimum wage if a tip credit is in effect.

While restaurants can compensate tipped staff a lower direct wage (currently $2.13 per hour), tips must bridge the gap to meet the overall minimum wage of $7.25 per hour. If tips fall short, employers are obligated to cover the shortfall.

For those venturing into the restaurant business, a prudent step is to review the resources offered by the Wage and Hour Division of the Department of Labor, especially the Restaurant Employment Toolkit. This toolkit serves as a valuable initial guide and resource for understanding and complying with labor standards.

https://www.dol.gov/agencies/whd/compliance-assistance/toolkits/restaurant