One of the most difficult aspects of working for tips is that you never know how much money you will be going home with at the end of the day.
If you work at a restaurant or hotel that has a steady stream of well-paying customers, you may not be so worried. But if you are like many Americans who depend on the generosity of others to pay your bills, you know that many different factors can affect your bottom line. Many tipped employees, especially those in the food service industry, know that anything from a holiday to the weather can affect a family's decision to go out to eat.
But the Houston fair wage lawyers at Kennedy Hodges want tipped employees to remember that there are certain things that should never be dependent on customers walking in the doors. Tipped employees should, no matter what, always be entitled to the following:
- Federal minimum wage. According to the Fair Labor Standards Act, all tipped employees must be paid a minimum wage of $2.13 per hour, as long as the tips that the employee earns, when added to the $2.13, brings the employee's hourly rate up to equal or exceed the federal minimum wage of $7.25. If not, the employer is required to make up the difference.
For example, if a tipped employee only made $30 in tips during one 8-hour shift, he essentially made $3.75 per hour in tips. Add in the $2.13, and the employee made $5.88 per hour. That means that the employer needs to make up the difference of the remaining $1.37 per hour, or $10.96 for the 8-hour shift.
- A fair hourly wage based on the task. The FLSA has strict guidelines for when an employer can take the tip credit, depending on the job that the employee is performing at the time. For example, if a waitress spends more than 20% of her time rolling silverware or cleaning the supply closet, then she is entitled to the full minimum wage of $7.25 and not $2.13.
- Keeping all tips. Regardless of what your employer tells you, you are not required to share your tips with any non-tipped workers. That means that you are not required to share your tips with cooks, bussers or managers.
- Correct calculation of overtime. Many employers think that they can pay overtime on the hourly rate of $2.13. This is not the case. Overtime should be paid at the one and a half times the hourly rate of $7.25, then subtract the tip credit of $5.12 per hour. The difference in pay can add up over time.
Let's take a look at the correct and incorrect ways that overtime is calculated:
Incorrect: 40 hours per week at $2.13 = $85.20 8 hours of overtime = ($2.13 x 1.5) x 8 = $25.56 Total pay for 48 hours = $85.20 + $25.56 = $110.76
Correct: 40 hours per week at $2.13 = $85.20 Overtime rate = ($7.25 x 1.5) - Tip credit of $5.12 = $10.88 - $5.12 = $5.76 8 hours of overtime = $5.76 x 8 hours = $46.08 Total pay for 48 hours = $85.20 + $46.08 = $131.28
The miscalculation means the difference of $20.52 each week. That's over $1000 per year!
If you are a tipped employee encountering any of these common problems, order your free copy of Kennedy Hodges' book, The Ten Biggest Mistakes That Can Hurt Your Wage and Overtime Claim, by calling 888.449.2068 today. Or use our online form to schedule a free consultation.
