LC-10 · Labor

The tipped subminimum wage

Customers pay the wage

In ordinary words

Federal law lets employers pay tipped workers a cash wage of $2.13 an hour if tips bring them to the full minimum. The employer is supposed to make up any shortfall.

Why people call it a crime

A paycheck that says two dollars an hour looks illegal on its face. For servers it can be the lawful floor, with strangers’ tips doing the rest of the work.

A scene, not a hypothetical statute

The posted wage is $2.13. On a slow Tuesday the tips do not reach minimum. If the restaurant does not add the difference, the law is broken. If it does, the tiny cash wage was legal all along.

Where it stops being legal

Keeping tips, failing to make up a shortfall, including managers in a tip pool, or taking a credit without notice violates the FLSA and can mean back wages and liquidated damages. Chronic underpayment is wage theft, which is illegal.

Back to the docket