UnderCover Waitress: What is a Tip Credit?

Tuesday, July 12, 2011

What is a Tip Credit?

Very few states pay wait staff minimum wage. Most of us waitresses make less than
our state's minimum wage because our employers expect us to earn enough tips to ensure we go home with more than minimum wage.

Federal law requires (as do some states) that the employer figure a "tip credit" for tipped employees. For example, if minimum wage is $5.00 per hour and a waitress is earning $3.00 per hour, then the tip credit equals $2.00 per hour.

Okay, so why does this even matter? Let's say its an extremely slow night. Maybe there was an unexpected snowstorm... You get one table all night. He orders a couple of appetizers and a glass of wine, totaling about $30. He is a a good guy, however, and tips you $6. Problem: you were there for four hours, so without even considering tip outs, you have not made minimum wage. In this situation, the employer is required to pay you extra so that your take home pay equals minimum wage.

Not that it always happens this way. My least lucrative night was actually funny. Had a snowstorm but the owner was nervous about closing "just in case." It looked bleak; I asked my colleague if she wanted to pool our tips for the evening and she agreed. She helped out in the kitchen and I took the one table that evening. Similar to the above example, the lady spent $30 and tipped $6. So, the other waitress and I each went home with $3 for the evening. Truth be told, I don't think I inspected my pay stub to see if I was bumped up to meet minimum wage, but I rather doubt it.

Incidentally, California is one state in which waitresses make full minimum wage, so the concept of a tip credit in California is moot.

1 comment :

  1. I didn't realize each state was different about paying waitresses (or servers, as we say out west) minimum wage... still.


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