The next time you eat in your favorite restaurant or belly up to your local bar, think about this: the federal minimum wage for the person who is serving you is $2.13 an hour. That’s less than one-third of the federal $7.25 minimum wage for other workers.

This means the tips you give these workers are an enormous part of their take-home pay. While this might encourage you to reward your servers even more, be aware that tipping also has its drawbacks.

Tipping has become a way for restaurant owners to continue paying low base wages to wait staff. In fact, the $2.13 minimum wage provided to tipped workers under federal law has not changed since 1991, despite cost-of-living increases and inflation.

Federal law also provides that, if the $2.13 minimum wage plus the worker’s tips does not equal $7.25, the employer is supposed to make up the difference. But according to reports, many restaurant owners do not account for any shortfalls. In the past few years, the U.S. Department of Labor has recovered nearly $83 million in back wages owing to more than 93,000 restaurant workers. In one case, a Philadelphia restaurant chain paid $6.8 million in back wages and damages after it illegally kept a portion of its servers’ tips.

In addition to tipping itself, there are other reasons why low minimum wages persist for wait staff and bartenders:

  • They don’t know the law.
  • They are hesitant to speak up to their supervisors.
  • They are afraid to report any violations.

Because the federal minimum wage for tipped workers hasn’t changed in 24 years, many states have decided to take matters into their own hands. More than 30 states now have tipped minimum wages that are above the federally mandated $2.13. And seven states now require their restaurants to pay tipped workers the state minimum wage.

Why not solve the problem by raising the federal minimum wage? Because the restaurant industry does not support it, especially since tips help subsidize what restaurants must pay their workers. In fact, the National Restaurant Association claims that any increase in the federal minimum wage will cost jobs.

California and Nevada, however, have proven the association’s job-loss theory wrong. Both states reportedly lead the nation in restaurant job growth — and California pays its tipped workers $9 an hour, while Nevada pays them $8.25 an hour.

The attorneys in Sommers Schwartz’s Wage & Hour Group are knowledgeable in all aspects of federal minimum wage law. If you are a worker who receives tips and you suspect that you have been not been fairly compensated, contact us to learn how we can help.

Kevin J. Stoops

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Kevin J. Stoops

Kevin Stoops is an experienced trial attorney who appears frequently in Michigan state courts and federal courts across the United States, representing clients in complex business litigation. He has vast experience and a track record of successful outcomes high-dollar matters involving trade secret, business tort, intellectual property, executive employment, and class action claims.