People working in the service industry in the United States, especially the wait staff of a restaurant, typically receive a substantial portion of their income as tips. Since the practice of tipping is so well-established, wait staff are often paid significantly below minimum wage on the assumption that the money they receive as tips will make up for the difference. For that reason, it is important for employees working for tips to know their rights.
Minimum wage laws, including wages for tipped workers, vary from state to state. At the federal level, however, the minimum wage is $7.25 per hour. For employees who work for tips, the minimum is much lower: in Texas, for example, it is $2.13 per hour. Since it is customary to give waiters and waitresses a gratuity of roughly 15% of the total bill for their services, minimum wage laws assume employees will take home at least enough money to make up the difference.
When an employee who works for tips does not receive enough tip money to make up the difference, employers are required by law to pay their employees extra hourly wages to meet the local minimum wage laws. A waiter whose combined hourly and tipped pay averages around $5 per hour must therefore be paid $2.25 per hour extra to meet minimum wage.
Unfortunately employers do not always comply with that law. It can sometimes be difficult to document and prove the amount of tip money an employee receives, so some employers attempt to underpay their tipped employees. If an employee can demonstrate that they have been underpaid, they are entitled to take their employers to court.
Similarly, when a gratuity is left on a credit card bill, employees are required to factor that into an employee’s pay as well. In some cases they are allowed to subtract the credit card processing fee from the employee’s tips. In doing so it is possible to push an employee’s wages below minimum wage. When that occurs, the employee’s rights have been illegally violated.