Technically, this would be a violation because employees should only be paid the tip credit amount while they can be earning tips. During this time they pay only the tip credit amount. Many restaurant owners, for example, have employees come in 30 minutes to an hour before their shift to set up tables and prep the restaurant. How does prep time count: Prep time is dangerous for employers. That said, the Department of Labor (“DOL”) does not consider the automatic gratuity charged by some restaurants for tables of 6 or more to be a service charge as long as the employee receives the tip. It does not include service charges, i.e a restaurant that automatically taps your bill for a certain amount on top of the food to pay for the service you receive. What is a “tip:” A tip is a monetary payment by a customer that is totally discretionary. This includes employees like a busboy who may not receive the tip directly, but is awarded the tip as part of a legitimate “tip pool.” Tipped employees typically include: waiters, waitresses, bellhops, counter people who serve, busboys, service bartenders, and perhaps hostesses, seaters and greeters. A tipped employee is a person who receives more than $20 per month from tips, retains all the tips (except for tips shared in a legitimate pool), and is employed in a job that customarily and regularly receives tips (not just holidays or special occasions). Who does the credit apply to: Well, “tipped employees,” of course. If the employee falls short of this mark during any week, however, the employer is obligated to make up the difference. As long as the tipped employee earns at least $5.12 per hour in tips, the employer has no further obligation. Currently, employers may take a credit against minimum wage reducing the tipped employee’s pay to $2.13 per hour (as opposed to $7.25). What is the “tip credit”: Employees who earn tips may be paid a lower hourly rate than the standard minimum wage on the theory that they make it up in tips. Who does it apply to: Employers who take the “tip credit” against wages of some or all of their employees.
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