Failure to pay the tipped minimum wage is a part of the $50Billion problem of wage theft. This violation covers everything from minimum wage violations in the hospitality industry to unpaid commissions for sales and retail workers. Here is our perspective about tipping in the United States.

The practice of tipping in the United States never ceases to surprise, frustrate, and burden first-time visitors from abroad. If you do some research or talk to these visitors, you’ll often find people proposing that tipping be eliminated. You will also find stories about the failed “no tipping/fair prices” policies many restaurants experimented with a few years ago. As we will see, however, tipping in the United States seems like it is here to stay.

 The harshest critics of tipping characterize it as an economic model based upon and perpetuating sexist and racist stereotypes and a source of race and sex discrimination in the restaurant industry. 

A quick look at the history of tipping reveals that it was an act of noblesse oblige, brought by wealthy travelers from Europe to the United States in the late 1800s. Tipping spread quickly as a way to compensate newly-freed slaves and new immigrants for menial work. Tipping then became an economic model, substituting for actual wages paid by the employer.  

This issue was brought to light by the case of the Pullman Railroad Car Company, which tried to have its black porters compensated by train travelers’ tips. A. Philip Randolph organized the train porters and secured regular pay and benefits for the porters, with tips in addition. Restaurant servers, mainly women, did not fare as well. 

The first minimum wage law (1938) excluded restaurant workers entirely, and when they finally did become covered in 1966, it was at a sub-minimum wage. This coverage, far from resolving the inequities in the restaurant and hospitality businesses, codified and entrenched the sub-minimum wage for millions of US workers.

Today, the federal “tipped minimum wage” is set at $2.13/hr for workers earning at least $30/month in tips. If a worker’s tips plus $2.13 per hour do not add up to the minimum wage, the employer must add enough pay so the total meets the minimum wage of $7.25/hr. 

Twenty-eight states and several counties and municipalities have tipped minimum wages higher than that mandated by the federal government. For example, in New York City, Long Island, and Westchester County, tipped restaurant workers are guaranteed $15/hr – a $10 cash wage and a $5/hr “tip credit” that the employer takes.

Tipped minimum wages can be difficult to figure out, especially when overtime is involved and various state and local rules to consider. In addition, the regular minimum wage must be paid to tipped workers who spend more than 20% of their time doing non-tipped work, such as cleaning, mopping, paperwork, reports, etc. 

The complexities and some intentional actions by unscrupulous employers – such as illegal tip pools – contribute significantly to the $50Billion annual problem of wage theft. If you and your co-workers suspect that your wage is not correct or have other questions about the terms and conditions of your employment, contact Pelton Graham to discuss your issues. 

At Pelton Graham, we get results – we don’t take every case, but if we accept yours, we promise we’ll do our very best to bring you the best possible outcome.

If you have any questions regarding your rights as an employee, applicant, independent contractor, or anything else related to the workplace, contact us for a no-obligation, no-cost consultation by telephone, video conference, or in-person at our nearest office.




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