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Waiter and Waitress Wages

The waiter
The waiter


Waiter and waitress wages can be a very confusing subject. While the Federal government does impose a minimum wage, there are exceptions, and there are also state laws which can override the federal law in some cases. The bad news is, for 50 states and 3 territories, there are 48 different sets of rules. The good news is, you only need to worry about the one set that applies to your state.


Since July of 2009, the Federal minimum wage has been $7.25 per hour, though all four West-Coast states have higher state minimum wages, and Nevada imposes a minimum wage of $8.25 for employees who do not receive employer-provided health insurance. Montana also has a slightly higher minimum wage for some hourly workers, depending on the size of the employer.


So, how do employers get away with paying some servers $2.00 an hour? Well, the Federal wage law has exceptions for some classes of employees, and tipped employees are one of those. Federal law defines tipped employees as “those who customarily and regularly receive more than $30.00 per month in tips”.


Basically, the Federal law says that your employer can take a “tip credit” of up to $5.12 per hour toward the minimum wage of $7.25 per hour, if the employer can show that you regularly make that much in tips. This allows the employer to actually pay you as little as $2.13 per hour. Having waited tables for a living myself for seven years, I can testify that a decent server should be averaging at least $10.00 per hour in tips even in a coffee-shop, and in an up-scale restaurant twice or three times that much.


Now, there are two conditions to this “tip credit”, but they don’t provide you much protection. First, the employer must tell you they are taking a tip credit, and fill you in on what the law says about it. Second, you must keep all your own tips, unless a valid tip-pooling arrangement exists.


(While we’re on the subject, let’s talk a bit about tip pools. Your employer can impose a tip pool, and you can be required to share your tips with employees that customarily receive tips, such as busboys or hostesses. You cannot legally be required to share your tips with employees that do not customarily receive tips, such as cooks and dishwashers. Furthermore, your employer can only take a tip credit for tips which an employee actually receives, and under no circumstances may an employer ever take any of your tips for themselves. If your employer is dipping into your tip pool, they are breaking the law.)


If you look at the distribution of state laws across the map, you quickly realize that this is very much a regional issue, with the states on the West Coast providing the most protection to the worker, (California, Oregon, Washington, and Alaska prohibit tip credits completely), and the states on the East Coast allowing the greatest degree of exploitation. Fortunately, most states do not allow waiters and waitresses to be abused to the full degree permitted by Federal law, even on the East Coast. New York State, for example, limits the tip credit to $2.25 per hour, requiring employers to pay a cash wage of at least $5.00 per hour.


For details on how the tip credit works, see the US Department of Labor document here, ( ), which contains a number of interesting rules for special situations. Possibly the most interesting is this one, “Where the employer takes the tip credit, overtime is calculated on the full minimum wage, not the lower direct (or cash) wage payment. The employer may not take a larger tip credit for an overtime hour than for a straight time hour.


For details on the state laws for each state, see the US Department of Labor document here, ( ), which actually lists in detail exactly what the relevant laws are for each state. Give it a second to load, this is a large document, though you only need to read the small part of it that applies to your state.


For details on the Federal Minimum Wage law, and exceptions to it, see the US Department of Labor document here, ( )


If you work as a server in the state of New York, there is a website dedicated specifically to the issue of your compensation, ( )and having a look is well worth your time.


And there you have an review of the subject, with links to the official documents containing all the detailed information you might ever need or want. And remember, serve from the left, clear from the right.