{"id":10252,"date":"2024-10-04T16:55:09","date_gmt":"2024-10-04T20:55:09","guid":{"rendered":"https:\/\/jordanbarab.com\/confinedspace\/?p=10252"},"modified":"2024-10-04T17:20:55","modified_gmt":"2024-10-04T21:20:55","slug":"tips-are-on-the-policy-menu","status":"publish","type":"post","link":"https:\/\/jordanbarab.com\/confinedspace\/2024\/10\/04\/tips-are-on-the-policy-menu\/","title":{"rendered":"Tips Are On The Policy Menu"},"content":{"rendered":"

A<\/span><\/span>lmost anyone following\u00a0 current labor issues (or who works at a minimum wage job) knows that the federal minimum wage of $7.25\u00a0 per hour is pathetic. But did you know that many workers \u2013 those who work receive tips — work under a minimum wage of only $2.13 per hour?<\/p>\n

Before delving into the \u201ctipped minimum wage\u201d issue, I honestly had little idea there were different minimum wage laws for tipped workers than those for other workers. Reading about an upcoming ballot measure in my home state of Massachusetts was a real learning experience for me. The ballot measure<\/a> would phase out the \u201ctipped minimum wage\u201d and require employers to directly cover the full minimum wage of their tipped workers by 2029.<\/p>\n

In the U.S., many states have their own tipped minimum wage laws, along with their own minimum wage laws. Both of which can vary significantly and are often far greater than the \u00a0paltry 2024 federal minimum wage of $7.25 per hour and the unbelievably paltry federal tipped minimum wage of $2.13 per hour.\u00a0 For example, in Massachusetts, the minimum wage is $15.00 per hour, and the tipped minimum wage is $6.75 per hour. And in California and Washington, tipped workers must be paid the state minimum wage of $16.00 and $16.28 per hour respectively. Forty-three states have tipped minimum wage laws, 7 of which require employers to pay the full state minimum wage.<\/p>\n

Some Background<\/strong><\/h2>\n

Under the Fair Labor Standards Act (FSLA)t,<\/a> a tipped employee is an employee engaged in an occupation in which they customarily and regularly receive more than $30.00 a month in tips.\u00a0 Tipped occupations are jobs where tips are common, such as restaurant wait staff, bartenders, barbers, and hairdressers.\u00a0 According to the Budget Lab<\/a> \u2013 a non-partisan policy research center at Yale \u2013 roughly 4 million people worked in tipped occupations in 2023 — about 2 \u00bd percent of all employment.<\/p>\n

An employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference.<\/p>\n

However, as noted above, many states require higher direct wage amounts for tipped employees.\u00a0 The FLSA also permits employers to take a tip credit toward its minimum wage and overtime obligation(s) for tipped employees, meaning they can count a portion of the worker\u2019s tips toward meeting the minimum wage requirement.<\/p>\n

The FLSA allows employers to require employees to share or \u201cpool\u201d tips with other eligible employees. There are several possible tip pooling arrangements, from one that limits the pool to employees who regularly receive tips to one that includes employees who do not, such as dishwashers and cooks, the so-called \u201cback of house\u201d staff.\u00a0 And under no circumstances can employers be included in a tip sharing arrangement.<\/p>\n

Tip pooling is a common practice in the restaurant and food service industry, which employs approximately 11.5 million workers — making it one of the largest employment sectors in the country. According to the National Restaurant Association<\/a>, 40% of tipped workers in the restaurant and food service industry are under the age of 25, and 60% are under 35.\u00a0 Women make up a majority of tipped positions; 69% of waitstaff and 56% of bartenders are female. Minorities make up 50% of employees in the industry, compared to 41% of employees in the total U.S. employed labor force.<\/p>\n

Under current law, all gratuities that workers receive must be taxed at the same rate as their regular income, and many employers report their workers\u2019 tips to the Internal Revenue Service. Employers use various methods to determine how much a worker gets in tips.\u00a0 These include daily or monthly employee reports of tips received.<\/p>\n

Many businesses \u2013 like my local watering hole — have systems in place where workers log their tips at the end of each shift. Other businesses use point of sale systems that track tips paid through credit and debit cards.\u00a0 Others might use a tip estimator based on historical tip rates for certain positions, typically as a percentage of sales, especially in the food and beverage industry.<\/p>\n

The Pros, The Cons, The Views on the Massachusetts Ballot Question<\/strong><\/h2>\n

According to a fact sheet<\/a> produced by the Tufts Center for State Policy Analysis, research and experience in other states have found that income among tipped workers is likely to rise slightly and businesses will see increased costs if the referendum succeeds and the tipped minimum wage is phased out.<\/p>\n

Arguments for a YES vote on the ballot measure:<\/p>\n