Every time I see this article floating around Facebook I get a little upset. It's not the customer's fault that the server is not receiving a proper wage or that the tip credit was not explained. A customer is never required to tip. Tips that are converted into wages are not included as part of a Tip Pool. And $2.13 per hour is LESS than the Federal Minimum Wage of $7.25 per hour and WAY LESS than my home state's minimum wage of $9.19 per hour.
But I don't know how to put it into words, so here's some math:
Note: $2.13/hr is less than Federal or State minimum wage rates and are only allowed in the restaurant industry IF the the server will make up the remainder of the wages in gratuities from customers. I'm using State minimum wage in calculations below
I'm going to assume that the person worked a 10 hour shift, so:
Tip Credit Base Pay: $21.30 ($2.13 x 10)
Washington State Minimum Base Pay: 91.90 ($9.19 x 10)
Difference: $70.60 (this is the minimum amount tips that MUST be received from customers in order for the Employer to use the Tip Credit. Otherwise the employer owe the employee more.
Scenario One -
Worked 10 hours and received $80.00 in tips for the night.
1) Add Tip Credit Base Pay plus Tips = $101.30
2) Divide that by Total Hours worked = $10.13/hr
Question: Is that higher or lower than the State's minimum wage?
Answer: Higher
1) Tip Credit Base Pay plus Tips = $101.30
2) State Minimum Wage times Hours Worked = $91.90
Subtract line one from line two = $9.40 <-- this is the actual total amount of tips received for the night and this is what you use to 'tip out' to other staff. Out of the $80.00 you were 'tipped' for the night, $70.60 of that was converted into wages.
You were paid WAGES of $21.30 from the restaurant. You were paid WAGES of $70.60 from the customers. You were tipped $9.40 from the customers.
Scenario Two -
Worked 10 hours and received $20.00 in tips for the night.
1) Add Tip Credit Base Pay plus Tips = $41.30
2) Divide that by Total Hours worked = $4.13/hr
Question: Is that higher or lower than the State's minimum wage?
Answer: Lower
1) Tip Credit Base Pay plus Tips = $41.30
2) State Minimum Wage times hours worked = $91.90
Subtract line one from line two = -50.60 <-- this is what the employer owes you.
You were paid WAGES of $21.30 from the restaurant. You were paid WAGES of $20.00 from the customer. You are OWED wages of $50.60 from the restaurant. You made $0.00 in tips for the night and therefore should not be required to 'tip out' to other staff.
OR you were paid WAGES of $21.30 from the restaurant. You were paid TIPS of $20.00 from the customer (which a portion goes toward a tip pool). You are OWED $70.60 from the restaurant. Because now your tips are tips but you're still owed more in wages (apparently this is an alternative way of calculating it? Tip Pooling makes everything more complicated)
The point is that getting paid $2.13 an hour is not okay. And it's not the customer's fault.
Check out the law: US Dept of Labor Fact Sheet
