The battle to end discrimination against tip earners is continuing its progress towards becoming the norm for many U.S. states. This year, more states are considering requiring full minimum wages for tip earners, in lieu of tipped minimum wage, with Washington State leading the charge.
The Department of Labor requires that all non-tipped employees receive the federal minimum wage, currently $7.25 per hour. Some states have adopted higher minimum wages; however, when it comes to tipped employees, the rules are more complicated.
Currently, employers are allowed to count a portion of tipped income towards the employee’s total minimum wage. This means that while employers must pay tipped employees at least the federal minimum wage of $7.25 per hour, they can then add the amount of tips an employee makes back to that number.
The problem is that in an effort to save money, some states are not always as stringent with enforcing this requirement. As a result, tipped employees often earn less than minimum wage.
Due to the dissatisfaction with the current system, states are beginning to introduce policies that would require businesses to pay all tipped workers the full minimum wage. In addition, the National Employment Law Project has released a plan that seeks to guarantee full minimum wage to all tipped workers in all 50 states.
Washington State is the first state to make full minimum wage for tip earners mandatory. Under their new law, employers must either pay their tipped workers the full state minimum wage amount or give employees a comprehensive wage payment system that includes a wage of at least the state minimum wage, supplements, and tips.
Other states, including California, Massachusetts, and Maine, have also proposed legislation that would set a fixed minimum wage for employees in the service industry. However, not all states are on board with these new laws.
“If these mandates are applied across the country, the result would be higher wages for some tipped employees at the expense of many businesses which rely on tips,” said Scott DeFife, the executive vice president for policy and government affairs at the National Restaurant Association.
While the laws establish an important protection for tipped employees by ensuring that they are paid the full minimum wage, there are concerns that these laws could lead to job losses and fewer hours for tipped employees, due to the extra costs businesses would have to invest in wages.
Time will tell whether these laws are effective in protecting tip earners. Nonetheless, it is a step in the right direction for those who have been subject to unfair wages for far too long.
