Some of the most vulnerable employees in the U.S. are those who work primarily for tips. Not only is their income dependent on the whims of others, but employers frequently cheat tipped workers out of their full pay and benefits.
Now, the federal Department of Labor has issued a final regulation that clarifies when an employer can apply a "tip credit" to a worker's pay rate and when they cannot.
Tipped workers have been suffering wage abuse for decades by employers who use them to do the work of higher-paid workers without equal compensation. An example of this is a restaurant manager sending home the dishwashers ($7.25 per hour) on a slow night and requiring the waitresses ($4.40) to clean dishes in addition to their regular work and for no additional money.
Regardless of pay structure or hours — full-time, part-time, contractual, tipped, freelance — all workers have a right to fair compensation and work duties. When employers cheat workers out of proper wages, employees often seek legal advice from an attorney who knows and understands wage and hour claims.
Tipped Worker Regulation
The new federal regulation defines when employers can and cannot pay a typically tipped employee the tipped-employee rate.
In Ohio, the minimum wage for tipped workers is set to increase from $4.40 to $4.65 per hour on Jan. 1, 2022. On the same date, for non-tipped employees, the minimum wage is slated to go up by 50 cents, from $8.80 to $9.30.
The regulation says, "An employer may only take a tip credit for the hours when an employee is doing work that is tip-producing or engaged in tasks that directly support tip-producing work." The worker may do tip-supporting work and still take the tip credit as long as the tip-supporting work does not exceed 20% of hours worked in a week or a continuous period of time greater than 30 minutes.
Here's an example: A waitress is doing tip-producing work when she fills a guest's request for more napkins. In this situation the tip credit applies. She is doing tip-supporting work when she cleaned, restocked, and filled dining room napkin holders for more than a half an hour at the start of her shift. In this scenario, the tip credit should not be claimed.
Tip Credit And Wage Exploitation
In Ohio, the tip credit is $4.40 an hour, but what many tipped workers don't know is that they must be paid the state's minimum wage regardless of tips made during shifts. If, after a slow night, a tipped employee hasn't earned the equivalent of minimum wage, they should notify their supervisor that they are being underpaid.
The right thing to do is for the employer to make up the difference between the tip credit, tips earned, and state minimum wage, but this doesn't always happen.
Just as some employers will use the tip credit to exploit workers for cheap labor, there are also those who will do whatever they can to get out of paying tipped workers the bare minimum.
Some of the most common law violations affecting tipped workers include:
- Withholding tips from tipped workers
- Requiring tipped employees to perform non-tipped work while paying the lower rate
- Making tipped workers share their tips with employees who would not normally be tipped like managers and supervisors
- Not paying the overtime rate when tipped workers are on the job for more than 40 hours per week
Help For Tipped Ohio Workers
If you are a tipped employee in Ohio and you believe you are being cheated out of proper compensation by your employer, an experienced employment law attorney can help you fight for the money you deserve.
Gibson Law, LLC is focused solely on Ohio employment law. Our dedication to worker rights has allowed our legal team to develop hard-hitting strategies that get results.
We take defending your right to fair compensation seriously. Our employment lawyers are aggressive in fighting for the money you deserve and sending a strong message to employers that cheating their employees out of wages is wrong.
It's not always obvious when your boss or manager is taking advantage of you. If you know or suspect you are being unfairly paid or are otherwise exploited by an employer, contact Gibson Law to schedule a free case consultation. Our legal team can help you understand how the law applies to your situation and explain your legal options.
Contact us today. We have offices in Cincinnati, Dayton, and Tipp City, and we are ready to hear from you 24/7.