Restaurants did not fare well during shutdowns, with around 110,000 shut down because of the pandemic as of January 2021. Hopefully, some of these are up and running again, and to make it more difficult, on June 21, 2021 the Department of Labor announced a proposed rule change around the tip credit.
What is tip credit?
Under federal law (some states have higher minimum wages), the minimum wage is $7.25 per hour, but if your employee receives $30 or more per month in tips, you can pay $2.13 per hour and have the rest made up by tips. The employee has to receive at least $7.25 per hour, but only $2.13 has to come from the employer’s pocket if they get enough tips.
Employers can use the tip credit only when employees spend 80 percent of their time in tipped tasks, like waiting tables. So, if you have a server who also does maintenance work 25 percent of the time, you have to pay at least $7.25 per hour for the maintenance work, even if the employee received $1,000 in tips that week.
To keep reading, click here: Attention Restaurant Owners: The Tip Credit Rules Are Changing