Glossary > Employment Law > Wage And Hour Laws > General

Tipped Wages

Tipped wages refer to the practice where an employee receives a lower base wage with the expectation that tips from customers will make up the difference to meet the minimum wage.

Example #1

For instance, a server in a restaurant may be paid $2.13 per hour as a base wage, with the expectation that their tips will bring their total pay up to the minimum wage set by law.

Example #2

A bartender might receive a lower hourly wage with the understanding that tips will supplement their income.

Misuse

Misuse of tipped wages can occur when employers fail to ensure that the total earnings (base wage + tips) meet the minimum wage requirements set by law. This is important to protect against because it can lead to employees earning less than they are legally entitled to, resulting in financial insecurity and exploitation.

Benefits

Tipped wages can benefit employees in industries where tipping is common by providing an opportunity to earn additional income based on their service quality. For example, a skilled server who offers exceptional service may receive generous tips beyond their base wage.

Conclusion

It is crucial to monitor and enforce compliance with tipped wage laws to ensure that employees are fairly compensated and not taken advantage of. By upholding these regulations, we can protect the financial well-being and rights of workers in service-oriented industries.