Although the Fair Labor Standards Act (FLSA) generally requires that employers pay workers a minimum wage of $7.25/hour (see 29 U.S.C. § 206(a)), the law permits employers of tipped employees to take a “tip credit,” only paying employees who customarily receive at least $30/month in tips from customers a cash wage as little as $2.13/hour, as long as the employer ensures that the aggregate of cash wages paid directly by the employer plus tips paid to the worker by customers results in the tipped worker earning at least $7.25/hour (see 29 U.S.C. § 203(m)(2)(A)). However, the long-standing tip credit model presumes that tipped employees receive a steady flow of tips and spend nearly all of their working hours engaged in tip-generating labor, a presumption that does not always align with reality. Read more HERE.
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