How Will Tipped Workers Earn a Living?

Making as low as $2.13 an hour

Before telling you why this could be the case, I want to share my own personal story when I considered working as a waitress in Texas.

When I lived in San Antonio, I applied for some jobs as a tipped employee until I found out I would only be making some ridiculously low salary that was barely half of the minimum wage requirement. The manager told me that the rest would be made up in tips. Noticing the place was dead, I thought what tips?

I do not recall the exact amount of the wage, but anything below the minimum wage is known as a tip wage that employers can pay their workers because the Department of Labor allows their tips to make up the difference.

In order to keep receiving this tax credit, the 80/20 standard applied which meant tipped workers shouldn’t participate in non-tip-generating-duties more than 20 percent of the time they were at work. In a way, this helped protect both the employer and the tipped worker. The employer could still assign such duties to the tipped worker but the tipped worker was allegedly guaranteed that it would not require more than 20% of their rime. Now, this rule is no longer in effect as of November 2018.

How could this affect tipped workers? How will employers respond to the Department of Labor’s new opinion letter?

It is possible that employers can assign tipped workers more tasks that do not generate tips so long as it does not change the nature of their occupation whether it be a waiter, bartender, or whatever.

If the duties are considered “core or supplemental” to their position and are performed “contemporaneously with …or for a reasonable time immediately before or after…” such duties, employers will still be able to enjoy a tip credit and pay workers as low as $2.13 an hour.

Only time will tell how this will affect tipped workers in America. For restaurant owners out there (hopefully reading this article), consider the overall well-being of your tipped workers and how forgoing the tip credit could generate more money for your restaurant in the long-run.

How Tips Inhibit Customers from Eating Out and Hurts Your Profit Margins

Have you ever thought about how your customers feel about paying tips?

Since I learned about the tip credit years ago, I must admit that my experience eating out at restaurants is a bit tainted. The thought that how much I can afford to tip can have such an effect on the waiter has at times discouraged me from going out to eat.

There have been many times when money is tight for me, especially when I am in the United States. In the United States, I have become more reluctant to go out to eat knowing I have to factor in a tip. I wonder how many people have been in my shoes.

As a business owner, can you imagine how much more business you could be doing in America if customers did not feel like their tips impacted the tipped workers’ salaries?

As a customer, can you remember how many times an American restaurant included the tip as part of the bill? There are some restaurants that will add the tip onto a bill if a table has a certain number of customers; however, this is not the norm.

Financial Future of Tipped Workers

So long as tipped workers in America rely on their customers rather than employers for a guaranteed salary, I have many questions about the financial stability of tipped workers:

· Will they have the means to contribute to a 401k plan?

· What kind of social security benefits will they have when they retire?

If the financial futures of tipped workers are not considered before it is too late, there could be adverse effects on the American economy once tipped workers reach retirement age.

On a Final Note:

I believe the custom of tipping in America needs to be reversed to ensure the financial stability of tipped workers. I will leave you with two questions to ponder, and please comment below.

I would also appreciate a clap, sort of like a tip to show you appreciate me.

Here you go:

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