April 2017 - Tips Do Not Count Towards the Minimum Wage Unless a Worker Qualified as a “Tipped Employee”
In Romero v. Top-Tier Colorado LLC, the Tenth Circuit Court of Appeals ruled that tips received by a restaurant server for hours in which she did not qualify as a tipped employee were not “wages” under the FLSA, and therefore should not be considered in determining whether she was paid the minimum wage.
Tipped Employees & the FLSA
The FLSA provides that employers may take a “tip credit” and pay employees as little as $2.13 per hour if: (i) the tip credit is applied to employees who customarily and regularly receive tips; (ii) the employee’s wages and tips are at least equal to the minimum wage, and (iii) all tips received by a tipped employee are retained by the employee or pooled with the tips of other tipped employees.
In Romero, the Tenth Circuit noted that an employee may hold both tipped and non-tipped jobs for the same employer. In those cases, the employee is entitled to the full minimum wage while performing the job that does not generate tips.