Minimum Wage for Tipped Employees

While minimum wage has slowly climbed over the past few years, there stands to be one industry that the government may be forgetting. Minimum wage for those who rely on tips. It has remained at $2.13 for over ten years! This means the pay for waiters and waitresses has been declining steadily for a decade. Meanwhile, restaurant profits go up by increasing the menu prices and still not being required to pay their wait staff a decent wage.

There are a handful of states who do have a higher minimum set for tipped employees. However, there are many states who still go by federal minimum which is set at $2.13. Click here to see a list.

Servers who get paid $2.13 seldom see a paycheck from their employer. Most times it is for $0.00. The reason for this is because that tip money is not tax free. Servers must claim the amount of money they receive after every shift. That money is taxed via the $2.13 they get per hour. There are a lot of people in the service industry who actually owe money after filing taxes. Servers are literally at the mercy of their customers to make a living.

Some states require restaurants to pay employees more than $2.13 if the server didn't make enough money to reach the regular minimum wage. So, if minimum wage is $7.00 an hour and the server didn't make the $5.87 an hour to make up for it then the restaurant has to make the difference up in the paycheck. Remember, servers are at the restaurant clocked in before and after they have tables to wait on. However, this isn't true in some states. There are states that do not require the employer to make up the difference.

Servers also have to give part of their tip money to several other employees within an establishment such as the bartender and bus person. This money is taxed even though they don't get to take it home at the end of the night. That's right. It still has to be claimed by the wait staff. And guess what? The bartenders and bus people have to claim it as well. So, the government is actually double dipping on tip money.

It's a common myth when people say that tipped employees don't claim everything they make. The truth is (waiters and waitresses at least) may actually be paying more than they should. The restaurant automatically claims for the server 100% of tips left on credit cards. Aside from that, if a server doesn't claim at least 15% of what their sales were, they stand to be audited by the government. Hence, if a customer decides to leave less than 15% they are, in essence, causing the person that waited on them to actually pay money out of their own pocket to wait on them to cover tip share and taxes.