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Judges: Employers Must Pay Tipped Staff Minimum Wage for Non-Tipped Work

— September 20, 2018

Ruling in on tips, a U.S. appeals court determined that restaurants must pay bartenders and waitstaff minimum wage when they’re doing work that’s not related to their primary positions.

Exemptions to what would have been considered gratuity-based compensation include cleaning toilets and washing dishes.

The decision, brought by an 11-judge panel of the 9th U.S. Circuit Court of Appeals, was what the New York Times describes as a ‘federal law that allows an employer to pay workers who receive tips as little as $2.13 an hour as long as their tips earn them minimum wage.

That law, taken alone, has long attracted criticism. While restaurants and other businesses employing tipped workers are supposed to make up the difference between minimum wage and real earnings falling under its threshold, many employers don’t do that in practice.

However, tipping remains such an ingrained part of American dining culture that few challenges have made been to its legality as a bonda fide means to make ends meet.

Some lawsuits, such as the one at question in Tuesday’s ruling, have tackled other questions about gratuity in compensation.

Photo by rawpixel on Unsplash
Photo by rawpixel on Unsplash

The panel ruled that employers can no longer use ‘tip credit’ to pay workers engaged in ‘unrelated tasks that don’t pay tips.’ Businesses can’t use tip credit for ‘tasks related to bartending or serving,’ such as preparing coffee, if employees spend a substantial part of the work week on them.

Regardless of the win for workers, the New York Times says the ruling’s scope appears ‘limited.’

‘Seven states require that employers pay workers the state minimum wage on top of any tips they receive, according to the labor department’s wage and hour division,’ said the Times. ‘Six of those states fall under the 9th Circuit’s jurisdiction: California, Alaska, Montana, Nevada, Oregon and Washington.’

Writing for the panel’s split 9-2 majority, Judge Richard Paez said tips were meant to be “a gift to the server, as opposed to a cost-saving benefit to the employer.”

Paez’s interpretation, while fair, seems somewhat at odds with ordinary discourse on tips and tipping—so embedded is it in American culture that expectations of gratuity enable employers to pay some workers just $2.13 per hour.

In an effort to appear more equitable, some restaurants have given up tipping altogether. Results, however, have been mixed, with some insisting that it’s just not right to not tip waitstaff.

At other establishments, like Bob and Mac’s in Virginia, have been at the receiving end of tip-related lawsuits.

Bob and Mac’s was sued for distributing a share of waiters’ tips to kitchen staff. But because Bob and Mac’s paid its waitstaff less than the federal minimum wage, they were found in violation of federal compensation schemes and thrust into bankruptcy.


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