Is a waiter or waitress exempt from minimum wage and overtime?
People often hear that waiters and waitresses are paid poorly, so therefore customers should leave generous tips because these servers do not even get minimum wage. Some servers even say that they get paid nothing at all! While tipping is always appreciated, the legal question we assess today is this: are waiters and waitresses exempt?
First, we have to determine what we mean by “exempt.” Under the Fair Labor Standards Act, employees are entitled to at least minimum wage for all hours worked and one and one-half times their regular rate of pay for hours worked in excess of forty per week, unless there is a specific rule “exempting” an employee from these requirements. Some “exemptions” are for both minimum wage AND overtime, meaning an employer does not have to pay minimum wage for all hours worked and also does not have to pay time-and-a-half for hours over forty per week, and some “exemptions” are only for overtime (but the employees are still entitled to at least minimum wage.)
Second, we have to address the difference between state and federal law. The Fair Labor Standards Act is a federal law that address minimum wage and overtime requirements. It covers most but not all employment situations. There is also a Michigan law that addresses minimum wage and overtime requirements for Michigan employers. Employees are always entitled to the greater protection available to them. So, if an employee is covered by both Federal and Michigan law, but one requires that the employee receive a higher rate of pay, then the employee is entitled to that higher rate of pay.
Waiters and waitresses are not exempt from minimum wage or overtime pay under federal or Michigan law. That’s right- all those social media posts you have seen about how restaurants don’t even have to pay their servers are wrong. Waiters and waitresses are entitled to receive at least minimum wage for all hours worked and one and one-half times their regular rates of pay for hours worked over forty in a week.
HOWEVER, employers are entitled to use a “tip credit” when paying their servers. If an employee “customarily and regularly” receives tips of at least $30.00 per month, as most servers do, an employer can take an offset, called a “tip credit,” against the amount the employer pays the employee as long as the employee receives at least as much as the off-set in tips. Let’s look at some numbers.
-The federal minimum wage is currently $7.25 per hour. Waiters and waitresses are entitled to receive at least that much for every hour worked. However, restaurants can take a “tip credit” of up to $5.12 per hour, meaning they only pay the servers a cash wage of $2.13 per hour.
-The Michigan minimum wage is currently $9.45 per hour. Waiters and waitresses are entitled to receive at least that much for every hour worked. However, restaurants can take a “tip credit” of up to $5.86 per hour, meaning they only pay the servers a cash wage of $3.59 per hour.
Since employees are entitled to the greater protection available, this means that waiters and waitresses in Michigan are entitled to be paid at least $3.59 per hour by restaurants, with restaurants using a “tip credit” of $5.86. If restaurants do rely on a “tip credit” of $5.86 per hour to justify paying servers $3.59, they must also keep track of tips to make sure that employees are receiving enough in tips that they are making at least minimum wage for all hours worked. If a server doesn’t reach the minimum wage amount by adding in the tips, then the employer must pay that difference to get the server up to minimum wage.
Do you believe that you are not being paid properly under federal or Michigan law? If so, call Gold Star Law for help.
