TIPPED EMPLOYEES- HOW TO COMPUTE YOUR OVERTIME & OTHER PAY THAT YOUR BOSS OWES YOU.

INTRODUCTION

You have a right to receive the minimum wage for each hour worked and overtime for any hours worked in excess of 40 hours in a workweek. Tipped employees, such as waiters/ servers routinely get short changed because their employer (boss) takes advantage of the tip credit and then violates many of the rules regarding how a tipped employee is to be properly paid.  Here is what you need to know as a tipped employee.

WHAT IS A TIP CREDIT?

A tip credit is where your boss can count your tips toward your earning minimum wage. Your employer is allowed to not pay you the full minimum wage by counting the tips that you earned toward paying the full minimum wage. For example, as of January 1, 2014, the NY State Minimum Wage is $8.00 an hour. However, your boss can use a tip credit of $3.00 an hour. Therefore, your boss only has to actually pay you $5.00 an hour from the business and can count the tips that you earn to make up the $3.00 per hour that he is not paying you.  So you are receiving $5.00 per hour from your boss and $3.00 per hour from your customer in order to receive the minimum wage.

Now, if you do not receive enough tips to make up the difference in the tip credit (for example; a customer only pays you $2.00 an hour), then your boss is required to pay you the money that you didn’t receive in tips to ensure you are paid minimum wage (in this example- $1.00 per hour).

Current minimum wage- Under the federal law you are required to be paid $7.25 for every hour worked. The minimum wage in New York State is scheduled to increase as follows:

(1) December 31, 2013- $8.00,

(2) December 31, 2014- $8.75,

(3) December 31, 2015- $9.00.

Your boss must pay you the greater of the state or federal minimum wage.  As of January 1, 2014,  a tipped employee’s boss can take a $3.00 per hour tip credit and directly pay you as low as $5.00 per hour.  However, only actual tips that were voluntarily paid by customers to you can be used for the tip credit. Your boss is not allowed to count any tips that it requires customers to pay.

HOW DO I CALCULATE MY OVERTIME RATE OF PAY WHEN MY BOSS USES A TIP CREDIT?

You are entitled to overtime for every hour you work over 40 hours in a workweek. In New York, the overtime rate for tipped employees is 1.5 x the New York Minimum Wage ($8.00) – the tip credits taken by your employer.

Therefore the general formula in New York as of January 1, 2014 looks like this:

NY Minimum Wage $8.00
Overtime rate X 1.5
Overtime hourly rate $12.00
Less NY Tip Credit*($8.00-$5.00) $3.00
Required overtime wage $9.00

*If your boss takes a smaller tip credit, then your overtime rate will increase.

WHAT DO I DO IF MY BOSS HAS NOT BEEN PAYING ME THE PROPER OVERTIME RATE

Call El-Hag & Associates right away. Under the federal wage and hour laws, you are legally entitled to DOUBLE your unpaid wages for at least the last 2 years, and in some cases even longer.  Many people discover that they are owed thousands of dollars in unpaid wages when they learn this information. For example, if you worked 10 hours of overtime in 1 week and did not get paid for those hours worked you would be entitled to $90.00 (10 x $9.00) for that week. You would then double that for legal damages. So for 1 week you would be owed $180.00.   If you were paid minimum wage, but not overtime, you would be owed $4.00 ($9.00 – $5.00) for each hour worked over 40 in a workweek and double that for liquidated damages.**

WHAT OTHER PAYMENTS IS MY EMPLOYER (BOSS) LEGALLY REQUIRED TO PAY ME?

Your boss also has to pay you (1) Call in pay, and (2) spread of hours pay.

Call in pay. If you are required to report to work and there is no work for you, your boss must pay you for at least three hours for one shift, or the number of hours in the regularly scheduled shift, whichever is less.

Spread of hours pay. If you are required to work shifts spread across a day, you must be paid an extra one hour of pay at the overtime or regular rate of pay, whichever is applicable. The spread of hours for any day includes working time plus time off for meals plus intervals off duty.

Examples of a spread of hours greater than 10 are: 7 a.m. – 10 a.m., 7 p.m. – 10 p.m. = 6 hours worked but a 15 hour spread; 11:30 a.m. – 3 p.m., 4 p.m. – 10:00 p.m. = 9½ hours worked but a 10½ hour spread.

CONCLUSION.

Most Employers do not properly pay overtime to tipped employees. Many tipped employees work very long hours and rely on tips to make their living.  However, your employer has some responsibility to ensure you are properly compensated for the time you provide to helping his/her business operate.  Overtime pay is significant. If you are not receiving it, you are doing yourself a disservice.  Call El-Hag & Associates, P.C today if you believe that you are not being paid properly and we can help you get the money that you are owed in addition to damages.

**Disclaimer- You must prove all damages when bringing a lawsuit. Although you are legally entitled to be paid in accordance with the law, there are no guarantees that you will win all the money you are owed when bringing a lawsuit. You will however, be entitled to all damages provided under the law if all the necessary elements of a lawsuit are proven.