Tipped employees are not paid like most other employees. Most employers must pay all of your wages directly from the business. However, employers (bosses) that employ tipped employees have the right to use a tip credit so they do not have to pay you the full minimum wage from the company. The tip credit allows your employer (boss) to count the tips you are paid from your customers to satisfy part of their minimum wage obligation. This means that your boss only has to pay you part of the minimum wage while your customer pays you the other part. The following is a brief explanation to help you understand the tip credit.
The main concepts you need to understand are: (1) Who is legally a tipped employee, (2) What is the minimum wage, (3) What is the tip credit set by law, and (4) your rights as a tipped employee. (more…)