In the current tight labor market, an area that is currently coming under increasing scrutiny is the pay of workers who rely on tips for a living. Existing labor laws, both federal and in all but eight states, substantially modify prevailing minimum wage requirements. In these states, employers can pay tipped workers subminimum wages, resulting, in some cases, for the minimum wage for tipped workers to be as low as $2.13 an hour.
This has mostly affected workers in the restaurant industry where wages remain low and workers complain that they are often cheated by their employers out of their rightful tips, usually added onto credit cards. Many are immigrants who fear that there may be repercussions if they challenge employers they feel are withholding their tips. There are so many cases of employers cheating tipped workers that one former official of the Labor Department, David Weil, who headed the Wage and Hour Division, declared, “It’s baked into the model. And it’s very problematic.”
In some places, there have been steps to meet the problem. Michigan will scrap its subminimum $3.75 cents an hour for tipped workers in February. They will now be covered by the state regular minimum wage, set to rise from $9.87 to $12 an hour. Portland, Maine, has a referendum on the ballot this year to end subminimum base pay and raise the regular minimum wage to $18 an hour over a three year period. And the District of Columbia also has a ballot proposal to end the subminimum wage.