One of the most misunderstood area of employment law are the laws governing tipped employees.
Because these employees earn a substantial portion of their income from tips, many people – including both employees and employers – operate under the belief that the federal minimum wage and overtime laws do not apply to them.
In fact, one of the most commonly asked questions relating to tipped employees is “Are tipped employees entitled to overtime?”
The simple answer to that question is “yes,” tipped employees are entitled to overtime wages.
Calculating those wages, however, can get tricky.
The Fair Labor Standards Act, or FLSA, is the federal law that governs minimum wage and overtime laws in the U.S. The FLSA requires all non-exempt employee working for a covered employer to be paid at least minimum wage and to be paid overtime at the rate of one and one-half the employee’s regular wage for all hours worked over 40 in a workweek.
HEAR HOW EMPLOYERS COMMONLY STEAL WAGES FROM TIPPED EMPLOYEES HERE
Both employers and employees often think that because tipped employees are not required to be paid minimum wage outright that the FLSA laws to do not apply to them. The truth, however, is that those laws do apply.
According to the FLSA, tipped employees are those who customarily and regularly receive more than $30 per month in tips. Tipped employees must ultimately earn minimum wage; however, Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage.
This is why employers are allowed to pay a tipped employee just $2.13 per hour instead of the federal minimum wage of $10. In Florida though, the state minimum wage for tipped employees is $8.98 and for other workers, $12 per hour (As of Sep 30, 2023). This means an employer is entitled to a $4.02 per hour “tip credit.”
A tipped employee must also be paid overtime hours if the employee works more than 40 hours in a workweek.
Overtime pay, based on Florida’s rates, is calculated as follows:
Hourly minimum wage = $11
Tip Credit = $4.02 ($11.00-$7.98=$3.02)
Minimum wage of $12 x 1.5 = $15 (Hourly overtime pay)
Hourly overtime pay – tip credit ($18-$4.02 = $13.98)
Overtime rate for tipped employees = $13.98
Of course, if the tipped employee’s regular hourly rate is more than the state minimum the calculations for overtime pay will be different as well.
Minimum Wage Increase Timeline:
| September 30, 2022 | $11.00 |
| September 30, 2023 | $12.00 |
| September 30, 2024 | $13.00 |
| September 30, 2025 | $14.00 |
| September 30, 2026 | $15.00 |
Employers routinely fail to pay tipped employees overtime pay, either as a result of ignorance of the law or intentionally. If you believe you are owed overtime pay, contact the experienced Florida employment law attorneys at Celler Legal, P.A. by calling 954-716-8601 to schedule your appointment.