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Q & A: Minimum Wage

Q: Is it true that if my servers aren’t making enough in tips to meet minimum wage that I have to kick in the money?

A: Yes that is true and not properly handling this requirement has been the reason many restaurants end up involved in investigations and lawsuits. This is what the DOL says in in their Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act : Employers electing to use the tip credit provision must be able to show that tipped employees receive at least the minimum wage when direct (or cash) wages and the tip credit amount are combined. If an employee’s tips combined with the employer’s direct (or cash) wages of at least $2.13 per hour do not equal the minimum hourly wage of $7.25 per hour, the employer must make up the difference. (Note that this is over a pay period – not per shift.)

Q: What happened to the minor minimum wage? Do I really need to pay a teenage $7.25 an hour when it’s their very first job?

A: If only I had been making that much money as I scraped plates and manned the conveyor belt in the dish room at UW Stevens Point! Wisconsin’s minor minimum wage of $5.90/hr. was eradicated two years ago when both the state and federal minimum wages increased to $7.25/hr. You do still have the option of paying the opportunity wage to your young employees. This $5.90/hr. wage applies to teen employees during their first 90 calendar days of work as your employee. After this period they must be paid the general minimum wage of $7.25/hr.

Q: My restaurant occasionally has staff meetings. Do I have to pay my employees to attend? And if I do, how much do I have to pay my servers?

A: Most meetings at work are going to be considered working time. The only time they won’t be considered working time is if the following four tests are met:

  • Attendance is outside the employee’s regular working hours.
  • Attendance is truly voluntary.
  • The subject of the meeting is not related to the employee’s work.
  • The employee doesn’t perform any productive work during the meeting.

Even if the meeting is considered voluntary, it is probably related to work and you must pay your employees to attend. If you threw a company party on a day your restaurant was closed and employees could choose whether or not to attend, you would not have to pay.

A tipped employee would have to be paid the full minimum wage (currently $7.25 for most workers, $5.90 for opportunity wage earners) for attending a work related meeting. Tipped employees may only be paid below the full minimum wage during hours when they have an opportunity to earn tips or are doing sidework related to their tip-earning work. Since the servers can’t earn tips during the meeting, you cannot take a tip credit.

Q: Recently a server had a really bad run. She dropped a tray of plates earlier in the week, calculated a check incorrectly and bungled opening an expensive bottle of wine by getting cork pieces in it. Can I deduct money from her paycheck to recoup some of this money that her carelessness has cost us?

A: You need to be careful about using paycheck deductions as a disciplinary measure. Whenever a deduction is made for breakage or errors on the job, the employee needs to give written permission prior to the deduction. No blanket agreements are permitted because the employee must give permission on a case-by-case basis. If the employee offers to cover the cost of a breakage or error out of pocket, this is considered a voluntary action, but owners must use caution when deducting money from paychecks.

Employers whose restaurants are covered by federal AND state law need to be aware that the employee’s pay can’t be brought below the minimum wage (currently $7.25/hr.). Employee’s tips may not be taken as payment for a breakage or error. Deductions may only be taken from the employee’s actual base wages in excess of $7.25 an hour.

For businesses subject to Wisconsin law only, tips may not be taken as payment for breakage or error, but there is no maximum amount that can be taken from the actual base wages. Again, written permission is required for both tipped and non-tipped employees.

If an employee makes a huge and costly blunder, like dropping an entire tray of expensive dishes, you can approach her and see if she will agree to have money withheld from future paychecks to cover a percentage of the loss. If the employee refuses to allow this, you must find another way to discipline her. Remember, the disciplinary action (up to and including termination) must be about the employee’s negligence or carelessness, and shouldn’t be about their refusal to pay for any of the damage. As always, it is important to keep accurate records in personnel files. Breakage/error employee permission slips are available in your HERO manual and in the Members Only section of the WRA website.

While deducting money from paychecks is permissible in some situations, you need to follow the proper guidelines and should not use this approach as a disciplinary cure-all.

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Wisconsin Restaurant Association • 2801 Fish Hatchery Rd. • Madison, WI 53713 • Tel: 608.270.9950 • Toll Free: 800.589.3211 • FAX: 608.270.9960