Minimum Wage and Tipped Employees

 Posted on May 10, 2024 in Minimum Wage

Many workers traditionally make most of their income in tips. Servers in restaurants, concierge staff in hotels, valet drivers, and bartenders usually receive tips that far exceed the wages they receive from their employers. Although these workers often see tips as their primary source of income, businesses that employ tipped staff members still have an obligation to pay these workers minimum wage. However, the minimum wage employers must pay tipped staff is different from the minimum wage employers must pay to staff members who do not consistently receive tips. The Fair Labor Standards Act controls how much employers must pay tipped workers per hour. A Schaumburg, IL minimum wage violations attorney can help you ensure that you are meeting your legal obligation to compensate tipped workers.

What is the Minimum Wage for Tipped Employees?

In Illinois, under most circumstances, an employer must pay employees who customarily receive tips at least $8.40 per hour. This equals 60% of the $14.00 per hour minimum wage Illinois has set for adult employees in 2024.

Does it Matter How Much My Employees Actually Earn in Tips? 

Yes. Your employees' take-home pay must equal at least $14.00 per hour. If you pay them the minimum wage for tipped workers of $8.40 per hour, this means that your employees must make a minimum of $5.20 per hour in tips over the course of a pay period to take home $14.00 per hour. If your employees do not receive this amount in tips, it is your responsibility to pay them the difference.

This means that you may ultimately need to pay your employees more than $8.40 per hour if they are not making enough tips to increase their income to minimum wage. You should keep track of the tips your employees earn in a pay period to ensure that each employee will take home at least $14.00 per hour. If they fall short in a given pay period, you will need to make up the difference.

It is common for businesses to have a slow business week or even a slow season during which tipped employees receive less than usual in tips. Do not worry if you find that you must occasionally compensate tipped employees during a particularly slow pay period, but do plan for the possibility in your company’s budget.

Contact a Schaumburg, IL Minimum Wage Violations Attorney

The Miller Law Firm, P.C. is experienced in helping employers calculate the minimum wage for tipped employees and determine their legal obligations. Knowledgeable Cook County, IL minimum wage litigation lawyer Richard Miller is a Chicago native and understands the needs of local business owners. Contact us at 847-995-1205 for a free consultation.