All You Need To Know About Paying Tipped Employees

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All You Need To Know About Paying Tipped Employees
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• When paying your employees, the last thing you
  want to do is break any of the labor laws, and so
  minimum wage laws at federal, state and local
  levels must be strictly adhered to. That said,
  some employers paying staff within certain
  industries, can pay their tipped employees less
  than the minimum wage and not break any labor
  laws this is known as the tipped minimum wage.
• Heres a closer look at tipped minimum wages
• What is the federal minimum wage for tipped
  employees?
• Currently, the federal minimum wage stands at
  7.25 per hour, and this is the lowest amount
  that an employer can pay their workers for each
  hour that they work.

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• However, the FLSA or Fair Labor Standards Act
  does make an exception for those working in
  certain industries, such as waitressing, whereby
  employers can pay them a lower minimum wage based
  upon the fact that they earn tips. Tipped
  employees, as federal law states, are workers who
  are in regular receipt of tips upwards of 30
  every month. Employers can then claim a tip
  credit toward the federal minimum wage which then
  enables them to pay their tipped staff at a lower
  hourly rate.
• Tip credits lower the hourly minimum wage for
  those employees who qualify, by the amount of the
  credit, and the highest tip credit employers can
  claim is 5.12 per hour.

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• In summary, tipped employees are paid a federal
  minimum wage of 2.13 per hour, which is the sum
  of 5.12 subtracted from 7.25 and is referred to
  as the minimum cash wage.
• Paying your staff, the tipped wage
• In order to pay your employees a tipped wage, you
  must notify them of the amount youre claiming as
  a tip credit and their hourly rate. Failure to do
  so could result in you being forced to pay them
  the regular minimum wage and allowing them to
  keep their tips.

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• Do all states follow the federal tipped minimum
  wage rate?
• While some states dont permit employers to pay a
  tipped wage rate, others require that employers
  pay a state-mandated tipped minimum wage at a
  higher rate than the federal one. In some states,
  tipped employees are considered as such if they
  earn more than 20 in tips a month, such as the
  case in Kentucky, North Carolina and
  Massachusetts, for example. Understanding and
  being clear on how the state youre in defines
  tipped employees, is important if youre to stay
  on the right side of the law.

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• What if an employee doesnt earn enough in tips?
• The combined minimum cash wage and an employees
  tips should be more than the regular minimum wage
  for employers to qualify for tip credits, so if
  an employees tipped minimum wage and tips
  combined dont make enough to reach the minimum
  wage, then the employer has to make up the
  difference.
• For further advice and guidance on any wage
  related queries that you may have, contact a
  professional payroll company, who will have all
  the latest updates regarding labor laws.

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• Apollo Payroll is one of the premier small
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