Restaurant and food service workers have rights and protections under the Fair Labor Standards Act to ensure they are paid a fair wage. When employers don’t follow these laws, MSE stands ready to enforce these employees’ rights to fair pay and benefits.
The FLSA Applies to Employees Paid at the Lower, Tipped Hourly Rate
Congress enacted a special exception to minimum wage requirements for tipped employees, such as restaurant workers. A worker is considered a tipped employee under the FLSA if they customarily and regularly receive more than $30 per month in tips. A tipped employee’s employer may take a tip credit against its minimum wage obligations, which permits the employer to pay workers at a rate of at least $2.13 per hour in direct wages so long as that amount combined with the tips received equals at least the federal minimum wage (currently $7.25 per hour). If the total amount received from tips and the minimum direct wage does not equal the federal minimum hourly wage, then the employer must make up the difference.
Significantly, many states require higher direct hourly wage amounts when the employer takes a tip credit, or have higher minimum wage requirements. For example, as of July 1, 2025, in the District of Columbia, the minimum direct wage is $12.00 per hour and the full minimum wage is $17.95 per hour. In Maryland, the tipped hourly wage is $3.63 per hour, and the full minimum wage is $15.00 per hour (although some counties, like Montgomery County, have higher wage requirements). In Colorado, the tipped minimum wage is $11.79 per hour and the full minimum wage is $14.81 per hour. In these states, employes must pay workers at the higher state or local rates.
Seven states, (Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington) prohibit an employer from using tips to reduce its obligation to pay employees the applicable minimum wage. This means that all workers in those states must be paid at the full applicable minimum wage rate for all hours of work, regardless of whether they earn tips.
Common Wage and Hour Violations Experienced by Tipped Employees
McGillivary Steele Elkin LLP represents restaurant and service industry workers who are paid at the lower, tipped hourly wage rate and who have not been paid fairly. Some common violations by restaurant and service industry employers include:
- Requiring participation in a tip pool that unlawfully includes supervisors, managers, or back-of-the-house employees, or other individuals who are not permitted to share tips;
- Using pooled tips to pay for business expenses, meals, to make up register shortages, or to make charitable donations;
- Failing to pay overtime pay when working over 40 hours in a week, particularly where employees work at more than one location during a workweek;
- Failing to pay overtime compensation at the correct rate;
- Failing to make up the difference between the lower tipped hourly rate and the applicable full minimum wage rate;
- Failing to pay the full minimum wage for non-tipped work hours, including mandatory pre-shift meetings or other side work, when those hours represent more than 20% of the employee’s workweek; and
- Treating workers—particularly delivery workers—as independent contractors resulting in a failure to pay minimum and/or overtime wages.
Questions? Contact MSE Today!
If you work in the restaurant or food services industry and are paid at the lower, tipped hourly rate and have questions about how these issues apply to your individual situation or think you may not be paid in accordance with the law, please contact us through our website or by email at [email protected] to schedule a free consultation with an experienced attorney.
If you are an hourly worker who earns tips, but are paid at least the full minimum wage per hour (as opposed to at the lower, tipped hourly rate discussed here), please see our other resource pages for further information on common tip-related violations and your workplace rights.
