This year, Congress is expected to make sweeping changes to the Fair Labor Standards Act, and if you rely on tips for your income, it could affect your take-home pay.
The degree to which you’ll be affected depends on the minimum wage in your state.
In the restaurant industry, and other industries in which employees rely on tips, the common practice for decades has been to pay employees well below the minimum wage. This is done with the expectation that tips from patrons and customers will more than make up the shortfall.
Some states have put an end to this practice, forcing employers to pay at least minimum wage to all employees. Some states have also raised their minimum wage to a level substantially higher than the federal standard.
On its face, this may seem like a positive to tipped employees, as their incomes may rise. But with anticipated changes to the FLSA, that may change.
Those changes may allow employers who pay employees at least minimum wage to keep any tips. Supposedly, employers will then distribute tips evenly among employees, but the fear is there will be nothing in the law preventing employers from simply keeping the tips.
What should you do?
First, know the law in your state. Every state can have different laws governing compensation for tipped employees. Visit United States Department of Labor website for information on the law in your state.
If you live in a state with a high minimum wage, your income likely will not be affected much by the changes to the law.
However, if you live in a state with a minimum wage at or near the federal level, your income could be reduced significantly.
Second, keep an eye on the news for changes to the FLSA. It’s expected that Congress will adopt these changes sometime during the current session, which doesn’t end until December 2018.
If the law does change, and your employer decides to begin paying minimum wage, they are supposed to to inform you how that will affect your tips.
Finally, be prepared to make less money. This change in the law could have a dramatic affect on your livelihood and your standard of living. If you are anticipating this change where you live, you should plan your spending habits accordingly.
As an employee, one of the most important things you can do is to know the law and know your rights. Keep yourself informed so you’re prepared for major changes that might affect your income.