$2.13 an hour sounds like an immoral rate of pay. Only a cold-hearted jerk would pay a hard-working (or even a lazy) employee $2.13 an hour. This is why Jane Fonda and Lily Tomlin's campaign to raise the tipped minimum wage to at least the federal minimum wage (currently $7.25 per hour) tugs at heartstrings.

Their Facebook video has over 2.5 million views, after being posted on October 31. That's pretty viral, as far as videos about wait staff pay are concerned. They make plenty of good points--$2.13 an hour is barely enough for a cheap cup of coffee, or maybe you could get two candy bars if they are on sale. 

No waiter or waitress legally receives only $2.13 an hour. Minimum wage is still $7.25 per hour (federally) or whatever your state minimum wage is. Here's what the law requires (emphasis mine)

Tip Credit: Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage (currently $7.25). Employers must provide oral or written notice to tipped employees of the use of the tip credit in advance. 29 C.F.R. § 531.59(b). Employers using the tip credit must be able to show that tipped employees receive at least the minimum wage when direct wages and the tip credit amount are combined. If the employee's tips combined with the direct wages do not equal the minimum wage, the employer must make up the difference during the pay period.

In other words, every waitress and waiter needs a paycheck that, including tips, brings them to at least minimum wage. The tip credit simply allows the employer to count tips as part of that wage.

Restaurants are not exactly get-rich-quick schemes for owners. Many restaurants fail in the first year or two, and the successful ones operate at an average of a 5 percent profit margin. Compare that to Netflix, which produces Tomlin and Fonda's show, Grace and Frankie, which frequently has profit margins above 30 percent. 

Fonda and Tomlin don't address the fact that many tipped workers earn far more than minimum wage. Maine servers worked together to end a wage increase. The Washington Post reports:

[I]n Maine, servers actively campaigned to overturn the results of a November referendum raising servers' hourly wages from $3.75 in 2016 to $12 by 2024,  saying it would cause customers to tip less and actually reduce their take-home income.

Does this mean all servers are opposed to a wage increase? Absolutely not. Does this mean that all servers are paid correctly? No. But, if servers are currently not receiving minimum wage, their employers are breaking the law. The way to fix that is not to add another law. People who will break one law will certainly be happy to break another.

Whether tipping is the best way to pay restaurant servers is a hotly debated topic, but what their paychecks look like is governed by law already. Tomlin and Fonda should consider Googling the law before they go on a campaign.

Overall, just don't get your labor law advice from Hollywood. 

Published on: Nov 3, 2017