Legislative Positions


TIPPED EMPLOYEE WAGE INCREASE

Background

Tipped employees work in an occupation where in addition to their hourly wage, an employee receives more than $30 per month in additional wages left by customers, tips. The tip earned is the employee’s property and the employer is prohibited from using the tip for any reason aside from credit against minimum wage obligations to the employee or a valid tip pool. Only the tips received by the employee can be counted when determining tipped employees. If the employees tips added to their hourly wage do not equal the federal minimum wage of $7.25, the employer must pay the difference.

Tipped Employee Wage Talking Points

  • Currently, Delaware’s minimum wage is $8.25 per hour, and the cash wage is $2.23 per hour.
  • Delaware operators already pay more than the national federal cash wage of $2.13 per hour.
  • By law, employers must pay the minimum wage of $8.25 per hour if the employee does not exceed the minimum wage when combining the cash wage and tips.

Understand the Facts About Tipped Employee Wage

  • Employees are guaranteed to make at least the minimum wage of $8.25 per hour.
  • Employers must make up the difference if employees’ tips fall short of minimum wage when combined with the cash wage of $2.23.
  • Tipped employees are NOT minimum wage earners.
  • The IRS has determined that tips/gratuities are wages. According to the National statistics, compensation for servers exceeds $10-15 per hour.
  • In recent years, the IRS has developed programs that have encouraged the employers to increase the amount of tips that their employees claim through education.

Tipped Employee Wage Facts in Delaware

  • Delaware’s minimum wage exceeds Federal law as well as its neighboring states of Maryland, Pennsylvania and New Jersey.
  • The restaurant industry in Delaware is struggling to cope financially with increased cost of goods, a constriction in the market as well as a struggling economy.
  • Increasing the tip credit would create another financial burden to the State’s number one small business and tourism employer.

Federal Issues