New Law On Tips

New Law on Tips

Sweeping Changes for Tipped Workers

A new law has been passed that will have a significant impact on tipped workers. The new law, which goes into effect on January 1, 2023, will raise the minimum wage for tipped workers to $15 per hour and eliminate the tip credit. This means that employers will no longer be able to pay tipped workers less than the minimum wage, and they will be required to pay tipped workers the full minimum wage, regardless of how much they earn in tips.

What is the Tip Credit?

The tip credit is a provision of the Fair Labor Standards Act (FLSA) that allows employers to pay tipped workers a lower hourly wage than the minimum wage. The tip credit is based on the assumption that tipped workers earn enough in tips to make up the difference between the lower hourly wage and the minimum wage. However, studies have shown that tipped workers often do not earn enough in tips to make up the difference, and as a result, they are often paid less than the minimum wage.

Why Was the Tip Credit Eliminated?

The tip credit was eliminated because it was found to be unfair and discriminatory. Tipped workers are often women and people of color, and they are more likely to be paid less than the minimum wage than other workers. The elimination of the tip credit will help to ensure that tipped workers are paid a fair wage.

What Does the New Law Mean for Tipped Workers?

The new law will have a significant impact on tipped workers. Tipped workers will now be paid the full minimum wage, regardless of how much they earn in tips. This will result in a significant increase in wages for many tipped workers. The new law will also eliminate the tip credit, which will help to ensure that tipped workers are paid a fair wage.

What Does the New Law Mean for Employers?

The new law will also have a significant impact on employers. Employers will now be required to pay tipped workers the full minimum wage, regardless of how much they earn in tips. This will result in an increase in labor costs for many employers. However, the new law may also help to reduce turnover and improve employee morale.

Conclusion

The new law on tips is a significant change that will have a major impact on tipped workers and employers. The new law will raise the minimum wage for tipped workers to $15 per hour and eliminate the tip credit. This will result in a significant increase in wages for many tipped workers and will help to ensure that tipped workers are paid a fair wage.