In the United States, employment laws, and more specifically, the minimum wage laws are not always clear, especially when you are considering the minimum wage for tipped employees. While tipping is perhaps not common practice in other countries, thousands and thousands of workers in the U.S. make the majority of their income through tips.
Employees of Connecticut that are employed by bars, restaurants, hotels, airports, and other service providers often expect to be paid a rather small hourly wage, which is then supplemented heavily by tips (also known as gratuities). Many service-industry workers base their entire salary on tips and rely on them to cover their living expenses, fund their lifestyle, and take care of their family.
What is a Tipped Employee?
What exactly is a tipped employee? A tipped employee is one that earns their wages through tips rather than a fixed salary or higher hourly rate. Federal law establishes the rules of what is considered a tipped employee vs. a non-tipped employee.
The tipped minimum wage in Connecticut works slightly differently than most other states. The majority of states define a tipped employee as an employee that receives more than $30 per month in tips. Whereas the tipped minimum wage in Connecticut is determined by the employee having to earn at least $10 per week in tips as a full-time employee or $2 per day in tips for part-time employees.
These employees will often include workers such as waiters, food delivery drivers, restaurants, hotel doormen, some beauticians, and more.
Connecticut Tipped Employees and Tipped Minimum Wage
In order to comply with the Connecticut minimum wage law, employers must ensure that when including tips, their employees are being paid at least the state minimum wage rate set for Connecticut workers. If those employees are not making that minimum pay rate via tips, it is then the employer’s responsibility to make up the difference.
There are several different factors of employment law that impact how Connecticut employers handle tipped employees. Understanding the minimum wage in Connecticut, the federal laws controlling wages, and how pay and wages work for tipped employees is important, especially if you are operating or thinking about starting a service-related business with tipped employees.
The Connecticut minimum wage is currently $13.00 per hour for non-tipped employees. There is no specific tipped minimum wage in Connecticut, however, a tipped employee will have to receive a minimum wage of $13.00 per hour regardless of how much they make in tips.
So, if you qualify as a tipped employee in CT due to you earning $10 per week in tips, which would be $40 over a 4-week period, the tipped minimum wage rate you will receive per hour would be $12.75, with a tipped credit of $0.25 to make your wage equal to the Connecticut minimum wage of $13.00 – this will change depending on how much you earn per week in tips, however, the wage you will be paid will be the minimum of $13.00 per hour for the time you worked.
Connecticut law requires the Connecticut Department of Labor to calculate a minimum wage increase each year. The annual calculation is based on the percentage increase in the federal Consumer Price Index (CPI) for the previous 12-month period within the state.
The CPI is calculated based on what consumers pay for goods – a 1% increase in the regional CPI translates to a 1% increase in the applicable minimum wage in Connecticut. The minimum wage for both tipped and non-tipped employees rises based on the CPI.
Fair Labor Standards Act (FLSA) and Tipped Employees
The Federal Fair Labor Standards Act, also known as the FLSA, is a federal law from the U.S. Department of Labor. This law establishes a national minimum wage, defines classifications for employees, and covers other essential standards and requirements for employers.
Federal law requires that employers make tipped employees aware of the cash wage paid (currently, the national direct hourly salary is $2.13 per hour), let them know about the tip credit, and explain any tip pooling systems at the workplace. Because Connecticut’s minimum wage rate is higher than the federal minimum wage rate, the state laws supersede the federal regulations.
Tipped Employees, Tip Credits, and other Considerations for Connecticut Employers
Since the rules for tipped employees are different than non-tipped employees, there are other ways that employers can calculate the minimum amount earned by a tipped employee. One of these ways is through tip credits.
There is no specific tipped credit per hour in Connecticut – this means that employers will have to pay their employees the remainder of the minimum wage rate after tips have been received. So, in one hour if you have made $3 in tips, then you will have to be paid $10 for that hour by your employer to make up the $13 minimum wage in Connecticut.
This minimum wage rate ensures that servers, hospitality and others in tipped roles in Connecticut that do not make enough with tips can earn a weekly wage when working full-time of $520 (40 hours x $13.00 per hour).
What Does This Mean for my Business?
If you currently operate, or are planning on starting a new business in Connecticut or are considering Connecticut as your new home and are seeking a service and tip driven job, you should certainly take this information about the Connecticut tipped minimum wage into account.
While you may want to speak with an employment attorney or accounting firm for legal and tax advice about your business, understanding the minimum wage laws for tipped employees can help you make an informed decision.
In Connecticut, much the same as most other U.S. states, tipped jobs are a mainstay of the economy and accessible for those seeking employment given the nature of Connecticut’s eating and drinking out culture. Today there are over 8,200 eating and drinking establishments in Connecticut, and there are almost 160,000 restaurant and food service jobs in the state.
Most U.S. states and territories require that tipped employees make either the full state minimum wage or make a minimum cash wage higher than the FLSA’s requirements. Regardless of where you locate your business in the U.S., you will likely need to have a pay rate for tipped employees higher than the federal tipped employee rate.
To learn more about tipped employees, you can check out the Department of Labor’s Website on the minimum wage for tipped employees.