How Do Tips Factor Into an Hourly Wage?

If you work in a job field where tips are a part of your income, it is important to understand how these tips can affect your wages. According to California Labor Law, employees who receive tips as part of their job can be paid a lower wage when compared to the minimum wage required to be paid by other employers. The number of cash wages you are paid as a tipped employee, however, can vary depending on how many people are employed with the company. For example, companies that have less than 25 employees must pay a cash minimum wage of $10.50, while companies that have more than 26 employees must pay a minimum wage of $11.00.

As a tipped employee, you often receive varying amounts of tips depending on the day. However, you are guaranteed to make at least the cash wage amount. For instance, if your tips for the day calculate out to $6.00 an hour, your employer is responsible for making up the difference so that you are paid the cash minimum amount indicated. As a tipped employee, there is the possibility that you could make over the minimum cash amount on a good tip day. Furthermore, broken items and cash register shortages cannot be taken out of your paycheck under federal law.

Employers who do not pay their tipped employees properly in California and throughout the United States could face wage and hour violation charges if a claim is brought up against them.

This information is intended to educate and should not be taken as legal advice.